The legal industry is considering its options in the wake of the MOJ decision to reduce fixed fees for Road traffic accident cases by almost 60% in April 2013.
The fees for RTA claims that settle (for less than £10,000 of damages) at Stage 2 in the portal will be reduced to just £500 a little over two years after they were agreed by all stakeholders at £1200.
The fees were agreed in 2010 after Government sponsored mediation. This time the suggested figures were arrived at by the Government after seeking opinions in writing. So this time there was less stakeholder involvement and less transparency.
How can a 60% reduction be justified? Will it promote access to justice? Will it lead to a reduction in insurance premiums? Will the insurance industry pass on any savings to the British public? Or is the insurance industry rubbing their hands together in delight?
How can a 60% reduction be justified? Will it promote access to justice?
The key question here is how an accident victim might be able to make an injury claim after April 2013 when most RTA personal injury law firms will struggle to continue in business?
So how on earth does the MOJ justify a 60% decrease in costs just two years after insurers, the Law Society, and claimant representatives agreed a figure of £400 for Stage 1 and £800 for stage 2 costs for RTA claims?
What appears to be certain is that the reduction in Portal costs will lead to more technology and lower skill sets being used. However there is a real concern that the fee available will not cover the core time a law firm requires to handle a claim with regard to our core duties to the SRA and our clients. Furthermore the fee has been cut so much that, potentially, the fee will not even allow the lawyer to put in enough skill and care to avoid being negligent.
The biggest loser in this decision will be the injured victim
If law firms have to reduce the time spent on claims in order to survive as a business then surely the biggest loser in this decision will be the injured victim. A common theme among the raft of industry changes being implemented in 2013.
Maybe the hyperbole around a ‘compensation culture’ has affected the MOJ’s reasoning. Maybe with personal injury law firms out of the equation, insurers will be free to settle any injury claims on the cheap direct with the victims.