The Government is planning a raft of changes which will affect the way that personal injury litigation is conducted. Last week the Government announced that it was going to ban referral fees in personal injury claims. The Government sees this as an addition to the other reforms which they are in the process of introducing.
In other reforms, the Government is changing the law so that successful claimants will not get all of their costs paid by the defendants and the defendants' insurance companies any more. Instead the claimants will have to pay their lawyer's success fee out of any compensation they have been awarded.
As far as referral fees are concerned, under the present rules, insurance companies are allowed to charge referral fees to solicitors for passing on details of potential claimants who may have been injured in an accident. Claims management companies are also allowed to charge referral fees for passing details which they gather on injured claimants to lawyers. The government is going to ban these referral fee payments. The Government claims that this together with their other reforms will make claimants think harder about whether to sue, and so reduce the costs of claims and give insurance companies an incentive to pass savings on to customers through lower prices.
Whilst many lawyers will welcome the banning of referral fees, the other reforms which are being considered by Parliament are more controversial and are the subject of continuing debate over access to justice.