Jackson Reform is ‘beginning, not end’ for some law firms
The much publicised Jackson Reforms to the legal profession have now been implemented, but for many law firms it may feel like not much has changed.
The date April 1 2013 had loomed on the horizon for a seeming eternity, its intentions of upsetting the status quo leading it to be viewed as the end of something, rather than a new beginning.
While there are a number of ways the reforms will impact on the legal sector, the main changes relate to how litigation is funded and the ban on payment and receipt of referral fees for solicitors, claims management companies and insurers.
Planning now for when the work runs out
However, personal injury specialist firms that bought huge chunks of work in before the reforms took effect on April 1 will no doubt be busy for many months to come as they service that work.
And it’s here where there is a real danger of firms burying their heads in the sand and failing to plan how they will sustain their business when the work generated under the old regime runs out.
This is particularly the case for firms with a traditional structure where managing partners and senior staff are still heavily involved in client work and don’t make time for strategic planning.
These firms face real organisational challenges in deciding how they will structure their business and where their future work will come from.
The options for generating new work
Many firms involved in personal injury work may go down the route of joining joint marketing / advertising panels. This is where firms will pool their marketing resources and pay a third party to generate business, with the resulting work being shared out among the law firms on the panel.
While this will provide PI firms with a legitimate model for generating new business, it will be monitored closely by the authorities for any whiff of referral fees.
Others may choose to invest heavily in their own marketing to cut out the referrers and target potential customers directly. However, this will require significant resources and may be unviable for smaller firms and sole practitioners.
As we have seen over the last couple of years, there is likely to be much more consolidation in the legal sector in the next 12-months and a merger, or being acquired by another business, may be the only option left for many firms.
Mergers on the rise
Having advised on a number of legal mergers in recent months, I have seen firsthand that it’s not something that just happens. As I’ve referred to in previous blogs on legal mergers, the days where firms could tread water and wait for some other firm to snap them up are long gone.
It takes a lot of planning and restructuring of the business to get it in the best possible shape and make it appealing to a potential buyer or merger partner.
Whatever position your firm is in, you cannot afford to delay decisions about your future. Risk management and strategic planning has to happen now to decide on the best way forward.
For further information please contact Karen Hain on 01772 821021.