Tuesday 20 November 2012 by John Hyde
Thousands of personal injury solicitors face uncertain futures after the government unveiled plans to slash fees for road traffic accident work.
The Ministry of Justice wants to cut fixed recoverable costs for claims up to £10,000 through the RTA Portal from £1,200 to £500. For claims valued up to £25,000, fixed costs will be set at £800.
Solicitors running public liability or employer liability claims will be able to recover £900 costs for cases up to £10,000 and £1,600 when the case is worth up to £25,000. The new costs are likely to come into force next April when the RTA Portal is extended.
The government believes solicitors can offset the smaller income by not paying referral fees, which will be banned from next April.
But the Law Society described the proposed costs as 'woefully inadequate' and promised to raise concerns immediately.
'The likely result will be that many solicitors will not be able to afford to carry on doing this type of work,' said a spokesman.
'There is a danger that if our members are forced to stop this type of work it will have a detrimental impact on access to justice for accident victims.'
The Motor Accident Solicitors Society (MASS) told the Gazette that around 2,000 solicitors from 200 firms are employed in the RTA sector. They handle approximately 500,000 cases every year.
MASS chairman Craig Budsworth said the existing costs were agreed between claimants and insurers based on the amount of work required to undertake the case. 'The costs never had a referral fee element factored into them,' he added.
The insurance industry, which lobbied the government earlier this year for reduced costs, has welcomed the new proposals.
Paul Evans, chief executive of AXA Insurance, posted on Twitter: 'Stripping out lawyers' and claims mgt cos' obscene profits for whiplash claims will lead to lower premiums - good news for honest drivers.'
The MoJ will accept responses to the consultation until 4 January.
The government has until Friday this week respond to a letter before action from the Association of Personal Injury Lawyers. The letter threatens a judicial review over the process that has led to fee changes and the extension of the portal.