Unaffordable, unsustainable, unacceptable – legal fees in settling motor personal injury claims now cost UK consumers £1,666 every minute. ABI calls for reduction in fixed legal fees.

    The ABI today (Thursday, 23 February) highlights why the UK’s exorbitant legal fees bill must be cut. UK consumers are now paying the equivalent of £1,666 every minute of every day in legal fees in settling personal injury claims following motor accidents.

    UK consumers are now paying £2.4 million a day through their motor insurance premiums – the equivalent of £1,666 every minute – in legal fees incurred in settling low value motor personal injury claims of up to £10,000.

    On top of this, legal costs often exceed compensation payments:

    • One insurer’s average claimant legal costs in 2010 represented 142% of the sums received by injured victims.
    • A recently reported compensation claim for a work-related injury for £12,750 settled out of court attracted legal costs of £74,000. After hearing about the case, Lord Neuberger, the Master of the Rolls, said of the case that there is something “out of kilter” in the civil justice system.
    • A legal bill of £37,250 was run up in settling a claim for £15,000 in respect of injuries sustained by a woman who fell into the moat at a castle (source: National Trust).
    • Between 2004-2011 there has been a 5% rise in NHS legal costs, but a 130% increase in claimant legal costs. In the financial year 2010/2011 the NHS paid out £257 million in lawyers’ fees following claims.

    Speaking today at a conference today ‘The Future of Casualty Claims’, James Dalton, the ABI’s Head of Motor and Liability Insurance said:

    “Since its introduction in 2010 the fast track process for settling lower value personal injury claims has led to significantly quicker compensation pay outs. But the fixed costs in the process remain too high.

    “The UK’s compensation system is riddled with disproportionate and excessive legal costs, often exceeding compensation awards. This means higher insurance costs for motorists and businesses and a heavy cost burden on local authorities and the NHS.

    “The Government must press ahead with the much-needed reform of our dysfunctional compensation system, which, together with the ban on the selling on of personal details of potential claimants, will enable solicitors’ fixed fees to be reduced to more realistic levels. Lower legal costs will help bring down the cost of motor insurance for all drivers.”