MoJ confirms closure of 20% of claims management companies

According to truly remarkable figures obtained from the Ministry of Justice by the Law Society Gazette, it appears that over the last 12 months approximately 20% of claims management companies registered with the Ministry of Justice have in fact been closed down by the MoJ.

The MoJ confirmed that 734 separate claims management businesses were, to use their terminology “cancelled” in the year ending March 2012. Even so, as at March 31, 2012, 3018 claims management companies were still registered with the MoJ – that compares with approximately 11,000 law firms in England and Wales.

These closures followed a full 9570 complaints from the public about the behaviour of these claims management companies. In an interesting aside, it appears that the number of staff employed by the MoJ in relation to claims management regulation has increased from just 32 in 2007 to 57 in 2012.

The MOJ has also estimated that the actual cost of regulating these claims management companies [which it would appear,the regulation is financed by the companies themselves] rose by 17% up to a cool £2.5 million pa.

Claims management companies sell on a wide variety of claims [for eye watering referral fees -up to £1k per case] – but mainly sell accident claim and medical negligence compensation leads to personal injury solicitors, along with personal protection insurance claims and other areas of law, including employment law.

We have been concerned by the behaviour of many of these companies for some time – and by the unnecessary level of costs they impose on all areas of law. We are proud that none of our accident compensation or medical negligence claim cases come from such sources – we don’t pay for personal injury claims – unlike many other firms, we simply don’t need to, and again unlike many other law firms, our personal injury claim caseload continues to grow.