Personal Injury sees massive reform in Autumn Statement

9 December, 2015

Law firms specialising in the provision of personal injury services could see a significant decline in their client base following proposals to raise the small claims limit for personal injury claims and a scrapping of general damages for ‘minor’ whiplash injuries.

During the Autumn Statement, George Osborne announced the government’s intention to remove the right to general damages for ‘minor’ soft tissue injuries and increase the small claims limit from £1,000 to £5,000.

The Chancellor said: “We’re going to bring forward reforms to the compensation culture around minor motor accident injuries.”

“This will remove over £1bn from the cost of providing motor insurance. We expect the industry to pass on this saving, so motorists see an average saving of £40-£50 per year off their insurance bills.”

The government has said that it is ‘determined’ to crack down on the ‘fraud and claims culture’, while a statement from the Treasury estimated that ‘Whiplash claims cost the country £2bn a year, an average of £90 per motor insurance policy’.

The increase to the small claims limit will effectively mean that victims of accident claims with a value of up to £5,000 can no longer recover any legal fees, save for a nominal fee, if they win their case.

Law Society President Jonathan Smithers is ‘gravely concerned’ the proposals could stop compensation payments for road traffic ‘minor’ soft tissue injuries.

“[The proposals] will completely undermine the right of ordinary citizens to receive full and proper compensation from those that have injured them through negligence,” he said.

“These proposals will stop people obtaining legal advice for all personal injury claims below £5,000 and stop people claiming for often debilitating injuries arising from road traffic accidents if these injuries are considered minor.”

“People recovering from their injuries will have to bring claims as litigants in person (without any legal advice) and this can be very unfair because those defending the claims can often afford to pay for legal advice,” added Smithers.

“This therefore undermines ordinary people’s ability to access justice. Especially if defendants simply deny liability forcing people to fight through the courts without legal help.”

Smithers said personal injury claims, even lower value claims, can include serious injuries arising from the fault of an employer or other road traffic accidents where legal rights can be very complex and the injuries caused debilitating.

“A new limit of £5,000 will mean personal injuries including facial scarring would be considered as ‘small claims’. This is totally unacceptable.”

The society’s president also refuted the proposition that these proposals are about stopping fraudulent claims.

“Fraudulent claims are clearly repellent but they should be dealt with by targeting the fraudsters and not the vast majority of honest claimants who have been injured and bring genuine claims,” he said.

In the last few years many firms have diversified their operations by incorporating personal injury services into their practice. However, the changes outlined by the Chancellor are likely to reduce the market considerably if they are introduced.

At Watson Buckle our team of legal sector specialists can help your practice prepare for any changes to the current personal injury market, so that you can cope with a decline in fee income. To find out more about our services, please contact us.