Court of Appeal hand down “400 Club” decision

Some Claimant Personal Injury Lawyers are breathing a sigh of relief as the Court of Appeal have today handed down the reserved judgement in an appeal brought by a Claimant firm against a judgement that they had to repay a £400 fixed fee that was payable when the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents (“the Protocol”) came into force in April 2010.

At stage 1 of the process under the Protocol, if third party insurers admitted liability to claimant solicitors, they had to pay them £400 plus VAT which was for the Stage 1 costs. The claims came about because 3 separate Claimants then failed to pursue their claims any further. The defendant’s insurers then commenced proceedings to recover the £400 paid in each case. The rules did not provide for repayment.

The District Judge initially found in favour of the insurers. The decision was appealed and Lord Justice McFarlane, Briggs and
Flaux heard the appeal and today handed down their judgement. They have found in favour of the Claimants.

The Protocol was written by sophisticated stakeholder groups and the rules did not allow for repayment. It was and still is a fixed costs regime. The Claimant lawyers have to carry out work in order to comply with Stage 1 of the Protocol and should be paid for it. This fee was reduced in July 2013 to £200 and is no longer paid until a Stage 2 settlement pack is submitted which will include a medical report.

If the Lord Justices had found in favour of the insurers, some Claimant firms who dealt with high volumes of these cases could have been facing a bill of hundreds of thousands of pounds.