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23 January 2017

PI reforms could cost 28,000 UK law firm jobs, warn economists

Personal injury firms will have their margins pushed to 'unsustainable levels' if the Government pushes ahead with its planned shake-up of small injury compensation.

By Kathryn Higgins


A report, authored by Capital Economics and the request of lawyers’ pressure group Access 2 Justice, has warned that as many as 35,000 jobs in the personal injury sector will be at ‘high risk’ if proposed changes to the PI claims process are approved. Of those, the report estimates that at least 28,000 at-risk jobs represent those employed by law firms.

Legal industry impact

The Government has proposed lifting the limit on small injury compensation from £1,000 to £5,000, a move that would allow more people than ever to pursue PI cases in small claims court without the assistance of a lawyer. The Government has estimated that the move could save around £1.2bn per year in insurance costs, which insurers have promised to pass on in the form of consumer savings. However, the move would likely cull around £20m in revenues from claimant lawyers, placing thousands of jobs at risk. Capital Economics’ own survey of 161 PI firms found that nearly half of them received more than 60 per cent of their total income from claims valued below £5,000, while 40 per cent of all PI legal jobs are at firms specialising in sub-£5,000 claims.

Sources: Legal Futures; The Telegraph

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