Plans to slash fees go ahead despite concerns that lawyers won’t be able to cover costs
Severe cuts to road traffic accident (RTA) portal case fees went ahead this week despite fears of personal injury solicitors that the new system is not financially “viable”.
The fees have been slashed from £1,200 to £500 from 1 May, for uncontested compensation claims worth up to £10,000.
The change does not affect the amount of compensation claimants can obtain.
From 31 July, the portal will be extended to include claims worth up to £25,000 and to include employers’ liability and public liability claims.
The cuts in portal fees are part of a package of reforms introduced by the government to put Lord Justice Jackson’s recommendations on civil costs into practice. On 1 April, the government implemented major reforms to “no win, no fee” cases and banned referral fees.
Justice Secretary Chris Grayling says the “compensation culture” is “pushing up the cost of insurance”.
However, Deborah Evans, chief executive of the Association of Personal Injury Lawyers (APIL) says: “These changes mean lawyers will be faced with a series of fees that are too low to be viable so they will have to recover full success fees just to cover basic costs.
“As they will have to charge the full 25%, it means claimants will only receive 75% of their damages if they win. This reduces further if they have to pay after the event insurance on top of that and further still if they accept earlier offers. Damages may have risen by 10%, but because of these extra costs, claimants will be worse off this year than they were last year.
“APIL’s concerns do not stop there. There is a real inequality between defendant and claimant when claimants work with fixed fees but defendants are unfettered. This could encourage defendants to run up costs in an attempt to price claimants out of the market.
“Unfettered costs give an advantage, particularly in the Pt 36/qualified one-way costs shifting area where the genuinely injured person is held to account for the full amount of defendants’ costs should they fail to beat the Pt 36 offer. We hope the Ministry of Justice will look at this closely.
“Referral fees may have been banned but our concern has always been that they will simply be driven underground. Only time will tell.”
