4 February 2013Print This Post

Grayling “considering raising small claims limit for PI to £15,000”

On the up: could the small claims limit shoot up?

The Ministry of Justice has neither confirmed nor denied a press report last week that justice secretary Chris Grayling might raise the small claims limit for personal injury (PI) victims to £15,000.

The Daily Telegraph indicated that the move was being considered in response to the judicial review of the RTA portal fee cut brought by the Association of Personal Injury Lawyers and Motor Accident Solicitors Society.

The story – which was not sourced but seems unlikely to have come from anywhere other than the Ministry of Justice – is being seen as a warning shot to lawyers that worse is to come should they resist the government’s current proposals.

The Telegraph said that as a result of the legal action, Mr Grayling “is understood to be reassessing whether more drastic changes should be brought in”.

It said: “The revised plans could see the limit on cases being made in the small claims court, where claimants typically represent themselves, increasing from £1,000 for personal injuries and £5,000 for other cases to £15,000 for all claims. The move could cut insurers’ costs with the savings passed on to motorists, sources said.”

The small claims limit for non-PI cases rises to £10,000 from 1 April, with a view to increasing it to £15,000 in time. The government is currently consulting on whether to increase the small claims limit in PI to £5,000 in a bid to tackle fraudulent whiplash claims.

In response to the story, a Ministry of Justice spokesman said: “We have consulted on changes intended to ensure claims are handled quickly and efficiently and accident victims with genuine cases can be compensated as soon as possible.

“These changes, along with our wider reforms, are intended to bring more balance to the system, make lawyers’ costs proportionate and in turn create an environment where insurers can pass on savings to their customers through lower premiums. Following recent legal challenges the Justice Secretary is examining all options.”

By Neil Rose

8 Responses to “Grayling “considering raising small claims limit for PI to £15,000””

  1. PI Lawyers Should Work for Nothing – Shock new MOJ Idea
    The MOJ has today shocked personal injury lawyers by announcing that they should all work for nothing.
    As a Ministry of Justice spokesman might well have said:
    “These changes, along with our wider reforms, are intended to bring more balance to the system, reduce lawyer fees to, well, pretty much nothing actually and in turn create an environment where insurers can continue to donate millions to the Tory party.…er sorry, I mean… pass on savings to their customers through lower premiums. Following recent legal challenges the Justice Secretary is, very, very cross indeed and will be examining all options once he has retrieved his dummy.”

  2. dom on February 4th, 2013 at 3:26 pm
  3. Of course, the Claimant personal injury industry has brought this on itself to a very large extent by regarding accidents as money-wells to be plumbed, generating spurious new industries (claims referral companies; the credit hire banditry), charging unqualified clerks out as if they were fully qualified solicitors, abusing the CFA system, grossly over-working files, pocketing huge sums in personal remuneration and generally taking Defendants and Defendant insurers for a ride. They have now killed the goose that laid golden hourly rate and provided Government with the justification to cut the system to the bone, disadvantaging the very people they claim to represent.

  4. Alan Alda on February 5th, 2013 at 8:56 am
  5. this announcement just says it all.
    Grayling clearly does not know anything about the law and the legal process. but then, he’s not a lawyer. that says it all doesn’t it.

  6. Michael Pace on February 5th, 2013 at 10:32 am
  7. Very funny and its not even a
    April 1st yet.

    Maybe if the Govt introduced tough regulation on estate agents for say a fixed fee of £500 max for selling a house (i mean sloppy text and digital photos uploaded to Right Move can’t be that hard to do?) I’d feel less persecuted as pi lawyer.

    Hold on now thats a good idea for a new career, no qualification, no skill required, and none of the crushing regulation oh and you get wined and dined by solicitors.

  8. JD on February 5th, 2013 at 1:05 pm
  9. Alan, I agree with everything you say. However, there was and is a system currently in place which was and is designed to keep in check the excesses you describe. It is called Court.

    The only reason Claimant Solicitors have been able to get away with the recovery of silly amounts of costs is because the Courts let them, not all, but the majority of them.

    Perhaps if Lord Jackson could be fly on the wall of a number of the 100 or so DA hearings heard each day across the country, he would see what descisions his peers are passing down each and every day. He will begin to understand where the problem stems from.

    The DA hearings should only be heard by specialist DJ (Regional Costs Judges).

    The large reforms Jackson proposes were not required. All could have been dealt with easily by three simple changes. Abolish the recovery of additional liabiltiies in the detailed assessment process, make it move difficult to obtain hourly rates over and above the GHR (rather than the Court failing to adequately address the regular doubling and tripling of the guideline hourly rates we currently see) and be more strict with the level of the success fees (perhaps asking Court to pay particular heed of the guidance from the Court of Appeal – see last paragraph of Ku -v- Liverpool City Council), which the Court’s seemed to have lost sight of.

    Job done. Significantly reduced litigiation costs without putting the entire industry in peril.

  10. Barry on February 5th, 2013 at 1:34 pm
  11. Here Here Alan Alda.

  12. Jack on February 6th, 2013 at 7:45 am
  13. Raising the small claim limit will have the exact opposit desired effect on insurance premiums. Insurers place and cover close to half a million claims per year through their BTE legal expenses. these services are self funding because they can be placed with panel solicitors for the most part and the insurer doesn’t pay the solicitor as he recovers his own cost. If the small claims limit is raised as suggested, insurers wont be able to give thos claims away! Policy holders who have an insured BTE benefit will expect the insurer to honour that part of the policy, who will inturn then be forced to actually pay out from the BTE cover the actual cost of the solicitor doing the work. That expense will find its way directly back on to the botom line of insurance premiums.

  14. Amanda Ashton on February 6th, 2013 at 9:21 am
  15. Alan Alda

    The number one reason, absolutely head and shoulders above everything else, why solicitors’ fees get high in lower value claims is insurers’ conduct. I don’t know any claimant solcitor who wouldn’t be delighted to see a legal landscape in which insurers took reasonable points, proportionate to the size of the case, and didn’t take the attitude that claims aren’t some sort of game to be played.

    Insurers should be asking the question, ‘What happened?’ but instead ask the question, ‘What can we get away with?’

    It may be, of course, that once the scourge of claimant lawyers is removed as the vast majority of claims go to small claims, insurers will start treating claimants fairly and nobody will need doubt that an insurer’s first offer is always right. But to date, this hasn’t happened. Ever.

    Can insurers be trusted? I recently finished a case which, in the utopia of de-lawyered PI claims the insurers would have directed down the small claims route. Their first offer? £3,000 (repeated several times, quite insistently). The final settlement? Just under £60,000.

    The thing is, this isn’t particularly unusual. If insurers could be trusted to get it right, I’d be only too delighted to leave them to it and go off and do something else.

    You say claimant lawyers have brought Grayling’s idiocy on themselves. The reality is that insurers expose themselves to these costs, fighting cases pretty indiscriminately, and by complaining when it costs them money they are simply trying to have their cake and eat it.

  16. RJ on February 7th, 2013 at 4:49 pm