Big changes ahead for Personal Injury Claims...Lord Jackson's deadline approaches
The Legal Aid, Sentencing and Punishment of Offenders Act (LASPO) comes into force on 1st April 2013 and will mean big changes for Personal Injury Claims costs recovery. It is over three years since Lord Jackson was asked to undertake an inquiry into costs and some reforms will come into force under the new legislation.
What is in the Act?
1. Damage based agreements
Damage based agreements (contingency fees) have only been allowed previously in non-contentious matters. Under the new legislation, it is intended that solicitors can charge their clients a percentage of compensation that they recover. If a solicitor wishes to charge a Success Fee (as has previously been standard practice) they must take it from their client's damages awards, up to a maximum of 25%. A Success Fee is a "percentage based risk fee that solicitor is able to charge to the other party in addition to their base costs incurred throughout the case" i.e. it represents the financial risk taken by the solicitor of the case being unsuccessful and the Solicitor in that event not getting paid for work done on that case. This will no longer be recoverable from the Defendant post 1st April 2013. Effectively this encourages solicitors to take a cut of their client's damages under the new legislation.
WITH THIS VOUCHER YOU PAY JUST
1. Voucher is not exchangeable for cash and is non-refundable.
2. Voucher can only be used once, per customer, per transaction.
3. Cannot be used in conjunction with any other offers or promotions.
Contact: 01246 386616
Valid until: Tuesday, May 28 2013
2. A ban on referral fees
As of 1st April 2013, the receipt of referral fees by regulated persons in personal injury matters is prohibited. This means big changes for the way Claims Management Companies operate. With the reward of a referral fee previously, it was likely that Claims Management Companies were not vetting personal injury claims effectively, allowing claims that were unlikely to succeed to be passed onto solicitors for a fee. After the perception of a 'compensation culture' where the public were encouraged to make claims, this is expected to lead to a decline in the number of personal injury claims being made each year.
3. Preventing the recovery of Additional Liabilities
LASPO legislation will prevent a party recovering the cost of an After the Event Insurance premium from the other side, in most cases. Prior to 1st April 2013, a Claimant has been able to take out an insurance policy to cover them against the possibility of losing and becoming liable for the Defendant's costs and has been able to recover the cost of this premium from the Defendant's in the event of a successful claim. This will be no more as of 1st April.
It has also been proposed that the fixed costs regime for Road Traffic Accidents via an online portal system will be extended to employers' and public liability claims. This has yet to confirmed and Lord Jackson has not yet given a date for the implementation of this, if it happens at all.
It is also expected that the RTA fixed fee costs will be reduced. Current figures suggest a reduction from £1200 to £500. This is yet to be agreed and we await further announcements on this subject.
In order to counter act the proposed new damage based agreements whereby the solicitor is entitled to take a percentage of the Claimant's damages, the case of Simmons v Castle in the Court of Appeal has confirmed that general damages compensation will be increased by 10% from 1st April 2013. This will apply to all cases where judgement is given after that date.
The future is uncertain. The reforms are due to political will to save costs in Personal Injury Claims, but let us hope that the reforms do not see a breach of Access to Justice for honest victims of Personal Injury. We will be very interested to see what happens next.