Article

The Lord Chancellor’s big “but”

Relief at Lord Falconer’s announcement at the APIL conference that the small claims limit for PI cases will remain at £1000 was quickly overshadowed by his big but - although the current small claims limit stays, the DCA consultation paper on case track limits and the process for PI claims proposes the fast track limit be increased from £15,000 to £25,000 and a system of fixed costs and fixed success fees apply to fast track claims. The paper is silent, however, on the fundamental issue of how these fixed costs are to be calculated.

Changes to the timings when it will be appropriate to take out after the event insurance cover where cases are funded by a conditional fee agreement are also proposed and it is intended that claims will be speeded up by introducing new time limits - the claimant’s solicitor will have 5 working days from taking instructions to send a claim form to the defendant, containing the minimum information needed to reach a decision on liability. In RTA claims the defendant will have 15 working days to respond and 30 days for other claims. Currently defendants have 21 days to acknowledge the letter of claim and then 3 months to investigate liability but frequently fail to meet these time limits. The proposed shorter ones are therefore unrealistic and are further watered down by lack of penalties for failure to comply and the suggestion that defendants should be given more time where necessary.

A settlement pack including medical reports, offer to settle and a special damages form, is to be sent to the defendant within 15 days of the claimant agreeing the medical report. If a final prognosis cannot yet be given the parties should agree a time period and should not carry out any unnecessary work during this time. The defendant will have 10 days to consider the offer and where a counter offer is made the claimant will have 20 days for consideration and negotiation.

Other proposals include standard templates and maximum recoverable fees for medical reports, standardised limits for special damages below which Insurers will take the claim on trust, without proof and the use of a tariff or assessment tool to calculate general damages.

The reforms are stated to be “in the interests of access to justice and value for money” but it is questionable whether this is really state intervention to benefit claimants. The price of justice has long been too high for insurance companies who have persuaded the government that high costs are down to greedy claimant solicitors. However, all too often it is the attitude of defendant insurers that leads to delay and increased costs. There are already measures in place to deal with proportionality of costs meaning that if it were merely greedy claimant lawyers trying to drive up their costs, then the costs would not be recoverable under the present system. The DCA is under the impression that reducing costs will mean savings can be passed back to the public through lower premiums. However, surely the insurance companies’ main motive is to improve profits for their shareholders?

The consultation period ends on 13 July 2007 and the paper can be located at www.dca.gov.uk. For in depth comment on the proposals and the possible effect on access to justice, please refer to the full article on our website by visiting www.ts-p.co.uk.

For further enquiries please contact Jonathan Clement (view full profile) on 01892 701264 or email jclement@ts-p.co.uk.

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