A small win as small claims reforms are paused in the wake of the General Election
Posted on May 17th 2017
Last month personal injury lawyers across the country were nervously bracing themselves for sweeping reforms to the small claims limit – but with the snap election looming, all legislation has been dropped.
The government had previously ruled that from October 2018 the small claims limit for whiplash and other personal injury claims would increase, and that there would be a ban on pre-medical offers.
Whilst these reforms may come back in the future, they have been delayed for now.
What is the small claims limit?
The small claims limit decides whether your claim is allocated to the small claims track or not. Currently, if your personal injury claim is worth £1,000 or less in the UK, then you must go through the small claims courts. The small claims court is purportedly a simple and informal way to settle non-complex cases. In the small claims court claimants often represent themselves rather than employing a lawyer.
What changes would the reforms have made?
From October 2018 if you had a whiplash claim worth £5,000 or less you would have had to pursue your case through the small claims court. For any other personal injury claim, you would have had to go through the small claims court if your claim was worth £2,000 or less.
Furthermore, a tariff system of compensation would have been introduced for Road Traffic Accident-related whiplash claims and minor psychological claims brought regarding injuries lasting between 0 and 24 months. As a result, claimants would have received as little as £225 for the most minor claims.
Why were the changes bad?
These changes would have limited the public’s access to justice. Most personal injury lawyers currently work on a ‘no win, no fee’ basis because fees are recovered from the other side when the case is won. However, in the small claims court this is not the case. If you employ a lawyer in the small claims court, you would have to pay them yourself regardless of the outcome.
For most, paying a solicitor to represent you in the small claims court would not be feasible, so it is unlikely that solicitors would have accompanied many to the small claims court when the changes to the law went into effect.
Facing the small claims court alone, claimants would be very unlikely to know what their claim is worth. With no previous experience of claiming for an injury, and little legal knowledge, they might accept much less than the worth of the claim.
Navigating the system alone would put illiterate, vulnerable or disadvantaged claimants with real, legitimate cases, in a position where they feel unable to claim at all.
Access to Justice (A2C) state that the changes would drastically restrict people’s access to justice and the consequences for victims of negligence would be disastrous. They suggest that if the reforms had been in existence in 2014, up to 95% of the 759,763 road traffic accident victims awarded compensation, would not have been able to claim at all.
Who would benefit from the changes?
The reforms had been pushed by the UK insurance industry, who were set to save £1.2 billion a year in legal fees. They promised that these savings would be passed on to customers but, despite changes which saved the insurance industry money in 2013, legal fee premiums have continued to increase dramatically in recent years.
What will happen now?
It depends on which party wins the election on June 8th. However, if the opinion polls are correct then it would seem that this is only a temporary halt to the reforms.
Whilst this temporary halt is positive for PI solicitors and those seeking to make a personal injury claim, those lobbying for prison reform and changes to the treatment of domestic violence victims in court will be rightfully disappointed.
What seems certain is that the reforms, at the very least, will be delayed. This gives anyone wishing to make a personal injury claim under the current rules more time to do so.
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