George Osbourne’s announcement in November 2015 that the small claims limit is set to rise has sent deep shockwaves through personal injury firms nationwide. The Chancellor plans to raise the small claims limit for personal injury claims from £1000 to £5000 and get rid of general damages for minor soft tissue injuries.
The Government claims this change will remove over £1bn from the cost of providing motor insurance and it is expected that this will translate into the insurance industry passing on an average saving of up to £50 per motor insurance policy on to consumers.
The introduction of the RTA Portal was in part designed to reduce the cost of motor insurance however since its introduction in 2015, there has been little evidence of this saving being passed down to consumers. This new change means a large number of law firms will be forced either to restructure their entire business model or simply face going out of business creating mass redundancy in the sector.
Personal Injury solicitors warn however, that this change does not safeguard genuine claimants. The new change will mean that victims of injury may not be able to afford legal help and some argue that removing the right to claim damages for pain and suffering caused by the negligence of others shows a callous indifference to citizens.
The bombshell has left many firms reeling and wondering how they are going to replace their long relied upon income stream. Most PI firms are now considering how to develop their business in the face of declining PI revenues and some have already taken positive and decisive steps to protect their firms. However, the legal profession has long been adverse to great change and many firms are panicking as to how to keep their firm afloat in this turbulent market.
There are numerous factors for PI firms to consider now in the face of Osbourne’s announcement, for some the plans could be catastrophic particularly smaller Pi firms with no other income streams to rely upon. Affected firms across the country are considering the following difficult questions;
How can Personal Injury lawyers learn and acquire new skills, or refresh their old skills, rapidly enough to meet the timescales of change?
How can PI firms develop a new income stream or develop existing practices quickly enough to cope with the changes, particularly as these markets are already highly competitive?
*How should firms decide which markets to diversify into? *
Solicitors as a general rule are not market leaders in business development and marketing strategies, so how can firms foster an ethos where marketing is embraced?
In an industry which has been comfortable for many years with recognized roles and ingrained routines, how can firms enable a culture where staff and partners alike can embrace change?
The future of a huge number of firms depends on the action taken now. Many will struggle as they have never had to face such change before, whereas others will see it as an opportunity to diversify and will quickly find new strategies. This will also test firms’ ability to adapt and their commitment to training and development in order to survive these tempestuous changes.
So what should firms be doing now if affected by the new proposals; firstly they must work out what they can focus on instead of PI. Consider the firms strengths and weaknesses and look to ideas that they might have had over the years. Firms should also use this as an opportunity to study what their rivals are doing.
Firms need to develop a new strategy and even more importantly, the steps for implementation. In any business, good ideas are useless without a detailed and accurate plan for implementation. It is also important for partners and senior colleagues to be singing from the same hymn sheet right from the outset and to make sure the whole firm is kept informed and understands what is happening and the importance of the planned changes.
Finally it is inevitable that new directions will require new skills. Firms need to allocate time to training and development so that those who are changing have time to get familiar, or re-familiarize themselves, with their new roles. It may also be advisable for firms to get outside help to ensure that the transition away from PI into new realms runs smoothly.
Although many industries face change, it is unfamiliar territory for many solicitors firms and developing new strategies and engaging in new activities is a huge unconventionality. Each firm will present its own difficulties in this transition, for some it will be marketing, for others project management and business development but there is one commonality; that this is quite possibly the largest shake up of the PI industry in decades and those affected must act positively and decisively now to protect their firms and their employees.
For advice on a Personal Injury matter head to our PI services page and speak to an expert today.