Jonathan Wheeler looks at the barrage of reforms facing the personal injury sector in England & Wales
Personal injury lawyers in the UK have a bad press. If you believe all you read, you would be forgiven for thinking that the courts are awash with fraudulent claims, and so-called fat cat solicitors are preying on the misery of injured people. Whilst this is fake news, the sector has awakened the ire of those in charge, and as a result it is facing an unprecedented onslaught of reform.
It is true that some made a good living in the world before the Legal Aid, Sentencing and Punishment of Offenders Act (LASPO) 2012, an unlikely title for a statute which did away with recoverable success fees in conditional fee agreements a year later. Success fees since April 2013 are now paid by those bringing successful claims, ensuring that claimants have “skin in the game” as former justice minister Jonathan Djanogly indelicately phrased it when he introduced the measure.
Since then a number of personal injury firms have gone out of business,[1] and the future looks uncertain for many others, including key players in the claimant personal injury market. This is not enough for the Government which appears to have been swayed by partial information from the Association of British Insurers to target personal injury lawyers and their clients with further, and multiple layers of reform. In the Government’s stated wish to reduce insurance premiums, hoping that those savings will reach the public, they risk destabilising the sector further, whilst diminishing the legal rights of its electorate.
Reforming compensation for ‘minor’ whiplash claims and the small claims limit
One major plank of the Government’s reform programme comes from the Ministry of Justice. It proposes to do away with general damages for ‘minor’ whiplash claims (‘minor’ being defined as pain, suffering and loss of amenity of up to 9 months’ duration). This presents an attack on the rights of this country’s citizens and is likely to be unlawful for as long as we stay within the European Union. The alternative limited tariff scheme would equate the pain and suffering for a soft tissue neck injury with the sort of compensation one can claim for a flight delayed by over 3 hours.
Additionally raising the small claims limit for all injury claims from £1,000 to up to £10,000 puts the moderately injured on the same level as someone suing for a lost rental deposit or a dodgy vacuum cleaner. Legal costs are not awarded to the successful party in the small claims court. Whilst it may be the appropriate forum for minor consumer disputes, it will present an unlevel playing field for unrepresented victims of accidents (unrepresented because it would be uneconomic to instruct a lawyer and pay them out of their damages). Litigants in person will be Davids pitched against Goliaths as the defendant will most likely be insured and have professional representation whichever court is handling the dispute. The Government is currently considering its response to its consultation which closed on the 6th January. Now is the time to involve your members of parliament to lobby the Ministry on your behalf, before it’s too late.
The Ministry of Defence and a scheme for service personnel injured in combat
In parallel, the Ministry of Defence is consulting on doing away with lawyers in a no-fault scheme for service men and women injured in combat. This is an attempt to side-step the consequences of the judgment in Smith v Ministry of Defence[2] which involved the supply of inadequate equipment (Land Rover vehicles) to soldiers in a combat situation in Iraq. There is a serious constitutional issue here: a defendant Government department, which pays out on claims because of the negligence (or worse) of its employees, is planning to legislate to do away with the rights of those wronged to sue them in court in certain situations. Instead, the defendant sets up a scheme where it is judge and jury over its own wrong doing. The courts perform an important function in evaluating the merits of a claim independently and holding power to account; the Government is strangling legitimate opposition. Its consultation closes on the 23rd February so there is still time to have your voice heard.
A ‘fixation’ with fixing fees
In a related move, the Department of Health is consulting on a fixed fee process for clinical negligence claims. Having been trialled as applying to cases up to £250,000, the Government appears to have been persuaded to limit the scheme to cases worth £25,000 and under. Claimant lawyers have breathed a sigh of relief. But again this is an example of the defendant (the Government) legislating to control the process, and the costs that will be paid, to those patients who have been negligently treated at that defendant’s hands. The long-awaited consultation was only published on the 30th January this year and closes on the 1st May
What is it with the “powers that be” and their apparent fixation with fixing costs? We already have a fixed cost regime for the vast majority of personal injury claims worth up to £25,000 and costs budgeting for those above that. We also have a perfectly good system called detailed assessment for losing parties to challenge winning parties’ bills with judicial scrutiny of the process. But the move to fix ‘anything that moves’ is relentless: the Civil Justice Council’s work on fixing fees in noise induced hearing loss claims must be nearing its conclusion.
In a similar vein, Lord Justice Jackson has been tasked with looking at fixing fees in the multi track for cases worth up to £1/4 million. One cannot fix fees fairly without fixing the process, and personal injury claims (or for that matter any unliquidated claim) of that value do not conform to stereotype. Lord Justice Jackson’s previous reforms recognised this and introduced costs budgeting for such cases – a bespoke solution, to control costs for each case, depending on the work required in that case. If fixed costs are to apply to personal injury claims, and are not fixed fairly, then more costs will fall to be paid by the claimant, flying in the face of one of the fundamental tenets of tort law, to put the claimant back to the position they were in, had the wrong not been done to them, as much as money can achieve that aim.[3]. This was very recently approved in the Supreme Court judgment of Knauer v Ministry of Justice[4] where the two most senior judges in the land, Lord Neuberger and Lady Hale, President and Deputy President of that court said:
“It is the aim of an award of damages in the law of tort, so far as possible, to place the person who has been harmed by the wrongful acts of another in the position in which he or she would have been had the harm not been done: full compensation, no more but certainly no less”.
Lord Justice Jackson’s report on the issue is set to be published in July 2017. He needs to understand that injury claims valued from £25,000 to £250,000 are not ‘minor’. They will include fatal accidents and those which have resulted in life changing injury. The concern is that fixing costs on a ‘one size fits all’ basis will inevitably mean that the costs will not pay for all the work which needs to be done to prove the case. The only solution (save for not bringing the case at all) is for a claimant to pay an increasing amount of his lawyers’ fees from his compensation, money perhaps earmarked for care or adaptations, or to reimburse lost earnings. The onus is on the claimant to prove their case to the satisfaction of the court, and our current adversarial system cannot be compared with international models where such claims are dealt with in an inquisitorial way, and where the judge has a much greater role in preparing the case and looking for the truth.
Let us end this hiatus, let the reforms we have already endured bed-in, and review using empirical evidence. Those in charge – the Government, the judiciary, the Civil Justice Council – should not pander to the wishes of an insurance industry which first and foremost looks after its shareholders and not injured people.
The silver lining?
On the 7th December, the Lord Chancellor somewhat surprisingly let it be known that she was going to pronounce on her department’s long running (almost 7 years’ long) review of the discount rate. If reform is recommended, then this is likely to have the most spectacular impact on damages for those who have been seriously injured. The discount rate is the expected rate of return for the future investment of damages, and as such it is ‘discounted’ from an award paid by the tortfeasor. Since 2001 it has stood at 2.5% per annum, originally based on safe gilt yields. But no one can achieve a rate of return of 2.5% these days, unless (possibly) a claimant invests in much riskier stocks. But why should claimants take such risks with their compensation, which may be needed to pay for future care, treatment, adaptations and equipment to help them live their lives as comfortably as possible as an injured person? The Association of Personal Injury Lawyers has been calling for a review for years – they suggest that in line with current gilt yields the rate should be –0.5% or -1%. It can be seen that that would have a massive effect on damages awards for the most seriously injured. The reality is that our own court system has been systemically under-compensating claimants for years and this is an opportunity to redress the balance. The Association of British Insurers – whose members clearly stand to lose if the rate is reduced – attempted to stop the Lord Chancellor by way of judicial review last month; that was defeated. But the Lord Chancellor has since delayed her announcement, whilst promising more news in February. I hope she does the right thing for seriously injured people.
[1] Firms that disappeared last year, citing changes in the personal injury claims sector for their closure, included big players Parabis Law and Prolegal, as well as Carter Law, GT Law, and Mendell Solicitors.
[2] Smith & others v MoD [2013] UKSC 41
[3] Livingstone v Rawyards Coal Company (1880) 5 App Cas 25
[4] Knauer v Ministry of Justice (2016) UK SC 9