Hundreds of firms specialising in personal injury could be whittled down to barely a dozen within five years. That was the prediction today from Steve Din, the founder of law firm investor Doorway Capital, as he predicted rapid consolidation of the market driven by imminent reforms of the sector.
Doorway recently acquired the debts of Simpson Millar owner Fairpoint and Din revealed the risk capital investor has substantial funds available to make further purchases.
Speaking at a PI conference in Manchester today, Din said: ’Of the 800-plus specialist PI firms presently in the market, consolidation appears not only likely but, for us, represents a real opportunity.
‘We consider this opportunity will also encompass non-PI consumer law firms. We believe Doorway Capital can force this consolidation by focusing our investment at making acquisitions, making lateral hires and investing heavily in direct marketing.’
Din, a former managing director at Morgan Stanley and Citigroup, told delegates that some High Street banks are expected to retrench from funding small personal injury firms, leaving them to focus on funding just the larger firms.
He added that smaller claims management companies, particularly those that depend on RTA claims, would largely disappear, with the larger surviving CMCs becoming an alternative business structure and possibly integrating with a law firm.
Doorway Capital has come to prominence in recent weeks through its investment in Simpson Millar, effectively becoming owner of the national firm after the administration of its previous parent company Fairpoint.
Din insisted the firm is a profitable business which only posted losses for 2017 because of goodwill repayments.
Over the last two years, Doorway has advanced almost £50m to various law firms needing to fund their work-in-progress, case acquisition and the acquisition of other firms.
The PI sector is set to experience major change in the coming years, with RTA claims subject to a fixed tariff scheme and the small claims limit rising to £5,000 for RTA claims and £2,000 for other personal injury claims. Any claims worth less than those figures will effectively be taken out the hands of PI firms who will no longer be able to claim their costs. Fixed fees are also likely to be extended, following a report by Lord Justice Jackson.