The government recently introduced changes to the civil court system with a new ‘intermediate track’ for civil claims cases where damages are valued at between £25,000 to £100,000. This includes personal injury and medical negligence claims and, due to how this system works, it is disproportionately unfair on modest and low earners.

To provide some background, civil claims are assigned a certain path or ‘track’, depending on the value and complexity of the claim. This track impacts how the case is dealt with by the court including the work that is expected to be done, the timetable of the case and how long the hearing could last. Previously there were three tracks: the small, the fast and the multi-track. The small claims track is for less complicated cases with a value of up to £10,000 – typically you don’t need a solicitor for these cases, the fast track was for claims valued between £10,000 and £25,000 and the multi-track was for complicated claims with a value of £25,000 or more. The new intermediate track sits between the fast and the multi-track.

Previously, solicitors taking on cases valued at more than £25,000 would be paid a reasonable proportion of reasonably incurred costs. Now, they will instead be paid a fixed fee depending on when the case settles, and for how much. There are some exceptions which would throw the case out of the fixed costs scheme, but, by and large, the government wants most cases valued at under £100,000 to fit within this new track.

I want to provide a really clear example why this new system is disproportionately unfair on modest and low earners:

Take Person A and Person B, who each have a personal injury claim. In a bizarre set of circumstances, both are injured in the exact same car accident where they fracture their elbows, sustain a minor spinal fracture and suffer major depression. It takes them the same amount of time to recover and they each require 12 sessions of Cognitive Behavioural Therapy and are on anti-depressants for a year. Both are out of work for exactly eight months as a result.

The only difference between them is their job. They are both 49 years old, with no pre-existing disabilities and both went to university. Person A has lucked out and is in a job paying £150,000 gross a year, while Person B is on a salary of £23,000 gross a year.

Person A’s case would fall into the multi-track, whereas Person B’s would fall into the intermediate track. Both of their general damages, past and future treatment costs and levels of care required would be more or less the same, but the big difference would be their loss of earnings calculation. The net loss of earnings for Person A coupled with the rest of their compensation would be over £100,000, whereas for Person B it would be less than £100,000. Due to the way costs in their cases would now be handled, it is likely that the proportion of compensation they can keep will be different – with Person A likely keeping a higher proportion of their compensation.

How and why is this the case?

Well, a solicitor acting under the fixed recoverable costs intermediate track may recover £15,000 costs for, say, two years of work to the conclusion of their case. A solicitor acting under the multi-track would receive a reasonable proportion of whatever their reasonably incurred losses would be, which could be more like £45,000. In Person B’s scenario, in order for a solicitor’s firm to be able to keep running profitably, they are much more likely to charge a fee from the damages in order to make up the shortfall of costs that the new changes have brought about. This is much less likely to happen for Person A.

How is this system fair? Well, it’s clearly not. While we’ve seen similar discrepancies like this over the years, this one is so stark that it is difficult to ignore. It is yet another example of how the poor get poorer.

Firms do charge differing amounts for this shortfall and so it is really important when shopping around for a solicitor to understand what is being charged and how, before you agree to sign up with someone.