Let me just make it clear right here - we here at Clough & Willis are totally independent and we do not pay referral fees at all. We prefer clients to come to us because of our reputation and the quality of the work we do - because they want us to act for them. We do not "buy” claims in any shape or form. Surely that's the best way…isn't it?
But not all lawyers, especially personal injury lawyers, are like us! Many pay for their personal injury work. No doubt most do a good job for their clients, but the truth is that these lawyers are buying the work. Surely you would want to choose your own lawyer to act for you rather than have one imposed on you?
So how do these lawyers find this work to buy? Well, Claims Management Companies and Insurance companies sell your details to them.
Claims Management Companies (CMC) are basically middle men who sell your claim to one of their "panel” solicitors. They spend a fortune advertising for accident victims to contact them and if you do they will take some details of your claim, maybe take a statement from you, and then send your details to a firm of solicitors on their panel. The solicitors will decide if they want to take the claim on and, if they do, they will pay the CMC a fee for it. These solicitors could be anywhere in the country - you can live in Bury but your solicitor could be in Plymouth!
Some CMCs insist that you take out an insurance policy (which you pay for) or have a medical from one of their panel doctors. No doubt they make money at each step of the process.
They really add nothing at all to the process of bringing your compensation claim. So why would you do it? What benefit is there to you? I can't see any benefit at all, but I can see lots of drawbacks. For example:
· Delay - You have to deal with the CMC at first and your appointed solicitor will have to report back to them throughout the claim. This just slows things down.
· Cost - You may have to pay money out of your compensation at the end of the claim (maybe for the insurance policy, additional costs not recoverable from the other side etc).
· Remoteness - Do you really want a solicitor in another part of the country? You will never meet them and getting to speak to them may be difficult.
· Good advice - Will the CMC give you good, sound advice about your claim? The person you deal with at the CMC is unlikely to be legally qualified. It's possible that they could unfairly raise your expectations of the amount of compensation you could receive just so that you sign up with them.
· Reputation - How do you know whether the CMC is reputable? What is their track record?
And insurance companies are just as bad! Remember, these are the people who constantly moan about the amount of compensation and legal costs they have to pay out because of accident claims. It is they who increase your insurance premium every year and blame it on "ambulance chasers” and "frivolous” compensation claims. But in reality the insurance companies encourage compensation claims and they make as much money as they possibly can from it.
How do they do this? Well let's look at the methods they make money out of accidents:
1. First of all, we all have to pay an annual, it seems ever increasing, insurance premium to the insurers to drive our cars.
2. Most insurers try to "tag on” to our motor insurance premiums what they call "legal protection” policies. An additional "extra” for you to pay!
3. These "legal protection policies” mean that if you need to make a compensation claim after an accident your insurers will get one of their "panel” lawyers to deal with the claim for you. And guess what? These solicitors will probably pay the insurance company an annual fee for being on their panel (and the fees they can charge will usually be capped).
4. The insurers also sell details of people injured in accidents to selected firms of solicitors who will pay them a fee for each case they get. As mentioned above this fee can be as much as £800 per case.
The insurance industry also makes money on the "After The Event Insurance” market - in effect they will sell you a policy to cover your legal costs after an accident has happened. Another premium for them!
I could go on, but I don't think I need to. As I said, we take a step back from all this. We are totally independent. We will not "buy” work. I think that works best for our clients. Don't you agree?
Chris Macwilliam is an experienced personal injury specialist and is the partner who heads the firm's personal injury department. He is a member of the Law Society Personal Injury Panel and holds Senior Litigator status with the Association of Personal Injury Lawyers (APIL).