Market round up: June 2023

The Official Injury Claim (OIC) portal has probably changed personal injury practice more profoundly than any of the many other reforms the sector has witnessed over the past 25 years – and that’s saying something.

It would seem that only around a dozen law firms handle the large majority of claims going through the OIC – an extraordinary contraction when you think how many hundreds, if not thousands, of firms were handling such low-value RTA work before it came into existence.

What are those other firms doing as a result? Merging, selling WIP, targeting other areas of PI and litigation more generally – and giving up, seem to be the main answers.

The OIC marked its second anniversary on 31 May by announcing it has received more than 500,000 claims, of which just under 120,000 having settled, with compensators paying out £130m. Out of context these figures may look impressive, but what they really demonstrate is how effective the portal has been in reducing the number of claims.

Compensation Recovery Unit figures show that the total number of motor claims in 2022, at 370,645, was little more than half the 2019 total of 653,983. The number in the fourth quarter of 2022, 84,257, the lowest of any quarter to date.

The proportion of self-represented litigants recently inched above 10% for the first time and while this figure has consistently highlighted a major flaw in the thinking behind the OIC, the Ministry of Justice argues that this still represents – in actual numbers – tens of thousands more than before the reforms.

A Ministry of Justice spokeswoman told me: “The latest data shows that around 24,000 claims are being processed a month – proving beyond doubt that the service is successfully supporting claimants to register, negotiate and settle their cases. It also shows that unrepresented claimants who use the portal settle quicker than those with legal representation and receive comparable pay outs on average.”

The average settlement rate at the end of April 2023 was 265 days for represented claimants and 127 days for unrepresented claimants; the average value of a settled claim for a whiplash tariff injury was £889 and £933 respectively.

But claimant representatives remain unhappy with many aspects of the system, such as the A2A link and insurer behaviour. Jeff Winn, chairman of accident management business Winn Group, went so far as to suggest that the OIC may in time face a legal challenge in the same way that the employment tribunal reforms were knocked back after being found to be discriminatory.

He argued that the significant reduction in volumes of claims showed that the OIC “has restricted access to justice for around half the people who would otherwise receive justice and compensation”.

And further delay will infect the system now that the Supreme Court has agreed to hear the insurance industry’s appeal against the Court of Appeal’s decision in Rabot on valuing mixed claims.

Consumer awareness of the OIC remains very limited and I am struck by the idea of F4L’s head of marketing Andy Cullwick that the claimant industry needs to come together to improve the OIC’s visibility.

He says: “The pandemic and the prospect of reduced damages undoubtedly contributed [to the fall in claim numbers]. However, cuts to law firms’ advertising budgets and the increasing move away from mainstream platforms to more below-the-line methods may have also played their part.

“Perhaps consumers simply aren’t as aware of their right to claim these days and, if so, is it time that we, as an industry, took action to address that. This could take the form of a genuine collective whose sole aim is to create and execute successful marketing campaigns that reach potential claimants and inform them of their rights and routes to redress.”

It’s an admirable and sensible notion but the failure of the main claimant organisations over the years to show unity – in stark contrast to insurers – is one of the reasons they are where they are.

Things might not be so bad if the rest of the system was working well, but it’s not. According to the latest government figures, the average time for multi/fast-track actions to reach trial in the first quarter of this year was an average of 79.9 weeks, more than six weeks longer than just a year earlier and the longest period on record. At 51.9 weeks, the time from issue to trial in small claims was near the all-time high of 52.1 weeks reached in the third quarter of last year.

The Ministry of Justice is showing little interest in sorting this out, with all the focus on the much more politically important figures for the criminal courts.

This in turn makes all the more worrying the prediction of the new president of the Association of Personal Injury Lawyers that the extension of fixed recoverable costs later this year will need a decade of litigation to clarify how they work. The delays might make that even longer.

Jonathan Scarsbrook also expressed concern that “what will and will not fall into fixed costs is ambiguous across various elements of civil litigation” – especially clinical negligence claims. He said it was not clear what fell within fixed costs. “Vulnerable parties may or may not be able to recover the costs they need to pursue their claims and they won’t know this until frankly it is too late.”

Finally, there was a surprisingly muted reaction to publication of the Civil Justice Council’s costs review. This said that “overwhelmingly, and somewhat surprisingly”, responses to its consultation last year supported costs management, with “evidence of real and sustained progress in the discipline and understanding around costs and this has consequently improved case management and the proportionality of costs”.

Yet the responses came with calls for changes and the working group’s “fundamental recommendation” was that budgeting should be retained alongside “acceptance of the hypothesis that ‘one size does not necessarily fit all’”.

The working party “tentatively” identified three areas where costs management could work differently from the norm and each other: personal injury and clinical negligence work, claims progressing in the Business and Property Courts, and “other specialist work”. It said that, where QOCS applied, particularly in clinical negligence cases involving the NHS, defendants should only have to provide the Precedent H front sheet and not full budgets, subject to the court requiring one.

The group also recommended piloting a “costs budget light” regime for part 7 cases in the multi-track valued up to £1m – these cases were “at greatest risk” of incurring disproportionate cost but are not so high in value that they needed full-scale budgeting – and a “lighter touch” approach for Business and Property Courts cases worth more than £1m.

The consultation supported continuing with the guideline hourly rates and uprating them every year (something that should obviously be adopted across fixed costs as well), and a review of the costs provisions of the Solicitors Act 1974, which pretty much everyone agrees need to be updated.

Whether the courts really control costs adequately is a debate for another day – I suspect those beyond the legal profession may have a different view – but the CJC has set out a path to reform that should not be too scary.

The lack of fanfare around the report might be because there is so much on everybody’s plate at the moment that they haven’t the time to worry about changes far less radical than the OIC coming down the line.

Neil Rose is the Editor of Legal Futures