Clinical negligence fixed costs: A threat to small firms

clinical negligence fixed costs

The Department of Health & Social Care have announced plans to introduce fixed recoverable costs in lower value clinical negligence claims, valued up to £25,000. It was further stated that if a claim is initially overestimated and subsequently settles for less than £25,000, it will still be subject to fixed costs, regardless of compliance with the new pre-action protocol.

The main aim of the reforms is to allow claimants and defendants to resolve lower value clinical negligence claims more quickly, at lower, more proportionate costs.

The government has acknowledged that small firms will face difficulties in competing under the new clinical negligence fixed costs regulations, as well as the impact it may have on access to justice for claims involving children and protected parties.

Expected impacts of the new clinical negligence fixed costs rules

An impact assessment undertaken by the government painted a grim outlook for smaller legal practices seeking to remain active in the sector following the implementation of the clinical negligence fixed costs reforms.

The government clarified that larger firms with the necessary resources to handle fixed cost claims will be more likely to have the resources to take on these claims, whilst smaller firms may struggle to transition into taking on higher-value clinical negligence claims.

Furthermore, small and micro businesses might find it risky to undertake clinical negligence claims, even those exceeding £25,000, for fear of a potential decrease in their value.

The impact assessment stated the following:

“The proposals could make small legal firms less able to compete with larger firms that have greater economies of scale and can provide services ‘en-masse’ more cheaply.”

Although the impact assessment state that no ‘direct discrimination’ against any protected group would be created as a result of the reforms, it went on the clarify the following:

“Disproportionate impacts may fall on older populations and those with pre-existing disabilities, who are over-represented in the inpatient population compared to the general public, and so are more likely to make a claim.”

“Those with lower earnings may also be disproportionately impacted, through their lower earnings making them more likely to fall into a lower compensation band, if loss of earnings is taken into account when agreeing the compensation amount.”

In addition, it was noted that protected parties or children will require additional support as part of the legal process and so will incur increased costs; however, they are not exempt from fixed costs. The government proposes a ‘bolt-on’ of £1,800 for these cases but the extra costs involved may still mean cases are unviable for solicitors to take on or may be under-investigated.

 

Preparing your firm for clinical negligence fixed costs

Exit the clinical negligence market – It is unsurprising that some law firms will make the strategic decision to exit the clinical negligence arena to allow them to focus on more profitable markets. With the help of Recovery First, you can ensure a smooth, compliant exit from any market, placing files with the most suitable firms from our panel of solicitors, allowing you to preserve the value of your locked-up WIP.

Consider a merger or acquisition – It has become clear in recent years that larger firms have more power to compete in such a competitive legal market. Because of this, the number of mergers and acquisitions has increased substantially. In some circumstances, the merging or acquiring firm may not wish to continue in a specific legal market. If this is the case, Recovery First can assist firms in dealing with the element of the new firm that requires to be discontinued through placing those files with a suitable firm on our panel.

All options ensure that the focus is always on protecting the interests of the client whilst preserving the value of your WIP

Staying in the market – If you wish to continue operating in clinical negligence, you may wish to cut costs in other areas of operation. You should review your outgoings and make decisions on which expenses can be cut to help reduce costs and increase profits for your firm. Get advice as early as possible to ensure you make the best decisions for your firm.

 

Why choose Recovery First?

If you’re concerned that the upcoming clinical negligence fixed costs rules are likely to have an impact on the survival of your law firm, you may wish to consider exiting the market.

Selling Work in Progress (WIP) as a means to exit the clinical negligence market can serve as a beneficial strategy for firms impacted by the new fixed costs rules. This approach enables firms to redirect their attention towards more lucrative practice areas.

In the worst-case scenario, you may be required to close your firm due to insolvency. Recovery First can assist you in this situation to ensure a compliant closure mitigating the risk of SRA intervention.

Whichever route you choose to take for your firm, Recovery First will ensure the most positive and profitable outcome is achieved.

Our clients receive 100% of their recoverable WIP, plus their allocated entitlement to deductions from damages, anecdotally returning significantly higher value than a traditional WIP sale.

The unique scheme offered by Recovery First is suitable for both law firms and for professional advisors working with law firm clients. Our team manage the transfer of files from start to finish; placing case files with an approved law firm to protect the integrity of the client’s case, while at the same time maximising the value of the work in progress.

We guarantee 100% confidentiality for all clients. If you would like to find out more about Recovery First’s process, feel free to get in touch today.

 

It's never too late to speak to Recovery First. Contact us now in the strictest confidence

Sally Dunscombe:

sally.dunscombe@recoveryfirst.co.uk

David Johnstone:

david.johnstone@recoveryfirst.co.uk

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