Car accidents: the cause of 48% of "no win, no fee" claims, according to survey
A Yorkshire law firm has set up a website called to acquire business from practices looking to shed personal injury (PI) work ahead of alternative business structures and the Jackson reforms.
Meanwhile, a survey of consumers has highlighted dissatisfaction with the PI claims system, and leading legal expenses insurer DAS has hit back at yesterday’s report by Consumer Focus on before-the-event (BTE) insurance.
Neil Hudgell Law, which employs more than 50 people from three offices in Hull and Leeds, aims to buy other personal injury practices, claims management companies, caseloads or individual cases, and says firms could be out of PI within a month. It is also looking to recruit experienced personal injury lawyers.
Managing director Neil Hudgell said the firm is in “a strong position to seize the opportunities presented by all the big changes happening right now in the legal profession”.
He added: “But we know through the research we’ve done that some practices do not share our outlook. Some want to shed personal injury cases to concentrate on their core areas, and with Jackson, ABS and the prospect of ‘Tesco Law’ looming, some feel it’s time to move on from the profession altogether.”
Since launching the website, Neil Hudgell Law – which also handles clinical and professional negligence matters – has already acquired one practice and said it is in talks with several others looking to refer caseloads and cases.
It undertakes to make a provisional offer within seven days before undertaking an audit of the files; a final offer would then be made within 14 days. The firm is offering cash payments in lieu of the value of work in progress, as well as to cover employment costs, TUPE transfers, run-off cover and undischarge disbursements and funding loans.
Meanwhile, the survey of 1,980 people by ConsumerIntelligence.com found that more than half has been cold-called or texted by claims firms in the past three years, although only 6% have actually used “no win, no fee” solicitors or claims firms in that time. Of those, 28% said they had been left disappointed with the outcome.
More than three-quarters (78%) of people said they were concerned by a growing compensation culture and nearly 80% were worried by the effects on car insurance premiums. The survey drew no distinction between solicitors and claims management companies.
The research showed that 48% of claims related to car accidents, 14% to financial mis-selling, 13% to “street accidents” (ie, pedestrians), 10% to accidents at work, 8% to other mis-selling and 6% to accidents in a restaurant/pub.
Ian Hughes, managing director of ConsumerIntelligence.com, said: “Access to justice is an important principle and ‘no win, no fee’ solicitors can play an important role. But the clear message from our research is that people believe it has gone too far.”
DAS strongly criticised the report published by “the soon-to-be abolished quango” Consumer Focus. Chief executive Paul Asplin said: “It is disappointing that Consumer Focus failed to acknowledge the millions of people who have been able to access justice through legal expenses insurance (LEI) policies that could not have done so without them, and the report contains some alarming factual errors.
“However, far and away the report’s biggest failure is that it makes a range of suggestions to ‘improve’ BTE insurance, without acknowledging the huge and inevitable impact these would have on the cost of policies.”
This would “massively” reduce the number of people with BTE policies, he predicted. “In its current form, the legal expenses market delivers enormous value to policyholders, precisely because of effective distribution models and the insurers’ ability to manage otherwise excessive legal costs.”
Mr Asplin said BTE would not fill the “justice gap” left by the Jackson reforms and legal aid cuts.
Among the errors in the Consumer Focus report, according to DAS, was “not understanding that referral fees have almost no impact on family legal (non-motor) policies and giving a very misleading impression of the profitability, or otherwise, of this type of business”.
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Well, I said the insurers would run a ‘too expensive’ defence yesterday (http://lawyerwatch.wordpress.com/2011/04/18/bte-yet-another-fees-conflict/) so I am not dropping down from shock. I suppose the question DAS has to answer is why insurers can render merits testing in Germany independent but they can’t do it in E&W. If consumers are as happy with LEI as DAS protest they are then an independent right to appeal merits decisions would not cost them much (and its worth noting that Kerry Underwood has been doing something like this on settlement decisions for years and last time I looked Kerry was not practising in Germany).
My own study suggested (I have to say suggested because we weren’t funded to look at large numbers) that LEI could be associated with a variety of problems (including one client having to fork out four figure sums to get cases to the stage that they were accepted).
I totally accept that there has to be a trade off between cost and what the consumer gets but it is a trade-off currently shrouded in a great deal of mystery. Insurers hold the data and control the process. We need to know more and treat at least some of the insurers protestations with a degree of circumspection.