A report on the costs of legal cases which includes workplace accidents has suggested changes that could rob injured people of up to half of their compensation and will make it harder for trade unions to provide a comprehensive legal service to their members.
The winners from the report will be insurance companies and their shareholders who will enjoy extra profits.
Sir Rupert Jackson – one of Britain’s top judges – launched his Civil Costs Review in response to constant insurance company complaints that legal costs were too high.
The detail of his final report, published recently, is now being studied by the government. There is pressure from the judiciary and insurers for it to form the basis of legislation.
Among the proposals are:
• An end to insurers having to pay for the risk of cases being lost. This will make it financially risky for unions to back some members’ claims.
• The money that insurers pay when they lose a claim – a success fee - which is meant to cover the cost of unsuccessful cases will no longer be paid by them. It is proposed that this would have to be paid out of the claimant’s compensation.
• Claimants will also, if they lose, have to pay the cost of medical reports and court fees and insurance against that risk will no longer be available.
• Fixed costs (ie the amount of the costs of pursuing a claim that can be recovered from the defendant) in personal injury claims where the likely value of the whole claim is less than £25,000 compensation.
Fixed costs will enable employers to estimate what the cost of injuring a worker would be and whether it is a price worth paying.
The report appears to have forgotten the furore about no win no fee lawyers taking money from compensation. Jackson’s proposals would mean a potential take from an injured person’s compensation of up to 50% while insurers pocket what they are currently paying out.
The ‘good news’ for claimants and trade union legal services is a decision not to increase the small claims limit. But that is only a temporary reprieve as the small claims limit will be reviewed again at the end of 2010 if it is not considered that the reforms on fixed costs and success fees have been satisfactory by then.
Even if the reforms are considered satisfactory the limit will still be raised to £1,500 when inflation since 1999 - the last time the small claims limit in personal injury cases was increased – justifies it.