It’s exactly six months since the
controversial reforms to the Legal Aid, Sentencing and Punishment of Offenders
Act 2012 came into effect on the 1st of April. Now that the dust has
settled, what do industry figures really
think of the changes, and what does the future have in store for the personal
injury sector?
Find out what prominent industry figures
Tim Kevan (ex-barrister, creator of the Guardian’s Baby Barista blog and co-editor
of the Personal Injury Brief Update Law Journal
(PIBULJ)), barrister Aidan Ellis, and Alan Kennedy (the founder of National Accident Helpline, the UK’s biggest personal injury claims company),
have to say.
LASPO and its impact on personal injury claims
The 2013 reforms aimed at eradicating the
UK’s so-called ‘compensation culture’, have been criticised by many
commentators, including Labour Peer and shadow spokesman on legal aid Lord Bach,
for limiting access to justice and for hitting those who are worst off the
hardest.
Tim agrees, saying his main concern is the
“detrimental effect [the changes] could have on those who have been injured and
have a legitimate claim, both in terms of the amount of money they might ultimately
receive, and worse still on the more fundamental issue of access to justice. Some
claimants may slip through the net if their claims are not seen as viable due
to the balance of recoverable costs and risk”.
LASPO abolishes the recoverability of
success fees from defendants in most personal injury cases, and means that
success fees will be often be deducted from the compensation awarded. Tim
points out that the “general principle for most damages in this country is that
they should be compensatory”, in other words, putting someone back in the
position they would have been in if the accident had not happened. Tim believes
that this principle is undermined when costs which have been legitimately
incurred by the claimant then have to be paid from their compensation, rather than
by the wrong-doer's insurer. He adds “I fear that this may not be adequately
compensated through the 10% increase in general damages for pain, suffering and
loss of amenity”.
Aidan adds that the introduction of Damages
Based Agreements for no win no fee personal injury claims could on occasion “cause
serious ethical dilemmas for lawyers”, such as when advising clients on whether
or not to accept an offer, as in some circumstances the claimant’s decision
will have a “direct effect on whether and how much the lawyer gets paid”.
So what does all this mean for those who
believe they’re entitled to compensation? Is it simply not worth making a claim
anymore?
Alan Kennedy from National Accident
Helpline stresses that those injured and in need of compensation should not be
put off by the LASPO reforms, but says because it’s likely claimants will have
to pay some of their costs out of their compensation, it’s “now more important
than ever that people choose an honest firm” with which to make their claim. Some
firms will place a cap on the amount they deduct from the claimant’s
compensation, whereas others will be less clear about their charges in the
event of a successful claim. Similarly some firms may leave consumers exposed
to litigation risk and ask for a payment of upfront fees. “It’s critical that claimants understand
exactly where they stand when starting the claims process”.
The future of personal injury claims - what will change in
the next five years?
As Aidan points out, “five years can be a
short time in litigation”. Already figures released by the Claims Management
Regulation Unit (CMRU), reveal that the number of claims management companies
fell by nearly 30% recently, with many companies closing because of financial
pressure resulting from the LASPO reforms.
Tim, Aidan and Alan all agree that this
trend looks set to continue, and that smaller high street firms in particular
may struggle to cope. They expect to see lots of mergers as small firms strive
to achieve the economies of scale necessary.
While acknowledging that consolidation
within the PI sector is inevitable, Alan believes that there is also an upside
for claimants, as the remaining operators will “have to be very tuned into
consumer needs, and will, like NAH, have to provide consumers with guarantees
around charges and risk as well as consistently high levels of expertise and
customer service.
In addition, Tim expects there to be an
increasing shift towards firms using online marketing, and the provision of
some services online, as “if law firms get it right, they have access to an
enormous market far more easily than before”.
Watch this space…
LASPO is just one of a number of issues
currently affecting the personal injury sector, and it may be more than five
years before the full implications of the reforms are known.
As far as the claimant is concerned, LASPO does not mean the end to access to
justice. The reforms bring both advantages and drawbacks, but it’s clear that it’s
now more important than ever that the claimant chooses carefully when it comes
to selecting a solicitor, firm, or claims management company to handle their
claim.
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