Jun 9

How After the Event Insurance Works & the Importance of Insuring Early

Posted in After The Event Insurance, General, Solicitors

Actually, let’s start with insurance generally.

All insurance companies need to make money (this comes as a surprise to some!). This means that they have to pay out less in claims than they get in in premiums and have enough left over to pay overheads, wages etc. In order to set annual premiums, insurers analyse risk very carefully and set premiums high enough to cover their calculated risk (and a bit on top just in case). If they get it wrong, there is always next year’s premiums which will have to go up to cover any losses from the year before and to cover the increased risk calculation this year.

After the Event Insurers operate in a similar way but with a few differences. First, they need to make money so they calculate premiums based on risk just as a domestic insurer. The problem is, premiums are normally only paid at the end and aren’t paid annually – the end means the end of the case and this can be 3, 4, 5 or more years away. This is a long time for the cash to come in and also a long time before the insurer knows whether or not it is getting it right or not. It is therefore only now, after many years of operating, that ATE Insurers are bedding down their risk profiles. Just when they get it right, things are about to change of course (see Jackson).

The other problem for After the Event Insurers is that the market (in insurance terms) is very small. Domestic insurers may have millions of policy holders whereas ATE insurers are lucky to have 10,000. This means the spread of risk is much lower. Lower risk spread means lower premium income, higher premiums and higher risk.

So you see, ATE Insurers get upset with solicitors who don’t play ball and insure all of their cases from day one. The problem with firms insuring later on is that, by doing this, the ‘easy’ cases which are settling early aren’t being insured. With no premiums coming in from these straight forward claims, the insurer’s spread of risk is further reduced. It is like a tightening net and a bit of a downward spiral. This is because, if a solicitor insures later, the premiums the insurer has to charge to maintain income for virtually the same risk means all premiums have to rise. The solicitor is then faced with higher premiums so is put off insuring early and in fact waits even later – perhaps until proceedings are issued. This means there is even less spread of risk so premiums rise again etc etc. You get the idea.

There is another problem though. Insuring late means that a lot of the claim isn’t going to be covered. Let’s do a comparison with health insurance. If you take this out when you are young, premiums are cheap – perhaps just a few pounds per month. Why? Well, the risk of you being ill when young is very low. If you wait to take it out until you are say 50, premiums are very high because people who are in their 50s tend to have more ailments. Let’s say though that you wait until you are 50 years old to take out a policy. Once on cover you then contact the insurer and say that you incurred some physio charges two years ago due to a bad back. Do you think the insurer will pay up? Of course not. The treatment occurred prior to the inception of the policy. This is exactly the same as an After the Event Insurance policy. If a solicitor takes it out late in a claim, any disbursements incurred prior to the policy start date won’t be covered AND MOST POLICIES WON’T COVER THE DEFENDANT’S ADVERSE COSTS UP UNTIL THIS POINT EITHER. This means, by insuring late, a solicitor has exposed their client to the risk of having to pay pre-policy disbursements, adverse costs and a very high ATE Premium to boot.

So the moral of this tale is, insure everything and insure early.

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

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Jun 6

Referral Fees

Posted in After The Event Insurance, General, Solicitors

Bit like Marmite these – you either love them or hate them. Some say that permitting companies and organisation to sell cases to the highest bidder has resulted in the devaluation of a profession. Others believe referral fees have allowed markets to be opened up for consumers.

Refferals have been talked about for some time now and finally, the Legal Services Board (LSB) has come to a decision. They have decided not to ban them but have then left everything else to the Solicitors Regulation Authority with a steer to ensure there is transparency  i.e. the SRA needs to create some rules so that clients know how much is being paid, when and by whom to whom (er which already exists in Personal Injury).

Why did the Legal Services Board decide not to ban them? Well, bizarrely Alternative Business Structures seem to have put a kibosh on the ban. The rules for Alternative Business Structures come into force in October this year. They will allow non-solicitor ownership of solicitors firms – which means that external investors can get a piece of the pie.

How can this be related to referral fees? Well, large referrers are pretty powerful. A company that controls the supply of work is very valuable. The LSB  realised that if referral fees were banned, come October, there was a lovely mechanism being put into place which would allow referrers to be rewarded. They would simply be given a slice of a law firm – and they didn’t want that. A ban would encourage this and this was a step too far for the legal profession.

Referral fees may be a dirty word to some but they are here to stay and remain the caller of many tunes.

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

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May 26

That’s a wrap

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

Is that the correct spelling? Hopefully, people won’t think I am talking about sandwiches here.

Yes it is reference to our Animation competition which we have now launched to the world. We have set up a dedicated website (www.boxlegalfilm.co.uk)  where you can see the rules, ask questions and (best of all) submit your entries. Don’t forget the closing date is the end of July.

We want to redefine the corporate video with a fresh approach and a good dose of humour. Looks like we have trodden on a few toes though – we have already upset an animation company who say we are simply trying to get some animation done on the cheap. Well that’s not entirely true – the prize fund is £2250 and we had to invest in a new website – but the point is we want to get the bedroom animator (not sure that sounds quite right) to show us what he/she can do rather than a company who (we suspect) won’t be half as creative.

Anyway, we hope that the challenge will produce some clever/funny/wacky/bizarre entries about, er, After the Event Insurance. Should be interesting….

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

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May 13

We are going into the film business

Posted in After The Event Insurance, General, Solicitors, The Jackson Report

Of course you knew that already. Obviously, a company full of lawyers selling After the Event Insurance is bound to start making movies – it’s a logical step after all.

Well, the thing is, we are developing a completely new website and will be using short films to get the message across. The problem of course is that we know nothing about making ‘webinars’ etc so instead we are going to hold a competition and get the YouTube generation to come up with some new takes on the corporate video.

The first competition will be starting next week and will run until the end of July. We are offering a total prize fund of £2250 and are looking for a 2 minute stop/go animation explaining what After the Event Insurance is and the effect of the Jackson Report.  So we hope some students out there will be entering with the hope of paying for some of those tuition fees.

I shall publish the rules and rough script next week so watch this er, space. 

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

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May 10

Referral Fees and Before the Event Insurance

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

Old Ken Clarke was all for Before the Event (BTE) Insurance. No wonder the Government has decided to leave referral fees alone.

Let me explain.

BTE Insurance, as you no doubt are aware, is an annual policy attached to motor or household insurance policies which covers the policy holder (and often their family) in the event of a legal dispute. If for example someone has a policy with their motor insurance, it would have cost them about £25 to £40. For the next 12 months they then have legal assistance and all of their legal fees paid for if they need to make or defend a legal claim.

So, let’s say they have an accident which wasn’t their fault. They contact their BTE insurance provider who places them with a solicitor. The policy holder will be protected against legal costs if they lose and if they win, the solicitor recovers their charges from the defendant. Sound familiar? Well it is exactly what happens with After the Event Insurance save for one significant fact: The BTE insurer will charge the solicitor a referral fee for getting the case.

In other words, the BTE provider sells the case to the solicitor, for up to £750! So instead of the BTE policy actually being a liabilty for the BTE Insurer, it is in fact an asset – they want clients to claim on them as it makes them money. What is more, the BTE provider insists (often with a nod and a wink) that the solicitor doesn’t claim on the policy. You know the sort of thing – if they did claim, it would be the last case they received or similar strong arm tactics.

So the BTE provider is receiving up to £40 for each policy they sell plus £750 for each personal injury claim. Nice.

Let’s compare this to After the Event Insurance bought er, after an accident has happened. Motor ATE Policies typically cost around £350 although the cost to clients post Jackson is likely to be much less, around £150. How many car accidents have you had in the last 10 years? Me – none. The average person – one. So, in 10 years, if you were buying a BTE policy just in case, you would have shelled out around £400.  Instead, if you simply bought an ATE Insurance policy when the accident happened, it would most likely cost just £150 for you to have exactly the same cover.

So BTE isn’t the answer. Not only are BTE Insurers flogging cases to the highest bidder, they are charging clients far too much. After the Event Insurance is much more efficient and cost effective. You only buy it when you need it, not each and every year just in case.

Ken Clarke is wrong. BTE Insurance is not the holy grail but a licence to print money. Tick the ‘No’ to legal insurance box on your motor quote and save a packet.

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

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May 6

Part 36 offers and ATE Insurance

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

I have been asked to explain how After the Event Insurance works with Part 36 offers, so here goes.

As you will no doubt be aware, a Part 36 offer is an offer to settle made by either party in an attempt to conclude a claim early. They are most often made by defendants and can be in relation to liability or quantum or indeed both.

The rules state that, if a defendant makes a Part 36 offer and the claimant decides not to accept it, if they go to trial and less is awarded by a judge or if later the claimant is forced to accept less than was offered, the claimant has to pay the defendant’s legal costs (and disbursements) incurred from the date the offer was made until the end of the case. What is more, the claimant also has to pay his/her own legal costs (so basically any disbursements if acting under a CFA) from the offer date as well, as these cannot be recovered from the defendant.

So this is where After the Event insurance comes in. You see the problem solicitors have is that they are dammed if they do and dammed if they don’t. If they tell a client to accept an offer, they get hassle from the client who thinks the solicitor isn’t getting them the right settlement and just wants to get their costs. If they tell the client to carry on and then fail to beat the offer, the client says they should have advised them to accept. So you see, ATE Insurance is as much to protect the solicitor here as the client. With our After the Event insurance in place, if a solicitor advises the client to continue, but then the offer isn’t beaten, the insurance will kick in to cover the adverse costs and disbursements. Without it, the client has to pay these out of their damages OR (as is often the case we hear) they create such a stink that the solicitor ends up paying them.

Well at least this is all changing post-Jackson I hear you cry? Not a bit of it. Exactly the same rules will apply. So which is it? Protect your client from costs and yourself from accusations of bad advice or take a punt on each and every case. Bit like driving without a seat belt. Daft.

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

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May 3

Not about After the Event Insurance but a Word of Warning

Posted in General, Road Accidents, Solicitors

Another good short week? Enjoy the wedding?

I didn’t. Had a bit of an incident which soured things a little.

Now if you read my blog regularly, you might begin to think that I am a used car salesman on the side but it’s just coincidence. We bought a 7 seater to accommodate all of the children plus their assorted friends recently so last week, I put our Mercedes M class up for sale in Autotrader.

I got a couple of calls, and one person wanted to come and see it on Tuesday night. Problem was, I was out playing football but we finally managed to shift the times and ‘Akesh’ and his friend were there when I got home. I proceeded to show them around the car but refused to let them drive it as they obviously weren’t insured. They checked all of the paperwork  – chassis number against the V5 etc, even that the chassis wasn’t bent at all.

They said they had seen one other car that night but the owner only had one key so they were suspicious. Did I have two keys? Of course – so I locked the car and got the other one. They then wanted to check that the central locking was working with the metal part of the fob (there is a small emergency key which is hidden in the Mercedes electrical fob) but it didn’t seem to work.

They then wanted to check the spare tyre was in the boot so I opened it and lent in. Next thing I know, the boot lid has come down on my head and I am somewhat stunned. ‘Akesh’ said he was looking for the lock in the boot and hadn’t realised I was going to lean in. I wasn’t feeling all that great – but ‘Akesh’ said he was interested in the car and just wanted to do an HPI credit check on it and would call me in the morning. With that, he locked the car, handed me back the key and I went back in side to look at my head in the mirror (cut and massive raised bruise).

So that was that. Except, in the morning I woke up and the car had gone. I then looked at the keys and realised they had swapped one of them after cracking me on the head. It was pretty much identical to our keys and not obvious in the dark.

So there you have it. I am now dealing with my insurers and the police who incidentally, despite an assault and theft of an expensive car, couldn’t be less interested.

I have since been told that this same theft modus operandi was featured on the BBC’s ‘The Real Hustle’.

Shame I hadn’t seen it. I suspect ’Akesh’ and his mate have.

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

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Apr 26

After the Event Insurance & Holding Harmless Policies

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

Good break? Very hectic bank holiday for the Morris family so I have come back to work for a rest.

There didn’t seem to be many people going to work this morning though. I read somewhere that over 25% of people would be taking these middle 3 days off in order to end up with an 11 day holiday. Now here at Box Legal, I am in obviously, and so is Jon Gouldsmith and Kirsten Arnold. Which means it must be my colleague Alan Whicker who is off. I wondered why I hadn’t seen him (with apologies to Tommy Cooper).

Enough of the flim flam, let’s talk about something you may not have heard of: ‘Hold Harmless’ ATE Insurance policies.

Strange name, strange concept. Basically, there are unscrupulous After the Event Insurers out there and some greedy (some would also say foolish) solicitors. The solicitors have agreed to take out After the Event Insurance from the insurer but have also agreed never to claim on the policies (they ‘hold’ the insurer ‘harmless’ to claims). How can that be I hear you say? Well, the whole point is that the policy is recoverable at the moment from the defendant. The solicitor agrees to buy the policy for a low sum, say £100 but can then recover £350 or more from the defendant. This gives them a tidy ‘profit’ of £250 per policy and the insurer makes £100. Everyone’s a winner? Well, no. What happens if someone loses? Well the solicitor has agreed to pay out all of the costs from the profit they have made on the policies. Which basically means they are acting as insurers themselves - which is illegal by the way and the SRA aren’t happy either.

Solicitors acting in this way are putting profit before their client’s best interests as they will always be having one eye on the risk of losing. The insurer is basically defrauding the defendant insurance industry as they are issuing a piece of paper and saying it is an insurance policy when in reality it isn’t.

We are aware of a number of insurers and firms who act in this way. The problem is, they are clever and there isn’t anything in writing. It is all done with nods and winks.

So how do you stop them? Well, there’s no need actually. When Jackson comes in, Hold Harmless policies will disappear. Why? Well, the client is going to be paying and will vote with his or her feet if a solicitor tries to sell them an inflated policy. The SRA is looking to come down very hard on firms attempting to make a profit out of ATE insurance at the expense of client’s damages. We believe some may try to continue the con but they will be a dying breed.

Bit like people who actually turn up for work I suppose.

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

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Apr 19

Disbursement Claims on After the Event Insurance Policies

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

Hello there. I am back.

We had a lovely week in the French Alps. Fantastic weather but only snow quite high up so the children had to go in the cable car every day to ski school whilst the poor old parents sat outside drinking espressos at 3 (where’s my Euros symbol?) a pop. We shall go earlier next year.

I thought I would talk today about disbursements as I think these are not really seen as a risk for clients (everyone focuses on adverse costs) but they are very important.

We have carried out an analysis on claims paid since we set up our scheme some 7 years ago. It may surprise you to know that the average disbursement claim paid out is nearly £1,900! Don’t forget that is the average – if you look at the top 25%, it is over £5,000 per claim and the worst ever was for just over £16,000!

I think it was good old Lord Jackson who suggested that solicitors would be happy to shoulder these expenses and absorb them into the overheads of their business models. This was generous of him – particularly as he has effectively taken away the success fee (clients will shop around for the cheapest one). I don’t think many firms are going to be happy to pay £1,900 per failed case let alone £5,000 or even £16,000!

And it gets worse….

The number of claims are likely to reduce (less money for solicitors = lower ability to pay referrers = less referrer profit = less claims) and we all know what happens with supply and demand on services. If a company is supplying engineer’s assessments and is doing 5,000 of them a year, they can keep their prices low due to high volumes. If instead they are only doing 3,000 a year, they still have to cover their overheads and so, to keep profitable, their prices will have to rise. It’s the old ‘pile it high, sell it cheap’ Woolworths analogy in reverse (and look what happened to them).

So we think disbursements are going to rise – and that’s not all….

Our legal expert, Jon Gouldsmith, pointed out something interesting to me. A lot of our claims involve barristers who have acted on a CFA and so when they lose, they have waived their fee. Well, success fees for barristers won’t be recoverable from the defendant post-Jackson, just like the solicitor’s success fee. It will be a client expense and so we think clients won’t like them and nor will barristers. They will go back to standard fee paying arrangements which means their fees are going to be added to the disbursements which the solicitor has to, er write off (this means pay of course!) in the event of a loss. Our calculations show this will add about 15% to the disbursements liability.

So the bad news is, clients are going to have to be told that they face an average disbursements liability of £2,000 odd and a worse case scenario of, say £18,000 based on our figures. Some solicitors may want to ask for money on account for this.

OR, clients could buy a useful thing called After the Event insurance!

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

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Apr 9

The Future for Personal Injury Solicitors

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

OK. I have done After the Event Insurance and the fact that it is going to be needed post-Jackson, so let’s look at solicitors shall we? Are they going to be needed, I mean after all, they are going to increase the litigant in person rates so no need for them anymore?

Well that’s rubbish of course. Most people when faced with dealing with legal proceedings would run a mile and would rather do nothing. It is pretty daunting, no matter how many leaflets the small claims court issues. 

The problem here is not whether there are going to be sufficient punters for solicitors to act for but rather the other way round – are there going to be sufficient Personal Injury Lawyers around after the Jackson reforms? You may recall the hit the profession took recently with the fixed costs allowed by the RTA portal not to mention predictable costs rates which haven’t been increased since being brought in – not even for the galloping rate of inflation. After the Government brings in their Jackson reforms, will there be any profit in Personal Injury anymore?

Well I think it depends. Before I give you my opinion, I should say I have quite a bit of experience at the coal face (otherwise I suspect you may stop reading and do something more interesting instead (‘Why Don’t You’ reference there for the older readers)). A few years back, Simon Pinner and I set up a very large PI department at our firm – Kingsford Stacey Blackwell. You wouldn’t believe it now but we leased a very large office in Fetter Lane, Central London – just inside the ‘City’ to take advantage of the City of London recoverable Court rates. We had over 80 staff at our peak. Unfortunately, predictable costs then loomed on the horizon so it was no longer viable to operate where we were.

Which is, I suppose, my point. Post Jackson, those practices doing it the old fashioned way (solicitor, secretary, expensive centrally located office etc) are going to be a thing of the past. It simply won’t be viable for firms to operate in this way. We are talking factory hens here I am afraid and a lot of decent IT. We are going to see more of the out of town industrial estate operations with lots of paralegals using case management software to churn out settlements.

Jackson is going to change the face of litigation and in particular PI like no one before. The odd high street PI solicitor may survive but it won’t be the mainstay of their practice anymore - they will have to subsidise their work with something else. Clients are used to telephone banking and call centres so it won’t come as much of a shock to them but be under no illusion, Solicitors are going to suffer. Money can be made but PI solicitors are going to be heading the way of the bank manager – no longer top of the tree but  about two thirds of the way down. Just above Quantity Surveyors.

So it is on this cheery note that I bid you farewell. Rats and sinking ships I hear you cry? Not a bit of it. Just off for a week, er skiing. Trouble is there’s no snow. My crumb of comfort is thinking of the money I am saving not having to hire skis. Always look on the bright side is what I say. They could have upped the PI small claims court limit after all.

See you in a week.

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

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Apr 6

The Future for After the Event Insurance

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

Now that the dust has settled on Ken Clarke’s announcement, let’s do some crystal ball gazing to see what is going to happen to After the Event Insurance post Jackson implementation.

First, let’s look at the (likely) rules:

  • After the Event Insurance won’t we recoverable from the defendant
  • Adverse costs won’t generally be payable except:
    • Where the claimant has acted unreasonably (we shall ignore fraud as ATE Insurance wouldn’t cover this anyway)
    • Where the claimant is wealthy
    • Where the Defendant has made a Part 36 offer and the client fails to beat it.
  • The client will get an uplift of 10% on their general damages to pay for their success fee and any ATE insurance policy.
  • There may be a fixed sum payable if a case is lost to put off ‘silly’ claims – the amount being banded around here is £1,000.

So, why would anyone need an After the Event Insurance policy (I am being facetious)?

Well, here goes:

  1. To cover the claimant’s own disbursements which can run into 5 figures
  2. To cover the risk of the claimant being found to have been ‘unreasonable’ which will be decided at the end of the case by the Judge.
  3. To cover the risk of the claimant being found to be sufficiently wealthy (no definition yet) to pay costs
  4. To cover adverse costs should the claimant fail to beat a Part 36 offer which can be made at any time (we think defendants will make it very early)
  5. To cover fixed adverse costs should the claimant lose (£1,000?)

So, basically, pretty much the same as the current regime save for some part of adverse costs which may be restricted but may not be - and the claimant won’t know which it is until the end of the case anyway.

It appears that the defendant insurance industry has managed to pull the rabbit out of the hat. They have left the claimant facing almost the same risks as before but have made them pay for the premium. Brilliant.

Now the good news is that premiums will have to fall as adverse costs are definitely going to be less. Also, those ‘hold harmless’ cowboy insurers won’t be able to operate any more and inefficient insurers will disappear so only proper insurers will remain operating on a level playing field.

I know this sounds strange but I am actually looking forward to it.

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

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Apr 1

Government Based Their Decision on Jaggards Data

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

I have just read the Government’s Impact Assessment. I thought for a minute it was an April Fool joke but then looked at the date – it was written 10th March.

In the assessment, Annex A reveals that the Ministry of Justice have based their assessment purely on data received from Jaggards. Now anyone in the personal injury industry will have heard of them. Jaggards act for defendant insurers and their role is to knock down the claimant’s costs. They take any and all possible stances to do this (trust me, I was in practice for 7 years and had to deal with them).

So do you think their dataset will be skewed towards the defendants? Well the Government doesn’t think so. I do.

Let’s look at one item in particular. The Impact Assessment states that the Jaggards data shows average GENERAL damages in Road Traffic Accidents are £4,348. Now when I was in practice not so long ago, average damages were £2,000. Claimants need to get some data together (come on APIL!) but I suspect what has happened here is that Jaggards have accidentally given the total damages figure to the Ministry and not the General Damages figure.

Now this is quite important as the Ministry is now assuming the clients will be getting an additional £434 on average which should be more than enough to pay for success fees and After the Event insurance. If the true figure is half this sum then that is a very different kettle of fish.

If you are a member of APIL and are reading this, contact them now. This is an outrage. Something must be done.

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 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 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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Feb 25

Getting Clients to Sign CFAs

Posted in General, Personal Injury Claims, Solicitors

Have you ever wondered why so many potential clients are keen as mustard for you to conduct their claim while they are on the phone and then vanish off the face of the earth as soon as you send them your client care letter, never to be heard of again?

The clue may be in the answer to the question “What’s the difference between 100% NO WIN – NO FEE” and “If you win your claim, you pay our basic charges, our disbursements and a success fee.  If you lose you remain liable for the other side’s costs?” The first part of the statement is typical of the advertising that motivates clients to call you, whereas the rest is what the CFA agreement tells them.

I was talking the other day to the head of a firm of agents (Malcolm Roberts of Beechwood Services) who visit clients in their own homes to explain and get signatures on CFA documents. They have success rates in excess of 90% compared to around 50% achieved by solicitors who post their papers out to clients.

Apparently whenever an agent meets a potential client they are always asked “how much will I get, how long will it take, and will it REALLY not cost anything?” That’s before they’ve clapped eyes on the actual papers. Just imagine what clients must think when they tear open your envelope and read the CFA? We know that the advertising is accurate, but the cynical and suspicious can easily have their worst fears confirmed by the official forms. Not that we’re biased, but if all of our solicitors had success rates of 90% we would sell an awful lot more ATE policies and we would all make a lot more money.

Just a thought. I can provide Malcolm’s contact details if anyone wants to explore this further.

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

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Feb 21

Spam Fritters ATE My Hamster

Posted in General, Personal Injury Claims, Solicitors

Yes well, it worked for The Sun (or something similar). I remember when spam meant something completely different. I used to enjoy it made into fritters and served with chips and baked beans. Difficult to get it in cafes these days.

Now spam of course means rubbish emailed to you by robots (or worse – deliberately by marketing people). We thought we had cracked it by adding a difficult bit of maths to complete (6+4 = ? etc) before someone could post a comment but as of yesterday, it seems someone has managed to program a computer to work out these problems. So today I was faced with 56 comments to look at, all of them pointing me to some Russian website which I am sure would instantly drain my bank account should I so much as hover the mouse over the link. It’s all about fooling Google I am advised – the more links appearing to that website, the higher it ranks for key words such as, I don’t know, double glazing or Viagra.

Anyway - looks like we are going to have to revert to those funny handwritten letters which even humans have problem reading. Should mean I don’t get any comments from now on (so that’s 2 less than I have currently). Come on, isn’t this blog fascinating? Doesn’t the subject of law and insurance get your mouth watering? No me neither so I am open to suggestions as to topics you would like me to cover (within reason). As a friend of mine said, ‘it needs sexing up a little’. Not sure how to do that with the subject matter but you never know – some bright spark may come up with some gossip or link to Lady Gaga.

Over to you….

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

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Feb 11

Trust

Posted in Personal Injury Claims, Solicitors, The Jackson Report

Remember the Nissan Micra saga?

Well, I managed to get into to it and take it to get an MOT (there and back without passing GO as no road tax!) and eventually put it up for sale on Autotrader. I did some research about the price but must have pitched it a bit low because within 10 minutes I had 2 calls and the second chap bought it over the phone before he had even seen it! What’s more, he paid a £200 deposit straight into my account and arranged to come down from Newcastle at the weekend to pick the car up (that’s a 500 mile round trip).

Talk about trust.

Now I like to think it is because I was 100% up front about the car and had an honest sounding voice on the telephone (I didn’t mention I was a lawyer in case that put him off). If you ask my friends if you can trust me I think they would say yes.

What if the question was ‘Do you trust the Government’? Now I am not generally a sceptic but I suspect the majority would answer ‘no’ to that question. So if the question was, ‘Do you trust the Ministry of Justice Government Department’ then I suspect again the answer would be ‘no’.

If you DO trust the Ministry of Justice then good news! All you have to do is wait until the summer to hear how they are going to change litigation and of course get it right for everyone. If like me however you don’t think you can trust them, you need to give them your opinion in the form of the Jackson Consultation response.

I know I have been banging on about this for ages but you now only have until Monday so send something in to the MoJ to ensure your voice is heard. If you don’t and it turns out you shouldn’t have trusted them, don’t start moaning to me.

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

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Feb 9

Numbers

Posted in After The Event Insurance, General, Solicitors

What’s in a number?

We don’t often crow about our business – we prefer to to a good job and then (hopefully) let others do the talking however, sometimes it is appropriate to blow your own trumpet. So here goes.

We have just signed up the 200th firm to our insurance scheme (quickly followed by no. 201) and the 5th new firm this week – and it is only Wednesday. I suspect this is mainly due to the excellent work our team are doing including Jon our in-house legal expert (the person who visits firms), Roger who is revamping all of our websites plus of course Kirsten who handles marketing. When she suggested we put an advert on the side of a taxi, we were not 100% convinced but our profile has definitely improved. This blog is another one of her ideas – is it a millstone for me or a chance to rant – who knows but it is being followed (why?).

We have also been getting into social networking so look for us on Twitter (105 followers and counting), Facebook and Linked-In. The more the merrier I say.

So what is in it for you all? Well, the more policies we sell, the less margin we need to make on each one so the less premium can be charged. With increased business we can keep our premiums down which is good for clients, solicitors and defendants.

Roll on firm number 250. Only 49 more to go….

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

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Jan 26

Case Management Systems & Nissan Micra Part II

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

Let’s deal with the Nissan first shall we.

You may recall my dilemma. I had parked it with the passenger door against a wall and found it had a flat battery. The only way in is a secret key hole on the passenger side (the central locking only works if there is power!) and I can’t open the door to get to the bonnet catch due to the wall.

Anyway, I have had a few suggestions via the blog:

  1. Go up underneath and get to the battery that way – What am I, a contortionist?
  2. Get a load of strong mates to bounce the car away from the wall – Yes would work but my mates work in offices and the closest they have been to anything physical is listening to Olivia Newton John.
  3. Smash a window – Yes would work but don’t fancy the repair bill

Anyway, I have decided to go with: Get another car and drag it out using a tow rope. Just need to find a rope. And another car.

Right – back to work.

Do you have a case management system? They may seem daunting at first but odds are that, if you are reading this blog then you are a bit IT savvy so you may already have one. Why am I mentioning it? Well, if you don’t have one I recommend you do. And guess what? We are giving one away for any new firm signing up to our After the Event Insurance scheme!

Blimey I hear you say. Are there any catches? Surely it isn’t a very good one. Well you would be wrong.

The offer is for the Proclaim case management system written by Eclipse. They are the market leaders so it is an excellent system.  The offer includes the software, all hardware and training. Not bad. Only condition is you have to use our ATE insurance for a minimum of two years. In addition, we will link the system to ours so all admin concerning the ATE policies will be removed.

Can’t say fairer than that.

Right, now where is that washing line.

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

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Jan 20

Lord Jackson Submits His Own Response to Consultation

Posted in Personal Injury Claims, Solicitors, The Jackson Report

Lord Justice Jackson has sumitted a response to the consultation on implementing his own proposed reforms!

Not surprisingly, he thinks his proposals are still brilliant – the best thing since sliced bread.

Download his letter to Ken Clarke and his submission here:

We are working our way through it but one obvious poser – if you turn to the back, there is a nice little graph showing how the majority of claimants will be better off (taking into account more damages less success fees etc). Lord Jackson’s starting point for his report is that the balance for claims is currently tipped unfairly towards the claimants and the poor old PLC insurance companies are being treated unfairly. So answer me this:

If Jackson is proposing one way costs shifting so claimants won’t face any costs risk (the MoJ have said this will increase the number of claims made) AND claimants are going to be on average better off (see the graph), how does that make things more fair on the defendants? I can’t work it out. Can anyone help me? 

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

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Jan 18

Success Fees, Naomi Campbell & The European Court of Human Rights

Posted in General, Solicitors, The Jackson Report

You couldn’t make it up.

The European Court of Human Rights has ruled that The Mirror’s right to freedom of expression was violated by the 100% success fee that Naomi Campbell’s lawyers were awarded following her 2004 breach of privacy claim. The Mirror had originally written a story about the Supermodel’s alleged drug addiction (I am choosing my words very carefully here).

What does this mean? Well bizarrely for starters, The Mirror can seek compensation from the Government (so that means us) for the ‘violation’ plus no doubt some serious legal fees (I wonder if there is a success fee there as well?).

Next of course, this adds fuel to the fire that is Lord Jackson’s report and his proposal to cap success fees at 25% of damages. This is going to happen – the Government can’t afford to be in breach of the ECHR but libel claims or privacy claims are very different from personal injury claims so is it right to apply a broad brush approach? We don’t think so. If you agree – get your submission in to the Ministry of Justice before 14th February.

I feel violated.

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

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Jan 13

Flat Battery (and why solicitors don’t insure cases)

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

Before I get onto After the Event Insurance, I have a problem.

We have a run-around Nissan Micra which to be honest we don’t use very much. It is on the drive parked with the passenger side against a wall. It has been there a while so this morning I thought I had better start it (we are going to sell it). Guess what? Yep – flat battery. Not the end of the world I thought but then spotted a problem. You see, in the old days, before cars were opened with a press of a key fob, you used to open the door with a key. Well the Nissan doesn’t have any key holes – it is all done via the fob, which is fine as long as you have some power….

So how do you get in? Surely they would have allowed for cars having flat batteries now and again? A quick look on the Internet and bingo, they did hide a key hole away- under a removable panel on ….the ………..passenger ………….door………… handle.

Oh dear. I can now unlock the passenger door, but I can’t climb in due to the small matter of a wall being in the way. The windows are, you guessed it, electric, so I can’t wind them down and climb through and the other doors are still locked (including the boot).

Any suggestions?

Whilst I ponder this problem – here is another poser. What is it about After the Event Insurance that causes over a quarter of solicitors to decide not to bother insuring their client’s cases? We have obtained information which indicates that an incredible 27% of firms fail to insure some or all of their cases - prefering to let their clients face the risk of adverse costs rather than taking out ATE cover.

Surely this is madness? After all, policies are (currently) recoverable from the defendant, protect the client from adverse costs and own disbursements and don’t have to be paid until the end of the case. Isn’t this a win-win situation for firms and claimants? Well obviously not.

The problem, in our view, is the perception of (a) the admin normally associated with policies and (b) the solicitor’s own view of the prospects of success. Let’s look at these:

(a) Admin

Most policies have a detailed application process, normally a form to fill in which can take some time and sometimes a fee is involved. In addition, many policies require the solicitor to provide a progress report at key stages and the firm may need to request permission if they want to incur unusual disbursements for example a second medical report. Solicitors see this as a burden that they don’t need – particular when linked to (b(3)) below.

(b) Prospects

Solicitors quite rightly must assess prospects of success before taking on a case. At this stage they have probably placed the claim (in their minds at least) into perhaps three different categories: (1) Propects marginal but worth a punt (2) Propects quite good but may be a split liability or some risk of losing (3) Dead cert.

Our research shows us that categories (1) and (2) are generally always insured as the solicitor thinks there are risks and so the admin (a) is worth it – but Dead Certs (3) generally aren’t insured. This can be expressed in a formula: Too much admin + Very low risk of losing = Not worth insuring.

Simple. The problem is – dead certs can be lost. What about causation issues and part 36 offers? What about lost interim applications? We see several of these claims every day.

So what is the answer? Well, if you remove the admin then the formula becomes more straight forward: Low risk of losing + easy to insure and no reporting = Worth getting cover anyway just in case.

This is what we have done: a simple on-line application (30 seconds), no reporting and no requirement to get permission to do anything.

Much easier than getting into a Nissan Micra.

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

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Jan 5

PI Fire Sale – Last Few Days Left

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

Bit dramatic I know but it is effectively what the Government is trying to do. All submissions on the Jackson consultation must be in by 14th February and after that they will reply in the spring with details of how they are going to decimate the industry.

I may sound bitter (still recovering from spending 12 hours in Terminal 4 – more later) but we have a fight on our hands here. It is extremely important that everyone submits their comments to the MoJ so that they don’t just receive reports from large organisations. I have included a link to the consultation below and details of where to send it.

The consulation is long and a lot of it won’t apply to your firm but some bits will. Simply write a reply refering to the numbered parts of the consultation you wish to comment upon – there is no need to reply to all of it! We need to back up comments made with hard facts – example cases where your input was crucial and statistics for cases. We also need information about the RTA portal. Is it working? Do you have examples of abuse from defendant insurers? The more details the better.

Please don’t leave the submissions for APIL or MASS – your input is very important and may sway the MoJ to be more generous to you and your clients. Don’t allow yourself to think you are too busy to do this – spending half a day on this now could save your success fees on all of your future cases. This is much more important to your business than Mr Smith’s witness statement which can wait until tomorrow.

The consulation document is here: Proposals for reform of civil litigation funding and costs

Once you have written your submission send it recorded delivery to:

Annette Cowell
Ministry of Justice
Postpoint 4.42
102 Petty France
London SW1H 9AJ

May the force be with you.

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

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