Mar 5

How to survive on reduced fixed costs

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

And so it came to pass. David did meet with the great unwashed (insurers) and a deal was done which the learned Judges hath said ‘there’s nothing wrong with that’: Costs for a basic RTA will now be fixed at just £500 post April.

So what now? There are letters in the Gazette saying ‘we are turning out the lights’, ‘we are all doomed, doomed I tell you’ etc etc.

But is this really true? Let’s wind back to 1998, before the Access to Justice Act. What used to happen then?

Well, solicitors used to charge their clients an hourly rate and claim costs back from the defendant if they won. If they lost, the client sometimes still had to pay – as was also the case if there was a shortfall in recovery of costs. What is more, there were After the Event Insurance policies taken out – which the client paid for.

Did the world end back then? Were solicitors firms closing and laying off hundreds of workers? Er, no.

What used to happen was that clients paid for a solicitor to run their case for them. What is wrong with that? We have all got into the mindset over the last 10 years that the client’s damages are sacrosanct. Why is that? Why should they not pay something in order to be compensated? Why shouldn’t clients agree to a deduction of say, £500 from their damages if the solicitor wins their case for them?

I know some solicitors will say that this would mean that clients would not be fully compensated for their injuries. Now I can understand that where future care is concerned or if we are talking about a serious head injury claim but whiplash? Come on. Clients won’t care. Prior to 1999 they were happy to hand over a size-able percentage of their damages to a solicitor who won their cae for them and they will get used to it again. They will have to. It is either that or solicitor firms up and down the country will have to close and then who will act for the injured clients?

I know which I would rather do.

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Jan 18

Will Jackson be the death of BTE Insurance?

Posted in After The Event Insurance, General, Personal Injury Claims

Is it a surprise that the percentage of people who have a ‘Before the Event’ (BTE) Legal Insurance policy has been dropping over the last few years?

During periods of recession, luxuries such as non-compulsory insurance often need to be jettisoned in an exercise of belt tightening. What surprises me however is the extent of the recent drop-off. DAS have reported that take up was running at 80% a few years ago but is now down to 50%. No wonder claimants are increasingly looking to After the Event Insurance as a better deal – they only take out a policy when they actually need it and don’t have to pay for it unless they win.

The Government of course made their view clear 2 years ago when the Jackson report was published. They believed that the solution for claimants was a greater take up of BTE but they clearly did not know the market well enough – both the way it operates and the sensitivity to economic times. You see the cost of BTE Insurance has for years been supplemented by referral fees. BTE insurers have until now actually encouraged claims by ringing around their policy holders to see if they had had an accident. Why? Well, if there was a claim, the insurer could sell it to a solicitor for several hundred pounds. Not just that but they would have an ‘arrangement’ with the solicitor that there would never be a claim on the BTE policy.

So the claimant got compensated, the solicitor got a case and the BTE insurer made lots of money. It became so lucrative that often policies were virtually given away far below their true cost – sometimes for just £10.

But that was before the recession - now savy drivers have began un-ticking the ‘Do you want Legal Insurance?’ box on their car insurance renewals, thereby saving themselves money. After all – if they did have a claim they knew there were lots of companies ‘off the telly’ who would help them.

So BTE insurers have been seeing a drop in income. But the worst is yet to come….

When the Jackson reforms come into force in April, there will also be a ban on referral fees. Immediately the BTE insurer’s business model will have to be junked. No longer will they be able to go after claims and then sell them on but instead they may be keeping their heads down for a change. The only option for the larger ones will be to take over a solicitor’s firm and run cases in-house for the legal fees. Trouble with this of course is that the fees a solicitor can generate are also likely soon to be slashed.

Only one thing for it then – put up the cost of the BTE policy to a true ‘burn cost’ figure (who knows what that would be – I doubt many of them will know either!). Oh dear, bad move – we are in a recession. If the take up of BTE is going down now, just think what is going to happen when the referral fee ban comes in and premiums have to rise two or three fold.

If you have shares in a BTE insurer, sell them now. They are in for a rough ride.

 

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Dec 20

Small Claims Court Rise Consultation – Why Bother?

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

So here we go again. The Ministry of Insurance Companies  Justice has issued another consultation document, this time regarding their proposal to raise the Small Claims Court limit for some PI claims.

Now if the Government hadn’t already rejected a rise less than a year ago, perhaps I wouldn’t be so sceptical about this but I am afraid to me, and countless others, this just goes to show how close the Insurance industry has managed to get to the decision makers at the MoJ.

A further indication that there has been some very successful lobbying going on are the three proposals themselves. The MoJ has given respondents 3 options:

1. No change to the small claims court limit
2. Raise it to £5,000 for all Road Traffic Accidents
3. Raise it to £5,000 only for whiplash claims suffered in a Road Traffic Accident.

So why options 2 and 3? Why limit the change to RTA claims? Are those injuries less serious or the victims less worthy than say someone injured at work? What has option 3 got to do with anything? Is a whiplash claim less serious than an injured leg? Is a whiplash claim somehow easier to deal with and so victims won’t need legal representation? What happens if there are multiple injuries including whiplash?

This is just unbelievable. It is quite clear that the Government has listened to the insurance industry and has ignored everyone else.

I will stick my neck out here and predict the results of the consultation. There will be loads of replies but the summary document produced by the MoJ will refer mainly to data provided by the defendant insurance industry. The MoJ’s summary will be produced somewhat quickly following the closure of the consultation period (I am guessing we will be seeing it within 2 weeks of the March deadline) and will conclude that the public will be well looked after using the small claims court (and Insurers can be trusted to pay out the right compensation). The MoJ will therefore decide to raise the limit to £5,000 for all Road Traffic Accident claims to take effect in October 2013.

I will now also predict the results of all of this:

1. The Small Claims Court will become swamped with claimants who will be ‘represented’ by claims management companies in return for a cut of the damages. There will be an outcry from The Law Society and APIL etc but they will be ignored. No one will be paying referral fees so no law will be broken. This is will be a brilliant way for Referrers to remain in business.
2. Car Insurance premiums will drop by an average of £20. The predicted £90 reduction which has been banded round by insurance companies will turn out to be incorrect. After all, the insurance industry will have a large hole in their finances following the ban in referral fees and so the lower claim payouts will help them to maintain (or who knows increase) profit levels. Additional costs will also be found with the waters muddied by, I don’t know, flooding claims or similar. The £20 reduction won’t take effect for 2 or 3 years anyway due to the ‘backlog’ of claims.
3. The Government will sympathise with the Insurance industry who will hold further talks at Downing Street over tea and cakes. The invitations to this shindig for representatives of claimants will be lost in the post.

That’s it. I am off to punch a wall.

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Nov 21

The New Costs Regime – A Trip to the Dentist?

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

We all dread it, sometimes for weeks in advance. A trip to the dentist. The visit itself may not be that bad, but the dread of what might happen……..

Could it be that in a few month’s time we will see the government’s latest announcement as just an anticlimactic session with the oral hygienist?

As you may know, the Justice Ministry has outlined its proposed new fixed costs levels for cases settling within the Portal, and of course from April onwards the Portal procedure will be extended to include EL and PL cases. The Ministry’s proposed flat rate fixed recoverable costs are:

  • £500 for RTA claims worth up to £10,000 (Stage 1: £200; Stage 2: £300)
  • £800 costs for RTA claims worth between £10,000 to £25,000
  • £900 for EL and PL claims worth up to £10,000
  • £1,600 for EL and Pl claims worth between £10,000 to £25,000

The Justice Minister has explained that the costs have been reduced to ‘reflect the forthcoming ban on referral fees’ which presumably means that costs have been reduced by the £700 which is often paid to referrers. It appears to be a disaster for personal injury firms, but how bad is it, and will it be impossible to adjust to this new landscape?

It’s worth looking at each component of the personal injury market in turn – referrers, solicitors, clients, BTE insurers and of course ATE insurers.

Referrers
… seem likely to suffer. Claims that generate less costs are less valuable, so referral fees will naturally drop and we already know that Section 56 of LASPO 2012 bans referral fees beyond a payment which a solicitor can show is a fair price only for work actually carried out.

Solicitors
…will still need to acquire work by marketing their services. They will either form new business structures with referrers, or increase their advertising spend. Baseline costs of £500 will be insufficient to pay for this, so they will probably need to charge their clients a small additional sum, to be paid out of damages on successful cases. There is obviously a risk that the rush to compete on headline price will cause an increasingly reduced level of service, but if this is avoided, and clients must now pay £200-£300 to supplement the new low level of recoverable costs, will this really be the end of all things?

Just one other thought – with Portal costs now so low, solicitors are going to do everything they can to cause claims to exit the Portal, so procedural failings within the Portal by Defendants may be more readily seized upon by Claimants from now on – Defendants beware! (…and will dealing with these issues increase satellite litigation?)

Clients -
…may well continue to behave as before. Clients should in theory receive 10% extra damages to offset any costs they will now have to pay, but in any case historical evidence (Claims Direct?) suggests that losing a proportion of their
damages (if necessary) does not deter them from making a claim. If referrers are providing a service which clients cannot do without, and referrer activity diminishes, then there may perhaps be a few less clients making claims, but by and large the number of clients pursuing a claim is unlikely to diminish significantly.

BTE insurers -
…may have to review whether they have a viable product. BTE insurance’s only value to insurers is as a tool to capture claims and charge solicitors a referral fee. If they can no longer charge that referral fee their first reaction will be to form Alternative Business Structures and take the legal work in-house, but with recoverable costs reduced, will the profits be attractive enough to large commercial organisations who will still need to employ solicitors and senior staff at the right level?

ATE insurers -
After the Event Insurance will still be required by clients to protect them against abortive disbursements and adverse costs awarded when a Part 36 offer is not beaten. ATE premiums will fall to reflect a lower but still significant costs risk, and price competition is likely to increase since the client will be paying the premium out of their own damages – albeit now increased by 10%!

Hand me that drill and don’t bother with the pain relief – I can do the fillings myself.

Simon Pinner
Director Box Legal

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Nov 5

Jackson Reforms – The End of Hold Harmless Insurers?

Posted in After The Event Insurance, General, Personal Injury Claims

Don’t worry. I am not talking about us here – we have never been so busy. Why is that do you think?

Well, we are finding that some solicitor firms are finally waking up to the fact that their current After the Event Insurer won’t cut the mustard come April 2013 and are rapidly jumping ship. They have realised that they need an ATE Insurance provider who will fit their amended business model and provide no-fuss affordable policies which require no additional admin. We have also found firms who were working with ATE insurers who weren’t exactly playing by the rules. They were providing solicitors with what is commonly known as ‘Hold Harmless’ policies or hiding commissions. ’Hold Harmless’ cover is where the solicitor agrees to never claim on the policies. In return they get a whacking great commission.

Now we (and the FSA, SRA, MoJ, Law Society, Uncle Tom Cobley ’n’ all) consider such arrangements to be illegal and a fraud on the client and defendant insurer. Well – another nice side effect of the Jackson reforms is that these policies are not going to be able to be workable anymore. Why? Well the client is going to pay and, under the commission rules, solicitors have to declare to the client any commission they earn AND tell the client that the money is in fact theirs to keep unless they agree in writing that the solicitor can keep it. Up until now, most clients have been happy for the solicitor to earn a commission from the ATE policy (after all this is normal for all insurance), however, which client in their right mind is going to agree to a solicitor making a large commission from an insurance policy that the client themselves is having to pay for?

Now some naughty solicitors have not been telling their clients about all of this money they are earning and may be tempted to keep on doing this. No problem they think. If they get caught then they can simply get permission later. We have come across quite a few of these. Well, bad news I am afraid.

You can only get the client’s permission before you earn the commission so, if you don’t comply with the rules, none of the commission is yours. And when I say none, I mean none. We know of at least one firm where the SRA spotted this ‘omission’ and made the solicitor send clients the commission they had earned on all of their files, going back 4 1/2 years! It nearly bankrupted them.

So you see, there are a lot of solicitors out there sitting on a time bomb. There are also insurers out there who will have to offer something a little more meaningful than just silly commission levels after Jackson comes knocking.

What is the moral of the tale? Well, make sure you work with a reputable broker who knows what they are doing (maybe even one set up by PI solicitors) and one who offers a decent and ‘above board’ product. If you haven’t declared commissions or have one of those illegal ‘Hold Harmless’ policies then I suggest you sort it out. Quick.

Knock knock.

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Sep 8

The King is Dead. Long Live the King.

Posted in After The Event Insurance, Personal Injury Claims

So bye bye Ken Clarke. In his re-shuffle, our PM has announced that Ken Clarke will be put out to grass (otherwise known as ‘Ministry Without Portfolio’).

Cameron has also got rid of our old friend, the grinning Cheshire Cat (otherwise know as Mr Jingle Jangly). Jonathon Jingle Jangly may have been sent to the back benches because of his number of gaffs and his sickening performance in the House of Commons where he was seen grinning and laughing like a spoilt school boy when the serious issue of Industrial Disease claims were being debated. Some good news then. Everyone gets their comeuppance in the end.

So who do we have now?

Well some chap called Christopher Grayling.

‘Who he?’ I hear you cry.

Well – let’s just suppose the country was facing one of the most important upheavils in civil and criminal law for a generation. Who would you need to steady the ship and listen with a trained ear to both sides of the debate?

That’s right, someone with no understanding of law or the legal profession at all – a former broadcaster. This is the first time in the modern era that a non-lawyer has been given the job of Lord Chancellor. Chris Gayling also used to be a management consultant – and we all know what job they do don’t we? What is the expression – ‘Jack of all trades, etc’

It’s like asking a sailor to fly a plane. Brilliant.

So will things change? Do you want my view?

Well – we all know that civil servants really run ministries – so no – nothing is going to change but, maybe things will slow down a bit. There is a lot for the new Lord Chancellor to get to grips with and understand. Let’s face it, some solicitors don’t understand the changes so it may take him some time to sign off on the new rules etc.

We can but hope.

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May 25

Single After The Event Premiums are fully recoverable

Posted in After The Event Insurance, General, Personal Injury Claims, Road Accidents, Solicitors

As many of you may know, since the introduction of the MOJ portal for low value RTA claims some motor insurers and their costs draftsmen have been saying that a fixed ATE premium is too expensive if the case has settled in stages 1 or 2 of the new RTA claims process.  Why, well they argued that that there are some staged ATE policies available with premiums that are apparently very reasonable if the case settles before stage 3 of the new motor claims process.

This argument came as a slight surprise for those trying to recover the same staged premiums on cases that had not settled in stages 1 or 2 of the MOJ portal, because these were often challenged by motor insurers for being too expensive.

The problem is that although some staged policies do offer very low premiums if the case concludes in the very early stages of a low value motor claim, the premiums tend to increase quite quickly if the case goes to stage 3 or drops out of the MOJ portal.  Therefore if the case settles early then it can be cheaper for the claimant to arrange a staged ATE policy, but if it doesn’t then it is probably cheaper to have used a fixed premium policy.

This is great if you can predict the future, as you simply pick the right type policy for where you know the case will end.  And it seems motor insurers were becoming quite annoyed by claimants lack of psychic abilities.  But with some figures suggesting that anything up to 40% of cases are dropping out of the new motor claims process with presumably a proportion of those that stay in going on to stage 3, it is in fact impossible to know for certain at the beginning of a claim how long it will take or where it will finish.

The problem however, as with most challenges we have seen over the years, did not go away and because of the amount of cases being issued on this issue in the Liverpool County Court, District Judge Smedley (acting as a Regional Costs Judge) decided to pick a number of them to treat as test cases.  The cases have been heard and DJ Smedley handed down his decision on 24th May.

Unsurprisingly, and very sensibly, DJ Smedley has recognised that defendants are trying to have their cake and to eat it by very often making contradicting arguments in different cases depending on what type of premium was being claimed and where the case has settled.  He said:

“So, the claimant and his solicitor dealing with funding at the outset know that their particular claim may or may not resolve within the Protocol. If they choose a single premium policy and the case settles within the Protocol, it will be said on assessment that they should have chosen a staged, reduced-premium policy.  If they choose such a policy and the case exits the Protocol and goes to trial, it will be said they should have chosen a single premium policy – in each case because the choice made was unreasonable.  I accept Mr. Finn’s evidence on this point.  There is no “right” or “wrong” decision to be made.  Both single premium and staged premium policies are legitimate.”

It was held that:

  1. It is reasonable to arrange an ATE policy at the very beginning of a claim, on the claimant first giving instructions
  2. It is reasonable for the claimant to choose either a single premium or a staged premium policy

Will this see the end of these challenges?  If I could see into the future I’d tell you, but if I could do that…….

Jon Gouldsmith
Head of Legal Support

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May 17

Government to Consult on Raising the Small Claims Court Limit

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

Hot off the press, Mr Jingly Jangly has confirmed the that the Ministry of Justice is going to ‘consult’ on their er, decision to raise the small claims court limit for Personal Injury claims from £1,000 to £5,000.

Here it is in black and white  (blue and red with my highlighting) – an official question asked:

Oliver Colvile: To ask the Secretary of State for Justice what plans he has to reform civil justice following his Department’s 2011 consultation. [106874]

Mr Djanogly: The Government’s plans for the reform of civil justice are set out in its response to the Solving Disputes consultation which was announced in a written ministerial statement on 9 February 2012, Official Report, column 31WS.

Since then, this Department has launched an evidence gathering exercise in relation to the extension of the Road Traffic Accident Personal Injury scheme; and has published provisions to establish a single county court in the Crime and Courts Bill which was introduced in another place on 10 May 2012. In addition, the Government intends to consult on raising the small claims threshold for personal injury claims to reduce the costs of challenging fraudulent cases in court, and
on tackling questionable medical evidence by considering the use of independent medical panels.

Now we all know how well the previous consultation went: lots of effort going into the submissions which were subsequently speed read by a thousand civil servants in 24 hours to give the Government their balanced view.

Soooo we shall see.

Here is a quick poser – how does raising the small claims court limit prevent fraud? Does it stop people making bogus claims? Is there some magical force-field at the doors of the small claims courts which prevents criminals getting in? Er no. What about costs then – at least the defendants can get their costs back if someone is found to be a fraudster? Well they can get personal costs orders now but not in the small claims court.

Mmmmm. Strange. So not sure how this is going to help except to give the insurers a lot more money to fight them. That must be it.

Trebbles all round!

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May 10

Unbelievable

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

I have had to wait a few days in order to calm down. I want to avoid potential defamation claims.

So the Government have suddenly decided to increase the small claims limit to £5,000 for personal injury claims.

Now I am a glass is half full sort of person but even I am somewhat sceptical about the timing of this sudden u-turn. The Legal Aid  Sentencing and Punishment of Offenders Bill was given Royal Assent after a rough ride through the Lords recently. Deals were struck during the passage of the bill to exclude mesothelioma cases. Many Lords were also assured by the announcement in February that, following a review, the Government would be keeping the small claims court limit at £1,000 for PI claims due to their inherent complexity and so voted with the Government.

Then what happens? The day the bill hits the statute book, the Ministry of Justice has a cosy conference about whiplash with the defendant insurers and suddenly announces that the small claims court limit will rise 5-fold to £5k.

Do you think they were considering this change whilst the LASPO bill was being debated? Do you think their announcement in February was genuine? I am sure you can guess my view.

So let’s see shall we. The reason for this about turn are the apparent large number of fraudulent claims for whiplash. Now presumably the Government accept that there are at least some genuine claims out there – surely there can’t be over half a million crooks making bogus claims each year. So the way to deal with let’s say 10% of bogus claims is to punish the 90% genuine claimants is it? The genuine claimants will now have to go it alone against the big insurers and all of their legal clout or they will have to forgo a fair chunk of their damages by paying a solicitor. Will this stop the bogus claimant? Will the thought of them having to pay perhaps 25% of their damages to a solicitor put them off? I doubt it.

In effect therefore, the defendants have managed to persuade the Government to remove payment of legal costs on 60% to 70% of road accident claims. Nice saving this.

This has been decided by insurers (who have a lot of money) and Government Ministers who, let’s face it, aren’t short of a bob or two. For most people, being in an accident where they have lost their car (let’s say £2000), been injured and off work for 2 weeks (let’s say £1000) could mean they are out of pocket by £3000 before you think about compensation. This sort of claim would probably have to proceed in the small claims court which is daunting to most people. So this man on the street is going to be injured and out of pocket with no easy way to get compensation. For the insurers and Government Ministers, £3000 is chicken feed. For voters, it isn’t.

The Labour Party have already said they will reverse many of theses changes if they come back to power. The local elections indicate that the man in the street may have had about enough of these underhand tactics by the Government.

With the massive costs savings that the insurers will experience however, at least we will have some benefits:

  1. Fewer defendant solicitors
  2. Fewer defendant costs muppets
  3. Much lower car insurance premiums

So every cloud does have a silver lining.

UPDATE: Made a mistake with point 3 – meant to say Higher Dividends for Insurance companies

 

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Apr 19

Government Overturns Lords Amendments

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

Check out these statistics. About 2,000 people in the UK are diagnosed with Mesothelioma each year, and some 60,000 people in Britain will develop mesothelioma over the next decades because of past exposure, and almost 40,000 have died thus far — the highest levels in the world. It can take around 30-40 years to be diagnosed and once diagnosed some sufferers with advanced symptoms have less that 9-12 months to live.

With the above in mind it makes sense that the House of Lords attempted to protect these Claimants from the reforms proposed by Jackson. And whilst we thought there may be a glimmer of hope for these Claimants, the House of Commons has now rejected those amendments so that the Jackson reforms will indeed apply to Industrial Disease claims in the same way as all other personal injury claims. It is difficult to understand the ideology behind the Governments’ refusal to
accept the proposed amendment to the Bill however, in light of the above facts.

Justice Minister, Mr Djanogly, argued that accepting the ‘Lords amendments’ to the Jacksons Reform would ‘create inconsistency and damage the wider goal of [our] reforms – to restore sense to the costs of litigation, which have substantially increased by way of which “no win, no fee’ cases operate, largely to the detriment of the defendants”. Basically, it is all about reducing expenditure and stopping lawyers from receiving “inflated profits”.

In his view, under Jackson, Asbestos Claimants would not be out of pocket from bringing their claim, as damages for future care and losses are protected and general damages are to be increased by 10% with a success fee capped at 25%. Ultimately, the suggestion is that  Claimants will not lose out if they shop around for the best deal on legal fees, and of course it would be up to the lawyer as to whether a success fee will be charged – (but surely, by making law firms compete for legal fees ignores the original policy behind success fees, which was to compensate the lawyers for the cases that they lose?)

Furthermore, given the life expectancy of these sorts of Claimants, I am not sure how much comfort the above reforms will give.  After all, given the seriousness of the illness, is it not a bit much to expect them to shop around for the cheapest deal and how much of this will actually benefit their beneficiaries? Not a lot, I say.

It was suggested by Shadow Justice Minister Andrew Slaughter, that if it is one of main objectives of the Jacksons Reform to reduce costs, then the “obvious way to stop inflated costs” would have been to reduce lawyers’ base costs rather than to take money out of victims damages. “The beneficiaries would be the defendants and their insurers.” This argument was strongly opposed  by Mr Djanogly, he argued that the focus of the Reform is not on cutting legal fees but on cutting inflated margins, and not making exemptions for one type of disease. The difficulty I have is that these types of claims are utterly different from road traffic claims. Cases centring on diseases such as asbestosis and mesothelioma are complex and require intensive research before liability is admitted.

Such claims cannot be dealt with by inexperienced litigators, but if they are unable to take them on a ‘no win no fee’ basis without an uplift or a recoverable ATE premium, then ultimately many experienced solicitors will be unable to take on such cases. The potential for injustice, I am afraid, is huge.

Sairha Hussain
Legal Support Advisor
Box Legal Limitied

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Mar 26

A Narrow Escape for Industrial Disease Victims

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

The rumour was confirmed last week.  The House of Lords has voted for industrial disease claims to be exempt from reforms to no win, no fee litigation. In effect Industrial disease cases will now be exempt from the Jacksons reforms.

Under the amendment, Industrial Disease Claimants would keep 100% of their damages whilst defendants would pay their After The Event Insurance premium and lawyer’s success fee. The House of Lords agreed that these claimants have suffered enough, their claims are serious and real – they are “true victims”, and it would be unfair to expect these Claimants to lose some of their damages. After all, industrial diseases affect those that have worked long and hard to contribute to the British economy.

Hmmm… So what about other innocent victims who have their lives shattered as a result someone else’s negligence? Why would it be fair to allow them to have their damages deducted to pay for their solicitors’ success fees and ATE Insurance premiums? In essence, if your life expectancy has been reduced by a negligent employer exposing you to asbestos you are entitled to claim 100% of your damages back. However, if you have suffered serious injury as a result of lack of safety measures in the work place you’ll pay a deduction. The amendment is obviously good news for victims of industrial disease, but it doesn’t go far enough in allowing fair access to justice. Let’s just hope that the government doesn’t overturn these important amendments when the debate returns to the House of Commons.

It appears however, that it is not all good news for this exempt group, as the House of Lords refused to grant an exemption to trade unions and charities from the referral fee ban, which means many charitable organisations set up for asbestosis and other industrial disease victims will struggle for funds. The criminalisation of referral fees and whether portal costs should be reduced, is to be thrashed out in the Commons next week… so let’s wait and see … since industrial disease claims were exempt from the reforms, perhaps there is glimmer of hope for the rest of Britain’s innocent victims.

Watch this space….!

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Feb 8

ABI Gain Direct Access to Top MoJ Civil Servant

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

This is how laws are made these days it seems.

The proper way is for the Government to issue a consultation document to all relevant parties (i.e. to organisations on both sides of the argument) and then invite responses. When those responses are submitted, the Government department should read them all and come to a balanced opinion. They should also look at data, again obtained from both sides so that a proper view of issues can be considered. Only then should laws be proposed and drafted.

Now I have already commented upon the ridiculously short time between the closure of the consultation period for the civil procedural changes (28th February 2011), the issue of the impact assessment by the Ministry of Justice (10th March 2011) and the announcement of full implementation by Ken Clarke in Parliament (29th March 2011) which indicates to me that the Government failed to read all if any of the hundreds of submissions to the consultations. What was the point of the consultation if the Ministry had already decided on what they were going to do?

Now it has been revealed that it seems that the top brass in the Ministry of Justice have also been getting very chummy with the top bods at the ABI. No doubt you know this but just to spell it out, the ABI represent the defendant insurance industry.

Following a Freedom of Information request, it has been discovered that the ABI have been in regular email contact and had secret meetings with Robert Wright, the head of civil litigation funding and costs at the Ministry of Justice to iron out the rules (see - http://image.guardian.co.uk/sys-files/Guardian/documents/2012/01/17/robertwright.pdf). The ABI was also sending Robert Wright advance press releases and their own industry ‘data’.

When challenged the ABI say that they said nothing which they have not said in public. So that’s alright then.

I would now like to write a paragraph about Robert Wright’s emails to APIL and the nice lunches they had when all of the issues were discussed sensibly or perhaps about Robert’s telephone calls to the Law Society to discuss drafting of the rules. Problem is, there weren’t any. No emails, no calls, no lunches. Just the official 15 minutes face to face time given to the key organisations to make their case.

So this is why this is wrong. The claimant side have to go through the official channels and get a very short time to put their points across but the ABI get as much time as they like. Not fair I hear you cry? Well yes but this is a democracy don’t you know.

I feel a judicial review is approaching.

 

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Feb 1

Jackson Reforms to be delayed by 6 months

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

The Ministry of Justice has today confirmed that implementation of the Jackson reforms will now not take place until April 2013.

Enactment of the new rules was scheduled for October this year but they have been receiving a rough ride in the House of Lords. Legal Aid reforms had already been put back to April 2013 and many groups were calling on the MoJ to do the same with the changes to the Civil Procedural rules as they often go hand in hand with Legal Aid in particular the use of After the Event Insurance.

Interested parties are still waiting for draft rules to be provided by the working committee. These were expected before the end of 2011 but it seems these two have been delayed. Is this because both sides are unable to agree or are the Jackson reforms unworkable?

More soon….

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Jan 23

The Future for BTE Insurance

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

Those of you who read this blog will have spotted a theme here. I have give my predictions for After The Event Insurance (well our take on it anyway) so what of it’s evil twin?

A quick lesson first. BTE stands for Before The Event and relates to those ‘tag on’ legal policies you get offered with car or household insurance. Often nowadays the policies are automatically added (costing from £25) and you have to tick a box to decline the cover. Why would you want it? Well, it means if you have a legal claim, the insurer’s panel of solicitors will deal with it for you – all subject to their terms and conditions of course.

The key thing is timing. BTE Insurance is an annual premium and is purchased before anything happens (in fact if the cause of action has already arisen it will be excluded under the policy). ATE or After The Event Insurance is taken out after the cause of action has occurred – i.e. the accident has happened or the wrong doing has been er, done.

Anyway, BTE Insurance sounds like a bargain at £25 doesn’t it? Well yes but you see, BTE Insurers actually want certain sorts of claims to be made on the policies so policies are kept artificially cheap. Why would they want claims? Well to sell them to the highest bidder of course! Personal Injury claims attract a hefty referral fee and so the more BTE policy holders make claims, the more money the BTE Insurer makes – until the Jackson reforms come in that is.

The Legal Aid, Sentencing and Punishment of Offenders Bill is currently with the House of Lords. One of the provisions is to ban referral fees and so you see, come the revolution, BTE Insurers won’t be able to sell claims to solicitors. Their income will drop and so the BTE Insurance premiums will have to rise to cover ‘real’ claims. Rising prices will almost certainly result in lower sales figures.

And so you see, far from BTE Insurance being able to step into the void caused by ATE Insurance recovery being removed, my opinion is that BTE will become less widely available and more expensive after the reforms. Which is funny because Lord Jackson said the opposite would happen.

Place your bets now please….

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Jan 12

After The Event Insurance Industry Post Jackson

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

Happy New Year to you all.

Having fun? Lots of stories about Jackson et al floating around. Today we have the Transport Committee’s findings and recommendations. Surprise surprise, they say whiplash claims are bad  -boooo – and should be curtailed. Also insurers shouldn’t be allowed to sell claims – hooray. Interestingly, they want to somehow stop whiplash claims by having a definition or hurdle to jump before an injury justifies compensation. They should have listened to the medical experts on that one who have been arguing for years about how whiplash should be defined. We are still watching that space.

The Legal Aid Bill is still working its way through the House of Lords and is expected to come through unscathed although I do draw some comfort with the latest defeat of the Social Welfare reform bill. Who knows, the Legal Aid bill may be stopped at the last minute – who knows.

Some After the Event insurers are banking on this. We know of several companies who are just going to stop providing policies in the post-jackson era. The reason? Well, they are too heavy on admin i.e. staffing etc which means their policies will be too high. Also, some companies simply don’t have the stomach for it any more – it is a small part of their business and soon to get even smaller.

What about us? Well we are expanding. We are taking on two new people plus a consultant. We think Jackson is an amazing opportunity. At the moment, there are all sorts of ‘strange’ arrangements out there between ATE Insurers and solicitors, some of which are not actually very legal – all with a view to getting as much money out of the defendants as possible. Post Jackson, with the client paying, all this will go. The After the Event Insurance providers who are left will have to compete on the quality of their product and their service. The feedback we get from our panel (yes we go and talk to them) is that we do very well on this.

So bring it on.

 

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Dec 13

House of Lords Gives Act a Rough Ride

Posted in After The Event Insurance, General, Personal Injury Claims

The Legal Aid, Sentencing and Punishment of Offenders Bill is now in the House of Lords but it has not been smooth sailing for the Conservatives. Over 50 Lords stood up to criticise aspects of the bill, in particular the cuts being made to Legal Aid. Now in the committee stages, it is expected that quite a few amendments are going to be proposed and concessions are going to have to be made to ensure it goes through.

So where does this leave the changes to Civil Litigation and in particular After The Event Insurance and Success Fees? Well, I have a friend who is an MP and pretty high up in the Labour Party. He says that no one is really focused on the Civil Litigation side. There is so much in the bill and so little time has been allocated that it is unlikely the changes are going to be debated at all! So you see this is how legislation is being brought in under this Government. They are chucking in lots of changes with the hope that MPs and the Lords won’t worry about the small stuff – and it is working.

The only ‘good’ news appears to be the 6 month delay in the Legal Aid changes being implemented (moved from October 2012 to April 2013). Now calls are being heard across the industry for both the legal aid changes and the civil litigation changes to take place at the same time. This makes sense as, after all, there is a significant interplay between Legal Aid and civil claims – After The Event Insurance was seen as the replacement for Legal Aid back in 1999. The reason for the delay in the implementation of the legal aid reforms is said to be Alternative Business Structures (ABS) - they want to see the impact of introducing ABSs before making further changes. Can’t see them taking much notice of it though.

And so to end… on a joke. I am still thinking of a good one but in the meantime, my fellow Director Simon has come up with this one – apologies in advance:

We promised a Christmas joke but instead we have to issue an important warning.  Many of you may have seen our latest Gazette advert offering assistance with a case management system for new firms under the slogan (with acknowledgement to the National Lottery) “Because you need to be in IT to win it”. Please note that some people may confuse this with the Eskimo lottery, but this is entirely wrong.

Under the Eskimo lottery “You need to be Inuit to win it”.

Oh reindeery me….

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Dec 7

Welcome to our New After The Event Insurance Website

Posted in After The Event Insurance, General, Personal Injury Claims, Solicitors

Well this isn’t it of course but you can check it out here: www.boxlegal.co.uk.

First, a big thanks to Roger and Kirsten – our two website and marketing gurus who have worked very hard to get the site up and running. A big thanks also to Surefire Media who did all the programming. We are pleased with the result but you be the judge.

So what’s new? Well, it obviously looks different and more modern - you can expand various boxes and even check out our photos. The really clever bits though are in the secure area – you will have to be one of our After The Event Insurance panel firms to have a look but suffice it to say – it’s the dogs er, dangly bits. You can look at all of your ATE Insurance policies, request amendments, put in claim forms, print policy documentation, run reports, customise your view etc etc.

This has been my excuse why I have been very quiet on the old blog posting but no more get out clauses. Now that this major project is out of the way, I shall concentrate more on keeping you informed about the industry. I shall start with Lord Jackson and the progress of the Legal Aid and Sentancing bill through parliament. Just as long as Christmas doesn’t get in the way.

And that reminds me – last Christmas I told a joke so I shall try to come up with something equally amusing to give you some ammo that isn’t from a cracker.

Over and out.

 

 

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Nov 8

Standing Still Moving Forward

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

We have our auditors in today.

How do they do it? I have to stomach one day of going through figures and cross referencing against files and documents. It is so boring! I have a headache and they have only been here 3 hours.

What’s more, the tests stay the same every year just on different matters. They check our procedures which haven’t altered so why bother? Seems daft to me.

Which brings me neatly on to Lord Justice Jackson and the changes which are afoot for civil litigation.

As reported in the Gazette, Lord Jackson has recently helpfully clarified what he had intended with regard to Part 36 offers – as there has been some confusion. Well, he said it was business as usual i.e. just the same as the rules now. So…. basically, a defendant insurer can make a Part 36 offer on quantum or liability at any time and, if the claimant fails to beat it then the claimant has to pay the defendant’s costs from the point the offer was made right up until trial.

Now it doesn’t take a great deal of intelligence to work out that this little arrangement gives the defendants a simple get out clause from the Qualified One Way Costs Shifting (QWCS) proposed by Lord Jackson – a scheme which he maintains means claimants don’t need After the Event Insurance any more. So here’s a question – what happens if a defendant insurer makes an early offer on each and every case against them? Doesn’t this mean that all of the claimants will then face a (significant) costs risk? Now I am all for this (after all we sell ATE Insurance so want a reason for people to buy our products) but doesn’t the Part 36 rule simply make QWCS redundant? Aren’t we going to end up with claimants still facing costs risks in full but instead of being able to recover an After the Event insurance policy, they must instead pay for it themselves?

If the defendant insurance industry were to play a game of poker they would clean up. How on earth did they manage that one?

Right – I have been asked to run another report so must go back to watching paint dry.

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

 

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Oct 14

£9.7 million After the Event Insurance Policy Allowed by Court of Appeal

Posted in After The Event Insurance, General, Personal Injury Claims

The Court of Appeal has just heard a costs appeal in Motto & Ors v Trafigura – the group action brought by Leigh Day and Company on behalf of 30,000 Ivory Coast claimants who sufferred illness following the fly tipping of toxic waste by the defendant. Now I have written about this case before but this time the hearing was looking at the ATE Insurance policy and the original 100% success fee being charged by Leigh Day and Co and counsel. In an earlier decision, Master Hurst had allowed the ATE premium in full but had reduced the success fees to 58%.

Well to cut a long story short, the success fees reduction to 58% was upheld and so was the decision to allow  the After the Event insurance premium in full. So that’s nearly £10 million for the underwriter. Nice.

Some important legal points were decided as well. One of the issues were the costs incurred by Leigh Day & Co in dealing with 30,000 CFAs and liaising with the ATE insurer throughout the case. It was decided that these costs couldn’t be recovered from the defendant. Logically, the Court of Appeal said that, when a solicitor was dealing with the signing of the CFA by a client, they weren’t actually a client at that point – and so the time spent was really down to marketing or negotiating rates with the client i.e. an overhead. It was only after they had signed that they became a client. All costs prior to that couldn’t be the responsibility of the defendant.

In relation to the costs associated with the ATE policy, Lord Neuberger said:

“The precise dividing line between recoverability and irrecoverability is, perhaps inevitably, somewhat blurred and subjective. However, as I see it, the cost incurred in having such discussions and taking such instructions was not so much a cost of the litigation as a cost which was collateral to the litigation, being a cost incurred to ensure that the claimants were not at risk on costs.”

So there you have it. You can’t charge the defendant for dealing with your client’s CFA nor their After the Event Insurance. So make sure you pick an ATE policy that doesn’t require any admin.

I wonder who could supply one of those…..

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

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Sep 27

Part 36 offers – Carver v BAA does not apply to offers made after 1st October 2011

Posted in After The Event Insurance, General, Personal Injury Claims, Road Accidents, Solicitors

An important change is being made to the Civil Procedural Rules which is going to require you to review all of your existing Part 36 offers.

The CPR (Amendment No.2) Rules 2011, which come into effect on 1 October 2011, will overrule the decision of Carver v BAA plc [2008], which ruled that because the Claimant had only just beaten a Part 36 offer, he had failed to obtain a judgment which was “more advantageous” within the meaning of CPR 36.14, and the Defendant was awarded its costs from the date the offer expired.

The rule change inserts a new paragraph 36.14(1A) into Part 36 of the CPR, which states:

 ’For the purposes of paragraph (1), in relation to any money claim or money element of a claim, “more advantageous” means better in money terms by any amount, however small, and “at least as advantageous” shall be construed accordingly’

Section 1 (4) of these (Amendment No.2) Rules clearly states: “Rule (4) applies to offers to settle made in accordance with Rule 36.2 on or after 1st October 2011” so this will apply to Part 36 offers made on or after 1st October 2011, irrespective of when proceedings were commenced, or when trial takes place, but it will not apply to offers you have previously made. This being so, Carver will apply to any previous offers and it may therefore be extremely wise to repeat any Part 36 offers you have previously made in order to avoid a possible award of adverse costs based on Carver, provided such an offer still makes sense in the context of the particular claim.

So there you have it. A sensible rule change for a er, change.

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

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Sep 20

Referral Fees – The Case for the Defence

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

So the Government wants to ban referral fees. We have all heard about this and Jack Straw’s campaign (don’t worry, I shall get to him later), but how exactly are they going to do this – and when?

Well the answer is, I am not sure that they can. You see, the Government has a large number of hurdles to jump and proberbial holes to plug before they can get anywhere near to legislation to ban them:

  1. First there is Europe. Referral fees are permitted in Europe so banning them here is going to be difficult – there may be anti-competitive claims arising.
  2. The Legal Services Board carried out a study of them and concluded that a ban wouldn’t work so it was better to legislate and control them. There was a call for greater transparency rather than sweeping them under the carpet. Better to have the referrers inside the tent er, you know - urinating out rather than outside the tent …. (you get my drift).
  3. Alternative Business Structures are soon to be permitted – which means a large claims management company and a solicitor could join forces. Business as usual.
  4. Referrers could be taken on as employees of solicitor firms on a low basic wage with a bonus for the number of leads generated. Would this be allowed?
  5. Solicitors are allowed to sell cases to other solicitors (and always have been allowed to do this). Would this practice be banned? What about file transfers with WIP being paid? Is that ok?
  6. The proposal is to ban referrals for personal injury claims only – not conveyancing or any other legal matter. Surely this is inconsistent and would be challenged.
  7. A lot of solicitors receive work for ‘free’ in return for doing other things. For example, some firms get PI claims from insurers but then have to handle their uninsured loss recovery work for nothing. This is a referral fee isn’t it? Is this going to be outlawed?
  8. What about a free referral but on condition you give a medical agency 10 medical instructions? Is that a referral fee? Is the Government going to ban freedom of choice and legitimate business arrangements?
  9. Here’s another one: 10 firms get together and form a company which advertises for PI claims. It is run by 5 non-lawyers. They all fund this marketing company based on the number of leads they take on. Is this arrangement a referral fee? Is the Government going to ban this? What if the company isn’t a company but a partnership – or a non-profit making organisation. Does the membership of that organisation or slots bought make the arrangement against the rules?

You see, I have only been writing this for about 10 minutes and already I have thought of several serious problems. Give me a few days (and the PI industry a month or two) and there will 100 different options on the list. The problem the Government has is that no one can say for sure what a referral fee is – and if you can’t properly and fully define it then you can’t ban it.

And so to Jack Straw. Has he really though this through? He is up in arms about referrals and claims management companies. He is incensed that insurers have sold injured people’s data to a claims company. The thing is, this goes on in all industries. Loads of companies sell personal details to other companies - which is why you no doubt have had several calls about double glazing, kitchens etc. Are they allowed to do this? Well yes because we have consented to it. Somewhere we have bought something where there is a clause saying the seller can share the data. Can this be banned? I suppose so but it has to be industry wide – it isn’t just Personal Injury’s dirty little secret – it is the western worlds.

Mr Straw is also saying the practice of selling PI claims should be criminalised. Well why didn’t he criminalise it or ban it when he was the Minister of Justice? Well the answer is, he looked at banning referrers but then decided against it.  Instead, he oversaw the cleaning up of the claims management companies by requiring their registration. Why the change of heart? I have no idea.

And you see, he might just be shooting the Labour Party in the foot. Would you believe that in 2009, over 60% of Labour Party funding came from Trade Unions? Where do the Unions get their money from – well membership fees but a large part of their income comes from notional After the Event Insurance policies (soon to be banned under Jackson) and referral fees. Supporting a ban of both is going to cut the amount of money Trade Unions have available and so cut the Labour Party’s funding. It is also going to annoy the Trade Union leaders somewhat.

Maybe, the Labour party has decided they don’t need the unions any more. Mr Straw is playing a dangerous game me thinks.

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

 

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Sep 8

Work work work

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

Oh my days. What a week.

To say we have been busy is an understatement. Just a few days into our new financial year and we are 25% up on new policies written compared with September last year.

And that’s not to mention our new website which we have been working on feverishly in the background (thanks Roger!). Or our link to a leading rehab provider  – press release to follow!

So you see, I have an excuse – of sorts. Anyway, let’s have a quick round up of developments outside of Box Legal shall we?

Well, on the Jackson front, Labour MPs seem to be proposing all sorts of amendments to the Legal Aid and Sentencing Bill - with some saying they are attempting to goad the Lib Dems to vote against the Bill’s passage. Anyway, no delays yet but who knows…

Defendant insurers (poor things) are meanwhile blaming claimant solicitors for just about everything. The masters of spin are saying it is the solicitors’ fault that they, the insurers, are having to receive referral fees for cases – running into many millions of pounds. Good eh? If you shout something from the rooftops for long enough, some people might believe you but come on Mr Admiral? Are we really to believe that it is Mr Blogs the high street solicitor who has caused you to turn over £1 billion including tens of millions in referral fees? Mr Blogs has a lot to answer for – it is his fault that car insurance premiums are rising don’t you know.

Well, the Office of Fair Trading may be investigating the rises – we shall see what they come up with but don’t expect the answer to be that it is the insurers fault. Watch out Grandma Smith – it will no doubt be you who will be taking the blame.

What else? Ah yes, premium challenges. Those pesky insurers keep on claiming that clients can’t take out a fixed premium After the Event insurance policy but guess what? Those nice Judges keep telling them they are wrong. It is 3 – 0 to us so far and no sign of any weaknesses. You would think they would give up – would save a fortune in legal fees but then, insurers were never short of a bob or two.

So that’s all folks. Except to say, I hope to become a bit more, er, regular in future.

P.S. My niece (fresh out of university) is looking for some work experience in a law firm (there is only so much insurance a young girl can take). Any one able to help her out?

STOP PRESS: The Ministry of Justice has announced it will be banning referral fees. No timetable has been announced nor any proposals. Watch this space.

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

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Sep 1

Happy New Year!

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

Nope – I’ve not gone mad. The reason I have been quiet for a week is that Box Legal has just finished it’s year end and so today is our 9th accounting year!

Now for After the Event Insurers, 9 years is a long time. When we started out, the market was very different with fewer players (and cowboys!) around. Now it is a cutthroat business and, with Jackson looming, it is getting even more so.

But we are still here and in fact, we have had a record year.

Record new policy numbers, record number of policies paid in a year and in a single month (June) and record new sign ups!

So we must be doing something right. Kirsten, our marketing guru, has been re-visiting 2 or 3 firms a week since joining us last year and, the consensus from our panel is, we provide a good service. This not only includes speed of response and the ease at which policies can be requested, but also low admin and full legal support services.

Now I am not one for blowing my own trumpet but with a growing team here, I would like to blow er, theirs. We have a great bunch working for us and our success is largely down to them. So thank you to everyone and long may it continue.

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

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Aug 24

Jackson Working Party Announced

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

The runners and riders for the Ministry of Justice steeplechase that is the Jackson Implementation Working Committee have been announced.

True to form, there are some old hands mentioned and the expected organisations. Interesting though, it is chaired by Alistair Kinleyn of Berrymans Lace Mawer and formally of the ABI. So I wonder which side he will be on then? Slightly pro-defendant? Of course not. Perish the thought.

The other 17 are:

Coleman Tilley partner Janet Tilley
Managing partner of Coleman Tilley and responsible for the firm’s personal injury practice.

USDAW legal advisor John Usher
Trade union legal consultant and lecturer in labour law at Birkbeck College.

Legal Services Commission’s Former Head of Funding Colin Stutt
A barrister formerly head of funding at the Legal Services Commission (formerly the Legal Aid Board).

Hugh James partner Mark Harvey
Head of the  firm’s claimant division.

4 New Square’s Nick Bacon QC
A costs specialist, took silk in 2010.  

Bott & Co named partner David Bott
Head of the Association of Personal Injury Lawyers.

Keoghs partner Don Clarke
Vice president of the Forum of Insurance Lawyers.

Thompsons partner Judith Gledhill
Head of personal injury at leading trade union firm.

McGuireWoods partner Hardeep Nahal 
International commercial litigator.

Hogan Lovells partner Graham Huntley
Partner dealing with disputes involving banks and other financial institutions.

Norfolk County Council principal risk officer Mandy Knowlton- Rayner
Knowlton will represent the views of local authorities.

Tesco lawyer Kay Majid
Currently senior counsel to Tesco, with a practice focused on litigation, intellectual property and data protection. 

DAS general counsel Kathryn Mortimer
Mortimer was appointed in 2006 to help DAS’s transformation into an alternative business structure.

QBE European Operations underwriting manager Rocco Pirozzolo
Barrister Pirozzolo is the legal expenses underwriting manager at QBE.

Birmingham City Council lawyer Hilary Homfray
Litigator

Aviva senior solicitor Howard Grand 
In house solicitor for insurance giant. 

AXA’s David Fisher
In house expert in catastrophic and injury claims at AXA Insurance

So there you have it. I make it an even spread between defendants and claimants provided Colin Stutt could be said to be more claimant orientated. Not sure about that one as he is involved in drawing up rules regarding Clinical Negligence and who can practice it – for the commission which is effectively the Government at arms length. We shall see which way he jumps.

Timescales are tight. The Ministry of Justice says the working party should complete their discussions and come up with draft rules by the end of September.  I think this is doubtful but who knows – maybe they will all agree?!

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

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Aug 15

Recovering Single Premium Policies

Posted in After The Event Insurance, General, Personal Injury Claims, Road Accidents, Solicitors

Still no call from the Ministry of Justice…..  I shall therefore continue with my day job.

A solicitor has asked me to write something about recovering After the Event Insurance premiums from defendant insurers. Apparantly, some insurers are mixing things up a little when it comes to the RTA Portal. I shall explain.

It used to be the norm (following Callery v Gray) that a single ATE Premium was recoverable from the losing party. That premium did not need to be the cheapest but had to be reasonable taking into account the risk, level of indemnity etc. Now Callery v Gray remains the key case with regard to ATE policies yet, with the advent of the RTA Portal, some insurers are arguing that claimants should be taking out staged and not fixed premiums. A staged policy is one where the premium starts off low but then gets increasingly more expensive as the case progresses to trial. The stages often involve being in the portal (which is the cheapest), dropping out, proceedings issued and trial. The premiums for the latter stages are very high with some insurers quoting over £3,000 when it gets to trial. Now that is a lot of money for an RTA claim you could have insured with a fixed premium of £371.00 at the start.

And so you see this is the problem. Defendant insurers are trying to have their cake and eat it. They are arguing cases in the portal should have low staged premiums (normally around £100) but they then argue against the higher premiums charged for those cases they settle or lose later on – saying in those cases the claimant should have bought a £371 fixed policy.

So how do you tackle this? Well, we have some bullet points for you to use in your replies:

  1. At the time the case commenced, the claimant did not know if the case would settle within the RTA portal process or not. The defendant is assessing the premium with the benefit of hindsight but at the time the policy was purchased, it was reasonable.
  2. Out of 31 brokers who offer ATE policies, only 8 offer staged policies. The vast majority therefore use fixed premiums. Claimants are entitled to recover ‘reasonable’ premiums and so it follows that ‘reasonable’ must include those offered by the majority of After the Event insurance brokers.
  3. The lower premiums for cases within the portal are not finite products. The policies are staged and you have to buy the whole product not just cover for the portal part of the claim. This means that the premium is not the £80 or £100 quoted but an amalgum average for all stages of a case. For example, a DAS 80e policy has 4 stages:  £79.80 if settled within the RTA portal; £397.50 if it drops out but proceedings are not issued; £848.00 when proceedings are issued; An additional open ended premium due 14 days before trial (individually assessed). Claimants cannot pick and choose different stages of the policy as they wish but must purchase the policy in its entirety before it is know at what stage the case will reach. This means they may be committing themselves to paying a premium of £848 or even several thousand pounds if the case gets close to trial. To work out an average, you need to apply some percentages to the various stages. Naturally, the portal won’t help with this - we wrote to them and they replied that they don’t keep this information – so we rely on our own experiences below.
  4. Assuming the best scenario is 70% of cases settle within the portal, 10% after, 15% after proceedings and 5% at trial, the DAS 80e average would be: 70% x £79.80 + 10% x £397.50 + 15% x £848 + 5% x £3500 (this is estimated for the final DAS premium) = £397.81. So basically more expensive than our single fixed premium of £371.00. If the settlement profile is worse (and we are hearing numbers of about 50% settling within the portal, not 70%) then the ‘average’ gets a lot worse for these staged policies – more like £450.
  5. There are of course many court decisions approving fixed policies, indeed in a 2005 case of J Tyndall v Battersea Dogs Home, the claimant took out a staged premium and the defendants then argused it should have been fixed! The court confirmed it was ok to have a staged policy but that the norm was for fixed premiums.
  6. Nothing in the rules which set up the RTA portal process said that only staged policies would be recoverable. Indeed, the Government specifically preserved the ATE market as it existed before the rule change.
  7. This argument has already been before a court. The defendant insurer argued that the claimant should be using a staged policy in the Wrexham County Court case of Watson v Johnson. They lost. The Judge ruled that it had not been established that staged premiums were cheaper and indeed were likely to be more expensive.
  8. Finally of course, nothing has really changed with the RTA portal process. The cases settling within the process would have been the ones settling before the rules came in anyway. The creation of the portal has not suddenly made wise old insurers throw up their hands and cave in on liability on cases which they could have won.  The chances of those cases being lost were always very low but the principle set out in Callery v Gray – that the ‘many pay for the few’ remains.  

So there you go. 8 paragraphs of wisdom should do it (thank you to Simon and Jon at this end who helped me with this).

As usual, the defendant insurers are using smoke and mirrors to try to save money. Don’t be fooled.

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

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Aug 8

Jackson Working Party to be Formed

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

And so back to business.

You may have spotted that the Ministry of Justice has announced that they are to form a working party to help to develop the court rules and regulations to enable the Jackson reforms to be implemented. Basically, they are going to ‘invite’ relevant interested parties to help put some meat on the bones. And about time too.

Their remit will be to look at (and I quote):

  • Qualified one way costs shifting – atypical cases and behavioural aspects
  • Introduction of an additional sanction/reward under Part 36
  • The detail of the proportionality test – content of a Practice Direction – examples of when the test should not be applied.

No mean feat. I have already pointed out the great flaws in the Jackson reforms so we shall see how they cope with getting around the problems. Key here of course is (a) who is going to be invited to join the group and (b) how exactly will the group operate.

Let’s look at (a).

Well, you would hope that interested parties would include the Law Society, APIL, MASS, the ABI and Trade Unions at the very least.  I think however there will be another agenda going on with a little bias in the sides. I doubt very much they will be even with most money going on more representatives from the defendant brigade. Also depends on (b) of course…

(b) How exactly is the group going to operate.

I doubt MoJ is going to allow it to be a democracy with each interested party getting an equal a vote on proposals. I suspect the MoJ will simply listen and then ignore anything it doesn’t like when it comes to the drafting. If I am right with this then expect some fireworks and a few walk outs. I can’t see this process going smoothly and with this will be a danger that we will end up with unworkable rules.

Satellite litigation here we come me thinks.

Or maybe I am just a born sceptic.

Anyway, the MoJ have said that they will be picking the attendees from those who submitted responses to the Jackson reforms (remember them – the ones they didn’t read). Now we put a reply in drafted by our very own legal expert, Simon Pinner. So, who knows, it could be us shaping the future of civil litigation. Could also equally be Claims R Us Ltd.

Timetable is tight. The working party is to report by the end of September 2011 with a ‘workshop’ to be convened towards the end of October 2011 to be attended by experienced practitioners (both claimant and defendant) in all civil litigation practice areas.

Now we work fast here but this is a joke. There is no way a properly formed working party is going to be able come up with properly drafted rules in 7 weeks, not forgetting or course that most people are away during August.

More slight of hand going on here?

I am sitting by the telephone waiting for that call.

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

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Aug 1

Back to work

Posted in After The Event Insurance, General, Solicitors

It was very kind of Kirsten to praise my blogs and indeed to hold the fort most impresively whilst I have been away. In actual fact, I could have probably managed the odd blog from the beach but I have to say it was nice not to have to think of a topic and link it to After the Event insurance for a change.

So with my creative juices re er, juiced (?) what will be the topic for today? Well, for a breath of fresh air, I won’t be mentioning ATE insurance (apart from saying I won’t be mentioning it – and the reference above of course).

I thought I would talk about my holiday. N0 – not a blog’s equivalent of getting the family to sit through a slide show of yet another picture of someone pointing at something – but a bit of a personal reflective and to gain some perspective.

We went to Mauritius. If you haven’t ever been then be warned – it is a long way away but well worth the trip. The weather was good but they are having their winter at the moment which ironically is the same as our summer. Nice but we are not talking Mediterranean weather – sort of Goldilocks temperature.

Great hotel - very luxurious villa with our own heated pool! The kids loved it and their swimming improved no end.

Great food – long leisurely breakfasts followed by building sandcastles on the beach. Brilliant.

We had day trips out – a crocodile park and one where there were giant tortoises the children could ride on – I kid you not.

Also there was a tour of the south of the island -the sugar beet and tea plantations as well as the gorges and waterfalls. It is a beautiful place.

So what was the best bit for me? Well – none of the above.

There was an iPod dock in our villa. One evening, we came home after dinner and I popped my iPhone in the dock and put some music on. I will never forget it. The children just started dancing and my wife and I danced with them. It was magical. We could have been anywhere and for half an hour nothing mattered.

When you work hard it is nice to spend time with your family. It is what it is all about.

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

P.S. Proof of the tortoise below (ridden by my daughter Imaani)

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Jul 16

Tick Tock

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

It’s that time again. I am off on holiday for the next two weeks so you will have to do without me for while. I think Kirsten might try her hand in my absence.

Before I go, let’s examine some issues regarding time shall we?

Starting with referral fees – me thinks their days may be numbered. Justice Minister Lord McNally is keen to ban them. Problem is of course - what is a referral fee? You may have read my blog concerning AXA – is your solicitor panel handling  work for you for free the same thing as paying for a case? The answer is yes in my mind. So how do you ban them? After all, Personal Injury Claims may be in the headlines but referral fees or ‘introductions’ are paid for all manner of legal work including conveyancing.  Before they were permitted, our friends Claims Direct managed to circumvent the rules with case assessment fees, client statement fees etc. You name it and there was a fee for it.

And if referrals are banned, is that going to be the end of claims management companies? The simple answer is no. They will join with solicitors – who rather conveniently will be able to offer them part of their practice in return thanks to the upcoming Alternative Business rules.

People don’t like insurance companies selling their cases so the political will is to ban them but the reality is likely to mean referrals simple morph into another form.

So what about Jackson? Well the timescale still indicates October 2012 for implementation. Which in legislation terms (excluding taking the country to war) is pretty quick. This is of course notwithstanding the fact that the Legal Aid, Sentencing and Punishment of Offenders Bill (LASPO)  is a very lengthy document. To keep the pedal to the metal, the Government has adopted the unique (and many say foolhardy) approach of fast tracking the consultation process. This has resulted in the scarcely believable time slot allocation of just 15 minutes per organisation. Now, LASPO is 187 pages long and contains no fewer than 119 sections. I calculate that they have therefore allowed each organisation to speak for just under 5 seconds per page. Now this is supposed to be the Government listening to esteemed organisations such as the Bar Council and the Law Society but clearly there is an agenda here. This procedure has judicial review written all over it. A more contemptuous attitude I could not imagine.

So the final subject on this topic is my flight time – 10 hours. It’s a long way to Mauritius you see. Longer than the Government will consult in total with all interested parties in the LASPO Bill.

You couldn’t make it up.

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

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Jul 12

Things are hotting up

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

Just back from southern Turkey. Now I was expecting it to be warm – the forecast was around 32 degrees. This level of sun I can cope with – after all we had 2 days of these temperatures here (otherwise known as our summer).

Anyway, dead on the money – it was 32 degrees – on Friday. It then jumped 10 degrees in a day to 42 degrees on Saturday. This was a shock. If you ventured outside, it was like having a sauna in your clothes. Lovely.

So what has all this to do with After the Event Insurance or PI claims? Not a great deal but just a tenuous link to the state of things with (a) Jackson and (b) referral fees and a general round up.

It looks like the newspapers (what’s left of them) have the bit between their teeth about referral fees and insurance companies. We also had Panorama last night telling us that a lot of the PI industry is made up of scams and fake crashes and the Law Society coordinating a backlash against the Jackson Reforms. Amongst all of this, is the Government really going to force through a set of rules that only the defendants say will work? You bet.

Now you remember my questions to Jaggard and Axa?  Jaggards: ‘How can costs be rising if RTA claim costs are fixed’ and Axa ‘What do your panel of solicitors taking PI claims from you [now without a fee] do for free in return’). Well,  I have had very few replies from either of them. Now when I say ‘very few’ I mean zero. Come on – they are straight forward questions and we should be told. Anyone else have the answers?

I think I preferred Turkish heat. Unpredictable maybe but up front and in your face.

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

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Jun 14

Justice Bill is nearly ready & Jaggards at it again

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

A couple of topics today.

First let’s talk about Jackson. That well known supporter of the PI industry, Jonathan Djanogly has confirmed that the Justice Bill will be published later this month. It has been delayed due to the Impact Assessment not being ‘fit for purpose’ as judged by the Cabinet Office (no doubt something to do with being prepared before the MoJ could have read all of the submissions to the consultation, being based on Jaggards i.e. skewed data blah blah blah). A new impact assessment will be produced alongside the Bill and will no doubt look very similar to the old one but with just some tweaks to keep the Cabinet Office lawyers happy.

The Justice Bill is going to contain a whole raft of changes and not just to Personal Injury claims. It is going to deal with Legal Aid and sentencing reform so I don’t think it is going to go through parliament (not to mention the House of Lords) without some challenges. No one knows how long the Bill will take to become law but the best guess we have is 6 months. The devil is of course in the detail and we won’t be seeing the draft procedural rules for some time. Even if the Bill can be enacted in 6 months, we still don’t expect the full reforms to be ready until at least October 2012. We shall see…

Now I have already mentioned our dear friends Jaggards and their willing to help the Government with their unbiased data set. Well they are at it again – helping the Ministry of Justice to decide on fixed costs. To be fair, they aren’t actually helping officially but having already had a foot in the door, I wouldn’t bet on them pushing it open a little more. Ready for this – it’s a good one………. they are now saying that fixed costs are too high and so the Jackson reforms, when they come in, will actually mean PI solicitors will be making more money and those poor defendant insurers will be losing even more.

Now I would like to know which abacus they are using and see their methodology. Which planet are they on exactly? Fixed costs are er, fixed and Jackson isn’t going to increase these. The success fee is not going to be recoverable under Jackson so how exactly are PI solicitors going to make more money? If you work for Jaggards and read this blog then please leave a comment explaining this one – I will publish it verbatim.

So there you have it – more smoke wafting over the battlefield. Unbelievable. 

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

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