The forthcoming LASPO Act introduces some laudable reforms such as imposing a ban on referral fees paid for the trade in cases. This system that now adds around £900 per case is seen as fuelling a rise in the number of claims as insurers unions and claims companies can make a quick buck from passing client’s details to solicitors. It is rightly perceived as incresasing the prevelance of fraudulent or exaggerated claims.
The rush to score political points has however left gaping holes as the definition of referral fees is vague. Further, in a bizarre twist of coincidence the ban in this trade coincides with a relaxing of the rules about legal firm ownership. Previously only a solicitor could be a solicitor, now any Tom Dick or Direct Line can acquire a “gateway” firm and do it. So right now in a town near you dodgy claims companies are doing deals with solicitors to circumvent the ban in April.
The whole point of introducing the ban was to get the personal injury claims market “back to basics”. The main beneficiaries would have been the insurers who would face less claims as an industry. Some however have had to publish reports to their shareholders in which they have to explain how they will replace the loss of income from the sale of their client’s misfortune. Direct Line seem to be the first to break ranks by publishing an intention to become an ABS (Alternative Business Structure) by entering the legal services market.
So what a complete and utter waste of time and it seems we have all been duped into believing that recent efforts were to clean up the market whereas it has all been a ruse to allow the insurers to corner the lot. Saga are another who want to make use of their 8m database to capture the legal services of what will be 1/7th of the entire country. Now that is scary.