Until the new process for dealing with “Low Value” RTA claims was introduced in April 2010 there would have been little difficulty in an injured person transferring to new solicitors.
“Low Value” is currently defined as “not more than £10,000.00”.
However, there is now a problem to address.
Where a claim is proceeding under the “Pre Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents
” the rules only allow the Claimant’s solicitors to recover prescribed fixed costs, regardless of the amount of work they have had to do, as follows:
“Stage One” fixed costs of £400.00 plus VAT, paid upon receipt of an admission of liability by the insurer.
“Stage two” fixed costs of £800.00 plus VAT, paid upon acceptance of an offer in settlement of the claim.
“Stage three” fixed costs of £250.00 plus VAT, if the claim cannot be settled by agreement and it is necessary to apply to the Court to determine the amount of damages.
As a significant proportion of the available costs will already have been ‘swallowed’ by the former solicitors, the new solicitors would therefore have to agree to undertake most of the work on a pro bono basis (ie for free) or charge the client for the work (which they would in all probability not wish to do; (a) because as a matter of principle an innocent injured Claimant should expect to recover their reasonable costs from the party who injured them and (b) because if the Claimant were to stay with their current solicitors it is unlikely that they would be charged in any event, depending upon the funding arrangement they have with their current solicitors).
There are certain provisions in the Protocol for cases to come out of the “process” and when they do so the pre-April 2010 rules apply and the costs restrictions are removed. In those circumstances the Claimant’s solicitor is entitled to charge for the work undertaken in the normal way and the costs are paid by the “at fault” driver’s insurers when the claim is concluded.
It is therefore very important for anyone considering transferring their claim to know whether their claim is proceeding under the new process (often referred to as the MOJ process) or the pre-April 2010 process, as this may very well determine whether it is going to be possible to change solicitors.
The situation is also about to become a whole lot worse. Even though the fees are already low, the government is set on halving fixed fees in April, which will mean that if a claim remains in the “process”, it will prove virtually impossible for a Claimant to change solicitors.
To put the level of fees in context, as things currently stand, if a claim is dealt with properly, a solicitor is lucky to break even on the basis of these fixed costs. That goes some way to explaining why so many such cases are not dealt with properly, but rather are processed through ‘litigation factory’ operations in order to reduce overheads. There is also considerable pressure at such firms to settle claims as quickly as possible, in order to maximise the profit margin. With fixed fees about to be halved, poor standards of representation are about to become a whole lot worse.
So, from April 2013, not only will it prove virtually impossible to change solicitors within the “process”, but already poor standards of representation are likely to plummet.