The Government is pushing ahead with plans to reform ‘no win no fee’ deals and overhaul the civil-justice system, as part of its efforts to release businesses from the fear of a compensation culture.
In a new consultation launched yesterday (29 March) and aimed at creating a simpler, quicker and more proportionate civil-justice regime, the Government is proposing to expand the use of an online system for resolving road-traffic accident personal-injury claims of up to £10,000, by making it available to process employers’ liability and public liability personal-injury claims.
The Government also plans to introduce automatic referral to mediation in small-claims cases, automatic referral to mediation-awareness sessions in higher-value cases, and consulting on making mediated settlements enforceable by courts.
Other proposals include raising the maximum value for small claims from £5000 to £15,000, enabling more cases to be heard through the small-claims process rather than through a costly trial.
Announcing the plans, Justice secretary Kenneth Clarke said: “With no major reform for 15 years, the civil-justice system has got out of kilter. Businesses and other people who have been sued can find that spiralling legal costs, slow court processes, unnecessary litigation, and the ‘no win no fee’ structures, which mean greater payments to lawyers than to claimants, are setting them back millions of pounds each year.”
According to the Government, statistics provided by insurers show that in 1999 claimant solicitors’ costs were equivalent to just over half the damages agreed, or awarded. By last year, however, average claimant costs represented 142 per cent of the sums received by injured victims.
Seeking reform in this area, the Government also confirmed it would be implementing Lord Justice Jackson’s blueprint to reform the cost of civil litigation. These plans include:
- Abolishing recoverability of success fees and associated costs in ‘no win no fee’ conditional-fee agreements. Under the current regime, defendants must pay these additional costs if they lose. Under the reforms, claimants will pay their lawyer’s success fee, and will therefore take an interest in controlling the costs being incurred on their behalf.
- Allowing damages-based agreements (also known as contingency fees) in litigation before the courts. These are another form of ‘no win no fee’ agreement, under which lawyers can take a proportion of the claimants’ damages in fees, and would increase the funding options available to claimants.
- Introducing a 10-per-cent increase in general damages, and introducing a mechanism to protect the vast majority of personal-injury claimants from paying a winning defendant’s costs.
Justice minister Jonathan Djanogly said the reforms would help tackle “the perverse situation in which lawyers can be awarded a greater proportion of payouts than claimants” and “help put an end to the fear of a compensation culture”.
Following the announcement, EEF head of health & safety, Steve Pointer, said: “This is a welcome step forward in delivering a system that reflects a fair balance between rewarding those who have been harmed, and the significant efforts of companies to manage risks. The current system of high legal costs for small claims is encouraging poor claims and is failing to meet the needs of genuine claimants, insurers and employers.”
He added: “Today’s reforms must now be followed by further action. The HSE is already doing a great deal to reduce the paperwork burden imposed by regulation, and this needs to be followed through into the compensation system, where straightforward changes could make a real difference.”
But TUC general secretary Brendan Barber attacked the proposals, saying: “This review has nothing to do with justice. It is simply lining the pockets of insurers at the expense of claimants seeking compensation for injuries caused by the negligence of others.”
The consultation, ‘Solving disputes in the county courts’, can be found at www.justice.gov.uk/consultations/solving-disputes-county-court.htm
Approaches to managing the risks associated Musculoskeletal disorders
In this episode of the Safety & Health Podcast, we hear from Matt Birtles, Principal Ergonomics Consultant at HSE’s Science and Research Centre, about the different approaches to managing the risks associated with Musculoskeletal disorders.
Matt, an ergonomics and human factors expert, shares his thoughts on why MSDs are important, the various prevalent rates across the UK, what you can do within your own organisation and the Risk Management process surrounding MSD’s.
At last a common sense approach to claims. This should remove spurious claims being paid off as it is cheaper to pay them, than going to court where the lawyers on both sides of the argument will get more than the claimant.
I think it is a very good indicator that something is wrong with our legal system, when we get spam messages on our computers and cold calling telephone calls encouraging us to sue someone if we had an accident over the last two years.
Steve Pointer: “The HSE is already doing a great deal to reduce the paperwork burden imposed by regulation”.
True that the HSE are working to simplify – not sure that legislation (or the HSE) ever actually did impose a ‘paperwork burden’. We did that ourselves. The HSE have been simplifying for years in my view. It is the H&S profession who create the “necessary” paperwork systems to supposedly validate compliance. Picked up on by the insurers way back in late 90’s. We are seeing the results.
They correct in saying that the system is out of kilter, there is too much expense in defending the flow of claims from people who either fiegn injury or have hurt themselves by their own stupidity or negligence and then wish to claim from someone else purely because the law firms advertise a no win no fee system. But is this the right way, we must protect those who can’t afford to claim and are genuine
So the Hooray Henry fraternity will in effect regulate the right of access to Criminal Proceedings and Civil Litigation for the less financially secure! I just wonder, have any of these people ever witnessed the Heartache, Trauma and Despair brought about as a result of needless deaths and injuries in the name of profit and greed; no I think not. RIP Justice for the working man/woman.
Part of the ‘claims ‘culture’ problem is the excessive cost of defending a claim. Surely, there is a need for a system in the courts to fast track claims and not disimliar to a small claims court with the benefit of reduced costs. Lawyers have been doing very nicely out of other people’s misery, Dickens recognised this 150 years ago, it’s about time someone called time on these archaic practices.
Surely the simplest way to improve justice (never mentioned by those in power) would be to require insurance companies to fight every case on the merits of the case – not just when it is in the best interest of their shareholders. Eliminating the insurance excess agreement would also help. Each would help to stamp out the practice of pitching claims at levels where either legal costs will outweigh the cost of fighting the claim or at under the excess limit where insurers don’t pay anyway.