PERSONAL INJURY: workloads of major firms to be hit

The workloads of some major personal injury firms will be hit by the latest collapse of a claims management company after administrators were brought in to attempt a rescue of Lancaster-based venture The Life Repair Group (LRG).

The events follow the withdrawal of funding from LRG by a major investor; attempts to secure cash from other sources proved fruitless, leaving 30,000 claims outstanding.

A spokeswoman for administrators Begbies Traynor said LRG had 15 major law firms on its panel, 'in addition to several smaller ones'.

Begbies Traynor is now hoping to save the company, although its first job will be to sack 200 LRG staff, many of whom are believed to have previously worked for defunct claims manager The Accident Group (TAG).

LRG director Tim Schools said he was saddened by the turn of events but was hopeful the company could be resurrected.

'We had a viable business which we believe had good future prospects,' he added.

Begbies partner Andrew Dick said the claims management industry had been growing rapidly, with LRG alone reaping profits of 800,000 last year.

'However, this sector has recently experienced the collapse of two major players - Claims Direct and TAG - and there appears to be a change of attitude from funders.'

Joint administrator Paul Stanley added that companies were also facing problems through showing income and profit before claims had been dealt with - this means that if a large number of claims ultimately fail, the following year's profits are wiped out.

Paula Rohan