LASPO: an insurrectional crossing of a legal Rubicon

The Legal Aid, Sentencing and Punishment of Offenders Act (LASPO) 2012 slunk into formal existence a few days ago. If only the date of its arrival - 1 April - was an April's Fool's joke (granted, of a rather convoluted and unpleasant kind). But LASPO is no joke. It may well be one of the most foolish pieces of legislation ever enacted, but regrettably it is all too serious.

A seismic shift

LASPO's advent as law which is alive and kicking amounts to a seismic shift in the UK litigation landscape. Often enough, legislation arrives, is found to be suspect in its operation, and is later repealed and/or replaced with something sensible. This time round, I am not convinced that we will one day see a reversal of the changes wrought by LASPO. They are simply too profound.

The Act's overarching aim is to save £350 million from the government's legal aid budget. To me, it is informed not just by the desire to save money but by the prejudice which would have us believe that the UK is rife with nothing but meritless personal injury claims. David Cameron himself is on record as castigating what he uncritically believes is a 'blame and claim' mentality, one that has created spiralling litigation borne of specious claims and unscrupulous claimants.

The media perpetuate what those who work at the coalface of personal injury litigation know to be a widespread but unfounded cliché: that ours is a 'compensation culture'. It is not. Ours is a society whose evolved ethical and legal principles make it possible for those who have been wronged to seek redress for the wrongs done to them. There is nothing suspect about this. It should instead be celebrated as a vital facet of what makes our democratic adherence to the rule of law so admirable.

But now, though, with LASPO, claiming redress will become more difficult. And yet more worryingly, its changes cannot but have a negative effect on that which clients should be able to take for granted - the honour and professionalism of their legal advisors.

Contingency fees by another name

A key change brought about by LASPO is in the introduction of Damages-Based Agreements (DBAs). Philosophically, DBAs becoming part of British litigation is the equivalent of crossing the Rubicon. It means that we have adopted the contingency fee model common to the United States. For the first time in contentious matters in the UK, solicitors will be entitled to enter into agreements with clients in which they have a vested interest in the outcome, for under DBAs solicitors can receive up to 25% of the damages obtained.

This is a departure from the previous the regime of Conditional Fee Arrangements (CFAs), introduced by Section 58 of the Courts and Legal Services Act 1990 and the Conditional Fee Agreements Order 1998. Here, solicitors can charge clients the usual charge out rate, plus an uplift (or 'success fee'), if the case is won. Confusingly, LASPO heralds a dual DBA/CFA system - but without recoverability of the success fee in CFAs. On top of this, recoverability of premiums of After the Event Insurance (ATE) is also no longer possible.

Confused? Practitioners are sure to be, as the complexities of DBAs v CFAs are worked out, against the background of their rushed introduction. Lawyers now have a clear personal interest in litigation. The words of Lord Denning, in Re Trepca Mines Ltd (No. 2) (1963) (CA), come to mind, but have arguably been ignored ever since the introduction of CFAs. His Lordship suggested that if legal advisors had a personal interest in the outcome of litigation they might be tempted to "influence the damages, to suppress evidence, or even to suborn witnesses".

Portal changes on the horizon

Worse is on the horizon. LASPO also seeks to reduce the monies recoverable in low value Road Traffic Accident (RTA) cases. Put simply, in RTA claims of up to £10,000 no more than £500 in legal fees will be recoverable. Other changes to the RTA Portal, which introduced fixed costs in the first place, are proposed. The government seeks to extend the Portal vertically, to handle claims up to £25,000. It intends to fix recoverable costs for such claims at £800 - which is a third less than the current recoverable costs on injuries between £1,000 and £10,000. That's not all. The horizontal extension of the Portal is also proposed, so that it will include employers' and public liability (EL/PL) claims up to £25,000. Here the costs recoverable will be £900.

These changes are all in LASPO, subject to a modest stay of execution: they come into being at the end of the month, on 30 April. A core lament is this: how can a solicitor be said to be acting in his or her client's best interests, when the maximum that he or she will recover in costs could be as little as £500? The changes are a charter for a lack of professionalism and an 'accept the first offer that comes along' attitude. It is hard to see how solicitors will be able to conduct cases commercially without such an approach.

I mentioned earlier that LASPO amounts to a crossing of the Rubicon. I've just looked up the term, which, of course, means to pass a point of no return. Its origin lies in Julius Caesar's army's crossing of the river Rubicon in north-eastern Italy in 49 BC. Caesar's crossing of the Rubicon was considered an act of insurrection.

It strikes me that LASPO might just be an act of insurrection against the solicitor's fundamental duty: to put duty before profit, and serve clients before commerce.

The Government’s Proposed Changes to the RTA Portal are Wrong and Unjust

As the year comes to a close I'd like to look back and write positively about events in 2012. After all, this was the year in which Britain hosted - to universal acclaim - the Olympics and Paralympics, Bradley Wiggins became the first Briton to win the Tour de France and Chelsea, my beloved football team, scooped the Champions' League trophy.

Regrettably, the feel-good factor generated by sporting success is not matched in other sectors of society. As my recent letter to The Times pointed out, Britain is bedevilled by ethical lapses in politics, journalism and finance. We must try to rectify these and instil higher standards of professionalism across the board, but so too, as the long-awaited Jackson reforms come closer to reality, should we take a long, hard look at how well we serve victims of accidents.

Slashing Costs in the RTA Portal Scheme

I say this because of the unconscionable changes which the government has proposed to the RTA Portal scheme. Fixed recoverable costs for Protocol claims were negotiated between insurers and claimant representatives just two years ago, before the Portal came into being. The figures took into account the amount of work required by law firms to process claims, from inception to conclusion. The fixed costs agreed represented the average cost of cases rather than the lowest possible level. They are not exactly generous: typically, time spent on RTA cases far outweighs the costs recoverable at the conclusion of the claim.

But, emboldened by its ban on referral fees and in cahoots with the insurance industry, the government now seeks to slash fixed costs in Portal claims by £700. This proposal is contained in the Ministry of Justice's consultation document. Put boldly, it means that for RTA claims of up to £10,000 no more than £500 in legal fees will be recoverable.

In Cahoots with Insurers

It seems likely that this arbitrary reduction is a reaction to the perceived levels of referral fee that some PI solicitors are thought to be paying. Undoubtedly, the proposal comes on the back of an 'insurance summit' held between the government and insurers earlier this year - to which not a single claimant representative was invited. It also follows a relentless campaign by the Association of British Insurers to influence policy under the guise of reducing motorists' premiums.

On top of this, further changes are proposed. The government seeks to extend the Portal vertically, to handle claims up to £25,000. It intends to fix recoverable costs for such claims at £800 - which is a third less than the current recoverable costs on injuries between £1,000 and £10,000. That's not all. The horizontal extension of the Portal is also proposed, so that it will include employers’ and public liability (EL/PL) claims up to £25,000. Here the costs recoverable will be £900.

A Manifest Injustice

The proposals are manifestly unjust. An injury valued at £25,000 is very serious. It may be permanent; it will almost certainly be long-lasting. Such cases routinely require multiple medical reports, extended periods of treatment and often have a multitude of losses such as past and future loss of earnings, handicap on the labour market and considerable treatment costs. How can it possibly be right that injuries like this are dealt with for a total of £800? The number of hours of work required in such a case bears absolutely no correlation to the proposed recoverable costs.

The same is true of ostensibly smaller claims. £500 yields little of even a junior solicitor's time - unless that solicitor is paid the minimum wage.

When it comes to EL/PL claims, the proposals are no better. By their nature these claims are labour intensive. They do not sit comfortably within a portal regime. Again, though, lobbying by the insurance industry would see these claims shoe-horned into the Portal environment, despite the absence of any considered analysis of whether they are suitable and the correct level of legal fees for such work. Indeed, by way of a general point, Professor Paul Fenn (a leading expert in the interpretation of data from the RTA Portal) has concluded that it is simply too early to glean any meaningful data from the Portal. His suggestion that a further period is allowed for the Portal to settle is all the more compelling given the fact that some 50% of claims presently exit the Portal.

A Drop in Service

As I say, then, I wish I was looking back with a warm glow at 2012 – but when I think of the palpable injustice to victims of accidents that will flow from the proposed changes to the Portal I feel only anger and dismay. There is no doubt, if the changes are implemented, that the qualification and experience of fee earners handling Portal claims will drop. Just as depressing, from the client's point of view, is that many law firms will be forced to recover significant costs from injured peoples' damages in order to meet the massive shortfall in costs.

The government is wilfully neglecting the rights and trauma of accident victims out of a shocking obeisance to the insurance industry. Join APIL, MASS, the TUC and the Law Society and others next year in campaigning to stop the changes becoming reality - and, in the meantime, have a happy and safe Christmas.

Changes to the RTA Portal need clarity of thought

This time next week I will be attending an interview. Well, not an interview in the traditional sense of the word, but an interview with Andrea Nicholls of College of Law Media. As part of a video series for Continuing Professional Development (CPD) for lawyers, Andrea will be asking me a number of questions about the RTA Portal, the electronic Portal put in place nearly two years ago to support the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents.

I’m looking forward to this particular interview – and my good mood is not solely down to the fact that Fernando Torres has remembered how to score goals. I can’t help but be pleased by this development, not least as last weekend’s 4-2 win at Aston Villa has helped put Chelsea back in with a decent shout for a Champion’s League place, but I'd applaud the approach to the interview for another reason, and it can be summed up in one word: clarity.

Andrea Nicholls is a writer-presenter as well as an employment lawyer, and she has kindly sent through a list of pre-interview questions which are well expressed. Combined with further clarification in discussion hopefully Andrea will have ensured the session meets the objective, of practical and relevant advice to practitioners. 

Andrea tells me I can’t wear blue – apparently, I will be rendered akin to the Invisible Man if I do – but aside from this modest disappointment (see above: it’s a Chelsea thing) I couldn’t have been treated more courteously before a televised interview. I’m optimistic that we will, as Andrea hopes, end up having a relaxed and yet informed conversation rather than a stiff and stilted interview. But if Andrea’s questions about the Portal are a refreshing model of clarity, regrettably the same cannot be said of the government’s proposals for change in this area.

Here, clarity of holistic thought is sadly as absent as Torres’ goal-scoring for most of this season. This is especially so when it comes to the ABI inspired proposal to fix at £300/£400 the fee for low-value road traffic claims handled through Portal. This would amount to a dramatic reduction from the present fixed costs of £1,200.  In reality, the protocol requires over eight hours of work.  The danger is obvious namely that such a slashing of costs will encourage or even force cutting of corners; in any event, it can only prompt a lack of professionalism, perhaps even encouraging spurious claims and even fraud.

The Ministry of Justice has begun meetings with stakeholders over its plans to make changes to the Portal, a key limb of which is extending the Portal to a £25,000 limit (a £15,000 increase from the current cap). This, too, is fraught with difficulty, both in the apparent rush with which the MoJ want to see the changes implemented – within just a year – and the extension of the Portal to covering employers’ and public liability accident claims.

As with too many of the initiatives emanating from the government in the personal injury sector, there is a sense both of undue haste and that a bandwagon is being pushed headlong to an uncertain fate. What is required is a holistic approach and a sensible consideration of the practical workings of the Portal, so that such changes as are made are in the best interests of the injured person as well as the public at large.

If only the government could adopt some of Andrea Nicholls’ clarity of thought. Meantime, I will continue to look forward to next Wednesday’s interview – and albeit that I can’t wear blue, I will also hope that Fernando Torres sustains his return to form, particularly since I sit finalising this blog in the Aziz deli, round the corner from Stamford Bridge, and before doing battle with Benfica!