Specialist defendant law firms have responded cautiously to yesterday’s whiplash consultation paper amid fury from claimant lawyers and groups.
The Ministry of Justice is considering raising the small claims limit for whiplash or all road traffic injury claims to £5,000 and introducing independent medical panels.
The Association of British Insurers and Insurance Fraud Bureau strongly backed the proposals, with the former saying it was “pleased that the government recognises that tough action is needed to protect honest motorists from the UK’s whiplash epidemic”.
While welcoming the direction of travel, defendant lawyers raised concerns over their timing and detail. Steve Thomas, director of market and public affairs at Keoghs, said that if the small claims rise is limited to whiplash only, “then we have little doubt that soft tissue injuries will manifest themselves in another guise which will take them out of scope and back into recoverable costs. We also believe that a £5,000 small claims track would spawn a prevalence of lawyers operating under damages-based agreements, which in turn may promote damages inflation.
“This consultation at first blush appears an attractive proposition but as ever, it is the unintended consequences that need to be thought through as the industry sets out its position with government.”
Mr Thomas said his initial concern over medical evidence is that “we do not simply move to neither re-badge the current process and practice nor layer additional cost when the ambition here is exactly the opposite”.
He explained: “It will also be important to incorporate the scope of appropriate medical evidence for simple whiplash claims. We are increasingly seeing psychologist’s reports as the norm. Many of these reports add little to the overall picture but seek to drive damages and layer in expensive disbursements. To paraphrase Jackson, are such reports both ‘necessary and proportionate’?”
City firm Kennedys said it supported the drive to reduce inappropriate claims, arguing that both claimant lawyers and insurers will be better off as a result.
But it said any new legislation must be properly thought through, maintain access to justice for innocent victims and create a proportionate framework of new rules and sanctions. It was particularly concerned about the timing, given the other civil justice reforms being implemented in April.
Partner Richard West said: “It’s important that the Ministry of Justice does not create change for changes sake. There are many good reforms to the legal landscape fast approaching which should have a substantial impact on whiplash claims. The government must resist the temptation to push too much through too quickly or they risk undermining the undoubtedly good intentions underpinning this consultation.”
Alistair Kinley, head of policy development at Berrymans Lace Mawer, said: “These proposals are close to the agenda set out by insurers, which will cause some reaction from industry bodies. To some extent, APIL [the Association of Personal Injury Lawyers] was smart in getting its retaliation in first two or three weeks ago with its own 10-point plan on whiplash fraud.
“There are wider costs reforms already afoot. [Early] questions which occur are: how many cases would go via the RTA scheme/portal if the small claims limit goes up to say above £3,000? What is the risk of damages creep if that happens? Does the news bolster APIL in their attempt to judicially review the extension of the RTA scheme? Time will tell.”
There was unanimous condemnation from claimant lawyers, who argued that many people would be put off pursuing legitimate claims if they had to do it without legal assistance. But they had a range of other criticisms as well.
Craig Budsworth, chairman of the Motor Accident Solicitors Society, said: “It is irresponsible to even consider more changes to our civil justice system at the moment. Implementing the Legal Aid, Sentencing and Punishment of Offenders Act 2012 and the proposed changes to the RTA portal mean that we are already in a period of unprecedented reform and uncertainty which could fundamentally alter the balance between defendant and claimant.”
Irwin Mitchell partner Matt Currie said that if the government is serious about tackling the problems in the current system, “then they should continue to focus their attention on the multitude of claims management companies who add little or no value, rather than making genuine victims suffer further. They could start by banning text messaging and cold calling right now.
“Of course, no one should receive any compensation without proper medical assessment so we welcome the chance to work with the government on that but forcing genuine victims to use the small claims track would be a misguided attack on access to justice. Small claims may be effective for disputes over washing machines but it isn’t suitable for more complex injury cases.”
Mark Grover, chief executive of north-west claimant firm Antony Hodari, said: “Claimant law firms use increasingly sophisticated anti-fraud systems, but they would be far more effective if insurers co-operated by giving us access to their own databases. Why would they refuse this? And, if they are so keen to combat fraud, why do insurers continue to offer settlements to claimants before they have seen a solicitor and before they have undergone a medical examination?…
“The government has not considered the economic impact of these proposals. It currently recovers £140m a year in social security benefits paid as a result of an accident where a compensation payment has been made – this will fall dramatically if people are put off making a claim in the first place. And thousands of people in the legal industry could be put out of work by cutting out their legitimate role in helping injured people pursue their legal rights.”
Iain Stark, chairman of the Association of Costs Lawyers, said: “These proposals could spell disaster for both consumers and the legal profession. Access to justice will be the ultimate victim. I foresee a whole new unregulated industry being created to handle claims below £5,000. Furthermore, the courts will be flooded with litigants in person, which will put huge strain on their already limited resources…
“The lack of joined-up thinking is also breathtaking. The government is already consulting on a 60% cut to legal fees for [the RTA portal]. These new proposals will remove most cases from that system, leaving just the higher value, more complex ones at unfairly low fee levels. The government needs to pause for breath and think through its approach before piling on yet more reform.”