Beware of what you wish for!
30th October 2014
Some years ago defendant insurers kicked up a fuss about the cost of success fees and After the Event (ATE) premiums in RTA cases. Apparently this raised the costs of all motor insurance and we all had to pay for it.
In April 2013 the Jackson reforms provided the solution and the defendant insurers were happy, car insurance premiums would fall for all.
18 months later, defendant insurers are again complaining.
Shock horror, fixed fees and the portal have had the desired effect, costs are falling but damages have started to increase. With success fees coming from damages (up to 25%) and damages going up by 10% to compensate for such, what did the defendant insurers expect claimant lawyers to do? If a business model works all is fine, if the income falls (reduced fees) then something has to give. Firms could go out of business with all the consequent problems or fight back and change the business model. It’s called survival.
This is not the only reason damages are increasing, previously unused heads of claim are being put forward. More sophisticated arguments are being used, psychological loss is more prominent but how is it quantified?.
This reminds me of the ‘cold war’ arms race. All it does is increase costs to BOTH sides. What is needed is a compromise, everybody gets a fair share and all are happy, is that too much to ask?
When I get home tonight I will be checking the bottom of the garden to see how the fairies are getting on!!
One way for claimant solicitors to push harder for their clients is to insure early, this protects clients and gives them the means to fight. Currently it is possible to have cover of £50,000 for between £90 and £500 for straightforward cases. Policies provide cover for own disbursements and other sides’ costs on failure to beat a Part 36 Offer. If you wait until a Part 36 Offer is received then the cover may be more expensive or not available.
The market is constantly changing, so the best way forward?
Use QLP to keep up to date with the market.