Morrish Solicitors Response to Jackson Reforms
PROPOSALS FOR REFORM OF CIVIL LITIGATION FUNDING AND COSTS IN ENGLAND AND WALES
CP13/10
RESPONSE BY
MORRISH SOLICITORS LLP
DATED 11TH FEBRUARY 2011
Introduction
A This response is filed by Morrish Solicitors LLP. The firm was founded in 1882 and for over 100 years has been representing working people. We are proud to represent trade unions and their members in industries as diverse as railways to racing, in occupations from actor to athlete, from blacksmith to brewer, from bus driver to banker, from clown to choreographer, from farrier to fish frier, from teacher to transport police officer and many more in the public, private and third sectors. As might be expected for a long established firm with a good reputation Morrish also represents more than its share of honest to goodness working people.
A.1 We are certain that our experience of litigation at the sharp end for the working man is second to none. Considerable data is already available and we propose to resist the temptation to add endless statistics, though case examples may have to be used where appropriate, these will be by way of proof of specific points. We do not wish to confuse things with considerations that are interesting to the statistical or academic mind but have very little to do with our actual personal injury work. When simmered down to the last what is important is that access to justice should not be an empty phrase, nor restricted only to the super rich or the particularly unfortunate. We understand what representing working people is all about and we understand what the problem is perceived to be so that at all times we will bear these two things in mind.
A.2 We believe the following to be true, either self evidently, or as a matter of princip le or from the author’s 28 years of sitting across the table from real life injury victims.
(a) Injury victims are not volunteers. In any sense that there may be a “market” in the provision of legal services to injury victims those clients are not voluntary consumers;
(b) However sophisticated any victim might be in their own working, academic or professional life it is overwhelmingly probable that they are and will remain “one time consumers” of personal injury legal services and will be disadvantaged by unfamiliarity;
(c) Defendants are invariably insured, thus represented, and held free from financial harm by, insurance professionals highly experienced and well resourced;
(d) The only duty in law owed by that insurance company is to its own shareholders; and this is borne out by their practice;
(e) Injured victims are all individuals with a plethora of concerns, such as any person has, and any litigation that they may become involved in is the source of concern not advantage. As a group Claimants are risk averse. Having been put in the situation of needing to take legal advice either as a consequence of a genuine accident or of the breach of duty by another person, Claimants are more likely to protect or preserve the assets they still have rather than to embark upon any gamble, however educated that gamble might be, in search of additional assets;
(f) We have never met a victim who wanted a cheque more than he wished to turn the clock back;
(g) We believe that a person has a right to go to work and come home again unharmed;
(h) We believe that solicitors (and barristers) are the only effectively regulated professionals engaged in the provision of services to Claimants;
(i) We believe that it has been repeatedly shown to be true that, contrary to media perception and insurance sourced self serving protestations, right thinking individuals, as injury victims do not make claims lightly and, the percentage of injury victims who actually do claim remains low. We note that in a different context this has in the past been used to justify permitting advertising, since the evil then perceived was that insufficient members of the public were aware of their legal rights;
(j) We believe that opportunities to properly regulate the claimants management sector were missed. In particular opportunities to control behaviour, to control the permitted content of advertising and prescribe a “wealth warning” were missed;
(k) The failure to regulate ( properly or at all ) the claims management activities of liability insurers was and remains a real disservice to the public and a major source of high costs;
(l) Damages in English law are and always have been entirely compensatory, designed to put the innocent victim back in the position that they would have been had the injuries not occurred. There is no element of windfall or profit from which an involuntary victim could, in conscience, be called upon to pay legal fees to “re-balance the cost of liabilities of Claimants and Defendants”;
(m) Damages are in any event far too low. Any 10% increase would not even begin to remedy this;
(n) That the “polluter pays” principle is universally acceptable to the public;
(o) That it is the fundamental justification for insurance to spread such losses caused by fault on the polluters part, including the costs involved, across society as a whole. On that basis the insurance industry is handed captive and compulsory markets for road traffic and employers liability insurance;
(p) That to protect the public purse Legal Aid was removed from personal injury litigation. We are not aware of any professional in the field who supported this or who now welcomes the possibility of further tightening of financial criteria or the scope of Legal Aid. This decision was by politicians. Legal Aid does not now pay for losing cases, winning cases now do;
(q) The trade union movement has for decades supported its members. There are fundamental differences between legal services provided by trade unions and claims farmers;
(r) Trade union funding has never been available to international finance companies, large contractors or others of similarly adequate resources. Further its role in workplace safety must not be overlooked;
(s) It is the duty of government to provide a proper system for resolution of civil disputes.
A.3 Abbreviations
In this response
“ATE” means After the Event Insurance.
“CFA” means Conditional Fee Agreement
“Consultation Paper” means the Ministry of Justice Consultation Papers CP/13/10
“FR” or “Final Report” means the Review Of Civil Litigation Costs Final Report
“LJJR” means Lord Justice Jackson’s response dated 14th January 2011 to the Consultation Paper
“MOJ” means Ministry of Justice
“QOCS” means Qualified One Way Costs Shifting
“TU” means a trade union or trade unions
“SF” means success fee
“Section 30 Payment” means a payment made in accordance with Section 30 of the Access to Justice Act
B. Executive Summary
B.1 The recommendations in the FR included valued proposals to ban referral fees and abrogate the indemnity principle. We express our considerable concern that these have not been brought forward.
B.2 One must at all times, however counter to ill informed opinion it might be, remember that case numbers are not rising, that Claimants in fact are risk averse. Any analysis always bears this out. The NHS reports something in the order of 900,000 patient safety incidents, the NHSLA suggests claims made of around 5,300 annually, of which one third are successful. The resulting percentage of adverse incidents in which claims are made becomes a fraction of 1% and the percentage of those which are paid becomes an even tinier fraction. Large numbers of employers’ liability, public liability and road traffic injury victims do not claim.
B.3 The fact that the CFA system filters out frivolous cases (or dropped at a very early stage as per LJJR 2.11) is a strength not a weakness. It is regrettable that paragraph 4 of the Consultation Paper mistakenly suggests that Defendants who successfully resist bad claims are liable for costs at all. It cannot be a criticism of the CFA SF regime that bad cases are dropped very early since they can never have occupied anyone’s time for long, nor troubled insurers. The objective in the Ministerial Foreword is thus achieved.
B.4 The CFA model is not, contrary to the FR and the LJJR, flawed in personal injury, clinical negligence and professional negligence cases.
B.5 It would be a very considerable concern to knowingly design a system that would leave 39% (at best) of innocent involuntary victims of the negligence of others worse off upon the false altar that costs to the public by way of reduced insurance premiums would result.
B.6 The proposals put forward risk disenfranchising the middle classes and the working man leaving only the particularly unfortunate and the super rich with access to the Courts.
B.7 There are material differences between ATE funding and Section 30 funding. It is wrong in principle to equate the two. In practice “on the ground” TU funding is less expensive, more suitable, has wider goals and greater utility to society than ATE funding ever could.
B.8 QOCS risks, amongst many dangers, satellite litigation at an enormous and paralysing level. For this and other reasons which are fully expounded below it is unsuitable for personal injury, clinical negligence and professional negligence cases.
B.9 Alternative Package 1 represents a potentially viable way forward.
C. Supplemental Points
C.1 We here comment on certain aspects, upon which questions are not directly asked, but which seem to us to be highly important in terms of the success or failure of any reform of civil litigation funding and costs.
C.2 The indemnity principle must be abrogated for personal injury, clinical negligence and professional negligence cases. The reasoning in the FR is clear and authoritative. Others have recommended this in the past. This is a yet further recommendation to abolish the indemnity principle. We are dismayed that the government is “currently not persuaded” and is therefore not proposing any further work on it at this stage (paragraph 276 of the Consultation Paper refers).
C.3 We accept that the indemnity principle may have a use remaining in other types of litigation but it is beyond question that, in the types of cases with which we are concerned, it has ceased to have any value and has become a major part of the problem of costs (as compliance with it is sought) rather than part of the solution.
C.4 In terms of predictable damages we will volunteer our services to any working group. We bear in mind that we were told by the Association of District Judges that, of the dozen or so Judges present at the meeting concerned, not one of them could ever recall an occasion in which they had been obliged to order costs to a Defendant because the Claimant had failed to beat a software produced damages assessment. We also note the comments of the barrister habitually instructed by insurers at chapter 22 paragraph 3.4 of the FR that he has found “the offers made by the Defendant are clearly inadequate and yet my instructions are that I have no authority to negotiate because the figure has been calculated by computer.”
C.5 His experience and that of the District Judges concern cases which get to or near trial. The problem of under compensation is real and endemic in all of the cases where the risk averse Claimant accepts “computer calculated” offers merely for the sake of an end to the matter.
C.6 The Consultation Papers raises but does not ask any questions concerning referral fees. The recommendation in the FR is clear. We submit in the strongest possible terms that referral fees are the sole reason why the claims management industry exists, failure to regulate in the past has been a matter of very great regret indeed.
C.7 It seems however that the Consultation Paper here crosses a logical line, which is this. The Consultation Paper slips into analysing referral fees on the basis of whether or not consumer detriment can be proven. The balance of the Consultation Paper and the proposals of the FR concern themselves with much wider issues. This logical inconsistency demonstrates an apparent reluctance, or to the cynic, searching for reasons to avoid, dealing with this question.
C.8 It seems to us that it is entirely clear that referral fees, if banned, must be banned by primary legislation. Controlling the Solicitors Code of Conduct or other professional codes is inadequate as this will not cover referral fees between “claims management organisations” and “claims assessors”.
C.9 We have separately commented elsewhere concerning fixed recoverable costs in the fast track. We can see that this is a desirable objective and would support it provided that they were set at sustainable figures and in a reviewable way. The question of industrial disease may be problematic but if properly informed the fact that the figures may be substantial would not mean that the figures would be wrong.
C.10 In terms of case management we strongly support the idea of docketing and specialist District Judges. This one recommendation alone would, if properly implemented, have very considerable effect. We consider that much could be done in this area and would offer our assistance, if needs be on an ad hoc basis, to any Group considering these important developments. Whilst this comment on case management is short its importance is considerable.
Section 2.1 – Conditional fee agreements and success fees.
The proposal: that CFA success fees should no longer be recoverable from the losing party
Q 1 – Do you agree that CFA success fees should no longer be recoverable from the losing party in any case?
1.1 No.
1.2 The theory is not flawed in so far as it relates to personal injury litigation. The very same rationale which would justify QOCS in personal injury litigation (the imbalance of expertise, resources and policy considerations) fully justifies that insured Defendants collectively should fund access to justice in this way as well.
1.3 If, as is true, personal injury Claimants as a category require special policy considerations which would, even under the proposal, always leave insured Defendant’s with their own legal bill under QOCS, and if the state does not support cases, then, if the Claimant or his TU cannot in conscience be called upon to do so (we know from our experience that Claimants are risk averse and unions have other equally if not more important purposes for their resources) then it must, in logic, be the case that the policy considerations which justify QOCS do in turn justify SFs.
1.4 We agree however that the practice maybe flawed. We do seriously dispute the proposition referred to in footnote 7 of the LJJR in so far as any trade union personal injury firm is concerned, though it may be true of defamation or commercial lawyers. We find it unfortunate that the view of the Association of Law Costs Draftsmen is quoted as authoritative when the connection between their experience and their conclusion is not made out.
1.5 Having said that we have already agreed that the practice is flawed, we also agree that recoverable SF CFAs should not be available for the examples given in paragraph 2.2 of the LJJR nor for the examples given in 4.9 and 4.10 and 4.11 of the FR and as will now be obvious our submission is that recoverable SF CFAs should remain in place for categories of cases (primarily personal injury, clinical negligence and professional negligence) where the policy considerations would otherwise justify QOCS.
1.6 It seems more appropriate to comment on the flawed practice in response to question 2 below.
Q 2 – If your answer to Q 1 is no, do you consider that success fees should remain recoverable from the losing party in those categories of case (road traffic accident and employer’s liability) where the recoverable success fee has been fixed?
2.1 We have agreed that the SF practice in the CFA regime is flawed.
2.2 We further agree that one consequence of the recoverability regime is that there is no true “market” as to the amount of SF set and we yet further agree that this is because the Claimant will, except in very exceptional circumstances and only with permission of the Court, not be called upon to pay the SF.
2.3 The lawyers who “honourably ensure” that they take on a wide basket of cases (such as trade union lawyers like ourselves) do not and in any event are not of the mind set to cherry pick. To do so is not to us compatible with our duties to the client, nor the law in its widest sense and trite as it might seem neither is it compatible with the common law system of precedent by which the law develops.
2.4 If, as is the case, “the elegant balance” which is at the heart of access to justice cannot be left to an unregulated market, and there is, in the vernacular, “market failure” then in common with many other societal issues, the market should be regulated. It already is. Success fees are already capped at 100% for the majority of cases and very recently there were proposals to cap at 10% for defamation cases. These examples are given simply to demonstrate that regulation in this area is not new.
2.5 Regulation of SFs by cross industry consensus was achieved in road traffic accident cases (which make up the massive bulk), in employers liability cases and in employers liability disease cases. There is no room for any seriously advanced proposition that SFs in those fixed success fee cases are not genuinely cost neutral. The fact that those fixed success fees were agreed by all stakeholders must not be overlooked and the MOJ ought to be cautious before seeking to unpick any aspect of cross industry agreement. Its own track record in this regard is not exemplary having failed to give effect to the cross industry agreement that “test cases and those effected by test cases” in disease work should not be governed by the fixed success fee for disease cases.
2.6 If cross industry agreement proved possible in relation to the difficult cases such as industrial disease there is no reason either in principle or in practice why SFs could not be agreed (and failing agreement imposed after proper consideration) across the remaining categories of personal injury cases.
2.7 One of the last two remaining major categories is public liability cases. Work in this area never truly began because of the difficulty in getting together insurers, local authorities, supermarkets, other large scale “occupiers” and because the group of stakeholders on the Defendants side was generally less homogenous.
2.8 No work has yet been done in relation to fixed SF for clinical negligence cases but again there is no reason in principle or in practice why this could not be achieved if not by cross industry agreement then by regulation.
2.9 In common with the existing arrangements “opt out” applications to a Court would be permitted with concomitant penalties if unsuccessful. The extreme sparcity of case law in this regard suggests beyond peradventure that fixed SF regimes are rarely if ever departed from, once agreed or imposed.
2.10 As will be obvious from what we have said we have no sympathy whatsoever with those who are rightly criticised as “generating substantially increased profits” or “cherry picking”. We see no problem with regulation prescribing both a restricted category of cases in which CFAs with recoverability could be used and prescribing the amount of the SF in those cases either following cross industry agreement or, following appropriate consultation, by imposition.
2.11 We remind ourselves as to what we have said in response to 2.1 above in relation to the societal need to fund personal injury cases, the special category that personal injury victims represent and the disinclination of the state to become involved in funding.
Q 3 – Do you consider that success fees should remain recoverable from the losing party in cases where damages are not sought e.g. judicial review, housing disrepair (where the primary remedy is specific performance rather than damages)?
3.1 For our part we do not see the same imperative for recoverable SFs in judicial review proceedings and we believe that when Legal Aid is available SFs should not be recoverable.
3.2 We think that whether housing disrepair Claimants are in the category of Claimants who should be entitled to recoverable SF is more debatable. Certain it is however that where Legal Aid is available a recoverable SF should not be permitted.
Q 4 – Do you consider that if success fees remain recoverable from the losing party in cases where damages are not sought, a maximum recoverable success fee of 25% (with any success fee above 25% being paid by the client) would provide a workable model?
4.1 The question, as posed, invites views upon what would amount, by any other name, to a fixed recoverable success fee. It seems to us that the setting of a percentage figure is an exercise in regulation of recoverable SFs, upon which we have already made our views and preferred methodology clear.
4.2 In passing and in response to the question asked at paragraph 73 of the Consultation Paper but not separately, it seems, identified, we are of the view that the percentage at which fixed recoverable success fees are set cannot logically be maintained at those percentages if recoverability disappears because of the impact of any cap (which would operate as a percentage of damages).
Q 5 – Do you consider that success fees should remain recoverable from the losing party in certain categories of case where damages are sought e.g. complex clinical negligence cases? Please explain how the categories of case should be defined.
5.1 Please see our answer to question 1 at paragraph numbered 1.5 above and 6.1 below.
Q 6 – If success fees remain recoverable from the losing party in certain categories of case where damages are sought, (i) what should the maximum recoverable success fee be and (ii) should it be different in different categories of case?
6.1 CFAs with recoverable SFs should be retained in personal injury, clinical negligence and professional negligence cases (in the latter category where the Claimant is an individual or a (to be defined) consumer).
6.2 The maximum recoverable success fee should be as already set in the fixed SF regime, in cases to which that already applies. Work should be done to either agree or failing agreement to impose a fixed SF across the remaining categories of cases for which we suggest recoverable SFs should continue to exist.
6.3 The fixed SFs will need to be different for different categories of cases. The need for this has already been established and the data to support it thoroughly analysed. We observe that Professor Fenn, in his reports which informed the fixed SF regimes has always made clear that Part 36 risks are excluded and, that the work done was on historical actual baskets of cases (thus disposing of the cherry picking argument as what was analysed was work actually taken on by solicitors and actually received by insurers).
Q 7 – Do you agree that the maximum success fee that lawyers can charge a claimant should remain at 100%?
7.1 We do not think that lawyers should charge a personal injury Claimant any success fee. SFs should be recoverable as outlined.
Q 8 – Do you agree that there should be a cap on the amount of damages which may be charged as a success fee in personal injury claims, excluding any damages relating to future care or future losses?
8.1 We do not believe that personal injury Claimants should suffer a deduction from their damages as a matter of principle. We reject the assertion that to introduce such a charge would succeed in creating a true “market” in success fees. Such is the reality of personal injury work that large scale consumers of legal services be they insurers or unions or claims farmers would dictate that this success fee be set at 0% which would equally amount to a market failure, but this time of the other extreme.
8.2 This version of market failure would deny access to justice for all except those who had very strong cases.
8.3 If contrary to our strongest possible submission recoverable success fees are to be abolished and replaced by success fees payable by the Claimant himself then regulation of the amount thereof is imperative.
Q 9 – If your answer to Q 8 is yes, should the cap be (i) 25% or (ii) some other figure (please state with reasons)?
9.1 In the light of our answer to question 8 above we are unable to support any figure as to do so could be seen as lending support to it when to do so would be wrong.
Q 10 – If your answer to Q 8 is yes then should such a cap be binding in all personal injury cases or should there be exceptions, and if so what and how should they operate?
10.1 We have nothing to add to our answer to question 8.
Section 2.2 – After the event insurance premiums
The proposal: that the ATE insurance premium should no longer be recoverable from the losing party
Q 11 – Do you agree that ATE insurance premiums should no longer be recoverable from the losing party across all categories of civil litigation?
11.1 No.
11.2 We consider that ATE premiums and Section 30 payments should remain recoverable across personal injury, clinical negligence and professional negligence cases, subject if needs be, to further regulation. Please also see our comments in response to questions 36 to 39 below.
11.3 We agree however that outside the categories of cases we have already identified here and elsewhere as having proper justification for recoverability of SFs that ATE premiums or Section 30 payments should not be recoverable either.
Q 12 – If your answer to Q 11 is no, please state in which categories of case ATE insurance premiums should remain recoverable and why.
12.1 Please see our answer to question 11.
Q 13 – If your answer to Q 11 is no, should recoverability of ATE insurance premiums be limited to circumstances where the successful party can show that no other form of funding is available?
13.1 This question postulates regulation of the recovery of, and quite possibly the amount of, ATE premiums or Section 30 payments. As such it would attract our support provided that regulation did not become interference either in the independence of the legal profession or in any reasonable choice that a client might make. The word “reasonable” is far from otiose in that sentence; see our answers to 36.8 and 36.9 below.
13.2 It would be important in regulation that a Claimant could not be called upon to prove a negative, that the expensive and usually fruitless search for pre-existing funding, with the attendant costs, must be avoided and for the client to be able to use the most appropriate and suitable form of funding.
13.3 The “price” tail must not be able to wag the “suitability” dog in the areas of litigation with which we are concerned. See our answer at 36.8 and 36.9 below.
13.4 In passing it is right to observe that BTE policies are not usually the best source of funding for a Claimant. They rarely if ever cover disease. They usually operate not upon an underwriting pot but upon a referral fee pot. Control of the litigation is always reserved to the BTE insurer and never to the Claimant or any organisation of which the Claimant is a member or in which he has a voice. The concept of suitability is wider than the question pre-supposes and furthermore as postulated the question of recoverability could not be determined until the end of a case whereupon hindsight could never be avoided.
Q 14 – Do you consider that ATE insurance premiums relating to disbursements only should remain recoverable in any categories of civil litigation? If so, which?
14.1 If as the LJJR supposes personal injury Claimants are to carry their own disbursements and stand those disbursements in the event of loss, the reality is that solicitors will be called upon to do so. In the light of the decision in Sibthorpe and Morris -v- London Borough of Southwark, the end result would be that solicitors would be required to fund and underwrite disbursements and underwrite and fund Defendants costs. If, as seems to be the case, ATE insurers make an underwriting profit in the order of 7% across personal injury cases as a whole but no ATE premium or Section 30 payment would be received, then the end result is that only legal service providers who could operate at a very small percentage profit could continue to exist.
14.2 Huge advice deserts would be common. The independent legal profession would become a thing of the past. We do not propose in our response to go into questions concerning the Legal Services Act but we hope that a worked example assists. If an ATE legal expenses insurer makes a 7% profit on turnover then in order to pay a lawyer 75% of the salary of a District Judge the lawyer would be required to earn in fees in excess of £1,102,000.00 each year after marketing costs were accounted for.
14.3 If contrary to our submission ATE and Section 30 payments are not to be recoverable then disbursement only ATE or Section 30 payments must be recoverable as a very long stop indeed. Note that to achieve this the wording of Section 30 of the Access to Justice Act would require amendment since at present TUs are not allowed to recover for provision made against their own disbursements.
Q 15 – If your answer to Q 14 is yes, should recoverability of ATE insurance premiums be limited to non-legal representation costs such as expert reports?
15.1 Please see our answers to question 13 and 14 above.
Q 16 – If your answer to Q 14 or Q 15 is yes, should recoverability of ATE insurance premiums relating to disbursements be limited to circumstances where the successful party can show that no other form of funding is available?
16.1 Please see our answers to question 13 above, and 36.8 and 36.9 below.
Q 17 – How could disbursements be funded if the recoverability of ATE insurance premiums is abolished?
17.1 The only logical answer is that Claimants (who generally won’t) or solicitors (who may not be able to) could be asked to fund such disbursements. In other words the answer to question 17 is effectively “they could not be funded”.
Q 18 – Do you agree that, if recoverability of ATE insurance premiums is abolished, the recoverability of the self-insurance element by membership organisations provided for under section 30 of the Access to Justice Act 1999 should similarly be abolished?
18.1 No.
18.2 ATE premiums and Section 30 payments are and always have been materially different. One organisation is in business for profit available at a price to the public at large, and covers disbursements. The other is a service available to members of a membership organisation, without a view to profit and not covering disbursements.
18.3 Much has been made and anecdotally repeated in a foot note to the LJJR that TUs have found a surplus in their Section 30 payments scheme. The whole point of the rolling basket of cases is that sometimes such funds will be in surplus but without surplus a TU could never fund tricky or difficult cases. This firm has in the last months alone lost or abandoned a number of hand arm vibration syndrome cases on the issue of causation (thus where breach of duty was admitted) at an anticipated cost to the union concerned the order of £150,000.00. We know of a union that paid out over £1,200,000.00 in costs in a complex personal injury case that was lost and we ourselves were involved in an unsuccessful case in the Court of Appeal for a union member on the subject of “stress” which again had very significant costs liabilities to be met by the union.
18.4 It would have been wholly wrong however not to have brought those cases.
18.5 TUs have for decades supported claims. Ever since Adams -v- London Improved Motor Coaches the Courts have regarded TU funding as integral to access to justice. TUs and their lawyers have always had affinity with the TU member, considerable expertise and rarely if at all become involved in the costs war. Apart from anything else the amount of a Section 30 payment is always lower than an ATE premium because it does not provide cover for disbursements neither does it include any element of marketing or profit.
18.6 It is wrong in principle and, in terms of access to justice, harmful in practice to analyse ATE premiums and Section 30 payments in the same way.
Section 2.3 – 10% increase in general damages
The proposal: that there should be an increase in general damages of 10%
Q 19 – Do you agree that, in principle, successful claimants should secure an increase in general damages for civil wrongs of 10%?
19.1 General damages in England and Wales are far too low. The recommendations contained in The Law Commission paper number 257 “Damages for Personal Injury: Non-Pecuniary loss” (1999) have never been brought into force. It is in error to suggest that the Court of Appeal did this in Heil -v- Rankin.
19.2 If this were a stand alone proposal to increase general damages by 10% it would attract unreserved support but it is not such a proposal.
19.3 It is suggested that from this 10% the Claimant pays his lawyer a success fee. With considerable regret we note that this proposal would be to sweep away hundreds of years of jurisprudence that damages are compensatory only and to introduce, as a fix to a short term problem or perceived problem and would bring in through the back door the payment of an element of damages in relation to costs liabilities.
19.4 It must be remembered that recoverability of SF and ATE and Section 30 payments was itself introduced only 10 years ago as a “fix” to enable the public purse to withdraw from the field personal injury litigation.
19.5 The very real danger is that as soon as damages become payable for costs (whatever one might choose to call it) this short term fix will prove no more resilient or problem free than the last.
19.6 We note that in Appendix 1 to the LJJR Professor Paul Fenn the Aviva Chair of Insurance Studies at Nottingham University Business School has estimated, and illustrated by graph that some 61% of Claimants may be “better off” whereas 39% would be worse off. It seems from his graph that employers liability Claimants would fair the worst but “pavement trippers” would gain more.
19.7 We find it surprising that any scheme which knowingly would leave 39% of involuntary innocent victims worse off is proposed especially when such analysis would be “best case” scenario.
19.8 Anyone who truly believes that insurers will immediately re-program their computers to upgrade general damages by 10% is naive at best. Repeated behaviour by insurers, to quote from three cases only of ours include “we never pay any damages for post retirement dependency on fatal accidents” and “we never pay more than £4.50 per hour for nursing care” and “Collossus says general damages cannot exceed £2,900.00 in this case” in fact represent the actuality of insurance company practices.
19.9 It may be that for their own business case such rules for their staff, for their own management information systems and for their own profits, make sense but that is not to say that the attitude of mind, which far from putting the Claimant at the centre of the process is to seek to minimise the Claimants damages however valid, will not continue to pertain.
19.10 It must also be remembered that the majority of settlements are achieved on global figures. The proposed 10% increase in general damages will, as a result of all these factors, simply not come about other than in cases which go to trial.
19.11 Even if we are wrong and the best case scenario comes into being, then there will be a 39% “error rate” in the payment of compensatory damages to innocent involuntary victims. We can think of no other field of human endeavour in which a 39% error rate would be regarded as acceptable, even where the participant in that process was in it entirely of their own volition. To knowingly design a system which it is known in advance will at its best adversely affect 39% of those who are in the process as a result of the negligence of others is gravely unjust.
Q 20 – Do you consider that any increase in general damages should be limited to CFA claimants and legal aid claimants subject to a SLAS?
20.1 The amount of general damages awarded should not, as a matter of principle, in any way depend upon the funding regime in place. To do so is to make out beyond any doubt that damages are paid in relation to costs. Such would be a very large step and like all genies, once out of the bottle it could never be put back in.
20.2 The “price” of the “fix” proposed is too high.
20.3 The need for all of this is removed if our submissions in relation to Sections 2.1 and 2.2 are accepted.
Section 2.4 Part 36 Offers
The proposal: that Part 36 of the Civil Procedure Rules (offers to settle) should be reformed
Q 21 – Do you agree with the proposal to introduce an additional payment, equivalent to a 10% increase in damages, where a claimant obtains judgment at least as advantageous as his own Part 36 offer?
21.1 Damages in England and Wales are too low.
21.2 However we think the starting point in principle must remain that damages in English law are compensatory. What is proposed is, by one name or another, equivalent to punitive damages. The MOJ should be cautious before bringing such a concept into the Court rules. In the same way that it would be invidious for two Claimants who had suffered identical losses to receive different amounts depending upon how their claims were funded it would seem just as incongruous those two Claimants with identical losses to receive different amounts depending upon the behaviour of different Defendants where one accepted the Part 36 and one didn’t but subsequently “lost” to that Part 36 at trial.
21.3 The problem remains as to how to affect Defendant behaviour to give real consideration to Claimant offers. The sad fact is that insurers know that Claimants are risk averse and whilst insurers may not accept the Part 36 when it is made, and whatever the rules of the Court might be, they are at liberty to and do make an offer to a Claimant later in the proceedings of that same amount but without any additional penalty whether by way of interest or otherwise.
21.4 That Defendant behaviour would not be changed by the proposed rule especially since it is proposed that the 10% “additional payment” would only operate at trial.
21.5 It is our view that any sanction prescribed by the Court Rules should be prescribed automatically by those Court Rules or face the probable certainty of being ineffective. Risk averse Claimants who want, usually, to see an end to the matter upon any reasonable terms will almost always accept later the amount that they had earlier said that they would accept, with the Defendant escaping any sanction for the delay in accepting that offer.
21.6 To suggest that there is any real advantage to negotiations being conducted under the shadow of the as yet unaccepted Claimant Part 36 offer, is not to appreciate the imbalance between personal injury Claimant and Defendant insurer.
21.7 Any sanction which depends upon a case proceeding to trial is, in the world of personal injury, effectively toothless. A rule should be drafted which provides that penalty interest should automatically be applied upon the application of the Claimant to the Court on paper and that save in exceptional circumstances for an insured Defendant to make out, the ordinary rule would be for the payment of the same by way of sanction.
21.8 Centring the sanction upon interest incentivises early offers. Centring the sanction upon additional payments to be awarded at trial makes no distinction between early offers and late offers.
Q 22 – Do you agree that this proposal should apply to all claimant Part 36 offers (including cases for example where no financial remedy is claimed or where the offer relates to liability only)? Please give reasons and indicate the types of claim to which the proposal should not apply.
22.1 Since we do not agree with the proposal we are unable to answer the question in the way that it is put but we support a suggestion that issue based Part 36 offers should sound in sanction in the same way subject to the relevant issue being sufficiently identifiable and discrete and on such an issue judicial input in determination of sanction would be required (this is the exact opposite therefore of our submission in relation to “whole of action” Part 36 where operation of rule is preferred).
Q 23 – Do you agree that the proposal should apply to incentivise early offers? Please explain how this should operate.
23.1 We have already expressed the view that the proposal does not incentivise early offers. We have explained our reasoning above.
Q 24 – Do you consider that the increase should be less than 10% where the amount of the award exceeds a certain level? If so, please explain how you think this should operate.
24.1 We have explained that we consider that the concept of “additional payment” (the very clumsiness of the language demonstrates that the Consultation Paper rightly runs away from calling it by what it is namely “additional damages”) is a dangerous genie to let out of the bottle. Whilst the aim of the proposal is valiant with some considerable regret we suggest that it falls foul both of hundreds of years of jurisprudence as to compensatory damages and as to inefficacy in practice.
Q 25 – Do you consider that there should be a staged reduction in the percentage uplift as damages increase?
25.1 Please see our answer to question 24.
Q 26 – Do you agree that the effect of Carver should be reversed?
26.1 Yes. Hard cases make bad law and Carver was one such.
26.2 Certainty is the desired goal here.
Q 27 – Do you agree that there is merit in the alternative scheme based on a margin for negotiation as proposed by FOIL? How do you think such a scheme should operate?
27.1 The proposed “refinement” put forward by FOIL demonstrates clearly an insurance company’s ability to seek advantage from inadequate offers knowing always that it can at any later time revise its proposals and that a risk averse Claimant (as they usually are) will take what he or she can get.
27.2 It would be interesting to put the proposal in reverse so that if a Claimant gets within 10% of his Part 36 offer then the costs sanctions apply against the Defendant. In other words if a Claimant made a Part 36 at £5,000.00 but then recovered £4,501.00 the costs sanctions would apply against the insured Defendant. We doubt that this would attract insurance industry support.
Section 2.5 – Qualified one way costs shifting
The proposal: that there should be a regime of qualified one way costs shifting in certain cases
Q 28 – Do you agree with the approach set out in the proposed rule for qualified one way costs shifting (QOCS) (paragraph 135 – 137)? If not, please give reasons.
28.1 Before moving to the central point we note that paragraph 134 of the Consultation Paper observes that the FR “says that QOCS is bound to reduce costs because the ATE insurance premium is currently covering not only Claimants adverse costs in unsuccessful cases but also the ATEs insurers administration costs and the profit element”. Whilst this may be true with ATE funding, such elements are not present in TU funding arrangements. We might add that ATE also bears an element of premium for insuring the premium itself and for marketing, again both absent from TU funding arrangements/Section 30 payments.
28.2 To cut to the chase, it is our firm belief that if we were to tell a man with a house, job, car, pension pot and modest savings (or any combination of these) that if he were to lose his case he would “only pay the winning Defendants costs where – and to the extent that – in all the circumstances it was reasonable for him to do so” and that such a decision could only be made at the end of a the case, by a Judge (a Judge is a mystery to the overwhelming majority of the population) we know full well that the claim would not be brought.
28.3 If that be the desired policy objective, then so be it but it is not transparent to seek to achieve such a goal by a method with purports to increase access to justice.
28.4 As we have said, Claimants are risk averse. Protection of their assets and their families future is foremost in their minds and to submit part of their assets to assessment by a type of person they have never met nor have any understanding of, (a Judge) in a process with which they are entirely unfamiliar and, to use plain words, of which they are scared, is not a decision that Claimants will make. The effect of the proposal will be, and try that we might to use neutral language the truth of it is that the effect of the proposal will be to disenfranchise the entire middle classes and the working man from access to the Courts.
28.5 The comparison with the historical cost shield offered under Legal Aid is not valid. Those who ever qualified under the financial means test for Legal Aid were of a different demographic, and with a different attitude to risk.
28.6 We observe that if the true policy goal is to lessen the number of claims:-
(i) If the Irish experience is anything to go by, and there is no reason to suspect that international insurance behaviour will differ, then insurance premiums will not in any event reduce. See the articles in the Irish Independent and the Irish insurance industries “Brown Book”;
(ii) The very same people who might have believed the “claims are bad things, “elf and safety” has gone mad” line are wont to change their views when they personally become a victim at which stage, they will look to government to ensure that their right of access to independent Judges is preserved because, from their own dealings with insurance companies they intuitively know that legal representation is desirable (the Irish experience informs again here);
(iii) Their intuition is correct. To list but a few reasons the working individual has seen an insurance industry responsible for endowment mis-selling, private pension mis-selling, the collapse of equitable life, the mis-selling of travel insurance policies, the mis-selling of loan insurance, the mis-selling of payment protection insurance, the mis-selling of precipice bonds, the mis-selling of zero dividend preference shares, the misrepresentation of critical illness cover, Fairchild, the trigger litigation, the underwriting practices of Independent Insurance, opposition to an Employer’s Liability Insurers Bureau based in a bare- faced way upon money alone and the mis-selling of extended warranties on consumer products.
28.7 The very suggestion, less than 10 years after recoverability of SFs and ATE/Section 30 payments, at a time when considerable constructive work has already been done (the latest achievement being the Portal with all attendant cost control) that the best thing to do is to embark upon a whole new funding regime, as fraught with detail and subjectivity as QOCS would be, which would require whole new regulations, spawn its own new genesis of satellite litigation would fill every personal injury lawyer be they Claimant or Defendant, with dread.
28.8 We take but a few examples below. No doubt others may and perhaps have brought forward other examples. For the sake of clarity we should confirm that these would not be “run of the mill decisions as to whether a losing Claimant ought – reasonably – be called upon to pay something” but cases in which the new proposed QOCS would be, quite possibly, stretched beyond its elasticity point.
(i) Claimant injured by uninsured driver in circumstances where liability is disputed. The uninsured driver is a man of means and defends the claim to which the MIB is added as Second Defendant. Is QOCS to apply against only the MIB or is it to apply against the uninsured driver as well? How does the situation differ if the First Defendant, who has the right to defend himself is not a man of means? Who is to make that assessment and when?;
(ii) A Claimant steps on a negligently left substance on the floor of a well known high street chain of shops, and fractures her hip. When the claim is presented the shop is generally thought to have considerable assets and has public liability insurance. It would seem that QOCS would apply. However before the Claimant can conclude the action, and who herself enjoys a salary, she finds that the shop chain has gone into administration, has no real assets and has a substantial policy excess (£50,000.00 for arguments sake) upon its public liability insurance. To what part of this process does QOCS apply and when is the decision to be made? How does QOCS achieve fairness for the Claimant? How does QOCS achieve any form of costs protection for the Claimant?
(iii) A Claimant works in a bank the public banking floor of which is accessible only by means of an upward escalator. By reason of the negligence of a visitor to the bank who negligently loses her footing she is cast down the escalator. The negligent individual whilst alive has no realisable assets. The Claimant has the benefit of unsatisfied judgment cover upon her house contents policy. The negligent individual then dies, so that her house which she owned becomes a realisable asset. At what stage is QOCS to apply in the claim against the negligent individual? When she is alive? Is it to apply against her estate once she has died? Is QOCS to apply in any action against the house contents insurers for satisfaction of the unsatisfied judgment?
(iv) A claim for a serious asbestos disease is brought against a subsidiary of T&N Plc. The company is apparently of considerable value. It is however acquired by an American company and enters into a scheme of arrangement. At what stage and to what end is QOCS to apply? What happened to the Claimant’s genuine realistic expectation of recovering disbursements?
(v) A man is employed in a scrap yard for cars. As a result of the employer’s negligence he is grievously spinally injured and paralysed. The employer, a limited company, is criminally uninsured. The individual behind the corporate veil is a man of substantial but fluid and not easily traceable assets. The Claimant believes that the negligence of the uninsured limited company and the natural person behind it are co-extensive. Is the criminally uninsured limited company and/or the criminal person responsible for that criminal behaviour, to benefit from QOCS?
28.9 We have given but a few examples. We stress that these are not hypothetical examples. These are examples that the author has dealt with as part of his work in recent years.
28.10 We do not wish to cite hypothetical examples, since we consider that real life examples speak more clearly but it is not difficult to think of circumstances where the inherent unfairness of QOCS is exposed. We think that this cannot be answered by reference to judicial discretion. Whilst on a case by case basis we would generally have considerable confidence in the independent judiciary we know what instructions a reasonably prudent Claimant would be likely to give in these circumstances, which are that the case would not proceed and his access to justice would therefore be denied, but not on any grounds of legal merit.
Q 29 – Do you agree that QOCS would significantly reduce the claimant’s need for ATE insurance?
29.1 The difficulty mentioned at paragraph 140 of the Consultation Paper does in fact arise. We believe that the LJJR is incorrect at its paragraph 6.2. The point would seem to be that the Part 36 rules would take precedence over the QOCS regime and that having refused the Defendant’s Part 36 the Claimant would now be called upon to pay the Defendant’s costs from the date of that Part 36. We suggest however that paragraph 140 of the Consultation Paper is in error but only to the extent that it says that this raises the possibility of satellite litigation. To our mind it raises a near guarantee of it.
29.2 The precedence of the Part 36 rules over QOCS rules would mean that ATE insurance would continue to be required if the Claimant is to have any realistic hope of funding any action beyond any Defendants Part 36 however inadequate that might, in truth, be. It must be remembered that Claimants are deeply unfamiliar with the process, highly sceptical of it and fearful of mind. Claimants are inclined to accept, in our long and considerable experience, offers which we firmly believe would be substantially beaten because a Judge would award substantially more.
29.3 If we were to seek to explain to such a Claimant, that the QOCS rules would be displaced by the Part 36 made then a method would be knowingly handed to the insurance industry to exploit the system. The “asymmetry of arms” is dealt with not one little bit in the absence of “Part 36 funding” funded by a Section 30 payment or ATE.
Q 30 – Do you agree that QOCS should be extended beyond personal injury? Please list the categories of case to which it should apply, with reasons.
30.1 It will be apparent from our answers above that we believe that QOCS should not apply, even to personal injury actions.
Q 31 – What are the underlying principles which should determine whether QOCS should apply to a particular type of case?
31.1 It will be apparent from our answers above that we believe that any process of determining the principles mentioned, or of seeking to put such principles into practice, is fraught with the greatest danger.
32 – Do you consider that QOCS should apply to (i) claimants on CFAs only or (ii) all Claimants however funded?
32.1 As we do not believe that QOCS should apply at all, to further answer this question risks our being taken as validating an alternative or fallback point of view, which we do not.
Q 33 – Do you agree that QOCS should cover only claimants who are individuals? If not, to which other types of claimant should QOCS apply? Please explain your reasons.
33.1 See the answer to question 32 above.
Q 34 – Do you agree that, if QOCS is adopted, there should be more certainty as to the financial circumstances of the parties in which QOCS should not apply?
34.1 See the answer to question 32 above.
Q 35 – If you agree with Q 34, do you agree with the proposals for a fixed amount of recoverable costs (paragraphs 143 – 146)? How else should this be done?
35.1 See the answer to question 32 above.
Section 2.7 – Alternative recommendations on recoverability
Q 36 – Do you agree that, if the primary recommendations on the abolition of recoverability etc are not implemented, (i) Alternative Package 1 or (ii) Alternative Package 2 should be implemented?
36.1 Alternative Package 1 provides a potentially workable solution in the area of personal injury, clinical negligence and professional negligence.
36.2 Adopting the numbering of the Consultation Paper the proposals at paragraphs 176 (i) (a) (c) and (d) can be supported without further comment.
36.3 The proposal of 176 (i) (b) can be supported if due financial allowance is made in fixed recoverable SFs to reflect the fact that the “clear cut” winners have been removed from the basket of cases which remains.
36.4 Failure to do this may undermine the collective costs neutrality of a basket of cases. It is an inroad into the concept of the many cases paying for the few (in terms of the percentage success fee to be allowed) even where the few are, which in this context, they are, also winners.36.5 We can however see that not allowing a recoverable success fee during the protocol period could act as a meaningful driver of Defendant insurer behaviour outlined so cogently by the Defendant instructed barrister in Chapter 22 paragraph 3.3 of the FR. The beneficial effects of any such change may be far reaching.
36.6 Also on this point 176 (i) (b) should, we firmly submit properly say where liability (meaning an admission of breach of duty and the causation of some damage) is admitted during the relevant protocol period. If it is not so admitted then there is no logical reason or behavioural justification for the work being done during the protocol period being excluded from that work which attracts a SF.
36.7 The proposal at paragraph 176 (i) (e) of the Consultation Paper is effectively to overturn Crane -v- Cannon Leisure. The result reached in that case could be said to have been hide bound by other aspects of the CFA/SF regime. If those aspects are to be put aside, as here they are, there seems no reason in logic or practice why any substantial SF should be payable upon detailed assessment.
36.8 The proposal at paragraph 176 (i) (f) of the Consultation Paper is of considerable merit if – but only if – the word “could” is changed to the word “should”. It is right to judge suitability of funding not opportunity of funding or existence of funding.
36.9 The “price” tail must not be allowed to wag the “suitability” dog. This is particularly true in terms of the availability TU funding for reasons which include workplace health and safety, the affinity of the Claimant to the Union, the availability to the Claimant of a separate voice inside the funding organisation (that of a member as opposed to that of a paying customer) as well as the specialist understanding of workplaces familiar to the TU.
36.10 Another danger which would flow from an unamended 176 (i) (f) is the loss of control in litigation, the inevitable forcing of people towards their BTE insurer and this in proposals which may (supposing that referral fees are indeed banned) undermine the financial and business model of those BTE insurers. The panacea which some (naively) believe BTE to be in itself becomes only the preserve of those who are wealthy enough to purchase a properly underwritten BTE product.
36.11 The proposals at paragraph 177 (ii) (g) (h) (i) and (j) seems sensible. However much it may be said that the proposal to link ATE premiums with damages is illogical as they in fact relate to costs not damages, it seems to us that the ATE market ought to be able to adapt to this proposal and that what is here being discussed is the recoverable element of an ATE premium not its totality.
36.12 Alternative package 2 at paragraph 178 of the Consultation Paper is not something that we could support for all of the reasons given in response to Section 2.1 and Section 2.2.
Q 37 – To what categories of case should fixed recoverable success fees be extended? Please explain your reasons.
37.1 As we hope we have made clear above it is our view that fixed recoverable success fees should be extended across all categories of personal injury, clinical negligence cases and professional negligence (by imposition following consultation if cross industry agreement is not possible).
Q 38 – Do you agree that, if recoverability of ATE insurance remains, the Alternative Packages of measures proposed by Sir Rupert should also apply to the recovery of the self-insurance element by membership organisations?
38.1 Yes. We think that the strengths of TU funding are clearly demonstrated when consideration is give as to how it might readily adapt to the measures set out at paragraph 177 (ii) (g) – (j) of the Consultation Paper.
Q 39 – Are there any elements of the alternative packages that you consider should not be implemented? If so, which and why?
39.1 Alternative package 2 should not be implemented.
39.2 We have outlined above at Q38 our concerns with paragraph 176 (i) (b) and (f) and to a lesser extent (e)
Section 2.8 – Proportionality
The proposal: that there should be a new test of proportionality of costs
Q 40 – Do you agree that, if Sir Rupert’s primary recommendations for CFAs are implemented, a new test of proportionality along the lines suggested by Sir Rupert should be introduced?
40.1 In answering this question we note well the proposed extension of fixed recoverable costs in the fast track.
40.2 If such figures are set out at sustainable amounts and in a reviewable way, the concept of proportionality, and the need to specifically answer this question in relation to personal injury, clinical negligence and professional negligence cases in the fast track falls away.
40.3 We remain concerned that the concept of the “irreducible minimum” amount of work or the “work made necessary only by the conduct of the other party” are not sufficiently reflected in the definition of proportionality, perhaps because the definition is just as to proportionality rather than requirements.
40.4 Each and every paid for task in life has a minimum cost. To take a perhaps outlandish but nevertheless illustrative example if one’s gas cooker ceases to function, a minimum call out charge will apply when the gas engineer is summoned. Let us suppose that he replaces a piece of plastic (value £5.00) in 5 minutes of his time (for which himself might earn say, £1.25) nevertheless the “value” of the job is, rightly, not judged by a figure of £6.25 but by the overall cost of the irreducible minimum and necessary work (from the purchase of the plastic part by his employer through to the employees travelling time, training and expertise costs, their liability insurance and many more factors). Now imagine that the job of the gas engineer is made more difficult by a deliberately obstructive attitude on the part of the person responsible for paying.
40.5 The concept of proportionality cannot be judged in money terms alone. This is particularly true in areas of industrial disease.
Q 41 – If your answer to Q40 is no, please explain why not and what alternatives would you propose to achieve the objective of ensuring that costs are proportionate?
41.1 We have outlined our thoughts above.
Q 42 – How would your answer to Q40 change if (i) Sir Rupert’s alternative recommendations were introduced instead, or (ii) no change is made to the present CFA regime? Please give reasons.
42.1 Please see our answer to question 40.
Q 43 – Do you agree that revisions to the Costs Practice Direction, along the lines suggested (at paragraph 219), would be helpful?
43.1 Yes, to take into account the matters that we have raised in answer to question 40.
Q 44 – What examples might be given of circumstances where it would be inappropriate to challenge costs assessed as reasonable on the basis of the proportionality principle?
44.1 See our response to question 40 above.
Section 2.9 – Damages-Based Agreements
The proposal: that Damages-Based Agreements (‘contingency fees’) should be allowed in litigation
Q 45 – Do you agree that lawyers should be permitted to enter into damages- based agreements (DBAs) with their clients in civil litigation?
45.1 We do not support the introduction of DBAs into the area of personal injury, clinical negligence and professional negligence. We consider more than adequate warning bells have been sounded in the experience of employment tribunal and criminal injuries compensation scheme cases.
45.2 Further the methodology of unqualified claims assessors is not one which ought to be followed.
45.3 Neither do we consider that DBAs would add any meaningfully attractive (for the client) alternative source of funding if Alternative Package 1 is adopted.
45.4 We consider that the risks of high charging on high value cases are significant.
45.5 We consider that if the client would not fall into the definition of consumer and if the litigation was outside the categories we have mentioned then DBAs would, if available, be a question of choice between the non-consumer client and its lawyer.
Q 46 – Do you consider that DBAs should not be valid unless the claimant has received independent advice?
46.1 As we have answered question 45 i.e. for non-consumers, the need for independent legal advice would seem to fall away.
Q 47 – Do you consider that DBAs need specific regulation? If so, what should such regulation cover?
47.1 Adopting our answers to the above questions the answer to this question becomes no.
Q 48 – Do you agree that, if DBAs are allowed in litigation, costs recovery for DBA cases should be on the conventional basis (that is the opponent’s costs liability should not be by reference to the DBA)?
48.1 On the basis that the client is not a consumer, as a non-consumer the client can be taken to be a voluntary participant in the process, more often than not, and left free to determine its own bargain. There is no evidence of market failure in this area.
Q 49 – Do you consider that where QOCS is introduced for claims under CFAs, it should apply to claims funded under DBAs?
49.1 We do not believe that either QOCS or DBAs should be introduced for personal injury, clinical negligence or professional negligence cases.
Q 50 – Do you consider that the maximum fee lawyers can recover from damages awarded under a DBA in personal injury cases should be limited to (i) 25% of damages excluding any damages referable to future care or losses as proposed, or (ii) some other figure? Please give reasons for your answer.
50.1 As we do not believe that DBAs should apply to personal injury cases at all, to further answer this question risks our being taken is validating an alternative or fallback point of view, which we do not.
Q 51 – Do you consider that in personal injury claims where the solicitor accepts liability for paying the claimant’s disbursements if the claim fails, the maximum fee should remain at 25%? If not, what should the maximum fee be? Should the limit be different in different categories of case?
51.1 See our answer to question 50.
Q 52 – Do you consider that there should be a maximum fee that lawyers can recover from damages in non-personal injury claims? If so, what should that maximum fee be, and should the maximum fee be different in different categories of case?
52.1 See our answer to question 48.
Q 53 – How should disbursements be financed by claimants operating under DBAs?
53.1 If those Claimants are personal injury, clinical negligence or professional negligence Claimants then the answer here does not differ from the considerations at and our answer to question 17.
Section 2.10 – Litigants in Person
The proposal: that the prescribed rate of £9.25 an hour recoverable by litigants in person who cannot prove financial loss should be increased to £20 an hour
Q 54 – Do you agree that the prescribed rate of £9.25 per hour recoverable by litigants in person should be increased? If not why not?
54.1 Our reply is yes.
Q 55 – Do you agree that the rate should be increased to (i) £16.50 per hour, (ii) £20 per hour or (iii) some other rate (please specify)?
55.1 To £16.50 per hour as suggested in the LJJR.
Q 56 – Do you agree that the prescribed rate of £50 per day for small claims be increased? If so, to what figure?
56.1 Yes. We are content with the methodology set out at paragraph 252 of the Consultation Paper and we suggest £87.00 at a round figure.
Questions relating to Impact Assessments
Q 57 – Do you agree with our assessment of the competition impact of these proposals?
57.1 The adoption of any proposal other than Alternative Package 1 will, without question in our view, play into the hands of, and force Claimants into the hands of liability insurers either directly in terms of third party capture or into their preferred or “owned” law firms or through their BTE operations. Another possible consequence is contraction or total failure of the ATE industry. Equally if not more worrying in terms of access to justice would be the inability of the trade union movement to maintain the legal services provided. The TU movement still funds more cases than any other single funder.
57.2 The evidence base of the impact assessment seems sparse at best when considering the impact upon competition.
Q 58 – Do you agree with our assessment of the impact of these proposals on small businesses?
58.1 We have not focused on small business in our response.
Q 59 – Do you have any evidence that any of these proposals will impact disproportionately on people depending on the following protected characteristics?
Disability
Sex
Gender Reassignment
Race
Religion or belief
Sexual Orientation
Pregnancy & Maternity
Age
59.1 There is a cogent argument that if the main proposals are brought in, and the catastrophically or seriously disabled injured are a “class” of persons for the purposes of article 14 of the European Convention on Human Rights then that class of persons could be at a particular disadvantage in securing adequate legal representation, a disadvantage in terms of the way that the proposed success fee deduction would operate and as to their protection from disbursements which inevitably would be far greater in amount, though their resources might not be.
59.2 Since drafting our above response we have since discovered that the MOJ has been provided with Leading and Junior Counsels opinion on this topic.
Q 60 – Do you have any other comments on the preliminary impact assessments published alongside this consultation?
