Review of the Year: Legal: A year of change

2013 will go down in history as a year of unprecedented upheaval for the legal sector, with many insurance law firms bearing the brunt of civil litigation reforms introduced in April via the Legal Aid, Sentencing and Punishment of Offenders Act 2012.

As the threat of closure looms over some claimant firms, the ban on referral fees and the reduction in fixed recoverable costs has come as a fillip to those on the other side of the fence – sparking arguments that emerging referral fee ban loophole schemes should come under the regulatory microscope.

Such reforms have engendered a wave of interest in establishing alternative business structures as a way of mitigating the loss of referral fee revenue. Elsewhere, progress within court, as well as a Law Commission consultation, has resulted in significant strides being made towards ensuring grossly exaggerated third-party claims are struck out in their entirety.

Post’s annual review of the legal sector gathered the thoughts of key industry players for their take on a landmark year.

What have been the most significant developments for the legal sector in 2013?
Deborah Evans, chief executive of the Association of Personal Injury Lawyers: In lower value work, the ban on referral fees restricted the ability of some firms to market themselves to secure new cases. However, the bigger blow came from the slashing of fixed fees in the portals. This saw some large firms become acquisitory, while smaller firms may be pulling out of personal injury or selling on their work in progress.


Craig Budsworth, chairman of the Motor Accident Solicitors Society: It’s a late entry but Andrew Mitchell’s solicitors failing to file a costs schedule on time and now being unable to recover any costs against News Group (a result of the Jackson reforms) is the most significant development. It brings about understanding of the changes and sets the grounding for future litigation.


David Johnson, president of the Forum of Insurance Lawyers: The Mitchell decision has already changed the manner in which litigation is approached on a day-to-day basis. However, the concerted and continuing uptake of ABS licences must represent the change likely to have the most profound effect over the long term.


Des Hudson, chief executive of The Law Society: A significant and helpful development for many lawyers is the government agreeing not to raise the small claims limit from £1000 for personal injury. It was a widely unexpected move, but good news for accident victims and a victory for common sense.


Alistair Kinley, partner and head of policy development at Berrymans Lace Mawer: The sustained consolidation and M&A among claimant injury firms. It will continue next year.

Elena Fry, head of insurance and risk at Brodies: In Scotland, the most significant development has been the long-awaited start of civil justice reform. The Taylor and Gill reports propose changes that will transform litigation in Scotland. Of course, as with any fundamental reform of this kind, we anticipate that there will be unintended consequences.

What has been your biggest disappointment of 2013?
Hudson: The proposed cuts to legal aid are a massive disappointment to me both as a solicitor and as chief executive of The Law Society. No solicitor ever went into legal aid for the money or glamour, but the cuts, however they are implemented, have made a hard path even steeper.

Johnson: The Law Society’s ‘Don’t get mugged by insurers’ campaign. When anticipating how their annual fees might be spent, I doubt many lawyers would have had an advertising campaign of that nature very far up their list.

Kinley: The range of approaches that appear to be being employed in order to navigate the ban on referral fees in injury claims. No doubt the letter of the law is being adhered to, but [I would] query perhaps the spirit of the ban.

What have been the main regulatory challenges this year?
Budsworth: The SRA has been clear that continuing business plans are its biggest challenge. However, in practice [business plans] have not been easy to deliver, as most law practices have struggled to come to terms with being a business [as well as] a law firm. This has been epitomised by the number of failed firms this year.

Kinley: Depending on the provisional findings of the Competition Commission’s inquiry into private motor insurance – now due in mid-December – it may be that some regulatory challenges are still ahead of us.

Who has been your ‘personality of the year’ in the sector and why?
Johnson: High Court Judge Justice Spencer, for delivering the right message to fraudsters [in the Homes for Haringey v Barbara Fari contempt of court insurance fraud case, in which Fari was jailed for three months having exaggerating the extent of a personal injury claim].

Kinley: Andrew Mitchell MP. The cost and compliance aspects of his ‘plebgate’ defamation case against News Group is the critical test case in the post-Jackson world of strict judicial case management.

Evans: Louise Ellman MP (chair of the Commons Transport select committee) and the cross-party select committee. [They] did some excellent work in cutting through the myths surrounding whiplash to come up with an informed report that made sensible suggestions to the government – many of which were reflected in their consultation response.

What are your hopes and expectations for the coming year?
Evans: We are hopeful that reforms do not continue to come thick and fast. The personal injury sector has been through a period of great change and would benefit from a ‘bedding in’ period, which would give law firms and insurers time to adapt. Only over time will the true effects of the reforms be felt.

Budsworth: Being able to deliver a medical process that changes the perception that it’s easy to con a medical expert on whiplash, and introducing data sharing with insurers in order to help reduce fraud.

Fry: 2014 will be challenging, with ongoing campaigns to reform whiplash litigation and counter increasingly sophisticated fraud taking place on both sides of the border. Against the backdrop of major constitutional debate in Scotland, we expect to see the continuation of a creeping divergence between Scottish and English law.