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The Looming Personal Injury Referral Fee Ban: Generating More Direct Business Online

The following is our article first published on the Internet Newsletter for Lawyers (Making the Most of the Legal Web) in November 2011 regarding the looming personal injury referral fee ban and generating more direct business online.

*update at 21 March 2012: as per Legal Futures article dated 21 March, it appears that the bid to make personal injury referral fees a crime has fizzled out after the Labour Party failed to move an amendment to that effect during the report stage of the Legal Aid, Sentencing & Punishment of Offenders Bill.

Personal Injury Referral Fees

The government has announced recently that it will ban the payment of referral fees in personal injury cases. The reasons cited include higher costs being charged by insurance companies, encouragement of a compensation culture in the UK and fostering of an industry pursuing claimants for profit. Given the potentially detrimental impact of this announcement for claims management companies (“CMC”s), it may be an idea for personal injury law firms to begin to, or indeed continue to, look at other ways of generating business. One such way is to focus on their online marketing strategies and increase relevant online enquiries that can be taken forward by the law firm itself.

What referral fees are to be banned?

The types of referral fees which could be banned and potentially criminalised include the following two main situations:-

-    Where a person seeking to bring a claim for damages views a TV advert or claims website or SMS text message, passes their details to a CMC which then refers the claim to a personal injury solicitor for a referral fee;
-    Where a person injured in a motor accident has their details passed by an insurer to a CMC (and then to a lawyer) or direct to a personal injury lawyer for a referral fee.

Other methods of referral happen on a daily basis and indeed it is not yet clear whether the ban in its proposed form will defeat all types of referral fees in respect of personal injury claims.

Additionally, some bodies, including the Law Society of England and Wales have sought bans on referral fees in additional areas such conveyancing.

Effects of the proposed ban

It is also not yet clear whether the proposed ban will serve its purpose in reducing motor insurance premiums or in curbing a “compensation culture”, or alternatively whether the ban will reduce access to justice. What is becoming clear is that changes are being made to business plans and Internet marketing is at the forefront of these changes.

Currently CMCs invest heavily in Internet marketing, particularly in respect of search engine optimisation (“SEO”) to get their claims websites to the top spots in Google for relevant keywords. They are also investing in enhanced social media activities, with greater use of blogs, Twitter, LinkedIn and Facebook. Such websites and social media accounts generate large volumes of enquiries and result in many potential clients which can then be referred on to law firms.

With the referral ban there are two main things which CMCs could do with their websites and online presence in general. First, they could continue to invest strongly in SEO and social media activities, while employing lawyers to work for them on an ABS basis, as Legal Futures editor, Neil Rose, suggested recently in the Guardian (http://www.guardian.co.uk/law/2011/sep/16/banning-referral-fees-personal-injury accessed: 11 October 2011). By doing this, the CMCs should be able to stay alive and continue to generate business through their websites and social media accounts. Or, second, they could sell their optimised websites and social media accounts to personal injury law firms so that the personal injury law firms themselves receive more accident claims enquiries and resulting clients.

Generating More Direct Business Online

While this illustration shows that CMCs will themselves have options for the future, what about personal injury law firms? In recent years we have been witnessing and indeed experiencing an increasingly competitive online search market, particularly for personal injury related keywords. With the looming referral fee ban, online search for such keywords will inevitably become even more competitive.

Personal injury lawyers should, therefore, reflect on their firm’s current online marketing approach. Relevant questions to be asking include the following:-

-    Where does our firm rank in Google for “personal injury lawyers” or long-tail keywords such as “accident at work lawyers london”?
-    How much business, if any, is being generated through our website?
-    How strong are our social media activities?
-    How much business, if any, is being won from social media activity, such as through Twitter or blogging?

Conclusions

In order for personal injury practices of law firms to take advantage of the upcoming referral fee ban, it is suggested that they should be looking to invest even more in their online marketing strategies to gain further direct business for themselves without relying too much on third parties. And indeed with search engine rankings for many other areas of legal practice becoming increasingly competitive, such investment by law firms as a whole will continue to produce positive results.

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