News - Birmingham Solicitors Personal Injury Solicitor

Peers Target Third-party Capture

Thursday 01 December 2011 by John Hyde, Law Society Gazette

Peers debating civil litigation reform have called for a crackdown on the so-called ‘third-party capture’ practice of insurers approaching claimants directly.

Four members of the House of Lords tabled amendments on the subject last week during the second reading of the Legal Aid, Sentencing and Punishment of Offenders Bill.

Lords Thomas of Gresford, Clement-Jones, Carlile of Berriew and Phillips of Sudbury proposed a new ban on insurers offering to settle a case when they learn the claimant is legally represented.

They also want to require insurers to obtain adequate medical evidence of personal injuries and disclose it to the claimant, as well as to inform clients they can still seek legal advice.

The Association of Personal Injury Lawyers told the Gazette it was encouraged to see the Lords expressing concerns about third-party capture.

A spokesman said: ‘It is a practice crying out for robust regulation to protect injured people. We hope these amendments will achieve that aim, but we are keen to discuss this further with the peers involved.’

Bill Willcocks, managing partner at Bristol firm Kirby Sheppard, said there would still be unresolved questions even if the amendments became government policy.

‘The fact is that insurers are getting to victims even before they have instructed solicitors,’ he said. ‘A ban on approaching claimants when they know solicitors are instructed seems to me to be unlikely to have any effect.’

The bill will be debated at committee stage before the break for Christmas.

Health and Safety Review

Shifts Liability “Onus”

Wednesday 30 November 2011 by John Hyde, Law Society Gazette

Employers who comply with health and safety rules should not be held legally responsible for all workplace accidents, according to a government-sponsored review. Commissioned by employment minister Chris Grayling, the report recommends an end to strict liability for bosses and shifting the onus onto employee responsibility.

The report calls for the restoration of the original aim of pre-action protocols, which support early settlements through better and earlier exchanges of information between parties. It also says that the UK’s one million self-employed workers be exempt from health and safety rules.

Professor Ragnar Lofstedt, who conducted the review, noted a perception among some trade bodies and employers that numbers of claims had increased in recent years. This belief - although described by Lofstedt as a ‘myth’ - is affecting the behaviour and outlook of businesses and forcing them to be too stringent and cautious. The report says that employers felt under pressure to complete risk assessments for every activity and were spending more on paperwork than preventing accidents.

Lofstedt said strict liability on employers regardless of culpability was not ‘reasonably practicable’ and should be dropped.

The report recommends a 35% cut in the 200 regulations by April 2015, even though existing legislation is ‘considerably less’ than 35 years ago. In 2010/11, 171 people were killed in the workplace and 4.4m working days were lost due to injury.

Grayling said reforms coming out of the review should put an emphasis on personal responsibility. ‘It cannot be right that employers are responsible for damages when they have done all they can to manage the risk.

‘Fundamentally we will ensure the health and safety system is fit for purpose through streamlining the maze of regulations and ensuring consistency across the board.’

Personal Injury Lawyers Criticise

Clarke’s Coroner Policy

Thursday 24 November 2011 by John Hyde, Law Society Gazette

The Association of Personal Injury Lawyers (APIL) has criticised justice secretary Kenneth Clarke’s refusal to allow appeals against a coroner’s verdict.

Clarke has scrapped plans to abolish the post of chief coroner after heavy opposition from charities such as the Royal British Legion.

But he also refused calls for a change to the existing appeals process, which denies the right of appeal. Instead bereaved relatives are offered the chance to challenge the inquest verdict through a judicial review application to the Divisional Court or submission to the High Court under the Human Rights Act.

APIL president David Bott said the u-turn over the chief coroner’s post was a ‘great first step’, but was undermined by the refusal of a right to appeal: ‘Bereaved families deserve to have a coroner service in which they can have confidence.’

He said: ‘Without a right to appeal, public confidence in the system will inevitably be diminished. What is needed is an efficient and accessible appeals system which provides grieving relatives with the reassurance that, if they feel there has been an injustice, they are able to change it.’

In a statement Clarke noted that the maintenance of the status quo was partly motivated by financial considerations, with his decision helping to ‘avoid the need for expensive new appeal rights’.

He added that the priority instead should be to improve standards and training, as well as setting minimum standards through a new charter.

‘Everyone is agreed that the priority is raising the standard of coroners’ inquiries and inquests to ensure that bereaved families are satisfied with the whole process.’

Motor Accident Solicitors

Society Chief Calls for

“Honesty” Over Fees Ban

Thursday 24 November 2011 by John Hyde, Law Society Gazette

The chair of the Motor Accident Solicitors Society has appealed to the insurance industry for ‘honesty’ in the debate over the effects of a ban on referral fees.

Addressing the Association of British Insurers conference on Tuesday, Donna Scully, partner at Liverpool firm Carpenters, called on firms to justify assertions that premiums would fall when fees are banned.

She also suggested that companies publicly calling for a ban are privately seeking ways to get round it, potentially through newly introduced alternative business structures.

‘I would ask you to be honest about whether or not you are in favour of a ban,’ said Scully. ‘How will premiums reduce following a ban - which is what everybody is expecting - when your income will be reduced?

‘Be honest about saying you support a ban but at the same time actively trying to find ways to get around it such as ABSs.’

She called for a holistic approach to tackling problems in the personal injury sector, including a halt to texting and cold calling, tighter regulation of advertising, and greater safeguards around third-party capture and claims management.

Whiplash Compensation System

“Open to Fraud”

Thursday 10 November 2011 by John Hyde, Law Society Gazette

Three-quarters of healthcare professionals believe the current system of compensation for whiplash is open to fraud.

A survey of more than 500 GPs, physiotherapists and consultants found widespread scepticism about the process of claiming after accidents.

Almost 90% believe some whiplash claims could be given a different label, while 47% of GPs providing medical reports in personal injury believe the system encourages diagnosis for maximum gain.

The survey, the full results of which will be published later this month, follows justice secretary Jack Straw’s comment that whiplash diagnoses are delivered by ‘third-rate doctors, in the pay of claims management companies or personal injury lawyers’.

But the research, commissioned by three leading insurers and rehabilitation provider HCML, suggests that doctors believe their hands are tied by regulations.

Reforms Will Cut Claims

Against NHS in Half

Monday 07 November 2011 by Paul Rogerson, Law Society Gazette

Legal aid cuts and the Jackson reforms will slash the number of claims brought against the NHS by 50%, a senior member of the Civil Justice Council has predicted.

Peter Smith, managing director of FirstAssist Legal Expenses Insurance, told Saturday’s Bar Conference that Jackson in particular will trigger a ‘windfall’ for the defendant insurance market, as a ‘golden age’ for litigation funding comes to an end.

The estimate is informed by discussions with the NHS Litigation Authority, with whom Smith liaises closely as a member of the CJC’s executive committee.

At present, 6,000 claims are pursued annually, he said, of which 2,000 would not have seen the light of the day following civil legal aid cuts. Of a further 2,000 cases backed by conditional fee agreements and after-the-event insurance, about half would have failed to proceed under the new regime, he added.

‘A golden age is about to end,’ Smith told a conference session on funding arrangements in civil litigation. He sees little prospect of the Legal Aid, Sentencing and Punishment of Offenders Bill being significantly modified at this late stage. The bill past through the Commons last week and will shortly go to the Lords.

He added: ‘The reforms are likely to come in on 1 October next year. There will be significant resistance in the Lords, but that resistance is not coordinated.’

Smith said he believed the reforms to be well intentioned, but that Jackson is only going to fulfil the second part of his remit to ‘promote access to justice at proportionate cost’.

He added: ‘These reforms will have very serious unintended consequences, making it materially harder for people with good cases to get damages in all parts of the personal injury market.

‘Sir Rupert [Jackson] and the government keep arguing that alternative funding options will emerge - but without any evidence.’

Smith said it is unrealistic to expect before-the-event insurance to ‘fill the void’. Take-up of BTE peaked several years ago and has been falling, he stressed. The product is sold as an add-on to household and motor policies, he added; products that are increasingly sold through price comparison sites where ‘add-ons’ are stripped out. He also expects BTE premiums to increase sharply, partly because of the abolition of PI referral fees.

Straw's Bid to Make Referral Fees

a Criminal Offence Fails

Wednesday 02 November 2011 by John Hyde, Law Society Gazette

Conservative MPs have voted down Jack Straw’s attempt to make referral fees in personal injury cases a criminal offence.

The former justice secretary tabled an amendment to the ban, included as part of the Legal Aid, Sentencing and Punishment of Offenders Bill, which was debated in the Commons on Tuesday.

Despite an impassioned plea for cross-party support from MPs, Straw’s amendment was rejected by 302 votes to 208 as the government ensured the ban will be policed by regulators.

Justice minister Jonathan Djanogly said: ‘Criminalisation would be too blunt an instrument. If we take the example of the straight payment of a fee for a referral, I can see how straight criminalisation would work, but we should appreciate that when that was last banned in 2004 it was a weak provision through which a coach and horses could be driven.

‘What if an insurance company provides insurance to a solicitor in payment for referrals, rather than a straight fee? What if a trade union gives its cheap work to a firm of solicitors in consideration for the solicitors getting its better work?

‘What if a claims management company provides a variety of services to a solicitor in payment for a referral?

‘The point I am making is that the circumstances could be very varied and complex and the straight criminal option would not be appropriate. It would be the principle that counts and it would have to be a regulator that looks to the principle.’

Straw told the Commons he ‘could not understand’ the government’s refusal to make the offence a criminal matter, as proposed by the Labour Party.

The Blackburn MP said there were many other examples of regulation where a breach of the rules can be dealt with by civil authorities and as a criminal offence.

Djanogly added he was convinced of the need for further regulatory powers, including widening the scope of a ban beyond personal injury, if the need arose. This power, he felt, should stop referral fees continuing to be paid under the guise of payments for services.

“Referral Fee Ban Will Hit Personal

Injury Claimants,” Says Ministry

of Justice Assessment

Monday 31 October 2011 by John Hyde, Law Society Gazette

Personal injury claimants could suffer from a ban on referral fees while insurers and lawyers would incur no extra costs, according to the government department proposing the ban.

An impact assessment of the proposed ban, published today by the Ministry of Justice, admits that ‘overall claimants might lose out’ from a ban on referral fees in personal injury cases, with individuals expected to be affected more than businesses.

However, lawyers are likely to incur no net additional costs, while insurers are expected to gain overall.

The report was compiled a month ago following the government’s decision to prohibit the payment and receipt of referral fees through a provision in the Legal Aid, Sentencing and Punishment of Offenders Bill (LASPO).

It states that the policy objectives are to reduce legal and related insurance costs and to discourage people from bringing unnecessary claims for compensation.

But the admission that claimants may lose out will be seized on by opponents of a ban, advocating the Legal Services Board’s position of increasing transparency instead.

The impact assessment says: ‘Some potential claimants may lose out if their claim is not brought forward without referral fees being paid, although there would be nothing to stop them contacting a lawyer directly to see if they have a valid claim.

‘This would depend upon the claimant’s ability to select the right lawyer for their case and upon the CMC’s incentives to do so.’

It adds that lawyers who currently pay referral fees may lose out from the reduced volume of personal injury business, but this is likely to be offset by no longer paying referral fees. ‘Furthermore, in future alternative business structures may see lawyers entering into partnerships with non-lawyers and this may negate the need for referral fees.

‘Finally, lawyers might benefit from getting more direct control over which cases to take on, achieving a more efficient matching process between lawyers and claimants taken on.’

There are also net gains for advertisers as a result of increased business from lawyers, and for insurers who will save costs from a reduced volume of claims, despite many also making profits from the sale of accident victims’ details.

The impact assessment again states that enforcement of the ban will be left to the Solicitors Regulation Authority. The ban is likely to take effect next October when the LASPO bill becomes law.

Meanwhile, the government’s referral fee ban has come in for criticism from both claims management companies and defendant insurers.

The Claims Standards Council has written to the government warning it will start judicial review proceedings if the ban goes into existing legislation.

Chairman Darren Werth said: ‘A ban would be unlawful, procedurally unfair, irrational and disproportionate. In any event, it would be impossible to enforce effectively.’

Leading insurance firm Kennedys has also warned the current ban proposal leaves room for exploitation of loopholes.

Head of liability division Richard West said: ‘A law firm could seek to pay to ‘receive’ services in return for receipt of cases. Such firms would therefore receive ‘for free’ the claimant injury cases thus exploiting the current loophole.’

Straw Confident Personal Injury

Referral Fees will be Criminalised

Thursday 29 September 2011 by John Hyde, Law Society Gazette

Jack Straw is confident he will succeed in his high-profile bid to criminalise personal injury referral fees. The former justice secretary believes the government will amend its reforms of civil litigation to incorporate the sanction.

The MP for Blackburn said yesterday that Labour’s legalisation of the fees through changes to conduct rules in 2004 had created conditions that have driven up motor insurance premiums.

Earlier this month, Straw tabled a ten-minute rule bill calling for payment of personal injury referral fees to be dealt with as a criminal matter. His initiative came soon after the government announced a ban would be reintroduced for PI cases.

Speaking at an event on Wednesday organised by iloveclaims.com, Straw said he is confident his proposal will be included in the government’s final legislation.

He said: ‘You can sometimes deal with these things by making it a civil matter but if you want to rid the industry of referral fees then you have to make it a criminal offence.

‘I’m not in any doubt this will happen. The government’s intention is to make it part of new clauses in the [Legal Aid, Sentencing and Punishment of Offenders] bill.

‘Once that happens, I also say that those who engage in this process will in my judgement be vulnerable in egregious cases to charges under the Bribery Act.’

Straw, who called for a ban to apply to all legal services and not just personal injury, reiterated his view that referral fees form part of a ‘racket’ designed to raise costs and send insurance premiums soaring.

And he derided Legal Services Board-commissioned research last year which led to the over-arching regulator ruling out a ban, describing it as ‘gobbledygook’. He added: ‘They [the LSB] don’t know what the public feels and haven’t found out about it.’

Straw was sanguine when asked to comment on the perception that he had been ‘gazumped’ by the government.

‘Ken Clarke did what any sensible secretary of state would do, faced with widespread agreement from across the chamber, which was to get his cabinet colleagues to change their previous position,’ he said.

‘I don’t criticise Ken for that, neither do I believe he was dealing in low politics.’

A LSB spokesman said: 'After a review of the impact of referral fees on the legal services market as a whole, the LSB concluded that there was no regulatory case for a blanket ban. Our decision was informed by analysis of a wide-ranging evidence base.

'The announcement by government, in the context of curbing “compensation culture”, concerns only personal injury claims, and clearly extends beyond the legal services market. We will continue to work with government to ensure that any specific implications for legal services regulators are understood.'

Government to Ban Referral Fees

in Personal Injury Cases

Friday 09 September 2011 by John Hyde, Law Society Gazette

The government has today announced that it will ban the payment of referral fees in personal injury cases.

The Ministry of Justice said the current arrangements have led to high costs, encouraged a ‘compensation culture’ and led to the growth of an industry which pursues claimants for profit.

The ban will not cover conveyancing cases and will be enforced as a regulatory rather than criminal offence. A spokesman for the MoJ said there are no precise dates for when the ban will be implemented, with discussions still taking place on the details.

Supporters of a ban argue that insurance companies pass on the costs they incur through increased compensation claims on to the motorist and those with other insurance policies, forcing up the cost of living.

Justice minister Jonathan Djanogly said: ‘The no-win no-fee system is pushing us into a compensation culture in which middle men make a tidy profit which the rest of us end up paying for through higher insurance premiums and higher prices.

‘Honest motorists are seeing their premiums hiked up as insurance companies cover the increasing costs of more and more compensation claims. Many of the claims are spurious and only happen because the current system allows too many people to profit from minor accidents and incidents.

‘Referral fees are one symptom of the compensation culture problem and too much money sloshing through the system. People are being encouraged to sue, at no risk to themselves, leaving schools, business and individuals living in fear of being dragged to the courts for simply going about daily life.’

The ban on referral fees is the latest in a series of government steps to reform civil litigation costs, although it was not included in the first package of changes based on last year’s review by Lord Justice Jackson.

Speaking earlier this week at a lecture in Cambridge, Jackson repeated his call for a ban on referral fees, citing the ‘middle men’ such as claims management companies, BTE insurers and trade unions as the beneficiaries of the system, rather than claimants.

The insurance lobby has welcomed the announcement but warned the government that further challenges await.

Otto Thoresen, director general of the Association of British Insurers, said: 'It is important that the ban must be watertight and apply across the board.

'Banning referral fees is an important step in tackling our dysfunctional compensation system, and needs to be accompanied by a reduction in legal costs and action to tackle whiplash if honest customers are to benefit from these reforms.’

Paul Evans, chief executive of insurance firm AXA, which called for a ban on the practice earlier this year, agreed that referral fees were the 'tip of the iceberg’, urging the government to commission 'a robust review of the fixed fees charged by personal injury lawyers for minor injury claims’.

Ross Clark, underwriting director at ATE insurance specialist FirstAssist Legal Expenses, expressed the view that today’s ban may not see an end to selling of injury victims’ details.

He said: 'Before referral fees were legalised in 2004, I know that enterprising lawyers found ways of transferring the economic benefit of injury actions a long way before that time.

'So it isn’t too cynical to believe that whatever is done to ban referral fees will simply cause this to happen in a different (and arguably less transparent) way.’

There was a positive reaction to the announcement from the Bar Council, as well as criticism of the Legal Services Board for failing to push ahead with a ban in May.

Peter Lodder QC, chairman of the Bar, said: 'They [referral fees] are bribes and add an unnecessary cost to litigation. They have no place in a fair and open justice system.

'We are pleased to see the government is acting on this issue in the public interest, which the Legal Services Board palpably failed to do when presented with the opportunity to earlier this year.’

But the outright ban was labelled a 'kneejerk' reaction from the government by Deborah Evans, chief executive of the Association of Personal Injury Lawyers.

She said: 'Most solicitors have reservations about referral fees but it's difficult to see how they can be banned without simply being driven underground, where we know from past experience that chaos and lack of transparency for consumers will be the inevitable outcome.

'Instead of trying to ban referral fees, why not introduce real solutions to tackle the real problems in the system? Why not impose an outright ban on the passing on of injured people’s private details without their express consent, on every occasion.'

The Law Society is also pressing the government to include conveyancing cases as part of the ban on referral fees.

Chief executive Desmond Hudson said the society is 'disappointed' that the ban will not be extended more widely and a letter has been sent to the Department of Business, Innovation and Skills asking them to reconsider on conveyancing.

'The Society believes this approach is short-sighted and does not recognise the clear potential for consumer detriment that exists in respect of one of the most important transactions most people make in their lives.

'Consider this, I appoint an estate agent to sell my house, I pay his fee, without my knowledge he sells my case to a conveyancer. How is that in the interests of the consumer?'

Pearson Rowe Solicitors