The recently implemented changes to the provision of access to justice for the personal injury sector will, it is anticipated, reduce claims by at least 60%.
How the new rules are interpreted and who chooses to play by them and how they are enforced will be of great interest to any law firm with an interest in staying in this, very visible, part of the legal services sector. Especially those High Street law firms that are not part of a collective marketing panel/arrangement or who have a substantial SEO and Google Adwords budget.
The Ministry of Justice has been lobbied hard by the insurance industry. The consequence is regulatory proposals to reduce the fixed recoverable costs for claims up to £10,000 processed from £1,200 down to £500 and for claims valued up to £25,000, fixed costs will be set at £800.
Insurers haven’t had it all their own way as basically they’ve had to bite the hand that feeds (their own).The outlawing of referral fees is one reason why our insurance premiums are unlikely to come down anytime time soon. A ‘no lose’ situation for the insurers, to the detriment of ‘no win, no fee’ for claimants?
Personal injury solicitors’ representatives such as the Association of Personal Injury Lawyers (APIL) made the point that a single, one-off item such as drawing up a Will can often cost more than £500. Insurance companies counter this by saying that the level of skill needed to process most claims does not require the payment of hourly rates of £150.
High Street personal injury solicitors are crying ‘foul’ and highlighting problems that could well arise – reduced access to justice for many, reduced quality of advice and poorer service being three. They also believe that insurers, having been able to set the legislation agenda will then be able to dictate the future processes and prescribe the financial outcomes.
Some of the big brands may still advertise a ‘100% No win, no fee service…’ but they should add ‘… for the claims we take on’. In this new environment ‘risk assessment’ will become very important and personal injury solicitors will need to be very rigorous in deciding which claims they take on, as they will not be able to recover the costs for the cases they may lose.
For these reasons personal injury solicitors will have to start charging a success fee meaning that compensation amounts will drop. This is where the public will start to notice a difference, actually paying for legal advice for accident claims. Not unreasonable in isolation, but it shows where we’ve got to in terms of what consumers have come to expect.
But are the public willing to pay that price or will they hunt around for the best deal? It’s back to those perceptions of value, and defining the key components of that.
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