There has been a lot of media coverage over the last 5 years about the explosion of injury claims and the phrase “compensation culture” has often been bandied around as a euphenism for the way in which the UK has seen a huge growth in this sector. Insurance companies have complained bitterly about the increase in the number of claims made and have sought to use this to explain the corresponding significant increase in insurance premiums.
It has only recently become better known that the insurance industry has, itself, been fuelling this growth by referring its own customer’s, unfortunate enough to be involved in an accident, to solicitors. The usual model is that the solicitor then pays the insurer a “finders fee” for sending the customer to them. On top of this few can fail to appreciate that there has been a rapid growth in the number of Claims Management Companies whose aim is to find innocent accident victims and encourage them to bring claims with this model again seeing the solicitor paying a fee for the customers details. Television and Radio advertising is dominated by these companies and it is often unclear to the listener whether the advert is by a Solicitor or a claims company. Many Law Firms have been forced, out of desperation, to pay these fees in order to secure customers, whilst some have stood firm and continued to attract their customers directly. A consequence of this is that many people have become increasingly confused about whom to contact in the event of injury, and most do not realise that there is no need to follow their insurers advice or contact a claims company. In doing so the poor victim is referred to the lawyer who can best afford to pay a fee, not one who is perhaps local and better able to help in the aftermath of injury.
Is all of this about to change? The government has set a deadline of 1st April 2013 to introduce radical reforms to the way in which the personal injury market operates: key to these changes is the outright ban on lawyers paying finders fees to insurers or businesses who send customers to them. Will this have the intended benefit of reducing the number of claims and the costs involved? Indeed, one may ask, why should those people who have been genuinely injured in an accident be discouraged from seeking redress from the people who injure them? It is all too easy for us to joke about whiplash claims; they are often severely debilitating and can lead to months off work, loss of income and all of the associated problems of paying the mortgage and looking after the children. People in this situation need access to specialist advice which is practical and above all impartial. Whilst these planned changes to the way in which the industry operates will undoubtedly affect the way in which law firms attract customers, and will significantly effect the ultimate costs of these claims, there is still first and foremost an overwhelming need for injured parties to find quickly the specialist advice they so often desperately need. Let us hope that the simplification of the referral process will make this easier and more cost efficient for the victim.
It is now clear that the accident victims will in future have to shoulder at least some of the cost of bringing their claim. The impending government reforms will reverse the regulations that have allowed injured parties to bring claims for personal injuries with almost no risk to their own pocket. Gone will be the automatic right to recover all of the costs from the other party in the event of a win. Injured parties themselves will now have to potentially pay some of their own costs and the complicated rules about paying the other sides costs if the case is lost are also set to change. There are rumours that the amount of costs that can be recovered from the other party are going to be strictly limited. This has been the case for some time in respect of road traffic collisions, but it is now planned to extend this to other types of accidents as well. This will further hit the accident victim in the pocket. The Association of Personal Injury Lawyers (apil) feels so strongly about this that they have launched their own legal challenge to the government’s reforms. More information about this is available at www.apil.org.
Whilst the main points of the governments intention is clear, reducing costs of the compensation process and limiting the number of claims, much of the finer detail has yet to be finalised and those who act on behalf of injured parties are still not yet sure how all of these changes will affect the victims in detail. What is certain, however, is that after 1st April 2013 it will no longer be possible to recover all of the legal costs incurred in bringing a claim.
A final piece of advice – anyone thinking of bringing a claim for personal injuries would be best advised to do so now, and certainly before the end of March this year, in order to take advantage of the full cost recovery rules that still apply. After 1st April its all change!
The writer, Simon Chiverton, is a specialist Solicitor-Advocate with extensive experience in personal injury and clinical negligence claims. He has been a member of the Association of Personal Injury Lawyers for over ten years.
If you would like any further advice in this respect contact either Steve Beasley at our Leek office on 01538 383201 or email [email protected]
