Lawyers and accident victims at risk from Small Claims plans

Dozens of solicitors across the North West could soon be made redundant if the government goes ahead with controversial plans, according to a leading personal injury lawyer.

The government wants to raise the value of the small claims limit for personal injury, a move James Barker, of Merseyside law firm Kirwans, says will be detrimental to the industry.

He believes the proposed move to up the limit from £1,000 to £5,000 will push people into third party insurers directly rather than use the services of a solicitor, leaving many lawyers out of work.

It could also see a number of Claims Management Companies spring up overnight trying to take on cases with little skill or qualification in which to do so.

Mr Barker said: “The vast majority of whiplash claims are worth between £1,000 to £5,000. This amount is not considered to be a small claim so, as it stands, an injured party would receive their legal costs in addition to their damages.

“The planned proposals to increase the small claims limit to £5,000 will divert many more cases through the small claims court, where only a minimal amount of legal costs can be recovered. Therefore, many solicitors will find it uneconomical to take the work on, and may lose a large part of their income as a result.”

But it isn’t only solicitors who could be hit by the move. Mr Barker believes that those injured could also be left vulnerable to the advances of third party insurers, who might try and persuade them to take a lower amount of compensation than they could potentially receive if they were to appoint a solicitor.

“Those dealing with a third party insurer are likely to get a lower settlement,” he said. “The government’s plans would simply push victims into the arms of the third party insurers. There is also a good chance that claims management companies pushing PPI-type cash recovery pledges would spring up, meaning that even more injured parties would be hassled at home.”

The pressure has been on the government to curb the high number of whiplash claims since 2004, when research carried out by the European Insurance and Reinsurance Federation showed that, at 76%, the UK had twice the average percentage of whiplash claims as a proportion of personal injury claims compared with the European average.

More recent research has confirmed that the overall position has hardly changed.

Mr Barker’s claims are the latest of a growing number of concerns about the government’s plans to cut the cost of whiplash claims, with Labour MPs warning that the move would impair access to justice.

The Commons Transport Select Committee also reported that the increase would encourage fraudulent claims.

“Mr Barker said: “We as an industry are all agreed that we must drive down whiplash-related fraud and exorbitant claims, but neither the legal sector nor the injured parties should bear the brunt of any efforts.

“As a result of legislation introduced in both April and July this year, the legal costs in respect of personal injury claims have been driven down further by the Ministry of Justice, which could lead to solicitors being much more strict about the type of cases they take on.

“Despite the cost cutting exercises, solicitors have remained willing to take on personal injury cases. But the latest proposals to increase the small claims limit mean that we could soon see this stance changing.

“But for the time being, there is still only one way for people to ensure that they are receiving expert, impartial advice – and that is to consult a solicitor.”

The plans are in the consultation stage at the moment, with the Ministry of Justice due to respond in the Autumn.

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