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Another Jackson casualty as Manchester practice splits caseload between five firms


Johnstone: process will take three years

Manchester-based personal injury firm Delta Legal has become the latest to exit the market in the wake of the Jackson reforms, and is heading into a process of managed wind-down.

It has appointed PI-Solutions to oversee a “managed and compliant” run-off of 800 personal injury files, which it said will allow the firm to achieve almost 100% of the value of its work in progress (WIP) over the next three years.

Daren Ismay, managing partner at Delta Legal, said: “It’s very disappointing that the Jackson reforms have resulted in such a Draconian reduction in revenues. Having recognised that the firm wasn’t going to be financially viable going forward, I decided to take immediate action. By seeking professional advice early, I’ve been able to manage the process, which will improve the situation for creditors and clients alike.”

At its peak Delta had around 60 staff, but by the end there were 12, of whom all but one have managed to find new jobs in the legal sector.

PI-Solutions – which launched last year as Recovery First [2] – allows firms to sell to multiple purchasers and maximise the value of their WIP if they are happy to wait until the case conclusion. Five firms are taking Delta’s cases.

The company’s managing partner, David Johnstone, said the whole process will last for three years, with Delta Legal likely to see 40% of recovery value within the first year, 30% in the second year, and 20% in the third. The remaining 10% is likely to be sold on a discounted basis. PI-Solutions is paid a fee for its work, including monitoring the caseload as it is worked through.

Mr Johnstone said: “Delta Legal acted early and approached us as soon as it recognised there was trouble ahead. At first, we directed the firm to other experts, including independent accountants and insolvency practitioners, who advised on a voluntary arrangement. It was after Delta Legal sought expert advice that it then came back to appoint us.”

He said PI-Solutions is seeing an increasing number in the pipeline as personal injury firms “begin to recognise that it is possible to avoid selling files at a discounted rate and instead realise up to 100% of the value in the WIP”.

David Thornhill, an insolvency practitioner at FRP Advisory, said: “It was refreshing to have the issues faced by Delta Legal brought to my attention early since the options available for restructuring are greater. In this case, the proactive involvement of PI-Solutions avoided the problems that can be encountered in disposing of books of WIP, often at a significant discount to their real value.”

He predicted that recoveries for unsecured creditors will be greater as a result, adding: “The benefit of avoiding bankruptcy to the sole trader in this case has allowed him to retain his practicing certificate.”