Changes at the MoJ, delay on the SCT limit, but ongoing changes elsewhere

Parliament has resumed from its summer break and the latest ministerial reshuffle has included one key new appointment in the Ministry of Justice. Shailesh Vara, the MP for the rural seat of North West Cambridgeshire, has replaced Helen Grant MP as the minister responsible for issues including civil justice. While the Secretary of State, Chris Grayling, will no doubt be involved, it is the new minister who will announce the Government's decision, when it comes, in response to the consultation which closed back in March on reducing the number and cost of whiplash claims including the important decision in relation to the small claims track limit which may well impact on all types of injury claim. This of course is the decision which had been delayed to the autumn whilst the MoJ look at the Transport Select Committee's report which came out in late July.

Mr Vara is a solicitor who says in his publicity that he worked at "City and West End of London firms", which apparently included CMS Cameron McKenna. He comes from a business background, so it might be thought he would be more sympathetic to reducing costs and administrative burdens to business than the last minister. While he will need some time to get his feet under his new desk, which may mean that any decision on the small claims track limit should not now be expected much before Christmas; insurers may be reassured about the background of the new minister making the decision.

On the claims side, the Portal Company have now produced no statistics as to the number of new claims notification forms since they last did so back on 2 August, when they released figures for the month of June. The statistics for both July and August are now overdue, but will presumably be issued shortly. In the meantime, the pace of change in the claims marketplace continues to be quick.

This week, the Law Society's Director of Legal Policy has expressed his organisation's public view that within three years, after more consolidation, there could be five or six giant claimant personal injury firms dominating the market. We would agree with him that signs are continuing to point that way. The Law Society go on to claim that they think there will be every incentive for those firms and their supporting organisations to increase the number of claims made, and with the backing of the substantial capital that they will have available, there will be the means to achieve this. It should be recognised that the Law Society's relationship with insurers is currently strained after the Society's "Don't Get Mugged by an Insurer" campaign, and against that background it is though difficult to give credence to the Law Society's claim that the introduction of QOCS removes a major disincentive to prevent claims. After all, under the pre 1 April processes, surely the vast majority of injury claimants were already protected against adverse costs orders by ATE policies that they did not have to pay the cost of?

Judged by the money being spent on claims advertising, confidence in some parts of the claimant injury sector remains strong. The claims management company First4lawyers representing thirty personal injury firms including SGI Legal are spending £10million on a yearlong advertising campaign based on the feel-good factor of a claimant receiving a damages cheque. Slater & Gordon are launching their own TV advertising campaign in a bid to become a household name, investing £1million in the initial phase.

Whilst Slater & Gordon's proposed acquisition of Simpson Millar has been deferred until 2014, Simpson Millar themselves have entered a joint venture with Neil Hudgell (of fame) to acquire existing case loads of solicitors leaving the market, and SGI Legal continue to be keen to buy existing case loads, encouraging potential sellers to do so by the end of this year to get best value for their cases.

While the large firms with capital continue to invest in the injury claims market, those at the opposite end of the scale face a very different future. The latest research is by Begbies Traynor, which reveals that of small to medium sized law firms, nearly one quarter of them are now in financial distress, one in eight of them have stopped trading during the last 12 months, whilst the Solicitors Regulation Authority have 1,200 firms on its financial stability watch list. In all of this news, there is strong evidence of the movement away from small claimant operations to much larger ones with money to spend, and while judgment must still be reserved on future claims numbers, there continue to be clear signs that the new emerging operations will be chasing claims hard in order to make their business models work.

As far as the new litigation processes are concerned, Mr Justice Ramsey, the judge in charge of implementation of the Jackson Reforms, says that he and a small group are reviewing areas of Jackson not yet implemented, and it is worthy of note that they have identified the issue of costs management prior to the commencement of proceedings as an area of focus. From the viewpoint of insurers, this is a worthwhile area for scrutiny, but careful thought will be needed as to how to achieve progress where the court supervisory process does not generally extend into this type of area pre-litigation. Another area not yet picked up by the law makers from the Jackson review is a move towards the fixing of claimant costs outside of the injury arena, and this again may be an area of focus over the next couple of years. Jackson himself argues that this should happen, writing in his preface to a special supplement of the 2013 edition of Civil Procedure that the recommended costs figures given in his Final Report for fast track non-injury claims would be worth referring to when the question of what costs are proportionate is looked at.

Whilst the direction of change cannot always be anticipated, it is clear that the pace of change is going to continue to be fast.


This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

Simon Denyer


I am the Strategic Legal Development Partner within the Insurance team.