Lawyers on both sides of the personal injury sector have rounded on the government after the latest announcement in an unprecedented series of radical reforms.
Justice secretary Chris Grayling on Tuesday outlined proposals to raise the upper limit of the small-claims track from £1,000 to £5,000 and for independent medical panels to diagnose whiplash injuries.
The changes had been expected following meetings between the government and the insurance industry earlier this year. Grayling insisted the measures would cut fraud and benefit honest drivers who have had to ‘bear the price of a system that has been open to abuse’.
But with the consultation on the measures closing on 8 March – just 14 working days before the Jackson reforms and a new costs regime for RTA claims come into force – claimant and defendant lawyers warned that the new plans could backfire.
Iain Stark, chairman of the Association of Costs Lawyers, said the proposals could spell ‘disaster’ for consumers and the legal profession alike. He warned they could lead to the creation of a new unregulated industry to handle claims below £5,000 and courts being ‘flooded’ with litigants in person.
‘The government is already consulting on a 60% cut to legal fees for the system that currently deals with whiplash cases worth up to £10,000 where liability is admitted.
‘These new proposals will remove most cases from the system, leaving just the higher-value, more complex ones at unfairly low-fee levels,’ Stark said.
Craig Budsworth, chairman of the Motor Accident Solicitors Society, said it was ‘irresponsible’ to consider more changes at a time of industry upheaval. ‘The government has forgotten that the majority of whiplash claims in this country are genuine,’ he said.
Even insurance lawyers expressed doubts about the timing and scale of the proposals.
While cautiously welcoming the consultation, Kennedys partner Richard West warned against ‘change for change’s sake’ that risked undermining the good intentions underpinning the consultation.
James Arrowsmith, from insurance firm Browne Jacobson, said the move could make it more difficult for defendants to prove fraud with only a few weeks from exchange of evidence to a hearing.
‘The deterrent effect the government seeks, therefore, seems more likely to arise through making claims less profitable and more of a challenge to run,’ Arrowsmith said.
The proposal to raise the limit for small claims comes five years after a government consultation found no justification for an increase. Sir Rupert Jackson, the architect of many of the government’s civil justice reforms, came to the same conclusion in his 2009 review of litigation costs.
Grayling insisted that reform will make it less likely that fraudulent or exaggerated claims will be made, and those that are will be properly tested. ‘Genuine claims can still be settled but fraudsters are left in no doubt there will be no more easy paydays.’
Shadow justice minister Andy Slaughter said: ‘The government underestimates the complexity of cases that are affected – it’s fanciful to think people are going to have to litigate for themselves.
‘If these changes led to falling premiums then I would be more sympathetic, but I don’t hear insurers saying that.’
A Law Society spokesperson said: 'Raising the small claims limit runs the very real risk that the already swamped courts will be flooded with self represented litigants, causing the inevitable delays that come with that. Of equal concern is the likelihood of a growing number of those who need treatment may be put off making a claim when they have a genuine injury. They will be the walking injured, literally.
'The onus here surely has to be on insurers. They need to do more to challenge false claims properly and their reasons for not doing so are flimsy to say the least. The government’s plans seem to be geared towards squeezing everyone – including those who suffer genuine injury – except the insurers.'
However the Law Society said it welcomed plans for stronger medical diagnoses but warned there needed to be care that the cost was not disproportionate. The Society said it would be working with its members to provide a robust and evidenced response to the consultation, and welcomed the three-month consultation period, which reflected the seriousness of the issue.