ABS firms and CMCs predicted to plug small claims gap

Claims management companies and “appropriately geared” ABS firms will attempt to plug the gaps created by the Chancellor’s decision to reform low value injury claims.

In his Autumn Statement released yesterday, George Osborne pre-empted an expected consultation on the small claims limit by announcing that it would be raised to £5,000, and also surprised many by saying that general damages for minor soft tissue injuries would be abolished.

James Arrowsmith, a partner at insurance law firm Browne Jacobson, said that although the reforms amounted to a significant blow to many injury law firms, there would still be a market for low value claims.

“It is expected that claims management companies and appropriately geared ABS firms will attempt to plug the gaps created, using, for example, damages based agreements and rehab provision to bolster their balance sheet,” said Arrowsmith.

Andrew Mckie, a barrister with Clerksroom, said on Twitter that PI lawyers should not panic over the announcement.

“Clients will still need advice in relation to claims – we just have to find new ways of working,” he wrote.

Meanwhile, Kerry Underwood, the founder of Underwoods Solicitors and Claims Magazine columnist, said that eliminating general damages could not be carried out that easily.

“The raising of the small claims limit does not require primary legislation,” he wrote on his blog.

“My view is that the removal of the courts’ power to compensate for a tort does require an Act of Parliament.”

Mark Dugdale