PI firms offered exit route with 'no need' for due diligence


Personal injury firms who may be fearing for their future are being offered a rapid exit route by acquisition specialists.

The Gazette understands that firms in the sector are being directly targeted with emails promising them a clean exit before the Civil Liability Act reforms kick in next April.

The email states that the purchasing party can ‘conclude deals very quickly and there is no need for lengthy due diligence’. The  acquirer says it will consider taking employeers and partners as part of the deal, and will handle negotiations with secured or unsecured lenders and creditors.

Whiule buy-out offers are not new, the nature of the marketing reflects the assumption that a significant period of consolidation in the personal injury sector is imminent.

From next April, the small claims limit is set to rise to £5,000 for RTA claims and to £2,000 for other personal injury cases. This means costs will not be recoverable for the vast majority of RTA claims in future, and is likely to drive many firms out of the market.

The acquirer’s message adds: ‘Amongst the options available to law firms, one of the best options remains selling their firm and making a clean exit from the business’.

A survey of 100 solicitors, carried out by marketing collective First4Lawyers, has suggested the PI market is already starting to contract.

In the company’s annual state of the market poll, 42% of respondents said their firm had seen profit decrease over the past year (although it had increased for 30%), while 46% said cashflow had worsened and 40% had seen staff numbers reduce. Almost half said the cost of doing business had increased.

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The survey found mixed views about the future of the market: 61% of respondents foresee a huge cull of firms after next April, leaving just a handful of big practices. But just 13% of respondents believe the reforms will lead to their firm closing. Some 41% said they would have some impact, but their firm was sufficiently diversified to cope, while 21% said the lower small claims limit for non-RTA cases would allow them to adapt and survive.

Qamar Anwar, managing director of First4Laywers, said: ‘With just under a year to go until the reforms come into force, firms still have time to decide how they are going to face the future and adapt to meet the challenge.’



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