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Djanogly delivers speech to the Association of Personal Injury Lawyers

13th December 2006

A New Claims Process - Putting Victims First ?

I pay tribute to the work of the Association of Personal Injury Lawyers and think that this forum is a good idea before the consultation. For many lawyers, this is not an easy time - both in terms of having their work load and fees squeezed, and also in terms of the uncertainties posed by the Carter proposals. This is particularly the case for civil and criminal legal aid lawyers. But many of you will practice with family lawyers, criminal lawyers and mental health practitioners and will be fully aware of the serious and potentially disastrous implications Carter, now the Government's proposals, may have for the High Street practice.

It is Government's job to protect lawyers and facilitate access to justice for all. We have been urging the Government to act on the important issue of small claims for a significant period of time and it seems bizarre that we are still waiting for the Government consultation.

Indeed I debated this issue with ministers as long ago as March - and so I can certainly understand practitioners' frustration at government indecision on this issue.

Small Claims

We are all aware of the importance and extent of personal injuries law.

However I have to say also that reading some reports - I am sorry to see how our small claims system can be undervalued. The small claims system is a low cost, speedy and informal way of allowing litigants to bring claims for small monetary amounts. The system provides greater access to justice as people are encouraged to bring their claims by the speed and informality of the small claims track. There are however problems with the present system.

The current threshold figure of £1,000 for small claims was introduced in 1991 and after a fifteen year period is outdated. As a consequence of inflation, very few personal injury claims can now be brought in the small claims system. Claims for several minor injuries, which by right should be brought in the small claims track, are now being brought in alternative tracks. This situation has the consequence that the small claims system is not being used frequently enough for personal injury cases. Not only has this resulted in the court's fast-track system being needlessly clogged up, but the expense of bringing a claim is now sometimes disproportionate to the amount of the claim.

The recommendation from the Better Regulation Task Force in their May 2004 report 'Better Routes to Redress' was that the small claims limit should be raised from the £1000 introduced in 1991 to £5,000. But we believe this level would shift the balance too far towards the reduction of access to justice for the sake of cost reduction. For example, I note from the Association's briefing that an estimated 70% of personal injury cases are for less than £5,000.

Also, I note that the Constitutional Affairs select committee and the Association of District Judges recommended a figure of £2,500.

Raising the limit too greatly could have certain detrimental effects.One significant problem could be that claimants may not be legally represented when they should be.

One discouragement for parties who are legally represented is the fact that the winning party in a small claims case is unlikely to be able to recover the costs they have incurred for their legal representation.

I do accept that the complex nature of many personal injury cases means that it is often inappropriate to expect litigants-in-person to deal with such cases.

When one considers that defendants in personal injury cases are often insurers, who will almost certainly be legally represented, the disadvantages to litigants-in-person will be even greater.

Considering the strong arguments both for and against raising the small claims limit for personal injury, a compromise solution needs to be found.

An increase of the £1,000 limit is probably necessary, as this figure is clearly outdated and results in disproportional expenses incurred in claims for a relatively minor amount.

But how can this increase be achieved without resulting in certain people being denied access to justice?

Providing adequate and satisfactory court advice could be decisive in achieving this. The crucial factor in supporting parties in an action is not just providing them with legal representation, but with adequate information and advice before they come to court and whilst they are in court.

The burden will fall on the courts to be more pro-active in ensuring that potential claimants have all the information which is required to bring a claim and can understand that information.

If quality and easy-to-understand advice can be provided, and district judges can continue their existing constructive interventionist approach to small claims cases, then this will hopefully negate much of the harm caused to parties who would otherwise be forced by an increase in the small claims limit to represent themselves.

We do also need to recognise the advantage of not going to court and the benefits of mediation, which can be quicker, cheaper and less stressful and with quicker compensation payments.

We recognise the ABI's argument, which is accepted by the CAB, that there needs to be a greater priority on rehabilitation and closer working with the NHS to provide back to work programmes. The Compensation Act should help this by allowing offers of help to claimants and apologies by defendants - without accepting liability.

On the claim side - simpler forms and earlier claim notification should be reviewed and fixed timetables could provide more certainty for both parties. Possibly as low as six months rather than the current average of 2 years. Also worth reviewing would be a public scale of compensation payments for common injuries and financial penalties for unreasonable behaviour during litigation.

So there is much to discuss in the government's coming consultation.

Finally, we now have the Legal Services Bill. For the most part, we accept the aims of the Bill and the benefits it could bring in terms of market flexibility. But we do have significant concerns, not least the involvement of ministers in the regulation of legal services. We believe that the chairman and members of the Legal Services Board should be appointed by a body such as the Judicial Appointments Commission - not by the Government.

We also have concerns over legal complaints handling, where there have been legitimate concerns about delays and inefficiency. The idea of the new Office for Legal Complaints is a good one - but we are concerned about the proposed staffing and location of the OLC. A new look and a new start is needed here.

The concept of Alternative Business Structures is interesting - but the market must be wary of those who lack proper professional ethics.

This is a great time of change in the provision of legal services but we need to ensure that access to justice is not ruined as a result.

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