The vertical and horizontal extension of the existing RTA portal is a good idea but cannot be done by the government’s target of next April, the Law Society has warned – and the case to cut fees has not been made out.
Chancery Lane said major changes to processes will be required and the amounts of fixed costs which are reasonable have “yet to be fully considered”.
It was responding to the Ministry of Justice’s (MoJ) call for evidence on its plans to raise the £10,000 limit of the current road traffic scheme to £25,000, and create new processes for employer’s and public liability claims. It also wants to reduce the £1,200 currently paid under the process in light of the impending referral fee ban.
The society said it supported the government’s policy “in principle”, but argued that the portal’s structure is only “just about capable of dealing with the existing RTA claims load… The existing structure was put together in a rush and, although its performance has improved considerably, we would not wish the same rush and risk occurring again”.
It also expressed “serious concerns” about the lack of competition to provide portal services.
The society insisted that the referral fee ban – which it supports – should not lead to a reduction in fixed fees paid under the portal; firstly the guideline hourly rates, on which the fixed fees were based, do not take referral fees into account, it said, while around half of personal injury firms do not pay them anyway.
The response said: “As a result of the prohibition, the costs of paying referral fees will simply be replaced by the same or greater costs of using other marketing mechanisms to secure work. Such methods are at least as expensive but without the guarantee of work that comes from arrangements with insurance and claims management companies.”
A survey of Law Society members indicated that an average RTA portal claim involves approximately 10 hours of work and that, when applying a grade D guideline hourly rate, the base cost is £886.33 including marketing costs.
The response continued: “It has long been accepted that guideline hourly rates for solicitors should be based on a profit margin of 33% and in order to achieve this a mark up on base costs of 50% has to be applied. This would equate to a selling price of £1,329.50 without any compliance compulsory supervision or allowance for any work undertaken on a case by a fee-earner above the level of grade D.”
The survey also showed that the average hours which it would take to complete an RTA portal case with a value between £10,000 and £25,000 would be 24 hours, given the added complexity of such cases, and 27.2 hours for an EL/PL case with a value between £1,000 and £25,000.
The Association of Personal Injury Lawyers and Motor Accident Solicitors Society also issued highly critical responses to the call for evidence last week.
- The Association of Costs Lawyers is canvassing views from claimant personal injury lawyers on the impact of the Jackson reforms. To take part in a short survey, click here.