The waiting game

April has passed, and with it another one of the many dates by which the MoJ promised to publish its long-awaited response to the Process Review Consultation. There are now rumours it will be delayed until June – a matter of increasing concern to defendant solicitors and the insurance companies that they represent.

No serious commentator would argue that the present system is efficient or that it delivers justice at proportionate cost, and it is apparent from its proposals that the Government shares this view. Although the proprosed new system would be challenging for defendants, it is workable – delivering quicker compensation to claimants at a lower cost to society. This all looked very positive until recently. The reasons for delay are unknown but the concern is that the Government has lost interest in PI reform.

So what does the delay mean for those involved? Theobvious answer is uncertainty.

The new system will mean a new approach to claims and those who handle them. For solicitors, that means new case management systems and training. For insurance companies it means that some claims operations will have to be restructured. For defendant solicitors, new business opportunities will open up. As with all change, those who innovate and adapt will gain a competitive advantage.

This brings us back to the delay. No organisation will spend time and money on restructuring until they know for sure that the changes are coming. On both sides new working methods have been devised and as soon as the Government fires the starting pistol, changes will happen. However, this state of readiness cannot be preserved forever. It is not acceptable for the changes to be left hanging. With key stakeholders in the PI market unable to finalise their medium-term business plans, this is an issue that harms us all – claimant and defendant lawyers alike. nHenry Bermingham is president of the Forum of Insurance Lawyers and a partner at Berrymans Lace Mawer

The current system cannot continue

Lawyers are notorious for extending deadlines, but the MoJ is setting a new standard. It is now over a year since the MoJ’s consultation paper ;and ;its statement that the current ;system “cannot continue”, which appeared to be ushering in a quicker, more cost-effective system for PI claims. The Government’s firm proposals were expected in October, promised by December, then January, then the end of March. Perhaps true to form, no new deadline has been set.

Why the hold-up? One must assume there is pressure on the MoJ to water down the proposals so that revenue streams are not affected. The Government’s job is to balance vested interests with the public interest, even if, as some believe, the vested interests are those of trade unions and linked to party funding. Having announced the intention to introduce change, it is all the more damaging to continue this uncertainty. A deadline needs to be fixed – and met.

There is predictable resistance to the idea of fixed costs, but in truth low-value PI claims are a commodity and a reasonable price can be set. The only alternative is further satellite litigation, which helps no one.

This week a judge in Bury County Court ruled that five exaggerated costs schedules could be considered in open court. The lawyer described the schedules as an “opening gambit”, but the judge rightly tagged them as “dishonest”. The result? All claims for costs withdrawn and the defendant’s costs paid on an indemnity basis. I’m sure that on reflection that lawyer would prefer fixed costs.

Can we finally lay the myth of third-party capture to rest? The reason insurers seek to contact claimants first is to contain costs that are otherwise not containable, not to reduce the compensation paid to the claimant. The MoJ could solve any perceived problems over damages levels by an independently monitored tariff system. The delay in implementation seems to be more about money for lawyers and referrers than about the public interest. nAndrew Parker is head of strategic litigation at Beachcroft

The claimant’s case

There are some good ideas in the MoJ’s proposals forreform, but it is looking increasingly unlikely that these are going to become government policy anytime soon. The question is whether this delay will have a detrimental impact on claimants. There are three key principles that are essential: fairness, transparency and proportionality. Fairness means claimants should have a right to independent legal advice and should get their compensation and rehabilitation as quickly as possible. Transparency means everyone should understand how the process works. And proportionality means costs should be fair and only for work that adds value to the process. Would the MoJ’s proposals address these principles?For example, it is arguable whether new time limits will work if there are no penalties for not complying. And although there is no problem in principle with fixed costs in many cases, the level of costs should always be linked to the complexity of a case and not its value, otherwise this could seriously impede access to justice for claimants.

The proposals also do not address how to ensure claimants get early access to rehabilitation. This must be at the heart of any reform to a system that aims to put victims back in the position they were before the accident happened. In short, although reform is undoubtedly needed, it is by no means certain that the Government’s plans would address all of these the issues.

However, the delays are unhelpful, because just as the current system evolved through market forces, it will continue to adapt by itself. Uncertainty will help no one and the danger is that without leadership from the top the process will develop in ways that are not necessarily in the best interests of claimants. nLouise Restell is head of public affairs at Russell Jones & Walker

Reform claims – but not at any cost

Over the past two years there has been a ;live ;debate between the MoJ and stakeholder groups about the need to reform the process ;for ;PI claims. Despite repeated deadlines going back over a year, the Government has not yet set out its response. Although this has led to frustration and uncertainty for insurers and lawyers alike, it is potentially a positive sign. The initial proposals in the consultation seemed to signal a fundamental shift in the current system towards a more insurance-based approach for small claims and it may be that the Government is reconsidering this radical change. Although many cases are conducted efficiently, the current system is prone to delays. Most often this is due to the lack of rigorous enforcement of time limits or behaviour protocols for both lawyers and insurers. Reform might focus on these areas, but change should not undermine the level playing field that has been at the heart of the claims system in England and Wales. To do so would restrict choice and risk the quality of justice available to claimants.

Restricting claim investigation to the defendant insurer alone, as originally proposed, further undermines the existing balance between insurers and solicitors which is vital in any fair system. It increases the likelihood of the insurer under-settling or approaching the claimant with an offer to settle direct, despite that placing the insurer in an obvious conflict of interest. The same access to justice issues arise if inflexible time limits or generic claim forms are introduced – these too will restrict the claimant’s solicitor from carrying out appropriate investigation. Claimant lawyers are also wary of any proposal to fix costs that does not set out the level at which such costs will be fixed. Any fair process must have the consumer’s interests at heart. There are concerns that a fixed costs regime will be too inflexible and will not allow lawyers to provide appropriate support in complex cases. It would be tragic if the consultation arrived ;at ;proposals ;that ;would disproportionately affect clients with limited knowledge or experience of the current systems, or those who face other barriers to justice such as poor English. We eagerly await the Government’s response.

John Campbell is legal director at National Accident Helpline