Pared down portal fees 'high but acceptable', FOIL says

The drastically reduced RTA portal fees proposed by the MoJ are “high but acceptable”, the Forum of Insurance Lawyers has said.

In its response to the MoJ’s fee consultation FOIL called on the government not to increase them, as current fees for personal injury claims were too high.

Justice minister Helen Grant announced in November last year that the MoJ was planning to cut existing portal fees from £1,200 to £500.

The proposed fee for the new category of RTA cases was £800, £900 for employer’s and public liability cases worth up to £10,000 and £1,600 for those worth up to £25,000.

FOIL said that it was “questionable whether the differential between the work types can be justified”.

In particular, the forum said that setting the stage 2 fee for an employer’s liability claim (EL) at twice the level of a RTA case could not be justified.

“This stage covers evaluation, quantum and negotiation and the work required on the different claim types is the same. In reality, the work required on EL claims is likely to be less as it is often easier to obtain loss of earnings details on an EL claim.”

FOIL also said the setting of the stage 2 fee for RTA claims over £10,000 at £600, twice the rate for smaller claims, seemed high.

The forum went on: “With costs at this level the work should be handled by qualified staff able to deal with quantum and there should be no provision for counsels’ fees to be paid in addition, as a disbursement.”

In its response to the consultation, APIL found, in a survey of 155 members, that nearly three quarters of firms were “likely to be making staff redundant.”

If the MoJ proposals did not change, 15 per cent of firms said they would pull out of personal injury work where cases were worth less than £25,000. A further 54 per cent said they were unsure what they would decide to do.

APIL said ABSs appeared to allow insurers to enjoy at least some of the benefits of referral fees, while being in a position of conflict of interest and preventing fair competition.

In a separate report attached to the response, Andrew Otterburn, a legal management consultant and accountant, said that unless claimant personal injury firms were able to cross-subsidise, they would no longer be able to do the work profitably and would have to “run down” their personal injury departments.

“The result will be that the victim of accidents will not be represented and many firms will be forced to close”.

Otterburn found that the average ‘acquisition cost’ of a personal injury case, excluding referral fees, was from £550 to £750, more than the proposed portal fee of £500.

Justice secretary Chris Grayling said at the end of last year that, following a legal challenge from APIL, he was reconsidering the timetable for extension of the portal. An announcement from the MoJ is expected later this month.