The recent history of personal injury litigation in the wake of the abolition of legal aid for PI cases has been one of trial and error. The introduction of a "standards culture" in legal services funded by the LegalAid Board in the 1990s was a force for positive changes in the practice management of many lawyer firms.
The pursuit of a legal aid franchise was a stimulus for practices wanting legal aid work to raise their games in terms of management standards. Invaro began its life as a company that provided practice management and IT consultancy to such firms, and has assisted some legal practices attain the franchise and its successor and related standards.
But when legal aid was abolished for PI cases by the Access to JusticeAct 1999, the requirement for such quality standards as a condition of doing the work was removed at a stroke.
In an uncertain market, Conditional For Agreements (CFAs) were introduced, and non-lawyer claims handlers entered the fray in a free-for-all for clients, with aggressive upfront marketing and little in the way of management or legal controls.
Some operated fundamentally unstable business structures:
* insurers provided after-the-event insurance cover to fund cases in the event that they were lost, but ceded the decision-making about which cases were signed up to third-party claims handlers;
* claims handlers were in turn motivated by the business stimulas of signing up as many cases as possible, without regard to the prospects of success, as they could make their money in three ways--from selling insurance policies, from non-refundable signing-on fees charged to the lay clients, and from referral fees charged to solicitors for cases obtained from high street canvassing.
It was only a matter of time before the business model collapsed under the weight of the hopeless cases signed on with no prospect of success but still requiring funding. The true depth of the risk to which these companies had exposed themselves could not be known until the cases were settled--or, worse still, simply collapsed for want of quality control.
In addition, the law firms on the claims handlers' panels were not always quality-assured. The result has been the spectacular business failure of companies such as Claims Direct and the Accident Group.
There is now a desperate need to build confidence in the personal injury market, so that lawyers can be confident that they are being properly and responsibly supported, and also that the public receives a credible and affordable service in relation to its claims.
Invaro is committed to building that confidence by:
* subjecting cases referred to it by panel solicitors to a rigorous quality control and case preparation process, freeing lawyers to do the lawyering;
* carrying out practice management spot-checks on its panel firms to ensure that robust management procedures are being followed in relation to all the cases being dealt with.
Crucially, Invaro both makes the decisions about which cases to fund through insurance and provides the cover. There is no separation of decisions about risk from liability for that risk. Invaro is in turn supported by substantial institutional investors, including Japanese pension funds and Japanese banking institutions.
Invaro charges no referral fees to its panel solicitors and makes its money solely from selling after-the-event insurance products. Its procedures make high street firms more financially secure by grooming their practices and …