Plans to overhaul the way that personal injury claims are funded are threatening to leave some claimants seriously out of pocket and others may be unable to find the legal representation they would need to do anything about it.
Under the current system, individuals who are successful in their compensation claims are able to recover their legal fees from the defendant, in addition to the sum they are rewarded for their injuries. Following the implementation of the Jackson reforms on 1 April 2013, and the introduction of the Legal Aid Sentencing and Punishment of Offenders Act, this will no longer be the case. It will be up to the claimant to cover some of their own legal fees out of the compensation they are awarded as the success fee awarded to the winning party will not longer be recoverable from the losing party. To accommodate this change, payouts awarded to claimants will be enhanced by 10 per cent, but this is unlikely to cover all their costs.
These planned changes will put claimants at a disadvantage, and they have also created a real dilemma for personal injury lawyers who work on a 'no win no fee' basis. We are very aware that in the vast majority of cases the 10 per cent uplift in awards is not going to cover the total cost of the success fee, and claimants will be left out of pocket.
The dilemma faced by personal injury lawyers is whether or not to deduct the success fee from compensation gained. Such a move goes against the principle aim of compensation, which is obviously to put an innocent injured victim back in the position they would have been in had they not been injured, as well as to cover any health and equipment costs that have been incurred. This could lead to more claims being rejected by legal representatives, thus leaving more people without any real means of getting fair compensation for their loss.
Additional changes are also planned for the current small claims limit, which could really hit those who are seeking smaller, but by no means less important, claims. Currently, successful claimants in personal injury cases can claim back legal costs from the defendant providing that value of a case is judged to be above £1000. However, the proposed changes will bring a rise in this lower limit to £5000, meaning that far more claimants will be forced to cover their own legal fees, further raiding their compensation pot.
The changes are also expected to push more claims into the 'standard fixed fees' category. From next April, the threshold for claims that fall into this category will rise to £25,000 (up from £10,000). It is also likely that the fixed fees payable to solicitors will be drastically reduced, making this type of work even less viable for law firms specialising in personal injury claims, simply because such claims will be less profitable.
The sum effect of these changes is that we are likely to see far more unqualified paralegals being used to do work that previously would have fallen to a fully-qualified, experienced personal injury solicitor.
This should concern us all as we are all potential claimants, and if needs must, we could all find ourselves losing out if the legal services we receive fall short. Many firms will stop doing this type of work, and as such more claims are likely to be rejected, as the higher cost of taking on such cases will make them unviable. Instead, claimants who may have been off work without pay following a serious road traffic accident or accident at work, for example, could find that they are unable to get the support they need to bring a claim. Inevitably, this will force many in such a position to suffer their loss without any prospect of financial aid.
There is real concern that in the not too distant future some claimants may end up losing out despite suffering a significant personal loss, and the bottom line is that this is unacceptable in the 21st century.