Claims management firms demise following Jackson Reforms

The Jackson Reforms came into effect on 1 April 2013 and represent a significant shift in the way in which litigation is funded. In particular, the Reforms introduce new rules in respect of "No Win, No Fee" arrangements so that where such agreements are entered into after 1 April 2013, it is no longer possible for the Claimant to recover its success fee from its opponent. The Reforms also include a ban on referral fees between lawyers and Claims Management companies. Both measures have the potential effect of leaving Claims Management companies out of pocket, with the aim of discouraging disreputable firms from operating in this area.

The Reforms are already making an impact, with the Government reporting last week that the number of Claims Management companies handling personal injury claims fell from 2435 in March 2012 to 1700 in June 2013. These firms are no longer able to attract clients with offers of "No Win, No Fee" agreements and therefore it may be the case that the number of Claims Management companies further declines as time goes on.

It will be interesting to see what further effects the Jackson Reforms have in practice and we will continue to monitor their impact.

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.