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May 11, 2010

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SHE10 – Claimants could lose out under new civil-litigation proposals

The Jackson review of civil litigation costs could have far-reaching implications for industrial relations, health and safety, and the behaviour of the insurance industry, according to a leading personal-injury lawyer.

Speaking in the SHP Legal Arena today (12 May) on Lord Justice Jackson’s proposals for reform, which were published at the beginning of this year, Tom Jones, of Thompsons Solicitors, warned that employers and unions must work together to ensure that insurance-industry “spin” is not allowed to prevail.

Jones laid waste to the insurance industry’s constant claims of an out-of-control compensation culture in the UK, pointing out that reviews by the Better Regulation Task Force and others all failed to find evidence of this. He emphasised that in 2007, personal-injury claims rose by just 5 per cent and that, overall, employers’ liability claims make up just 12 per cent of all claims, and public liability, 11 per cent. Traditionally, the UK has also had the lowest employers’ liability costs in the EU, in terms of percentage of payroll.

So why do people claim? Jones said: “Is it because of the growth of a ‘have-a-go’ culture? Greater knowledge on behalf of claimants because of all those ads on TV these days? Less subservience and willingness among those who are injured to just keep quiet and get on with it? I don’t think so. I think these suggestions that we have entered into some sort of US-style/Daily Mail-driven Armageddon is nonsense!”

Jones said the blame for much of the scaremongering around the ‘compensation culture’ and disproportionate costs can be attributed to the insurance industry itself. He explained: “The ABI continues to make unsubstantiated claims about legal costs, even though we constantly ask them for a breakdown of these claims and they just won’t give it to us. What we should  be doing is tackling why costs are built up, and not just moaning about it. If costs are disproportionate, we should be asking why?”

Claimant lawyers, he explained, can only claim their proportionate, reasonable costs. If the defendant insurer doesn’t like that, they are perfectly entitled to challenge those costs but this happens relatively infrequently. And they, too, are responsible for building disproportionate costs. Jones gave various examples of cases in which the claimant’s injury, or ill health, was very obviously caused by their work but the defendant insurer still chose to challenge it, with the result that the lawyers’ fees rocketed by virtue of having to fight the case.

There are rules to push cases along, he pointed out, but the problem is that judges do not apply them consistently enough,

He said: “The current system is not perfect, and we do welcome reforms to build a strong and stable system but both sides have to move on this. But with many of Jackson’s proposals, the insurance industry will be laughing all the way to the bank.”

He singled out some of the proposals to illustrate his point: “Lawyers can deduct success fees of up to 25 per cent from the compensation received by the claimant  -why would we go down this route if the consensus is that we don’t want a US-style system? And including compensation of 10 per cent for pain and suffering – how is that going to be measured?

“Also, after-the-event insurance (where the claimant lawyer can insure against the risk of losing the case) will no longer be recoverable, and no cover will be available for disbursements by the claimant (to pay up front for things like medical reports), so they will be out of pocket from the off. Then there is the proposal that claimant lawyers’ costs should be fixed – all this will do is encourage them to settle early, which may not be in the claimant’s best interests.

“And what are the proposals for the defendant insurers? That if they lose they no longer have to pay for the costs incurred by the claimant’s lawyers to investigate and pursue the case!”

This, concluded Jones, will give rise to a situation in which the claimant will potentially lose up to half their damages, which will have the knock-on effect of significantly changing people’s perception of access to justice and, effectively, changing that access, because lawyers will be less keen to take on cases they don’t think they can win.

But are the Jackson proposals good for employers? The obvious answer is yes, said Jones, but anything that prevents injured workers from pursuing litigation is not a good thing for industrial relations, or society as a whole, he argued: “Employers will also be potentially able to work out the cost of injury, so there may be the temptation to use this information to cut health and safety corners. It might also deter them from developing robust strategies to deal with workplace health and safety.”

Another issue which impacts employers is rising EL premiums. If, Jones wondered, there are savings to be made, as suggested by Lord Justice Jackson, then why are premiums continuing to rise, instead of falling? He elaborated: “Why is it not like with motor insurance, where, if you have no claims, you get a reduced premium? The idea that insurers cannot pass on savings is illogical. Premiums can and should be linked to good health and safety performance – it’s a simple as that!”


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14 years ago

The article fails to mention that solicitors’ costs are difficult to reconcile, hence making a a claim against unfair fees is unlikely and the solicitor will add costs for attending any subsequent hearing! How’s that for justice. Insurance companies perpetuate the problem by continaully asking for risk assessments and evidence of training. This also applies to minor incidents, such as falling down stairs. Very often documentation is not available for obvious reasons. Then the solicitors step in with their outrageous costs and this is how they make their money. Of course, they will only take on clear cut cases. Back… Read more »