The long-awaited motor reforms to civil litigation have been postponed until April next year. Are they going to happen? What are the details? And what will the impact be to access to justice? We asked a senior personal injury solicitor – DAS Law’s Miquelle Groves – to take a look...
The motor PI reforms: What are the headline changes being proposed?
The intention is to increase the small claims limit – currently set at £1,000 – to claims with a maximum value of £5,000. This would mean that the claim would need to be of a higher value than £5,000 to recover legal costs from the other party. There would be no need to have legal representation, and the claim portal will be simplified by the Motor Insurer Bureau so that people can use and initiate their own claim.
There will also be fixed tariffs for damages relating to pain, suffering, loss of amenities and whiplash claims. The changes will not affect claims for children or vulnerable road users such as cyclists or pedestrians.
Why has there been so much discussion surrounding this?
The government has acted out of concern by the continuous increase in the number of whiplash claims following motor accidents, and due to concerns surrounding the ability to claim and settle for compensation of injuries where there is little evidence. The new reforms will prevent any claims being pursued without a medical report, with the view of reducing the number of claims being pursued.
There have been delays: What is the new deadline for delivery of the motor reforms?
The government is certainly still committed to the reforms, with David Parkin – Deputy Director for Civil Justice and Law Policy at the Ministry of Justice – reaffirming the same at the Association of British Insurers (ABI) conference.
NOTE: It was announced on the 21 April, that for the second time this year, there have been further changes to the implementation of the new reforms. Provided there are no further changes, the proposed reforms will now come in to effect in April 2021.
What have we seen about the changes so far?
We haven’t yet seen any draft rules available for review from the Civil Procedure Rules Committee, but the MIB have confirmed that they will be ready to deliver the service by April 2021.
So the industry has to take their word for it at the moment?
Yes. Until the new rules are released and policy decisions are communicated, scenario planning can only take us so far. The industry remains concerned as to how it will be able to respond to the reforms and in what timeframes it will be expected to do so.
In real terms, what impact would an increase in the small claims limit have?
By increasing the small claims limit for personal injury claims arising from road traffic accidents from £1,000 to £5,000, the cost burden of pursuing an injury claim firmly shifts to the claimant and will negatively impact 90% of those who have suffered an injury as a result of a motor accident.
So ordinary people will find it harder to make legitimate claims for injury?
Potentially, yes. The CEO of the Motor Insurers Bureau has described the new approach as being “designed to facilitate a simple, secure and supportive process for injured victims to get appropriate compensation for their claim, without the need for legal support”, but the worry is that for many the absence of legal support will be a barrier to justice.
What about the proposed tariff on compensation for whiplash injuries lasting less than two years?
This will significantly reduce the likely award for many genuine claims, and those without access to legal expenses insurance (LEI) will find themselves in a position where the cost of instructing a lawyer to assist, outstrips the value of a potential award.
You mention legal expenses insurance. Do you think that will that become more important?
Absolutely. The changes will have a detrimental impact on claimants given their inability to claim legal costs. Therefore, the claimant will likely be without legal representation and without knowledge of how to clearly value and understand their claim, and the requirements for evidence of fault and medical evidence to support a claim for personal injury.
Without legal support there will inevitably be concerns for those with genuine injuries being confident and able to purse their claims, and may therefore ‘give up’. Having LEI means having access to legal support, from experts, who will be able to support and guide the injured party through the claim process.
Can’t people just enter into conditional fee agreements (CFAs) with a solicitor?
Where historically CFAs might have bridged this funding gap, ‘success fees’ are now unlikely to be viable given the likely reduced levels of compensation available for minor whiplash injuries.
What about non-whiplash injuries and the other elements of a claim?
The concern is that in general, claimants will be vulnerable to their claim being under-valued without the support of a legal representative. For example, financial loss claims arising from a motor accident can be complex and require guidance to evidence. The financial hardship that this could have, particularly on claimants who are self-employed or run small businesses, could be severe.
How will the changes impact the PI market? And support claimants?
Adjustments will be needed in the way lower value motor PI claims are managed, and law firms committed to the market will continue to provide support. It’s likely that we’ll see a contraction in the number of legal firms offering PI services and where that happens, access to Justice will become harder for some.
So how can law firms continue to support ‘low value’ claimants in this climate?
Agility is key. Law firms need to embrace the challenges these reforms will bring, and in solution terms, everything must be on the table. I think that those adopting a collaborative approach, with lawyers working with insurers and business partners to design solutions that work for their customer base, will find that it will be possible to meet the needs of consumers in a post-reform world.