Consumers deserve a better insurance industry

ABSs, as they are known for short, are in the news again following the application by Direct Line to the Solicitors Regulation Authority (SRA) for ABS status. As reported last week by The Law Society Gazette, Britain’s biggest car insurer intends to create a new, wholly owned law firm, DLG Legal Services, to operate in partnership with existing law firm Parabis.

If the application is successful - and there is no reason to suggest it won't be - it will result in the largest ABS to date.

There are various reasons for disquiet about the development - and, indeed, about insurers acting outside their remit generally. Before I explore them, let me first say that historically I acted for Direct Line. I'm not, though, penning this piece as a 'poacher turned gamekeeper' comment on the company. It is a reputable institution and I have no axe to grind with it. My concerns are with the ABS regime and with the conduct of insurers generally.

Conflict of interest

The Direct Line Group comprises various insurers. As such, it already provides customers of its own Direct Line, Churchill, Privilege and other insurance brands with some legal services in-house, as well as through outsourcing agreements with a panel of law firms. This brings me to my first reservation about Direct Line's application for an ABS: how will it not result inevitably in conflicts of interest, in acting as insurer and a claimant representative under the same and shared ultimate ownership?

Access to justice?

Direct Line maintains that its ABS application is based upon providing "access to justice", but how can sidestepping longstanding rules on conflicts of interest be commensurate with “access to justice”?

The company also says its move is "in the clear interest" of consumers. That strikes me as doubtful, for another key reason: ABSs might be renamed 'Awful Bits of Sidestepping' because they are a cast-iron way round the Ministry of Justice's ban on referral fees. When insurers and claims management companies can own and invest in law firms, they can handle PI claims from start to finish. They will therefore control the whole process. The raft of ancillary fees paid by those outside the legal profession, the likes of garages, reporting engineers, towing companies and trade unions, can just continue in another guise.

It’s just not cricket: Stuart Broad did the wrong thing in not giving himself out

The Ashes are underway and in their wake comes controversy. I refer to England batsman Stuart Broad having been caught at first slip last Friday afternoon, in what proved to be a close-fought England victory over Australia at Trent Bridge. I say 'caught', for that is what happened: Broad clearly nicked the Ashton Agar-delivered ball to Michael Clarke, who caught it from a deflection off Brad Haddin. Under the rules of cricket, Broad was out.

Except that the rules allowed the England player to keep quiet and await the umpire's decision. It came, and it turned out that umpire Aleem Dar hadn't seen the connection of bat and ball. And because Broad declined to walk - to give himself out - he was able to play on. His subsequent haul played a major part in what was ultimately an England victory.

Where have all the ethics gone?

Following the incident, cricket's great and good stepped in to defend Broad. To a man, they said he had done nothing wrong. He had simply played by the rules, doing the cricket equivalent of a footballer having committed an infringement of the laws of the game but waiting for the referee's whistle.

Take, for example, Ian Botham. "Stuart Broad did absolutely the right thing in standing his ground," said one of our nation's foremost cricketing role models. "He's got away with one," he added. "Good luck to him."

The former Glamorgan and England player, Steve James, described Broad's critics as "sanctimonious" while the batsman's father - who, coincidentally, is an International Cricket Council match referee - apparently sent his son a text telling him he had a future in acting.

Broad did the wrong thing

Forgive me for sounding a heretical note, but I think Stuart Broad did the wrong thing in not giving himself out. I imagine I might be called naive or even unpatriotic, especially if people have read my last couple of pieces on taking a leaf out of Australia's book. People are, of course, entitled to their opinion but I cannot but feel that something went wrong at Trent Bridge last Friday.

In so many spheres of life we encounter what I think we could call 'ethical dissonance'. Ethics are present in cricket; they underpin the laws of the game. And yet they're not wholeheartedly embraced. Because of this, ethics end up out of tune. They're dissonant.

It's not cricket, as the saying goes, and sadly it's a facet of sports from cycling to football to track and field and beyond. Look at Lance Armstrong: a man so divorced from standards of good ethical conduct that not only was he happy to take performance-enhancing drugs and deceive his legions of fans as well as cycling's authorities, he was even prepared to sue The Sunday Times for libel when it dared to expose him.

Look at football. From Diego Maradona's infamous 'hand of God' to the dubious hand of Luis Suarez in Liverpool's FA Cup third round tie against Mansfield last season, cheating is institutionalized. As in the case of Stuart Broad, every time cheating occurs the pundits are wheeled out to claim that the end justifies the means. Good luck to the player who conned the referee, say the 'experts'. Good luck, likewise, to the athlete Tyson Gay for saying he was clean for so long, and not getting caught until now.

Our sporting heroes should be role models, not cheats

Are those who object to all this rightly described as "sanctimonious"? I have my doubts. Surely our sporting heroes are role models. What sort of message are they sending out to society and its youth if they condone cheating? It seems to me that they're saying, albeit unintentionally: "Don't worry about it; it's OK to cheat; just cross your fingers and hope no one notices".

This mentality underlines the misconduct of MPs on the make, with their noses in the trough, fiddling expenses and taking cash for questions. It explains why journalists thought nothing of phone hacking despite a raft of laws which criminalise it. It is the reason for the systemic flaws in the personal injury sector, where claimants are treated as statistics rather than people.

Stuart Broad should have walked. He should have done the right thing. He should have done a Paulo di Canio. In doing the right thing, he would not only have garnered massive respect from beyond the cricketing world. He would also have set the kind of example that we, as a society, ought to ask of those in positions of influence.

It's time to adopt the Australian example for asbestos management

Last week I wrote about the opportunities the UK civil litigation landscape presented for Australian law firms. Today I'm again referencing the Antipodes. This time, though, rather than the focus being from Australia to Britain, it’s the other way round.

When it comes to asbestos, we could look to Australia and learn an awful lot.

The Aussies have got it right

Here, the government seems to have a blind spot with regard to asbestos, especially asbestos in schools. Time and again evidence is presented to make the case for the wholesale removal of asbestos in schools, and yet nothing happens. In Australia, a very different and laudable approach has been adopted.

On 3 June the Australian Federal Parliament passed legislation for the Asbestos Safety and Eradication Bill. As the estimable Asbestos in Schools website has it, "This is precisely the fundamental strategic thinking that is urgently required in Britain. It underlines the Australian Government’s commitment to solve their asbestos problem once and for all." Moreover, the Bill "sets a benchmark for our Government when they conduct the review of asbestos policy in schools."

In Australia, then, a national agency will be set up to investigate the problem of asbestos in schools. Far from thinking that asbestos in schools isn't a problem, in Australia the inherently fluid and dynamic environment in schools is accepted as being exactly the kind of place in which asbestos fibres can be easily disturbed – with potentially deadly results. The national agency will then go about developing and implementing a strategic plan to eliminate asbestos and asbestos-related diseases.

What needs to happen in Britain

Last Wednesday I attended a meeting convened by Asbestos in Schools at Portcullis House in Westminster. It was followed by the All Parliamentary Party Group Asbestos Annual Seminar, which was also held at Portcullis House. Regrettably I was unable to attend the second seminar, but as ever the speakers at the Asbestos in Schools meeting were articulate and persuasive. They included the tireless Michael Lees and NewLaw solicitor Cenric Clement-Evans, both of whose arguments I whole-heartily endorse. In summary, they are:

1. Children are more vulnerable to exposure to asbestos than adults; the younger the child, the greater the risk. This is because children's lungs are immature and therefore more susceptible to injury. The government's own advisory Committee on Carcinogenicity (COC) published a statement to this effect on 7 June. It stated clearly that the younger the child, the greater the risk.
2. The government's present review of policies regarding asbestos in schools is not impartial - and seems set to do nothing to change the status quo. The Health and Safety Executive, far from taking on board the profound dangers posed to children by asbestos in schools, underplays the threat. Its determination to have the review conducted internally is flawed, and likely to whitewash obvious problems.
3. The bold and principled stance taken in Australia should be adopted here. We need an objective, external review of the problem - a formal 'asbestos audit', as it were. Transparency and openness are key but beyond that it is vital that the government wakes up and confronts the profound danger posed to children by asbestos. There is more on this at this link. 

Flaws in the Mesothelioma Bill

Meantime, our parlous attitude to the problem of asbestos is highlighted by the disturbing story of Lorraine Berry. Lorraine was diagnosed with mesothelioma, caused by inhaling asbestos dust, in April 2012, aged just 48. On top of having to come to terms with the fact that she will die prematurely, Lorraine has come up against a brick wall in trying to obtain proper redress for the fact that, while at work, she was not protected from asbestos fibres.

Lorraine's former employer has ceased trading. Although employer's liability insurance was compulsory from 1972, attempts to find any insurance cover have failed. It is anticipated that more than 300 mesothelioma sufferers a year miss out on justice because insurance documents for their employer have disappeared; to remedy this, we have the Mesothelioma Bill, announced in the Queen's Speech in April. This purports to solve the issue of a lack of insurance, enabling claims nevertheless to be brought.

There are, however, unaddressed issues. The Bill only applies to those diagnosed after 25 July 2012. This arbitrary cut off date means that Lorraine is not eligible because she was diagnosed three months out of time.

In my view the government should take a leaf out of the Australian book. Whether young, adult or elderly, it cannot be right that a civilised society continues to acquiesce in the harm caused by asbestos and to inhibit those affected from obtaining rightful compensation.

Shine's interest shines a light on a UK market that is ready to talk

I was intrigued by a recent piece in The Lawyer about Australian interest in the UK legal marketplace. You can read the piece here. It explains that newly listed firm Shine Lawyers is looking at moving into the UK market. If it does, it would follow in the footsteps of Slater & Gordon, another heavyweight, and listed, Australian firm.

Shine has an alliance with environmental
advocate Erin Brockovich

Shine is valued at A$155m, after joining the Australian Securities Exchange in May this year. The very well regarded firm - which has a 10-year alliance with high-profile environmental advocate Erin Brockovich (yes, she of the Julia Roberts film) - made clear its ambitions for the UK in its IPO, signalling that its aim to expand globally would meet its first targets on these shores.

Antipodean enthusiasm

The firm's managing director, Simon Morrison, told The Lawyer that Shine was looking at acquiring "damages-based plaintiff litigation firms" here. "We have been looking at the market for the past few years and has done due diligence on a number of firms. But at the moment we don't have a time frame for the entry and haven’t decided on a target yet," Morrison said.

At first blush, it's tempting to wonder if Antipodean enthusiasm for the UK legal market is sensible. Certainly, there must be those who might suggest that Morrison has got it wrong, given the massive changes to civil litigation that have occurred in the wake of the Legal Aid, Sentencing and Punishment of Offenders Act (which became law last April). Moreover, as I wrote earlier this week, legislative change is not confined to LASPO: the Enterprise and Regulatory Reform Act, which recently received royal assent, is also set to introduce seismic eruptions to our legal landscape.

But actually, Morrison is onto something - and not just because of commonalities between Australian and Britain's developed legal systems. These are a great help, so too is something we can all take for granted: English as a common language. But there's another reason for Morrison, and, presumably, well-placed competitor firms in Australia, to be eyeing up the UK.

The UK market is ripe and ready

Post-LASPO, our law firms are facing a considerable challenge. The Act was introduced with the aim of curtailing what were perceived to be out-of-control litigation costs, but whatever its intent the reality has not been properly thought through. Put simply, LASPO's many changes will make it harder and harder for law firms to run cases professionally and commercially. At one end of the scale, high street firms existence may be challenged; at the other, national firms will see plummeting net profit margins, at least in the short term. The extraordinary and ongoing erosion of legal costs seems to pay no regard to the fact that maintenance of professional standards comes at a price.

In the middle, there are a great many firms who conduct and rely on claimant personal injury work, who when it boils down to it face one of two choices, or some combination of the two: to become niche, or to consolidate. The former will have to become lean and efficient if they are to survive (the real risk is that some will not maintain high professional standards) . The latter may conclude that only merging will see them still in business by the end of the present decade.


Morrison and his colleagues at Shine are wise to look to the UK. UK litigation firms, save for the already niche or the already huge, will be in the mood to talk.

Section 69 of the Enterprise and Regulatory Reform Act is bad law

The Enterprise and Regulatory Reform Bill received Royal Assent on 25 April 2013, making it the Enterprise and Regulatory Reform Act 2013. The Act's purposes are many and various, spanning copyright, payments to company directors and employment law, to name but a few. Buried in its small print, however, is a provision that is causing a great deal concern among personal injury and human rights lawyers.

Section 61 of the Act was inserted at report stage - in other words, at the eleventh hour. It has become section 69, and purports to do away with a long-standing principle of British law, enshrined in section 47 of the Health and Safety at Work Act 1974. This contains a presumption that regulations made under the Act (in effect all health and safety regulations) carry civil liability for breach, unless expressly excluded.

The end of strict liability

Section 69 will reverse this presumption.

Earlier this year, on 6 March, the House of Lords debated the inclusion and effect of section 69, as it now is, in the statute. The lords ultimately voted to remove the clause by a very tight majority of 225-223. Despite this, on 16 April members of parliament chose to reject the lords' amendment to the bill by a majority of 286-259.

This makes for a seismic change. It marks the end of strict liability for employers when accidents at work occur, overturning over a century of settled law. Way back in 1898, the landmark decision in Groves v Lord Wimborne established the principle that legislation protecting safety in the workplace gives rise to an action for breach of statutory duty. The Enterprise and Regulatory Reform Act endeavours to throw this sensible and eminently fair principle out of the window.

To add to the confusion, it is proposed to exempt pregnant women from the effect of section 69: the Health and Safety Executive is consulting on this idea at present. Any such exclusion would surely be discriminatory, and just goes to show how poorly conceived this legislation is.

Bad law

It is interesting to note the drivers for section 69. Yet again, we find that spin about the mythological 'compensation culture' is at its heart. In 2010, when David Cameron became prime minister, he declared his intention to rid businesses of red tape. A picture was painted of employers being unable to get on with making a profit because of onerous health and safety legislation and a supposedly crippling number of bogus claims for accidents at work.

The statistics tell us otherwise, and the spin continues with the deliberate skewing of a report by Professor Ragnar Löfstedt, itself commissioned by the government. Professor Löfstedt recommended that regulatory provisions imposing strict liability should be reviewed and either qualified with "reasonably practicable" where strict liability is not absolutely necessary or amended to prevent civil liability from attaching to a breach of those provisions. In section 69, the government goes much further than Professor Löfstedt recommended – and has the cheek to proclaim that it is implementing his proposals.

Section 69 is a very bad piece of law. It loads the dice against individuals who are unfortunate enough to be injured at work, meaning that they will have to prove negligence. In today's world of complex machinery, this will be costly and difficult; indeed, the costs of proving a claim may not, under new court rules, be proportionate to the nature of the injury. Claims may not even get off first base: the effect is to strip workers of their rights and the comfort that if something goes wrong at work, at least they will be compensated.

Vested interests

There is another knock-on effect of section 69. The government doubtless thinks that it will be good for business, but the opposite is true. It can only have a negative effect on employer-employee relations. Moreover, as Baroness Ford put it on 14 November last year:

"I have never enjoyed myself as much as when I set up my own businesses. But I never got up in the morning wondering how to get around the health and safety regime, wishing that employment law was weak, looking to dilute people's human rights, or thinking that all my Christmases would come if only the competition authorities were reorganised. I do not believe for one minute I was unusual in that. Do the Government really think that this Bill will make one iota of difference to the small business economy?"

Lastly, it is worth remembering that since 1972 employers have been compelled to insure against liability for injuries caused at work. Section 69 has crept onto the statute books, effectively eroding employees' workplace rights and entitlement to claim for injuries which are not their fault, at a time when a number of MPs have shareholdings in insurance companies.

Anyone for vested interests motivating our politicians? Surely not?