The Government's announcement, in the Autumn Statement, regarding increasing the small claims limit to £5000 and abolitioning compensation for soft tissue injuries, has showed no sign of retreat. The effects on different industries will be considerable.
According to a recent survey of over 2000 people launched by the new lobbying group, Access2Justice (as reported in our 'did you know that...' entitled 'claimant firms collaborate to fight reforms'), only one fifth of people advised that they would instruct a lawyer for a claim below £5,000. This is presumably a result of the prospect of recovering only half of any damages awarded, with the rest going towards legal costs on a contingency basis.
In contrast, 25% advised that they would run a claim themselves and a similar figure of 26% of those surveyed said they would hang in the towel and not bring a claim at all.
This could be good news for insurers and their lawyers, if more people are dissuaded from pursuing a claim. With far more time and effort required by going it alone, and therefore with something to lose, it is likely that less spurious claims will be brought.
On the other hand, the prospect of a 50% reduction in damages may simply encourage those who would have instructed a solicitor to represent themselves, perhaps resulting in a greater administrative burden and a longer drawn-out process, potentially resulting in more costs for insurers.
Effects Of Small Claims Limit Increase
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