Why Personal Injury Attys Are Wary Of New UK Claims Portal
By William Shaw
The U.K. Justice Ministry is engaged in talks for a new website that would let claimants contact insurers directly for automotive-related claims, leaving many British personal injury lawyers wary of an existential threat to their business as well as the veil of secrecy surrounding the talks.
News of the portal emerged in February, when the Justice Ministry revealed that it had agreed to let the insurance industry fund a “user-friendly” IT system for claimants in low-value personal injury claims. It would run parallel to an existing portal run by the ministry, which allows access only to a claimant's lawyer.
But, in a move likely to deter firms from pursuing small claims cases, the government is moving to push claimants into the lawyer-free claims portal by lifting the “no win, no fee” threshold for lawyers to claims totaling £5,000 ($6,981) from just £1,000.
“You are about to potentially move to a system where lawyers get next to zero, and it's questionable as to whether they are even in the system any more, and the claimant’s damages are decimated,” warned David Bott, senior partner at Bott & Co Solicitors. “I live in the real world, and if lawyers are not paid they will not be doing this work.”
Indeed, in a worst case scenario, personal injury lawyers worry that the moves could mean they will lose clients and even be forced out of business if the program takes hold, said Yasmin Tahir of Summerfield Browne Solicitors.
"Mr. Joe Bloggs from the street probably would go straight to the insurer because they don't want the whole headache of going to the solicitor,” Tahir said. "Companies that do personal injury are going to struggle … because it's their main line of work."
Insurance groups campaigning for the program say it will help to more efficiently process tens of thousands of auto accident litigants every year, whose numbers are expected to spike after extensive whiplash reforms take effect in April 2019.
Some lawyers even think the move could put claimants at an advantage, as they will no longer need to split their limited financial gains with an enthusiastic high street solicitor.
“If they reach a position where they were fairly compensated for injury and didn't lose 25 per of damages to lawyers, they might be better compensated than under the current model," said Mark Hemsted, partner at Clyde & Co. LLP.
But others warn that unrepresented claimants could be shortchanged in the process.
“What a claimant solicitor does is provide a bubble of protection around the claimant,” Bott said. “Anything overstated or understated by the other side can be looked at. If you take that filter out it’s not just the rules that are being subverted but the whole process of fairness.”
The Justice Ministry has said that claimants will still have the right to a lawyer if they choose, and that the new portal will help policyholders to pursue simple claims that don’t require legal assistance.
The project is part of a wider effort to discourage questionable claimant lawyers from pursuing neck injury claims that are notoriously hard to disprove. The industry says these claims have become a huge problem and forced up motor insurance costs for all drivers.
Lawyers have voiced surprise that those taking part in the meetings on the portal have been told not to discuss the contents of the talks publicly, given how much of an impact it could have.
"If people are not allowed to discuss anything, it's basically solicitors sitting back to wait for these laws and regulations to come into place,” Tahir said. “It is a concern.”
Brett Dixon, president of the Association of Personal Injury Lawyers, said in February that he has resisted plans to allow the industry to fund the portal “at every opportunity.” But today he is among those who have been gagged by the Justice Ministry.
“Brett is using APIL’s seat at the table to negotiate the best for injured people and safeguard their right as much as possible. There is still a lot of work to do,” a spokeswoman for the organization said about the meetings, noting that the gag order prevented her from speaking any further.
The Justice Ministry declined to comment on the reasons for the gag, though it is thought to be intended to manage expectations about the final deal on the portal. Unsurprisingly, not everyone agrees that important policy should be drafted behind a veil of secrecy.
Gerard Stilliard, head of personal injury strategy at Thompsons Solicitors, said the government should have allowed groups to volunteer their involvement in the talks. Instead, the ministry hand-picked organizations to take part, including the Association of British Insurers, the Law Society and the Forum of Insurance Lawyers.
Given the power and influence of U.K. insurance lobbyists, claimants need proper representation in the process, he added.
“Almost by definition, these individual people are not organized in any way,” he said. “The big question is how the government will make sure that this portal is set up fairly so that consumers aren’t ripped off.”
Lawyers also accuse the government of being too quick to delegate decision-making about the portal to sub-committees.
Stilliard said the ministry needs to show more vision, and tackle thorny issues such as how claims will be handed if an insurer rejects them.
“If this is a genuinely enormous IT project, and we know the record of those projects in terms of overrunning and coming in over budget, we have got to be realistic,” Stilliard said. “The government needs to be much clearer about what it is they want this system to achieve.”
Once the whiplash reforms enter into force, lawyers predict a big hit to the personal injury businesses.
Previous government reforms that fixed lawyers’ recoverable costs already mean that claimant lawyers typically make £500 for a “bog standard road traffic accident,” down from £1,000 or even more, Tahir said.
Such changes have already pushed many firms to push into new specialisms, such as employment and conveyancing. The impending reforms will place even more pressure on firms to adapt.
While there may be little that claimant lawyers can do to stop the government in its tracks, some are hoping that the Supreme Court could help throw them a lifeline. Judges at the U.K.’s top court are deciding whether an insurer that bypassed a claimant lawyer and settled directly with their client was still required to pay the lawyer’s costs.
The case emerged after Haven Insurance contacted clients from Gavin Edmondson Solicitors and settled with them directly. The case is being closely watched by lawyers. They are hoping for the best but fear that a ruling against Gavin Edmondson could help to sound the death knell for their industry.
“If insurers — having argued successfully for a portal system which benefits them hugely — are then going to undermine that system by going straight to claimants ... then the system can’t bear that sort of unfairness,” Stilliard said. “If the Supreme Court went that way then in my view the whole thing would need to go back to the drawing board.”
--Additional reporting by Paige Long. Editing by Rebecca Flanagan and Kelly Duncan.