Lisbon-bound for the NYSBA seasonal meeting

Today, I’m Lisbon-bound for a conference hosted by the New York State Bar Association at the Pestana Palace hotel. By all accounts this is a fine, city centre hotel, though I’ve opted to stay away from the hustle and bustle at The Oitavos Hotel, some 40 minutes drive from Lisbon.

This is my first trip to Lisbon, and next week I’ll post a snapshot of my impressions of this venerable and historic city. As I write, however, the task in hand is preparing a short speech I’ll give on Saturday morning, as well as a panel discussion. Between 9.00 and 11.00am, debate will centre on Alternative Law Firm Structures around the world, in a plenary session chaired by Kenneth G. Standard of New York firm Epstein Becker & Green. Other panellists include Vasco Marques Correia, the president of the Lisbon District Council of the Portuguese Bar Association; Junlu Jiang, of King & Wood Mallesons, Beijing; and Steven Younger, from Patterson Belknap Webb & Tyler LLP, New York.

I will be talking about Alternative Business Structures (ABSs), first proposed in Britain six years ago by Sir David Clementi, then given statutory footing in 2007 by the Legal Services Act and finally ushered in by the Solicitors Regulation Authority earlier this year. ABSs were much touted prior to their arrival as heralding a brave new world that would be of great benefit to consumers. They would allow non-lawyers to own and invest in law firms, thus revolutionising the legal profession because clients would have a cheaper, one-stop option for their legal needs.

Among those who sounded cautionary notes about ABSs were sole practitioners and small firms, who were wary of the notion of ‘Tesco law’ and ‘one size fits all’ for legal problems. I was also dubious about ABSs given the way in which they could be deployed to circumvent the Ministry of Justice’s  ban on referral fees in personal injury cases to be implemented in April 2013.  Because ABSs enable insurers and claims management companies to own and invest in law firms they can sidestep the MoJ’s efforts. It cannot be good for the consumer for a culture to arise which sees insurers start handling PI claims from start to finish.

In Britain, the take-up for ABS licences has been relatively slow, but the bandwagon is moving. More and more law firms are set to form alliances with other businesses, creating more ABSs. I do not object per se to the idea of ABSs, provided not only that a watchful eye is maintained on their ability to sidestep the ban on referral fees but also that the profession as a whole abides by its age-old principles. By this I mean that professionalism and ethical conduct must not be allowed to play second fiddle to the commercial dictates of outside ownership or too obsessive a focus on shareholder value.

The danger, with ABSs, is that he who pays the piper calls the tune. As lawyers, our tune must sing to the client’s good, first and foremost. ABSs are acceptable, so long as this is not forgotten. This is the most serious issue for debate.

Thoughts on whiplash on the eve of the Expert Witness Institute conference

Tomorrow I will be attending the Expert Witness Institute (EWI) Annual Conference at Church House Conference Centre in the heart of Westminster. This year’s Conference is themed around the implementation of Lord Jackson’s reforms in April 2013. The reforms have long been in the offing, and it’s no exaggeration to bill them – as do the EWI event organisers – the ‘Big Bang’. Lord Faulks QC’s ‘view from the House of Lords’ of the reforms should be particularly interesting.

But if April 2013 is set to yield seismic changes to the civil litigation landscape, I hope that the same isn’t true when it comes to our treatment and sympathy for whiplash injuries. As I have noted before, an unruly bandwagon is being piloted by an alliance of insurers, government and certain newspapers to convince us that whiplash is an invented condition. If the bandwagon isn’t stopped, it will career into whiplash victims and ruin their ability to obtain redress.

I hope to raise this issue at the conference, especially when I join EWI director Nick Addyman, EWI fellow Dr Keith Rix and Brian Gardner FRCS in a ‘medical breakout’ session. We’ll be debating topics dear to our hearts; the prejudice against whiplash is certainly one of mine.

However, before reiterating some of my beliefs about whiplash, perhaps I should first make clear that there is common ground here. I and other claimant PI lawyers agree with insurers that there is an opportunity for fraud in the current system. So, too, do we agree that fraud contributes to the rising cost of motor insurance. We also welcome the government’s wider interest in the motor industry and the myriad of factors that could contribute to lowering the cost of motor insurance, including education, training and monitoring for new and young drivers. 

But the myth that whiplash is not a genuine injury has got to be scotched. Whiplash is real and there is a wealth of evidence that demonstrates its potentially debilitating impact and long-term consequences.  The government’s proposal to increase the small claims limit in personal injury cases from £1,000 to £5,000 cannot but have a devastating effect on whiplash victims. It should be remembered that this idea was consulted on at length and rejected by the Ministry of Justice on the grounds that it would stop genuine accident victims from receiving justice.

Moreover, reducing legal fees to an artificially low level – as is also mooted – may have the unintended consequence of lowering the quality and standard of representation in whiplash cases. It could also lead to legitimate claimants having to fight for compensation without legal representation, therefore eroding access to justice.

Finally, imposing an arbitrary accident speed (e.g. 15 miles per hour) below which a claim cannot be made has little medical foundation, as serious injuries can occur even in low speed collisions. In addition, satellite litigation and unnecessary costs may be generated by arguments over evidence of exact speeds. One can well imagine endless and costly debate over whether a claimant was driving at 15mph or at 14mph. Technology such as telematics could have a role in reducing fraud and bringing down the cost of motor insurance in the future, but it is not a panacea. These schemes are currently unproven and cannot be relied upon as an absolute measure when all circumstances and individuals are different.

So much for the laments. Do we, I hear you ask, have any solutions? We do. Take a look at the 10-point plan for eliminating fraud produced by the Association of Personal Injury Lawyers. Some of APIL’s ideas overlap with mine, which appear below:

• There needs to be better co-operation between all affected parties to clean up the sector. We need a holistic approach involving government, insurers, the car industry, accident victims, medical professionals and legal professionals.
• There should be compulsory medical examinations. No whiplash claim should be settled without a medical examination. In other words: no medical, no damages. This would help to reduce fraudulent or exaggerated claims.
• There must be robust regulation of claims management organisations. This would reduce the negative impact they have on the industry.
• Better enforcement of data protection legislation is desperately needed. This would prevent the misuse of customer data, which concerns consumers and brings the industry into disrepute. It would also curtail the use of unsolicited marketing to encourage people to take up fraudulent or exaggerated claims.
• Better regulation of insurance companies is needed to stop sharp practices such as third party capture (pressuring claimants to settle before the case has been fully considered).
• The sector needs to work with medical organisations to develop better knowledge and understanding of what soft tissue injuries can be caused by motor accidents and to ensure that medical examinations and reports are substantive and objective.
• There must be continued improvement in vehicle safety to reduce and prevent head and neck injuries.

I’d be delighted to discuss any of this at tomorrow’s conference, or via comments to this blog.

Dawn Makin’s case is absolutely tragic for the loss of the life of a young child, as well as the devastating subsequent impact on her life

It also puts the spotlight on serious data protection breaches in the personal injury sector.

A few weeks ago the tragic case of Dawn Makin hit the headlines. The former nurse killed  her four-year-old daughter, Chloe in February 2011 before seeking to take her own life. Dawn Makin herself is now wheelchair bound following the suicide attempt. She is now serving a 12-year sentence following conviction for the killing.

Cases in which a parent kills a child are always awful. How, we wonder, is it possible that any parent would ever do such a thing? Our hearts go out to the poor, innocent child.

The data protection breach background pales into insignificance by comparison. Dawn Makin was sacked for illegally accessing a computer at Moorgate Primary walk-in centre in Bury. Why did she do this? To pass on the confidential, medically sensitive and personal details of 29 road accident victims to her boyfriend Martin Campbell, who worked for a personal injury claims company and who has since pleaded guilty to data protection offences.  He and Dawn Makin split up but she, too, was due in court to on data protection charges after a number of patients quite properly complained to NHS Bury in May 2010. Consequently Dawn Makin lost her job.

Judge Anthony Russell, passing sentence, stated: “The facts of this case are appalling. The victim was a four-year-old child, someone who trusted you. This was a sustained attack. Chloe must have undergone significant and considerable physical and emotional suffering. Finally, the physical injuries you have caused to yourself which are permanent and the knowledge you have killed your only child will be with you for the rest of your life.”

We should also condemn, in the strongest fashion possible, the very existence of the culture that facilitated the actions of Martin Campbell.

If personal data protection rights were properly respected, and the law observed, there would have been no mileage in Martin Campbell seeking to persuade his partner to reveal confidential medical information. As it is, the regrettable truth is that, as you read this, someone, somewhere will be illicitly selling on personal data.

We must hope that cases such as Dawn Makin’s mark the absolute limit of the tragedy that can indirectly  flow from data protection breaches, and further hope it acts as a catalyst to an impetus to prevent continued and future breaches.

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.

Postcard from Chicago

This blog is a first. In contrast to my usual musings, which are penned at various places in the UK, this one comes all the way from Chicago, Illinois. And no, before anyone tells me that I must be a workaholic, I'm not here on holiday.

I'm here as an attendee of the American Association of Justice (AAJ) annual convention, which is being held at the Chicago Hilton. The AAJ has been going for over 65 years, and previously  known as the Association of Trial Lawyers of America (ATLA). Its purpose is to support plaintiff lawyers of all guises, making for (as its website puts it) "a collective voice of the trial bar on Capitol Hill and in courthouses across the nation".

The AAJ's annual conference is attended by trial lawyers of every hue. There are seminars for trucking litigation lawyers, for those specialising in chiropractic malpractice litigation, birth trauma litigation and various kinds of pharmaceutical litigation. There all manner of other lectures and talks, all of which enable the open exchange of information and cutting edge know-how. I felt it was important to get a sense of how American lawyers deal with the kinds of issue that Spencers Solicitors handle, and so booked myself in for the four day conference.

The experience has been illuminating and when time allows I may write in more detail about it. For now, though, I will observe that two truisms seem to apply to the legal world on both sides of the atlantic.

Firstly, claimant lawyers are engaged in an adversarial battle with insurers. The latter subject to a minority exceptions seem to seek to minimise their liability at every stage, rather than remembering that without the people who take out their policies they wouldn't be in business. If only, as I have often argued in this blog, there could be a more constructive dialogue between insurers and claimant lawyers - if only a more holistic approach could be taken to the question of a victim's right to compensation - much time, cost and anxiety would be saved.

Secondly, claimant lawyers here and in America seem to be up against a legislative drive to reduce or cap the costs they can recover. While there may be merit in this in some ways, it cannot be right if the effect is to jeopardise a victim's ability to secure compensation to which he or she is rightfully entitled.

A final, more tangential observation is that it's true: American lawyers really are more theatrical than their British counterparts. They certainly don't lack for confidence and character. Last night, for example, my daughter Esme (who is accompanying me on the trip) booked us into Buddy Guy's Legends club. This is one of the most famous blues clubs in the world, and we had a fantastic evening watching brilliant musicians like Eric 'Guitar' Davis and Corey Dennison. As the evening wended on I found myself talking to a chap at our  table. He was confident and charismatic - and turned out to be an appeal judge from North Carolina.

Somehow, one doesn't seem to meet Court of Appeal judges in Ronnie Scott's club in the heart of the West End. That's not to say they don't like jazz - in fact, I suspect quite a few of them do - but it is to say that they'd be hesitant about striking up a conversation with a complete stranger. Not so in America, and tonight Esme is taking me to another blues club. I'll be surprised if any lawyers who happen to be there are backward about coming forward.

Britain’s dock workers shouldn’t have to rely on a Brando figure

Of all manual labour jobs, working in a dockyard might be the hardest. I say this because a friend once spent a summer working in Exmouth docks in Devon. He was exhausted by the end of every day. Sometimes his hands and wrists were cut by what he was unloading – he especially he hated fertiliser bags. But there was no alternative; my friend couldn’t just stop and invoke health and safety legislation. It was a case of either getting on with whatever he had to do, without complaint, or losing his job.

That was some 25 years ago. Society has come a long way since, and Britain stands proud as having the best health and safety at work record in Europe. Employers no longer resent provisions in legislation such as the Healthy and Safety at Work Act 1974. The majority now accept that they have a duty of care to look after, as far as possible, their employees’ health, safety and welfare while they are at work. For all that the tabloids sometimes assert that this means that it’s impossible to change a light bulb without performing a risk assessment, there’s an undeniable upside: our working environments are, for the most part, safe places to be.

It’s with some concern, then, that I read about proposals by the Health and Safety Executive (HSE) to axe rules which are specific to dockyards. There is more about this on the website of the Association of Personal Injury Lawyers. In a nutshell, the HSE proposes that regulations which are specific to dockyards, such as ensuring ladders are in place as a means of escape if workers fall into the water, are to be scrapped and replaced with ‘guidance’.

The measure is in keeping with the present government’s obsession with cutting red tape. I object to red tape as much as the next man – if it’s unnecessary and counter-productive. But I’m very worried when I see ‘red tape’ being cut in a dangerous working environment like a dockyard. The words of APIL president Karl Tonks are salutary: “Five times more dock workers die than the national average for workplace deaths so the last thing the port industry needs is weaker safety measures.”

It’s impossible not to agree. Working in a dockyard is tough enough without stripping workers of much-needed health and safety protection. As ever, what is required is a full and considered appraisal of existing rules and regulations and a holistic approach to whether they work or not. I very much doubt that this has been undertaken; once again, it seems as if the government is looking for sound bites in the tabloids rather than properly assessing a given situation.

In 1954, years before my friend had his summer stint in Exmouth docks, Elia Kazan’s On The Waterfront was released. The film chronicled corruption in New Jersey’s dockyards, with former boxer Marlon Brando famously taking on the mob boss, and winning. Great though it is, On The Waterfront depicts a lost era, one in which health and safety at work was as fanciful as rain in a desert.

We’ve come a long way since. What we don’t want is our dock workers having to rely on a Brando figure to secure their rights. I urge a rethink of the HSE proposals and due consideration of whether their implementation might not ultimately have tragic consequences.

SCI People Deserve Better

Yesterday I found myself in the House of Lords. Specifically, I was in the Grimond Room at Portcullis House for the AGM of the All Party Parliamentary Group on Spinal Cord Injury. I attended as a guest, having been invited by the Motor Accident Solicitors’ Society.

I found the experience very moving – and not just because of the impressive surrounds of the House of Lords. Certainly, being in such a historical place is stirring in its own right, but what I found so poignant was the subject under discussion, and the testimony of Spinal Cord Injured (SCI) people.

The AGM’s purpose was to discuss the issues SCI people face when being assessed for NHS continued healthcare. It was chaired by Ian Lucas, the Labour MP for Wrexham, and among those speaking were Professor Luke Clements of Cardiff Law School, and John Burns, who is a tetraplegic.

Mr Lucas was a fine chair, and Professor Clements an erudite analyst on the legal issues surrounding the provision of continued healthcare to SCI people. But what moved me so much was the story of Mr Burns, whose battle to secure continuing healthcare in his own home was shocking and dismaying in equal measure.

It strikes me as appalling that SCI people have to overcome such barriers when applying for continuing healthcare from their local Primary Care Trusts. Why, in a civilised society such as Britain, is it so difficult for people whose quality of life is so dreadfully curtailed to obtain adequate care?

The leading authority in the area is the Coughlan case, a Court of Appeal decision from 1999. Pamela Coughlan was a disabled woman who was denied fully funded NHS care, having been told that she only needed general rather than specialist nursing. She went to law to argue that the NHS had wrongly passed the buck to social services, and she won. In agreeing with her, the Court of Appeal laid down a test to determine whether the NHS is responsible for funding, as follows: 

• If the person’s reason for placement in a home was primarily a health need, then the NHS is responsible for funding the whole package;
• Local social services are only responsible for care which is “merely incidental or ancillary to the provision of the accommodation”.

Regrettably, the Coughlan criteria have not been universally adopted – the Department of Health left it to individual health authorities and Primary Care Trusts to decide each case on its own merits, which led to considerable divergence in practice around the country. In turn, this has led to palpable injustice and a great many misconceptions, not least the widespread beliefs that once a person is not in hospital, they have to pay for their care, and that care outside hospital is social (or personal) care. A related myth is that people in residential or nursing homes automatically have to pay for their care.


Professor Clements debunked these ideas, citing the Coughlan criteria to show that they are not legally correct. That he did so made Mr Burns’ tale all the more moving. This is a man whose circumstances are heart-rending and far from unique. He was forced, through lack of any alternative, to live in institutional care – which understandably he regarded as akin to prison. He missed family life, the benefits of which so many of us take for granted. Mr Burns missed anniversary celebrations and seeing his sons grow up, and all at a time when he was in most need of family support. 


Throughout, he had to try to come to terms with a tragic water sports accident which had left him paralysed and without sensation from the neck down. He brought himself, his wife and his audience to the brink of tears as he so spoke so courageously.


I’m glad I was able to attend yesterday’s AGM. In some ways, it was depressing – the neglect of SCI people and the systemic failure to provide properly for their needs is terrible – and yet I emerged feeling inspired by Mr Burns’ courage. I hope that other people will join me in pressing for a higher standard of care in this area. As a society, we can and must do better.

Praise Be: the OFT has a go at Backhander Britain

At last, a breath of fresh air in the debate about the insurance industry. It came last week in the form of the Office of Fair Trading’s report on private motor insurance. Make no mistake: for those of us who have been banging the drum for reform, the OFT’s report was just what the doctor ordered, all the more so because it came in the midst of a barrage of spin about supposedly bogus whiplash claims and their dire effect on motorists’ premiums.

But the OFT report is not merely welcome because of its timing. Its clarity and sense are as impressive as its provisional decision to refer what it describes as the “dysfunctional” UK market in private motor insurance to the Competition Commission for full investigation. Transport Committee chair Louise Ellman applauded the report, describing it as “a major step forward” and declaring that the Committee ought to engage in the ensuing consultation process with a view to making “the strongest possible case for the referral”.

It is to be hoped that referral duly comes to pass. The insurance industry has mutated into an industry where profiteering sometimes seems to be the insurers’ sole motivation. Karl Tonks, the chairman of the Association of Personal Injury Lawyers (APIL) summed up this highly regrettable state of affairs:  “What the OFT calls ‘dysfunctional’ and ‘inefficient’ actually reveals a host of grubby practices to line insurers’ own pockets, to the tune of an extra £225 million on car insurance premiums last year.”

This is the truth that the insurance industry dare not allow to be uttered. Premiums keep rising and insurers blame everyone but themselves for what is happening. The reality is that real change – to the consumer’s benefit – entails a root and branch reappraisal of how the insurance industry operates. This, in turn, entails confronting the unpalatable fact that here, in a core service sector which affects us all, backhander Britain is alive and well.

Thankfully, the OFT report begins the process of tackling this. It reveals the shoddy practices that those of us who practise in this area see all too often, including the ramping up of repair costs and the charge of hiring replacement vehicles. In effect, insurers collude with vehicle hire companies and repairers (for example, paint and car parts suppliers) to inflate charges, and why? Because they’re in for kickbacks – and because higher costs for a claim will help to dent a rival’s profitability.

The OFT report is welcome, but any investigation by the Competition Commission won’t begin until autumn and may then take up to two years. Why not, in the interim, a voluntary abolition across the board of the insurer practices uncovered by the OFT?

We can be justly proud of Queen Elizabeth II and last weekend’s Royal Jubilee, but Backhander Britain is not something to proud of. Hats off to the OFT for lending significant authority to those of us who’ve had enough.

The insurers’ lot in life

Since the advent of the 2008 financial crisis, we are reminded on a near daily basis the weaknesses of free-market capitalism. Stories of sky-high pay, greed and commercial practices – which are geared to the benefit of the few and at the expense of the many – habitually occupy the public consciousness.

While the most common focus may be on banking, the personal injury system is just as riddled with the worst excesses of capitalism. No more so is this apparent than in the auctioning of personal injury cases.

Some of you may have read my remarks on this practice in the media this week, to refrain it is the ‘referral fees’ model brought to its logical and most dehumanising conclusion, essentially insurers conduct referral fee auctions amongst solicitors for bundles of cases. The ‘price tag’ of these case bundles is likely to be influenced by the degree of injuries sustained by specific cases, essentially putting people’s misery up for sale to the highest bidder.

I was compelled to speak out on this issue as it has become clear that the referral fee ban contained in the LASPO Act has done nothing to curtail this practice. Insurers, and others, continue to make hay while the sun shines ahead of the ban in April 2013. The Government and public are distracted by talk of ‘whiplash epidemics’ and the need to reign in ‘ambulance-chasing lawyers’. Blame for the ills in the personal industry market is spread far and wide, but little is placed at the door of the insurer. It is my hope that by shedding some light on this practice, the microscope of public scrutiny would focus sharply on the amorality of the insurance industry’s treatment of accident victims.

I don’t believe that the insurance industry is staffed by those lacking in moral conscience. It is not the people within the personal injury system who are found wanting, rather it is the mechanics of the industry itself which are so geared towards commoditisation and profiteering that the human element is all but removed. Like in banking, the rights of the individual and concepts of morality are often lost in a morass of spread-sheets, mathematical formulas and clever business practices all designed to accentuate the bottom line. At the end of the day we are talking about people who have been hurt, sometimes catastrophically. This fundamental misstep is not only a direct threat to access to justice for injured people, it is also a key reason behind the escalation of motor insurance premiums for all.

Make no mistake, I am not advocating reversion to an agrarian economy, nor harking back to some mythical golden-age where insurers were an unbridled force for good. I am simply saying that a conscious needs to be injected into the system – call it conscientious free-market capitalism or whatever you like – where the drive to an ever greater bottom line is tempered by equal thought for the public good. Such a step-change could result in insurers working with, not fighting, solicitors to create a framework where access to justice and the rights of victims of accidents are protected, while the costs in the system are minimised and fair returns are commercially generated.

These aims are of course not mutually exclusive; however the mentality present in the insurance industry, exemplified by these auctions, is not conducive to the construction of a fair and equitable system. I have written repeatedly of the need for personal injury solicitors to recognise the dysfunctions in the system and strive for higher professional standards and the same retrospective and reform needs to be undertaken by the insurance industry. Then and only then will the holistic reform which the personal injury system sorely needs become a reality.

Time for compromise and understanding

Yesterday I chaired a conference entitled ‘Whiplash: The Evidence’. It was hosted by the Association of Personal Injury Lawyers (APIL), of which I am a Fellow, and took place at the Grange City Hotel, near the Tower of London.

The Tower is well-known for having a bloodthirsty history, but I was surprised to learn that the Grange City Hotel has also hosted amateur boxing events. Perhaps some of the bouts even happened in the same room set aside for APIL yesterday – a strange thought.

But then again, perhaps a sense of conflict lurking in the margins was appropriate, for when it comes to the ongoing debate about whiplash it seems that polarised views have been taken and battle engaged. Or, to use a boxing metaphor, the two sides have not only laced up their gloves but have climbed through the ropes and now find themselves bloodied but still standing in the mid-point of a particularly savage fight.

My hope, after yesterday’s conference, is that the hostilities cease. The two sides – insurers and government on one side, with claimant solicitors and medical experts on the other – need to forge a dialogue and start working together to resolve the problems of a system that has become dysfunctional. Nothing is ever gained by rushing through reform; change needs to be holistic and sensibly considered. It is not too late for this to happen even in an area as controversial as whiplash.

In the hope that compromise between the two combatants can be found I suggested yesterday that solicitors should hold their hands up and acknowledge that there are problems in our profession. That there are problems is, after all, no secret. Some solicitors have forgotten the standards they should adhere to, others think more of their profits than their clients. We need to commit to the Benson principles – about which I have written here before – and agree to robust regulation by a regulator which enforces professional standards and has the tools and inclination to punish those who transgress. A robust regulator will help to stamp out the various other maladies which dog our profession – cold calling, advertising which incites litigation, and conflicts of interest.

If the legal profession is prepared to hold out an olive branch, I hope it will be reciprocated by the insurance industry – and prove to be a prompt for a united approach to reform in this sector. This, of course, would entail the insurance industry accepting that it needs to put its house in order, too. Many practices need to change, not least calling injured parties and convincing them to settle (with no medical assessment and no legal representation), then chalking up the resulting under-settled cases as ‘whiplash’ claims. We then need to ensure that the drive to ‘reform’ is slowed down and properly managed. At present, the bandwagon is pushing for the introduction of insurer-driven changes to the RTA portal and small claims court by April 2013. This is clearly wrong.

Reforms that I would like to see the insurers accept can be succinctly summarised. No personal injury claim should ever be settled without supporting medical evidence – or legal representation. If this were agreed I have a strong suspicion that the ‘whiplash epidemic’ would soon start to abate. Next, we need to upskill our understanding of whiplash as an injury. There needs to be consistency across all cases, informed by the necessary biopsychosocial model. There also needs to be better data sharing. Insurers need to share IFB data with claimant representatives. By sharing this information we can identify patterns of claiming and ensure improved fraud prevention.

Add to this a commitment by insurers to pass on costs to motor policy purchasers via a simple percentage mechanism where claims costs reduction equate to reduced premiums and we will have a system with less fraud, less costs and increased fairness.

Isn’t that worth striving for?

I hope so. Here’s to less by way of pugilism by the opposing sides and more consensus, understanding and compromise.

Whiplash reform: slanted to the insurance industry’s benefit

I was delighted to see that The Lawyer published my blog from last week, in which I criticised the bandwagon to dismiss whiplash. Delighted, yes, but despite some welcome extra publicity I do not feel that it is right to leave this issue alone.

The fact is that the government’s drive to ‘reform’ the way that whiplash claims are dealt with will leave anyone who has suffered a genuine injury feeling guilty if they make a claim, or, worse, unable even to make a claim in the first place. But what is even more worrying is the way in which the statements like that of Jack Straw, writing in The Times last week, are uncritically accepted.

Do a google search of ‘whiplash reforms’ and the newspaper headlines that come up are almost all slanted in favour of insurers, as if to accept, without any analysis, Straw’s statement in his Times piece: “Everyone I’ve met in the whiplash industry knows that they’ve been rumbled; that the game is nearly up.” The Labour MP for Blackburn wrote of his pleasure at “ministers’ determination tackle this issue”, in terms that were as pejorative as they were wrong. Whiplash claims apparently depend on “very flaky medical evidence submitted by practitioners with a vested interest”. It is supposedly “too easy to establish liability in whiplash claims”. All in all, they amount to “scandal” which only Parliament can put right. No surprise, then, that Mr Straw cites a book whose very title shows that it is likely to be biased rather than objective: Whiplash and Other Useful Injuries, by Andrew Malleson.

But talk to informed claimant solicitors, GPs and medico-legal experts who deal regularly with whiplash caused injury and you will find a very different view. For those of us at the coalface – for those of us who deal with the reality of the person whose neck has suffered real trauma in a road accident, through no fault of their own – whiplash is a real and debilitating condition. What surprises me, in newspaper coverage of the issue, is the way that journalists seem to accept that whiplash is inevitably ‘bogus’. Why is this? And do the journalists promoting  this line not understand that in doing so they are championing big business rather than the man in the street?

It is all very well for the likes of Jack Straw and other opponents of whiplash to say that it is driving up the cost of motor insurance premiums. But does anyone really think that insurers will suddenly drop the cost of those premiums if and when the government makes it all but impossible to bring a claim for low velocity whiplash incidents?

An oft-ignored fact gives the lie to this: since the introduction of the road traffic accident portal in 2010, insurance premiums have, according to the insurers analysis, been increasing above the rate of inflation. This is despite some  estimate  £500m in legal costs being  saved by the insurance industry since the establishment of the portal. That being the case, how can we seriously believe that insurers will pass on costs savings to motorists as a consequence of so-called ‘reforms’ to whiplash claims?

Past experience tells us its not guaranteed. The real scandal is not that people make claims for whiplash but that so few people (and certainly, no one in government) are prepared to peel away the layers in this debate and confront the truth: reforms to whiplash are geared to insurers’ benefit.

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.

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!

Clarity, at last, for mesothelioma victims – but we need to keep a watch on LASPO

At last, some clarity in the fraught arena of mesothelioma litigation. Today’s judgment by the Supreme Court finally establishes a level playing field and emerges as the single most important judicial decision affecting asbestos liabilities in the UK to date.

I touched upon mesothelioma, a form of cancer caused by exposure to asbestos, last October in the context of the Legal Aid, Sentencing and Punishment of Offenders Bill (LASPO). I made the point that the government’s determination to push LASPO through would, in reducing the recoverability of success fees and after the event insurance (ATE), make it very difficult for mesothelioma victims and their families to bring claims.

This remains a live issue but meanwhile the Supreme Court has been busy. Five justices – Lord Phillips, sitting as President, and Lords Mance, Kerr, Clarke and Dyson – have unravelled a complex skein of law and fact to give judgment on an appeal from a Court of Appeal ruling in 2010. The background is undeniably obscure, for many lawyers as much as laypersons, but today’s judgment concerns the obligations of insurance companies under various contracts of employers’ liability (“EL”) insurance.

In essence, the Supreme Court was tasked with determining the scope of the insurers’ obligations to indemnify employers against their liabilities towards employees who have contracted mesothelioma following exposure to asbestos. This was complicated because of the unusually long gestation period for mesothelioma: it can take up to 40 years for between exposure to asbestos and the manifestation of the disease. The insurers’ case was that EL policies only covered mesothelioma which manifested itself as a disease at some point during the relevant policy period. In contrast, the employers argued that the insurance policies covered mesothelioma caused by exposure to asbestos during the relevant policy period but which develops and manifests itself sometime later.

Thankfully, the Supreme Court came down on the side of the victims and their families. Its analysis of the factual nexus and preceding judgments led it to conclude that it would be “remarkable if the insurers were not liable under the policies”. Crucially, then, for the purposes of the EL policies, “the negligent exposure of an employee to asbestos during the policy period has a sufficient causal link with subsequently arising mesothelioma to trigger the insurer’s obligation to indemnify the employer.”

What this means is that there is now certainty and a level playing field for those affected by asbestos-related disease – the biggest killer in the workplace in Britain. Insurers have continually tried to wriggle out of liability for mesothelioma claims but this judgment should, thanks to its clarity, render such attempts futile and, just as crucially, see off the prospect of satellite litigation on similar issues.

Hats off to the Supreme Court justices but let’s not forget that LASPO as it is currently drafted will make it difficult to get claims off the ground in the first place. We need to remain vigilant, and ensure that the government’s easy spin about battling ‘compensation culture’ does not ultimately deny the deserving the right to justice.

Driving down legal costs also means driving down standards of service

This week I’m going to talk about costs. Or rather, the preoccupation with reducing legal costs that seems to be so high on the government’s agenda – and which certain newspapers trot out without thought.

Ever since the Jackson Review of costs in civil litigation, lawyers’ bills have been under the microscope. Nothing wrong with that: it’s important to maintain checks and balances, and there is no doubt that some lawyers milk the system to the exclusive benefit of themselves, with their clients’ needs a distant second. But lately, the laudable aims of the Lord Justice Jackson seem to have been hijacked.

The present government’s crusade to attack what it pillories as the ‘compensation culture’ – a crusade which its spin doctors say is in keeping with the spirit of the Jackson Review – amounts to a dumbing down of legal services. The preoccupation with reducing cost is evident at every turn, as if by driving down costs all the ills of the personal injury market will be cured. This, though, is not the case. The situation, as with so much of life, is fluid and complex rather than black and white.

By squeezing the market ever more and pushing costs down to the lowest possible denominator, the government simply increases the prospect of unprofessional representation.  It cannot be in the consumer’s interest to suffer an injury – one for which compensation is properly payable – and yet discover that a barely qualified, inexperienced practitioner is the only person available to take the claim forward.

Moreover, this, the commodification of legal services, flies in the face of what is second nature to the true professional. It would serve the government – and us, the taxpayers – well if it were to bear in mind what it takes to act professionally, as stated in 1992 by Lord Benson. There were nine key principles, and I’ve set them out in full below. 

1. The profession [in this case, the Law Society] must be controlled by a governing body, which in professional matters directs the behaviour of its members.

2. The Governing Body must set adequate standards of education as a condition of entry and thereafter ensure that students obtain an acceptable standard of professional competence. Training and education do not stop at qualification. They must continue throughout the member's professional life.

3. The Governing Body must set the ethical rules and professional standards that are to be observed by the members. They should be higher than those established by the general law.

4. The rules and standards enforced by the Governing Body should be designed for the benefit of the public and not for the private advantage of the members.

5. The Governing Body must take disciplinary action, if necessary expulsion from membership, should the rules and standards it lays down not be observed, or should a member be guilty of bad professional work.

6. Work is often reserved to a profession by statute – not because it was for the advantage of the member, but because of the protection of the public. Persons with the requisite training, standards and disciplines should carry it out.

7. The Governing Body must satisfy itself that there is fair and open competition in the practice of the profession.

8. The members of the profession, whether in practice or in employment, must be independent in thought and outlook. They must not allow themselves to be put under the control or dominance of any persons or organisation that could impair that independence.

9. In its specific field of learning, a profession must give leadership to the public it serves.

What underpins all of Lord Benson’s astute and sensible points is the notion that to be professional is to act in the public interest. The key factor, for Lord Benson, was the degree to which individuals in a profession and their governing body acted ethically.

It is this, allied with a holistic view of the PI market rather than a piecemeal approach, that will help lawyers provide the best value to clients. The government should take note. 

David Cameron’s proposals on whiplash are flawed and absurd

Picture this:  you’ve just parked your car, perfectly legally, outside a shop. You’ve just unclipped your seatbelt, and you’re about to open the passenger door to climb out of the vehicle, when a car shunts you from behind.

It turns out that the driver picked up his phone to take a call, and lost control of his vehicle. Thankfully, he was only travelling at about 10mph, so the impact wasn’t as bad as it could have been. But still, your body has been given quite a jolt. Fortunately you weren’t thrown through the windscreen, and yet more mercifully, nothing is broken. But within minutes of the incident your neck is hurting, and the following day it is worse. In fact, it hurts like hell, making your day-to-day activities thoroughly miserable. You struggle to turn your neck and move comfortably, so much so that you have to take time off work. Your car isn’t looking too pretty, either.

The injury takes a few weeks to settle down. Your doctor advises you that you’ve sustained whiplash. You’re self-employed, and have lost income as a consequence of another driver’s negligence. You don’t believe in what the government calls ‘compensation culture’ but you can’t help but feel fairly hard done by, so you go and see a specialist personal injury solicitor. This is what he says:

“I’m terribly sorry but there’s nothing I can do. For starters, you would need to see a panel of doctors and ensure that they agreed you’re suffering from whiplash, rather than just your own GP. This will make for delay, but in fact your claim doesn’t even get off the ground. This is because the vehicle which hit your car was travelling at under 15mph. Thanks to changes brought in by David Cameron, claims for whiplash injuries have become difficult per se – and impossible unless the incident happened at a speed of 15mph or over.”

To all right-thinking people, the above scenario will seem unfair and, indeed, absurd. However, it will come to pass if proposals announced yesterday by David Cameron to tackle ‘compensation culture’ are implemented. Making whiplash victims see a panel of medical experts and forcing their lawyers to incur extra costs in proving that an accident occurred at 15mph or over are precisely what the Prime Minister thinks should happen, following statements made at a summit of insurers at Downing Street yesterday.

Mr Cameron’s argument is that Britain’s reputation as ‘the whiplash capital of Europe’ forces insurers to raise their premiums, which, in turn, hits the wallets of the taxpayer. There are a number of flaws with this, not least the fact that medical understanding of whiplash is evolving rapidly and pointing squarely towards the fact that it is a genuine and debilitating condition. Moreover, what evidence is there to suggest that insurers will reduce premiums if the proposals are implemented? There is also considerable doubt that, all things considered, premiums are actually rising, least of all as a result of whiplash claims.

But perhaps the most insulting aspect of the Prime Minister’s proposals lies in their emphasis on the welfare of big business rather than the victim. To Mr Cameron, it is preferable to look after huge and wealthy insurance companies – and their shareholders – rather than think through the impact on the lives of people who suffer an injury such as that which I outlined above. 

The LASPO bill and the insurance industry: too close for comfort

Earlier this week the House of Lords voted on measures in government's Legal Aid, Sentencing and Punishment of Offenders bill (the LASPO bill), that which is intended to implement various reforms to the civil justice system proposed by Lord Justice Jackson. Fortunately, the vote resulted in a decision to delay implementation until April 2013.

As Lord Wallace of Tankerness put it, the drive to make radical and necessary changes has to be balanced against the need for thoroughness: "We believe that these are important measures and we want to implement them as soon as possible in order to control the costs of civil litigation. We wish to make sure that we get the details of these regulations and rules right, and that will inevitably take some time."

There will many observers who will have breathed a sigh of relief at the announcement by the Lords. Rushing through legislation is rarely a good idea. Time and thought are necessary to ensure that changes are fair, sensible and workable. At a time when a holistic approach is needed to resolve the problems in civil litigation and, especially, the personal injury sector, the LASPO bill, in its present form, is none of these things.

But just as I welcome the delay in LASPO's implementation, I cannot but be concerned by revelations of the cosy relationship between the government and the insurance industry. As The Guardian reported on Monday, insurers were given extensive access to the civil servants charged with drafting LASPO. The result is a bill that seems dangerously slanted towards insurers, benefitting the industry to the tune of hundreds of millions of pounds.

Thanks to a request under the Freedom of Information Act, it appears that the head of civil litigation funding and costs at the Ministry of Justice and the official in charge of the Jackson reforms, and his team gave the Association of British Insurers (ABI), the industry lobbying body, a great deal of information on their plans. This seems to have occurred with such regularity and willingness that Desmond Hudson, the Law Society's chief executive, described LASPO as "legislation for the insurance industry, by the insurance industry."

Naturally, the ABI rejects the charge of collusion. A spokesman said: "We have not said anything in private that we have not said in public and we have nothing to hide. We make no apology for providing evidence to policymakers to tackle the compensation culture and help reduce motor insurance premiums. The ABI, unlike the claimant lawyer lobby, has provided the evidence and analysis to support our public policy positions rather than rely on rhetoric and anecdote."

But, as the ever-readable Left Foot Forward blog says, "40 Conservative MPs, including the prime minister, chancellor, and minister of justice, have or had interests in the insurance industry." Chief among them would seem to be Jonathan Djanogly, the Justice Minister, whose shareholding in Aviva PLC amounts to a £97,000 conflict of interest. Evidently he is far from alone: the Central Conservative Party office and constituencies receive financial donations from a range of figures in the insurance industry and business connected to the insurance industry.

This week we have also seen Sir Fred Goodwin stripped of his knighthood. The Forfeiture Committee's decision to pour such ignominy on the man who played so large a role in the near collapse of the Royal Bank of Scotland has been welcomed by David Cameron. It seems to me, however, that the Prime Minister would do well to look closer to home. The government's house, when it comes to the insurance industry, is not in order.

Claimants should be free to bring claims as they see fit

The second reading of the Legal Aid, Sentencing and Punishment of Offenders Bill (LASPO) took place at the tail end of last year. It was accompanied by a number of amendments, tabled by members of the House of Lords. One especially is very welcome: that which seeks to prevent insurers approaching claimants directly.

Lords Thomas of Gresford, Clement-Jones, Carlile of Berriew and Phillips of Sudbury proposed the amendments, which were reported in The Law Society Gazette at the beginning of December. They seek to stop the practice known as 'third party capture', which usually happens in road traffic accident (RTA) cases but could also extend to other scenarios, for example a claim relating to an injury in the workplace.

In a case of third party capture, an insurance company representing the individual who caused a victim's injuries contacts the injured party directly. The injured party is not legally represented, but the insurer goes ahead and settles the claim regardless. Typical incentives to ensure speedy settlement will be phrases like 'If you agree this figure now, I'll have it transferred to your bank account later today' and 'Of course, you're entitled to go and see a solicitor - but we all know how much time they take up, so perhaps you'd like to come to an agreement now so that you can get on with your life?'

Such settlement is intended to be full and final. There's nothing to be done about it once it's been made, and guess what: it's never for the maximum amount that could have been claimed. The whole point of third party capture is to under-settle claims, to the insurer's benefit and to the claimant's detriment.

I do not object to an individual actively choosing to deal with the other side's insurers. If a person makes this decision willingly, that is a matter for them. But what goes on at present is wrong: it is another example of the dysfunction which abounds in the personal injury sector. Indeed, my worry is that the Lords' amendments (to clause 55 of LASPO) do not go far enough. Here's the new clause 55, as proposed by the four Lords:
 

Third party's insurance company

(1) A third party's insurance company may not solicit a claimant who has a cause of action for personal injuries against its policy holder, to settle that cause of action where to the knowledge of the insurance company, the claimant is legally represented.

(2) A third party's insurance company may not make an offer to settle in circumstances not prohibited by subsection (1), unless-

(a) it has obtained adequate medical evidence of the personal injury and has disclosed it to the claimant; and

(b) the claimant is advised when the offer is made of his right to obtain legal advice; and

(c) the offer is in full and final settlement of the cause of action.

(3) Any settlement made in breach of subsections (1) and (2) shall be void. 

Look carefully at the words italicised above. I suggest that these be deleted; likewise, that paragraph (2) (c) is removed. The reasons for these amendments respectively are, on the one hand, that the claimant is even more vulnerable where he or she is not legally represented. Insurers often contact claimants before they have legal representation: it is well known in the insurance industry that the quicker you can contact a claimant following an accident, the more likely you are to be successful in capturing that client prior to them taking legal advice.

On the other hand, I propose the deletion of the full and final settlement clause to ensure that the existing legal position is not interfered with. Paradoxically, the Lords, by inserting clause (2) (c), create the inference that a settlement made is valid. I believe clients should be able to reopen a claim at the moment where an insurer has inappropriately settled the case direct.

Some who have reached agreements directly with insurers to settle claims feel cheated and desperate to do something about it after the event, but more often people are simply unaware.  As a practice, third party capture is plainly wrong, but those of us who wish to do something about it must be vigilant and ensure that the Lords' amendments, welcome as they are, cover all the bases.
  

Accident victims should be entitled to instruct the solicitor of their choice

Picture the scene. You’ve been injured a mile from your house in a road accident. Fortunately, your injury isn’t life-threatening. However, it’s still painful and upsetting – perhaps a broken leg, or a badly damaged arm. The accident wasn’t your fault and, naturally enough, you’d like to make a claim for compensation. With a sigh of relief – for everyone knows that lawyers can cost a small fortune – you remember that your standard household policy also provides legal expenses insurance (LEI). Once back home, you dig out the policy and make a claim.

So far, so good. But then, a little later, you receive word from the insurance company that a firm of solicitors you’ve never heard of has been appointed to handle your claim. Worse, they’re at the other end of the country. They won’t be rushing down to see you to take instructions. If you want to go and see them, fine, but it’s hardly practical. You’ll have to accept that your relationship with them will be entirely over the phone and via correspondence.

You might not mind this, but many people do – especially if their accident isn’t straightforward. In such cases, local knowledge can be vital, but even if it isn’t the fact is that when people go through the trauma of an accident they often like to know the solicitor who handles their claim (or, at least, be able to get to know him or her). Their case, then, takes on a human dimension, rather than appearing as a statistic on a conveyor belt.

Regrettably, what ought to be a basic human right – to instruct the solicitor of one’s choice – is not as straightforward as it should be in Britain. A European Council directive (Directive 87/344, to be precise) provides that insurance contracts providing LEI should allow the insured a lawyer of their choice “from the moment that he has the right to claim from his insurer under the policy”. The Directive was tested in the European Court of Justice (ECJ) some two years ago, via the case of Austrian citizen Erhard Eschig (ECJ Case C-199/08). Eschig instructed the law firm Salpius Rechtsanwalts GmbH to represent him in several financial misselling claims. He sought confirmation from his insurer, Uniqa, that his legal costs would be met. Uniqa refused, stating that ‘mass claims’ (Eschig’s was one of many) would only be covered if handled by law firms on its panel.

Eschig complained. He challenged Uniqa, and the ECJ upheld his claim. It ruled that Uniqa’s purported limitation of the policy to mass claims was in breach of Directive 87/344.

As with so many European Directives, uncertainty as to their application in Britain prevails – irrespective of Mr Eschig’s claim. Here, the relevant law is contained in The Insurance Companies (Legal Expenses Insurance) Regulations 1990, which state:

6.—(1) Where under a legal expenses insurance contract recourse is had to a lawyer (or other person having such qualifications as may be necessary) to defend, represent or serve the interests of the insured in any inquiry or proceedings, the insured shall be free to choose that lawyer (or other person).

(2) The insured shall also be free to choose a lawyer (or other person having such qualifications as may be necessary) to serve his interests whenever a conflict of interests arises.

(3) The above rights shall be expressly recognised in the policy.

That seems crystal clear, but the practical reality is different. As many of us engaged in solicitor panel work know, insurers habitually work with panels of law firms, farming out work to their chosen panel where a key component in their choice is price. Claims will routinely be handled by lawyers who live and work miles from the victim’s abode or place where the accident occurred. Moreover, the Regulations stipulate that the freedom of choice arises in connection with “any inquiry or proceedings” – in other words, only when litigation is formally being contemplated. This is not in the spirit of Directive 87/344, which is not so restrictive.

The freedom of choice to instruct a solicitor is a basic human right. It’s a bit like supporting a football club. Some people may decry the fact that I choose to go and watch Chelsea (and after the home defeat by Aston Villa over the festive period, I lamented my decision, too) but no one can stop me from supporting the team of my choice. Similarly, no one should be able to prevent an accident victim instructing the solicitor with whom he or she feels most comfortable. If that’s the family firm, or the high street sole practitioner who’s been in the town for years, then so be it. The small print in LEI should have nothing to do with basic freedom of choice.