Mar 31

Was Jackson Implementation Politically Motivated?

Posted in General, Personal Injury Claims, The Jackson Report

Come on, you’ve spotted it haven’t you?

I am not talking about Ken Clarke’s reference to the cost of litigation to the NHS. He said lawyers fees were £456m when in fact claimant fees were just £104m. He got himself a little confused with £456m being the total cost to the NHS including damages. Convenient eh?

No, I am talking about Labour funding.

Now I am sure you all know that a large chunk of funding for the Labour party comes from the Trade Unions (about a third) and so if there was a way for the Conservatives to attack this in a legitimate way then this would be a nice little bonus.

Step forward Ken Clarke and his need to change the personal injury claims system. One of the changes was of course to remove the recoverability of After the Event Insurance from the defendant. A small clause was also added to the announcement, and I quote:

                         
‘The recoverability of the self-insurance element by membership organisations, equivalent to the ATE insurance premium, will also be abolished. Some trade unions and other membership organisations self-insure in this way.’

 

What is this? Well, if one of a Trade Union’s members had an accident, they were ‘covered’ by their Union against adverse costs and disbursements for making a claim. In return, the Union was permitted to recover a premium for a notional After the Event Insurance policy from defendant insurers when their member was successful in their claim. This sum was often higher than actual ATE Insurance policies and allowed Trade Unions to massively subsidise their membership fees.

Well this has now been taken away so an enormous amount has been wiped from the coffers of the Unions. Now they could increase their fees to compensate but times are hard so I don’t think so. The easiest way to balance the books would be to spend less (can you see where we are headed here?).

I think Labour is going to suffer with these changes. I don’t think they have thought this through. Clearly the Tories have.

Box Legal Limited: After the Event Insurance Providers
www.boxlegal.co.uk  | daniel@boxlegal.co.uk | 0870 766 9997

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Mar 30

Jackson’s Proposals to be implemented in full

Posted in Personal Injury Claims, Solicitors, The Jackson Report

And so it came to pass. Ken Clarke struck down upon the claimant with great vengence etc etc.

Well I did warn everyone that a quick decision probably meant the Government had decided to implement Jackson way before the consultation. We are pretty convinced that that the consultation was merely a formality as it would have taken quite some work to get the White Paper out so quickly having had over 600 responses.

So what has been decided? Well, here is a quick summary:

  1. Success fees will no longer be recoverable from the defendant.
  2. ATE insurance policy premiums will no longer be recoverable from the defendant.
  3. For PI claims a claimant’s general damages will be increased by 10%. (The intention is that claimants will use this 10% to pay their solicitor whatever success fee they are able to negotiate, but the success fee which a solicitor can charge in this context will be capped at 25% of all damages excluding damages for future care and loss).
  4. Qualified One-way Costs Shifting (“QOCS”) will be introduced for PI claims.

Unfortunately, quite a lot hasn’t been decided such as the definition of ‘person of means’ within the exception to QOCS. It seems there is going to be another consultation on the proposals and then some seriously clever drafting will be required.

Basically, rewind to before the Access to Justice Act. The client is going to be worse off, so will solicitors and After the Event Insurers. The only winners here are the defendant insurance companies.

But at least we can all look forward to cheaper car insurance. Can’t we?

Box Legal Limited: After the Event Insurance Providers
www.boxlegal.co.uk  | daniel@boxlegal.co.uk | 0870 766 9997

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Mar 29

Ken Clarke to Announce Government’s Decision on Jackson at 3.30pm Today

Posted in General, Personal Injury Claims, Road Accidents, Solicitors, The Jackson Report

And so it came to pass. After just 43 days in the wilderness, Ken Clarke will today put everyone out of their misery and tell Parliament what the Government intends to do about litigation.

Leaked sources indicate that the success fee recoverability from defendants is going, but it will instead be recoverable from the claimant (capped at 25% of damages). To compensate, the claimant will be given a 10% increase in damages. No win, no fee will stay and the RTA portal will be expanded to include all low value PI claims and Clinical Negligence.

Nothing about After the Event Insurance or one way costs shifting as yet – so the smart money is on this staying the same. But who knows? Am I chancing fate here by saying anything?

Not long to wait now. The only thing I would add is, this is incredibly quick. The Ministry of Justice received over 600 submissions on the Jackson reforms and over 5,000 on the Legal Aid proposals.

Mr Clarke must have been up all night for the last month reading that lot…..

Box Legal Limited: After the Event Insurance Providers
www.boxlegal.co.uk  | daniel@boxlegal.co.uk | 0870 766 9997

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Mar 28

Has Djanogly Let the Cat out of the Bag?

Posted in Personal Injury Claims, Road Accidents, The Jackson Report

One of our sharp eyed readers (it’s Malcolm Roberts again!) has spotted something very interesting. Mr Djanogly (remember him? Junior minister at the MoJ and former city slicker solicitor) spoke recently at an event organised by the National Pro Bono Centre.

Towards the end he mentioned something which, upon analysis, may indicate which way the Government is going to jump on the Jackson conundrum.

He said that plans to extend the year old road traffic accident claims process to other areas of personal injury, including low value clinical negligence, would leave only big cases affected by the Jackson reforms. Ah ha! So it appears the MoJ may be recommending that all low value PI claims go through the portal and that it is then given time to work rather than suggest big changes following the Jackson review.

OR it could be another clanger from Mr Djanogly who has slipped up quite a lot of late.

So we will have to wait but it is mildly encouraging. Let’s keep our fingers crossed.

Box Legal Limited: After the Event Insurance Providers
www.boxlegal.co.uk  | daniel@boxlegal.co.uk | 0870 766 9997

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Mar 25

Caselaw Review: Philips v Rafiq & MIB : Deceased client can claim against MIB even though he knew driver was uninsured

Posted in Personal Injury Claims, Practice & Procedure, Road Accidents

The Issues: Mr Rafiq was driving the Claimant’s uninsured car, in which the Claimant was travelling as a front seat passenger. Mr Rafiq lost control of the vehicle and crashed into the central reservation of the M25, overturning the vehicle. The Claimant suffered such serious injuries that he died in hospital later that day, and the claim was brought by his dependants. The question before the Court, was whether the MIB were exempt from paying the claim on the basis that had the Claimant survived the accident he would not have been able to recover damages from the MIB, on the basis that he allowed himself to be carried in a car which he knew, or ought to have known, was being used without proper insurance being in force (6.1(e) of the Uninsured Drivers’ Agreement).Held: Although Mr Rafiq had a policy of motor insurance which covered his own vehicle, this did not cover his use of the Claimant’s car. There was a finding of fact at first instance that the Claimant knew or ought to have known that he was being carried in a car which was uninsured. There was no appeal against this finding of fact.Clause 6.1(e) of the Uninsured Drivers’ Agreement provides the following exception to the MIB’s obligation to satisfy a compensation claim:

“Clause 5 [obliging the M.I.B to satisfy any judgment against the driver] does not apply in the case of an application made in respect of a claim of any of the following descriptions …

(e) a claim which is made in respect of a relevant liability described in paragraph (2) [it being common ground that this is such a relevant liability] by a claimant who, at the time of the use giving rise to the relevant liability was voluntarily allowing himself to be carried in the vehicle and, either before the commencement of his journey in the vehicle or after such commencement if he could reasonably be expected to have alighted from it, knew or ought to have known that –

(i) …

(ii) the vehicle was being used without there being in force in relation to its use such a contract of insurance as would comply with Part VI of the 1988 Act, …”

On considering the previous 1988 Agreement compared to the 1999 Agreement, the Court concluded that because the earlier Agreement had clearly excluded a claim of this type, but the 1999 Agreement had not, a reasonable man could only conclude that the 1999 Agreement meant to allow a dependent’s claim in such circumstances (para 25). The Agreement was between the Secretary of State and the MIB and the teams who drafted the Agreement must have had a high level of knowledge and expertise of the working of the scheme in the past and therefore must have intended to remove the exclusion to compensate dependents in this way.

The Court of Appeal upheld the first instance Court’s decision that the Claimant dependents should be compensated by the MIB.

Comment: This decision resulted in the MIB making a petition to the Government to change the law and amend the Uninsured Driver’s Agreement wording. Lawyers for Ms Philips said that the ruling would cost the MIB millions of pounds but the MIB played down the significance saying that there was only going to be a handful of cases where the “loophole” would apply. But the MIB was clearly concerned, evidenced by its contact with the Ministry of Transport.

Box Legal Limited: After the Event Insurance Providers
www.boxlegal.co.uk  | daniel@boxlegal.co.uk | 0870 766 9997

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Mar 23

Guest Blogger: Death of a Client

Posted in General, Guest bloggers, Personal Injury Claims

We are starting a series of guest blogs with a very useful posting from Keith Hayward of Victory Costs: What happens to your retainer if your client dies?

Where you act under a CFA and your client dies before their claim is concluded, you might decide not to continue. After all the client is a major witness, particularly if liability is in dispute.  But should you decide to proceed it is important your CFA covers the situation and you understand what you need to do to ensure you retain the right to be paid both base costs and a success fee where the claim concludes successfully.

Whilst death does not in itself usually operate to end a contract ( see the Law Reform (Miscellaneous Provision) Act 1934), the Law Society model CFA provides that the CFA will automatically terminate, and the estate become liable for all costs incurred to date. The model CFA then states:

“If your personal representatives wish to continue with your claim for damages we may offer them a new conditional fee agreement, as long as they agree to pay the success fee on our basic charges from the beginning of our agreement with you.”

So a new CFA is required. This can be retrospective from the date of death, being the date the original CFA was automatically terminated.  If you want to recover a success fee on the first CFA the Personal Representatives (PRs) need to agree to this. This can be achieved simply by writing to the PRs making it clear you will only offer them a new CFA if they confirm their agreement to be liable for a success fee should the claim be successful, or alternatively the new CFA should record the fact that the new CFA was entered into on that basis.

Remember that where the success fee is not fixed by Part 45 it will be assessed at the date the new CFA is signed. So you will have to reassess the success fee, and if an admission of liability has been received this will impact significantly on the success fee that can be recovered.

An alternative to this is to amend the model CFA to remove automatic termination and state that the solicitor MAY terminate if the client dies, and the solicitor can elect whether to continue or terminate. That way the original CFA continues and the success fee does not have to be reassessed. The estate would still be liable for all base fees incurred to date if either side terminate.

Keith Hayward
Victory Costs

Just thought I would add a bit about After the Event Insurance here. If you have an ATE Insurance policy in place and your client dies then the policy can be transferred into the names of the personal representatives if they wish to pursue the claim. Just email us or call and we will ask the underwriter to make the changes!

Box Legal Limited: After the Event Insurance Providers
www.boxlegal.co.uk | daniel@boxlegal.co.uk | 0870 766 9997

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Mar 21

Jackson Review White Paper Due

Posted in General, Personal Injury Claims, The Jackson Report

We understand that a White Paper will be issued by the end of the month detailing the Government’s proposed changes to the civil justice system.

This is in Usain Bolt territory. The Jackson consultation only ended on the 14th February so what does it mean if they are issuing their proposals under 6 weeks later?

My conclusions are:

  1. They have drafted in a large team of expensive lawyers to go through the hundreds of submissions and thereafter draft what is likely to be complicated legislation OR
  2. They have decided not to change much OR
  3. They already decided what they were going to do before the consultation and so most of the legislation was already drafted.

Well, let’s see shall we. I would dismiss option 1 – far too expensive and there has been no indication of a recruitment drive at the Ministry of Justice – the opposite in fact. So that leaves us with options 2 and 3.

Now I would like to think that the answer is 2. We have both sides of the industry telling the Government that one way costs shifting would be a disaster and would increase claims considerably. We also have a group of academics slating the Jackson report stating it was one sided and biased and can’t be relied upon. So we can all breath a collective sigh of relief can’t we?

Well, I don’t think so. Unfortunately, you can’t trust politicians and you certainly can’t trust this Government. Anyone remember what the Conservatives said before the election? They said they weren’t inclined to bring in the Jackson reforms. As soon as Mr Cameron stepped into No. 10, what did they do? Yep – decided Jackson was the best thing since sliced bread. So, if I were a betting man, I would put money on option 3.

The only light at the tunnel here is the problem of getting a bill through parliament. Again we understand that the Ministry of Justice has only been given time for one bill – so they are rolling all of their wish lists up into one piece of legislation – including reducing legal aid, prison numbers and prisoner voting. This will serve to delay the bill through parliament as I can’t see all of these going through without a fight. So don’t give up. If I am right and it is option 3, the battle won’t be over yet. Time to Lobby your MP.

Box Legal Limited: After the Event Insurance Providers
www.boxlegal.co.uk | daniel@boxlegal.co.uk | 0870 766 9997

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Mar 18

Red Nose on Insurers?

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

I thought it was appropriate to raise awareness of a practice employed by defendant insurance companies which the Government now recognise as being one of the factors behind the increasing number of personal injury claims in the motor industry.

Basically, defendant insurers are realising that there is money to be made in personal injury claims and so, when one of their insured has an accident, they are now quizzing them to determine whether or not they have a valid claim for personal injury. If they do, the insurer  ’sells’ the claim to one of their panel solicitors who acts for the insured against another major insurer.

We understand that the price or ‘referral fee’ for such claims can be up to £750 so it doesn’t take a genius to work out that it is quite a money spinner. Unfortunately, they are all at it which means that an insurer may make more money by selling claims but they are then having to pay out for more claims made against them!

So what do they do? Well, they blame claimant personal injury lawyers and claims management companies for driving up the number of claims. They back Lord Jackson’s reforms shouting loudly of ‘increasing lawyers fees’ and the ‘compensation culture’ – basically pointing the finger at everyone bar their own industry. Problem is of course they have been rumbled. Lawyers fees per claim can’t be increasing – they are fixed and Lord Young’s report on the ‘Compensation Culture’ concluded it was a myth created by the media.

So why change anything? Why bother looking at one way costs shifting, reducing success fees or removing recoverability of After the Event insurance? Why not ban insurance companies from receiving referral fees. In one fell swoop this would remove the incentive and would in one go reduce the number of claims.

Red, er noses all round I say.

Box Legal Limited: After the Event Insurance Providers
www.boxlegal.co.uk | daniel@boxlegal.co.uk | 0870 766 9997

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Mar 14

Claims on After the Event Insurance Policies

Posted in After The Event Insurance, Personal Injury Claims

Oh my word. We made a claim once on our household insurance policy.

We had a leak from a bathroom on the top floor of our house and it ran down the back of the walls and across ceilings down two floors. Fortunately, we managed to isolate the problem quite early on – a leaking pipe behind a wall – but the effect was we needed to redecorate two and a half rooms.

Well that’s what we pay our contents insurance for isn’t it? Well yes but boy, did they make us work for the money. We obviously needed an estimate which we obtained but the insurer had a ‘scale’ showing what the charge should be based on the square footage involved. Didn’t matter we were in London of course or that the ceiling had old coving around it etc – they just weren’t paying. So we had to get another quote and another! After the third one, they offered a payment which was still below any of the quotes so I had to negotiate with the decorating company. Eventually, 4 months later, it all got sorted. We had to pay an excess of course of £250, so not a great experience.

I had forgotten all about this until the new contents quote came for this year. Guess what, it had shot up 25% because we had made a claim.

So basically, we pay a premium each year then have to do a lot of arguing to get some of a small claim paid, and then pay more the next year for the privilege. It is the same for all insurance in the industry  – except After the Event insurance.

With ATE insurance, there is so much competition, and few claimants make more than one claim, that the premiums are generally fixed very low. If a claim is lost then the insurer can’t afford to put the premiums up for everyone else as they will lose business and there aren’t annual premiums. The only way insurers regulate things is by having clauses in their insurance contracts which get them out of trouble in the event that the client’s claim wasn’t as good as first thought. These are called ‘prospects’ clauses.

The clauses say, that cover only continues provided that prospects of success exceed x%. Often ‘x’ is 60% but it can be higher. Clever isn’t it? How can anyone (even a learned QC) say what the prospects of a case are? It is purely guesswork, and so here is the nub of the problem for clients. After the Event insurers can effectively use this clause to deny payment of claims. If a case is lost, all they need do is point to the clause and say ‘Prospects weren’t over 60%’ and refuse payment. How can a claimant prove that prospects were over 60% - they lost lost the case so it couldn’t have been that high?

It is a minefield for claimants and totally unfair, which is why we don’t have a prospects clause in our policies. Our policies allow the solicitor to decide if a claim should proceed. After all, they are best placed to make that decision and their money is on the line (they don’t get paid under a CFA if they lose).

So be careful who you insure with. It is not all about price – check the small print for the ‘get out of jail free’ cards held by the underwriter. They shouldn’t be allowed to chose which claims to pay or how much – i.e. they shouldn’t be allowed to behave like a household insurance company.

Box Legal Limited: After the Event Insurance Providers
www.boxlegal.co.uk | daniel@boxlegal.co.uk | 0870 766 9997

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Mar 11

Win an Amazon Kindle!

Posted in Amazon Kindle Competition, General

Here is your first chance to win a Kindle! The question: How many cancellation reasons do we allow?

To enter the competition you must:

  1. Be following Box Legal on Twitter – Follow us now by clicking here: http://twitter.com/BoxLegal
  2. Answer one of the questions based on the blog which will appear between 11th March to the 11th April. Answers should be by either a Direct Message through twitter or by emailing Kirsten@boxlegal.co.uk.
  3. Tweet the following message at least once: ‘Box Legal Competition: Answer just one question to win an Amazon Kindle! Click http://bit.ly/eVnKcq to enter.’

I will announce a winner chosen at random week beginning 18th April 2011 through Twitter and here on the blog. You can enter more than once provided you answer a different question each time.

Best of luck.

Box Legal Limited: After the Event Insurance Providers
www.boxlegal.co.uk | daniel@boxlegal.co.uk | 0870 766 9997

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Mar 9

Enter our competition to win an Amazon Kindle!

Posted in Amazon Kindle Competition, General

Guess what? We are holding our first competition  – and the prize is an Amazon Kindle! We are running it via Twitter and this blog.

To enter you must:

  1. Be following Box Legal on Twitter – Follow us now by clicking here: http://twitter.com/BoxLegal
  2. Answer one of the questions based on the blog which will appear between 11th March to the 11th April. Answers should be by either a Direct Message through twitter or by emailing Kirsten@boxlegal.co.uk.
  3. Tweet the following message at least once: ‘Box Legal Competition: Answer just one question to win an Amazon Kindle! Click http://bit.ly/eVnKcq to enter.’

I will announce a winner chosen at random week beginning 18th April 2011 through Twitter and here on the blog. You can enter more than once provided you answer a different question each time.

Best of luck.

Box Legal Limited: After the Event Insurance Providers
www.boxlegal.co.uk | daniel@boxlegal.co.uk | 0870 766 9997

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Mar 8

Policy Cancellation Analysis

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

I am not sure if you know this but we allow free cancellation of After the Event policies for a number of different reasons - 7 to be precise namely:

  1. Lack of client instructions
  2. Poor propects of success
  3. Low quantum
  4. Admin error
  5. BTE Insurance discovered
  6. MIB Untraced matter (RTA only)
  7. New Solicitors instructed

We keep a track of these so we can see what causes most policies to fail. If you are a Personal Injury practitioner then I am sure you would not be surprised to discover that, for motor claims, the biggest reason for cancellation is lack of client instructions. You may be surprised however to find out that our figures show this is running at 38.6% i.e. of all the 7 reasons we permit for cancellations, over a third relate to the client failing to continue their claim.

For non-motor claims (slips and trips, accidents at work etc) the figure is only a little better at 29.5%. The biggest reason for non-motor cases is however poor prospects of success which you would expect (46.1% of cancellations). For industrial disease ATE Insurance policies, the biggest reason is also poor prospects (66.6%)  whereas no instructions reason is only 17.8%. Note though that these figures only show cancelled policies where no disbursements need to be claimed under the insurance. If these claims were also included then the percentage would be higher.

So what can we learn from this information? Well, it shows us that a lot of work is done for nothing by solicitors who are then left high and dry when it transpires that the client either can’t be bothered to continue or solicitors discover the case is not as good as first thought. This is of course the reason for the success fee which Lord Jackson is trying to abolish. One of the arguments for this is that defendants have to pay for failed cases as well as successful ones through the combination of success fee and After the Event Insurance. He says this does not happen anywhere else in any other industry. Looks like he has forgotten about the er, insurance industry where claims by some people put the premiums up for everyone else.

The figures also show that solicitors should perhaps put additional resources into retaining clients, particularly with RTA claims as there are an awful number of claims disappearing due to the client simply giving up. If success fees are abolished or even reduced, there won’t be any money for doing this work so it is important that solicitors get their retention rates up and cancellations down.

Box Legal Limited: After the Event Insurance Providers
www.boxlegal.co.uk  | daniel@boxlegal.co.uk | 0870 766 9997

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Mar 3

Caselaw Review: Gaynor v Central West London Buses Ltd – Work Carried out Before CFA Signed is Recoverable

Posted in Caselaw Review, Conditional Fee Agreements

The Issues: The Claimant retained solicitors to pursue her personal injury claim. Their retainer letter to her said: “If your claim is disputed by your opponent and you decide not to pursue your claim then we will not make a charge for the work we have done to date.” No CFA was ever signed. Did this retainer letter amount to a Conditional Fee Agreement so as to be caught by Section 58 of the Courts and Legal Services Act 1990 and therefore unenforceable because it did not comply with that Act or the CFA Regulations in force at the time?

Held: Section 58 defines a CFA as an agreement to provide litigation services. Section 119 of the same Act provides that this must relate to “contemplated proceedings”. No proceedings can be contemplated before a Defendant indicates a dispute. Work prior to there being a “real likelihood” of proceedings was not “litigation services”. The retainer was not a CFA, and the costs incurred under it could be recovered from the Defendant.

Comment: This is important authority from the Court of Appeal which will normally allow a Claimant to recover the cost of preliminary work carried out at the early stage of a claim before a CFA is entered into – including disbursements and an After the Event Insurance policy. It may also assist in recovering costs where an informal “No Win No Fee” agreement is mistakenly entered into. Alternatively, it may be possible to enter into a retrospective CFA which covers previous work – see Forde v Birmingham CC (2009).

Box Legal Limited: After the Event Insurance Providers
www.boxlegal.co.uk  | daniel@boxlegal.co.uk | 0870 766 9997

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Mar 1

European Court of Justice Outlaws Insurance Sex Discrimination

Posted in General, Personal Injury Claims, Road Accidents

Well I am a bloke so this is good news for me – lower insurance premiums! Unfortunately (don’t tell her I said this), I am married to a woman so my lower premiums will be balanced by her higher ones.

The European Court of Justice has today ruled that insurance companies cannot take into account the gender of the insured when setting insurance premiums as this amounts to sexual discrimination. We all know that ‘boy racers’ are more risky than young female drivers but now they are going to have to be treated the same if they are the same age. Makes sense when you think about it – why should the actions of some male drivers push up the premiums for the rest of the male population? Hardly fair.

The rules will come in at the end of next year to allow the insurance industry to ‘adjust’. Now I am always blowing their trumpets for them but even I can see that this is an opportunity for insurance hikes across the industry. The only winners here will be the insurance companies. They will subtract x from male drivers and add 2x to female drivers making them a nice profit of, er x.

I just need to stop the Mrs from driving the car so we can gain. Maybe I could get a spider to take up residence in the glove box….

Box Legal Limited: After the Event Insurance Providers
www.boxlegal.co.uk  | daniel@boxlegal.co.uk | 0870 766 9997

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