Justice secretary Kenneth Clarke last week unveiled a host of changes to the law governing the cost of litigation in England and Wales, attacking ‘cases which would never have even reached the courtroom door were it not for the fact that somebody else was paying.’
The proposed changes see a dramatic change in the manner by which personal injury cases are administered, with injury victims expected to pay their own legal fees even if they win their case, whereas under the old system this was claimed from the defendant.
This amount is ‘capped’ at 25%, but in the majority of compensation claims, which attract an award of relatively little value compared to some higher-end cases, this will represent a severe drop in what the claimant receives.
Let’s take some examples – legal fees in an average whiplash case (the most widespread in the UK) come in at £1540. The typical value of a compensation claim is £2500. this represents a vast cut in what accident victims receive. Is this fair? The government’s 25% cap means, in very rough terms, that a claimant would have to be awarded around £6200 before this act of apparent benevolence would even take effect. Most road traffic accident claims do not meet this threshold unless the injury is catastrophically life-changing.
Or to look it another way – let’s say that somebody breaks their leg in a work accident and receives £2000 in compensation. Under the new system, they will have to pay their solicitor a quarter of that – £500 – leaving him with £1500 so far.
Clarke says that damages should be raised by 10% to offset this. But this still only ups the final amount to £1650, leaving the claimant with a 17.5% drop in what they take home – a significant amount. This is essentially the same as deducting VAT from a person’s payout. A payout that could conceivably be used to pay for rent, food, clothes, bills etc while the person is off work.
This demonstrates that there are many members of society who (along with those civil litigants who will be curbed by the legal aid reforms, such as married couples seeking a divorce) who will see their opportunities to have access to justice greatly decreased. In addition to this, it is also feared that those who were in greatest need of legal help will be hit the hardest.
Clarke’s reforms are obviously designed to save the UK’s legal system money.
There is a constant clamour of opinion that whiplash claims cost the country’s insurers too much, but it is arguable that a greater screening of claims at an early stage to separate the genuine from the opportunistic is what we really need. We can’t just simply say that only some of those who have been hurt in accident can claim for their injuries. That simply won’t work. The principle needs to apply equally. The German government runs a scheme whereby people involved in sub-30 mph accidents cannot claim for whiplash since it is automatically deemed that they must be inflating their story to get money.
While we here in the UK might not opt for such a black-and-white approach, anything that weeds out the fraudsters and leaves the system relatively free for the use of those genuine claimants should be welcomed. Otherwise we run the risk of taking even more from those who are already most vulnerable.
Source: BBC News
Date Published: November 24, 2010
Author: David Brown