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What are the features of this new RTA landscape?
Much has been said about litigants in person pursuing their own claims, and much has been planned for that eventuality. There has been a lot of talk about the complexity of guidance for litigants in person and how this can be simplified. This appears however to be window dressing. The government needs to demonstrate that despite (all but nominal) legal costs being irrecoverable, no one will be barred from recovering compensation. In practice, we can be certain that only a handful of the bravest souls will “go it alone”.
If this is true, will claims management companies take up the slack? Those in control of the Portal have confirmed that access is not confined to solicitors – CMCs can also use it. Wide scale claims handling by CMCs appears unlikely however.
Firstly the existing authorisation which CMCs normally hold from the FCA does not cover this activity - they will need additional authorisation. Secondly CMCs will be subject to the same economics as solicitors. If the work is only marginally profitable for solicitors, it will hardly be attractive to CMCs as a new venture. Thirdly CMCs will not of course be able to act on behalf clients once litigation is commenced. Only solicitors can do that, so if CMCs cannot resolve a claim without court proceedings, there will then need to be a cumbersome and expensive change of representation when a solicitor takes over an existing claim.
Fourthly CMCs are not currently authorised to advise on and purchase ATE policies. ATE policies will still be needed because the disbursements incurred are broadly unchanged and there are still a number of adverse liabilities which an unsuccessful claimant may face.
A representation revolution seems unlikely.
All of this means that the solicitor firms will continue their traditional role when it comes to handling RTA personal injury claims but some things will change. There will be fewer of the very smallest claims because some clients will decide not to bother claiming, but otherwise claim numbers will be broadly unchanged. Solicitors will need to offer a more streamlined, online service with, so far as possible, less direct client contact. Fixed damages for whiplash claims will obviously help by removing the current work of assessing and negotiating quantum.
These changes are already well advanced amongst many solicitors.
Inevitably solicitors will receive more costs for larger claims than for smaller claims, but solicitors are likely to take the rough with the smooth and so the overall eventual effect will be that larger claims will subsidise the cost of smaller claims. Whether this was ever intended by those who framed the new rules, we will never know.
In any event, the new landscape faced by solicitor firms will be rougher than before, but it will still be the same landscape, and in years to come we may even grow to feel comfortable in it.
Simon Pinner (Director)
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