Marketing Successfully in the Post-Jackson Era

This article was first published in the Journal of Personal Injury Law and appears by courtesy of Sweet and Maxwell/Thomson Reuters.

The legal profession has been able to advertise since 1986. What was first a case of crossing the Rubicon for an instinctively conservative profession was quickly embraced and is now widely practised. But the Legal Services and Punishment of Offenders Act 2012 (LASPO) makes it more important than ever to advertise effectively.

This article focuses on digital media and how traditional promotional methods should work in tandem with digital technologies to reach more clients, concluding with an examination of how to monitor and measure the success of work generation strategies.

John Spencer draws on his own experience over the past 30 years, and especially since the autumn of 2011- during which period the author rebuilt his practice from one which depended exclusively on referral fee based sources of work to one which, in 2014, generates 70% of its work directly rather than from referrals.

The legal and professional framework

Since 1986 it has been possible for Personal Injury (PI) practices to advertise, but with the implementation of Legal Aid Sentencing and Punishment of Offenders Act 2012 on April 1, 2013, the necessity to market well and effectively has been brought home with renewed force. Indeed, in today's legal services landscape, to ignore marketing imperatives would be tantamount to commercial suicide. The welter of change to which the PI sector has been subject is as well-known as it is dramatic, involving the introduction of qualified one way costs shifting, the removal of recoverability of success fees and ATE premiums, the increase of 10% in general damages, a greater emphasis on proportionality of costs and the extension of fixed costs, as well as fundamental changes to the court's approach to case management and costs budgeting. Aside from all these factors, arguably it is the ban on referral fees (LASPO ss.56-60) which brings about the greatest challenge for firms having to 'self-generate' work for the first time.

This article does not focus on ways to circumvent the referral fee ban through one of the avenues available, whether by forming an alternative business structure (ABS) or embarking on a joint venture through an ABS, or through arranging for the provision of 'information' which would enable the recipient to provide relevant services to the client through the client him or herself, or indeed through other methods.

Instead, it focuses on how to generate work directly through other marketing techniques. But aside from the referral fee ban, what are the relevant regulatory provisions that practitioners need to have in mind?
In marketing, as in all areas of practice, the 10 mandatory principles in the SRA Code of Conduct are pertinent and form an overarching framework for practitioners. Principles most relevant to marketing are to act with integrity, not to allow independence to be compromised, to act in the best interests of each client and to behave in a way that maintains the trust the public places in the legal profession as a whole.

In addition, practitioners must comply with their legal and regulatory obligations. Outcomes from this part of the Code include ensuring publicity is not misleading, that charges are clearly and unambiguously expressed, and that unsolicited approaches in person or by telephone to publicise practices are avoided.

Taking code compliance as read, how should firms proceed to plan their work generation strategies?

Ethos and focus

Each practice should ensure that it has a clear position, established through focusing first on its clients and developed through engagement with all those working in its business. This will form the backdrop to the practice's business plan generally and specifically its business development plan. Never is it more important to have clarity in positioning than when communicating with the public. An established, clearly defined firm ethos will help establish priorities, for example whether the emphasis is local or national and which categories of injured persons and liability types are in focus (and in what order of priority). The ethos and targets will inform communication and advertising as will ancillary choices such as those with regard to sponsorship.

Existing clients are a goldmine of information. For instance they will inform the importance of reliable ancillary advice and home visits, as well as the sorts of information that injured people would like to be able to access through a firm's website. What questions they have, and in what level of detail they would like answers, can all help identify changes and enhancements to assist clients and potential clients. Clients will also reveal what matters most to them, perhaps the importance of their local community, and other issues which they see as a high priority. Each practice will have different dynamics to consider and will make different choices, but it is vital that there is this kind of engagement with clients. It is an ethical as well as a commercial mistake not to do this.

Traditional media

Traditional media should not be ignored, and the mix of media used will vary according to budget, locality, ethos and preferences. Digital resources simply provide new and more powerful ways of promoting a practice. There is still need to create written articles and comment, engage in conferences and be involved in and known around your community. Just as personal folders in Microsoft Outlook replace paper files, so the internet supplies the foundation for a relatively new and extremely powerful communication tool.

There remains the need have to have something to communicate which is consistent with the chosen ethos and focus and it must be credible. This remains core material for practices which now can reach so many more through digital technologies.

Moving away from referred work means that advertising in all its forms becomes vital. Through newspapers, radio and even TV, each practice will cut its cloth according to its budget taking account of its target audience. Consistency and core values become even more important here to ensure that practices are consistently presented; ideally, nothing should ethically jar.

Digital media

Digital applications are the single most powerful tool with which businesses can communicate today.  Referring to IT in his latest book Tomorrow's Lawyers, Richard Susskind states:

"IT is now pervasive in our world. There are over 2.2 billion Internet users … and every two days, according to Google's Eric Schmidt, 'we create as much information as we did from the dawn of civilisation up until 2003'."

Website

The website is the shop window of a practice and it must be right. If the shop window is wrong, people will not visit. The ethos, approach and philosophy need to be accurate and therefore credible and clearly explained. This needs to be consistently presented across all aspects of the website. Services need to be clearly explained, contradictory services should be avoided; if this is not the case there needs to be a focus on something other than service type to avoid contradiction. For example, a practice specialising in both claimant and insurer PI work may have a core value around excellent and fearless professional representation whatever the issue at stake, whereas an exclusively claimant practice can take a more unequivocal claimant-campaigning position if it so chooses. Visitors to sites need to be comfortable with where they have landed, and confident they will be well looked after. Advice needs to be relevant, clear and concise.

Moreover, potential client visitors landing need to be converted to be clients. Technologies like conversion analytics and heat maps to show where visitors tend to focus can help inform where an invitation to provide instructions might be most effective; it will also reveal areas of lesser interest to visitors. To most visitors external accreditations and kite marks are important, as are (perhaps more surprisingly) photographs of premises.

Pay per click

Pay per click is a method of advertising on a search engine when a user types in a certain phrase. But unlike most other forms of advertising payers only pay for the click once someone has interacted with it.

Pay per click became very expensive in the immediate aftermath of the referral fee ban in April 2013.
Prices have settled somewhat but it remains expensive and each enquiry generated through pay per click may cost several hundred pounds or more. Pay per click is a bidding process where quality and price are relevant. If a practice is perceived to be of greater 'quality' it will pay less for a search term. This is another reason for firms to invest time and resource in optimisation in that it will improve its quality rating and consequently reduce the cost of pay per click. To increase scale will also reduce the cost of pay per click. However, I focus on quality in looking at optimisation.

Search Engine Optimisation (SEO)

In the United Kingdom, Google has 88% of the search market, with its closest competitor Bing/Yahoo having around a combined 10% of the rest. In the United States, Google is less dominant, having around 70% of the market. Maximising the impact of a practice through optimisation when people use search engines is important, especially so with Google given its dominant market share.

While pay per click advertising can get services onto Google, the majority of the content on the results page is still made up from organic listings. Organic listings appear on merit and what Google judges to be the most relevant content for what a web user is searching for.

Optimising content to try to rank higher in search-engine owner results, known as Search Engine Optimisation (SEO), is a long-term project, whereas pay per click provides quick and early wins. A practice can also calculate fairly accurately, once its strategy is established, what its pay per click spend will yield in terms of enquiries; this is not so with SEO. SEO is about quality content, and refreshing, reviewing and continually working to improve the number of visitors received. For a successful SEO strategy it is important to engage as many people working in an organisation as possible in the process.  There are different challenges with pay per click: it is expensive, and the lower the perceived quality of content the more expensive it is.

There are, however, dangers with SEO and organic listings. Search engines like Google are becoming increasingly strict. They want genuine websites that offer the most value and relevance, and without any manipulation. They regularly develop and change their algorithms (the rules which the search engine uses in order to rank pages), and are making concerted efforts to eradicate manipulation. Constant vigilance is required to avoid falling foul of their policing through optimisation strategies. In essence, optimisation must be genuine rather than seeking to enhance reputation falsely - which is what the search engines are trying to prevent.

Search engine policing

As stated earlier, Google is the overwhelmingly dominant search engine, and for this reason I use it as an example. However, the principles in operation will equally apply to other search engines.

Google monitors approximately 200 signals from web pages when deciding how to rank them in its results. This process is largely done automatically and algorithmically by constantly trawling web pages to determine which is the most relevant to display in relation to users' searches.

In theory, this means that pages which are the most relevant and offer users the most value will rank above those that offer less. Google details its ranking principles in its Webmaster Guidelines which sets out how pages should be built in order to provide users with the best experience.

But as with any rule, there are those who will seek to bend and even break them. For this reason, a large part of the guidelines relate to 'Quality Guidelines'. If a website breaches them then the practice will run the risk of a Google penalisation.

Google can and does take manual action on websites where it spots anything untoward, either with regard to unnatural links or otherwise trying to 'trick' Google or its users. Examples would be websites that hide text, that copy content from other websites or generally try to deceive users.

There have been a number of solicitors' practices which have been delisted following action by Google.

Rather more famously, Interflora's website was apparently delisted for a period of time after it was discovered that the company had financially incentivised bloggers to talk about and link to its website. The number and quality of links to a website is a key factor that Google takes into account when ranking websites.

Attempting to manipulate these links can result in severe penalties and manual action.

Complying with search engine guidelines

The SEO agency needs to be trusted implicitly. Due diligence and referencing is essential. Practice members need to speak to the agency and those people specifically allocated to its account. A firm needs to share its plans and hear its agency’s ideas and vice versa. There needs to be clear understanding of the practice ethos and business. Practices need to be satisfied that their agency’s ethics are sound. Return on investment needs to be evaluated and understood. It needs to be known how the agency intends to raise profile online; if any of this sounds like it is easy or too good to be true then it probably is.

Offers may be received from websites or agencies wanting to sell links to the firm's website, blog or even promising more followers on Twitter and Facebook. Many of these are trying to exploit search engine algorithms and if their covert efforts are discovered it will be apparent that they have done more harm than good.

There are organisations which operate solely to sell advertising on a so called 'churn and burn' basis.

These organisations set up a suitably and appositely named website and then set about selling sponsorship to firms, businesses and individuals who will be interested in instructions or workflow from such an organisation. However, the reality is that there may be little traffic to the website and their only goal is to sell potential sponsorship packages for 12 months.

Not all website listings and sponsorships operate in this way and some may add genuine value. For example, many people still use Yell.com and having an enhanced Yell.com listing may be valuable when attracting local clients. But when offered sponsorship of this type which apparently might be useful in attracting potential clients firms need to do due diligence to ensure there is likely to be a return on investment.

Social media 

The number of social networks (Twitter, Facebook, LinkedIn, Google+ etc) is ever-increasing and practices should have at least a basic presence on each major social networking site. Use of social media can range from publishing news items and content to taking part in discussions or engaging with clients.

Each network has its own technologies and audience, but it is important to develop a social media strategy that includes as a minimum:

• who in the practice is responsible for social media and interacting with each social network;
• what content is to be placed on each network;
• if individual lawyers are to use their personal accounts for business purposes; and
• ensuring guidelines and a framework is in place.

Visitor conversion and client retention

Once a practice has acquired visitors to its website it must then turn these visitors into clients. Once a firm is instructed, tight risk assessment procedures need to be in place. A dedicated and well-trained initial client liaison team may be the best way to ensure that potential clients are looked after and secured.

Over-worked practitioners are not always the best at converting and then retaining clients. It is beyond the scope of this article to say much more on this, other than to emphasise the importance of enquiries converting to instructions for your firm in meritworthy cases which clients wish to pursue.

Measurement and monitoring

There are various ways to measure effectiveness in marketing and there are no absolute answers to what is right or wrong. There are below set out some suggestions for areas to scrutinise.

Web content should be monitored, likewise the creation of blogs, articles and other content, including content on social media. It is important to have a clear and effective policy to ensure good content is generated which is useful to enquirers and clients. It is imperative it is accurate. Any opinions expressed should, where appropriate, be suitably caveated.

Content must be consistent with a practice's culture and ethos. Non-lawyer as well as lawyer input can be appropriate. Writing does need to express personality, which can be an area of difficulty for lawyers, for whom care and precision of expression rather than personality are more natural.

Some practices, according to size and resource, may employ PR agencies and again measurement and engagement is vital.

With digital agencies content should be monitored, so too the exposure that they gain and the traffic they generate to a practice's website. Agency performance should be scrutinised for evidence of the agency's appetite and quality of new ideas and targeting and general 'nose' for a good idea or opportunity.

Each practice will make its own decisions regarding what it chooses to review and measure, but the following might usefully be considered:

Organic performance:

• what search terms a practice is aiming to rank for and progress towards achieving these rankings;
• amount of organic traffic to the website;
• visitor conversion rates, i.e. the number of site visitors versus the number of enquiries made;
• client retention rates, setting an appropriate period or periods for measuring and evaluating this; and
• the quality and quantity of links to websites; as mentioned earlier not all links are beneficial.

Pay per click:

• keywords, the most relevant search terms for services that are being targeted;
• Impressions, how often advertisements are shown;
• clicks, how often advertisements are clicked;
• cost per click, and what a practice is willing to pay for a targeted visitor; and
• cost per enquiry, how many clicks have been paid for to generate an enquiry.

Marketing and financial:

• work generation;
• cost per enquiry;
• cost per converted and retained case;
• abandon rates;
• billing rates;
• risk rates by case category; and
• case acquisition cost by type, to take account of any disbursement write offs, both fault and no fault.

Conclusion

It is a regrettable fact of life that such is the intensity and uncertainty of change that even for the excellent there is no guarantee of success. Forecasting is, at best, an educated guess. Time alone will tell how successful a firm's marketing strategy, digital or otherwise, has been.

Following the implementation of LASPO as well as rapidity of technological change, the dynamics and cost of acquiring work are now very different - especially to how they were back in the days when law firms were prohibited from advertising. The fees which can be earned for every type of Personal Injury work have altered, and for some types of case the alteration is dramatic. Changes are compound and cumulative and cover recoverable fees, procedure and process, not to mention increased client competition fuelled by the increasing prevalence of consolidation through the availability of ABSs.

Add to all this the need for most to invest in wholesale new procedures and processes, and training and retraining, and one can readily conclude that these are very uncertain times. However, the vast majority of practitioners are highly motivated and determined people, who will hopefully survive and, indeed, flourish. In order to do so is, though, they need to embrace the brave new world and ensure that the firm is at the cutting edge of digital marketing.

A sanction too far? Striking a balance between access to justice and the new civil procedure landscape

How is justice faring post-Jackson?

We're now well into the new regime that was ushered in last April, when the Legal Aid, Sentencing and Punishment of Offenders Act (LASPO) 2012 became law. LASPO was inspired by Lord Justice Jackson's review of civil litigation costs and made for the biggest change to the domestic civil justice system since the Woolf reforms of the 1990s.

LASPO tried to strike a balance between streamlining civil procedure so that exorbitant and disproportionate costs weren't incurred by legal advisors, and ensuring that clients had proper access to justice. This was always going to be a tough challenge. And, in the wake of the much-publicised costs ruling in Andrew Mitchell's libel action against The Sun, it is debateable whether the challenge has been best met.

A black letter view

To revisit the Mitchell matter, the former government chief whip sued The Sun for libel over its coverage of the notorious 'Plebgate' incident. Regrettably his solicitors were late in filing a cost budget ahead of a case management hearing. The court then took a black letter view of the civil procedure rules, holding that Mitchell was to be treated, pursuant to CPR r.3.14, as having filed a costs budget comprising only the applicable court fees. In other words: he was prohibited from exceeding a set costs budget of £2,000.

There then followed appeals, in which Mitchell's solicitors - who were acting on a no win, no fee basis - sought relief from the court's sanction for non-compliance. It transpired that they had filed a proposed £506,425 costs application on 17 June 2013. This was less than 24 hours before the date of the case management hearing; court rules state that costs budgets must be lodged seven days in advance. The defendant, News UK (parent company of The Sun), had filed its planned £589,558 budget figure for defending the case on 11 June - within the seven-day deadline.

The attempt to obtain relief from the court's sanction was unsuccessful. The Court of Appeal made its position clear, stating:

"The defaults by the claimant's solicitors were not minor or trivial and there was no good excuse for them. They resulted in an abortive costs budgeting hearing and an adjournment which had serious consequences for other litigants. It seems harsh in the individual case of Mr Mitchell’s claim, [but] if we were to overturn the decision to refuse relief, it is inevitable that the attempt to achieve a change in culture would receive a major setback.

"In the result, we hope that our decision will send out a clear message. If it does, we are confident that, in time, legal representatives will become more efficient and will routinely comply with rules, practice directions and orders. If this happens, then we would expect that satellite litigation of this kind, which is so expensive and damaging to the civil justice system, will become a thing of the past."

Robust - but is it fair?

The outcome of the Mitchell ruling is robust - and its effect is being felt across the civil procedure landscape. A great many cases of procedural non-compliance have resulted in rulings that take a dim, not to say intolerant, view of human error. This trend has become so pronounced that a recent headline on the Litigation Futures website sums up the prevailing culture: 'Costs judge grants relief over failure to serve N251 - yes, really!'

It is undoubtedly right that legal representatives smarten up their acts and do their absolute best to comply with procedural timetables. But sometimes extraneous factors intrude; sometimes there are good reasons for a delay; sometimes plain old human error can’t help but arrive on the scene.

This, to me, is something to be mindful of. The law is an absolute construct, something above and beyond us, before which we are all equal - rightly so. But it deals with people, with human life in all its teeming ambiguity and with all its potential for mistakes; with things that are often coloured grey rather than black and white.

I worry that too rigorous an application of court sanctions may in some situations deny access to justice to those who need it - clients, who shouldn't be punished for the mistakes of their legal advisors.

A litany of errors that must not be repeated

This week we've seen a story that is both heart-rending and deeply worrying. It also casts a spotlight on the litigation landscape, post-Jackson and in the difficult new world of the Legal Aid, Sentencing and Punishment of Offenders Act (LASPO).

Maria De Jesus, a mother of three from Dagenham, was heavily pregnant when she developed pains in her stomach. She was admitted to Queen's Hospital, Romford last October, where she was treated by two trainee surgeons. Instead of removing her appendix, the surgeons took out one of Mrs de Jesus's ovaries.

A litany of errors

Mrs de Jesus was discharged eight days after the operation, but returned to hospital a week later with severe stomach pains. By this time it appears that she had developed severe sepsis as a result of appendicitis. Tragically, it was too late to save her. When doctors finally removed her appendix Mrs de Jesus died in theatre from multiple organ failure, despite the fact that 100ml of septic fluid was drained from her abdomen.

Cases like this are appalling. Three children have lost their mother; Maria's husband, Adelino de Jesus, is devastated. But to add insult to injury, it took a year and a half for a letter of apology to be sent by the chief executive of the Barking, Havering and Redbridge Hospital Trust, Averil Dongworth. On behalf of the Trust, she admitted liability and apologised to the family.

Mr de Jesus is understandably angry at what he describes as "a litany of errors". As he told The Evening Standard: "This is neglect, this is an unlawful killing. If my wife had been given treatment by fully qualified staff and people were informed of the mistake earlier she could still be alive." Moreover, he's livid at the length of time it took for an apology to be made - and the way in which it was conveyed. "Why has it taken so long? It is one-and-a-half years since she died. The letter is in Portuguese, our native tongue, but my sons speak perfect English - why can't they give me a letter in English as well? I am revolted by everything. It sickens me."

Mr de Jesus has every reason to be angry. He plans to sue the Trust, and it is entirely right and proper that he should be able to do so. The General Medical Council is meantime investigating eight medical staff in connection with the death of Mrs de Jesus.

Clinical negligence

With better standards of care and supervision, Mrs de Jesus would still be alive. The case against the Trust could not be clearer - and it has, of course, admitted liability - but often clinical negligence cases are not so clear cut. As Deborah Evans, the chief executive of the Association of Personal Injury Lawyers (APIL), says in PI Brief Update: "the success rate [in clinical negligence cases] is lower simply because the prospects of success are difficult to determine at the start of a case".

As Deborah goes on to explain, in the LASPO environment this creates a complex risk assessment exercise for lawyers - one which amounts to "a survival tool". Because a clinical negligence case is difficult to predict, with issues of causation often problematic, deciding to take it on may be a commercial gamble for law firms, because of LASPO changes such as the 25% cap on success fees. In other words, it may not economically viable to represent what Deborah describes accurately as "real people with real injuries that no lawyer wants to turn away".

Post-Jackson and thanks to LASPO, then, people who have suffered  serious malpractice at a hospital or those who have contracted an industrial disease at work may not find it easy to bring claims for negligence. Do we really regard this as access to justice?

I wish Mr de Jesus well in his efforts to obtain deserved redress from the Barking, Havering and Redbridge Hospital Trust. I also hope that the Trust and other hospitals learn from this tragic case - and, in time, that we find a way of ensuring that victims of clinical negligence are not left without any means of securing justice.

From DBAs to Turin

What do you think of DBAs?

If you're not a PI law practitioner, you might be forgiven for stumbling over the acronym. Is a DBA a new kind of Aston Martin, you might wonder, or perhaps the name of a new law firm?

It is neither. A DBA is a Damages-Based Agreement: a contract between the claimant and his or her solicitor, in which the solicitor agrees to be paid a percentage of the damages recovered in the case. DBAs are a constituent element of the welter of reform coming our way from 1 April this year, when the majority of Lord Justice Jackson's proposals become law.

No delay for DBAs

Some aspects of the Jackson reforms have been given a stay of execution. For example, last December the under Secretary of State for Justice, Mrs Helen Grant, issued a ministerial statement announcing that the provisions of the LASPO Act which would remove the recoverability of success fees and insurance premiums will not come into force for defamation and privacy claims until a "new regime of costs protection" has been introduced for these proceedings.

However, no such delay will apply to DBAs. The draft DBA Regulations have now been laid before both Houses of Parliament and their approval is a formality. It is important, therefore, that lawyers have a view on DBAs - not least so that they can explain them to clients.

DBAs are a variation of the 'no win, no fee' paradigm, in which lawyers have a financial stake in the outcome of claims and are therefore thought to be all the more motivated to secure the best result for the client. The key variation comes in the government's plan to introduce a 25% cap on the damages available for the lawyer (which, given the inclusion of VAT in the cap, amounts to a de facto cap of 20.8%). It is intended, too, that recovered costs will be included in the cap, meaning that in some cases the whole of the cap could be utilised for costs recovered from the other side. A number of other limitations apply to the cap. Counsel's fees, for example, are included, but the costs of experts' reports are not.

Problems with the cap

The purpose of the cap is to protect clients from overcharging and to provide sufficient flexibility for reasonable remuneration consistent with the commercial risk of conducting a claim. However, without going into the minutiae of DBAs and their expected operation, it is clear  they present a potential  problem. Their effect, in a great deal of litigation, will be to encourage solicitors to try to settle cases as early as possible, when to do so might not be in a client’s best interests. For example, a claim worth £10,000 will yield no more than £2,500 to a solicitor retained under a DBA; that which is worth £20,000 will net £5,000. This is one of the reasons perhaps why Lord Justice Jackson recommended that client's should be independently advised on whether to enter a DBA.

DBAs may need to be re-examined. The Civil Justice Council Working Party on DBAs, of which I was a member, were acutely aware of the limitation of the Ministry of Justice imposed timetable being too tight to allow us time to explore all issues in as much detail as we would have liked. I am therefore looking forward to attending a lunchtime seminar later today at Queen Mary University of London, in which DBAs will be debated. Professor Rachael Mulheron from Queen Mary’s kindly asked me to participate in the seminar, which is being hosted by the Practical Law Company.

To Turin for PEOPIL's RTA Conference

I will return to this topic in due course but meanwhile an overseas trip looms. Later this week I fly to Italy, where I will be speaking at the Pan-European Organisation of Personal Injury Lawyers (PEOPIL) RTA conference in Turin on 8 March. This takes place at the Golden Palace Hotel on the Via dell'Arcivescovado, in what I was interested to learn is Italy's fourth-largest city.

Although the main focus of the day is fatal accidents there will be time to deal with whiplash caused injury. As I have written on previous occasions, the backlash against whiplash in the UK is unjust and medically unsound. I have noted similar moves to curtail victims' rights to claim for whiplash in other jurisdictions. It will be fascinating to see how my European colleagues in PI law are dealing with what seems to be yet another attempt by at least some in the insurance industry to avoid  their obligation to pay all legitimate claims.

Australia-bound

Some half a year ago I wrote about the reasons for becoming a personal injury lawyer. Among them I cited the ability to right wrongs, the fact that PI law immerses its practitioners in the real world, and the constant challenges of this fast-evolving sector.

Given that I'm writing this blog about to depart for Australia you might think that regular travel is another reason to become a PI lawyer. I admit, as I'm about to board a plane to Australia, that lately I've seen a fair bit of the world. However, it’s not always like this – far from it, in fact. And this trip, to the national conference of the Australian Lawyers Alliance, will be the last for a while.

This time round, I'm travelling to Glenelg, in South Australia. This is a suburb of Adelaide and yes, I reckon that the weather will probably be better there than in Britain. But from tomorrow I’ll be wrapped up in the conference and preparing for my session at 4.45pm on Saturday. I'm speaking then about PI and litigation reform in the UK. This, of course, is a topic close to my heart - not least as LASPO enters its home straight.

The Legal Aid, Sentencing & Punishment of Offenders Act will become law on 1 April 2013. I will be speaking to conference attendees about the deficiencies in LASPO and ancillary changes, which I have often mentioned on this blog.

While in Australia I'm hoping to meet with various lawyers after the conference, by way of gleaning as much information about the legal profession and PI sector there as possible. In particular, I hope to discover more about the way in which outside ownership of law firms - pioneered in Australia - has panned out.

I’ll write about my trip as soon as I can. Please look out for the resumption of this blog in due course.

Simmons v Castle: a small step in the right direction, but sadly that’s all

The Court of Appeal recently declared that general damages in most tort actions are to increase from 1 April, 2013. That’s good news, isn’t it?

I wish it was, but a closer look reveals that it isn’t necessarily so. The Court of Appeal’s judgment came in the case of Simmons v Castle. The endorsement of a settlement between the appellant motorcyclist and respondent car driver saw the Court of Appeal hold that it had an ongoing responsibility and the power to monitor and set the guideline rates for general damages in tort claims, including personal injury actions. Any such rates would be neither rules of law nor practice rules, but judges at first instance should consider themselves bound by them.

Hence, their Lordships ruled in favour of an increase in damages – but only by 10 per cent. The judgment sent insurers calculating  by how much they will need to  increase consumers’ premiums. They, along with the rest of us, had assumed that any increase in general damages would come through the implementation of the Legal Aid, Sentencing and Punishment of Offenders Act (LASPO), also in April next year. But at the same time as insurers lament the guidelines of Simmons v Castle, so do personal injury lawyers who work at the coalface. The fact is that 10 per cent is nowhere near a large enough increase in rates for damages that have remained static and too low for far too long

This is not just the view of a claimant solicitor. Over 10 years ago, in 1999, the Law Commission Report No. 257 concluded that in cases where general damages exceeded £3,000 they should increase between 50% and 100% (with an appropriate tapering rise for cases where general damages were between £2,001 and £3,000). The Commission found that damages were not generally commensurate with claimants’ losses but also that “the ongoing non-pecuniary effects of many injuries are far greater than anticipated by victims at the time that they receive their compensation.” The Commission’s conclusions were reached after extensive research and an opinion poll on public attitudes to levels of compensation.

This issue was considered by the Court of Appeal in the 2000 case of Heil v Rankin. Regrettably, the recommendations of the Law Commission were not generally accepted. The Court held that in cases where the general damages exceeded £10,000 they should thereafter increase by 33%. However, there would be no increase for cases where general damages were under £10,000.

Little has happened since the Heil judgment. The recommendations of the Law Commission have not been implemented. Meanwhile, the cost of litigation has continued to rise. LASPO continues to wend its way through the legislative process, but there is no sign of provision for well-thought out increase in levels of damages envisaged by the Law Commission – as ought to be the case.

Now, along comes a recommended increase of 10 per cent, originally recommended by Lord Justice Jackson, implemented before April next thanks to Simmons v Castle. In some ways, we should be grateful as some were doubtful such a decision would come at all, but the truth is that as a society we are still woefully under-compensating injured people. We are still a long way from a collective endorsement of carefully considered recommendations which were made by experts, after due diligence and research, as long ago as 1999. The 'Simmons' adjustment does not even counterbalance the LASPO none recoverability provisions. As such, it is a step in the right direction, but that’s all it is.

Principles lost? The loss of professionalism in the personal injury system

In 1992 Lord Benson stated there were nine key principles of professionalism to which lawyers should adhere. Two, in particular, should be second nature to lawyers: the principle that ‘ethical rules and professional standards ... should be higher than those established by the general law’ and the principle that legal practitioners ‘must not allow themselves to be put under the control or dominance of any persons or organisation that could impair that independence’.

Regrettably, adherence to these principles is not always second nature, especially if we take a bird’s eye view of the personal injury sector. Here, as well as potentially referral fees – which the government intends to ban – there are a myriad of other practices which conflict with Lord Benson’s principles. Alternative Business Structures (ABSs) have been heralded as signalling a brave new world but they create a route to absolute ownership by insurers, who then effectively bypass the referral fee issue and achieve wholesale ownership of the entire process, from providing insurance as an indemnity insurer to solicitors making the claim against the third party. The government’s failure to any action given that ABSs will have this effect is symptomatic of a worryingly piecemeal and uncoordinated approach to the referral fee problem.

Some might say that the Legal Aid, Sentencing and Punishment of Offenders Bill (LASPO) will reform the personal injury sector. It professes to ban referral fees but, given the loopholes carved out in various places, is likely to be a paper tiger. Moreover, simply banning referral fees will not show insurers, CMCs and indeed some solicitors the error of their ways; in all likelihood, it is likely to push the practice further into the shadows. New practices will inevitably be devised which will share the detrimental and profit-driven features of referral fees. Some in the PI industry have already described to me the receipt of calls from CMCs offering to sell information with regard to prospective clients under the guise of ‘marketing information’ – a euphemism for ‘referral fee’. 

It was the proliferation of referral fees – and their associated, seemingly endless ancillary services such as car hire and medico-legal services – which have done so much damage to the PI system. Wedded to these are the advertising campaigns which CMCs and some solicitors have embarked upon. Not only do they sail dangerously close to inciting litigation, they cheapen the legal profession to such a degree that the title ‘ambulance chaser’ is not an entirely inappropriate label. Add the sale of personal data and underhand marketing tactics such as spam text messages, and we are faced wholesale systemic failure in this vital branch of the law.

If we want to grapple seriously with all the issues, we need wholesale cultural change. The government’s piecemeal, reactive approach is flawed. The interests of the public and victims of accidents must be the priority in the minds of all professionals, with profiteering stamped out.

Cynics might say such a utopian ideal for the PI system is unattainable. However, I would counter that it can exist if we rediscover and implement Lord Benson’s wisely drafted principles.

What underpinned Lord Benson’s approach is the notion that to be professional is to act in the public interest. The barometer by which he proposed to measure the standard of the profession is the degree to which individuals and their governing body act ethically. These principles should be the foundation of reform, and, even more important, practice. If the mindset of all the participants within the personal injury system is focused on acting ethically in the public interest, there will be no need for ‘catch-all’ regulation. Although a minority may still exploit loopholes in the system and evade regulatory oversight, they will eventually be stamped out by market forces. In fact if you speak to potential private equity investors in the profession, they see the value of retaining and emphasising professional standards.

Such a picture may seem uncharacteristically optimistic from someone who has written of his dismay about our industry and current efforts to reform. However, for every organisation or individual I have encountered who has displayed contempt for the public good, I have met dozens more who wish to do the best for their clients. It is because of this that I am certain that our profession and the industry can save itself from ruin and regain the principles which have been lost.

For any readers who are APIL members it is intended to publish a fuller article on this subject in the May edition of Focus, or if you are not and prefer please let me know and I will provide a full copy of the article.