No gain in personal injury pain

Those firms for whom personal injury is no longer viable should not wait to put a get-out plan in place

April Fools’ Day aside, 1 April 2013 was an innocuous date in Joe Public’s calendar but for personal injury lawyers in England and Wales it brought in changes that would change the legal landscape forever.


While some firms were prepared and so able to roll with the punches, others decided immediately and some further up the line, to change direction. Recognition is growing among those that remain, who do not have the ability to achieve scale, that doing nothing is not an option and the challenge is identifying the best course of action to take. For the element of the latter who choose to change direction before the asset is wasted, what happens next can be controlled and getting it right is key to retaining the maximum share of the value already created.

Some believe they can simply cease taking on new work and run off internally. If only it were that simple – this will have a drastic impact on the value ultimately retained. 

In the early days of an internal run-off, the improvement in short term cashflow can mask the reality of the situation. Low-hanging fruit is gathered in and without the outlay on acquisition costs for new matters, the garden appears rosy.

Unfortunately the valuable asset locked into work in progress associated with pre 31 March 2013 cases is being diluted. It is wasted on the lifestyle costs of principals and employees alike as each week goes by, often with no corresponding reduction in bank borrowing and other liabilities.

With the work involved in achieving the realisations, principals are not free to focus on what they are going to do once the asset has been extinguished.

Employees are astute and as soon as new cases stop being opened they are immediately aware that they are working in a graveyard. And who would like that? While the market consolidates there are still large businesses looking to deliver legal services which are recruiting and, unless heavily incentivised, the best employees will move on.

Those who stay will require micro-management if there is any hope of avoiding massive inefficiency, as employees coming into an empty office and under the threat of redundancy cannot be happy and the risk is they will be unproductive.

The behavioural drivers are not difficult to visualise and even for those loyal to the cause, it is impossible to remain as efficient as when you thought you had a future with your employer. The need for excellent micromanagement also prevents principals focusing on the ‘what next?’ question.

How old is your current longest running file? How long will it take to run off? And how many times are you going to have to go through redundancies until a time when you’re the last man standing to switch the lights off?

David Marshall, managing partner of Anthony Gould, was recently quoted in a Law Society Roundtable on Personal Injury as saying “get big, get niche or get out”. If the first two are not an option doing the latter at the earliest station possible, before the tracks hit the buffers, is sound advice.