Kennedys welcomes the publication of the Ministry of Justice consultation on the proposed levels of fixed recoverable costs (FRC) that will apply to the extended road traffic accident (RTA) portal scheme.
We previously advocated a reduction in FRC within the RTA scheme and welcome the government’s commitment to this.
"The proposed levels of fixed recoverable costs under the Portal appear sensible. A level of costs is required which reflects the genuine amount of work that is required in managing a personal injury claim. We believe the suggested amounts achieve that aim.
"It is vital that the amounts of fixed recoverable costs reflect the true operating costs of efficient Claimant law firms. The current Stage 1 fee, in particular, is disproportionate to the costs of a Claimant law firm taking a new claim to the Stage 1 notification point. This part of the process is largely administrative based and the proposed reduction appears to recognise that.
"Importantly, the proposed levels also appear to build in an incentive for a Claimant to proceed to Stage 2. This will hopefully translate to Claimants being vigilant about deciding to bring a claim in the first place.
"It is logical that fixed costs outside the Portal are dealt with at the same time as those costs within it. They need to complement each other so there is no incentive to choose one claims process vehicle over another. However, we fear the "Jackson Matrix" appears unduly complicated. Creating and maintaining a simple fixed fee structure is key to successful management of personal injury claims and avoiding costs disputes (i.e. the costs of costs)."
On 19 November, the parliamentary under-secretary of state, Helen Grant, wrote to stakeholders inviting comments on the proposed level of FRC that will apply to an extended RTA personal injury scheme. It is proposed that for low value RTA claims dealt with under the portal (up to a value of £10,000), the FRC at Stage 1 are reduced from £400 to £200 and at Stage 2 from £800 to £300.
For RTA claims over £10,000 and up to £25,000, the proposed FRC for Stage 1 and Stage 2 is £200 and £600, respectively.
Kennedys also welcomes the move by the government to confirm the proposed FRC for horizontal extension of the scheme to include employers’ liability (EL) and public liability (PL) claims.
"It is correct that the proposed fixed recoverable fees for employers’ liability and public liability claims are higher than for RTA claims, for Stages 1 and 2. EL/PL claims typically contain more complex liability issues than motor claims and require assembling evidence that is not always easy to obtain.
"We support measures which streamline the claims process and increase efficiency around claims management and proportionate costs. However, it is vital that any fixed costs structure goes hand in hand with modifications to the Portal which recognise the inherent differences in claim types."
We will publish our response to the Ministry of Justice consultation on the closing date for responses on 4 January 2013.