Solicitors fee for low-value RTA claims capped at £500 from May

We’re all used to seeing the attention-grabbing headline: accident claims with 100% compensation, guaranteed.

For those smaller RTA claims, which have taken much of the blame for the unprecedented rise in automobile insurance in recent years, it’s unlikely this service will be offered from the end of this month.

“Ambulance chasers” have been the bane of insurance companies ever since spurious accident claims, such as whiplash injuries, have set up shop with a production line outside accident claims courts.

RTA accident claims easy money for ‘ambulance chasers’

Joe Public was quick to cotton on to such personal injury claims as easy ways to win a little compensation for even the slightest of bumps when behind the wheel or as a passenger in an RTA.

One look at how many solicitors are involved in RTA litigation in the UK, some 20,000, demonstrates exactly how commonplace such accident claims are.

Many cases are taken on a no win, no fee basis, therefore the aforementioned Mr Public quite literally has nothing to lose.

What’s ground the gears of insurance companies on the nasty end of these virtually unwinnable cases (from their perspective) is the way some solicitors have actively gone out of their way to find possible victims.

It’s fair to say that without a no-win, no-fee promise, ‘victims’ may have otherwise not bothered making a claim.

The fees solicitors receive have made it possible to pass on all of the compensation to the claimant, another nugget making it worthwhile victims proceeding with a personal injury claim, regardless of its substance.

The days of 100% accident claim compensation are over

Prior to last week, the capped fee for small RTAs stood at £1,200. The way accident claims solicitors know the law surrounding personal injury has made 100% compensation a feasible business option.

However, the fee was dramatically reduced last week in the High Court and subsequently confirmed by Justice Secretary, Chris Grayling.

This decision was upheld despite a legal challenge by parties who could see how such a ruling could damage the whole ethos of the 100% compensation niche, an industry in its own right.

The capping of the fees personal injury solicitors receive for small RTA accident claims now makes it highly unlikely that all of the compensation awarded for this type claim will be passed onto the claimant.

Insurers have finally got one over on personal injury solicitors

Desmond Hudson, chief executive of the Law Society, told its members how angry he was that Government had taken on board the advice of insurance groups “unchallenged” by implementing the £500 cap seemingly without question.

What it does mean is that any compensation awards for small accident claims will now have a sizeable percentage extracted to pay for the solicitors’ time as the new limit of £500 may well not now cover costs.

Mr Hudson went on to suggest that not only will some firms of solicitors may even go under because of the ruling, but genuine claimants may not get redressed the full amount they’re due as solicitors will have to deduct some of the compensation to make it worth their while.

Is it just me, or do we expect to see a glut of self-employed solicitors willing to take on cases for £500 rising from the ashes of some of the personal injury firms that may indeed fold?

The worm may indeed have turned and, despite Hudson’s protestations to the contrary, I think claimants will still get their full redress; it’s just that the larger firms will be priced out of the small accident claims business.

What’s your take on this quite momentous ruling? Who’s the winner? Insurers, claimants or smaller personal injury solicitors?