Lessons from The Accident Group

The latest statistics show that personal injury claims have taken over from property-related claims as accounting for the highest number of professional indemnity notifications (see [2005] Gazette, 22 September, 3). Since the closure of Solicitors Indemnity Fund, Alexander Forbes' claims data suggests that personal injury claims have more than trebled from a lowly 5% of all notifications in 2000/01 to 18% of notifications this year.


There is little doubt that the rise in 'no win, no fee' personal injury litigation, driven by claims farmers such as The Accident Group (TAG), has had a significant impact on the rise in personal injury notifications. The problems surrounding TAG have been widely reported, but have law firms responded to the risk management challenges highlighted by TAG, and are the lessons relevant to all firms, whether they act in personal injury cases or not?


For many specialist personal injury firms, claims farmers quickly became important clients, providing a regular flow of work and income. Familiarity, and concerns about turning off the source of so much profitable business, may have led some firms to take on cases that should have been rejected. The lesson is true for all firms as it is difficult to turn down work from regular clients, and risk management procedures need to be sufficiently robust to vet - and, if necessary, reject - work offered to the firm, no matter how important the client.


Equally, the promise of a regular flow of work may have tempted some firms to take on personal injury work from claims farmers &150; even when their core expertise was in another practice area. Again, all firms should be alert to the risks of taking on work outside their areas of core competency - even when it appears straightforward and profitable.


Many specialist personal injury firms benefited from a huge rise in their volume of work as the claims farmers delivered new cases on a regular basis. For some firms, the increased flow of work led to systems coming under pressure, with the associated risks that work became rushed or delegated to inappropriate staff, or diary dates were missed. Again, this highlights the risk faced by all firms of making mistakes because of increased pressure of work. A carefully thought-through risk management procedure will highlight teams and departments coming under undue pressure.


All firms are susceptible to risk management failure when there is an increased supply of new business from one particular source and the temptation to think that TAG scenario 'couldn't happen to me' should be avoided. All firms should keep their risk management systems under constant review and if they begin to see a business trend happening in their firm they should focus even more risk management attention on that area.


This column was prepared by AFP Consulting, a division of Alexander Forbes Risk Services UK