The raft of legislative changes to the personal injury market since 1999 had little impact on access to justice, new research has suggested.
The Legal Services Board today published the findings of an investigation into the PI market during the period from 1999 to 2013.
During that time, referral fees were both allowed and then abolished, conditional fee agreements (CFAs) were created and alternative business structures were permitted through the Legal Services Act 2007.
The LSB research, undertaken by London Economics, concludes there is a lack of objective data on longer-term changes in this area of the law.
But where there is evidence, the oversight regulator said longer-term regulatory and legislative changes have had little impact on access to justice, finding that:
- Personal injury claims showed no growth except for motor accidents, in spite of the introduction of CFAs;
- Increased advertising had little effect as claimants were already aware of their legal rights;
- There is little evidence to suggest referral fees had an impact either way on access to justice.
The research found ABSs may have had a positive effect on access to justice by increasing the number and types of legal providers and reducing costs.
However, it warned the advent of ABSs could have encouraged a lack of transparency over referral fees as legal services providers have more flexibility to ensure they comply with the ban.
The report says: ‘This risk remains in ABS organisations where they shift pre-litigation work from solicitors to other individuals without a clear contracting method – with this work potentially taking place within the same organisation.
‘This form of vertical integration has the potential to reduce overall costs. The lesson with regard to regulation is the need to consider how larger more complex firms could be regulated in a proportionate way.’
The research said the wider effects of the Legal Aid, Sentencing and Punishment of Offenders Act, which scrapped the recoverability of success fees and ATE insurance from losing defendants, were still unclear, although it had the potential to reduce access to justice by ‘increasing the financial risk of making claims and reducing the returns to companies active in personal injury’.
Caroline Wallace, the LSB's strategy director said: ‘The development of the personal injury market undoubtedly polarises opinion. The research we have published today is unlikely to settle that debate.
‘But what it does do is confirm one important fact that is too important to be overlooked - that there is a continued lack of understanding of the needs of consumers in debates around legal services generally - not just in relation to personal injury.’
The Law Society said more research should be carried out as it was ‘clear’ that access to justice in the PI market has been impacted in recent months.
Chief executive Desmond Hudson said: ‘More research now needs to be undertaken to assess the effect recent reforms to civil litigation have had on access to justice. The government’s reduction of public funding, contrary to Lord Justice Jackson’s advice, needs to be scrutinised.’