Key industry figures have expressed concerns over the future of thousands of jobs at Personal Injury firms as these companies start to feel the financial impact of the introduction of RTA portal fees and the referral fee ban in April 2013.
The public release of an online profitability calculator has highlighted that traditional work sources for PI firms have failed to remain profitable since the new regulations were brought in last year. The free online tool, made public by Bott and Co, suggests continuing to source cases in this way will result in an annual loss of around £71,000 per fee earning unit. As a result, it has triggered fears that large numbers of PI specialist companies are struggling to adapt their business model to the new market conditions.
It seems brutal to strip back the pursuit of justice for wronged claimants to bare commercials, but the reality is that unless we can make a profit then we can’t take on cases that comes to us through the traditional routes.
Industry leaders claim there is a very real threat of scores of firms dealing in this type of work being forced out of business as they fail to adapt. After assessing its own claims using the profitability calculator, Bott and Co realised work brought in from outside sources before the changes in April 2013 was no longer financially viable, and took the decision to stop purchasing claims in this way.
Commenting on the changes in the marketplace, Anthony Hughes, Former Chief Executive of Horwich Farrelly, now Legal Consultant said “We’re now in a completely new era where the fees recoverable from opponents have changed beyond all recognition. One of the problems is that many businesses will be continuing to recover their work in progress on older cases so masking true performance. As such there’s a danger that they haven’t directed their mind to what the new era means and to underlying performance. This has the potential to result in some nasty surprises down the line.”
Paul Hinchliffe, Managing Partner commented: “It seems brutal to strip back the pursuit of justice for wronged claimants to bare commercials, but the reality is that unless we can make a profit then we can’t take on cases that comes to us through the traditional routes. I believe that less and less firms will be able to make this type of case pay and access to justice is being reduced. We have moved to generating all of our own cases now.”
To view the calculator please visit https://www.bottonline.co.uk/profitability-calculator
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