Personal injury (PI) lawyers are working in an era of fundamental and evolutionary change, not least because of the changes driven by the Jackson reforms but also because of the changing attitudes of banks and funders to PI law firms.
There have already been some high profile failures, while others have embarked upon vast redundancy programmes aimed at taking the fat out of their businesses. So can personal injury still be a profitable class of business? The answer is yes, but not as we know it, says Citadel Law founder and managing director Lesley Graves.
As an independent PI solicitor consultant, I have been working with law firms to drive the best results for their lay clients and deliver the most profit from their PI work for more than five years. Through auditing fee earners at all levels, I have collected evidence of a de-skilled profession that lacks the basics of evidence gathering to prove a negligence claim and of how to access appropriate rehabilitation for clients.
Furthermore, an over-reliance on medical agencies to select and instruct experts coupled with a lack of understanding of the technical skills required to build a claim means that firms are missing the value in their caseload. Missed multi track work, lack of understanding of liability principles and incorrect compromises in contributory negligence, defective pleadings and over reliance on poor quality counsel further adds to the end outcome of missing value and opportunity.
More worryingly, our audit collected data shows evidence of up to 10% of cases deemed to be low-value involving more serious injuries – such as brain and psychological damage – missed because of IT-led processes operated by under qualified fee-earners.
This is not a problem that has suddenly appeared overnight. Part of the problem is that in the rush to commoditisation over the past fifteen years – in part driven by new entrants to the market attracted by quick profits – process has eclipsed the true expertise required to assess risk and run PI work effectively. Firms thought that commoditisation on its’ own would suffice. A thorough examination of the claimant PI market shows that nothing could be further from the truth.
However, there is another way. Those claimant law firms that adopt a ‘back to basics’ approach to litigation ensuring absolute focus on client care and getting the best results in liability, rehabilitation and compensation are thriving. In these firms, often heavily driven by low value volume PI work, there is a strong element of process underpinned by legal expertise at critical points, thus ensuring a proper evaluation of liability, quantum and costs. In turn, this approach avoids negligence claims later on, something which I predict many claimant PI law firms are at great risk of.
At the heart of this approach is senior legal expertise; expert lawyers must lead a PI case at critical points to ensure optimum service delivery. Outdated technology, poor legal process and low-skilled fee earners often equate to an undervaluation of a PI case which can be devastating to both the client and the firm. This needs to be stripped out if firms are to survive.
Furthermore, the new requirement to prospectively set costs budgets in multi-track cases means expert case and costs strategy is vital. Many firms are increasing their hourly rates and reducing their caseloads in multi track work to ensure optimum outcomes in service delivery and streamlining their process driven volume work by bringing in expertise at key points to reduce risk.
Innovation will undoubtedly be driven from a number of sources, including from new market entrants who bring a fresh outlook; existing firms who re-engineer their practices and, from banks/funders, the SRA and professional indemnity insurers who will demand better value and certainty from claimant law firms.
As for price, those PI firms who are looking to take a percentage of their clients’ damages may find they lose market share as a result. I think we will increasingly see lay clients avoiding a law firm that demands they give up part of their compensation award.
Specialism as a result of increased hourly rates in multi-track cases may be one way of ensuring clients can retain their full compensation and law firms can continue to be profitable without putting the expense of their profitability partly at the door of responsibility of injured clients.
At the lower end of PI work, processes will need to be leaner equally they must be supported by a quality legal service. Technical expertise at key trigger points will be vital to ensure effective triage and analysis of PI work. This is the only way to deliver a commercial model that has compliance, governance and KPI’s to drive the process efficiently with client care at the heart of the process.
As to higher value and more complex multi track work, the devil is in the detail in terms of case management and costs budgeting. It is only by applying the most specialist and technical and costs expertise to these cases that law firms will survive. Law firms already doing this are ensuring they have the requisite expertise in house and from external PI costs experts, applying higher hourly rates and gearing the work to ensure that both in terms of quantum and costs these cases achieve the very best they can.
Behind every law firm sits its key stakeholders namely banks/funders, professional indemnity insurers, the SRA and its customer base. All will expect more for less in the current climate and driving efficiencies, client care and financial performance will be the key to future practice.