For most victims, the support of solicitors and barristers are essential in the pursuit of the financial compensation that they should be entitled to. However, claimants face a complex system of funding options created by the Ministry of Justice, which are acting to restrict the potential access to justice for victims.
Previously, access to legal counsel was widely available through Legal Aid and the subsequent introduction of ‘no win no fee agreements’. However, this innovation gave rise to criticism of high costs accrued in these cases, that insurers had to foot the bill for. In an attempt to tackle the high costs of injury claims, Legal Aid was withdrawn in 2013, which gave lawyers the opportunity to secure fees through no-win, no fee opportunities and damages-based agreements. However, again over time these funding arrangements have faced criticism over high costs.
Since then, the Ministry of Justice and the Court have slowly been eroding funding options, to supposedly reduce the cost of such injury claims with the introduction of the low value claims portal for Employer Liability/Public Liability and Road Traffic Accident, introduced in July 2013 for claims valued up to £25,0000.
This portal established fixed costs according to claim value. For example, for an employer liability claim, valued at under £25,000 and settled prior to the issue of proceedings for £20,000, in the highest complexity band, a lawyer would be entitled to recover £3,097.00 plus an amount equivalent to 10% of any damages over £10,000. Unfortunately, firms quickly realised that it was near impossible to take on and service cases within this fixed cost model.
With law firms expected to take on and resolve a high volume of these cases, the portal’s model was simply not workable. Consequently, victims of injury are being turned away and finding that the choice of legal services available has become more limited.
From 1 October 2023, victims suffered a further blow with the extension of the Fixed Cost Regime. This reform introduced a new intermediate track, to incorporate claims valued between £25,000 and £100,000, to apparently address so-called ‘uncomplicated’ personal injury claims.
The change was designed to give certainty of the maximum costs the losing party will have to pay in advance, and to improve access to justice, whilst controlling legal costs across litigation and ensuring proportionality. However, in reality it is unlikely that the costs provided for will cover the actual costs of running personal injury claims. Instead, it acts to deny genuine victims of injury access to justice for a legitimate claim. This is because the intermediate track is so cost-inadequate, that firms seeking a fair commercial return will not be able to offer a full no win no fee agreement to clients. This is because even where the client wins, the potential recoveries are not proportionate to the work required to support the claim.
If law firms are to survive, they will have to give consideration to adjusting their fee structure and may be forced to charge clients the shortfall in solicitor/client costs and the costs allowed by the fixed costs regime. Alternatively, some providers may decline to take on personal injury claims where the value is considered to be below £100,000, if it is unlikely to be economically viable. Ultimately, firms for whom smaller claims are their bread and butter are likely to have to re-evaluate whether they can continue to operate on such reduced costs recovery, and will increasingly find it difficult to stay in business.
The expansion of the fixed cost regime has caused firms to question the offer of conditional free agreements for claims where the value of the potential damages is likely to be under £100,000. Firms may consider adjusting their fee structure such as asking Claimants to pay privately for part of the legal services to pursue their claim, to cover the shortfall in costs as a result of the fixed costs regime.
Although the Fixed Recoverable Cost Regime currently only applies to Personal injury cases, there are proposals for the Regime to be extended to Clinical Negligence claims, with the original proposal for the Regime to be rolled out to claims valued between £1,501 and £25,000 by April 2024. This has since been delayed as there are calls from various bodies, including the Association of Consumer Support Organisations, for the reform to be delayed or dropped altogether.
In line with concerns over the recoverability of costs in Personal Injury Claims, there are also significant arguments against the Regime being rolled out to Clinical Negligence claims. All Clinical Negligence claims, no matter how small in value, involve a degree of medical complexity and arguably are simply unsuitable to operate under a Fixed Cost Regime.
In rolling out the Regime, it is likely that some Solicitors will consider it uneconomic to take on any clinical negligence case with a potential value of below £25,000, limiting the availability of legal advice and limiting a Claimant’s access to justice. In such a scenario, the insurers to such claims would be the only beneficiaries.
Despite the ever-changing legal structure of Personal Injury and Clinical Negligence, our team at Seddons GSC continue to assist client to navigate these complex legal systems and secure the compensation they are entitled to.