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Legal fee cuts may come at the expense of drivers

On Friday 1st March 2013, the High Court rejected a challenge against the forthcoming cuts to Claimant solicitor’s fees in road traffic accident (RTA) portal cases. As a result of the Court’s rejection, the cuts will see Claimant solicitor’s costs for RTA portal cases slashed from £1200 to £500 for cases worth up to £10,000 possibly by the end of April 2013. The portal scheme will also be extended to include all cases worth up to £25,000 with a slightly higher fee of £800 for cases valued between £10,000 and £25,000. In addition to these cuts a new portal scheme will also be introduced for employers’ liability and public liability cases with fixed fees of £900 for cases worth up to £10,000 and £1600 for cases between £10,000 and £25,000. It is envisaged this new portal scheme will be brought in by the end of July 2013.

The Association of Personal Injury Lawyers (APIL) and the Motor Accident Solicitors Society (MASS) launched a judicial review against the Government’s decision to reduce the legal costs solicitors could claim in RTA portal claims. The action, which was also supported by The Law Society, argued that the decision to make the cuts had been reached unfairly and unjustly as the Government had only consulted with Defendant insurers and had not consulted with anyone representing Claimants. They submitted that the insurance industry had been a party to the decision making process following their involvement in the Prime Minister’s insurance summit meeting in February 2012 to which no Claimant representatives were invited and relied upon several emails between the Cabinet Office and insurance companies.

However, the High Court rejected these arguments and found that the Government is entitled to obtain information from whoever they wish without any requirement to hear opposing parties’ views. It was held that the decision to make the cuts was made in 2011 and that the judicial review had been brought too late. Desmond Hudson, the President of The Law Society commented that it was “deeply unhappy with the new recoverable costs rules and the process by which the Government made its decision”.

The Government maintains that the purpose of the summit with insurers in 2012 was to obtain their agreement to cut their own insurance premiums as it has long been an argument of the insurance industry that they are forced to increase their premiums to account for the growth in personal injury claims being made. This would include a company such as Direct Line who only last week confirmed an increase in profit in their motor division from £245.8m to £261.8m with overall profits rising to £461.2m. This certainly does not indicate a company which has no option but to increase their customer premiums as a result of having to meet increased legal costs, but rather indicates a thriving multi-million pound company who could easily leave insurance premiums alone and make a little less profit.

Sadly, the insurance industry have made similar promises in the past when fixed fees were first introduced to RTA claims in 2003 and when the portal was introduced in 2010 but no reductions to insurance premiums were made then and it is unlikely they will be now.

The reality is that by fixing the costs at such a low level, Claimant solicitors will be hamstrung as to the amount of work they can do on a case to ensure that their clients are getting the correct amount of compensation and this could ultimately end with it being uneconomical for solicitors to represent the innocent injured party. Unfortunately, it is the public who will suffer again as they will have lost access to justice in return for ever increasing, profit driven insurance premiums.

Contact Harris Fowler now to start your claim for compensation before these changes are introduced. Free and friendly legal advice is available on 0800 213 214 or visit www.harrisfowler.co.uk

Harris Fowler is a trading name of Harris Fowler Limited and is authorised and regulated by the Solicitors Regulation Authority no. 558271.

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