In recent months, the legal community has been and continues to be rife with debate surrounding the proposed changes to the limits on the value of personal injury claims, and the effect that these changes will have on both Claimants and their legal representatives. The overriding change being that the Government proposes increasing the value of small claims from the current limit of £1,000 to £5,000.
This means that a Personal Injury claim would have to be worth in excess of £5,000 in order for the successful party to be able to claim back any of their legal fees from their opponent.
The Government believe that the current system is flawed due to the fact that there is minimal/low risk to a client bringing a personal injury claim under a Conditional Fee Agreement, which may not have much merit. As a result, insurance companies are left to meet the claimants’ legal costs. Insurance companies claim this is then reflected in premiums charged to motorists.
How important is legal representation in personal injury matters?
The general consensus has always been that personal injury claims require legal assistance due the complexity of situations that often arise.
It is certainly difficult, some may say near on impossible, for an ordinary member of the public to value the injuries they sustained in an accident. In essence, this is due to the fact that injuries are quantified in accordance with Judicial Studies Board guidelines and case law. Therefore, if those bringing a claim are not familiar with these guidelines (which most are not) they will not know how much their injury is worth.
It is arguable that without legal assistance, some personal injury claims may not fulfil their full potential and worth.
Contingency fees
At present, solicitors are not allowed to undertake work for claimants on a ‘contingency fee’ basis. This means that they are not allowed to work on the basis that they will receive a percentage of the clients’ damages.
However, the proposed changes come with the suggestion that this rule be changed. The new rules will allow solicitors to enter into ‘damages-based agreements’ with their clients, which means that the solicitors can take anything up to a maximum of 25% of the damages. This spells bad news for claimants, for obvious reasons.
The effects on Claimants
Raising the small limits to £5,000 will undoubtedly have a negative effect on Claimants because very few cases reach such figures. Therefore, Claimants with personal injury cases worth less than £5,000 will soon find themselves having to pay for all of their legal fees out of their compensation.
The result of the changes is likely to be an increase in the number of claimants trying to deal directly with their insurance company. The consequence of this is that cases will be under settled due to the fact that the claimant won’t be able to afford legal representation on their side and therefore know the true value of their claim.
It is evident that Claimants who have a legitimate low value personal injury claim are going find themselves at a disadvantage from the outset, unlike insurers who are going to be in a significantly better position.
Who will benefit from these changes?
In no uncertain terms, the proposed changes are significantly more favourable to those defending a claim over those bringing a claim. Many believe that these changes serve only to benefit the insurance companies. The changes would suggest that people are being discouraged from claiming for personal injury and even if they do so without legal representation, the insurance companies will be presented with cheaper options for settling.
People who believe that they have a legitimate personal injury claim have a small window in which they can still make a claim under the current limit. It goes without saying that it is wise to get these claims in as soon as possible in order to claim and keep a substantial amount in damages.