Civil Litigation Costs Review
Thompsons Solicitors response to the Interim Report – July 2009
Thompsons is the UK's most experienced trade union and personal injury (PI) law firm. It has a network of offices across the UK, including in the separate legal jurisdictions of Scotland and Northern Ireland.
Thompsons only acts for trade union members and the victims of injury, never for employers or insurance companies. At any one time, the firm will be running over 70,000 claims.
The firm participates regularly in government consultations on legislative issues.
Thompsons is committed to supporting pro-active reform of the legal process designed to improve that process for litigants including PI Claimants. We also propose reforms which, in our view, will deliver access to justice for injury victims at a reasonable and proportionate cost.
Within this paper we comment on the questions raised in the Interim Report, provide evidence where possible and expand upon the practical reforms of the PI process suggested in our preliminary response.
We spend some time on the issue of small claims as this is the single most alarming aspect of the Interim Report. Hawkish insurers have been pressing for an increase in the limit for some time as they know any increase will have the effect of removing the option of legal representation from vast numbers of injury victims. Every increase, however small, removes more people leaving them having to claim and negotiate alone against the might of the insurance industry.
The drive for fixed costs with its impact on Claimants is entirely consistent with the disturbing development in recent years of ‘claims capture’. Under that model the same insurers devoted substantial resources to establishing teams and mechanisms to contact injury victims direct as soon as possible after an incident with the primary objective of settling the claim with the Claimant without lawyer involvement.
Thompsons’ experience is that, wherever a Claimant negotiates direct with an insurer they settle for an inferior amount, quite simply they get persuaded to accept less than they should. No legal advice provided to the injury victim is good for insurers and bad for Claimants.
Where the ‘captured’ Claimant does wish to instruct a solicitor, the insurers strive to direct them to a panel law firm - a law firm chosen by the insurers - whatever the conflict of interest inherent in that arrangement, rather than independent lawyers chosen by the injury victim.
For the hawkish insurers increasing the small claims limit and claims capture are two routes to the same destination – weak unrepresented Claimants having to negotiate and litigate against strong, well financed and expertly represented insurers.
Reference has been made to ‘hawkish’ insurers because not all insurers have pursued this campaign. Some such as Zurich Insurance, with whom Thompsons settle more cases than most other insurers put together, have adopted a far more reasonable position based on the importance of adequate independent representation, early settlement and a pro-active approach to rehabilitation.
Zurich, and just a handful of other insurers, have played a prominent role in ensuring that in recent years cross party agreement has been reached on a number of issues following constructive assistance and mediation facilitated by the Civil Justice Council (CJC). The fact that the PI claims process has been undergoing constant reform in recent years means that it is important for this Review to be mindful of and linked into those developments.
The Interim Report makes little reference to the central role of the CJC in recent years in successfully facilitating industry wide agreements which have taken the heat out of the ‘costs war’ waged by a number of insurers as a backlash against the introduction of the current recoverable Conditional Fee Agreement/After the Event model predominant in PI claims.
Trade unions and/or Thompsons were centrally involved in all of these mediations and agreements which include:
• Fixed recoverable costs in road traffic claims up to £10,000 – 2003
• Fixed recoverable success fees in road traffic claims – 2003
• Fixed recoverable success fees in employers liability accident cases – 2004
• Fixed recoverable success fees in employers liability industrial disease cases – 2005
• Agreed medical report fees as between the main medical reporting agencies and insurers – 2007 (AMRO Agreement)
The Ministry of Justice (MoJ) then took up the agenda of PI reform with the Claims Process consultation from 2006 to 2008 but the CJC retained a central role and in 2009 secured a mediated agreement on the Claims Process.
This not only demonstrates the progress that was made and has continued to be made with the support of the CJC, but it also confirms that whilst some insurers will pursue an uncompromising line, sufficient insurers have been prepared to engage in constructive dialogue to have achieved all party agreements.
We would urge the Review to recognise and build on this progress based on conciliation, mediation and agreement and to bear in mind that, as matters stand, the CJC is the stakeholder based body established following the Woolf Review to deliver ongoing civil justice reforms.
Reviews will only ever be a temporary process based on a snapshot at a particular time. Recommendations may or may not be taken up wholly or partly by the politicians of the day. But any lasting reform requires the careful, ongoing persistent work of standing bodies such as the CJC.
Against that background our proposals are based on years of experience in tens of thousands of cases, backed up by the extensive statistics which we have provided separately to the Review.
There is no doubt and we cannot emphasise strongly enough that the key to ensuring proportionate costs is early settlement of cases. Any moves that go against achieving early settlement or fail to have that in mind will satisfy only one party and harm the Clamant who is the least well equipped party.
That goal of early settlement can be achieved in many more cases than at present. The key is to provide all available means to encourage and incentivise early settlement. That was our position in the preliminary Response and remains the case in this response.
We expand on the reforms we then suggested and propose:
• Compulsory pre-action settlement discussions;
• Claimants’ Part 36 offers with teeth to include additional damages;
• Unambiguous rules to ensure compliance with pre-action protocols and to enable consistent enforcement of those rules by the courts;
• Burden of proof reversed where protocol response on liability is delayed;
• Measures to ensure conflict of interest is stripped out of the claims process and that Claimants receive truly independent legal advice throughout
• Streamlining the litigation process by simplifying the procedures for directions and witness statements.
• Damages reform to ensure Law Commission recommendations are fully implemented and that minor injury claims in particular are adequately compensated
• Abolition of the indemnity principle to put an end to technical costs challenges
Any proposals that do not match costs recoverable under the claims process to work required will distort the process and produce a fundamental inequality of arms.
Attacking costs that are recoverable in PI cases without equating those with the work required would amount to a one-sided attack on access to justice and the ability of injury victims to continue to take on the might of the insurance industry.
Matching costs to the work required was a central plank of the 2008 MoJ response to the consultation on the Claims Process for PI Claims and whilst we are critical of aspects of that response the fact that that key point underpinned the MoJ recommendations that emerged was very welcome.
Agreement has now been reached on the main points to ensure implementation of those recommendations in early 2010 if not before. These new arrangements will apply to the vast majority of PI claims. It would be most unfortunate if those new consensual arrangements were undermined by this Review.
The new Claims Process is aimed at the vast majority of personal injury claims – those under £10,000. It would, we suggest, be nonsensical if they were not allowed to ‘bed down’ and their effectiveness reviewed. Any further reforms emerging from this Review could then build on that process. A state of constant upheaval in PI litigation is of no benefit to either party.
The hawkish wing of the insurance industry always complains about the outcome of any consultation that has not delivered everything on its wish list. It is a hugely impressive lobby force.
We are concerned that the Interim Report gives greater weight to hawkish insurer complaints than they deserve and, whilst not pandering to that lobby, lends respectability to long discredited and fundamentally unjust proposals such as increasing small claims, Collossus/computer based damages assessment and claims capture.
Clear rules, incentives, proper enforcement and a structure that binds parties to settlement discussions is what the PI process needs. The real target should be and the sledgehammer should be reserved for commercial litigation where costs are excessive in an area of law in which (in sharp contrast to PI) there has been little or no change in recent years and where costs abuse is manifest in the reported cases.