PI firms on the edge cannot wait for mixed claim perfection

The stories of woe in the personal injury market are, as so many predicted, becoming increasingly commonplace. In the past month alone we have seen a firm in Liverpool reporting a big profit fall and another established business deciding it was best to sell up and get out of the market altogether after profits halved. They won’t be the last.

Insurers and government officials will shed few tears at the consolidation of the market that they have effectively campaigned for over many years. The Civil Liability Act was designed to reduce claims and by implication the number of firms handling them, and in that respect it has worked.

The legislation took a blunt approach to whiplash claims by imposing – without judicial oversight – a set of tariffs for setting compensation. But crucially those officials mandating damages levels for whiplash had neither the inclination nor perhaps the expertise to do the same for so-called mixed claims, where injured victims complained of whiplash and some other physical ailment.

The claimant sector is nothing if not resourceful and adaptable. It didn’t take a legal futurologist to work out that, by limiting damages (and therefore solicitors’ fees) for one type of claim but not for another, you were likely to encourage more of the latter. As one cynical defendant lawyer once put it to me: ‘You watch, they’ll all develop sudden wrist injuries now’. The latest Official Injury Claim portal statistics show that they had a point: while 96.5% of claims included a whiplash-tariff element, 67.3% were also mixed claims.

This problem is caused by the inaction/inability of the government to fix a tariff for non-whiplash injuries, but it has been left to the profession and ultimately judiciary (whose opinion is required this time) to rule on test cases which can establish precedents.

But the further issue is that – like so often in the years of tough government reforms – the PI sector cannot seem to unite and speak as one voice.

Representative bodies such as APIL and MASS want to wait to collect a body of cases that will cover every type of claim and every eventuality. It is understandable that they would want the court to establish rules based on a complete set of circumstances, but this takes time. As I understand it, the OIC process requiring insurers to admit liability before claimants can obtain medical reports has hindered the collection of this basket of cases. Understandably as well, getting claimants to sign up for a test case which might be delayed for months has been a challenge.

It’s a tough balancing act for solicitors advising these clients: do they urge them to take what compensation might be on offer for now, or encourage them to join a fight for more that could take a long time to resolve?

One solution might be a Court of Appeal hearing later this year for two cases on mixed injuries which have come before Birkenhead County Court and have now been pushed forward in the queue. The firm running the cases, Robert James Solicitors, insists it cannot wait for a basket of cases to set a precedent and it must act now to protect clients and establish what compensation they can expect.

Many firms cannot wait. Practices are suffering massive profit falls not because they are badly run, but because a crucial source of income is closed due to an impasse in settling so many of their cases. Waiting for a perfect solution is a noble aim, but many PI firms on the edge do not have the luxury of time.