Market Background: Personal Injury Law Changes
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Personal Injury Law Changes: LASPO
In 2012, The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) was introduced, bringing huge changes and challenges for Claimant Personal Injury law firms. This new law came into force in April 2013 and had a massive impact on the personal injury claims process, as well as the funding of personal injury claims.
Until the introduction of the Whiplash Reforms, LAPSO was described as one of the most radical personal injury law changes faced by the PI industry. Some of the main reforms which were introduced by LASPO include:
- Legal Aid cuts
- The abolishment of success fee and ATE premium recovery from Defendants in the majority of personal injury cases. Success fees are now recoverable from Claimant damages with a 25% cap.
- The prohibition of referral fees in personal injury cases.
- Reforms for costs budgeting and proportionality in the assessment of legal costs, recommended by Lord Justice Jackson.
- An extension of the MOJ Claims Portal to include low value, Employer’s Liability and Public Liability claims. This change means that all EL and PL claims valued between £1,000 and £25,000 are now dealt with via an online electronic portal.
- The introduction of fixed costs for claims which conclude within the MOJ Claims Portal.
- Qualified One Way Costs Shifting (QOCS).
- A 10% uplift on damages.
LASPO was introduced to reduce fraudulent claims and eliminate claims culture in the UK. Prior to the introduction of LASPO, there were huge concerns regarding access to justice for legitimate Claimants, as well as the financial challenges which could have potentially been faced by Claimant Personal Injury firms as a result.
How Has Industry Change Affected Claimant PI Law Firms?
Eight years on from LASPO, we are now seeing the full impact of these changes. These controversial personal injury law changes have posed a huge financial threat to many firms of Claimant PI Solicitors in the UK. Most Solicitors firms have been required to adapt to these changes by introducing new business models, cutting staff numbers, and sadly, we have witnessed the closure of a number of legal service businesses.
Many Claimant firms have responded to the personal injury law changes by exiting the personal injury market and selling their WIP files so that they can focus on more profitable areas of law.
With more reforms on the way, the struggle may not be over for some firms.
Future Personal Injury Law Changes
Just as the dust began to settle following the LASPO changes, the Government announced the implementation of the whiplash reform programme, which is set to come into force in April 2021. The MOJ has also proposed the introduction of a fixed costs regime in medical negligence cases.
We anticipate that these new changes, specifically the whiplash reforms, will lead to many firms of personal injury solicitors deciding to make a strategic exit from the market.
New Whiplash Reforms
In April 2021, we will witness the biggest change to date in the Personal Injury market landscape, with the introduction of the whiplash reforms. The new reforms will bring a number of changes to the way in which those suffering from whiplash injuries (which may affect the neck, back or shoulders) will be able to claim compensation.
The whiplash reforms, which were due to come into force in April 2020, have been delayed and are now planned to come into force in April 2021. These changes are set to bring further challenges for personal injury lawyers who deal with Road Traffic Accident claims.
Some of the planned changes include:
- The introduction of a fixed tariff of damages awarded by the Courts for pain, suffering and loss of amenity for whiplash injuries sustained as a result of a road traffic accident.
- A ban on claims being settled without medical evidence in the form of an assessment and medical report.
- Raising the Small Claims track limit to £5,000, removing the ability for Claimants to recover any legal costs for these types of claims. All whiplash claims valued below £5,000 will be dealt with in the Small Claims Court.
There have been concerns that these changes will affect access to justice for many vulnerable road users and victims of road traffic accidents. The extension of the small claims limit will mean that many Claimants will be unable to obtain legal representation for low-value whiplash claims.
These personal injury law changes will undoubtedly have an impact on Claimant personal injury law firms dealing with road traffic accidents. The whiplash reforms will mean that many firms of solicitors will witness a reduction in profits due to a decrease in the number of Road Traffic Accident cases in which Claimants regularly suffer low-value whiplash injuries.
Fixed costs in Medical Negligence
The Department of Health and Ministry of Justice have proposed the introduction of fixed costs for lower value Medical Negligence claims. The reason for this proposal is to reduce the costs incurred by the NHS Resolution in defending these types of claims. These plans have been criticised by campaigners who believe that the introduction of fixed costs could lead to some law firms becoming insolvent.
File Transfer Managed Efficiently and Effectively
Recovery First has been formed by professionals with extensive knowledge of the legal sector and now has a proven track record of liquidating WIP of claimant PI files. We offer a positive solution for those affected by personal injury law changes.
Our team are aware of the reasons that law firms may want to exit the legal industry, and what could happen if any transfer of files is not managed effectively.
The unique scheme offered by Recovery First is suitable for both professional advisors and law firms. Our team can manage the transfer of files from start to finish; placing case files with an approved law firm so as to protect the integrity of the client’s case, while at the same time maximising the value of the work in progress.
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