We reproduce below our letter today to the Ministry of Justice who are consulting about introducing fixed fees recoverable by Claimant's in claims for personal injury. These fees will make it uneconomic in many cases for solicitors to represent their clients properly and for that and other reasons we are opposed to the proposals:-
Ministry of Justice
102 Petty France
LONDON SW1H 9AJ
Response to Extension of the RTA PI Scheme: Proposals on Fixed Recoverable Costs (Helen Grant MP – Consultation Letter of 19.11.2012)
Our firm responds to Ms Grant’s consultation document of 19.11.2012 as follows:-
1. Our firm does not pay referral fees. We do however, like any commercial enterprise devote some funds to marketing. Therefore an arbitrary cut to fixed fees on the supposed basis that all lawyers pay referral fees is wrongly concieved. The insurance companies on the other hand are allowed to spend millions of pounds each year marketing (even though, in the case of motor insurance it is mandatory), and so it seems grossly unfair that the Government should decide that marketing to encourage citizens to pursue legitimate claims against insurers should be severely restricted, while peddling insurance products is not.
2. Our firm has provided professional legal services in Hackney to individuals and businesses for over 100 years. The fixed fees proposed will effectively make much personal injury work uneconomic for solicitors to undertake while still complying with our professional duties as defined by the Solicitors Regulation Authority which requires, amongst other things, that lawyers:-
· Know their client;
· Take instructions;
· Investigate funding options;
· Provide advice on funding;
· Carry out checks as to money laundering, ID, conflict of interest and bankruptcy;
· Manage client’s expectations throughout the life of the claim;
· Updating clients on the progress of their claim throughout;
· Advising clients on the merits of the claim and the value of compensation they can expect to receive and gathering evidence necessary to make their claim.
3. Your consultation document does not provide any evidence from the Government to support the contention that current fees are too high. As you will be aware, the present fees were agreed by insurers and claimant’s representatives following negotiation facilitated by the CJC.
4. The inequality of arms which already exists between the insurers and injured persons will only deepen with fixed costs. The incentive on defendants to narrow the issues in cases is lost where claimants costs are fixed. Compliance with the Personal Injury Protocol by defendants is already a problem; however, if fixed costs were introduced there would be even less of an incentive for defendant insurers to comply. The amount of work involved in each case is largely dictated by the defendant. They decide on the issues which the claimant has to prove. Fixing costs therefore does not fix the amount of work involved. There is a real risk that as a result of fixed fees, the work that can be undertaken on each case will be so restricted, that many claimants will not recover the compensation that they are entitled to and that will prove to be a windfall to insurers, leaving a side the potential increase in professional negligence claims.
5. We can see no good reason why the Government seeks only to fix claimants costs. The defendant’s presently are not to be fixed and yet they have an equal bearing upon the level at which insurance premiums are ultimately set. Unrestricted costs for the defendant means that they will be in a position to draw out the claims process against the fixed costs recoverable by the claimant, thereby undermining the claimant’s representation and its quality.
The Free Market
The Government purport to be economic liberals and supporters of the free market. Everything however that the Government appears to be doing to restrict claimant’s rights goes against the grain of liberalism. Instead, the large and monopolistic insurance companies have entirely dictated the direction of policy to their own benefit and that of their shareholders. The impression we have is that the market is being fixed for the already strong and powerful.
Please be assured that should the extension to the Protocol, the introduction of fixed fees, and payment of success fees from damages proceed as planned, we shall do everything we can to make our clients aware of our opposition to the changes.
DOWSE & CO"