MoJ insists it has evidence to justify fee cut as FOIL brands new levels “high but acceptable”

Grant: impact assessment will be published

The government has insisted that it does have the evidence to justify the cut in fixed recoverable costs.

Meanwhile, defendant insurance lawyers have described the proposed fee levels as “high, but acceptable”.

Responding to a written question from Conservative MP Andrew Stephenson on the reasons and evidential basis for cutting the fees, justice minister Helen Grant said this week: “These proposals were advanced in a consultation exercise which closed on 4 January and, together with wider civil law reforms, are intended to make lawyers’ costs proportionate, and create an environment where insurers can pass on savings to their customers through lower premiums.

“Evidence for the proposals was gathered through a call for evidence conducted in early 2012; ongoing stakeholder engagement at ministerial and official level; and further consultations on specific aspects of the planned changes. The consultation responses will be analysed and a decision made in due course.”

Mr Stephenson also asked what assessment has been made of the effect of the proposed reduction on equality of arms in court cases and access to justice. Referring to a previous answer, Ms Grant said: “Prior to implementation of the extended road traffic accident personal injury scheme, the government will undertake an impact assessment of the potential effects on affected groups of introducing fixed recoverable costs in personal injury claims.” She said this will be published.

In its response to the consultation on the proposed fees, the Forum of Insurance Lawyers (FOIL) described them as “high, but acceptable”, and “strongly” urged the government not to make any increase in them. It also argued that employers’ liability (EL) claims should not attract a higher fee than road traffic cases, saying “it is questionable whether the differential between the work types can be justified”.

FOIL continued: “The fact that the proposed fee for EL claims for Stage 2 is double that for RTA claims cannot be justified. This stage covers evaluation, quantum and negotiation and the work required on the different claim types is the same. In reality, the work required on EL claims is likely to be less as it is often easier to obtain loss of earnings details on an EL claim.”

The group was also worried that the proposed costs figures for non-protocol cases will “introduce undesirable incentives, encouraging claims to be taken outside the protocols wherever possible”.

It again questioned whether the differential in costs between the different work types could be justified, and said the “significant differential” between pre-litigated and litigated costs is likely to encourage claimants to issue and pursue court proceedings. Similarly, the differential between claims below and above £5,000 is “likely to lead to claims inflation”.