Recent changes to personal injury practice

You could be a client looking to make a claim. Or you might be the lawyer helping to bring it. Either way, personal injury practice is undergoing big change.

From the 1 April of this year there have been many changes made to the funding and costs of civil litigation matters. The government has introduced them as a result of Part 2 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012.

Personal injury matters have been affected the most by these reforms. For example, a losing party in personal injury cases will no longer be required to pay a success fee or After the Event Insurance. This means that as a client, if you choose to make arrangements to pay a success fee and decide to take out an insurance premium, you will have to pay for this yourself if you are successful. No longer will the losing side foot this bill.  

It is also worth noting that there will be a cap on the proportion a lawyer can claim from a success fee. No more than 25 per cent of the damages recovered can be taken as a success fee, though this excludes damages for future care and loss. But of any losses that include pain, suffering and loss of amenity, the amount that can be paid to the lawyer has increased by 10 per cent.

The new changes have also scrapped Referral Fees. This prevents lawyers from making payments to third parties who refer clients to them. The hope is that by doing this, it will curtail what some claim is becoming a ‘compensation culture’, by reducing incentives to pursue unmeritorious claims.

Other parts of the Act are designed to encourage earlier settlement of claims. Penalties will be given to a defendant who refuses to settle at an early stage of the legal process. The sanction will be calculated as 10 per cent of damages where damages are claimed, and 10 per cent of costs for claims made that are not pursuing damages.

Damaged Based Agreements are another new introduction under the reforms, which have made such agreements available in personal injury claims. Lawyers can now recover fees in a way they could not before, by sharing the risk of costs with their client. It is worth noting that the cap under personal injury matters will be 25 per cent, excluding damages for future care and loss.

The impact of this reform remains to be seen. It will be a question of whether a balance has been struck between competing interests. There is the need to provide adequate access to justice for clients and allow enough revenue to sustain firms on the one hand, with government policy to ensure claims are pursued based on their legal merits alone on the other. Watch this space.