Dozens of firms have admitted they will have to shut their personal injury department or the whole practice if ministers push ahead with reforms.
A survey of 71 firms by claims management company First4Lawyers found 29 intend to close down if the small claims limit is increased to £5,000 for all personal injury claims. A further 17 said they would only survive if the increase was limited to RTA claims.
A minority saw an opportunity to advise those with what would be small claims, or felt they were sufficiently diversified to survive.
The government intends to close its consultation on the change – part of a package of measures including a cap on whiplash damages and scrapping of pre-medical offers – on 6 January.
The First4Lawyers survey is just a small snapshot of the firms that will be affected, but the results give indication of the extent to which the reforms will transform the sector.
Qamar Anwar, managing director of First4Lawyers, said: ‘This is a moment of existential threat for many law firms. The government needs to understand that in its pursuit of a mythical £40 off motor insurance premiums, it is stripping the injured of their rights to justice and causing serious damage to thousands of hard-working professionals who are doing no more or less than upholding the law of the land.’
The survey also found fewer than half of the firms involved plan to respond to the MoJ’s consultation.
Meanwhile, Hull firm Hudgell Solicitors has attacked plans to restrict links between legal services providers and rehabilitation providers. The firm accused the government, which insists the plans will reduce car insurance premiums, of hiding away references to rehabilitation within the consultation document.
The document introduces the idea of issuing vouchers for rehabilitation and restricting claims to victims who have sought medical attention within a specific time. But it makes no reference to the Rehabilitation Code, a voluntary framework drawn up by the entire claims industry.
Amanda Stevens, group head of legal practice at Hudgells, said: ‘All sides of the personal injury industry have co-operated to create a way of delivering rehabilitation that works for the injured person first and foremost, but also the paying party, lawyers and providers.
‘Making the code a compulsory part of the claims process will ensure that best practice is adhered to by all, without the need for the Ministry of Justice to take risks with the recovery of claimants from their injuries.’