Reforms under the Civil Liability Bill 2017-19 (the Bill) which requires that any RTA claim worth less than £5,000 be dealt with by the Small Claims Court (and in doing so dramatically reducing the costs that can be claimed on such cases, meaning lawyers are unable to handle them), have been delayed until 2020. This provides some much-needed breathing space for personal injury solicitors.
The result is that, for the moment, clients who have been injured in an RTA can still make a claim using a Lawyer. And Law Firms who wish to increase their capacity to take on claims should move swiftly to ensure they can maximise this revenue stream whilst continuing to develop strategies to grow other areas of their business to compensate for any losses once the Bill becomes law.
How does the Civil Liability Bill reform whiplash claims?
The Bill’s stated aim is to lower motor insurance premiums, and the savings estimated to be generated by the reforms are around £1.2 billion; or £35 a year for every motorist. The main changes included in the Bill are:
- increasing the small claims limit from £1,000 to £5,000;
- the introduction of a fixed tariff of compensation for whiplash claims lasting up to two years;
- banning insurance companies making offers to claimants before medical evidence is collected.
The reforms would mean most claimants would have to proceed without employing the services of a qualified lawyer. Therefore, the government will need to develop an online system to enable a person to manage their own claim.
The reforms are expected to affect 96% of whiplash claims.
Many Solicitors have been highly critical of the Bill, warning it could severely impact on RTA victim’s access to justice.
One practitioner stated the reforms would “profoundly reduce access to justice for ordinary, injured people”. She also doubts, given the past actions of insurance companies, that savings would be passed onto customers by way of reduced premiums.
Why has the Civil Liability Bill been delayed?
According to the government, the Bill’s implementation has been delayed a year following a Justice Select Committee’s report. Large-scale testing will now begin in October 2019, with the view to implementing the measures in full in April 2020.
Part of the delay has to do with the development of the online system. The MoJ told the Law Society Gazette:
“There will need to be extensive user testing in order to ensure that the system is easy to use for all user groups and that the guidance is clear. We agree with the committee and our stakeholders that it is crucial that these reforms and the implementation of the online platform is done right rather than quickly”.
In addition, the Select Committee has written to the government asking it provides evidence that inflating the small claims limit to £5,000 is a proportionate change. The Law Society Gazette reported in July that the committee chair, Bob Neill, is seeking clarification as to why the inflation-based increase to the small claims limit for personal injury is being calculated from 1991, rather than from 1999 when the limit was adjusted to exclude special damages. The MP wrote:
“You will be aware that Lord Justice Jackson used 1999 as the starting date when discussing this issue in the context of his review of civil litigation costs, and we find it surprising that the government should now adopt a different approach to that of a member of the senior judiciary”.
There are two other issues which may result in the Bill being delayed long after 2020. One is of course Brexit. All other matters are subordinate to this monster of a matter which shows little sign of being resolved anytime soon. The government’s currently shaky majority has resulted in skittish behaviour when it comes to contentious legislation, for example, the Cohabitation Bill 2017-19, which is arguably far more pressing given the number of couples now living together with no legal rights, which is currently languishing in no man’s land.
The other potential pothole in the government’s plans was the 2017 Supreme Court decision in R (Unison) v Lord Chancellor which stated claimants’ fees in the Employment Tribunal and Employment Appeal Tribunal were unlawful because they were an impediment to access to justice. By effectively removing lawyers from the small claims process, the effect of the Bill is to make it harder for claimants to bring a case. It is difficult to see how this legislation can sit beside the Unison decision, especially when the beneficiaries of the legislation are powerful insurance companies.
How can Law Firm funding assist firms in increasing their ability to take on more RTA claims?
Whilst the Bill is in limbo, the time is ripe for ambitious Law Firms to invest in expanding their claims capability. For those that lack the cashflow to purchase more referrals from a claims company, Law Firm funding provides a quick way to grow your team’s caseload before the Bill comes back into focus.
In part two of this series on RTA claims, we will examine how funding for PI claims works and how to take advantage of it.
To find out more about Law Firm funding for PI claims, please contact us on 0333 222 5731.
BMS Funding works with the legal profession and businesses to provide funding solutions for most areas of the legal market.