PI department sellers will face a “buyer’s market” after Xmas
Law firms considering selling off their personal injury departments have until the end of the year before market conditions change, SGI Legal has warned.
According to SGI’s managing partner, Simon Gibson, the more lucrative work that dates from before the implementation of the legal aid cuts and Jackson reforms to civil litigation in April is “constantly diminishing”.
Gibson says: “Firms that are considering a business or work in progress (WIP) sale but have delayed a decision are losing money every day.
“While it is currently a seller’s market, I expect this will change in the New Year as the number of sellers increases and the number of credible buyers—that is, firms with the cash resources in place and the support of their indemnity insurers—falls. This will mean that potential acquirers will be justified in driving a harder bargain.
“Those in for the long haul need to focus on making the right investments to retain business sustainability while those looking to leave need to urgently formulate their exit strategy.”
Four-partner personal injury firm SGI recently acquired midlands firm Challinors’ personal injury book.
Other acquisitions in the personal injury market include stock exchange-listed Quindell Portfolio’s purchase of The Compensation Lawyers, Silverbeck Rymer and Pinto Potts last year. Slater & Gordon, which bought Russell Jones & Walker last year, bought the personal injury practice of Taylor Vinters last month, and announced talks with Goodmans Law in May.
Gibson says: “Some firms may decide to run down their WIP over the next two years—but not only is it a pretty demoralising approach, it may not be profitable when you take into account the costs of winding down, such as run-off insurance cover, tax and redundancy costs.”
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