Are you negligent if you don’t offer ATE Insurance?

Well I am sure you can guess my answer but let’s look at this a little more scientifically shall we?

Chapter 1 of the SRA Code of Conduct 2011 requires that:

 O(1.6) you only enter into fee agreements with your clients that are legal, and which you consider are suitable for the client’s needs and take account of the client’s best interests;

The guidance on Indicative Behaviours is that acting in the following way will show that you have complied with this:

Fee arrangements with your client

IB(1.13) discussing whether the potential outcomes of the client’s matter are likely to justify the expense or risk involved, including any risk of having to pay someone else’s legal fees;

IB(1.14) clearly explaining your fees and if and when they are likely to change;

IB(1.15) warning about any other payments for which the client may be responsible;

IB(1.16) discussing how the client will pay, including whether public funding may be available, whether the client has insurance that might cover the fees, and whether the fees may be paid by someone elsesuch as a trade union;

IB(1.17) where you are acting for a client under a fee arrangement governed by statute, such as a conditional fee agreement, giving the client all relevant information relating to that arrangement;

So I think that is pretty clear. You have to be offering your client ATE Insurance. If you don’t, how can you defend an accusation that you failed to give the client all relevant information when the SRA come knocking? You may as well call up your Professional Indemnity Insurer now and put them on notice.

Even if you do offer the client an ATE Insurance policy, a client who has a costs order made against him will, at the very least, lose some or all of his damages and will be most disgruntled and may say: “I know that you advised me regarding ATE policies and I opted not to purchase a policy, but you should have told me that I was making the wrong decision!” If the client complains to the SRA, they may well take the view that when faced with a client pursuing a risky course of action, your obligation was to meet with your client and ensure that they fully understood the risk they were taking and the complexity of the costs which could be ordered etc.

In practice many solicitors have already indicated that they would be very reluctant to act for a client who indicated that he wished to pursue his claim without the benefit of an ATE policy – the practical burden of protecting oneself from a client complaint is too high.

So what does that mean? Well, be afraid, be very afraid…. If you don’t spell out why a client needs ATE Insurance then you are bang to rights. Even if you do, you need to make it very clear to them that you strongly recommend that they take it.

How do you achieve this? Well, we have a clever signing strip which our solicitors use with great success. It asks the client to sign one of two options: Proceed with ATE cover or Proceed without ATE cover. The without option spells out that they will be personally liable for any costs orders and disbursements if the case is lost. So far, it has worked every time.

Email me if you would like a copy.

Posted in Personal Injury Claims

‘Personal Injury Solicitors Are Earning Too Much’ – Really?

My Dad has a saying, ‘You never see a farmer on a bike’.

To explain his ramblings, he thinks all farmers are rolling in it (money that is).

It seems that the Government i.e. the Ministry of Justice, think PI lawyers are the same. Why would they think this?

Well, once again it seems, some PI lawyers have managed to shoot the entire profession in the back. In the quest for cases, several firms are advertising inducements to attract clients including up to £2,000 up front.

As with farmers though, all is not as it seems. Will the Government actually look at the substance of these inducements I wonder? They are not costing the solicitor much money and they are certainly not being funded out of the costs being earned on cases. The MoJ think that the £2,000 is being paid IN ADDITION to the damages awarded to clients when all they are doing is advancing some of the damages then deducting the money when the full damages arrive. It is just cash flow – a clever marketing tactic. These inducements only apply quite late on when liability has been agreed and the case is progressing nicely.

Now personally, I don’t agree with inducements as it makes lawyers look desperate and appears a little unsavoury. Fine – let’s ban them then  – but don’t go shouting that this is evidence that PI lawyers are rolling in it. They aren’t. Proof of this is the massive consolidation going on in the market, file sales and closures. The number of PI firms is reducing with many well known players either selling up or merging.

Once again it seems we have individuals in the Ministry of Justice who simply do not understand the industry. To assist them to understand they listen to the whisperings of the Insurance Industry – maybe at yet another tea party where the invites for the claimant industry strangely being lost in the post. Who knows. What is apparent is that they are not happy to stop with the Jackson reforms and slashing fixed costs. Further legislation may be afoot.

The only pin-prick of light at the end of the tunnel is the election looming in politicians’ sights next year. Will this Government press on with the changes? Will they win another term? Let’s hope not. Problem is of course, although PI lawyers may cry fowl, even if all of them voted against the Government, it wouldn’t make a blind bit of difference as there aren’t many of them left. Still worth a try though eh?

I know several PI lawyers who cycle to work. Says it all really.

Posted in Personal Injury Claims

Conveyancing Expenses Insurance Survey

Daniel Morris

The results are now in from a survey we commissioned from top pollsters, Populus.

We decided to undertake a survey to put paid to the myth that clients don’t like conveyancing insurance products.

We have had a few conveyancing solicitors say that their clients don’t want Conveyancing Expenses Insurance to protect them in case their purchase or sale falls through. Yet, when we have asked around, the man in the street seemed to think it was a good idea. Hence the survey.

We wanted a good cross section and a reasonable number of respondents. In the end, some 2,048 people completed the questionnaire, answering 3 questions.

The first explained that, some sales or purchases fall through and can mean they would be out of pocket by up to £1,200 due to the cost of a survey, disbursements and fees. If they were considering buying a house, would they be concerned about this risk?

Guess what? A massive 80% said they would be concerned. That’s pretty significant.

Question 2 told them that our MoveSafe policy would cover these risks and cost £82 but was only payable if the house purchase went ahead. Would they be likely to buy it?

Answer : 60% said yes.

Final question (and this is the crucial one for conveyancing solicitors), we asked: Should your conveyancing solicitor have the ability to offer you Conveyancing Insurance policies?

Answer: 77% said yes, they wanted a conveyancing solicitor to offer such insurance.

So that’s pretty significant all round I think.

Clients want the insurance, clients benefit from peace of mind, and solicitor gets paid on failed transactions if the insurance is taken out.

Win win isn’t it?

Posted in Personal Injury Claims

Most Partners think ATE Insurance ‘Essential’

Well I have been banging on about this for a while now  – hate to say I told you so but…

A study by O’Connors LLP who surveyed 500 firms concluded that 9 out of 10 Senior Partners believed that Qualified One Way Costs shifting did not do away with the need for After the Event Insurance. This is our experience too with policy numbers continuing to climb back close to our Pre-Jackson figures.

Why essential? Well, firms are now down on cash and so it is important that they close off risks which could sink them. One such risk is lost disbursements. They may not seem like much on a single case – perhaps £500 or £600 but if you are taking on 50 cases a month, just 10% being abandoned would mean disbursement right-offs of £3k per month – £36k a year. Can you afford that?

When you add written off marketing fees (which you can get back on our policies by the way) of say £400 per case, you could be looking at £60k going down the drain each year on lost disbursements.

That’s not to mention of course costs lost on failing to beat Part 36 offers (and having to deal with the complaints from your client for taking their compensation) as well as failed application costs and adverse costs.

Our statistics show that the total average loss per file is £1,200 so a 90% success rate (which, let’s face it, is pretty good) would still mean you have to cover an average of £133 of losses across the successful cases. Isn’t that your profit down the drain?

‘I can’t insist on ATE Insurance as my clients will go somewhere else’ has been quoted back to us – well where will they go? 90% of firms are now insuring so the odds are the client will only pitch up at a firm who insists on ATE cover anyway. Why do you think 90% of firms are insuring? They have done the maths. They can’t afford to shell out £133 per case to cover losses.

Of yes – one final thing. If you have a loan covering disbursements or WIP, have you told the bank that you don’t insure the cases? If not, check the small print. They might be concerned that their lending is not backed by ATE cover.

I would suggest you get your calculator out…

Posted in Personal Injury Claims

Massive Hike in Court Fees

More bad news for clients and solicitors who fail to take out an ATE policy.

From the 22nd April, court fees for Personal Injury claims are set to rise by a massive 81% (so slightly above inflation) to £445 for a standard claim. Interlocutory applications fees are also set to rise.

Why? Well the official line is to make the Civil Courts a much better place but the real reason is to put off those pesky claimants. Bringing in the Jackson reforms doesn’t seem to have put many people off so the Government is trying a different approach – and of course they don’t need a majority vote in Parliament to do this. Stand by for further hikes in future.

So, what should claimants do? Well they would now be totally mad not to insure their claim. Why would they risk having to pay the fees (and all other disbursements) if they lose for the sake of just £106 payable only if they win? If your client says they don’t want the ATE policy then I think you should seriously examine their credibility.

I am not alone here. A recent O’Connors LLP survey of 500 firms found that 90% believed ATE insurance was still required for personal injury clients – a percentage which can only get higher with this latest news. The survey also concluded that a very large percentage of firms were simply refusing to give the client a choice – either the client agreed to an After the Event insurance policy or they would decline to act.

We are still coming across the odd firm where they are taking the hit for disbursements themselves but they are few and far between. I don’t think they have worked out how much this will cost them - and if they have they need to re-calculate as costs are about to rise. I simply do not believe that a firm can operate without the security of ATE insurance.

Now some good news. Despite the hike in court fees, we have received confirmation from our underwriter that they won’t be increasing prices for anyone joining in the next 6 months – so hurry up and get in touch.

Our motor policies are just £100, non-motor £345 and industrial disease £450 (all plus IPT).

You’d be mad not to.

Posted in Personal Injury Claims

Abortive Transaction Insurance

We have launched a new Abortive Insurance product aimed at the Residential Property market.

Our MoveSafe product insures a purchaser or seller’s legal fees, disbursements and expenses. For a reasonable premium, if a purchase or sale fails to go ahead i.e. it proves abortive, then the policy pays for the wasted legal fees and expenses.

Is Abortive Insurance new to the market?

Abortive Transaction Insurance  is not new but it has often in the past been a difficult sell. The reason is that the terms and conditions have historically been drafted very narrow with claims being quite restricted. This has kept prices down but not realistic. Our Abortive Transaction Insurance  is much more flexible and easy to use. What’s more – it pays out!

Is there really a need for an Abortive Insurance product?

With gazumping rearing its head again and mortgage companies continuing to be cautious, the number of residential purchases or sales that fall through are higher than you think – around 10 to 15% of all instructions.

This is then quite a gamble for a purchaser or seller – should they insure or not? Well, the great thing about our MoveSafe Abortive Transaction Insurance policy is that the premium is only payable if the matter completes – so there isn’t really now a reason not to insure all clients.

Having spoken to many solicitors, there is a need for a properly priced Abortive Transaction Insurance product in the market. We believe our Abortive Insurance product fills a very wide gap. Clients can now buy or sell without the risk of having to write off hundreds or thousands of pounds, and conveyancing solicitors can now off a true ‘no-completion, no-fee’ service AND receive payment for their time even if a purchase or sale fails to complete.

To find out more about our new Abortive Transaction Insurance product, please visit our main website: www.boxlegal.co.uk/movesafe

Posted in Personal Injury Claims

One Year On

So as we approach the anniversary of the Jackson reforms, how do we think it has gone?

My view, for what it is worth, is that not a lot has changed. Yes the small referrers (and many dodgy ones) have left the market but the big ones are still out there. So are the TV and Radio adverts. So are the clients – there has not been a major drop off in claim numbers as had been predicted. It seems clients are getting used to paying part of their damages in legal fees and ATE premiums.

What has happened of course is the amalgamation of law firms (or take overs) and several non-lawyer organisations entering the market through ABSs. We have seen Slater and Gordon buy up a large number of PI firms and grab 5% of the UK market. At the same time we have Saga, Direct Line and Allianz entering the market through the ABS structure, allowing them to make more profits than before.

Fortunately, we have all seen a massive reduction in our car insurance premiums haven’t we? Well, er no. Latest figures show they are just 3% lower than before the Jackson reforms whereas insurers were predicting a 15% drop. So where has the money gone?

The answer of course is in the insurers’ pockets (or more precisely, their shareholders’ pockets). Defendant insurers have saved a massive amount due to the revised fixed costs, removal of the success fee and recoverability of the After the Event Insurance premium. These charges have instead been foisted on the client with the defendant insurers saying ‘thank you very much’ and sticking two fingers up to the rest of us. They simply don’t care. Nor, it seems, does the Government. They are too busy looking to next year’s General Election to realise that they have been shafted – along with every one of the victims of accidents these past 12 months.

So what now? Will Labour change things back if they get in? I doubt it – they will have too many other things to think about.

Now if anyone from either political party should read this then be warned. We told you that the insurance industry would do this but no one listened. People don’t like being shafted. The worst people to shaft are of course lawyers as they can often do something about it. This imbalance needs fixing. If it isn’t sorted out politically then I suspect there will be legal challenges in the long term.

Posted in After The Event Insurance, Personal Injury Claims, Road Accidents, The Jackson Report

The Naked Truth

We are about to do something unheard of in After the Event Insurance circles.

Some may call it shameful. Others may think it will create a price war or maybe signal the end of the ATE insurance industry as we know it (bit strong this but it is good to build up some tension).

What are we going to do? Well, we will shortly place adverts in the legal magazines which tell the world how much our premiums are.

Yes that’s it – that is the news.

Why is this so amazing? Well unlike any other product which has a price tag, ATE remains quite reclusive. Why not have a look around. No ATE Insurance provider has their premiums listed on their website (us included although about to change). The level of premiums has, until now, been a closely guarded secret. This is all about to change.

We are starting with our Clinical Negligence and Industrial Disease policies. We aren’t worried as we are pretty sure ours are the cheapest (and best i.e. we pay out when a claim is made). As soon as the adverts hit the papers, be prepared for some backlash. If we are indeed the cheapest, there will be quite a few upset ATE insurers out there. Some may publish their own premiums. The ones that choose not to may be more expensive – who knows.

Time will tell but I predict this will be a turning point. We will remain the cheapest as we don’t have huge offices nor thousands of staff to pay. Our overheads are low as we have spent our money on technology and building systems which are cheap to run.

So, if you are paying more than the price you see next time you open up the Gazette, give us a call. After all, your client won’t thank you if you don’t.

Posted in Personal Injury Claims

Is Self Insuring A Sick Bird?

Old joke this one – What’s the difference between unlawful and illegal?

Answer: The first means doing something which breaches an existing legal statute, the second is a sick bird.

Boom boom.

So Happy New Year to everyone.

Things are picking up here at Box Legal, with more and more firms finally getting to grips with their rush of pre-Jackson work. Policy numbers continue to climb and we are also seeing a surprising number of new enquiries – some from very large firms. The reason? Well we think it is flexibility – our new campaign says it all really, we can offer policies at any price, and will let you know what you get in return. Simple.

Now on to the joke and by this I mean firms who are self insuring.

We have come across a small number of firms who say they dare not push an ATE policy on the client as they fear they will lose the business. Instead they are either saying nothing to the client, leaving the choice up to the client or (unbelievably) saying they will take the risk themselves as a firm.

So let’s analyse these options shall we:

1. Saying nothing

Keeping quiet and not telling the client about the risks and advising them to insure against them is a recipe for disaster. Two possible results here: first – you get away with it so everyone is happy; second the case is lost or an offer is not beaten so the client loses – they will complain and so you will have to put your hand in your pocket. Worse, they may report you to the SRA. Now funny this but we are aware that the SRA are clamping down on this shoddy practice in their visits so watch out. It is NOT a defence to point to the CFA small print by the way.

2. Leaving the choice up to the client

Almost as bad as saying nothing. The issue here is – can the client make an informed decision based on a long client care letter? We think not (and the SRA seems to agree with us). Again we have heard of firms being visited and asked why they did not discuss the choices with the client in a meeting.

Anyway – what happens to the client who decides to go ahead without ATE cover? If they lose, who pays then? The client has agreed to it but won’t they be jumping up and down at that point. Will you really be suing them for the money? Will you be able to find them? You could of course ask for money on account at the start of the case…

3. Self Insuring

Ok ok – it isn’t illegal. The case of Sibthorpe & Morris v LB of Southwark says adding a clause to your CFA to say you will take the risk of losing is absolutely fine. What is illegal is charging the client for this. If you attempt to add a fee for taking the risk then this is insurance so you would be breaking the law.

So why then would you take all the risk but not get paid for it? We think this is a bit daft – after all, you would need to notify your Professional Indemnity Insurer who would not be happy (as they would be taking on additional risks) - your PII premium would no doubt rise as a result. You would also need to make a provision in your accounts for the amount you may have to pay out in the future. This would reduce profits.

So why do people do this? Well it is the fear of clients disappearing.

So let me put your minds at ease. In the past 3 months we have visited over 50 firms and only one has lost a client when they insisted on the client taking out an ATE policy. When I say ‘a client’ I mean just one client. That very client then came back with his tail between his legs when the firm down the road failed to provide a decent service.

Almost all firms are now insisting on insurance – it protects the client and it protects you, the solicitor. There is nowhere else for the client to go.

I think it is time for the sick bird to become deceased. To shuffle off this mortal coil. To kick the bucket etc, etc ….

Posted in Personal Injury Claims

Low ATE Premiums – Don’t kid yourself.

Can ATE Insurance policies be too cheap?

Well some ATE insurers are offering motor policies which are £40 + IPT. Excellent. All is wonderful with your client  and your boss – the client has full protection and the firm isn’t going to have to write off any disbursements. You are giving the ATE Insurer some nice business as well – 50 cases a month. That’s £2,000 in premiums.

Great!

Well, not really. You see the ATE insurer’s fixed overheads amount to £20 a policy, their running costs are £10 and they need to make a profit of say £5. So out of £40 there is perhaps £5 in each premium left to pay claims. Now 50 cases @ £5 = £250 per month available to pay claims. Not much is it?

What do you care though? That’s the insurer’s problem isn’t it? If they have sold the policies too cheap then they still have to pay out on claims so they lose, not you or your clients.

Well no, they don’t. You see, there will be several clauses in the ATE Insurance policy which allow the After the Event insurer to wriggle out of paying individual claims. One such term will be a ‘prospects of success’ clause. It will state that the policy is only valid as long as prospects of success exist. Everything will be hunky dory as long as your claims are low but when you put in that big £20k claim form, the ATE insurer will ask for your file and begin wriggling. They will refer to the ‘prospects of success’ clause and say that clearly the case should not have been pursued or an offer should have been accepted. They can prove this of course because you didn’t win or you didn’t beat that offer.

What’s the result? Well they will refuse to pay that claim. Worse, you have now lost confidence in the ATE insurer but you are left with hundreds of clients insured with them. Can you be confident those policies will be paid out on? Are they in fact worthless?

When something appears too good to be true then there is probably a reason for it. Don’t be fooled in this ‘post-Jackson’ race to the bottom. Very cheap premiums are worthless. Your clients will end up without proper cover and you will end up in a mess.

Think about it for a minute. If you give an After the Event Insurer £24,000 in business each year, are you really going to be able to make claims exceeding this figure or even half or a quarter of this sum? Isn’t it better to buy a correctly priced premium for the type of claim which has no ‘wriggle room’ clauses?

I know just the company who can offer you this….

 

Posted in Personal Injury Claims
Welcome to the ATE Insurance Blog


This blog is produced by Box Legal Limited, providers of After The Event Insurance to the legal profession. Our aim is to provide news, advice and guidance on all issues around ATE Insurance and making personal injury claims. We welcome your comments and questions both on the blog and by contacting us direct on 0870 766 9997 or by emailing daniel@boxlegal.co.uk