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In the absence of a crystal ball

After another turbulent year for claimant personal injury (PI) law firms, many will be left feeling apprehensive about what the future will bring. Of course nobody knows for certain, life has a habit of throwing curve balls, but here’s what I think might happen for the claimant PI sector in 2016. Recently published legal sector analysis has highlighted the unprecedented levels of solicitor firm failures in recent years. The reducing pre-LASPO work in progress (WIP) realisations and the added challenges coming in 2017 will lead to others. The fact that dividends for unsecured creditors is lower where a firm of solicitors is concerned, when compared to any other sector, should not be surprising. There are many reasons for this, but high on the list is the reluctance of solicitors to seek external advice early when the road gets rocky, as well as the lack of experience within the restructuring profession of dealing with the legal sector. Most restructuring firms have little experience of a sector that certainly has unique features, meaning only a few specialist firms have the depth of understanding necessary to secure the best outcome for creditors. In addition, behaviour drivers for both sides of the equation mean they are, by nature, providers of advice rather than recipients. A number of specialist Insolvency Practitioners (IPs) have emerged in recent years and solicitors and creditors need to research their choice of adviser if the best outcome is to be achieved. Where IPs are approached, who do not have experience of the sector, they really need to invest time in understanding that the legal sector is different. As neither are easy objectives to achieve, expect more of the same. The flip side of the coin is that many claimant PI firms have adapted and flourished post-LASPO. Additionally, they have either accepted that further change will come and are geared up for it or are already adapting their organisations to deal with the inevitable. With the […]

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Law Gazette analysis confirms distressed solicitors firm present significant challenges in realising value

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Just when the PI sector thought it couldn’t get any worse, George Osborne happened – looking back on 2015

By David Johnstone, managing director at PI-Solutions Ever since the legislators introduced Access to Justice in 2000, claimant personal injury (PI) law firms have taken a whipping of some sort; from insurers blaming them for escalating car insurance costs to the media berating the sector for the UK’s perceived claims culture. Of course, it wasn’t the solicitors that created the commercial environment. Meanwhile, those that did, appear to be made of Teflon and have been able to shift responsibility for the outcome. Then in 2013, LAPSO was introduced and in 2015 when LAPSO really started to bite, impacting work streams and revenues, George Osborne stuck the knife in yet again during his Autumn spending review. Over the past year, those firms that successfully negotiated a pathway, enabling them to survive and thrive, are those that carved out a sustainable business model, using a number of different strategies to do so, and were proactive and/or inventive in dealing with change within the spirit of the regulatory framework. Some firms consolidated their activities away from claimant PI; others sold certain streams of work in order to focus on specific areas of claimant PI law while undertaking an HR restructure to ensure profitability; some firms sold their work in progress (WIP) and used the capital to cover redundancies and restructuring departments while others have worked with us, outsourcing a run-off that can achieve them up to 100% of the value locked in their WIP. Our expertise in the PI arena has become more widely known and during 2015, I was able to discuss the management of risk in claimant PI firms to delegates at The Westminster Legal Policy Forum Keynote Seminar, which also featured Crispin Passmore from the Solicitors Regulatory Authority and Kevin Rousell from Ministry of Justice. I told them that I thought the most exciting and best outcome that will be driven through the industry as a result of LASPO, in 2015 and onwards, is the […]

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Exiting practice areas

This article was first published in the November 2015 edition of Managing for Success, the magazine of the Law Society’s Law Management Section. Read the full article

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Benefit from an external run off and retain the full value incumbent in WIP
 

Delta Legal


When personal injury (PI) law firm, Delta Legal, realised it was facing insolvency issues following the huge changes to the legal landscape last year, its managing partner knew he had to act quickly to improve the situation both for creditors and clients.


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