Claims regulation - painful but necessary
The personal injury sector is about to undergo radical change as the government attempts to drag the industry kicking and screaming into a new regulated environment.
The legal profession has been crying out for this and by April 07 the regulatory body will finally bare its teeth. Here is the DCA website - its hard to find on their main site so bookmark the link if required.
The regulations are designed to put a stop to sharp practices in the industry with genuine claimants losing hard earned compensation in payment of legal fees or expenses that should otherwise be recoverable from the defendants. Cases are captured by non qualified / regulated claims farmers and then sold on to solicitors desperate for the work. Kickbacks for medical reporting fees and insurance abound and the client can often (but not always) lose out.
There are many more issues at stake but lets just say Im in total agreement with the forthcoming changes.
My worry is that the changes will ironically hit some law firms more than they will the so called claims farmers. Many law firms dont market themselves and instead rely on being fed work from the claims farmers. Some law firms pay good money for the cases - £450-600 per accepted claim - and have no other sources for acquiring new business.
The claims farmers are rushing to obtain authorisation under the new regs. Most of the decent ones will prevail and may actually be empowered by the new rules. They will gain a form of legitimacy that up to now has eluded them.
Some claims firms will however not bother to seek regulation. They may be too small to cope with the fees or the onerus duties involved. They may be too damn dodgy to even give a sh!t. They wont like the fact that they cannot cold call in the way they did previously and they wont like the promise of a random inspection by the regulatory body (who have suggested they will take a peek from time to time)
This will create a sub layer of "bad" firms that will trade around the regs. This sub layer will still find desperate solicitors ready to accept their work - despite knowing that this is a breach of Law Society rules and completely illegal.
Its a supply and demand situation. Such firms may eventually die off, but my fear is that they will become re-sellers flogging their illegally acquired claims through legitimate regulated firms. Imagine that - crap firms still trading but selling on thru legit companies.
So what of the legitimate firms? There will be less competition. The big ones are going to become powerful. They will hold court in a similar way to, God forbid, TAG & Claims Direct
If you want a stocks option tip - there it is. The big claims companies will grow.
The law firms on the other hand have a major problem. The smaller firms will struggle to gain panel memberships. They will be faced by TESCO law fairly soon and this will eat away again at the opportunities available. There will simply be less business available for small to medium sized law firms in this sector.
So here are some thoughts for any law firm out there who might find themselves in the firing line. I dont seek to patronise nor do I pretend I am a soothsayer with a crystal ball. I do, however, know something about marketing and I work for a firm that has already grasped some of these issues:
1) The next few years are going to be very difficult - there will not be enough work - register that thought. Its a fact
The personal injury sector is about to undergo radical change as the government attempts to drag the industry kicking and screaming into a new regulated environment.
The legal profession has been crying out for this and by April 07 the regulatory body will finally bare its teeth. Here is the DCA website - its hard to find on their main site so bookmark the link if required.
The regulations are designed to put a stop to sharp practices in the industry with genuine claimants losing hard earned compensation in payment of legal fees or expenses that should otherwise be recoverable from the defendants. Cases are captured by non qualified / regulated claims farmers and then sold on to solicitors desperate for the work. Kickbacks for medical reporting fees and insurance abound and the client can often (but not always) lose out.
There are many more issues at stake but lets just say Im in total agreement with the forthcoming changes.
My worry is that the changes will ironically hit some law firms more than they will the so called claims farmers. Many law firms dont market themselves and instead rely on being fed work from the claims farmers. Some law firms pay good money for the cases - £450-600 per accepted claim - and have no other sources for acquiring new business.
The claims farmers are rushing to obtain authorisation under the new regs. Most of the decent ones will prevail and may actually be empowered by the new rules. They will gain a form of legitimacy that up to now has eluded them.
Some claims firms will however not bother to seek regulation. They may be too small to cope with the fees or the onerus duties involved. They may be too damn dodgy to even give a sh!t. They wont like the fact that they cannot cold call in the way they did previously and they wont like the promise of a random inspection by the regulatory body (who have suggested they will take a peek from time to time)
This will create a sub layer of "bad" firms that will trade around the regs. This sub layer will still find desperate solicitors ready to accept their work - despite knowing that this is a breach of Law Society rules and completely illegal.
Its a supply and demand situation. Such firms may eventually die off, but my fear is that they will become re-sellers flogging their illegally acquired claims through legitimate regulated firms. Imagine that - crap firms still trading but selling on thru legit companies.
So what of the legitimate firms? There will be less competition. The big ones are going to become powerful. They will hold court in a similar way to, God forbid, TAG & Claims Direct
If you want a stocks option tip - there it is. The big claims companies will grow.
The law firms on the other hand have a major problem. The smaller firms will struggle to gain panel memberships. They will be faced by TESCO law fairly soon and this will eat away again at the opportunities available. There will simply be less business available for small to medium sized law firms in this sector.
So here are some thoughts for any law firm out there who might find themselves in the firing line. I dont seek to patronise nor do I pretend I am a soothsayer with a crystal ball. I do, however, know something about marketing and I work for a firm that has already grasped some of these issues:
1) The next few years are going to be very difficult - there will not be enough work - register that thought. Its a fact
2) Tesco law will eat away at everything. Check the Halifax legal services website which is a similar venture and equally frightening - just for a moment imagine the scale - the threat and the reality.
3) Market yourselves. If you dont know how to - learn. Get yourself a marketing consultant - recruit one even. It might be £30k-40k well spent
4) Provide a marketing budget - this will need to be over and beyond what you are currently
spending (although if your claims are no longer coming in - you can re-assign those funds)
5) Build a website that works and brings traffic. Learn about web advertising and organic search engine ranking. If you dont have a workable website - give your senior partner a slap
6) Look at other products - financial services for example - its a great niche seldom embraced by law firms. Use the "trust" factor most lawyers have - OK we may not be well liked in some quarters but we definitely out rank an IFA.
7) Look at staff levels - have you too many fee earners right now? Should you promote any more partners or associates that you may need to ditch next year?
8) If you are an up and coming solicitor - is your firm doing enough to protect your future? If not - MOVE ON. But before you do, why not make a few suggestions about managing some of these issues.
In summary - wake up and smell the coffee people
The times really are a changing!
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