Friday, 19 February 2016

Whittling at the spearhead of justice.

The torrent of legal reform in personal injury rages on, seemingly never able to rest even for a moment.  Now, the way for the reform that many lawyers feared most has been prepared. Chancellor George Osborne announced late last year that the small claims limit for personal injury would increase from £1,000 to £5,000.  Although no date has been set, it cannot be long until this comes to pass. Yet the Chancellor did not stop there as he went onto announce another, unheralded and more novel alteration to personal injury law.  He proposes that claims for general damages (that is pain, suffering and loss of amenity) are to be abolished for people with minor soft tissue injuries.

Both these changes are very significant for injured people. By and large, if a personal injury claim is in the small claims track of the County Court, the rules are that the Claimant will not be awarded their Solicitors’ fees even if they are successful against the Defendant (and vice versa).  Normally if you win a case at Court, your opponent must pay your lawyer’s fees but these cases are deemed to be too small to warrant the use of a Solicitor.  As using a Solicitor would be considered disproportionate to the size of the case, you cannot normally claim your Solicitor’s fees.

For example, in a debt case of say £2,000, if you win your case a Judge will not normally award you your lawyer’s fees in addition to the claim for £2,000.  This acts as a practical restraint on people obtaining legal advice from Solicitors.  If you cannot claim your Solicitor’s fees even if you win, it does n’t make sense to spend lots on legal advice and assistance as you won’t be able to recover it.  Clients often seek a limited amount of advice in such cases if they are unsure of the merits of their case or the procedure involved and may be happy to risk say £100 or so for some limited advice.

In cases without a personal injury element, the limit for small claims at the County Court was changed in April 2013 from £5,000 to £10,000.  This means that in debt cases, contract claims and so forth, if the amount you seek to recover is less than £10,000 it is very likely your case will be assigned to the small claims track.  As a result claims of less than £10,000 are now less likely to involve legal advice and assistance from a Solicitor.  Many people and businesses may consider that claims between £5,000 to £10,000 are sufficiently serious and complex enough to warrant obtaining legal advice but the law now does not allow them to claim the fees if they are successful from the opposing party.

In the run up to these changes in April 2013 it was widely speculated that the government would change the small claims limits as they applied to personal injury claims as well.  After backing away from this change in April 2013, the government has signalled that this change is now definitely going to take place. It is just a question of when.

The limit for these cases has for a long time been £1,000 for the injury claim. In a personal injury claim, a value known as general damages is given to the injury element; the more serious the injury, the higher the amount.  These rules mean that if the injury element of a personal injury claim is valued at £1,000 or less than your claim is in the small claims track and, as above, you will not recover any money spent on Solicitors from your opponent if your case is successful.  Again the idea is that these cases are too small to warrant the involvement of a Solicitor.

A claim of £1,000 for personal injury normally involves, for example, a claim for a whiplash injury that lasts around a week or so.  It could also be a very minor case of scarring that clears up completely in a short time, damage to a single tooth or injuries or wounds of a similar nature. No one who suffers an injury, particularly due to the negligence of someone else, ought to be belittled. Anyone who suffers in this way goes through a terrible time with all sorts of pain, frustration, distress and inconvenience.  Yet setting the small claims limit for personal injury claims at this level seems to be intuitively right.

The reforms proposed by Osborne increase this limit fivefold and this changes the range of injuries that will fall into the small claims track dramatically.  An injury valued at £5,000 can be very serious and many people suffering in this way would find it a traumatic experience.  The severity of such injuries means that they are likely to be cases involving substantial claims for loss of earnings, medical expenses or care (that is assistance from someone during recovery).

Injuries at £5,000 or so can involve fractures of an arm or leg, or a fractured jaw or clavicle (that is a bone in the shoulder).  It might also be the loss of your two front teeth.  It might involve a significant scar to the hand or back. In cases involve a whiplash injury suffered in a road traffic accident, it can include cases of suffering that last for a prolonged period of up to two years.  The point is that increasing the small claims limit to £5,000 suddenly includes injuries that are clearly not trivial, transient or minor.

Injured people making claims for compensation of this sort may be reluctant to obtain legal advice as they are unlikely to recover these fees from the opponent and so any fees they pay will effectively be a deduction from their compensation.  As a result, they are likely to deal with the case themselves and will to some extent be reliant upon the opponent, who is almost always represented by an insurance company, being fair with them.

Is that likely, given that the motivation for all these reforms comes from the insurance companies and their long term quest to cut down the legal fees and compensation they have to pay for claims?

The majority of personal injury claims involve injuries of less than £5,000 and so these reforms will be of great significance to many people and how they claim compensation in the future.

The insurance companies are often quoted as saying how outrageous it is that on average, the premium for every motor insurance policy includes £90 to go towards the expense of paying whiplash claims. This begs the question of what, exactly, is the point of motor insurance if it is not to pay people when they have suffered loss or damage.

The other even more dramatic reform is to abolish claims for general damages involving minor soft tissue injuries.  If you suffer one of these through someone else’s negligence you will simply not be able to claim compensation for your injury.  No further refinement of what is meant by a minor soft tissue injury has been provided. Guidance can however be obtained from a publication called, “Guidelines for the Assessment of General Damages” from the Judicial Studies Board. This is an important reference for personal injury lawyers in valuing claims.

Interestingly, the Guidelines refer to cases of whiplash involving neck and back injuries as being “minor soft tissue” or “soft tissue injuries” and this includes cases where the injured person has suffered up to two years after the accident.  At a stroke, the Chancellor wishes to prevent people suffering these potentially very serious injuries from claiming compensation for the injury, a potent weapon in his armoury of legal reforms to assist the insurance industry.

It is all too easy to be sceptical about lawyers and their interests when legal reforms are mooted.  Are we only thinking of ourselves and our ability to earn an income? I wonder how teachers, the clergy, Doctors or indeed anyone else would respond to such large scale changes in how their professions or businesses operate.  Given a government presumably philosophically attached to free market principles, it is odd that there have been such regulatory intermeddling.

Many people maybe tired of endless adverts on day time television for no win no fee injury lawyers.  Maybe there are fraudulent claims; but then it is the job of the insurance industry and its highly talented legal advisers to spot them. Yet these changes surely go beyond mere lawyers’ self interest.  They go too far.  Abolishing a large category of claimants as these reforms propose is a huge change and is not proportionate to the problems presented.

Whittle the spearhead of justice too far and you blunt the rule of law.

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