New UK regulations squeeze personal injury lawyers

March 24, 2013 The Guardian has reported on a survey indicating that nearly a fifth of the personal injury law firms operating in the north-west of England are considering closing down. The figures come from a survey conducted by Liverpool law firm O'Connors.

There are two regulatory changes that are threatening the industry: first the imminent banning of referral services, which advertise personal industry litigation and then sell clients on to law firms.
The second change relates to the RTA portal, a computer system used by lawyers for all claims worth between £1,000 and £10,000, which covers most personal injury claims arising from motoring accidents.

RTA portal regulations currently permit claimants' lawyers to charge insurers fixed costs of £1,200, but last month justice secretary Chris Grayling announced that these fees would be cut to £500 from the end of April. In addition, the portal will be extended to cover claims worth between £10,000 and £25,000, for which costs will be fixed at £800.

The government justifies cutting lawyers' fees on the basis that solicitors will save as much as £700 per case in referral fees. But lawyers complain that they will still have to pay marketing costs.

The Guardian points out that the changes may result in fewer spurious claims, and premiums may be lower. But one thing is for sure: people who suffer serious accidents through the fault of others will find it harder to claim compensation.

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