Clients and law firms left reeling from the Jackson effect

While we’re yet to discover what long-term effects the changes will have on both the client and the legal profession, already clients have been hit by the reforms to the point where the Association of Personal Injury lawyers (APIL) has spoken out about its concerns around access to justice, as more and more PI firms, mindful of the bottom line, turn away cases with borderline prospects of success.

Responding to the Civil Justice Council’s call for evidence on the first year of the Jackson reforms, APIL said that clients with complex and high-risk cases were being turned away by solicitors fearing that their cases were not “financially viable to run”.

These are decisions that many PI firms are taking not to thrive, but just to survive. Whereas pre-Jackson solicitors recovered their success fees from the defendant, we now have to work on a ‘damages-based agreements’ basis or on a CFA in which they agree fees with our clients as a proportion of damages awarded.

Many solicitors have set that proportion at 25 per cent,
rather than negotiating the fee with the client in the way that Lord Justice Jackson
apparently intended.

In addition, it has been reported that solicitors are also flouting the referral fees ban, working in conjunction with claims management companies to pay them a proportion of clients’ damages in return
or a referral.

Of course, what affects clients inevitably affects solicitors too – and so it is the case here. We’ve all been shocked by the redundancies made within large, established PI firms since the reforms came into play, but these may be just a drop in the ocean compared with what’s to come.

Solicitors across the sector are anxious that they might fail to follow directions to the letter – and be hit with professional negligence claims as a result. Court redress has a tendency to be so dire that professional indemnity insurance is both rising and becoming more difficult for firms to secure.

So a painful post-Jackson period so far, with lots of victims, but how much more bloodshed is still to come?
The PI sector will have to undergo a long and painful adjustment period before we
will know the true cost to our once-valued profession. SJ

James Barker is a solicitor at Kirwans Law Firm