Calls for Legal Fee Reform in Injury Claims Resolution

The Injuries Resolution Board has urged the government to reconsider legislation regarding the payment of legal fees. This request marks a significant shift, as the board was originally established two decades ago to eliminate the burden of costly legal fees. Currently, the board is only able to approve legal fee payments in rare scenarios.

In a recent submission to the Department of Finance, related to the Action Plan for Insurance Reform, the Injuries Resolution Board highlighted that a substantial 95% of claimants are represented by solicitors. The absence of legal fee payments often leads to the rejection of settlement offers, as noted in their submission.

The Challenge Of Settlement Rejections

A notable proportion of settlement offers, nearly half, are declined. Despite this, insurers’ lawyers frequently cover legal fees when claims exit the Injuries Resolution Board’s system, according to the board’s report. “For many claims leaving our system, legal fees are subsequently incurred and paid,” the submission stated.

The board, formerly the Personal Injuries Assessment Board, facilitates the resolution of personal injury claims without court intervention. It addresses claims related to road traffic, public liability, and workplace injuries. Typically, claims must be processed by the board before proceeding to court, and only if an assessment is rejected by either party.

Potential Benefits Of Legal Fee Payments

The board’s submission suggested that considering legal fee payments could expedite claim resolutions. Many insurers offer to cover legal fees when a claimant’s solicitor accepts the board’s initial award after the claim exits the system. “In the interest of resolving claims sooner for all parties, 20 years after our establishment, the legal fee issue warrants consideration,” the submission stated.

Such a policy change could impact lawyers who benefit financially from moving cases out of the board’s system. The board proposes a “scale of fees” it could cover, understanding typical legal fees range from €1,000 to €2,000, given the board’s quicker resolution times compared to litigation.

Efficiency And Cost Benefits

A separate submission by the Competition and Consumer Protection Commission supports the board’s efficiency, noting that resolving claims through it is faster and incurs lower legal costs than litigation. Research by the Central Bank indicates that settlement costs for claims under €150,000 are uniformly €23,000, whether resolved by the board or litigation. However, legal costs for the board’s cases are €1,000, compared to €23,000 for litigated cases.

Litigation remains the dominant method, accounting for over 70% of claims and 89% of settlement costs, despite legal costs rising even after the Personal Injuries Guidelines lowered them by up to 40% in recent years. Controversially, judges have advocated for a 16.7% increase in award guideline levels, pending governmental approval.

Demand For Greater Transparency

The Competition and Consumer Protection Commission calls for increased transparency concerning legal costs. Meanwhile, Supermac’s, led by Pat McDonagh, advocates for insurance pricing transparency legislation, urging insurers to disclose premium calculation components and justify significant annual premium hikes under regulatory oversight.

Insurance Reform Alliance Concerns

The Alliance for Insurance Reform highlights that broker charges are increasingly affecting overall insurance costs, with brokerage firms being sold at substantial values. “Many brokers charge fees based on a policy’s cost percentage. This practice is unfair to consumers, as brokers profit more from higher premiums. Further scrutiny is needed,” the Alliance claimed.

ISME, representing small businesses, remarked on the absence of “moral hazard for fraudulent claims.” The Convenience Stores and Newsagents Association (CSNA) urged insurers to focus more on investigating claims rather than settling due to cost-benefit analyses.

While approximately 70 submissions were made, notable absences were the Law Society, which represents solicitors, and the Bar Council, representing barristers.