Claimant firms face uncertain future after MoJ sees off reform challenge

Claimant law firms could be forced to rethink their business models after the Government saw off a challenge to its forthcoming overhaul of the low-value claims system – changes that could cost personal injury (PI) lawyers an estimated £200m a year.

The Association of Personal Injury Lawyers and the Motor Accident Solicitors Society last Friday (1 March) failed in a High Court challenge to the Ministry of Justice’s (MoJ) plans to cut fixed fees for claims processed via the Road Traffic Accident (RTA) Portal from £1,200 to £500.

The RTA Portal – set up in 2010 as a fast-track for low-value PI claims – will be opened up to employer’s liability and public liability claims this summer and rebranded as the ‘Claims Portal’, with the maximum size of claims raised from £10,000 to £25,000.

DWF occupational health head Simon Denyer thinks the changes could force claimant lawyers to reconstruct their business models to adapt to the new system.

“These reforms will prove to have a significant impact on the claimant business model. We are now in the territory where claimant lawyers need to reassess – if they haven’t done so already – their business practices and look inventively at how a profitable business model can be constructed.

“It’s possible some firms may look to trim their claimant practices. But on the flip side, there’ll be others that will seek to expand as they adjust to the new fee levels.”

But Kennedys insurance partner Tracy Head believes the simplicity of the Claims Portal will reduce the need for more expensive senior lawyers to get involved in low-value claims.

“Motor claims require the completion of a questionnaire, which is a tick box exercise with only a small amount of free text, so its completion can now be passed down to a more junior lawyer – although I appreciate some of the smaller firms with less resource, particularly IT, may struggle,” she commented.

Weightmans claims partner Kate Lotts (pictured), who helped design the original RTA scheme, does not believe the reforms will impact on access to justice, as some within the claimant lobby have argued.

“The combination of changes, including the referral fee ban, should see some modest reduction in claims frequency, particularly around the more frivolous claims but I don’t think there’ll be an issue of access to justice.

“Over the past ten years the motor claims market has undergone significant change yet claims have gone through the roof – firms reinvented themselves and they will do again.”

The reforms of the current system are part of the MoJ’s ‘compensation culture’ crackdown, with the legal fee cuts intended to enable insurers to pass on savings to customers through lower premiums.

Related: ‘Compensation culture’ review calls for curbs on personal injury law advertising.