New laws to tackle the growing compensation culture that has turned the UK into the ‘whiplash capital of Europe’ will hit genuine victims, warn lawyers.
Anyone suffering personal injury must pay their legal costs if they claim compensation, as dramatic changes to the law on ‘conditional fee agreements’ – better known as ‘no-win, no-fee’ deals – kick in from tomorrow.
It means that even when victims win compensation in the courts, their legal costs can no longer be recovered from the defending side.
The changes are part of a Government clampdown on fraudulent whiplash claims, which as Financial Mail has reported since 2009 have inflated motorists’ insurance premiums by more than 20 per cent.
But some lawyers argue that genuine claimants – some who suffer severely after an accident – will be more reluctant to bring claims while lawyers may refuse to take on complicated cases that require more work if they are not able to recover their full costs from the defendant.
Many claims do come from honest people in serious need of recompense. This was the case for semi-retired nurse Anne Spoor, 62, who was badly hurt in a coach crash in 2008.
Passengers were invited to help themselves to drinks aboard the coach while it was travelling. Anne had done so and was walking back down the coach to her seat when the driver braked hard.
She was flung backwards towards the front of the coach and injured her arms and shoulders seriously enough to need surgery in 2010 and again just a few weeks ago – nearly five years after the accident.More... CAR INSURANCE: Everything you need to know Teenage female drivers see car insurance premiums rise by 50% since EU ruling Car insurance: Is it worth paying the extra cost to protect your no claims bonus? Get a car insurance quote
Anne, from Sale in Greater Manchester, who is married and has a grown-up daughter, says: ‘It has restricted everything I do, from helping look after my grandchildren to carrying shopping. Driving is also a problem. It’s debilitating.’
She felt unable to apply for active nursing roles because she couldn’t carry medical equipment in an emergency, for example.
In 2011, Anne used Manchester-based Express Solicitors to make a claim against the coach company and eventually received a £6,000 payout, which she used to reduce the mortgage on her home. Her solicitors’ costs would have been paid by the coach firm or its insurance company.Clampdown: Injury claims for car crashes have sent premiums soaring
But if her claim had been processed under the new rules, her compensation would have been cut by about 25 per cent to £4,500 to cover the lawyer’s costs. She says: ‘Deciding to claim was certainly not something I entered into lightly. The accident had a substantial effect on me and I feel sorry for other genuine people who will be put off and lose out.’
Anyone who has already signed an agreement with a solicitor, before the April deadline, can benefit under the previous rules if their case succeeds, with the full costs recovered from the defendant.
Express Solicitors’ senior partner Robin Patey says: ‘It’s a scandal. The Government has decided to reduce the cost for the insurance industry and shift it on to victims.
‘There is an inequality of arms between individuals bringing a claim and insurance companies that have the money and expertise to defend it.’
Under the new rules, personal injury lawyers face a cap on how much they can recover from the other side – known as a fixed recoverable cost.
This will be about £500 for claims worth up to £10,000. Claimants need to make up the shortfall, capped at 25 per cent of the payout pot.
But Patey, like many other lawyers in his field, maintains that if insurers believe claims to be fraudulent, the onus should be on them to prove it.
Critics of the changes are also sceptical whether the rules will result in reduced insurance premiums for motorists.
Figures issued by the Association of British Insurers suggest that whiplash claims cost £2 billion a year and add an extra £90 a year to the average motor insurance premium.
But John O’Roarke, managing director of LV=, one of the country’s biggest insurers, indicated that the new rules would translate into only a three per cent premium reduction – a far smaller saving than £90.
The ABI says the changes will not hinder access to justice and that the current system is failing because of excessive legal costs and because it encourages a ‘have a go’ attitude, allowing for more spurious claims. A spokesman says: ‘We strongly support access to justice, as long as it does not result in abuse of justice.’