Richard Finan says the debate over the small claims limit is a distraction to achieving cost controls
No one seems to be disputing the need to make litigation less expensive and complex. But the continuing obsession with an increase in the small claims court limit might just be obscuring a very viable alternative to achieving the same overall objective.
The Woolf reforms set out to reduce the costs, delays and complexity in the personal injury claims process – all good stuff.
Underpinning this "new landscape in civil litigation" was the principle of proportionality and it is here that has the potential for all concerned to successfully deliver the change we all want to see.
The proposal for an increase in the small claims limit to £5,000 has generated a flurry of arguments for and against.
The liability insurers, fuelled by what they see as very justifiable concerns about unreasonable costs, see the increase as a way to effectively remove the cost recovery position completely on large volumes of claims.
Not surprisingly, claimant lawyers call for the status quo, highlighting the importance of legal representation and providing access to justice.
Both sides have some valid arguments but by preventing solicitors from recovering costs, one important and fundamental issue directly aligned to any increase is revealed.
As the vast majority of claims would fall within the proposed £5,000 limit, large numbers of claimants would effectively go unrepresented.
And we should all be concerned about the implications of claimants having no legal representation especially if they face disputes over liability or quantum.
The commonsense option is for this proportionality, already enshrined within Woolf and Access to Justice, to be the cornerstone of dealing with costs recovery, rather than it simply continuing to be a common battle at local court level between claimant lawyer and liability insurer as is currently the case.
As a result, insurers will have certainty that costs will be more proportionate to the value and complexity of claims.
And solicitors will be able to recover costs and provide representation for the large numbers of low value claims, safe in the knowledge that insurers recognise these as proportionate.
The legal expenses insurance industry already has proportionality terms within its policy wordings. As insurers covering the claimant's legal fees, there can be no argument put forward to persuade them to indemnify legal costs above the likely damages award.
If claimant lawyers are already used to working within this principle under these policies, surely this would therefore be an easier solution than continuing the debate over the issue of raising the small claims court limit.
Proportionality has an important role to play in the compensation claims debate and, while liability insurers may argue that even proportionate costs are unreasonably high, it is at least a move in the right direction and less contentious than the current proposal of leaving many claimants without adequate legal representation when needed.
So why aren't groups like the ABI and the Association of Personal Injury Lawyers focused on pushing for what is already recognised as a basic principle of fair claims settlements? IT
Richard Finan is director of Arc Legal Assistance
