Could We See a Decline in Personal Injury Firms in the North?

Recently there have been a lot of articles in the legal press about new government legislation which could impact the amount of personal injury firms we see. At present, the mainstream media hasn’t really covered this, most like due to the lack of sympathy it would probably garner from the public – let’s be honest, solicitors, particularly in personal injury or claims management, aren’t well-liked! So they wouldn’t be so keen to report on something where it paints a solicitor’s firm in a sympathetic light!

However, this new ruling by the government could affect a lot of firm across the country and in the North West, with some already reportedly saying they may choose to close down. This relates to the way smaller, more local firms gain clients. So I think it is important to report on this and make people aware, as it could lead to more unemployment in the area!

The background

Typically in the personal injury and claims market, the way a smaller legal firm will obtain new clients, is actually through the use of so-called ‘client-farmers’. These bigger firms are the ones you see all over daytime TV. They don’t actually do the work themselves, but instead pass you to a smaller firm in your local area, for a referral fee of around £750 usually. That;s all about to change though, as the new government rules state that referrals in this manner will no longer be allowed. Instead, a smaller firm will have to do more to attract it’s own clients, which will mean an increase in marketing budgets. This is the main reason a lot of firms are weighing up the cost of whether it is worth continuing to stay open, or close the department down.

Loopholes?

We all know working in law, if there is a loop-hole, law firms will find them! The bigger firms have already started to drop hints that they may just buy some of the client-farmers, therefore having referrals coming from an internal department, rather than an external company. However this isn’t really an option for smaller firms. Smaller firms are however exploiting the use of local marketing firms and paying for leads, rather than referrals. The technical difference being that it is up to the firm themselves to turn the lead into a client, rather than having the client already booked and ready to refer.

One such personal injury firm doing this is based in Bolton, called www.personalinjurysolicitorsboltonarea.co.uk and ran by John Peterham. John started the small company as a lead generation business, and positions himself as providing a valuable service to clients by matching them to the right solicitor. When we emailed him to ask how close to the line of referral fees this is, he said “It is close, but are certain we are within the guidelines set out by the Government. Our operation is referral fee’s as we just ensure a lead is passed to the most relevant firm.One that is local, and has a good reputation. It is then up to the firm themselves to actually convert that lead into a customer, and it doesn’t always happen.”

Impact

The impact of this ruling is yet to bes een fully, but one think-tank estimates up to 180,000 solicitors could have their jobs put at risk. We would estimate based on that around 30,000 would be in the North-West – staggering numbers if true. We contacted law students at Liverpool Hope University, and one who wanted to remain anonymous told us:

“This ruling seems very unfair, and it is hard to see the logic behind it. Why bother? What does it matter where the referral or client comes from, as long as they get a good service and their case represented by a qualified legal firm? For me personally, it’s a worry. Personal Injury and accident claims management was one area I was keen on, but now I may have to switch my course modules to something else if it is uncertain any jobs will be there when I graduate”

The reason for the change is a bit unclear, with the government’s own website not even explaining the reasons behind the change, but instead just enforcing the new ruling – check it out here. What is clear though, is that jobs in the local area could be heavily impacted, just at a time when they seemed to be stabilising. This could mean a lot of talented graduates out of work once again, and surely another damaging blow for the Government and local councils.

Chaffinch Student Storage

An interview with Terry Rogers of Chaffinch Student Storage. Terry is one of the owners, and has agreed to share some advice and tips for anyone thinking of starting a small business in Cheshire. 

The Cheshire Cat (TC): Hi Terry, thanks for coming and doing this interview, I know our readers will enjoy learning more about your business, what it does, and how it grew.

Terry Rogers (TR): Thank you for letting me do this, it’s been a while since we last spoke so it’s a great thing you have this small business website!

TC: Thanks! So let’s get down to business, or rather your business! Can you explain what Chaffinch Student is?

TR: Sure! Chaffinch Student is a storage company, aimed mainly at the student market. When student’s leave home for Uni, they often forget that they have holiday times, summer out of terms times, and sometimes they need to move from one place to the next when they change years, friends, or courses! So there is a lot of demand on taking care of their belongings and either storing them safely, or moving them to another place safely. Parents are often willing to help on the first trip, but it can get a bit tedious and difficult after that, especially as they accumulate belongings naturally, like everyone does. So that is where Chaffinch come in. We will pick up, pack and move your stuff securely, and fully insured, or we can store it safely in one of our secure storage units until you need it again – then we deliver it to you wherever you are!

TC: Do you serve the whole country?

TR: We are based in Cheshire and Liverpool, but can go anywhere. Wherever student needs us, we will deliver or pick up from. Student storage Liverpool is our main market currently though, and performs very well with the 2 big Universities there.

TC: Ok great. How did you start the company, and what has it been like to grow the business?

TR: We started back in 1998, and it’s been growing ever since. We bought some small premises just outside Liverpool, and a few years later some in Stoke on trent, and then later Manchester. These are all secure units. The trick for us was appealing to a very specific market, instead of just targeting anyone and everyone, which would have had us competing directly against Big Yellow Storage and companies like that. Being specific meant we could exploit and grow our niche. We try to market and brand ourselves to appeal to students, but we also get business from the general public too, however we don’t rely on that.

TC: So you would say it’s important to really be specific in business?

TR: Definitely. I know when starting a business, you can think you have to appeal to a large base to ensure you get money coming in, but 9 times out of 10, a bigger, better company is already doing that. By targeting a specific niche, you can grow at a decent rate, and build up over time. Most of the time too, you’d be surprised how many people are desperate for your business to be there, specifically serving that niche’s needs.

TC: What was the biggest struggle with starting a small business?

TR: Great question. I’d have to say it was getting a grip on the financial aspects. Me and my partners just wanted to provide a great service, without fully realising all the costs involved, how to control them, keeping cash flow well, and handling tax! We made quite a few mistakes along the way, but now we can afford the proper help to do it for us. When you start however, take advantage of friends who know something about these areas – accountants for example – until you can afford full time help! It’s so tricky!

TC: Yes i’ll certainly agree with that! What are your plans for growth over the next few years?

TR: We want to appeal to more of the country, and pull in a larger crowd from the internet. To do this, we have begun with an aggressive marketing campaign, using social media and targeting Google. This interview is a good example of that – just trying to get more exposure everywhere, whereas before we have been a bit insulated and let people come to us, we are now actively looking to ‘recruit’ customers. It is starting to work, but we have a long way to go to be where we want to be!

TC: What advice would you give to anyone in Cheshire who is looking to start a small business?

TR: Firstly, just do it! Far too many people sit thinking about it, and never launch. Of course it’s scary, and you’ll never be 100% ready to go, but you can learn on the way too. Also, make sure you target a specific thing like I said before. It really helps to be able to be after a specific customer and then directly appeal to them.

TC: Terry, many thanks for doing this, and we really appreciate some of the honest and open advice given. All the best with Chaffinch Student in future!

TR: Thanks, it’s been a pleasure!

So there you have it! If you have any more questions for Terry, leave a comment below, and we’ll make sure he answers it, or alternatively email us privately for more information.