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APIL secures review of discount rate

9 November 2010

Ken Clarke, in his role as Lord Chancellor, has agreed to review the discount rate used by the courts to calculate personal injury awards after the Association of Personal Injury Lawyers threatened to bring a judicial review.

Muiris Lyons, president of APIL, told Solicitors Journal that the decision to review the rate, which has remained at 2.5 per cent since 2001, was communicated in a letter sent to the association yesterday.

Lyons said claimants had been undercompensated for the last nine years because the rates received from gilts had never been more than two per cent, and at times had fallen to as low as 0.5 per cent.

He said the average yield for the last three years was 1.05 per cent and those with the most serious injuries, who received the biggest compensation awards, had lost the most.

“We’ve constantly called for this to be reviewed,” Lyons said. “On this occasion we decided to do more.

“We made a formal request to the new government, failing which we said we would consider judicial review proceedings. We got no answer, so we sent a letter of claim under the pre-action protocol.”

Lyons said the next stage would be for the MoJ to formally announce the review and inform solicitors how long the decision on the new discount rate would take.

“Solicitors need to be able to advise clients whether to carry on and settle or whether to wait,” he said.

“A reduction in the rate to one per cent could result in a significant increase in the amount they receive. At the moment clients aren’t getting proper compensation.”

Lyons said the only permanent solution would be for a formula to be put in place which took the decision out of the hands of the Lord Chancellor and automatically altered the discount rate to take into account economic circumstances.

Hodge Jones & Allen and Philip Havers QC acted for APIL on a pro bono basis.

A spokesman for the Ministry of Justice said: “The Lord Chancellor will be undertaking a review of the discount rate. Further details will be available in due course.”

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