The last few years have been difficult for those law firms specialising or relying in large part on personal injury work.  A new set of reforms proposed by the government recently could make the job even harder. 

The Government recently published a proposal designed to reduce the number of “minor exaggerated and fraudulent soft tissue injury (whiplash) claims stemming from road traffic accidents”[1] and the proposed reforms are wide-ranging.

The aim of the Government is to reduce the costs incurred by insurers in dealing with those claims and as a result, to decrease annual insurance premiums for millions of motorists.  In 2014/2015 there were 702,000 road traffic accident related personal injury claims of which 523,000 involved a soft tissue injury and received a financial settlement.[2]

Insurers estimate that soft-tissue injury claims costs the industry around £2bn a year which is passed on through motor insurance premiums. If the reforms go ahead, this is likely to lead to a saving for insurers of around £1bn[3] which equates to a £40 to £50 average cut in the cost of each motor insurance policy.  Some insurers have already committed to passing on savings, with some confirming 100% of any savings will be passed on to consumers.[4]

This new consultation is the latest in a long (and seemingly never-ending) march of reforms in the sector.  On 30 April 2010 the original Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents came into force.  The rules originally applied to all injury claims arising out of road traffic accidents with a value of between £1,000 and £10,000.

In July 2013, the scope increased to cover any claim with a value between £1,000 and £25,000 and the claimant’s ability to recover any success fee was abolished.[5]  At the same time, a new Pre-Action Protocol for Low Value Personal Injury (Employers Liability and Public Liability) Claims was introduced.

While the protocols themselves are not an issue for personal injury lawyers, the fixed recoverable costs regime which run alongside them has made it difficult to turn a profit when handling these types of claims.

The total costs a claimant can claim from a defendant in road traffic claims up to the value of £10,000 (even if an oral hearing is needed for quantum) is £1,000.  This increases to £1,300 if the claim is worth between £10,001 and £25,000.  The costs recoverable for employee and public liability are slightly better, at £1,400 and £2,100 respectively.

The rewards for carrying out this work are slim, and this has led to several failures in the legal sector in recent years.  Firms such as Ashfields, Isaac Abraham and Pro Legal have become casualties of the fixed cost regime.  The latest reforms, if imposed, could potentially have a devastating effect on many personal injury law firms and may mean we see an increasing number of failures in the legal sector.

The reforms proposed by the current consultation are wide-ranging. They include:

  • fixing the compensation payable for pain, suffering and loss of amenity for minor whiplash claims; or
  • dispensing with compensation altogether and raising the small claims limit in ALL personal injury claims from £1,000 to £5,000 (or higher). This means claimants will not be able to recover any costs for claims valued below the limit.

The Association of Personal Injury Lawyers (APIL) issued a briefing note earlier this year.  This confirms that according to research carried out by it in 2006, around 70% of personal injury cases were valued at £5,000 and under.  Although this research is 10 years out of date, APIL expect today’s figure to be similar, given the lack of change in damages since then.[6]

If the Government approves the reforms, it is likely to mean that many claimants will either be put off making a claim at all, or at the least, will choose to represent themselves.  In 2014/2015, claimants in 99% of road traffic related personal injury claims had a solicitor.[7]  This will surely decrease significantly because of these reforms.

The Ministry of Justice has estimated that claimant lawyers will lose £20 – £31m in revenue a year. This is based on the number of cases that will not be pursued, or will proceed with the claimants acting without solicitors.[8] The Ministry of Justice’s response to this potentially devastating blow?  Claimant lawyers are “assumed to find alternative economic activities”.[9]

The campaign group, Access to Justice, have predicted:

  • “mass unemployment in defendant and claimant law firms”[10]
  • up to 60,000 redundancies
  • the closure of law firms dealing with personal injury within two years (or a few months if they deal solely with road traffic accidents).[11]

Responses to the consultation are due by Friday 6 January which means the personal injury industry doesn’t have long to frame its no doubt many objections to this proposal.

And lawyers dealing in civil litigation other than personal injury shouldn’t get too comfortable either. Lord Justice Jackson has asked for written evidence or submissions for his review of fixed recoverable costs, the aim of which is to extend the fixed recoverable costs regime across other areas of civil litigation.  Responses are due by 23 January 2017.[12]


[1] Consultation: Reforming the Soft Tissue Injury (whiplash) Claims Process, November 2016

[2] Impact Assessment: Reforming the Soft Tissue Injury (whiplash) Claims Process, November 2016

[3] Impact Assessment: Reforming the Soft Tissue Injury (whiplash) Claims Process, November 2016

[4] AVIVA Nov 2016:

LV= Jan 2016:

[5] Legal Aid, Sentencing and Punishment of Offenders Act 2012

[6] Association of Personal Injury Lawyers Briefing – Government proposals to reform low-value personal injury claims, February 2016

[7] Impact Assessment: Reforming the Soft Tissue Injury (whiplash) Claims Process, November 2016

[8] Impact Assessment: Reforming the Soft Tissue Injury (whiplash) Claims Process, November 2016

[9] Impact Assessment: Reforming the Soft Tissue Injury (whiplash) Claims Process, November 2016





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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.