North-west firm Horwich Farrelly is to close its motor injury claimant arm to all new business.

The Manchester practice will wind down the subsidiary trading as Zest Legal following a review of how to tackle 'increasingly challenging and turbulent market condititons’. Far-reaching reforms of the personal injury claimant sector are expected to be resurrected if the Conservatives win the forthcoming general election.

Zest Legal was created to provide support for not-at-fault claimants who had been referred by insurers. The firm’s website states that the business has 26 employees, but Horwich Farrelly has not confirmed how many will be retained after the subsidiary has closed.

John O'Roarke

John O'Roarke

John O’Roarke, chairman of Horwich Farrelly, said the firm will prioritise defendant litigation expertise and its specialisms in large catastrophic loss, counter fraud and costs management.

'Our focus now is to ensure we are completely fit for purpose as regulatory reform and the changing shape of fraud put new pressures on the bottom lines of our clients,’ he said. 'Our claimant business has its origins in the very early history of the firm but is no longer consistent with our strategy nor with the aspirations of our key clients. This arm of our business will therefore be run down in an orderly manner and our colleagues who work in it will be redeployed into new roles in defendant and operational activities.’

Horwich Farrelly says it will also undertake a ’structural and operational review’ to improve efficiency, which will be accompanied by a ‘substantial’ investment in a new case management system. It is unclear whether this drive will have any effect on staff numbers.

O’Roarke said the firm faces a challenge to make strong defences on behalf of insurers while offering services as efficiently and competitively as possible.

He added: 'With our in-depth expertise in all aspects of insurance defendant litigation, our national network of offices and our long-term strategic partnering model, I am confident that we will continue to see strong growth in our business.’

The firm said it recorded £39m in turnover for 2016/17, representing an annual increase of 15%. Important new contract wins, diversification into non-motor claims and the recruitment of sector specialists were cited as causes for the rising income. It did not reveal any figure for profits.