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Personal Injury industry sees a fall in CMCs

The beginning of the financial year marked two things in 2013; as well as restarting the tax year, the 1st April 2013 introduced the latest reform into the personal injury industry.

These reforms related specifically to the way personal injury claims were to be funded. Within the Civil Justice reforms key changes were summarised:

    • No win no fee conditional fee agreements remain available in civil cases, but the additional costs involved (success fee and insurance premiums) are no longer payable by the losing side
    • No win no fee DBAs (Damage Based Agreements) are available in civil litigation for the first time
    • Referral fees are banned in personal injury cases
    • The introduction of new protocols extending the Road Traffic Act personal injury scheme to £25,000
    • A new fixed recoverable costs (FRC) regime
    • Claimants’ damages are protected: the fee that a successful claimant has to pay the lawyer – the lawyer’s ‘success fee’ in CFAs, or ‘payment’ in DBAs – is capped at 25% of the damages recovered, excluding damages for future care and loss
    • General damages for non-pecuniary loss such as pain, suffering and loss of amenity are increased by 10%

Recent figures have revealed that the number of personal injury claims management companies (CMCs) fell from 2,316 to 1,485 from January to September 2013. The reform was originally intended to come into effect at the beginning of October 2012, but due to the number of changes involved it was pushed back. In February 2012 the Law Gazette stated:

‘The Ministry of Justice this week confirmed that civil litigation reform will be put back by six months to give law firms time to adjust.’

What does this mean for personal injury solicitors?

According to the Ministry of Justice’s annual Claims Management Regulation Unit (CMRU)report for 2012/2013, the personal injury sector made an annual turnover of £354m, equating to 35 per cent of the overall claim sector.

Personal injury has remained the largest sector within the claim sector, despite a reduction of authorised CMCs from the end of March 2013. Year on year the number of CMCs had decreased by 533, the report attributed this fall to the recent reforms which have greatly impacted these figures, most significantly the ban on referral fees and cash incentives.

Kevin Roussel, head of CMRU stated at a recent legal policy forum at Westminster that:

“It is inevitable that we will see fewer businesses, but they are going to be bigger. The sector is not about to die. It is adapting to the ban and the new situation. There is a core future and it should be a better industry.”

Contact Slater Heelis about your personal injury claim

This is good news for many, particularly in the North West, home to the largest number of personal injury CMCs in the country. The reform reduces the number of smaller firms who were actively not complying with the reform’s standards, allowing firms such as Slater Heelis to work harder for those who ask for our help with their claims.

If you would like more information about how our team of expert personal injury solicitors can help you achieve the maximum compensation for your claim, please contact us today on 0161 969 3131.