Raise the small claims limit, say leading claimant PI lawyers with alternative reform plan
RTAs: reform should be limited to this area of PI, says A2J
Leading claimant personal injury solicitors recognise that the small claims limit “needs to rise” but have called on the government to increase it to £1,600, rather than £5,000, and also require road traffic accidents to be notified within a year, as part of an alternative package of reforms.
The blueprint has been laid out by the Access 2 Justice (A2J) lobbying group, whose members include some of the country’s biggest and best-known claimant firms, including Slater & Gordon.
Unlike most other responses to the Ministry of Justice’s consultation – which have focused solely on outlining their opposition to the proposals – A2J’s said it put forward its ‘alternative claims framework’ (ACF) “in the spirit of collaboration as well as fairness”.
It said: “We believe that in many areas there is widespread agreement from insurers and injured people’s representatives on the best way to reform the claims process…
“The ACF can be introduced almost immediately and without the need for primary legislation or the parliamentary resource this would necessitate. The ACF will reduce cold calling, eliminate older cases, inhibit the business practices of unethical claims management companies (CMCs), reduce the overall cost of whiplash litigation and be fair to genuine claimants.”
A2J is headed by Martin Coyne, managing partner of Manchester firm Ralli; Andrew Twambley, senior partner of Amelans and co-founder of Injury Lawyers 4U; and Matthew Maxwell Scott, who leads on government relations at Slater & Gordon.
Among the other well-known law firms that have publicly pledged their support are 2020 Legal, Express Solicitors, Hilary Meredith, Jefferies, JMW, Michael W Halsall, Scott Rees & Co, Thorneycroft and True.
Earlier this week, it published research that suggested that more than 30,000 jobs would be lost if the government pressed ahead with its reforms.
Given that the focus of the government’s policy proposals as set out in the 2015 Autumn Statement was whiplash cases, A2J said any reforms should relate to road traffic accident (RTA) claims only, not all PI claims, as they currently do.
The ACF consists of:
- An index-linked increase in the small claims limit to £1,600 to reflect retail prices inflation (RPI) since it last rose in 1999 – “The claimant industry acknowledges that the small claims limit needs to rise,” the response said;
- PI fixed costs to be adjusted by RPI every three years, while a mechanism to index general damages should also be considered;
- The three-year limitation period should not change – the issues within claims “are a result of flaws in notification, not limitation” – but RTA claims should be submitted within 12 months of the accident (subject to limited exceptions), and if they are not, then no pre-issue legal costs would be recoverable.
The response explained: “By allowing no costs for pre-issue work, money is taken out of the market, thereby preventing solicitors from paying CMCs for such work. Tackling the economic levers that support CMCs from seeking out ‘aged claims’, in addition to more robust regulation of CMCs, will also address those operators involved in cold-calling activity, which tends to focus on aged claims.”
On CMCs, it said the transfer of CMC regulation to the Financial Conduct Authority should be accelerated, and in the meantime some other recommendations of the Brady report could be implemented sooner, such as a ban on CMCs cold-calling and introducing a ‘fit and proper person’ test for directors and controlling parties of CMCs.
A2J backed the proposed ban on pre-medical settlements, saying: “Best practice should go further and ensure that all unrepresented claimants and pre-medical offers require a compliance/settlement certificate which must be signed by an independent personal injury solicitor and advise whether the sum offered is fair and reasonable.
“The insurer should pay the solicitor’s fee. This solution is successful common practice when handling employment law compromise agreements and such a safety net will protect the injured party.”
It also supported all but two of the 26 recommendations made in the report of the Insurance Fraud Taskforce – those two being superseded by the ACF – which include the government looking at whether to strengthen the fining powers of the Solicitors Regulation Authority for fraudulent or corrupt activity and review the standard of proof used before the Solicitors Disciplinary Tribunal.
A2J estimated that about 25% of motor claims would be caught by the ACF and projected the savings to be up to £200m – the government reckons that its reforms would save £1.3bn.
The response concluded: “Both sides, insurers and claimant lawyers, must collaborate in future if the dysfunction in the claims market is to be resolved. The government’s proposed ‘whiplash’ reforms will neither remove the scourge of cold calling nor lead to a sustainable reduction in insurance premiums.
“The government should urge insurers, through the Association of British Insurers, to come together with the MoJ and with claimant lawyers under the auspices of an independent chairman to establish common ground.
“The intention would be to agree proposals, which the government could adopt immediately as a cross-industry agreed, fair and sensible solution and one that involves and is supported by the primary regulators.”
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