23 March 2015
Claimants and solicitors have both suffered significantly from changes introduced by the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO), according to new research* commissioned by Bristol-based legal expenses specialist ARAG UK.
In the 18 months since LASPO was introduced, 80% of practices say that claimant’s access to justice has been restricted – significantly so, say 64% – while 72% say that the 10% uplift in general damages is inadequate to cover the additional costs that claimants now have to meet.
Anonymous interviews were carried out with senior figures working on personal injury and/or clinical negligence cases at 100 different firms.
68% of solicitors consider that LASPO has had a negative impact on their practice, while not one reports any positive impact. Some 31% of practices now admit to rejecting proportionately more cases than they did before the legislation was introduced.
Furthermore, while 83% of practices offer After-the-Event (ATE) insurance, only half offer it on all cases, risking higher premiums due to adverse selection by those firms who cherry pick the more certain cases.
“Where firms don't insure, the client is often left holding the risk unless the firm agrees to carry the risk themselves. This leaves the firm vulnerable to Professional Indemnity claims from disgruntled claimants, an area we know is on the rise" comments Paul Hurley, Director and Head of ATE at ARAG.
Equally telling evidence emerged that only 11% believe they are securing the additional 10% uplift on all successful their cases. Claimants now end up with less in damages with only 1% of practices believing the additional 10% fully covers the additional cost of ATE premiums and success fees.
“The results of the research are not surprising” comments Paul Hurley, ARAG Director and Head of ATE. “The reforms should have ensured that a claimant is returned to the position they were in prior to the injury, without penalty and this is not the case. In fact, for many without the means to fund a case themselves, access to justice is simply not available.
"Whoever is in power following the next election, an urgent review of the reforms is required, ensuring changes are fair to all sides in the claim, not just the defendants. With legal aid only available in exceptional cases, ATE insurance is the only recognised form of protection that can safeguard the claimant against adverse costs in pursuing a claim and so the cost of premium should be recoverable from the losing party”
The publication of the research follows a recent report from the House of Commons Justice Select Committee criticising the reforms. The committee found that the Ministry of Justice had “harmed access to justice” and failed to achieve “…three out of four of its stated objectives.”
* Independent market research consultancy MSS carried out the telephone research with a randomly selected sample of solicitors operating throughout England and Wales. All respondents were key decision-makers, involved with personal injury and/or clinical negligence cases. The surveys were conducted between September and November 2014, some 18 months following the introduction of the LASPO reforms.
For more information please contact :
Paul Hurley, Director & Head of ATE
0117 917 1686/ Paul.Hurley@arag.co.uk
David Haynes, Head of Underwriting & Marketing
0117 917 1684 / David.Haynes@arag.co.uk
Rachael Wornes, Marketing Manager at ARAG
0117 917 1578 / email@example.com
Notes to Editors
ARAG plc is part of the ARAG Group, the largest family-owned enterprise in the German insurance industry, employing 3,600 people internationally, generating premium income in excess of €1.5 billion.
Combining the best of Assistance and ‘Before’ and ‘After’ the Event solutions, ARAG plc has developed a comprehensive suite of insurance products and services for a wide range of legal issues for businesses and private individuals.