It comes as no surprise that the reforms introduced by Lord Justice Jackson in 2013 have hit the personal injury sector hard, particularly as we have come to the end to any pre-Jackson cases.
Turnover in the market sits at £215m, a loss of about a third in comparison to just last year's figure.
The Claims Management Regulator's annual report has revealed that the number of authorised Claims Management Companies (CMC) has dropped by almost half from 3,213 in 2013 to 1,610 this year. The number of personal-injury specific CMCs has decreased by a quarter since 2014, from 1125 to 868. Before the reforms, around 40 applications for CMC authorisation were made each month. For the 2015/15 period, this fell to 25 per month and then only 16 per month for last year.
The CMC market in the personal injury sector largely consists of regional CMCs who have joined forces with claimant firms to adapt their business models in order to remain profitable in the 'no referral fee era'. CMCs have also turned from claims to other more lucrative areas in order to survive, namely accident management activities. There are now a minority of large personal injury CMCs functioning nationally.
However, the lull in the market appears to be levelling off, according to numbers published in the report. Despite the number of CMCs having fallen by over 1500 in just three years, there were only 142 fewer recorded this year compared to the previous year (although 111 of those were in the personal injury sector) and three quarters have been operating for more than three years. The North-West, closely followed by Greater London, sees the greatest amount of personal injury CMC activity; with 256 (out of a possible 868) and 168 located here respectively.
Given the likelihood that CMCs have now had the time to adapt to the reforms, it is hoped that the Government will press on and introduce the recommendations it accepted in the Brady report (see related content), as any increase to the small claims limit would mean a greater proportion of claims being handled by CMCs.