Posted by Jeff Zindani, managing director of Legal Futures Associate Acquira Professional Services
Zindani: Firms that can’t invest in cutting-edge technology will struggle to compete
The personal injury (PI) and clinical negligence sectors have undergone seismic shifts over the past three decades.
Since my early days at Russell Jones & Walker (now Slater & Gordon), legislative and policy changes have chipped away at the financial viability of claimant work, leading to significant structural changes.
Volume road traffic accident firms, once dominant, have all but vanished or shifted focus.
According to IRN Legal’s 2024 PI market report, the sector still generates £4.3bn annually, but law firms are shrinking, with active firms and claims falling sharply. Claims registered at the Compensation Recovery Unit have plummeted by more than half in the past decade, from 1.1m in 2013/14 to just 477,420 in 2023/24.
Meanwhile, the ‘vanishing trial’ syndrome, where cases settle or drop before reaching court, mirrors trends seen in the US.
While fee income has stagnated, firms’ costs keep climbing. The clinical negligence market has fared better, generating over £1.5bn in fees, but it’s still not a high-growth sector.
Private equity’s bold entry
In recent years, consolidation has swept the PI and clinical negligence markets, accelerating mergers and acquisitions.
The entry of private equity, once seen as unlikely in claimant work, changed the game. Sun European Partners stunned the sector by acquiring Fletchers, a leading personal injury firm, for over £40m. Sun’s expansion continued with vertical integrations like the Blume Group acquisition, broadening its control over the supply chain.
Despite a controversial history, private equity isn’t backing down. Simpson Millar, owned by Doorway Capital, is among those making aggressive moves, acquiring smaller practices to build scale.
The pressure cooker: Why firms are consolidating
Competitive pressures and the diminishing pool of cases are driving firms to merge. Larger firms can pool resources, reduce per-case costs, and access capital for tech investments, like AI-powered legal tools and automation systems that streamline case handling.
The days of old-school case management are numbered. Firms that can’t invest in cutting-edge technology will struggle to compete with larger, leaner players that can process cases faster and with less lawyer involvement.
Small firms, with limited resources, are increasingly turning to marketing networks and claims management companies, but they’re facing an uphill battle.
Consolidation also benefits staffing. Larger firms attract top talent and can offer better career paths and perks. Smaller boutique firms may thrive by focusing on high-value, complex work, but they’re also prime targets for acquisition.
The future is consolidation
The current wave of consolidation shows no signs of slowing. Smaller firms lacking tech, marketing, and capital will find it hard to survive. Private equity, seeing huge potential, will continue snapping up firms, bringing them under one umbrella to create powerhouse operations.
Firms need to face the reality of this evolving landscape and consider where they fit in the future of personal injury and clinical negligence law.
Leave a Comment