Whiplash Claim Consultation – Act Now
The Government today at 00.01 hours, announced the commencement of the Whiplash Claim Consultation. It has to be completed by 06/01/2017, which the MoJ knows falls during a time of absence from work by the people most affected, due to the Christmas Holidays. Essentially, instead of having 7 weeks to deal with this we may realistically expect most people to have merely 4 to 5 weeks.
The language used is unfortunate and inflammatory (e.g. “a predatory claims industry”), and the content goes much further than Osborne’s Autumn Statement. The language suggests that the Government may be unprepared to undertake any U turn on this policy. Additionally, the intention is to increase the Small Claims Track to ALL PI claims and to a figure of £5000. EVERY PI FIRM is affected. No legislation is required to implement these draconian reforms. April or October 2017 could be the trigger dates.
Once implemented the consequences are irrefutably Armageddon:
- Costs in cases under £5000 for general damages will be irrecoverable from defendants;
- Clients will be frightened off from bringing claims, due to the costs and complications of issuing in the Small Claims Track;
- Case volumes handled by law firms will immediately plummet in Claimant and Defendant firms;
- Cash flow will be seriously affected and the banks may call in business loans for Claimant and Defendant firms;
- Firms will not be able to afford marketing fees to increase new business (fast track and multi track). New cases will dry up;
- Fees charged to clients in the Small Claims Track will not fund law firms (estimates that turnover will drop to 20% of current levels in a typical PI firm with a 25% RTA, 70% EL/PL/OL and 5% Clin Neg practice – worse for purely RTA fast track firms.) That means current overheads will not be met;
- There will be mass redundancies following implementation, estimated at possibly 60,000 people;
- The Treasury will lose PAYE, NIC, Employers NIC, VAT, Corporation Tax, and landlords will lose rent, Council Tax will not be paid as firms cease trading; Loss of tax 1 billion per annum?
- Outsourced business allocated by law firms will be decimated;
These proposals affect every person practising law on behalf of injured clients in England and Wales and more importantly, they dissolve the rights of 60 million people forever.
If implemented, RTA firms both Claimant and Defendant, will go immediately into run off and early closure within months. Firms practising in other areas of PI Law will go into run off and will cease trading probably within a 2 year period.
We can influence HM Treasury (from where the reforms have emanated) and MOJ if we can present an industry representative independent report from Capital Economics, which forensically quantifies the economic impact of the reforms on job losses and loss of Treasury income. This report should prove to be political dynamite against the current extent of the proposed reforms. We believe it will make the Government listen and tone down the proposals, as A2J has suggested in our not yet published, Alternative Claims Framework.
YOU HAVE TO PARTICIPATE IN THIS SURVEY NOW
As you already know, A2J has commissioned Capital Economics to prepare an economic impact report. We intend to go to HM Treasury again and give them the report, as we believe it will demonstrate economic devastation for the PI industry with tens of thousands of job losses and significant loss of tax revenue.
We need your help to complete the survey now more than ever. We want to present data demonstrating a good slice of the PI market. So your firms involvement is vital. Completion takes only about 1 hour by your FD or accounts personnel. It’s easy but so crucial that you participate.
The data you supply is utterly confidential to 3 people only at Capital Economics.
EFFECTIVELY YOU HAVE LITTLE TIME LEFT TO UPLOAD DATA – SO PLEASE ACTION
The link to the online survey can be found here: https://www.surveymonkey.co.uk/r/a2j_survey_ce
Clients legal rights, and the jobs of tens of thousands, including yourself and your colleagues, depend on you playing your part.
Thank you for your support!