Whiplash claim consultation

  • To read the Capital Economics report – PI Reforms Impact, commissioned by Martin Coyne at Access to Justice please CLICK HERE.

 

CONSULTATION ANNOUNCED – Deadline 06/01/2017 CRUCIAL and URGENT – ECONOMIC IMPACT

Dear All,

The Government today at 00.01 hours, announced the commencement of the Whiplash Claim Consultation. It has to be completed by 06/01/2016, 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.

BUT !!!!

We can influence HM Treasury (from where the reforms have emanated) and the 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

Click here to link to the online survey

As you already know, Access to Justice (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. Click here to read a PDF letter from Mark Pragnell at CE confirming confidentiality.

EFFECTIVELY YOU HAVE LITTLE TIME LEFT TO UPLOAD DATA – SO PLEASE ACTION

Click here for the PDF version of the survey, which should be printed off, populated by hand, and then used to complete the online survey.

Click here to link to the online survey

Clients legal rights, and the jobs of tens of thousands, including yourself and your colleagues, depend on you playing your part.

Do not be regretting that your firm did not participate in one years time.

Thank you for your support.

Martin Coyne
Managing Partner
Ralli Solicitors

t: 0161 615 0614
m: 0779 870 1336

Main Office
t: 0161 832 6131
f: 0161 615 0741
e: enquiries@rallisolicitors.co.uk
w: www.rallisolicitors.co.uk

Access to Justice (A2J)

1.   Sign the petition:-at https://petition.parliament.uk/petitions/173099

2.   Write to your local MP raising concerns about the process:- http://accesstojusticeactiongroup.co.uk/lobby-and-write-to-your-mp/

3.   View the A2J leaflet

Presently we have 75 complete surveys from Law firms and 100 which are incomplete. It takes just 1 hour to do. Large firms have completed it, as well as sole practitioners. This data will be grafted into a report, which we believe (from an initial report prepared by CE in February) will show at least 60,000 job losses across the sector and a billion lost in tax to the Treasury. The Government’s policy is based upon:

  1. reducing / eliminating the number of whiplash cases and cold calling;
  2. and secondly hopefully, reducing insurance premiums by £40 per policy (initially it was £90, then £50 and now £40). Currently 2 insurers (AVIVA and LV have “pledged’ to lower premiums – for how long? Also there are about 300 insurers and they have not openly “pledged” to do the same!!). Premiums have rocketed and the specialists say money will not be passed on.

The Impact Assessment states that in the event of imposition “Those providing services (lawyers, medical experts, Claims Management Companies) are assumed to find alternative economic activities.” Helpfully, the MoJ provide no empirical evidence to support this assessment. It is a hunch. That is where the compelling CE report will make the difference and hopefully impress HM Treasury not to pursue such an aggressive policy, which flies in the face of PM Theresa May not favouring big business. How does a PI solicitor retrain and find a firm to take her/him on with no experience?

Jack Straw said at the Modern Law Conference in May, that there are too many lawyers (currently about 133,000 solicitors). There are 12,700 PI solicitors and about 2,777 firms doing PI work. Multiply the PI solicitors by 3.5 for support staff and you have 57,150 affected. Add on the doctors, medical agencies, Defence firm staff (as they will go out of business too) and other support organisations, which are linked and 60,000 is a pretty accurate assessment. With the supplied data for say 200 law firms (which is utterly confidential BTW to 3 people only at CE) we can project the data across the industry and give a pretty accurate assessment of the economic carnage which will ensue.

Such a result would be hugely damaging for the Government. It would be a political own goal. Remember Sajid David travelled to India to preserve 12,000 steel making jobs. This policy (which does not benefit the Government financially) is disastrous and on another level.

As the consultation responses have to be completed and lodged by 6 January 2017, time is critically of the essence.  There is an enormous gap in much of the data and supposition contained both in the Consultation document and in the Impact Assessment. Many MPs have advised that the key to achieving a more sensible reform, is to highlight the enormous economic impact that the proposed changes will have within the personal injury industry and the loss of income to HM Treasury.

Capital Economics is a world-renowned specialist organisation, which provides economic data to business sectors. With the data they can illuminate the lacuna in the Governments data.

By way of example, my firm undertakes purely personal injury work, and undertakes approximately 25%  RTA work, 5% clinical negligence and the balance of 70% being employers liability public liability and occupiers liability work. The current proposals in their entirety, or the imposition of a £5,000 Small Claims limit threshold will reduce the turnover of my business to 20% of the current turnover. Our profit margin varies with between 15% and 31% dependent whether we have a good year or a poor year. As a consequence we could not afford to continue in business and around 50 people would lose their jobs. In addition there will be loss of council tax, rent to landlords, outsourced work to businesses supporting the personal injury work, and a significant loss of VAT, corporation tax, PAYE, employers NIC,  schedule D tax et cetera et cetera. Multiply that across 2,777 law firms undertaking PI, plus all of the support industries and some runs into probably a billion pounds. CE will prove this.

Obviously the economic argument is not the only argument and there is an enormous campaign that we have at A2J… We now have more followers on Twitter than APIL, in less than one year. We are driven and committed to make a difference. The Committee is detailed on the web site and all have given their time for free over the last year to ensure that 60 million people do not lose their legal rights created in the 7th Century and that the industry is not decimated.

Our web site has all of the information www.ajag.co.uk and our Twitter handle is @ccesstojustice. We also have a Facebook site and are prevalent on Linked In.

I have focused on the economics as this CE report is time critical

DEADLINE Friday 02/12/2016

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