PI Brief Update

How Two Law Firms Have Adapted to the PI Reforms - Brian Rogers, Access Legal

27/08/21. From 31 May this year, the personal injury claims process changed for people who suffer from what is categorised as low-value injuries in road traffic accidents or RTAs.

Essentially, the changes have impacted the amount of compensation claimants can receive and it means RTA cases valued up to £5,000 will now be treated as small claims. In theory, claimants are now less likely to seek legal representation as they will have to pay for their legal costs out of reduced damages.

These reforms have had a major impact on the market, for firms of all sizes. According to a report by RTN Research^[1], the reforms will ‘intensify’ the fight for market share as the market shrinks and make it vital for firms to improve operational efficiencies and service provision - something which larger firms are better placed to do, with more resources to invest in technology to streamline processes and reduce time adding up case-by-case.

To find out how the reforms have impacted law firms, we spoke with Mark Evans, co-owner and director at Easthams Solicitors, which serves Blackpool and the surrounding areas and Clint Milnes, chief information officer at Winn Group, national accident claims specialists.

What have the changes to the PI claims process meant for your firm?

Mark: Like many smaller firms which have historically specialised in RTA claims, we have had to rethink our strategy and refocus our services. Obviously, we have known for some time that these changes were coming in, so we had plenty of time to prepare.

With the small claims limit now increased, it means we can no longer claim our costs back if the claimant is successful, where historically we could. And when they are successful, they have to pay their fee to their solicitor out of the damages they receive. That will automatically deter many claimants from seeking legal representation, because they won’t want to lose a good chunk of their compensation.

The changes have impacted firms in two ways. It’s less attractive for claimants to use solicitors, especially when there’s a portal set-up for them to do it themselves, and for firms like us, because of the reduced levels of compensation, it isn’t financially viable to handle these claims. These types of cases can typically take six to nine months to conclude and where before we may have received a fee of around £2,000 per case, we would now be looking at probably less than £600, and that’s if the claimant wins. The risk is just too high for smaller firms to take on RTA cases in my opinion.

Clint: Essentially the changes are asking lawyers to take on cases where they won’t be entitled to recover legal costs and if we do win on our client’s behalf, we are looking at potentially 25 per cent of damages in the region of £500 - £750.00 as our income for that case. It’s a real challenge to make this work for law firms of all sizes. At Winn’s we will continue to provide a service to all clients, despite the reforms.

Of course, we have had to make far reaching changes to make it financially viable for our business. We’ve written a timeline of what the perfect low-value RTA claim case would look like for us, in terms of how much time it would take and how much time a lawyer needs to be involved.

A legal representative has to oversee the case but it’s about streamlining the entire claims process to reduce our work in progress and place more onus on clients, like in other walks of life such as insurance renewals, where clients would go online and complete forms themselves. As such technology is key to our strategy.

Have the changes accelerated any plans to adopt technology solutions in a bid to expand or grow areas of your business? Or have you turned to your technology solutions to help offset the forecasted loss in income created by the PI reforms?

Mark: As mentioned we have had to refocus our services due to the reforms, so we have moved our main focus away from RTA claims to other services like employers’ liability and public liability and strengthened our position in other areas including conveyancing and wills and probate.

For smaller firms making investments in tech, it has to be cost-effective. We can’t afford to take huge risks. For us, and I imagine most smaller firms, the cost involved in investing in the type of technology that would eventually make RTA claims financially viable, would be out of all proportion to the returns that we would get, given the reduction in the fees. So for us it's about using the technology we have and working with our technology partners like Access Legal to use technology for the services which are profitable, improving our efficiency and client experience in those areas.

Clint: Technology solutions have been an important part of our business for some time, but the PI reforms have certainly played a part in influencing our strategy towards making clients more self-sufficient. We have moved away from the typical paper-based or over the phone communication for many of our services. Instead, we have in place secure documents that we can share via a secure link. We are able to accept e-signatures and we have accelerated the use and functionality of our client-facing applications. All of this is designed to save time - even if we can save just 20 minutes case-by-case, overall, it's a major saving. It’s about chipping away at those minutes over a period of time.

We are also aiming to streamline as many of our processes across our services as we can. We are currently working with our technology partners to do this - for example we know that Access Legal is working to integrate its case management software (that we use), with the Official Injury Claim (Portal) that the Ministry of Justice has set-up for small track RTA claims. This is the way I think the sector is going, partially driven by the pandemic and hybrid working too. Lawyers need to be more streamlined from both a cost and client experience perspective, to stay competitive and financially viable.”

For more information about the PI reforms, visit https://www.gov.uk/government/publications/whiplash-reform-programme-information-and-faq.

Brian Rogers
Regulatory Director, Access Legal