PI firms to face major upheaval from April 2020

The personal injury market continues to suffer from the affects of forthcoming regulatory change as leading claims management company National Accident Helpline issues a profit warning to the stock exchange.

Last month the company said that it had a ‘disappointing’ end to 2018 with profit and earnings per share likely to be between 5% and 10% below expectations. Shares dropped more than 20% as a result.

NAHL said that expected regulatory changes due to come in to force in the shape of the Civil Liability Bill had led to an ongoing decline in demand from panel law firms.

Reforms have been delayed until April 2020 and are widely expected to have a profound effect on firms carrying out PI work. The changes are designed to reduce the number of fraudulent minor injury claims, such as whiplash, and will involve a tariff for fixed and much-reduced damages for RTA claims, alongside a new £5,000 small claims limit. Both are likely to result in litigants running their own claims.

The Solicitors Regulation Authority has today announced that it has given the business approval to set up an Alternative Business Structure, which will start trading in April. National Accident Law, the firm will provide customers of the listed NAHL Group with a digital platform to manage the whole of a personal injury claim.

The group has restructured its PI operation, creating two business units: one is the existing National Accident Helpline while the second incorporates the new firm and two joint venture ABS businesses established in 2017.

National Accident Law says it will provide a bespoke online platform for case management and has committed to cutting out ‘unnecessary paperwork’ for customers.

Companies looking to remain in the personal injury market face major upheaval from April 2020 when legislation significantly reduces damages for whiplash claims to a fixed level. Claimants with RTA claims under £5,000 will not be able to recover legal costs from the defending party – effectively taking lawyers out of the process in favour of an online system that will decide on claims.

The government intends to create the online system to enable them to handle cases without representation. The decision has led to widespread concern about access to justice from lawyers.

In a response to the justice select committee’s report on the bill, the government says its revised timetable is to be ready for large-scale testing by October 2019 with the view to implementing the measures in full in April 2020. Previously the government has always worked on the basis of implementing changes in April 2019.

The MoJ said: “There will need to be extensive user testing in order to ensure that the system is easy to use for all user groups and that the guidance is clear. We agree with the committee and our stakeholders that it is crucial that these reforms and the implementation of the online platform is done right rather than quickly.

“The government is committed to control the reducing the number and costs of whiplash claims. These reforms ensure genuine claimants will continue to receive proportionate compensation for their injury and importantly will also dis-incentivise and control unmeritorious claims.”

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