The appeal from The Law Society earlier this month for the government to delay the extension of the fixed fee portal seemed to fall on deaf ears, like most recent appeals from the legal sector. The rules for the portal extension were finally released on Friday 17th July, allowing the personal injury industry just 12 days to adjust and prepare for their implementation.
The reason for the Law Society President, Lucy Scott-Moncrieff’s complaint to the Justice Minister Helen Grant, was due to the government’s delay in releasing the new rules. Scott-Moncrieff claimed that the government seemed ‘hell-bent on disruption’; by failing to give the legal profession the notice they reasonably need to adjust and prepare. Yet the government chose to ignore this and has elected to stick with the implementation date.
So with just under a week left to prepare for the introduction of the new fixed costs rules, what are they? And what does the extension to the claims portal mean for the future of personal injury claims?
Moving forward the claims portal will now be extended to include higher valued claims ranging from £10,000 to £25,000, as well including employment liability claims (EL) and public liability claims (PL) with value of £1,000 to £25,000. Also introduced is a brand new, untried fixed costs scheme for claims that exit the portal and either settle or go to court. Claimant’s costs with their own solicitor are uncapped, but the costs due back if the case is won are capped, putting all claimants at risk of having to pay part of their lawyer’s fees. This is not without precedent, but unlike before, the capped costs make it highly unlikely that law firms can absorb the drop in income and all claimants are put in this position, regardless of their means. Worse still, there is no cap on what a defendant insurer can choose to spend to fight a case, so the playing field is certainly not level.
The new rules will apply to any claims submitted to the portal on or after the 31st July. If a claim has been submitted prior to this date then it will continue to proceed under the current protocols.
There will also be new rules regarding the provision of the fixed costs a claimant may recover if they choose to proceed with a claim after a Part 36 offer. In the case of the defendant this will now mean that if the they refuse the claimant’s offer to settle and the court then award the claimant damages equal or greater than the amount they were prepared to settle for, the claimant will no longer be limited to receiving fixed costs and will be entitled to costs assessed on the indemnity basis in accordance with rule 36.14.
In regards to claims that exit the RTA and EL/PL portal, moving forward, the costs, which might be recovered, are prescribed in the rules with the amount depending upon the nature of the claim, the stage the proceedings have reached and the damages which might be agreed or awarded. In the case of the defendants’ costs, if the judgement is found in their favour, the court will have regard to the amount of costs which the claimant would have been able to recover at the same stage of proceedings had they been made in the claimant’s favour and will not exceed that amount.
There are numerous exceptions to the rules, but the big two are: (1) Failing to beat a Defendant’s Offer – the claimants damages are yanked back to pay for the insurer’s lawyers at whatever sum a Judge gives them up to the cap and (2) if a case is dropped or thrown out because the judge thinks it is a weak claim. Again, the defendant’s insurer’s solicitors will be keen to pounce on a pay day off a claimant. Again, this is not means tested and ability to pay the bingo win money to the insurer’s lawyer does not come into it. Some may say that weak cases should be punished, but that ignores the fact that a trial judge has to decide between two versions and once he has decided who to believe, it will be easy to allege that the other side should have seen the weakness of their case much earlier. Claimant’s can be sure to be hit with these allegations every time they drop a case or lose a trial. The punishment for running a bad claim is heavy indeed. It is a great pity that running a bad defence and refusing to settle costs a defendant and his insurers not one penny more. Every claimant’s solicitor has a cabinet full of examples of insurer delay and time wasting, so it is a shame – but wholly in keeping with the rest of the government’s “reforms” – that the changes turn a blind eye to misconduct unless it is by the claimant.
In response to The Law Society complaints about time constraints last week, a spokesman for the government responded saying: “These complaints are disappointing, as the legal sector has been aware of the plans for 18 months and has been closely involved in the shaping of the rules – they have been consulted throughout the process.
“The draft rules were made available in good time and the direction of travel has been clear. There is no legitimate reason for lawyers to claim they are unprepared.”
Time will tell on how much of a success the extension will be and how lawyers will adapt to the new rules. For full details on the new fixed cost rules and Claims Portal extension.