Clinical negligence: Is it the yellow brick road to ruby slippers?

Clinical negligence under FRC: Is it the yellow brick road to ruby slippers?

Within the context of the tornado of legal reform, the impact of the proposed Fixed Recoverable Costs (FRC) within clinical negligence (CN) has the potential to be both dramatic and sobering. We have firmly landed in Oz. Further, recurring proportionality issues are already causing CN firms to wince. The journey on the yellow brick road is a fraught one. Do firms have the courage, knowledge and skill to take CN forward?

The wider personal injury (PI) sector changes have seen a swathe of firms looking to CN as a replacement. Some of these perhaps do not fully understand the commercial realities of managing a CN department. There are firms that lack the required knowledge to risk assess cases properly, and moreover, less experienced firms treat CN as an extended version of PI. A pre-medical letter of claim in complex cases is often the first giveaway of an inexperienced firm.

Zebra’s instructions have seen a tangible increase in established firms looking for additional funding and/or looking at remodelling, and also those newer entrant firms requiring guidance on why the cash flow isn’t coming after a 3 year period post LASPO. In a Zebra market survey this month, out of 20 established personal injury firms with turnover in excess of £5m, 9 of these have either considered setting up CN departments or have already done so.

Bank funding and investing in CN

Banks are looking more closely at firms’ WIP profiles and WIP valuation, and the management team’s approach financial management of CN. Firms must have a grasp on their WIP risk profile to achieve appropriate funding. Banks are also aware of proportionality issues. This is something that we are now asked to look at as part of our bank funding projects. Banks want a granular view of what is within the firm’s filing cabinets, and this is set to stay.

Will you find your ruby slippers?

Whichever way a firm comes at it, either an established CN firm or a new entrant, the road ahead is potentially a difficult one. It won’t simply be a skip, hop and dance along a dazzling yellow brick road, and not all of those that engage in the sector will find their ruby slippers at the end. It’s not just a case of ‘follow the yellow brick road’. Firms will need to be prepared to adapt and evolve to the rocky terrain ahead. Naivety will be costly.

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