Irwin Mitchell has launched an internal review as it braces for the impact of upcoming law reforms on its volume personal injury business.
Changes being brought in by the Civil Liability Act are set to shake the entire PI sector, not just Irwin Mitchell. Under the new legislation, PI firms will essentially be unable to recover their legal costs for road traffic accident claims under the value of £5,000 and under £2,000 for other PI claims. The government had originally planned to introduce the changes in August 2020, but the implementation has now been delayed until April 2021 (although the exact date could shift again due to the impact of Covid-19).
The new rules will result in ambulance-chasing firms having to abandon lower value PI work, as individuals will process small claims (such as whiplash) themselves using online portals, without legal advice. PI firms will have to adapt by scrambling to compete for higher value claims instead.
With lower value work drying up, it could also mean a reduction of those unsolicited calls by claims management companies spuriously asking people about the car accident they've just had (even when they don't drive). Although those call-centres will undoubtedly find other ways to pester people.
"Hi, I understand you're a law firm that's suffered a head-on collision with the Civil Liability Act."
One source told RollOnFriday that Irwin Mitchell's review of the impact of the Civil Liability Act had been given the "odd name" of Project Tesla - perhaps with a Tesla car in mind, that's run out of battery and about to breakdown. The source said "it looks like the end of the fast track work". Another insider was more upbeat, saying that Irwin Mitchell's volume PI business had work beyond that being impacted by the new legislation.
While staff will clearly be worried about job losses, an insider told RollOnFriday that despite the reforms no large scale redundancies were planned at this stage.
“It’s important that we prepare for the upcoming Civil Liability Act law reforms and the potential impact it may have on lower value personal injury work." a spokesman for Irwin Mitchell told RollOnFriday. “We constantly review all lines of work we undertake and it is natural that we have a team that’s examining the potential implications to our business and our potential response to it."
The spokesman added that the firm does not yet know all the details of how the reforms will be implemented so it was still reviewing the "potential actions" it might take in response.
It is a headache that Irwin Mitchell and other PI firms could do without on top of Covid-19. It comes at a time when PI firm Slater and Gordon is closing its London office as part of a plan for staff to work from home permanently.