Injury claimants have been hit with a double blow over the last two weeks. Firstly, on 11 November 2016, the Lord Chancellor, Liz Truss announced that Lord Justice Jackson had been commissioned to undertake a review of costs in civil litigation. The primary aim of the review is to develop proposals for extending the use of fixed costs in civil litigation. Secondly on 17 November 2016, the Ministry of Justice announced a consultation to reform the procedure for whiplash injuries and low value injury claims in general.
In this post I consider these proposed reforms out of turn, starting with the reform to low value injury claims.
The current Government has been heavily lobbied by the insurance industry for changes to reduce the volume of claims so that the cost of insurance premiums can be reduced. George Osborne set out a strong intention for reform last year indicating that damages for minor whiplash injuries could be removed altogether.
The proposed reforms do not appear to go that far but include the following:-
- Reducing the average payment for a minor whiplash currently thought to be £1,800 to £425
- Introducing a tariff system for more severe whiplash injuries
- Increasing the small claims limit from £1,000 to £5,000 so no legal costs are recoverable and inevitably claimants are not legally represented.
The consultation will run only until 6 January 2017 and, without wishing to sound cynical, the outcome is a fait accompli. There is little public sympathy for whiplash claimants or opposition to the reforms. There is a general perception that these claims are meritless and often fraudulent. People associate them with the spam calls they are being plagued with from cold callers. The Ministry of Justice’s tag line for the proposed reforms is that it will save £1 billion and motorists could see their premiums cut by £40 per year (although this would be offset by the recently announced hike in insurance premium tax). I will believe it when I see it. The main result is likely to be claimants not being to seek legal representation or advice when they have suffered genuine injuries or not bothering to claim at all due to the stigma attached with doing so. I also have concerns about who will represent those injured people who do make claims market once solicitors have ceased to do so.
On the issue of the extension of fixed costs, Lord Justice Jackson’s review is due to be completed in July 2017. I specialise in serious/catastrophic injuries and therefore this development gives me more cause for concern. He carried out a series of lectures at the turn of the year setting out his view that fixed costs should be expanded to further areas of civil litigation and should be increased in scope to the “lower reaches of the multi-track”.
The current position is that fixed costs are in place for all injury claims with a value of up to £25,000. Lord Justice Jackson suggested in his lectures that this should be extended to all claims with a value of up to £250,000. He set out a table of proposed fixed recoverable costs which were not in my view realistic.
Whilst I appreciate the rationale for increasing fixed costs, the people who normally suffer are claimants. Cases with a value of up to £250,000 can involve life-changing injuries, complicated liability investigations and complex expert evidence. For example, I am currently dealing with a fatal case which falls into this value, with multiple defendants, several witnesses and a possible 5-day trial. The case obviously has the upmost importance to my client. If costs were fixed then it would affect how I was able to prepare the claim. I have other cases within this value involving injuries which prevent my clients working in their chosen professions. It is for the claimant to prove their claim and this means their solicitor has to ensure the evidence served is cogent, well prepared and persuasive. The introduction of fixed costs will restrict a solicitor’s ability to prepare a case properly which in my view is not in the interests of justice.
I do not see the necessity for an expansion of fixed costs. There is already a system of costs budgeting in place for cases over £25,000 where the judiciary have the ability to limit and restrict costs to sums proportionate to the issues at stake and the value and complexity of the claim. This system was introduced in 2013 and is just bedding down. Why not give it more time to see if it is effective? Insurers also have the opportunity to challenge unreasonable or disproportionate costs through assessment by the court.
I have more hope that Lord Justice Jackson review is less of a formality. He has appointed an impressive panel of assessors who will no doubt provide cogent evidence that fixing costs in cases with values of up to £250,000 will lead to inequality of arms and injustice. Whilst I expect the scope of fixed costs to be extended, I hope that it will not be to claims as high as £250,000.