Written evidence from Excel Legal PI Limited
I am writing with reference to The Prisons and Courts Bill which I understand is to be considered by the Justice Select Committee in the coming weeks. I have previously spoken to my firm’s local MP, Mr David Nuttall regarding the Government’s Proposals, who kindly made representations on our behalves during the second reading of the Bill on 20th March 2017. I am writing to you now to bring to your attention my concerns regarding the impact of the proposals on my Firm and many like us, as well as the disastrous consequences of the Bill for many, genuinely injured people who will not be entitled to pursue their right to compensation if the Bill is passed in its current format.
My firm is a small niche practice specialising in Personal Injury work, which serves the local community. Whilst some of our work consists of higher value and more complex matters, the bulk of our work is made up of the lower value RTA Claims, many of which have a value of £5,000 or less. In addition to myself, there are five other ladies – two part time Solicitors; one trainee Legal Executive, who has been doing the job for over 20 years and 2 legal secretaries, all of whom have worked with me for a long time.
Like many PI Practitioners, I am extremely concerned about the Government’s most recent proposals, because this will have the effect of removing access to Justice for most, if not all of our clients, both those that fall within the proposed Small Claims bracket and the higher value claims, which inevitably will be affected by the changes because of the impact of the changes on our Firm.
There are a number of issues which arise which are relevant. The first relates to the removal of the entitlement to claim for minor injuries. I understand that the clarification of “minor injuries” is yet to be determined. However, I fail to see how minor injuries can be distinguished from those of a more serious nature, which might not be identified until further down the line when the opportunity to investigate a claim may well have been prejudiced by the delay. I am also unable to reconcile the situation where someone who has been injured as a consequence of the actions of a negligent third party, with no recoverable legal costs, should not be entitled to be compensated, whereas an individual whose flight has been delayed, is entitled to compensation with recoverable costs.
The Governments proposals to increase the Small Claims Limit will leave the injured Claimant with the burden of pursuing litigation in person or having to pay their Lawyer out of their damages, which cannot be an acceptable situation, particularly given that the Claimant already pays the Lawyer’s success fee out of their damages for injury, which will not be sustainable under the tariff of injuries tabled by the MOJ. Personal Injury Lawyers have had to deal with a raft of changes in the past few years in the Government’s bid to clamp down on fraudulent claims. In April 2013, the revision to the rules meant that Claimants were responsible for payment of their Lawyer’s success fees. It was suggested then there would be a corresponding increase in the level of General Damages to assist the Claimant to discharge the success fee and any ATE Premium. I can say, from experience however, that although there was a suggested 10% increase in General Damages in November 2013 (which was reflected in the Judicial Studies Board Guidelines), in practice, the increase did not materialise, leaving our clients out of pocket.
Insurers have continued to make unrealistically low offers, leaving the Claimant with the burden of continuing with the litigation to the Stage 3 Process requiring assessment of the value of the claim by the Judiciary. Awards are so far ranging, in terms of value, that it is impossible to properly advise a client about whether they should be accepting or challenging low offers and their potential exposure to adverse costs in taking a matter forward. We have often had to take a view with regard to recovery of the success fee, particularly if we are acting for a minor, not only because of the difficulties of recovering success fees from minors, but also because morally it does not seem right to take the success fee from childrens’ damages. Consequently we have already suffered a reduction in our entitlement to costs above and beyond what was envisaged in 2013 by the MOJ (and Insurers whom, as I understand it, approved the cost structure, which was negotiated by all interested parties).
It would not be feasible, in my view, for a lay person to conduct the litigation necessary to bring a claim. I am fortunate enough to be in a position to have clients, most of whom have a certain level of intellect. However, even with our assistance, most of our clients find the legal process daunting. To expect individuals to pursue a contested liability claim in the Small Claims track, is simply asking too much. It will create an uneven playing field, with Claimants having no representation, and Insurers with deep pockets continuing to fund litigation, unnecessarily in some circumstances (as they do now) so as to mitigate any pay out. I anticipate that inequality between Claimants and Defendant Insurers will result in Insurers being less receptive to legitimate claims and refusing to pay out at all because they will know how difficult it will be for Claimants, and that most will not bother to pursue matters either because they do not have the inclination or know how.
Thought has to be given to the vulnerable victim of an accident, who often is suffering injury and how they would, at the same time, deal with the litigation process, when in some cases they may be out of work as a result of their injury, without transport and possibly having to seek rehabilitation. These people need help and guidance. Some of them may not even have access to a computer, or necessary I.T skills to use the Claims Portal. It is not realistic to expect them to pursue a claim on their own behalves. If they are in gainful employment, how can they be expected to pursue litigation, which can be involved and time consuming, when they are not familiar with the processes and may not have the resources necessary to do so? For instance, funds to cover disbursements (or rehabilitation costs), which invariably we pay out of office account in the first instance on behalf of our clients.
If Lawyers, such as ourselves, are removed from the process, this will result in a flood of Litigants in Person, which will put pressure on the already strained Court staff and compounded by the numerous Court closures which are underway.
Although the current proposals affect only low value RTA claims (and PL/EL/OL Claims), the lower value claims (which in most cases are conducted on a No Win No Fee basis and consequently we are only paid if we are successful with a claim) fund the more complex matters. It is not “a given” that liability will be conceded. Many cases proceed via the Courts before settlement is achieved. Firms like ours will cease to exist under the Government’s new proposals and consequently we will not be in a position to process the larger more complex claims, thus restricting access to Justice for those Claimants with injuries valued in excess of £5,000.00. No consideration appears to have been given to this.
I understand that the thrust of the Government’s Reforms stem from the Insurers suggestion that there is a pandemic of fraudulent claims, but this cannot be substantiated because statistics do not support it and certainly in my experience as a High Street Practitioner, the number of fraudulent claims are few and far between.
The suggestion that the Government will remove the right for Claimants to claim in respect of minor injuries, intimates that they believe that every minor claim is fraudulent. My own experience does not suggest that as being the case. Most of our clients come across as being genuine, legitimate Claimants who have suffered injury and associated losses. Often they seek medical advice, either at Hospital or via their GP, undergo rehabilitation and in most cases, their vehicle has suffered substantive damage and they are in need of assistance in resolving repairs and sorting out alternative transport whilst their own vehicle is off the road. They should not feel in a position whereby they are obliged to process repairs via their own Insurer because there are no other viable options and the damage has resulted from the tortious actions of a third party.
As regards the Insurer’s suggestion that there is a pandemic of fraudulent claims, I would suggest that there are already systems in place to deal with the issue of fraud. Millions of pounds has been spent on the current system which issues a specific claim reference number for each Claimant providing details of their accident history, alerting parties to anything untoward. Furthermore, Med Co, ensuring the impartiality of the Medical Expert. Finally, if the Insurer remains unconvinced about the validity of the claim, they are entitled to pursue the matter via the Courts (and do). The Courts are well equipped to determine the legitimacy of a Claimant.
If the Government proceeds to implement its proposals, there will be a hiatus between the UK and Europe, where, as I understand it, it would still be possible for a Claimant to seek compensation following a road traffic accident. There is also the question of how foreign Claimants will be treated if involved in an accident in the UK, and what measures would be implemented to enable their claim to proceed from overseas.
I understand that the MOJ has expressed concerns that the number of claims in the UK far outweigh those in Europe. As I understand it, there are 79% more vehicles per kilometre in the UK than any other country and this no doubt accounts for the increased number of claims here, as compared with overseas.
I am disappointed that the driving force behind the Government’s proposals, is the promise by Insurers to pass on any saving to the consumer, thus reducing each Policyholder’s premium by £40.00. However, the Bill does not provide for regulation compelling Insurers to pass on the saving. An article in the Law Society Gazette on the 18th January 2016, suggested Insurers were likely to pocket £1 billion annually from the curb on minor injury claims. Despite this, Insurance Premiums continue to rise and there has been no downward trend since implementation of the MOJ’s other numerous reforms.
If we are no longer able to offer the service to our clients that we offer currently, it is likely that there will be an increase in unscrupulous Claims Management Companies, which go largely unregulated. This has been a bone of contention for us for many years. We have hoped again and again for intervention by the Government in relation to these third party companies, who we believe, do not really add anything useful to proceedings but we are still waiting for action in relation to that. I fear that with our removal, this will promote the CMC’s to a position where they are conducting the litigation in our place and taking Claimant’s damages without any regard for their best interest. Because of the lack of regulation and supervision in relation to CMC’s, this is likely to result in even more fraudulent claims, because CMC’s are unlikely to implement the system of due diligence which we have in place and are more likely to run every case to Trial, with nothing to lose.
Numerous changes implemented over the years by the MOJ in an attempt to streamline the claims process has reduced the number of claims with the introduction of the RTA Fast Claims Process and fixed costs. Our costs have decreased significantly. Costs in higher value claims are now also subject to review with the prospect of fixed costs in Multi Track and Clinical Negligence matters, not to mention costs budgeting. The full effect of these changes are still to be determined and we are uncertain as to the impact of them on our firm.
What has been proposed will remove access to justice for many vulnerable people. The other consequence, of course, is that it is likely to put me and my colleagues, and many others out of work.
I should stress that we are hardworking Lawyers in a stressful job, juggling our family commitments. We do little advertising and most of our work comes from recommendation. We have resisted throughout paying referral fees and welcomed the referral fee ban, which was long overdue. It is a shame that those reforms did not go further in relation to a curb on Marketing Fees/Advertising, which we feel would put us on a level playing field with larger firms. We provide an excellent service to our clients and the proposed changes will not just reduce our income, but put us out of business altogether, along with many other Lawyers, both Claimant and Defendant.
Whilst I accept that the Small Claims Limit has not been increased for many years, I believe that any increase should be in line with the cost of living. I should stress that General Damages, were only increased after years of lobbying by the Professional Bodies in November 2013 by 10% (and in practice Insurers do not apply the increase). However, this falls a long way short of the proposed small claims limit increase of 500%, which is disproportionate.
I believe if there is an increase in the Small Claims limit for RTA claims this should be limited to, perhaps £2,500 to £3,000.
I remain firmly of the view that the Proposals in their current format take no account of the impact on small High Street firms such as ours, nor on the rights of injured people who do not have a voice in this process. The Government’s stance is disappointing indeed.
Helen Thompson
Excel Legal
4 April 2017