Research has revealed that North West legal firms have been hit hard by fee income drops since the introduction of the Legal Aid, Sentencing and Punishment of Offenders Act (LASPO) on the April 1st.
Liverpool based firm, O’Connors, who specialise in advising other legal firms asked more than 300 managing partners for their views on what life had been like post LASPO and unsurprisingly the feedback was predominantly negative.
Of the respondents more than 70% said that there had been a negative impact on business due to the regulatory and structural changes to the industry and just 15% revealed that they believed the changes had brought a positive impact.
Previous research carried out in February by O’Connors had predicted that the industry would go into financial meltdown and that a fifth of firms were considering leaving the personal injury sector altogether although despite the bleak outlook it would seem that the changes have not had as bad as effect as first thought.
O’Connors Partner Neil Wallis explained: “The fear of the unknown is always worse than the reality. We’ve done a comprehensive survey of the market and found that there is less pessimism than there was before the costs reforms. Perhaps it is a little early following the reforms and that the reality has yet to bite.
“Anecdotally, firms that are coming to us looking at going into run-off, are packaging those cases for onwards sale to another firm this trade in existing caseloads is a halfway house between firms completely shutting up shop and other firms buying up entire practices.”
The research also revealed concerns about the Solicitors Regulation Authority’s (SRA) actions since LASPO‘s implementation with at least a third of the firms receiving an unsolicited direct communication from the SRA, of which 11% were to seek assurance of financial stability.
Mr Wallis said: “Anecdotally, firms are telling us that SRA is more concerned with having to make an intervention than on what firms are doing about the referral fee ban.
“They want to know what the impact on income has been, look at the books, seek assurances and try and keep their finger on the pulse of the sector. They haven’t the resources for an intervention and focusing their thematic push on financial stability of firm.”
1. Pixabay; Willi Heidelbach; https://pixabay.com/en/fragmented-glass-broken-717138/