It’s exactly six months since the controversial reforms to the Legal Aid, Sentencing and Punishment of Offenders Act 2012 came into effect on the 1st of April. Now that the dust has settled, what do industry figures really think of the changes, and what does the future have in store for the personal injury sector?
Find out what prominent industry figures Tim Kevan (ex-barrister, creator of the Guardian’s Baby Barista blog and co-editor of the Personal Injury Brief Update Law Journal (PIBULJ)), barrister Aidan Ellis, and Alan Kennedy (the founder of National Accident Helpline, the UK’s biggest personal injury claims company), have to say.
LASPO and its impact on personal injury claims
The 2013 reforms aimed at eradicating the UK’s so-called ‘compensation culture’, have been criticised by many commentators, including Labour Peer and shadow spokesman on legal aid Lord Bach, for limiting access to justice and for hitting those who are worst off the hardest.
Tim agrees, saying his main concern is the “detrimental effect [the changes] could have on those who have been injured and have a legitimate claim, both in terms of the amount of money they might ultimately receive, and worse still on the more fundamental issue of access to justice. Some claimants may slip through the net if their claims are not seen as viable due to the balance of recoverable costs and risk”.
LASPO abolishes the recoverability of success fees from defendants in most personal injury cases, and means that success fees will be often be deducted from the compensation awarded. Tim points out that the “general principle for most damages in this country is that they should be compensatory”, in other words, putting someone back in the position they would have been in if the accident had not happened. Tim believes that this principle is undermined when costs which have been legitimately incurred by the claimant then have to be paid from their compensation, rather than by the wrong-doer’s insurer. He adds “I fear that this may not be adequately compensated through the 10% increase in general damages for pain, suffering and loss of amenity”.
Aidan adds that the introduction of Damages Based Agreements for no win no fee personal injury claims could on occasion “cause serious ethical dilemmas for lawyers”, such as when advising clients on whether or not to accept an offer, as in some circumstances the claimant’s decision will have a “direct effect on whether and how much the lawyer gets paid”.
So what does all this mean for those who believe they’re entitled to compensation? Is it simply not worth making a claim anymore?
Alan Kennedy from National Accident Helpline stresses that those injured and in need of compensation should not be put off by the LASPO reforms, but says because it’s likely claimants will have to pay some of their costs out of their compensation, it’s “now more important than ever that people choose an honest firm” with which to make their claim. Some firms will place a cap on the amount they deduct from the claimant’s compensation, whereas others will be less clear about their charges in the event of a successful claim. Similarly some firms may leave consumers exposed to litigation risk and ask for a payment of upfront fees. “It’s critical that claimants understand exactly where they stand when starting the claims process”.
The future of personal injury claims – what will change in the next five years?
As Aidan points out, “five years can be a short time in litigation”. Already figures released by the Claims Management Regulation Unit (CMRU), reveal that the number of claims management companies fell by nearly 30% recently, with many companies closing because of financial pressure resulting from the LASPO reforms.
Tim, Aidan and Alan all agree that this trend looks set to continue, and that smaller high street firms in particular may struggle to cope. They expect to see lots of mergers as small firms strive to achieve the economies of scale necessary.
While acknowledging that consolidation within the PI sector is inevitable, Alan believes that there is also an upside for claimants, as the remaining operators will “have to be very tuned into consumer needs, and will, like NAH, have to provide consumers with guarantees around charges and risk as well as consistently high levels of expertise and customer service.
In addition, Tim expects there to be an increasing shift towards firms using online marketing, and the provision of some services online, as “if law firms get it right, they have access to an enormous market far more easily than before”.
Watch this space…
LASPO is just one of a number of issues currently affecting the personal injury sector, and it may be more than five years before the full implications of the reforms are known.
As far as the claimant is concerned, LASPO does not mean the end to access to justice. The reforms bring both advantages and drawbacks, but it’s clear that it’s now more important than ever that the claimant chooses carefully when it comes to selecting a solicitor, firm, or claims management company to handle their claim.