Firm offers £1,500 advance for PI victims
A personal injury firm with ambitions to open 50 outlets this year is offering a £1,500 cash advance for accident victims who make a claim.
GT Law, which has also applied to be an alternative business structure, will require a medical report and insurer’s admission of liability before paying clients. The firm says clients will not have to refund any money if the settlement comes to less than £1,500.
GT director Gordon Tucker (pictured) said that the move was one way of dealing with government attempts to rein in claimant firms. ‘Some people will say “they’re trying to encourage more personal injury claims” but they miss the point,’ said Tucker.
‘Insurers are in complete control of this industry and we can’t compete with the money they spend on publicity. We’re just trying to get clients to come to us as opposed to their insurer.’
Tucker said that clients could use the advance to meet short-term needs such as rehabilitation or public transport. The money will, in effect, replace payments currently made to claims management companies and insurers in referral fees.
Tucker wants GT Law, which has offices in Essex and Liverpool, to open branches in 20 locations by the summer and 50 by the end of the year.
A finance director has been recruited to help with the expansion and the firm is at stage two of its ABS licence application.
Comments
Incentives
Whilst business is business, where will this end ? Personal injury lawyers have historically been quite savvy, but this is becoming an incentives war as opposed to a price war. You only have to look at what happened to conveyancing due to undercutting to see this is bad business.
Ridiculous
I don't know why people make such ridiculous claims in press releases.
There was a firm in Greater Manchester a few months ago explaining that they were going to reach the £20million turnover mark in 3 years, despite admitting in the same press release they had achieved entirely flat revenue of less than £5million that year, their PI and Family departments were going to contract by 40% over the coming months and acknowledging that the market conditions were the toughest they had been in a generation. Any business reading that just thinks "they have no idea about business, why on earth should I use their services".
Now this chap explains he plans to expand his current 2 office practice into 50 offices within 8 months. I think Tesco were struggling to achieve this rate of growth in 2003 when they were expanding on a scale as yet unprecedented in the UK and had teams of corporate and property lawyers working round the clock buying up small shops everywhere.
Regardless of the business model (cash flow, anyone?), it just sounds like fantasy.
Very shortly someone else
Very shortly someone else will get publicity by offering £2,000 and saying that they are aiming to open 200 offices.
Will someone explain how all this is funded? We bank with HSBC and our relationship manager says that they are very cautious with solicitors now, particularly after the Halliwells debacle. Funding PI claims requires a lot of capital because of the length of time until the cases pay. Expanding rapidly while doing this massively increases the capital needs. Are there banks out there throwing money at solicitors on the basis of a fanciful business plan?
Wouldn't it be nice if the
Wouldn't it be nice if the LSG actually gave some thought to the ludicrous 'stories/Press Releases' it publishes...
eg: "When asked how he would possibly be able to fund/manage such a scheme and rapid expansion, Mr Tucker said he hadn't a clue..."
It might be that (aided of
It might be that (aided of course by this wonderful publicity in the Gazette) that Mr Tucker will be able to sell his firm now to a venture capital company, which will be able to fund the whole operation and garner the huge profits generated by this unique business model.
How to get an article in the Law Society Gazette
How to get an article in the Law Society Gazette.
1) Write a press release. You can say anything you like, because nobody will check it.
2) Mention the word "ABS" (even if, such as Quality Solicitors, you are not an ABS but a Claims Management Company). If you really can't shoehorn the expression ABS in there, just say "opening legal services sector due to the Legal Services Act 2007".
3) Er, that's it!
If these sums are believed
If these sums are believed [are realistic] this goes to show how quickly we need the LASPO reforms and a ban on referral fees and a reduction on costs that fund such inducements.
But you have to remember, GT
But you have to remember, GT Law are different to all the other personal injury firms:-
"At GT LAW we believe it is important that you receive all of the compensation awarded for your injuries and losses, which is why we offer 100% compensation alongside our guarantee of no win, no fee.
There are businesses out there offering a similar sounding no win, no fee service, however this can be misleading as they often recover their fees directly from the compensation awarded. The fees can significantly reduce the amount of compensation the client actually receives and although technically the claimant has not paid a fee, they end up with very little real compensation, let alone 100%."
I didn't know that the other firms of solicitors "often recover their fees from compensation awarded", but you learn something new every day. http://www.gtlaw.co.uk/compensation-guide
Jackson is wrong - GT Law are RIGHT
Good for GT Law! I hope them all the success in the world.
I can't believe it's taken this long for a Claimant firm of Solicitors to think outside the box. What client wants to go cap-in-hand to his local tradition firm of Solicitors, only to have to wait forever for their outdated systems to bring in any compensation whatsoever and then, to have to suffer because their instructed Solicitor's costs recovery is (predictably) rubbish.
Despite Jackson's "reforms" being completely wrong, some firms, like GT Law, will thrive post Jackson and their clients will do likewise.
Up yours AVIVA and co
I couldn't agree more with the comments Anom makes above. It's time to stop paying the insurance company's referral fees. There is no reason why the playingfield cannot be level.
Good luck GT Law.
I also agree Jackson is wrong.
is this really sustainable?
I hate to think what the Jackson reforms are going to do to PI firms... but is this something that could actually work? I can imagine this would be a nightmare for the firm's cash-flow.
I waiting to see what the next PI firm is going to come up with!!!
Please stop describing these
Please stop describing these payments as an advance, because clearly they are not. These firms should be reported to trading standards for misleading advertising! Any new client would first have to attend a medical examination and get a full written admission of liability before receiving payment.
I've seen firms offering iPads etc 'up front', only to read their small print and learn otherwise. Anyone not advised properly at the outset would be tied into a CFA and could still find themselves out of pocket several months later. Bring on the ban.
But it is an advance, of
But it is an advance, of sorts - once liability is conceded, and a medical report obtained, the money is paid, while negotiations are ongoing.
It seems to me that this firm offers an interim payment from its own funds.
Anyone signing up to a CFA would be tied into it anyway, advance or no. That's the nature of a contract isn't it?
Which ban? Why would it help?
Sure, its a gimmick, but its just marketing isn't it? Why is this worthy of contempt but bribing corporate clients with days out at sporting events or lavish meals and booze an acceptable way to do business?
but it is an advance
Well said, i agree, nothing wrong with it, just god marketing although i doubt they can really afford it unless they have huge capital behind them.
Funding
It isn't hard to get funding for a project like this, even at reasonable rates of return.
Making some intelligent assumptions about average damages and the (likely uncommon) files where GT will have to make up the difference to £1500, it is easy to see how this kind of marketing ploy works out as a net gain for them, even after the funders take their share. It's a bit of a gimmick admittedly, but if it works, not a bad idea.
Who is going to fund it
Who is going to fund it though? In the days when I did PI, banks would occasionally give someone an overdraft when they were waiting for an agreed settlement to come through if it was for a good customer who they wanted to help out, but lending criteria are much more rigid now.
how many solicitors work for GT?
3 at present. At projected rate of expansion there should a further 10 to cover all the branches. Is this a legal service?
Consumer Credit
Wouldn't you have to comply with the Consumer Credit Act if you advanced £1,500 to a client on the basis that he would repay it out of the proceeds of his claim? The OFT has issued a group licence to solicitors, but the formalities of the Act and Regulations would still need to be complied with, wouldn't they? Solicitors lending money to clients sounds like something potentially fraught with compliance issues of one kind or another.
it would be exempt if: a)
it would be exempt if:
a) interest free
b) four or fewer instalments to repay, and
c) final payment no later than 12 months from date of advance.
that said, who would actualul challenge the agreement anyway?
CCA
The OFT or the SRA (or, for that matter, consumer groups) might look at it. Presumably, repayment would be by way of one "instalment" (being the repayment out of the proceeds of the claim), but that might not occur within 12 months.
Inducements
Some might say business is business, but this is the sort of thing that will only end up damaging personal injury in terms of it being viewed as anything more than a commodity and possibly damaging the profession as well.
With a medical report and a
With a medical report and a liability admission, one can request an interim of £1000 through the Portal. Presumably the remaining £500 would come from either 1) the 'referral fee' that might already be accounted for in the marketing budget, but paid directly to the client rather than anyone else as might be the case currently; and/or 2) the firm would have already been paid stage 1 interim costs upon admission of laibility. So either way, the firm can raise in the region of £1500 to pass on to their client quite easily.
In reality, when you scratch beneath the surface there is little to fund, and they won't have to wait until the conclusion of the claim to recover it. Recovery of damages rarely falls below £1500 on full liability anyway so despite the great promise, absorbing any shortfall would be a rare event made affordable by paralegals running the portal claims.
Distasteful as it sounds, they're merely using the portal system to their advantage, and their offer is not as magnanimous as it sounds.
No, it's just a scheme to
No, it's just a scheme to generate interest by paying the damages out of their own pocket (or more likely a funders) up front. If it helps them generate a large volume of work, I'd say its a clever way of cutting out claims managers and making a healthy profit.