Government to go ahead with restrictions on accident claims

Potentially increasing litigants in person

Personal Injury compensation small claims reduced by Justice Secretary, David Lidington.

The Justice Secretary, David Lidington, has announced his intention to press ahead with reforms that will make it harder for injured people to pursue compensation claims.

The plans, which have existed in one form or another for some time, had been shelved due to this year’s general election, but now appear to be back on the agenda.

The effect of the plans will be to reduce compensation for whiplash injuries caused by road accidents, and to remove the right of injured people to claim back their legal costs from the insurers of those who have injured them unless their claim is worth over a certain amount.

The restriction on recovering legal costs is likely to cause the biggest issues. In 1999 with the Access to Justice Act, Legal Aid was significantly scaled back, and was largely removed from personal injury claims. It was replaced with a “no win-no fee” system where solicitors agreed not to be paid if the case was lost, whilst if they won the injured person could recover their legal costs from the defendant’s insurers. This was based on the so-called “polluter pays” principle, that where somebody had broken the law it was only fair that they, through their insurance company, should foot the bill for putting things right.

Now, by removing the entitlement to legal costs from lower value claims, injured people are to be faced with the choice of either using a solicitor and paying out of their own pocket, or by trying to pursue a claim without legal advice, as a “litigant in person”.

So what’s wrong with that?

In fairness there always has been an effective lower limit to injury cases. At the moment, claims where damages for the injuries are £1,000 or less are dealt with as “small claims”, where the claim is for damages alone, not legal costs. Because legal costs in such cases will usually be more than the damages, it is almost never worthwhile for the injured person to use solicitors in such cases.

However, claims of a few hundred pounds are by their nature for fairly minor injuries. They are for injuries like strains or sprains where there is a full recovery within 2-3 weeks. They are for injuries like minor cuts or burns which leave no scars. An intrepid few pursue such claims without solicitors, but by their nature they are simple cases where not much can go wrong, and where even if it does it is generally not a disaster. Most of the time claims for these kinds of injuries are not pursued at all.

The new limits put the level at which legal costs can be claimed, on top of damages, at £5,000 for road accidents and £2,000 for other types of claim. Whilst this does not put a block on claims for really serious damage, it would include a great many claims of the sort of level that many would think absolutely do require proper legal advice.

To give an example, a great many fractures or dislocations of joints would attract damages of less than £5,000 for the injuries themselves. An injury like that would often be enough to keep someone away from work for weeks or months (especially if they have an active job, or need to drive). More and more people do agency work or have zero hours contracts, and many have very limited entitlement to sick pay. Whilst a claim for loss of earnings can be added to the claim, the lower limit for claiming legal costs in road accident cases is £5,000 for the injuries only. If damages for the injuries are under £5,000, the claim as a whole would have to be worth £10,000 before the injured person – injured by someone else breaking the law – can claim back the legal cost of trying to put things right.

So imagine a warehouse worker. On the drive home from work, another driver causes a crash, and the worker ends up with a broken leg. Monthly earnings are £1,500 but because of the injury money from work cannot be earned for three months. The average savings of UK families is currently £3,134. For families with an income of £1,500 a month or less it is £95.

The worker might get Statutory Sick Pay of £89 per week, but you can imagine that would become a fairly desperate financial situation very quickly. If there is a family to support, the financial pain will be shared.

This sort of case is not unusual, nor is it “minor” or “trivial”. Is it right that if the worker wants to take legal advice to make sure things are put right, the worker – the innocent party – should pay for it, while the defendant – who has broken the law and in doing so has broken someone’s bones – should not?

So what about the other option, of claiming compensation without legal advice?  The Justice Minister said, “I would argue these are not cases where it ought normally to be necessary to have legal representation […] if you have the evidence to show you are a victim it is fairly straightforward.”

Well yes, simple cases are simple. But hard cases are hard. Injury claims are almost always made to insurance companies, and are handled by lawyers and other claims handlers who deal with claims for a living. Whilst one shouldn’t portray them as pantomime villains, they work for the insurance company rather than the victim, and they aren’t offering a neutral service. Ultimately, insurance companies are commercial organisations that are there to make money for their shareholders.  Paying out less money, or no money on claims helps them do that.

Imagine our injured worker has a claim where, if a solicitor ran it, compensation would be £4,000 for the broken leg and £4,500 for the loss of earnings, so a total of £8,500. However, our claimant doesn’t know any of this, has never had to make a claim before, and doesn’t know how to make a claim. The claimant gets in touch with the other driver’s insurers, but they say:

  • “We need you to get a medical report to show how bad your injuries are, we can’t do anything without that.” The claimant doesn’t know what medical report to get, or how to go about it.
  • “We still need to check some details with our policy holder. We will get back to you.” They have been telling the claimant this for several months now.
  • “We agree our driver caused the crash, but he tells us you were speeding too, so we will only pay 50% of your claim.” The claimant wasn’t, but it can’t be proved.
  • “We can’t pay your claim unless you let us have independent witness evidence.” Nobody else was in the car, and there are no details of any witnesses.
  • “If you go to court, we think a judge would award you £5,000. If you don’t agree then you can go to court if you want.” The claimant has no idea what the case is worth, and is worried about going to court.

It is easy to see how, without a solicitor, many claims would either not go ahead at all, and would see the injured person giving up at some point, or result in a substantial under-settlement.

For those brave enough, they can end up taking their case to court as a “litigant in person”. However, following cuts to Legal Aid in 2013, courts are becoming bogged down with people trying to represent themselves in other areas of law such as divorce or debt cases. Any savings in the Legal Aid budget are being wiped out by the cost of hearings being delayed, or bad cases being brought or defended by people who aren’t familiar with the court system. Having advice from a solicitor from the start of a case means far fewer cases end up getting to court at all, either because the bad ones have been weeded out, or the good ones have been settled.

And for those cases where someone does end up representing themselves at a trial, they will find themselves arguing their case against a barrister representing the insurance company. In the words of one lawyer who finds himself arguing cases against unrepresented individuals, “It's absolutely not fair. It's very much a system for those who know and those who can pay.”

Much of the publicity surrounding these changes to the law centre on the idea of there being a “compensation culture”, that too many personal injury claims are being made. Whilst these changes will undoubtedly cause the number of claims to fall, there is no particular reason to believe that the “undeserving” cases will be targeted. All claims will fall, and by far the majority of them will be very reasonable claims made by people who are nothing but the innocent victims who have been injured by other people.

Interestingly, the government has also said it will look again at banning cold calling aimed at touting for personal injury claims, which seems a much more sensible approach and one more likely to reduce the sort of claims that people wouldn’t have made without prompting. Our claimant with the broken leg has a very good and urgent reason to be considering making a claim, whereas someone with a minor whiplash might not bother were it not for a phone call about all the money supposedly set aside for the claim.

Undoubtedly these reforms will make life harder for injured people, as well as for their lawyers. At Hunt & Coombs Solicitors we are working on ways to lessen the impact as much as possible so it will remain possible to use professional legal expertise in as many injury claims as possible.

If you have been injured through no fault of your own and would like to discuss a potential personal injury claim please contact our Personal Injury team on 01733 882800 or email info@hcsolicitors.co.uk .

Author

Richard Moon, Senior Solicitor

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This article has been prepared for general interest and information purposes only; it does not constitute legal advice and should not be relied on as such. While all possible care has been taken in the preparation of this article, no responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by the firm or the authors.