Personal Injury Market Report Published – PI Firms Brace Themselves for 2020
16 Oct 2019
The UK Personal Injury Market Report 2019 is the fourth edition of an annual market report from IRN Research (in the Orchard Reports™ series). As well as exploring key market trends, issues, and forecasts, the report includes profiles of 20 leading personal injury (PI) law firms – 18 with financials – and the results of a PI practitioners’ survey. Here are some selected findings:
- PI claim numbers are dominated by road traffic accident – RTA – claims and industrial accidents and injuries. The numbers of both these types of accidents have been declining in the last few years and this trend continued in 2018.
- The PI market, including clinical negligence claims, is valued at almost £4bn a year but annual value growth remains weak. The market increased in value by 2.4% in 2018 compared to 2017.
- Consolidation is gathering pace in the PI sector as smaller firms and PI teams leave the sector or are purchased by larger players. Legislative changes on their way in April 2020 are likely to drive even more consolidation as the larger players can invest in new technology, improved case management systems, marketing, and acquisitions to deal with the changes. These changes include an increase in the small claims limit, fixed recoverable costs for whiplash claims, and a new online portal for claims submitted by individuals.
- More smaller players are cleaning up their case files and WIP ready to sell to other firms but it is a buyer’s market and fees paid for existing files are likely to be lower than sellers expect.
- Leading PI claimant brands are high volume litigation services. Specialist firms like Bott & Co, Express Solicitors, Hudgell Solicitors, and Winn Solicitors have grown into top 200 law firms in 2018 and they are targeting the top 100. Fletchers Solicitors is already there after targeting the top 100 five years ago. These firms have joined leading PI brands Irwin Mitchell, NAHL Group, Simpson Millar, and Slater & Gordon as the leading PI players. Some insurance companies – Admiral, BGL, and DAS – now own PI legal brands and can control the entire claims process.
- David Mort, IRN Research Director states that “the larger firms have identified a route to navigate the regulatory changes and this involves investment in IT and improving operating efficiencies, coupled with reducing their dependency on RTA claims, moving towards more high-value claims and expanding related services such as rehabilitation services. Most of these firms also have the financial resources to cope with the changes. Competitive pressures are increasing for smaller firms and they just don’t have the financial leeway to change their business models”.
- An analysis of the latest financials from 10 leading specialist PI firms shows that profit margins are relatively modest – around 6% margin – and margins are likely to be much lower for many smaller firms. Costs associated with investment in new technology and re-engineering case management systems have impacted on profits for the larger players in the last year.
- Despite the financial pressures noted above the same percentage of practitioners in IRN Research’s PI Practitioner Survey 2019 – 60 firms surveyed – are optimistic about workloads in the next 12 months as in the previous survey in 2018. However, it is still less than half that are expecting workloads to increase in the next 12 months.
- IRN Research expects the PI market value to decline in value terms in 2020 as the small claims changes have an impact. Once the market has aligned itself to the new landscape, the market should see some modest value growth.
The report (56pp, PDF), is available directly from IRN Research, priced at £200. UK sterling price is plus VAT so total price is £240. Contents page and ordering details on the Legal Reports page.