The Ministry of Justice (MoJ) has rejected the suggestion that as many as 60,000 jobs could be lost as a result of its personal injury reforms, saying that the legal market has “long proven itself to be adaptable and innovative”.
Responding to an e-petition calling for the retention of the £1,000 small claims limit and damages for whiplash injuries, which said there could be that number of redundancies, the MoJ continued: “It is likely that the industry will continue to provide cost effective services following the implementation of these reforms.
“The potential impact on solicitors will depend on a number of factors, including the volume of claims and their ability to adapt in response to a rapidly changing market.”
It pointed to the impact assessment published alongside the consultation in November, but this did not necessarily paint a rosy picture.
It recognised that lawyers “may face a reduction in demand for their services because cases allocated to the small claims track require fewer legal resources than those allocated to the fast-track, and some claimants may choose to act as litigants in person”.
The assessment continued: “Legal services providers and claims management companies could also face a cost as fewer claims may be lodged as a result of these proposals.
“However, in the case of legal services providers, this may be partially offset by an increase in the number of cases contested as a result of these reforms, which were previously uncontested, which would increase demand for legal services (legal costs in uncontested cases are assumed to be lower than legal costs in the small claims track).”
However, looking at the impact on law firms as small businesses, the assessment acknowledged that “small organisations may be less able to absorb the impacts of the change or redirect resources to other areas. Potentially solicitors will no longer find it financially viable to be involved in this market”.
The response to the petition – which was required because it gathered more than 10,000 signatures – indicated little change of position by the MoJ, which will publish the outcome of the consultation by 7 April. It also made no mention of the non-whiplash areas of personal injury that will be affected.
Some 16,889 people have signed the petition at the time of writing – it is open until 23 May and would need 100,000 signatures to be eligible for a debate in Parliament.
The MoJ said an increase in the small claims limit – which was set in 1991 – was “long overdue”.
“As set out in the consultation, raising the small claims limit in personal injury cases to £5,000 would cover relatively straightforward, minor personal injury claims, which should not need legal representation. However claimants are not, and would not, be precluded from seeking legal representation in the small claims track if they so wished.
“Support for litigants in person is also available from a number of advice organisations and online sources. It should also be remembered that whilst the financial limits are one of the primary factors considered as to which track a claim should be in, the court can, on application, transfer a claim to the fast or multi track if it is particularly complex.”
The MoJ said that “the price paid by all motorists from the continuing high number and cost of these ‘minor’ and ‘straightforward’ claims is too great, and it is right for the government to take firm action to reduce the financial burdens on consumers”.
It continued: “Whichever option for tackling minor claims is pursued, all claimants will continue to receive compensation for other areas of loss such as the costs of medical treatment or for loss of earnings. Those with more serious injuries will also continue to be entitled to compensation for PSLA [pain, suffering and loss of amenity], but importantly, following the implementation of these measures, the excessive costs attached to dealing with these claims will be reduced and controlled.
“Implemented as a package, these reforms would end the cycle in which innocent car owners pay higher premiums to cover minor, exaggerated or fraudulent claims by others.
“The government expects insurers to pass on savings of around £40 per motor policy, and a number of leading insurers have publicly stated that they will pass on all of the savings through lower premiums.”
There continues to be an argument over the number of whiplash claims, and in its response the MoJ said that figures from the Department for Work and Pensions’ claims recovery unit showed there were around 770,000 road traffic accident claims in 2015/16, compared to 460,000 in 2005/06, of which around 690,000 (90%) are labelled as whiplash or soft tissue neck/back injuries.