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In the recent Government Spending Review Chancellor George Osborne has once again proposed increasing the small claims limit in personal injury claims from £1,000 to £5,000.

For those not in the profession, what this means is that if your injuries are worth less than £5,000 you will not be able to get your legal costs back from the other party if your case wins.  Presently the limit is set at £1,000 and so if your injuries are very minor – say only a few weeks, you cannot get your legal costs back, but the Government plans to increase this limit significantly, to £5,000, which will mean lots of injuries, including some injuries that could last up to a couple of years, will be included.

If an injured person cannot recover their legal costs from the other party if they win then they will need to think very carefully about using a lawyer to represent them as they would have to pay those legal fees out of their compensation.

The Government also plans to remove entitlement to compensation for “minor whiplash claims” altogether.

I for one believe introducing these changes would cause significant harm to justice; citizen’s rights; the court system and the economy as a whole.  But, as someone who practises personal injury law, I would say that wouldn’t I?

Aside from the obvious reduction in work for personal injury law firms here, briefly are the problems with what the Government proposes:

  1. On the face of it the changes will include employer’s liability law, industrial disease and maybe even clinical negligence.  These areas of law often involve numerous laws and can be very complex – it is extremely unlikely a non-lawyer member of the public would be able to properly represent themselves in such a claim;
  2. An inequality of arms – large defendant insurance companies will still use their own law firms, as they do now, but the majority of the public will not be able to afford a solicitor.  This means a member of the public will be faced with having to deal with a large defendant law firm on their own.  Anyone who has practised personal injury law knows the conduct of many defendant law firms can be questionable at best – a member of the public will have little chance of securing a fair outcome;
  3. A limit of £5,000 will include a number of quite serious injuries, some of which could last up to a couple of years.  The changes would therefore not just affect people with minor injuries.
  4. The limit of £5,000 only refers to injuries for compensation (“general damages”) – so someone could be forced out of work through an injury and have a claim worth ten or fifteen thousand pounds but still have to deal with it themselves
  5. The courts will become clogged up with judges having to step in and advise claimants or put things right to ensure a fair trial.  For example, sometimes defendant solicitors do not follow the correct procedure for defending so called “low velocity impact clams” – if a judge spots this should he or she step in and object?  What happens if a judge realises a claimant has not obtained the right type of medical evidence, or needs further evidence – should the judge intervene?
  6. The courts will also face increased work in that defendant law firms are likely to defend many more cases as they will be aware the claimant does not have adequate/any legal representation.  Further, defendant law firms will realise that as they are not at risk of having to pay legal costs in the event they lose at trial they might as well defend the claim, resulting in many more trials and court hearings for an already strained court system;
  7. The changes will likely result in significant job losses both for claimant and defendant solicitors as the number of claims will inevitably decline.  However, worse still, the entire network of businesses that depend upon the personal injury legal sector such as: medical agencies, medical reporting staff; legal costs draftsmen; recruitment agencies; secretarial and administrative staff; and many more will also likely face significant job losses;
  8. Significant loss of tax revenue for the country in an already strained period – a contraction of the legal services industry will result in a substantial decline in tax revenue for the country;
  9. A decline in health and safety standards – if injured employees are not able to bring a claim then why should an employer bother to comply with health and safety standards?
  10. A questionable, very small benefit in exchange for all of the above in that the Government states “annual insurance costs for drivers could fall by between £40 to £50 per year.  Notice the Government uses the word “could”.  This is most likely because when the last series of legal costs changes were being introduced the insurance companies pressing for the changes promised to pass on the savings to the public.  Did premiums fall as promised?  The answer is no.  Data from Comparethemarket provided to the Telegraph newspaper revealed that insurance premiums increased from an average of £459 in 2013, £471 in 2014 to £506 in 2015.

The only potential beneficiaries of the proposed changes appear to be the insurance companies who are lobbying for them to be introduced.

The question for the public is whether losing legal rights, losing health and safety protection, increased stress, increased expense, increased taxes in other forms to compensate for the loss of this tax revenue, fewer jobs, poorer and slower court systems, and more, is worth the possibility of an extra £40-50 per year?

Maybe I’m biased, or missing something, but it doesn’t sound like such a great deal to me.

If you would like to know more, or let us have your thoughts, please contact us on 0161 399 1231, request a Free Call Back or send us an Email.

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