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Scanning the horizon (and other sea-faring clichés) - Jonathan Wheeler, Managing Partner, Bolt Burdon Kemp

17/07/19. I recently presented my firm’s business plan to all our staff. As managing partner of the good ship Bolt Burdon Kemp, a practice which exclusively represents seriously injured claimants, it is very much part of my job to scan the horizon for threats and opportunities, and lead everyone through choppy waters. My analysis attracted a lot of attention! So what will PI practice look like in the next year or so?

The Government continues its relentless implementation of reform which will further attack our clients’ right to damages and the recovery of their costs. Brexit – deal or no deal – will clearly have some impact, although exactly how is actually very unclear. Charting a course through such change is a real challenge and only the most sea-worthy practices will emerge unscathed.

Attacks on our clients’ damages

The Government continues to promise that by April 2020, a tariff scheme for low value traffic accidents will be introduced courtesy of the Civil Liability Act. Law firms specialising in such cases will either need to cut their cloth in the way that they run these claims to make them pay, or abandon the market altogether. A great opportunity for the unregulated sector of paid McKenzie friends and claims management companies, but I fear for claimants and predict worse outcomes for them. Some law firms may raise their sights to more serious, complex work.

At the opposite end, the Lord Chancellor is to make a decision on the discount rate by 6th August 2019. It is predicted that the rate will be increased to 0-1% and if this comes to pass seriously injured claimants will be forced to invest damages in riskier stocks or else be under compensated for their long term needs.

Attacks on our clients’ costs

Fixed fees for low value (up to £25,000) clinical negligence and noise induced hearing loss claims are on the cards, and the Government has recently consulted in raising the fast track limit for “intermediate claims” up to £100,000. Law firms will have to start modelling the proposed costs matrices to ascertain how and if they can continue to be profitable in running such cases, or moving into areas which appear to be exempt – such as child abuse claims and contested clinical negligence work. As this only requires rule change, not primary legislation, solicitors could see these changes coming in fairly swiftly.

Coping with reform

Some firms have already become croppers - Seth Lovis & Co ceased trading in March and Nesbit Law Group LLP crashed out with high debts in July last year. The Law Society Gazette reported recently that creditors of Bolton firm Asons are owed £26.5m. All this news makes banks twitchy and reluctant to extend credit lines to the firms remaining in the market. Borrowing vast sums of money to prop up a failing law firm has never made good business sense, and it also prevents firms staying nimble enough to cope with change: you need to be more speed boat than oil tanker to stay the course.

Change breeds innovation: Representing the interests of the vast majority of accident victims at the lower value end of the market will require larger economies of scale, slicker use of technology, reliance on lesser skilled and cheaper staff, or the unbundling of services. There is no doubt that there will be a continued need for law firms to represent accident victims; accidents will continue to happen and people need compensation to cope with the changes their injuries have made to their lives, who would otherwise be marginalised and forced to fend for themselves in a system heavily weighted against them.

Getting ‘niche’

Without the economies of scale of some larger law firms, to stay in the market others need to ‘get niche’, and that is certainly the direction we have chosen at Bolt Burdon Kemp. We have so far managed to stay at least one step ahead of the reforms. Some time ago we re-focussed our business on the most seriously injured. This allows us to provide the full service to our clients that we want to provide, without cutting corners for the sake of proportionality.

It is a truism that the amount of cash needed to finance a personal injury department (or a whole personal injury firm) is eye watering. The cost of investing in marketing to attract the clients you want to represent, and in employing great staff to service the needs of those clients is immense. Then you have to fund your clients’ cases (and their disbursements), only getting paid at the end of the case (and only if you win). This means that there are immense barriers to entry into the serious injury market, and for those firms that are already operating successfully within it, this is good news. It is certainly my intention that the good ship BBK will steady its course and sail on, and not end up beached on the sand bank of reform.

Jonathan Wheeler
Managing Partner, Bolt Burdon Kemp

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