At the end of summer holiday season it is worth looking at where we now stand in relation to current and likely future claims volumes, as well as the increasing pace of change in the business models of claimants' solicitors which will in turn affect future volumes.
May’s stats from the Portal Company for new CNFs submitted to the £1-10K RTA portal were the lowest for nearly two years at just over 54,000, a hangover from the exceptionally high numbers of the previous months caused in turn by the keenness of claimants' solicitors to submit claims earlier to avoid the ongoing changes. June's figure for new CNFs was slightly higher at around 58,500, though the number was still the lowest monthly figure for 18 months apart from May's number. The corresponding figure for July is likely to show a further increase back towards what used to be regarded as usual levels, aided by the fact that in July, there was of course extra reason for claimants' solicitors to lodge £1-10K RTA claims into the portal before 31 July to avoid fixed recoverable costs as should those claims later drop out of the portal they will attract costs on the old costs system including hourly rate costs in litigation rather than the new FRCs.
The expanded portal opened of course on 31 July for RTA claims up to £25,000 and for EL and PL claims between £1,000 and £25,000.
Whilst currently the portal company prepare monthly new CNF statistics for claims entering the RTA portal, going forward from August onwards we expect they will make available separate statistics for RTA claims on the one hand, and for EL/PL claims on the other. As the statistics a month in arrears, it will be in early October that the first statistics will be available showing how the expanded portal has affected the number of new CNFs both for RTA, and for EL/PL. It will be a few months after then that statistically significant trends will become known.
Up until now, few claims are entering the expanded portal outside the previously eligible RTA £1-10K claims which have of course been portalised for some time now. Because the number of CNFs to the expanded portal are currently so low, defendants and insurers are currently still noticing the odd new portal claim as something of a novelty.
This is hardly surprising where the new categories of claim entering the portal for the first time are only doing so where both the accident has happened after 30 July, and there has been enough time afterwards for the claim to be submitted. It will probably be a few months yet before the number of new notifications to the expanded portal picks up.
It might have been thought that EL disease claims would have been quicker off the mark into the expanded portal, as of course all that is needed there is for the claim to be notified, as the claim must be lodged into the portal if the notification date is after 30 July. While it could have been the case that EL disease claims were being promptly notified in early August in the sense that they were eligible for the portal, in fact over the preceding weeks it is clear that the aim of claimants' solicitors acting in current EL disease claims was to avoid the portal wherever possible, and to notify them by means of an ordinary letter of claim before 30 July. While disease claims are of course exempted from FRCs outside the portal at present, those claimants' solicitors were presumably keen to avoid the portal process and the FRCs that would apply inside the portal, preferring instead to stick with the former processes and costs regime which with they were familiar.
The pace of change on the claimant's side is hotting up. The expected new landscape of a move to larger commoditised entities is moving ahead quickly in places.
A survey by Company Watch of 2600 firms has reported nearly 900 current claimant law firms have a 25% chance or more of failing. Nearly 500 have a zero or negative net worth. Whilst sole practitioners were excluded from the survey, of the smaller firms included, nearly half were at a risk of failing.
The Midlands firm Challinors or whose work personal injury claims made up a significant proportion is a case in point as it has gone into administration. SGI Legal, an ABS, has acquired their personal injury caseload, but taken on none of its partners, perhaps an indication as to the lower level of lawyers expected to be used on the claimant side. SGL says that it intends to make more acquisitions in the period ahead.
Quindell, another ABS who took over firms such as Silverbeck Rymer and Pinto Potts last year, has reported an increase in revenue of 78% in the first six months of this year, now up to £163 million.
In an interesting example of how the commoditised RTA claims process is now likely to extend into EL and PL claims, Minster Law, which was taken over by BGL Group in May, has announced its intention to move into EL and PL claims. It says that it sees its experience of managing RTA portal claims as capable of being transferred easily to EL and PL claims now that they will be entering the portal where the accident occurs after 30 July.
Perhaps the biggest deal announced recently was the intention of Slater and Gordon to acquire Fentons, a deal that is expected to be completed in October. Fentons' justification was that they saw the Government reforms putting pressure on firms even of their size, so that they needed an upwards merger.
As I say, the pace of change seems to be getting quicker. Slater and Gordon are quoted as saying that there is now a greater rate of consolidation amongst claimant outfits than had been expected, and it is hard to say that they are wrong.
What impact will this all have on future claims levels? If the pace of change is going to be quicker, and claimant work is moving across to these expanded outfits with more efficient processes sooner, then if anything claims numbers are likely to move back more quickly towards levels which were encountered before the hiatus that began this spring as the reforms had effect. The latest developments show that there continue to be well resourced outfits whose business plans involving making money out of claimant injury cases even after the current changes have had effect who are moving quickly where they see opportunities. If their plans are to be achieved, they will need to maximise claims volumes. Insurers would be well advised to be ready.This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.