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.

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.