Personal injury cases are to be outsourced to South Africa this week in the first trial of its kind, the Gazette has learned.

Hertfordshire firm Underwoods has signed a deal with an unnamed practice to test whether road traffic accident (RTA) cases that fall under the predictable costs regime can be handled properly in South Africa. If the trial is successful, the firm will look to outsource around 2,000 cases a year.

Underwoods, which is acting as the firm’s agent, charges a flat fee of £500 per case. The recoverable costs of RTA cases which settle pre-issue are £800, plus 20% of the damages figure up to £5,000 and 15% of the damages between £5,000 and £10,000; for example, £1,800 for a case worth £5,000. Even with a large referral fee, there would be a profit for the firm.

The cases are being handled by Underwoods’ associate in South Africa, but if the operation takes off, the firm intends to build its own practice there with at least 40 staff. It has set up Underwoods South Africa, a registered South African partnership based near Cape Town.

Senior partner Kerry Underwood commented: ‘I am exiling the English legal system to a place of safety where the work will be done by lawyers and controlled by lawyers and kept well away from the banks and supermarkets.’

Underwood, who will be in South Africa to supervise the first tranche of work, is targeting insurers to outsource further PI cases, and is close to another deal with a law firm to outsource conveyancing. He said he had also received enquiries about commercial work, which could be handled by South African practices under the supervision of his firm. He said he is confident of bringing in more work on the basis that ‘we can offer a higher-quality service because of a lower cost-base’.

Underwood pledged that the minimum qualification of the South African staff would be a law degree.