There are massive changes afoot to the way an injured person receives compensation, and yet the public remains blissfully unaware. Unless an accident happens to you, you don’t need to know about this. Or do you?
Anyone who has been injured at the hands of another, whether in a road traffic accident, or an accident at work, will have their lives turned upside down. There is the pain of the injury, the disruption to their lives, the inability to work or look after their family. Accident victims are awarded damages to compensate for this. The payment of compensation also acts as a deterrent to wrongdoers – employers will sharpen up their health and safety, supermarkets will carry out regular inspections, drivers take more care to avoid losing their no-claims bonus.
We have several concerns for the future – firstly, that genuinely injured people will in many cases be deterred from claiming and, secondly, that those who do successfully pursue a claim will receive less damages in the future than they do today. We are also concerned about confusion – will the victim truly be able to make sense of the Government’s new funding ideas?
The Government is hosting a number of initiatives to reform the legal services market, but at breakneck speed and in a disjointed way. The impact of one reform has barely begun to show before another is announced.
The first big idea was allowing legal advice to be provided by commercial operators such as the Co-op, rather than solely in the traditional law firm model. This will undoubtedly give consumers more choice, and is predicted to lead to a radical shift in the legal market. However, this model is in its infancy and its impact is yet to be seen.
Secondly, the Government has taken steps to reduce legal costs paid by insurers by transferring some of those costs to the victim. The injured person will, from April, be expected to contribute to the costs of their claim from their damages. Damages are already low in England and Wales compared to other countries. This will erode them further. Damages go a long way in preventing the cost of injury being carried by the state – indeed, the NHS recovers its costs from the wrongdoer in many accident cases. Damages also help victims cope with loss of income due to the inability to work – they can prevent injured people sliding into debt.
Legal costs are also being fixed in many areas – whether it be through specific schemes for the more minor injury cases (eg. low value road traffic cases) or through limiting the percentage of costs a lawyer can recover. This is likely to have the very real impact of making many personal injury cases simply uneconomic to run. With many cases it is not immediately obvious whether a case has good prospects of success. The lawyer already takes a financial risk when he starts a case – if he doesn’t win, he won’t get paid. As the profit margin on cases becomes increasingly tight, lawyers will have to make sound decisions on risk in order to remain financially viable. They won’t be able to afford to lose many cases, and as such, unless a case has clear prospects of success it is unlikely to start.
Fee models grow increasingly complex. The meaning of ‘no win, no fee’ has changed. Now, a client needs to understand that they will pay the success fee charged by the lawyer and any insurance premium out of their damages. There is, in effect, a ‘fee’. Different firms may offer different sizes of success fees, so there is value in shopping around. Firms will also have the option to offer contingency fees as well, which may cost the injured person more in some cases, or less in others, than a ‘no win ,no fee’ agreement. Even lawyers are struggling to understand the difference.
There is also more pressure on victims to make the right call when they are offered a settlement by the insurers. If you fight for a higher settlement by taking them to court and get it wrong, your damages can be completely wiped out by their costs. You can win your case, yet walk away with nothing.
But the biggest impact is be yet to come – the Government has announced an intention to look once more at putting personal injury claims in the small claims court. This means that an injured person will be expected to put together their own case, get medical notes and an experts report, and stand up, without legal representation, against an insurer. Injured people simply will not do this. Instead of receiving compensation that is rightfully theirs, they will be deterred from taking a claim and will receive nothing. Over 90% of all personal injury claims could fall into this category. This is simply not appropriate and we will battle hard to stop it.
The landscape is changing for injured people. It is certainly bleaker. At APIL we will continue to fight hard for the rights of the injured person, and our members will remain committed to their best interests. The short term gain the reforms may deliver on reducing legal bills, may have a significant long term cost on the injured person.