Why law firms are exiting the claimant personal injury market

Over the past decade, Recovery First has noted a growing trend in claimant personal injury lawyers wishing to exit the market. Personal injury claims are one of the most prominent areas of litigation; so, why are law firms exiting the claimant personal injury market?

There are many reasons why law firms are exiting the claimant personal injury market, from growing competition, issues in obtaining professional indemnity insurance, and reforms to the levels of profit costs that can be recovered in certain types of cases.

It is no surprise that the legal landscape is continuously changing, with many firms wishing to make changes to their legal offerings or adjustments to the structure of their firms to stay competitive in an ever-changing industry.

Having a well-planned legal change management strategy can assist firms in ensuring they attain continuous improvement and long-term success.

An overcrowded market

The personal injury sector can be highly competitive, with many law firms vying for clients and cases. Increasing competition can put pressure on personal injury law firms to invest in marketing, advertising, and client acquisition strategies to maintain a steady flow of cases. If a firm finds it challenging to secure sufficient cases or feels the market is overcrowded, it may choose to exit claimant personal injury to focus on other areas of law where it sees more opportunities for growth and profitability.

Professional indemnity insurance

Many personal injury solicitors are finding it difficult to obtain professional indemnity insurance (PII). The cost of PII has been increasing in recent years, and this is particularly the case for personal injury lawyers. This is due to a number of factors, including the increasing complexity of personal injury law, the rising number of claims against personal injury solicitors, and the increasing cost of litigation.

Moreover, PII is not always available for personal injury lawyers. This may be because some insurers are reluctant to insure personal injury solicitors due to the perceived high risk of claims. This can make it extremely difficult for lawyers to obtain the cover they need.

Law reforms

Since the 2013 Jackson Reforms, claimant PI solicitors have faced a series of regulatory changes that have systematically reduced the profitability of lower-value claims. These include:

• The 2021 whiplash reforms, which introduced fixed tariffs and raised the small claims limit from £1,000 to £5,000 for RTA injuries
• The October 2023 Fixed Recoverable Costs (FRC) Extension, which expanded fixed cost regimes across most civil claims up to £100,000 in value

These changes have had a particularly severe impact on road traffic accident and lower-value claims, where recoverable legal costs are now tightly capped. In many instances, solicitors can no longer cover the cost of running a case under the new fee structures, let alone make a profit.

This has led to a sharp contraction in claimant PI work, particularly among firms without the scale to absorb reduced margins.

Merger and acquisition opportunities

The evolving nature of personal injury law has not only prompted firms to exit the market but also created significant movement in the form of mergers and acquisitions. As smaller practices struggle to adapt to the economic and regulatory pressures, some are being absorbed into larger firms.

These transitions are not always full takeovers, as many involve partial acquisitions, team integrations, or file transfers as part of wider restructuring strategies. These deals often allow firms to extract value from their PI work while ensuring continuity for clients.

Retirement

Many of the lawyers who built their firms on the back of the Access to Justice Act 1999 and the early 2000s boom in no win, no fee litigation are now reaching retirement. With the market hardened and less lucrative than before, many are opting to retire or restructure rather than attempt to navigate yet another wave of reforms.

Exiting the market through a planned wind-down or transfer of work in progress (WIP) can often provide better financial outcomes than continuing to trade in an increasingly squeezed sector.

How Recovery First can assist firms in exiting the personal injury market

Our unique scheme can assist those wishing to exit any legal market for any reason. 

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

Recovery First’s services are suitable for all types of legal work, using a simple, ongoing process with no up-front costs – to find out more click here . 

If you are considering exiting the claimant personal injury market and wish to discuss your options, please do not hesitate to contact us at Recovery First for a confidential chat.

We offer a positive solution to any law firm by helping them exit any legal market whilst remaining solvent, maintaining cash flow, and ensuring they get the most out of their files.

We will provide you with all the advice and support you need, and we provide the strictest confidence and 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 with our Managing Directors on a confidential basis: David Johnstone at david.johnstone@recoveryfirst.co.uk, or 01357 440140, or Sally Dunscombe at sally.dunscombe@recoveryfirst.co.uk or 01357 440140.