Personal Injury small claims limit increase – what impact?
Richard Green, a Specialist injury claims Solicitor who covers our North Somerset offices met North Somerset MP Dr Liam Fox, also the Secretary of State for International Trade, on 17th December 2016 to discuss the Ministry of Justice's proposed whiplash and small claims reforms.
In a helpful meeting, Richard was able to highlight the impact these changes will have on ordinary people.
Small claims limit
Richard was able to explain to Dr Fox the proposal to extend the small claims limit to £5000 would have a severe detrimental effect on access to justice.
The current small claims limit is £1,000. Claims valued at less than £1,000 include whiplash-type injuries that last only a couple of weeks and it is relatively easy to determine at the outset whether a case is likely to be a small claim.
The reason that the small claims limit is important for Claimants is because, if a case is a small claim, you are not entitled to recover any contribution to your legal fees from the Defendant who caused you the harm. This is obviously an extremely important consideration for clients when deciding whether they should instruct a solicitor.
An increase to £5,000 will potentially leave Claimants to face bringing their claim against an insurer, whose interests are ultimately to pay as little as possible or nothing at all, without legal advice or assistance.
Richard also provided examples from the Judicial College Guidelines (a publication that gives guidelines as to the value of claims) to illustrate the fact there is often a very fine line between cases valued at less than £5,000 and more than £5,000, and that in either instance this can cover some very complex and long-lasting injuries. In the vast majority of cases, it is impossible for the Claimant or a lawyer to estimate the value to that extent at the outset.
Richard illustrated the dangers of the proposed change to the small claims limit with examples (duly anonymised) of current cases. In one example, if the governments proposed changes come into effect, one Claimant is unlikely to have obtained legal representation because his case would at first glance have appeared to be valued at less than £5,000. However, in that case, it has been come apparent over time that the Claimant has suffered a possible traumatic brain injury that would not likely have been picked up unless a qualified, specialist solicitor were acting for him and was able to ask the right questions as the case progressed.
The proposed changes will also cover all types of claim - including industrial injuries - which can involve some very complex technical legal issues irrespective of the value of a claim.
Fraud is a crime that damages the integrity of the legal system, our profession and, most importantly, every innocent claimant (who are the vast, vast majority). We actively do our part to stamp out fraud and will not assist anyone in putting forward a fraudulent claim. However, the reality is that we have experienced very few instances of fraud and Richard highlighted to Dr Fox the insurance industry's own figures from 2014 that state that fraudulent claims make up only 0.25% of motor claims.
Richard explained that recent legal reforms regarding fraud are beginning to bear fruit, with Courts now empowered to retrospectively strip Claimants of their damages if it is later found there has been fraud.
However, Richard also explained that our experience is that fraud is very rare and our clients are ordinary people who just want someone to help put right what happened to them.
Richard advised that the real problem that the Government needs to tackle is the unethical practices of Claims Management Companies in cold calling by telephone and text messages, which lawyers have been calling on the Government to ban for some time.
Decreasing numbers of claims and costs
One of the key allegations put forward by the insurance industry is that the number of claims is going up. Richard highlighted the fact that official government statistics show this simply is not true. By law, every claim must be registered by the Defendant with the Department for Work and Pensions and the DWP's own figures show that the number of whiplash-type claims has reduced by 41% since 2011.
For many years, but particularly since 2013, the amount that a Defendant contributes to a Claimant's legal fees has been fixed at quite a low level by the Court rules, resulting in insurers paying a substantially smaller amount in legal costs.
The reality is therefore that the number of claims has reduced dramatically, as has the amount that each insurer pays in respect of each claim in legal costs.
Richard explained to Dr Fox that nearly all clients who approach him say at the outset that they are not the sort of person to make a personal injury claim. However, in Richard's experience, they absolutely are - that is to say, they are ordinary people who are not looking to make money but just want someone to put right the wrong that was suffered. They are ordinary people who may have lost earnings, have bills to pay, have young families, need medical treatment, or who may be having real trouble coping and need help day-to-day because of their injuries. Some may not have been treated well by their employer or the Defendant's insurance company if they have been approached by them directly.
The government's plans will take access to justice away from ordinary people and place it in the hands of insurers who are often wasteful, untrained, uncooperative and/or aggressive, pushing up costs and creating delay. The proposed reforms will limit access to justice for people with disabilities, children, the elderly and the disadvantaged. Access to justice - and the quality of that access to justice - would be determined by someone's ability to pay, not the merit of the case or the harm that has been done. This is not a situation I believe anyone would wish to see.
 Official DWP figures show the number of whiplash claims registered with the government in 2010/2011 was 571,111, compared to 335,365 in 2015/2016.