The relaunch of Claims Direct will see the claims handler's legal panel being asked to directly fund a projected £5m marketing campaign in a ground-breaking but potentially controversial move.

Russell Jones & Walker (RJW), which owns Claims Direct, has confirmed that it has changed the way it allocates work to the 12 firms on its panel, as part of the relaunch of Claims Direct.

The company has abandoned the referral fee, in which firms paid £450-£500 to receive each mandate. Claims Direct will now allocate work based on how much money each panel firm has contributed towards the marketing budget. Each firm will be ranked according to its contribution with those paying less money receiving fewer mandates.

The new system, which is automated, came into effect at the same time that RJW tripled the size of its legal panel from four firms to 12. The panel and the multi-million pound re-launch of the controversial personal injury claims brand went live this week (18 June) with an advertising campaign covering media, including tabloids, TV and radio. However, the firm needs to spread the costs of the campaign, £5m over 12 months, as its overall turnover is only around £40m. RJW, which is also contributing to marketing costs acquired Claims Direct in 2003.

With the upcoming introduction of the Legal Services Bill, the firm has been looking at alternative business structures and decided to capitalise on the brand recognition of Claims Direct for promoting its personal injury legal services.

Claims Direct will continue to be regulated by the Solicitors Regulation Authority as well as the Ministry of Justice's new Claims Standards Council.

Andrew Hoe, the firm's marketing director, said: "The original business model was based on referral fees but now it will be based on contributions to advertising and marketing costs. That will be the only payment
the panel firms will make and work will be allocated in the ratio of contributions."

Commenting on the new system one partner at a personal injury firm said: "It is an interesting system. It will consolidate the amount of firms they deal with as those firms ranked at the top will get everything."

However, the regime has been criticised by some PI solicitors, who have argued the funding model acts as referral fees through the back door. Claims Direct has also been criticised for refusing to disclose the firms on its panel.

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