Is the government backtracking on whiplash reform?

Will the government bulldozer through its reforms after all?

Posted by Neil Rose, Editor, Litigation Futures

One of the more pressing matters in the in-tray of new civil justice minister Shailesh Vara is whiplash reform. Or at least personal injury lawyers will hope it is.

It has been seven months since the consultation closed on the government’s plans to raise the small claims limit for personal injury from £1,000 and £5,000, and introduce independent medical panels.

In May Mr Vara’s predecessor, Helen Grant, said the outcome would be delayed pending publication of the House of Commons’ transport select committee’s report on whiplash. At that point in time, the general feeling was that the government would barrel ahead with its reforms, whatever the protests of the claimant lobby. The passage of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 – where claimant opposition was pretty much ignored – indicated as much.

Then, on 31 July, the select committee reported. And to the very pleasant surprise of claimant lawyers, MPs not only concluded that whiplash exists, but also said access to justice meant the small claims limit should not increase.

Since then, the rumours of a government rethink have been growing, and I’ve heard them from multiple sources – enough to decide I should put them into print.

There is still a feeling that the limit will go up, but nowhere near as far as had been proposed – maybe £1,500 or £2,000. The claimant lawyers I speak to seem comfortable with this.

But then again, these are just rumours. Might Mr Vara have an influence either way, or has the decision already been made? All we know, from a reply from the new minister to a written parliamentary question, is that there will be an announcement by the end of the year.

In the meantime, some firms have been making their preparations for the limit going up to £5,000, but I suspect the majority are in ‘wait and see’ mode – from what I can gather, there was no shortage of practices that thought the referral fee ban and the other LASPO reforms would somehow never happen and were caught on the hop when they did.

The problem is that if the limit does go up, to whatever level, it is likely to be from next April. That is already just five and half months away and could be substantially less by the time we get an announcement. Is that enough time for you to do the sums and rework the way your practice operates? Should you put a contingency plan in place now?

The answer, surely, is yes. The smart ones have, and will have stolen a march on the rest once again. Quite what you do, of course, is another matter altogether. If the limit does go up to £5,000, do you have a viable way of handling small claims track work on a contingency fee basis? How are you going to market it? How are you going to deal with what may well be an increase in the number of hearings? Is your friendly claims management company about to become your competitor as it looks to handle small claims work itself?

Equally, what if you do the sums and realise that an increase in the limit means curtains for for your PI practice, or even your firm?

All of this sums up a tricky position for PI lawyers – you could waste time preparing for something that may now not happen, or you could put yourself in pole position if it does. Maybe in the process you will learn something about the way your firm operates that can be improved on whatever the outcome of the consultation. Or maybe you’ll just confirm that you run a tight ship already.

But it is surely better than sitting around your meeting room table next April and saying “Now what?” to each other as the axe falls.