Due to a major drop in turnover over the last six months, Brighton PI firm LA Law has been forced to close which has resulted in the loss of 24 jobs. Founded in 2011, LA Law which specialised in RTA claims is the latest loss in a sector facing unprecedented challenges.

Going into Receivership

On December 20th, 2017, the company went into receivership with Andrew Hosking, partner at administrators Quantuma, saying that, “Turnover had slipped from £3.4 million in the year to 31 May 2014, to £2.6 million in the year to 31 May 2017, but since the start of the firm’s new financial year, there had been a marked fall in turnover which in turn had led to the company being loss making.” It has been confirmed, however, that the firm had no connection with south of England firm Lester Aldridge.

Both directors of the firm have encountered redundancies from the collapse. “It was not possible to sell the business on, and instead, case files have been sold on to three separate law firms,” Quantuma said.

However, despite the bad news for LA Law, other personal injury firms say that they expect their revenue and profits to rise in 2018. A survey of the sector carried out by marketing collective First4Lawyers found that 69% of firms surveyed expect profits to rise and 76% expect that turnover will increase.

Confidence in the Market

While the results are based on a poll of fewer than 100 firms, they demonstrate confidence in the personal injury market that disproves grim warnings for its future. The positive outlook comes at a time when the government is preparing to raise the small claims limit and set fixed tariffs for soft tissue RTA claims. While there is positivity, both of these developments are likely to put greater pressure on firms operating in this field.

Just under half of respondents to the survey saw no likelihood of the government watering down the reforms in its Civil Liability Bill. However, 15% optimistically believe that ministers will change their mind.

Firms Are Staying Positive

Firms are reasonably positive that they can respond to any potential expansion of fixed fees, as recommended by Lord Justice Jackson last summer but his proposals have yet to be put into practice.

54% of respondents said they will cut spending if fixed fees were implemented, but would be able to cope. However, 23% of those who took the poll said they would have to significantly change the way they practiced, and 9% said they would have to close their department or firm.

Qamar Anwar Comments

First4Lawyers managing director Qamar Anwar said, “Whatever the outcome of the government reforms, there will still be injured people looking for legal assistance. The question is where they will go and our analysis of the market shows that firms realise that they have to raise their game and their profile.

“It is not an easy time but the smart firms, with clear strategies and effective marketing, will ensure that those injured people have access to proper advice.”

While respondents were for the most part confident in their firms’ ability to respond to market pressures, the majority, unfortunately, expect more closures, mergers and redundancies within the next 18 months.