Following the announcement last week by the Ministry of Justice to "crackdown" on whiplash claims, a Consultation Paper has now been published.
The consultation, which is open until 6 January, outlines plans to either scrap the right to compensation or to cap the amount that Claimants can claim for minor soft-tissue injuries.
The 'whiplash' element of the reforms have attracted a great deal of publicity. Claimant lawyers are concerned and insurers are pleased, whilst commentators speculate on whether the savings will indeed be passed on by the insurers to motorists as promised and question what impact these reforms will have on 'access to justice'.
Amongst all this 'noise' very little attention has been given to the proposal to increase the small claims limit from £1,000 to (at least) £5,000 for injury claims.
If passed, this proposals will apply to ALL injury claims (not just whiplash), and will mean that the bulk of injury claims will fall within the small track regime which is not cost bearing.
This reform would be introduced by an amendment to the Civil Procedure Rules (not legislation) and could therefore be introduced as soon as April 2017. We should expect a flurry of Claim Forms before that deadline if that is the case.
Genuine Claimants will be left to either act without solicitors or to sacrifice a large percentage of their damages to pay for their legal costs. Many may chose not to claim at all.
On the face of it Public Authorities will welcome these proposals as enthusiastically as the commercial insurers. Many Authorities have a level of excess that means the majority of lower value claims are dealt with by the authority direct, funded from the public purse.
Most straightforward highway claims, public liability or employer liability claims fall within this bracket of valuation. Even some lower value disease claims such as Noise Induced Deafness claims will be captured.
A reduction in such claims, and the removal of the legal costs burden, will represent a significant saving to most public bodies.
However, before compensators put out the bunting, it isn't all good news…...
Claimants are likely to be increasingly targeted by Claims Management Companies, who will enjoy lower overheads than solicitors and will be subject to less regulation. The public should be prepared for an increase in cold calls and text messages, akin to the PPI market. A less regulated market is also likely to lead to an increase in fraudulent claims.
An increase in litigants in person is another an unwelcome consequence for claims handlers. Such Claimants inevitably take more time and are more challenging to deal with.
Defendants have already found it difficult to commercially justify defending a claim under the QOCS regime. When there is no prospect of recovering costs against an unsuccessful Claimant, a Defendant is encouraged to make offers of settlement even where there is a strong Defence in order to avoid incurring further costs.
In this scenario a Claimant will quickly recognise that submitting even a speculative claim could result in an offer of settlement. Defendants will be faced with the difficult policy decision of either paying these claims, albeit at a nuisance value level, or incurring unrecoverable legal costs in defending them.
Whilst generally welcomed by the 'defendant' lobby, the full extent of the unintended consequences of these reforms may not be apparent for some time. We, in the injury sector, continue to live in ''interesting times'.