Nearly half of claimant personal injury and clinical negligence law firms are expecting their turnover and profit to increase over the next year as they remain bullish about the appeal of smaller firms to consumers, according to a new annual survey of the market published by leading marketing collective First4Lawyers.
Though new legislation and competition were their top concerns, 49% of respondents anticipated an increase in turnover and 46% in profit in the next 12 months, with 32% and 29% respectively expecting them to stay the same.
The 104 firms polled confirmed that the reduced RTA portal fees had made it difficult to make a profit from such work (62% said so), but nonetheless broader confidence in the future of their practices was such that 38% had recruited more qualified and paralegal staff in the last three months (14% had reduced numbers), while 25% expected to recruit in the next three months (11% to cut headcount).
Despite the concerns about competition, 56% of respondents believed that alternative business structures have not improved the quality of service to injured people, with 49% convinced that people still want the personal service a small firm can offer. On the flip side, 32% felt there was no future for small firms in the market.
There was also widespread concern that the cut in portal fees had contributed to a deskilling of PI work and impeded access to justice. Similarly, respondents felt that the main impact of the Jackson reforms has been to discourage claimant solicitors from taking on less straightforward cases, as well as tilting the playing field in favour of defendants.
But the referral fee ban has not been a huge issue, the survey found. More than half of respondents (55%) found it easy to comply with and continue operating as before, while 41% thought it had the hoped-for impact of rooting out bad behaviour while still permitting legitimate marketing.
However, a third of respondents believed the Solicitors Regulation Authority (SRA) has shown no interest in enforcing the ban “as long as you’re not blatant”.
First4Lawyers’ managing director Qamar Anwar said: “I’m pleasantly surprised that the PI and clinical negligence sector is in relatively buoyant mood despite its challenges. Very few industries could emerge as robust and positive having experienced three years of tough regulatory change.
“There is a growing tide of concern about its impact on how firms go about their work, with so-called commoditisation leading to a deskilling of the sector. But my sense is that there is a backlash against this, encouraging firms to focus on improving the quality of service and advice that their clients receive, and scrutinising very carefully for potential fraud.”