It still looks like the whole world of Road Traffic Accident claims will change at some point in 2021 – April is the plan at the moment. The limit for Small Claims, and therefore recovery of legal costs, in all Personal Injury cases will go up to £2k. Alongside this, the limit for RTA claims will rise to £5k. Awards for Whiplash will be based on a tariff with shockingly low figures. A 6-month injury which would attract up to £3630 under the JAC Guidelines will drop to just £450.
The upshot is that most RTA cases will be small claims and the right to recovery of costs in whiplash cases will virtually disappear. So, what will happen? Will lawyers abandon the sector? Many are looking at other areas of work such as Housing Disrepair where there is a more favourable costs regime. But I think that others will look at more creative options.
One idea is Small Claims Portal which is a joint solicitor/barrister initiative. They are offering a fixed fee service of £999.00 inc VAT and encouraging solicitors to refer cases to them rather than simply turn clients away. Other firms that handle large numbers of cases are likely to follow suit.
The other likely option will be DBA’s. They have never really taken off since the rules were relaxed in 2013. This is because the indemnity principle limits what is recoverable from the 3rd party although there are likely to be changes in the future. But a DBA might be a real option where there is no right to recover costs in any event. So we are likely to see cases taken on with deduction of a straightforward percentage of the damages to cover the costs. This is not likely to help a whiplash victim who only gets £450 (neither is any sort of fixed fee). But as cases up to £5k are shunted into the Small Claims Track, these agreements could be an answer. There are plans to relax the DBA rules.
Could this ultimately see the end of inter partes costs?
I think is still a long way off! But I RTA claims will not go away and we should expect to see other initiatives as and when the ‘reforms’ eventually arrive.