In previous blogs I have dealt with the many changes in the world of personal injury claims that are due to come into effect in April of this year.
There are further changes proposed that will not necessarily come into force in April or, in deed at all, but which represent even greater threats to the public’s access to justice. The proposed changes will, in some cases make it even harder for people injured in accidents that were not their fault to claim compensation.
At the moment compensation claims with a value of £10,000 or less are dealt with via an electronic system which we call the MOJ Portal.
The electronic system has been in operation since the end of April 2010 and overall it has been successful in speeding up the settlement of straight forward claims for injury damages arising from road traffic accidents.
The electronic system includes fixed costs for the solicitor handling the claim which whilst not generous are generally adequate for the amount of work involved in a straight forward road traffic accident.
The government want to make three changes to this system. The first change is to raise the value of claims handled through the system from up to £10,000 to up to £25,000.
The second change is that the government wants to extend the scope of the electronic system to cover accidents at work and accidents in public places as well as road traffic accidents.
The final change proposed by the government is to cut the amount of costs payable to the solicitor for handling a claim that goes through the electronic system.
The problem with the proposed changes is that they mean that much more complex claims will be handled via the electronic system whilst at the same time reducing the amount that solicitors receive for carrying out the work.
Whilst I appreciate that the public are not going to be upset by solicitors receiving less in fees for the work they do, there are implications to this that are important.
If the fees provided by the electronic system are insufficient to enable a solicitor to deal with the claim then either solicitors will simply be unprepared to deal with these type of claims or client’s will have to pay some of the solicitors costs out of their damages.
As the electronic system covers more complex and higher value claims with lower fees the danger is that claims will be dealt with without proper solicitor involvement which will undoubtedly lead to under settlement of claims.
The greatest danger to the public having their claims handled properly by solicitors lies in another change which the government have proposed.
At the moment claims that do not involve personal injury have to be worth in excess of £5,000 before the other side are obliged to pay costs even in a successful case. This is referred to as the “small claims limit”. Claims for damages for personal injury have always been treated differently and the small claims limit for injury claims is currently set at £1,000. This means that as long as the injury element of a claim is worth £1,000 or more the other side pay the claimant’s legal costs in a successful case.
The reason that personal injury claims are handled differently is that it has always been accepted that assessing the value of a claim for personal injury is complex and therefore even in relatively low value cases should be dealt with by a solicitor.
The government have proposed that the small claims limit even for personal injury claims should be raised to £5,000. As the vast majority of personal injury claims dealt with by solicitors involve injuries worth less than £5,000, the proposed change to the small claims limit could have far reaching and negative effects.
At the moment all but the most minor of injury claims are dealt with by solicitors who’s costs are paid by the other side so that the claimant receives their damages in full and the process does not cost them anything.
If the proposals do come into force, it will either mean clients having to pay their solicitor out of their damages in claims where the injuries are worth less than £5,000, or, alternatively, members of the public dealing with the claim themselves directly with the insurers which inevitably will lead to under settlement of claims.
It is to be hoped that common sense will prevail and the small claims limit for personal injury claims will remain where it is. If not there is a new form of funding agreement that is part of the changes coming into effect in April that will be a solution but an unattractive one.
At the moment a solicitor cannot act for a client in a personal injury claim on what is called a contingency fee basis. This means that a solicitor cannot agree to deal with a claim on the basis of receiving part of the client’s damages by way of payment in a successful case.
As part of the changes coming into force in April the government are introducing “damages based agreements” which are a form of contingency fee agreement. The amount of the client’s damages that a solicitor can agree to take is limited to 25% of the clients injury damages. If any costs are recovered from the other side then these are deducted from the amount to be paid to the solicitor by the client out of their damages.
Damages based agreements have been used in employment law for a long time as generally no costs are payable by the other side even in a successful case before the employment tribunal. The fact that they will soon be available in relation to personal injury claims is not a positive thing but might be the only way that a solicitor can act for a client in some personal injury claims if the current proposals do go through.
In summary all the changes that are coming into force or are proposed do not benefit the prospective claimant in any way and, as far as I can see, can only possibly benefit insurance companies. The changes are clearly aimed at discouraging people from making claims and making it cheaper for the insurance companies when they do.
At Wanstalls Solicitors we will do everything we can to continue to provide a service to our client’s at no cost to them but much will depend on what, if any of the proposed changes come into effect.
Our advice at the moment is that if you have been injured in an accident that wasn’t your fault, contact our Durham office straight away so that your claim can be got underway before the changes come in. This is the only sure fire way of avoiding the effects of the changes.
If you have been injured in any type of accident that wasn’t your fault call us now on 0191 375 3938 so that we can start to deal with your claim.
Ian Wanstall – Contact me at email@example.com
Wanstalls Solicitors are based in County Durham in the North East of England. We represent clients both locally and nationwide and offer a friendly personalised service. If you would like to discuss any aspect of a personal injury claim, we would be delighted to hear from you.