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Personal injury (PI) lawyers were left reeling at the beginning of the year when Lord Justice Jackson published his proposals on how the litigation model should be reformed to help stem costs (see story).
The only saving grace, they thought, was that it would be at the bottom of the priority list for the coalition government. Yet with Prime Minister David Cameron promising sweeping budget cuts, lawyers have found themselves in the firing line.
On Monday the Parliamentary Undersecretary of State for Justice Jonathan Djanogly MP announced a review of conditional fee arrangements (CFAs) with a consultation due to begin in the autumn. “The Government’s taking these proposals forward as a matter of priority,” Djanogly said in a statement.
Rising costs in clinical negligence and defamation cases, he added, were a particular concern.
The latest figures from the NHS Litigation Authority (NHSLA) show that it incurred £164m in legal costs in the 2009-10 financial year. The largest proportion went on claimant legal fees, costing the taxpayer £121.5m.
At the top of the government agenda are Jackson’s proposals that civil litigation success fees be capped at 25 per cent of damages and that losers should no longer be liable for after-the-event (ATE) premiums. To help claimants pay the success fee Jackson proposed a 10 per cent rise in general damages.
By reducing the success fee, defendants like the NHSLA would see their legal bills reduced dramatically.
Claimant personal injury lawyers, however, argue that without proper financial support claimants on limited budgets will be denied access to justice.
In response to the Jackson report Andrew Tucker, head of personal injury at Irwin Mitchell, summed up the feeling in January when he said: “In cases involving the most serious injuries, claimants may have to contribute thousands of pounds. This cannot be just or fair.
“In many cases compensation is carefully calculated to pay for a lifetime of future care and is contrary to the current intention of Parliament in setting up the ‘no win, no fee’ system.”
Edwin Coe partner David Greene suggests that the Government is addressing a more fundamental problem: “This is a social policy question about access to justice. Do you take access to justice away from claimants to give better access to justice for defendants?”
As part of the review, Djanogly also promised to take into consideration another Conservative commissioned report into health and safety legislation, which includes an assessment of whether Britain has a so-called ‘compensation culture’.
For some lawyers this might all seem like deja vu. Back in 2004 Labour’s Better Regulation Task Force published its thoughts on ‘compensation culture’, concluding it was a myth and that the perception of its existence impacts on behaviour and imposes burdens on organisation.
The then Labour government responded by consulting on whether the PI system should be streamlined across all liabilities, but concluded that this should only apply in road traffic accident (RTA) cases - an initiative put into effect in April this year, just weeks before the Con-Lib coalition took over government.
The Ministry of Justice’s predecessor, the Department of Constitutional Affairs, also looked at the thorny issue of contingency fees. This would allow lawyers to take a percentage of a successful settlement as payment for work.
This is back on the agenda as part of the CFA consultation and, this time round, it is a serious proposition.
Far from being kicked into the long grass, Jackson’s report is being taken very seriously and that could mean some major changes for personal injury lawyers.
Readers' comments (4)
oliver jackson | 28-Jul-2010 5:34 pm
The litigation system in this country at the moment is the best in the world with good levels of access to justice in most areas due to cfa's. However, it is still very difficult for vulnerable individuals to bring cases particularly in the areas of clinical negligence and disease where cases can be vey risky for law firms to take on and few lawyers have the expertise required. Bringing in fixed fees and removing the recoverability of success fees and ate insurance would seriously reduce access to justice in these critical areas where the NHS and employees are sometimes due to negligence kiling or seriously injuring people. The sensible approach is to look at the courts fixing success fees in certain areas as has already been done in RTA. The real problem with litigation costs in most areas stems from the insurance companies not training staff to determine which cases to settle and which cases to defend. Tinkering with a system that currently works well could lead to increased costs and huge problemsif satellite litigation around these issues cloggs the courts. Lord Jackon has no experience of disease, clinical negligence, or personal injury claims generally and nor I don't think do any of the minsters. Certainly Mr Djanogoly was a city corporate lawyer with no experience of litigation nevermind personal injury so how could he make decisions about costs in these areas. The real agenda for the government will be to save money on the council's and NHS legal bills but the way to do this is to deal with the real issues ie why are doctors and councils negligently injuring people?
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Anonymous | 28-Jul-2010 6:46 pm
The proposal that losers should no longer be liable for after-the-event (ATE) premiums cannot come soon enough. The premiums appear to be disproportionate to the damages claimed and give claimants a distinctly unfair advantage, when assessing the risk of success or failure in fighting an otherwise defendable claim.
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James Bell | 28-Jul-2010 7:04 pm
A few points to make re clin neg.
Following the housing boom of the 1990/2000s increasing numbers of people were unable to qualify for legal aid. Changes also incurred in the early to mid 2000s when the funding guidance for clinical negligence claims was altered. Costs benefit ratios were then applied to claims and a large number of Claimants found themselves unable to pursue clinical negligence claims under legal aid.
Clinical negligence is not an area in which the legal expense insurance (LEI) market has reached into and consequently the vast majority of claims now being pursued are by way of a Conditional Fee Agreement or Collective CFA with after the event insurance (ATE) protection.
This type of funding has brought a particular discipline to clinical negligence lawyers and ensures that only viable claims are pursued and non viable claims are quickly discontinued once negative medical evidence comes to light.
It should be noted that whilst the government is now complaining of conditional fees and uplifts in 2010, before the advent of CFAs the NHS Litigation Authority was complaining about the use of so called “legal aid blackmail” where they alleged that a weak case could be brought close to trial with the support of the Legal Services Commission.
The grumble now is that cases are being heavily vetted and pursued under CFAs.
With regard to budgets it should be noted that any increase in the NHSLA budget due to conditional fees has to be balanced against the much reduced clinical negligence legal aid budget. Has this been looked at / will it be looked at by Jackson?
When attacks are made upon clinical negligence lawyers to blame them for the legal bill incurred by NHS this must be viewed in proportion to the expanding amount of medical treatment that has been undertaken by the NHS in recent years. There has been a significant investment in NHS surgery and over the past 13 years this has led to surgery being undertaken much quicker and in some instances the speed of the result has not always meant that the right result has been achieved.
As ever, the claims that do litigate represent the tip of the iceberg with the vast majority of claims not being pursued at all due to a belief that there is insufficient access to justice.
All in all a somewhat odd approach from this government which has ordered an inquiry into the scandal at Stafford but is now set do permanent harm to access to justice for people who are the very victims of Stafford hospital.
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Anonymous | 30-Jul-2010 3:47 pm
The personal injury litigation system in this country is something I think we should all be very proud of because unlike other jurisdictions it has in theory genuine access to justice for all and not just the rich and famous. The main reasons for this are referral agents advertising for cases, and the recoverability of ate insurance and a success fee which allows law firms to take cases on difficult and complex cases. Referral agencies have increased the level of awareness through television advertising and other forms of media as they are specialists in this area and lawyers are generally poor when it comes to this field. As a consequence many more people now understand that however poor or disadvantaged they may feel they are, that they have a chance for justice by utilizing the simple to understand “no win no fee” process. No-one wants fraudulent or undeserving claims to be successful but in the main I think most on all sides would agree that they are not. The press seize upon perceived abuses of the “compo culture” in order to sell papers but the reality is that cases only win for the claimant and the law firm if negligence has been committed. The defendants case handlers and lawyers have to have the ability to know when to settle a case and when to defend it but this is an issue of training and the skill set of the insurance companies and I think here lies the problem. The high costs of personal injury litigation are actually due to the lack of quality in the defendant’s case handling departments. Often juniors with no legal training are trying to decide on complex matters of law and either sit on the files or play safe and defend cases that they should be settling. This is where the costs mount up and the real problem lies. While generally levels of access to justice are good, it is still very difficult for children, the elderly, the deaf, blind or illiterate, or those whom are generally disadvantaged and unsophisticated in legal ways to get to the point of bringing successful claims after an incidence of negligence has occurred. These vulnerable individuals find it particularly hard to bring cases particularly in the areas of clinical negligence and disease where cases can be very risky for law firms to take on and few lawyers have the expertise required. Bringing in fixed fees right across the fast track and removing the recoverability of success fees and ate insurance would seriously reduce access to justice in these critical areas where the NHS and employees are sometimes due to negligence seriously injuring people. Even with the current good system in place many of us know people whom have suffered from a operation carried out incorrectly or a wrong diagnosis or course of treatment which has seriously blighted their lives and yet they don’t bring a claim and justice is not done for them because they feel it will be more trouble and grief than they can cope with. As a society surely we want these people to obtain the compensation they deserve. As a society we should do everything we can to encourage claims in these and all circumstances where negligence has occurred. If we remove ate cover law firms will be less likely to take cases on, and if the success fee is taken from the claimant, the claimant will be less likely to bring the claim and will not receive a fair level of damages. A 10% increase in damages will not offset a 25% success fee and if the law firms aren't awarded the success fee they will take on less cases. In certain boarder line or highly complex cases success fees of 25% will not be enough for law firms to take the case on, particularly with the ate insurance to cover the costs of investigating the claim. As a society if claims are not brought it is inevitable that our society will become a more dangerous place to be as successful claims highlight areas where negligence has occurred and therefore action is taken by the defendant to ensure it does its best to prevent the negligence taking place again. Without the claim, negligence will continue and more and more people will be injured. The sensible approach is to ask the courts to continue to try and fix success fees in all the various areas so that the correct balance is reached depending on the risks involved in bringing claims in that particular area. Defamation is no doubt different to clinical negligence or RTA and therefore different levels of success fees should be agreed as a one size fits all approach is clumsy and inappropriate. The system needs improving and taking forward as it matures and not dismantling and taking backwards. Limits on ATE premiums could be imposed again depending on the area of law. It should also be borne in mind though that the success fee is not just about rewarding a law firm for winning a case that it might lose. It is also designed to compensate the law firm for all the time it spends speaking to potential claimants and vetting cases and obtaining medical and engineers reports in order to try and seen which cases have merit and which don’t.
Reducing success fees will lead to law firms only taking on the easiest and most obvious cases or going into new areas where results will be uncertain. The real problem with escalating litigation costs in most areas stems from the insurance companies not training staff to determine which cases to settle and which cases to defend. This is the area that needs to be improved to reduce costs. Fundamentally changing a legal system that currently works well could severely reduce access to justice whilst not actually reducing costs at all. It could lead to increased costs if satellite litigation around these issues means that many more cases go to the courts. I think it is relevant that Lord Justice Jackson has no actual experience of personal injury, disease, or clinical negligence matters, and nor I don't think do any of the new ministers. I suspect that the real agenda for the government not surprisingly is to try and win votes by removing the tabloid "compo culture" headlines even when they know from their own reports that the so called "compensation culture" is a myth and that the number of claims in most areas are going down rather than up. They will also be under considerable pressure to save money for the local Council's and NHS by reducing the number of claims that get taken on and reducing the legal bills of ones that do. But what is the actual effect of this. Inevitably Lawyers and those in related areas lose their jobs, access to justice is reduced, and we all live in a more dangerous place with higher risks of bricks falling off scaffolding, our child suffering injury from a botched operation, or our father's friend dying because his employer did not have to deal with the lethal asbestos in the ceiling at work. Is this the way to deal with rising litigation costs or is the best solution to ask why are employers doctors and local Councils negligently injuring people and what can be done to stop this.
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