Small claims: big impact

Never has Bob Dylan so often been quoted as he has been in claimant lawyer circles recently. I have heard the lyric: 'The times they are a changing' open and end so many speeches at personal injury conferences over the last few years that it is now somewhat cliché. As much as it pains me to start on a cliché, there is nevertheless a great deal of truth to Dylan's words.

If the PI newsletters are to be believed, the country is heading for a situation where victims of road traffic accidents will be walking the streets, untreated, unrepresented and uncompensated. The insurance industry, on the other hand, will have you believe that the same victims walk the streets of England, faces lowered to the floor, unable to look the public in the eye due to the guilt of driving up insurance costs, or perhaps because they simply can't support the weight of their own heads as a result of having 'the weakest necks in Europe': a phrase as, if not more, popular than the Dylan quote.

One should hand it to the insurance lobby. They are the ones winning this battle, and we are kidding ourselves if we think otherwise. The government, and now public perception, is on their side. That's the result of a perfectly executed campaign by Nick Starling and his insurance backers.

However, I wonder whether our loss in battle is also partly because our vision of the future isn't quite as bleak for the accident victim as we made out. Indeed, when we discuss the MoJ portal, CFAs, ATE and the rest, it could be worse for everyone '“ a lot worse. Unlike many of the Jackson and LASPO changes, which when the smoke clears are likely to impact our business more than our clients, there are potential changes which genuinely would limit access to justice, and leave many people unrepresented. The most major of which would be an increase in the small claims PI limit.

Uncertain future

In the post-Jackson era, we will all have to wait and see what the results of the changes are, which include the abolition of the recovery of success fees and ATE premiums from the other side, the introduction of contingency fee agreements, with clients becoming open to having 25 per cent of their damages taken by solicitors, as well as a ban on referral fees. Not to mention the review of the amount of fixed costs recoverable in the MoJ portal scheme, currently £1,200 plus success fee, but rumoured to be going as low as £400 by some circles.

It is difficult to predict, from a business perspective as well as a public one, what the outcome will be. Such are the nature of the changes, and the continuing lack of clarity on key issues. However, one thing I am pretty certain of is that those injured in a road traffic accident will be able to find representation. I doubt that genuinely injured claimants will only be able to seek pre-medical offers from insurance companies direct, or walk the streets alone and unloved. I am sure the changes will have an impact on their claim, even if the nature of that impact is yet to be seen. And I know the changes will impact on our industry and our businesses.

The removal of success fees as well as an overall reduction in portal costs will leave solicitors with much less funds to work with in running a case, at every level. The argument that this loss to revenue will be recovered from the client's damages is also flawed, in so far as the marketing for '100 per cent compensation' is so well established now it will take a brave company to be the first to only offer 75 per cent. Even if they do, the impact only switched from lawyer to claimant, which is no good thing. The ban on referral fees, coupled with the reduction in portal costs, seems to suggest that solicitors have no right to market and indeed that there is no cost to marketing. While referral fees may be high, some cost of marketing, as with any company, needs to be factored in along with the cost of actually running the case. It seems this isn't the case, and that presents a challenge. Indeed, that's the point here. All of these changes, as they pan out, will provide a massive challenge. However, what they won't do is leave people without legal guidance from a firm of solicitors (if they so desire such guidance).

A change to the small claims limit, however, would be much more catastrophic. Currently this is set to £1,000 for personal injury. Therefore, providing the personal injury claim is worth more than £1,000, costs are recoverable; the level of costs depending on at what stage the case settles. If the injury is worth less then £1,000, then the maximum recoverable is £80. My background, and the background of our firm, is in motorbike accident claims. A lot of motorbike accidents result in nasty injuries but the vast majority result in bumps and bruises, soft tissue injuries and minor fractures, which though painful and debilitating are recoverable from. Often, the award for personal injury can be similar to that of a car accident, £1,000 to £2,500, on average. However, the issues surrounding the claim can be considerably more complex. The value of injuries does not equate to the complexity of the claim. The small claims limit really does highlight this. A rise in the small claims limit would be like a tsunami rushing through accident victims.

It would have no reason, no mercy, no exceptions and leave nothing and no one in its path. If someone drives into the back of your car, which is the most common type of car accident, most people will know who is to blame. However, if you ride a motorbike past a line of stationary traffic at 30mph on a 40mph road, and a car pulls out to turn into a side road, indicating only at the last second, causing you to take evasive action and swerve, come off your bike and cause no actual collision with the car itself, who is to blame? If the biker was wearing full leathers and a good helmet, he may walk away with injuries worth no more then someone rear ended by a car. However, there is no doubt that the amount of personal injury compensation is where the case similarities end.

Without a specialist to guide them through the claim, advise them on where they stand on liability, the case law, contributory negligence and constructing the best possible argument to get the best possible result, the claimant really could end up without access to justice. Not a lesser form of justice, not a lesser service, not a lower level of claims handler, but no representation at all. A rise in the small claims limit would leave thousands of people unable to get any representation or advice, at a time when they would need it most. Not every low-value claim equates to a straightforward case. My experience in motorcycle claims is one example of this.

The portal, for all its perceived flaws, does seem to be working. It's quicker, it's simpler, and, despite teething problems and a belief that it would simply fail, I believe it's largely been successful. Crucially though, what it does have is provision to change the course of the case, and the costs the claimant can recover, based on the complexity of the case. If the case is complex, it usually does drop out. This mechanism should be praised. It's so vital, yet often overlooked by us.

Outlook for claimants

A rise in the small claims limit would not have such provision. All the small claims limit looks at is value, and, if the value isn't high enough, then all that is recoverable is £80, regardless of any other complexities. Even the most adaptable of solicitors' firms cannot market their services and provide a service for £80, and that therefore basically shuts the door for the public to get representation for their accident. The higher the limit, the more people have that door closed in their face. Basing someone's need for representation on value alone is dangerous, far more dangerous than any of the changes mooted so far, and far more dangerous than any of the changes we have already seen. Be glad of the portal, because it could be far worse for everyone, client and business alike. As clients, the changes may impact their claim, but they will still have access to specialist support when needed, whatever form that support ends up as, and whatever level of fee that support recovers. As a business, we have to work with the changes and adapt to the legal landscape.

The changes do offer challenges and a number of issues, but they do still offer means of adapting because some level of fees to run the case will still remain. A rise in the small claims limit offers no options to anyone, because there won't be the level of fee needed to run a case. Specialists may adapt to work under lower margins, but they will not work for free. Especially when the amount of work needed in the case, due again to complexities outside of the value, is going to be high. Again, the portal will allow a higher fee in the more complex liability cases. A rise in small claims limit will not.

For all the petitions and lobbying from the claimant contingent, there is a situation that could be significantly more detrimental to all of us. There would be no ifs, buts and maybes regarding access to justice. There would be no uncertainty or need to adapt in the industry. It would be the end of justice for the majority of accident victims. Legal advice and representation following most accidents would be a thing of the past, regardless of the need and complexities of that person's case. The insurance industry couldn't hide it, and the claimant lobby wouldn't need to voice it. It would be a stark reality.

The accident victim really would be left walking the streets without any guidance or representation, the process for claiming a complete unknown. On their own. With no direction home. As Dylan would say.