Personal injury solicitors are on tenterhooks over how the controversial fixed costs scheme for lower-value road traffic accident (RTA) claims will work in practice when it comes into play next week - amid warnings that that they should be urgently reviewing the agreements they have with clients to reflect the changes.

The scheme - following months of negotiations between claimant and defendant personal injury solicitors - will apply from 6 October and will affect all RTA cases that settle without issue of proceedings, are worth 10,000 or less, and would escape allocation to the small claims track.

The scheme provides for a basic payment of 800, plus 20% of the damages up to 5,000 and 15% of damages from 5,000 to 10,000.

The Law Society said that, as well as looking at the retainers and conditional fee agreements they are working under and making the necessary amendments to procedures, practitioners should review costs explanations when dealing with clients.

Some uncertainty has been caused by lack of clarity on whether the indemnity principle will apply, and solicitors need to take this into consideration, it said.

A Society spokesman said it was hopeful that the scheme would lead to fewer costs disputes.

'While the scheme only applies to a narrow class of case, it is numerically very significant,' he explained.

'The scheme is subject to review during the next two years, and [then] we will be able to assess whether it has delivered the certainty, simplicity and transparency we have hoped for.'

David Marshall, president of the Association of Personal Injury Lawyers, agreed that solicitors should be making decisions now about which approach to take to fixed costs, and advised that utmost in their minds should be judicial guidance stating that costs belong to the client.

He said he expected the meat to be put on the bones of the scheme through court decisions at district judge and higher levels.

If successful, it seems likely that fixed costs will be extended to other stages of litigation and practice.

See Gazette in Practice, page 35

Paula Rohan