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‘Get big, get niche or get out,’ Marshall tells personal injury firms

'Sticking your head in the sand is not an option'

16 October 2013

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David Marshall, managing partner of Anthony Gold, has told personal injury firms that they must "get big, get niche or get out" to have a future.

Speaking at SJ Live yesterday on 'Surviving Jackson', he warned lawyers that "sticking your head in the sand is not an option".

Marshall said a 'business as usual' approach could lead to reductions of 20 per cent in work volume and a further 20 per cent in fee income, and profit would be "wiped out".

While firms may be able to mask this for two years by relying on income from pre-Jackson cases, cash-flow problems might lead to failure before that time.

Marshall said firms could "get big" through setting up an ABS, merging with a claims management company and creating a commoditised business.

Under this model, post-Jackson fees would fall by 20 per cent per case, but there might be a 400 per cent increase in the volume of work, and staffing costs could be reduced by using lower qualified staff and more IT.

Marshall said profit margins might fall to around five per cent, but in cash terms profit would remain the same. The downsides were the need for significant capital investment and the fact that the people sharing the profit would change.

He outlined two models for post-Jackson niche firms, one for a 'boutique' and the other for a 'back to basics' local firm.

The boutique would abandon lower value work and concentrate on niche practice areas, such as medical negligence, abuse cases and military claims, or focus on higher value claims generally.

Marshall said the downsides were the difficulty of obtaining this kind of work, the fact it often came in a "mixed bag" and the need for the lawyers to have "genuine and recognised expertise" to succeed.

A different kind of niche firm was the "back to basics" local firm, which required some investment in technology and restructuring to preserve its profit margin.

"Back to basics" marketing would emphasise personal service, local roots and expertise, while franchises could be used to compete with the big brands. The downside was that the firm's own brand could be diluted.

"We are going to be earning a hell of a lot less per case," Marshall said. "The whole system is designed to ensure that."

He suggested that firms could potentially limit the drop in fee income from the Jackson reforms to 25 per cent if success fees and solicitors and own client costs were charged on top of fixed recoverable costs.

Marshall added that the impact of the Jackson reforms would be greatest on cases worth up £10,000, which accounted for 85 per cent of the personal injury market.

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