Friday, 21 December 2012

The Government’s Proposed Changes to the RTA Portal are Wrong and Unjust

As the year comes to a close I'd like to look back and write positively about events in 2012. After all, this was the year in which Britain hosted - to universal acclaim - the Olympics and Paralympics, Bradley Wiggins became the first Briton to win the Tour de France and Chelsea, my beloved football team, scooped the Champions' League trophy.

Regrettably, the feel-good factor generated by sporting success is not matched in other sectors of society. As my recent letter to The Times pointed out, Britain is bedevilled by ethical lapses in politics, journalism and finance. We must try to rectify these and instil higher standards of professionalism across the board, but so too, as the long-awaited Jackson reforms come closer to reality, should we take a long, hard look at how well we serve victims of accidents.

Slashing Costs in the RTA Portal Scheme

I say this because of the unconscionable changes which the government has proposed to the RTA Portal scheme. Fixed recoverable costs for Protocol claims were negotiated between insurers and claimant representatives just two years ago, before the Portal came into being. The figures took into account the amount of work required by law firms to process claims, from inception to conclusion. The fixed costs agreed represented the average cost of cases rather than the lowest possible level. They are not exactly generous: typically, time spent on RTA cases far outweighs the costs recoverable at the conclusion of the claim.

But, emboldened by its ban on referral fees and in cahoots with the insurance industry, the government now seeks to slash fixed costs in Portal claims by £700. This proposal is contained in the Ministry of Justice's consultation document. Put boldly, it means that for RTA claims of up to £10,000 no more than £500 in legal fees will be recoverable.

In Cahoots with Insurers

It seems likely that this arbitrary reduction is a reaction to the perceived levels of referral fee that some PI solicitors are thought to be paying. Undoubtedly, the proposal comes on the back of an 'insurance summit' held between the government and insurers earlier this year - to which not a single claimant representative was invited. It also follows a relentless campaign by the Association of British Insurers to influence policy under the guise of reducing motorists' premiums.

On top of this, further changes are proposed. The government seeks to extend the Portal vertically, to handle claims up to £25,000. It intends to fix recoverable costs for such claims at £800 - which is a third less than the current recoverable costs on injuries between £1,000 and £10,000. That's not all. The horizontal extension of the Portal is also proposed, so that it will include employers’ and public liability (EL/PL) claims up to £25,000. Here the costs recoverable will be £900.

A Manifest Injustice

The proposals are manifestly unjust. An injury valued at £25,000 is very serious. It may be permanent; it will almost certainly be long-lasting. Such cases routinely require multiple medical reports, extended periods of treatment and often have a multitude of losses such as past and future loss of earnings, handicap on the labour market and considerable treatment costs. How can it possibly be right that injuries like this are dealt with for a total of £800? The number of hours of work required in such a case bears absolutely no correlation to the proposed recoverable costs.

The same is true of ostensibly smaller claims. £500 yields little of even a junior solicitor's time - unless that solicitor is paid the minimum wage.

When it comes to EL/PL claims, the proposals are no better. By their nature these claims are labour intensive. They do not sit comfortably within a portal regime. Again, though, lobbying by the insurance industry would see these claims shoe-horned into the Portal environment, despite the absence of any considered analysis of whether they are suitable and the correct level of legal fees for such work. Indeed, by way of a general point, Professor Paul Fenn (a leading expert in the interpretation of data from the RTA Portal) has concluded that it is simply too early to glean any meaningful data from the Portal. His suggestion that a further period is allowed for the Portal to settle is all the more compelling given the fact that some 50% of claims presently exit the Portal.

A Drop in Service

As I say, then, I wish I was looking back with a warm glow at 2012 – but when I think of the palpable injustice to victims of accidents that will flow from the proposed changes to the Portal I feel only anger and dismay. There is no doubt, if the changes are implemented, that the qualification and experience of fee earners handling Portal claims will drop. Just as depressing, from the client's point of view, is that many law firms will be forced to recover significant costs from injured peoples' damages in order to meet the massive shortfall in costs.

The government is wilfully neglecting the rights and trauma of accident victims out of a shocking obeisance to the insurance industry. Join APIL, MASS, the TUC and the Law Society and others next year in campaigning to stop the changes becoming reality - and, in the meantime, have a happy and safe Christmas.