Opinion

New law will impact access to justice

9th July 2019

New law will impact access to justice

The Civil Liability Act received royal assent on 20th December 2018 and work began on setting the wheels in motion for a new ‘Litigant in Person’ portal to be created.  The intention was to allow people who have sustained soft tissue injuries to make their own claims direct to the insurer of the person who caused the accident.

Once the portal is developed, those who have sustained injury will have to evidence and submit their own claims without legal support.  In particular, the injured victim will have to grapple with the complexities that often arise in such cases including commissioning their own medical evidence and proving any financial losses. Children will have to take an additional step of issuing court proceedings in order to have any compensation award approved by the court.

Andy Shaw, Head of Personal Injury and Clinical Negligence at Higgs & Sons solicitors explains: “Compensation awards will shift from the current negotiated settlement based on the individual circumstances of the case to a tariff-based system. The targeted launch date for the new tariff system is April 2020.” 

The reform programme also extends to those who have sustained significant serious injury. 

In March this year, the government set out plans to restrict costs to those who are significantly injured and where the compensation awards are no more than £100,000. 

Andy predicts that if the government’s plans come in to force as expected, this will have a major impact on how cases can be presented: “It will in all probability mean that a seriously injured claimant cannot afford to obtain all the evidence that is necessary to prove their losses and  accordingly they will they will have to decide where to focus their efforts. 

“Unfortunately they will be fighting a well-resourced insurance company who may decide to invest heavily in defending a case to limit the ultimate compensation award.”

The Ministry of Justice is also revising the current discount rate which is applied when victims of life changing injuries accept lump sum compensation payments. The amount they receive is adjusted according to the investment return they expect to achieve by investing compensation for future losses. The discount rate is applied to reflect that a claimant can invest his settlement proceeds to generate a return.

Andy explained: “On the 7th December 2016, The Lord Chancellor reduced the discount rate by 3.25 points to -0.75% because the evidence was such that the investment returns for safe investments was historically very low. The discount rate changed from the 20th March 2017 to reflect this. The change reflected the fact that a Claimant who was receiving money today for losses which would not arise until the future was only expected to invest the settlement proceeds in very low risk investments which was necessary because the awards often included compensation for long term care needs.”

Following the change, many insurers had to adjust their reserves to cater for the fact that they would have to pay higher compensation awards and insurers lobbied the government for further change.

As a result of that lobbying, the Civil Liability Act 2018 was passed and in August 2019 the rate will change again - predicted to increase to between 0.5% and 1.5%.  This will result in a reduction in the compensation awards for those seriously injured from the awards currently being made today.

In changing the discount rate so soon after it was changed in favour of those seriously injured, Andy commented : “There has been a clear material shift in the principle of law which had been in place for many years as a result of the Civil Liability Act 2018, in that an injured person who historically has not been compelled to take risk with their compensation award is now expected to take some risk.  Unfortunately, the change of approach potentially puts at risk compensation awards which are provided to meet the Claimant’s long-term needs.” 

Andy concluded: “The personal injury and clinical negligence industry has endured reform for many years.  We have numerous protocols, portals, tracks, guides, codes, practice directions all with separate cost structures which makes the system far too complex.

“I question how a litigant in person is expected to understand and follow such a complex claims process and what is more of a concern is that all of these changes are likely to have a real impact on access to justice at all levels.”

Andy Shaw is a Partner and head of Personal Injury and Clinical Negligence, supporting those affected by serious injury.

 

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