Damages awards set to increase next year by 10 per cent

Judges say that personal injury compensation awards will be increasing by 10 per cent from 2013 in part of an effort to make it less expensive for defendants to lose personal injury claims.

At first blush this seems mad – why raise the damages awards for claimants as a way to reduce costs to insurers or institutions like the NHS? Well, it’s just one side of the coin; the other side will be an end to the custom of having losing defendants paying the ‘success fees’ and legal costs for the winning side’s personal injury solicitors.

Thanks to the new Legal Aid Act that was signed into law this year, this practice comes to an end on 1 April of next year. Now winning claimants will pay their own lawyers’ legal fees out of their compensation awards, which is why the damages awards are being increased by 10 per cent in order to keep up with the change.

The practice could lead to millions being saved in the car insurance industry, as successful car accident claims can generate massive legal costs in addition to any compensation payment directly awarded to a claimant. Medical negligence cases are likely to become less expensive overall as well, as the NHS was in the same rapidly-sinking boat that insurers were prior to the law.

The new change will also lead to fewer spurious claims being brought in the UK, as claimants now no longer claim the entirety of their award on a successful claim and lawyers will not be able to charge exorbitant legal costs – success fees are also capped at 25 per cent of the usual costs, unlike the current 100 per cent fees charged to losing defendants now.

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