“The government in their wisdom removed legal aid for personal injury work in the mid 90s, allowing solicitors to take these cases on under a ‘no win no fee’ arrangement.
“They effectively wanted to save money and said that members of the public could have access to justice - the right to make a claim - by solicitors taking the risk of litigation, rather than the State.
“In return for taking that risk solicitors were allowed to charge a success fee - a bonus on their basic costs - to compensate them for the risk of losing and not getting paid.
“Initially the success fee was payable by the client out of their damages but this was capped at 25% so the client was always guaranteed 75% of their compensation, which was highly acceptable to everyone.
“Then, for some bizarre reason, the government decided that the success fee would be paid by the defendant’s insurer. So when the defendant lost, the insurer would pay compensation, legal costs and then the other side’s success fee as well. This didn't go down at all well with the insurers and so they lobbied to get the government to cap success fees in certain types of cases.
“For instance in road traffic accidents - which make up the vast majority of all personal injury cases - the success fee is capped at 12.5%. In work-related accidents the success fee is capped at 25%. The exception is where the claim concludes at trial ( very few do) in which case, if successful, the solicitor can receive a 100% success fee i.e. double their costs.
“Over the past 10 years or so, at comercrawley we have operated all our claims on no win no fee and do not charge clients a penny, win or lose. We fund (to the tune of several hundred thousand pounds) all the ongoing expenses of running clients’ claims including the cost of medical reports, other experts’ fees, police reports, the cost of accessing medical records etc. On one case alone we have over £50,000 outstanding on disbursements we have funded for the client.
“Firms like comercrawley have lifted the burden of funding personal injury litigation off the State and now insurers are saying they don't like it. They say there is a litigation culture but in fact the number of claims made is not increasing.
“David Cameron talks about personal injury lawyers jumping to take on a claim on the slightest pretext – but the whole point about no win no fee is that you don't get paid if you don't win the claim. If you took on any old rubbish you would soon be out of business. Who wants to work on a ‘no win no fee’ basis on something where there is only a slim prospect of success?
“If the current proposal was just that the success fee should once again be paid by the client out of damages - subject to the same safeguards as before - then I don't see too much of a problem.
“In fact, as I am sure that the government is well aware, some personal injury solicitors will cut their own throats by offering to do cases for lower and lower success fees until we get back to where we are – clients not paying anything towards the litigation.
"However, this is just the thin end of the wedge. Over the last seven years personal injury lawyers have seen insurers and the government force through costs changes which have meant that the vast majority of claims are now dealt with on fixed costs - and we have seen a significant reduction on these costs during this period. For example, seven years ago a straightforward road accident claim valued at £5,000 would attract fixed costs of £1,800 - now such a claim would attract costs of just £1,200.
“I am sure that the government and insurers’ game plan is to drive solicitors out of the market for modest value claims. There is already a new electronic portal system which covers road traffic accident claims up to £10k, which has been designed for use by the public - and I am sure this is the forerunner of excluding costs altogether so the public have to pursue their own claims, and we all know what will happen then.
“The insurers will bank on members of the public getting worn down by the process of delay and prevarication and I am sure the vast majority just won't bother if they have to take on the insurers on their own.”
http://www.comercrawley.co.uk/
Personal Injury Solicitors Liverpool
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