Personal injury solicitors feeling financial pressures

Personal injury solicitor firms are feeling the heat in the current economic landscape, as highlighted by the sudden death of one Manchester-based firm’s staff being made redundant and its ongoing cases sold on – while luckier firms face consolidation and market shake-ups instead.

Personal injury lawyers are under all kinds of financial pressures as they are claiming basic regulatory compliance costs have rocketed upwards yet banks have tightened lending in the wake of the credit crunch exposing law firm partners taking out excess capital.  Further complications are on the horizon, with the Legal Aid bill, based on the Jackson reforms, threatening to bring about the end of referral fees and keeping no win no fee lawyers up nights with a serious case of the shivers.

However, there is an other hand, as the Solicitors Regulation Authority is poised to approve alternative business structures, creating legal giants with deep pockets that can offer additional profit-turning services.  However, high street legal professionals have a bleak outlook, according to Axa UK claims managing director, David Williams.

Once the Legal Aid reforms kick in, the world ‘will go with a bump,’ Mr Williams said, as lawyers that had been relying on generating business leads through referral fees are in for a rough go of it.  There has simply been no focus on efficiency with business being driven by a ‘highest bidder’ acquisition model, the director added, and many firms will be faced with serious profit limitations if they do not find ways to become more efficient.

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