Saturday, 20 August 2016

Smokescreen

I see The Times has lapped up the latest propaganda about the cost of car insurance.

This time we are back to whiplash, giving fraud a rest for a few days, with the claim that at least £64 has been added to your average car insurance premium during the last year under the heading “Whiplash claims bump up car insurance costs”.

It's another big fib from the Dark Side of the industry that so many of us know well enough.  Government figures confirmed only three weeks ago that whiplash claims were falling, as reported by Scott Rees & Co , for example.

So, how can this be?

Well, fundamentally the explanation is that one story is true and the other isn’t.  Anyone who keeps an eye on this particular area or the financial markets will understand why there is a renewed drive right now to cover up the truth.

Half year results are out.  Let’s have a look at how three of the big names in motor insurance are faring amidst this battlefield of whiplash, fraud and fat cat lawyers…

First - good old Aviva.  One of my former assistants will remember them as the people who recommended that she didn’t obtain independent advice on her claim against their insured (Livin’ Aviva Loca!).

The former Norwich Union began in 2016 “from a position of strength”.  The Telegraph reported in March this year “Aviva shares jump as insurer posts bumper profits”.  Dividends were raised by 15%.

It seems like it has continued to go well for Paul Whitehouse’s chums with the interim results announcement of 4 August 2016 .  Mark Wilson Group Chief Executive Officer tells us:-

“Operating profits are up 13% and the dividend is up 10%.  We are delivering consistent, stable and predictable growth despite challenging market conditions”.

AXA half year results on 3 August 2016 show income and profitability rising across the board although they were cautious enough to mention “rising claims costs in motor classes”.

Perhaps the briefing in the summer was tighter than it was at the beginning of the year when AXA had announced gleefully an earnings increase of 25% in its UK and Ireland operations.  This included, according to Group Chief Executive Paul Evans:-


No mention there of rising claims in the UK or that profits are static, or worse, despite massive increase in revenue.

Direct Lying (remember them and the lovable hound tampering with complaint files before they went to the FSA?) were reported at the beginning of March as seeing “profits rise on strong motor business”. 


Meanwhile, they spin the story that these hikes are all a product of opportunist and dishonest claimants assisted by unscrupulous lawyers.

The bolder and brassier you are, the more you can get away with.  This sort of thing has happened on a terrifying scale in the past and shown just how much selfish desire can be satisfied if you Make the lie big.

Just occasionally, these con tricks are properly exposed.  Unfortunately events such as the grilling of top executives from these companies by a tenacious parliamentary sub-committee chair never seem to get the profile they deserve. See Hey diddle diddle..

At the end of the day all this wailing about whiplash and fraud is utter rubbish. Here’s the truth.

Insurers will whinge as they always have done that motor never makes a profit, never has. I’ve no doubt that the accounts they present will 'prove' that. They were more than happy to be in the business though and collecting huge swathes of cash from the punters whilst double-digit interest rates enabled them to make a big turn on that money.

We all know they would string out the claims for as long as possible to keep earning interest for as long as they could. Now interest rates are almost negative that profitable model is broken.

The hike in the cost of your policy isn’t to counterbalance the effects of whiplash or fraudulent claims. It’s to compensate for the disappearance of the revenue from capital reserves so they can still post huge profits to pay fat salaries and rising dividends.

The truth is ugly and embarrassing so it's dressed up and the activity of a tiny minority of criminals within a culture that insurers have created and cultivated is exaggerated, at increasing prejudice to genuine claims from innocent victims and access to justice.

And whilst we're all distracted by whiplash, fraud - even claims management - they'll be helping themselves to more of our money as usual..




Saturday, 30 July 2016

Under pressure

Brian May’s blog about his bruising experience in the civil courts showcases one of a number of ways in which access to justice is being eroded by recent and continuing changes to the rules that govern our civil court procedure.

Queen’s legendary lead guitarist, and astrophysicist, recently fell victim to what he understandably describes as the “absurd proportionality rule”. In short, he ended up with a recovery of around 20% of his actual costs of a ‘successful’ action against a noisy neighbour. He describes the detail of it at his blog, The scam of 'proportionate' legal costs and makes some heartfelt observations that resonate loudly with me.

At some time in our lives many of us will become involved in a civil court action. We’re not talking here about criminal offences which are dealt with by magistrates and Crown Courts but claims for money, compensation, injunctions, restitution etc handled by our County and High courts.

We’ve probably all done a spot of DIY around the house and garden. Law is no different in that you’re entitled to run your own case – as a litigant in person – and many more people are being forced to do so at present. But as with anything else you’re more likely to get the best results if you hire an expert, somebody who litigates for a living.

If you do engage a lawyer, you’ll need to pay them for their services and litigation can be expensive. What makes for a happy ending is being able to recover your legal costs, or the majority of them, from your opponent. Loser pays is a basic rule that has been a cornerstone of civil justice in this country for hundreds of years.

Of course that has to be subject to controls. It can’t be an open cheque book for those who can afford it to spend lavish amounts on the priciest solicitors and barristers they can find and use that enhanced threat to their advantage in the litigation. Courts use a process of assessment to ensure if necessary that the costs a winning party may recover at the end of the litigation are reasonable.

“Reasonable” isn’t defined on a whim. Costs judges have to exercise discretion and decide what they think is right in all the circumstances of the case but they must do so in accordance with established principles drawn from earlier cases. They’ll hear argument from both sides – those paying and those receiving – before deciding all the items in issue.

So far so good. 

Good enough, many would say. If for example your legal spend is many times the sum you eventually recover or reasonably thought you would recover, then it’ll take some explaining to persuade a costs judge that your bill is reasonable, surely?

Nevertheless, in 1998 along came Lord Harry Woolf with what was to be the first of many shake-ups of the rules and introduced the new concept of proportionality in response to these concerns. The Lord Chief Justice himself presided over a Court of Appeal that delivered a landmark judgment in 2003. It was in the case of Lownds v The Home Office.

The facts of the case are unimportant in this context. The focus of the judgment was on the successful claimant’s costs which ultimately added up to more than five times the value of the compensation that the defendant was ordered to pay. The court set out the approach to be taken in applying the new rules on proportionality.

In short there was to be a global assessment first. Did the amount claimed appear disproportionate having regard to various features of the case including notably the amount that the claimant had pursued and/or won? If so, the court must then look at the winner’s bill item by item applying a stricter test than normal.

To be allowed, each element of the costs claimed would have to be shown to be both reasonable and necessary. It was a game-changer.

I was involved in a lot of costs litigation last decade, some of it high profile, and largely in the context of personal injury cases funded by conditional fee agreements. For those of us in that arena the most important passage in the Lownds judgment was at paragraph 39:

“In deciding what is necessary the conduct of the other party is highly relevant. The other party by co−operation can reduce costs, by being uncooperative he can increase costs. If he is uncooperative that may render necessary costs which would otherwise be unnecessary and that he should pay the costs for the expense which he has made necessary is perfectly acceptable.

Access to justice would be impeded if lawyers felt they could not afford to do what is necessary to conduct the litigation.”

This was absolutely crucial, as anyone who has ever been involved in litigation against an opponent with deep pockets understands. Without that safeguard a party to litigation who can afford to lose is able to fight a war of attrition against a party that can’t.

Or as Brian May puts it, “It’s likely to make it almost impossible for the man in the street to fight back for justice against the bullies who trample all over him.”

Liability insurers are particularly prone to what I heard described in the Court of Appeal in 2003 as ‘behavioural issues’. As a matter of policy and business ethos, they make life difficult, not just for the claimant in one particular case but to deter others whose lawyers will know that the same risks face them and their clients if they dig in and fight for a fair result in the face of daft offers and spurious arguments.

All’s well that ends well if the claimant lawyer’s assessment is right and ultimately the loser is made to pay for “that which he has made necessary”.

But in 2013, the man seen by many as the nemesis of our civil justice system, Lord Justice Rupert Jackson, was to turn it upside down. The rule change introduced in April that year reversed the process.

Now the costs judge on a contested assessment is required to assess the reasonableness of the items claimed and then consider proportionality. If it looks too much in the circumstances, then the court has to cut the total allowed to a figure that looks and feels right.

So, everyone may spend days in some cases debating and arguing to reach a figure that is reasonable having regard to all the features of the case, including the losing party’s behaviour, and then slash it because – well – it still looks too much.

It’s a licence to insurers and other faceless corporates to print money to fill a war chest.

In an article I wrote for the Solicitors Journal in 2012 I examined how this would destroy Equality of arms – such an important principle of our – any – justice system. It generally takes around three years for the impact of such changes to be seen in the bigger cases that may then reach the spotlights of the superior courts so we’re starting to see the evidence of how momentous and potentially unfair this rule change will prove to be.

It means that the risk of a Pyrrhic victory in any successful case rises sharply especially against a corporate opponent where individuals are rarely held responsible for the sort of arrogant and lawless behaviour one Lord Justice described as ‘an insouciance to their obligations….that leaves one quite breathless” in the case of Brown-Quinn and others v Equity Syndicate Management

Disturbingly this is just one more ingredient in a poisonous concoction that is killing off our justice system. The growing imposition of fixed costs regimes is severely restricting the amounts that deserving litigants may recover from a wrongdoer against whom they have no other (legitimate) recourse. Mediation simply isn't an answer - you can't Speak softly without carrying a big stick.

Still, the greedy insurance companies bay for an increase in the limit below which virtually no costs are recovered by the innocent victims to Five grand.

In consequence, numbers of claims are falling. We’re not talking about fraudulent or frivolous actions but justifiable claims that people can’t afford to run even if they rightly assume that they’ll win. Lawyers who would effectively fund deserving claims with decent prospects can’t afford to do so, because even if they win, they’ll lose.

As litigation shrinks, so does the system. Courts close, law firms go bust, able people get out. The government speeds the process by hiking the fees, closing provincial courts, starving the ones left of resources. It’s the Road to Ruin.

The trouble is that for most people these are just the cries of self-interested lawyers – ‘fat cats’ starting to feel hungry. Actually, there are many of us who are motivated by pride in something that we made our vocation and the desire to champion weaker members of our society. Soon, though, there will be No more heroes.

Justice is an entitlement of everyone in our society. It’s the state’s duty to provide it and make it accessible when it is needed. Right now, it’s under immense pressure.



Monday, 16 May 2016

Dead...end

I was astonished to read yesterday that the DPP has felt it necessary to ‘issue a reminder’ to chief constables of police that dead people cannot be prosecuted. 

Seriously, it's true. See, for example, Saturday’s report in The Guardian.

Apparently, Inspector Hugh Tree and Chief Superintendent Dawn Raid have lost perspective in the wake of the Savile enquiry and similar investigations – many, I hasten to add, leading to entirely justified and necessary prosecutions.

For one thing it is right that the grotesque conduct of people like Rolf Harris, Gary Glitter and others should be directly punished, even after the passage of time. Better late than never, one might say.

Also vitally important is the deterrent effect. It would be quite wrong to send out the message to the perverts that if they run long enough, the law will give up and they will get away scot-free. That mustn’t happen.

But dead perps are a different kettle of fish. Any fool can see that. Whilst there might still be some benefit in terms of the deterrent effect, I doubt it will add much and there certainly won’t be any direct penal consequences. The faint hope that there might have been some accomplices who are still alive and can be caught is pushing it.

Reportedly this intervention by the DPP was prompted by the news that Wiltshire Police are continuing enquiries into the activities of the late former Prime Minister, Edward Heath. Already some £370,000 of taxpayers’ money has been spent on this investigation.

So why is the DPP a lone voice here? Where is Mr Gove, the Prime Minister or even that nemesis of wasteful causes, Lord Faulks?

If litigation is an “optional activity”, if claims for minor injury (genuine ones by innocent, living people) are “unnecessary”, then why not arrest the expenditure of hundreds of thousands of pounds of public money building a case to prosecute a corpse?

We could use the money and police time saved to catch some live villains who are otherwise much more likely to commit further crimes.


Wednesday, 11 May 2016

Make the lie big...

Last week 'justice' minister Lord Faulks beamed down again from his remote planet and landed in the midst of the annual personal injury lawyers’ (APIL) conference with more on the latest pestilence for innocent victims.

Faulks has something of a penchant for the political burlesque having been the man who last year described litigation as an Optional activity whilst he pushed 660% increases in court fees through the House of Lords.

Our ermine-clad hero is now championing the biggest kick in the groin for (already) injured people that we’ll have ever seen if it becomes law. This is the twin proposal from the delightful George Osborne to abolish compensation for whiplash injuries and raise the small claims limit to £5,000.

Faulks needs to beam up again and stay there because this is more of the callous behaviour that ultimately even IDS could stomach no more. It’s a shocking proposal. They are now talking about ‘unnecessary’ claims.

As John Hyde commented last week, “Once damages for any injury are deemed to be unnecessary, something fundamental has changed. Simply targeting fraud clearly wasn’t profitable enough for the insurance lobby – now they’re coming after the genuinely injured too.

Whiplash has been in insurers’ sights for a long time. They like to tell the world that it’s some sort of fabrication, that’s it’s all in the mind or just plain fraud.

It isn’t. Whiplash is real. It’s debilitating. It’s horrible for those who have suffered it. I wrote about one of the more extreme cases I dealt with in Whiplash backlash. That guy was absolutely genuine and deserved substantial compensation for the dreadful effects of his injuries.

The government wants not only to sweep away whiplash claims but also to prevent injured people from effectively pursuing claims for compensation in respect of other injuries where the value is less than £5,000. This would remove the majority in number of accident claims from the normal costs rules in the county court.

The result is in most cases to make it unworkable for accident victims to instruct lawyers and leave them to battle experienced and skilled insurance company claims managers and their lawyers unassisted.

This has been on the agenda for a long time. It doesn’t become any more attractive, as time passes, for those people to whom Five grand is a substantial sum of money. That doesn’t include Faulks, Osborne, Cameron or any of the leading figures in the rapacious world of liability insurance.

But why? How can a government do this? Surely even as desperate and unscrupulous a bunch as we have at the helm presently needs some apparent justification for what are undeniably harsh steps where injured people are concerned and compensation claims are far from ‘unnecessary’.

It’s all down to the data fed to the government by the insurance industry. Some of it was openly discussed in the deeply shameful (and very under-publicised) performance of a few of the top boys in a parliamentary sub-committee grilling just under three years ago – read Hey diddle diddle.. for the ugly detail

The insurance industry has consistently alarmed us with reports that 7% or more of claims are fraudulent (see Hey diddle diddle again). Some may say that’s too high yet still not horrifying but the statistic is false in any event. 

The Association of British Insurers’ own data demonstrates that as little as 0.25% of injury claims are proved to be fraudulent. See Insurance industry ‘smokescreen’ will impact on injured motoristsSolicitors Journal 18 April.

As the incoming President of the Association of Personal Injury Lawyers, Neil Sugarman, has said, “Vulnerable people are being targeted in a game of numbers”.

It’s not much of a game either because one side plays by the rules and the other doesn’t. Claimant solicitors observe professional ethics and codes of conduct. Insurance companies?  Well, how about...



How bad does it get? Tampering with the evidence of complaints before submitting to the regulator investigating them. It’s amoral and corrupt.

Direct Lying and the Bull***t Hound were fined just over £2 million for this appalling behaviour. That hardly grabbed a headline. A blip in the accounts. No individual careers ruined. Imagine if that were a solicitor – one of those “ambulance chasing fat cats”?

Look – this is all very well, you may say, but if there is fraud costing the country billions of pounds then something has to be done. That’s what insurers are saying.

But here’s the deal (raw). Whiplash claims – including the painful, debilitating, costly and perfectly genuine ones – will go. On insurers own stats, those genuine claims will be the overwhelming majority.

Claims worth less than a mere (!) £5,000 - including the painful, debilitating, costly and perfectly genuine ones – will lose the assistance of lawyers. On insurers own stats, those genuine claims will be the overwhelming majority.

On any analysis this is throwing the baby out with the bath water. Worse than that, it is founded on grossly exaggerated claims by the insurance industry.

9%? Or was that 0.25%? Hmmm.

Remember that entire nations make very bad democratic decisions from time to time. 80 odd years ago, Germany put its trust in a man who said "Make the lie big, make it simple, keep saying it, and eventually they will believe it".


Wednesday, 30 March 2016

Sold out

Today I asked one of my team to make a call to the Land Registry to find out how much longer it will be before our application to register the transfer of part of a plot of land will be processed.

The transaction was completed at the end of last year and the application for registration lodged in January.

The response was disturbing – on two levels.

First, we were informed that there is currently a backlog of six months – yes, half a year. Imagine what goes on (or can’t) in the property market over that period of time, even in dull times.

This was followed by the illustrative report that the call-handler is currently dealing with applications lodged in July 2015.

So, actually that’s 8 months, not 6, and you’re so disillusioned perhaps that you’ve lost track of time…

On any analysis this is lamentable. I thought our local courts were a scandal, taking as they are 5-6 weeks to draw an order (even when we have drafted and e-filed it). They are – but this is just surreal.

One couldn’t contemplate for one moment of course that this is the product of some filthy trick by a government committed to selling off the Land Registry that has until recently been so efficient and would net them a chunk of cash to aid the hopeless task of balancing the books..

One way or the other, it’s an ugly state of affairs.


Friday, 5 February 2016

The bitterest pill

I see that another debate has kicked off about how to make savings in the NHS, efficiency expert Lord Carter concluding that up to £5 billion could be found. I don’t know the merits of that and the true potential.  In principle it’s a perfectly valid discussion to have – as long as one keeps an open mind to the possibility that it’s further investment, not cuts, that we need.

It won’t be long before the old cracked record comes out of its sleeve and we are being told that the biggest drain on the NHS is the army of “ambulance chasers” and “fat cats”. That will be lawyers acting for victims of clinical negligence.

In this country we have, and have had for hundreds of years, laws that require (put in very simple terms) people who act carelessly to compensate other people who are injured and suffer loss as a result. We all fall into error during the course of our daily life, often without any dire consequence.  

Sometimes, though, it happens whilst we are driving a vehicle, operating machinery or performing some other skilled task.  Acts of Parliament and other subordinate legislation define and refine the standards that must be met as well as prescribing in many instances insurance to meet awards of compensation – and dare I say it, victims’ costs.

All this doesn’t exist just because somebody thinks it a fine idea for the sake of it.  It is not there to create an industry – to feed “fat cat” lawyers. It exists, as should all our laws, for moral and humane reasons.

One is that we are (or were) a caring society that helps those who have been the unfortunate victims of somebody else’s error, rather than simply shaking our heads, pursing our lips and leaving them to get on with it.  Just as - if not more - important is the deterrent effect, to put it in blunt terms. 

Positive aspects of every misfortune are that it is a reminder of the risk and potential consequences – a prompt to be more careful next time.  We don’t rely on the wrong-doer’s conscience alone, though in many cases that will be the most powerful control of future behaviour.  Awards of compensation not only help the victim but also hit institutional culprits where it hurts, where it will make them think again. 

Even if they have insurance, there will be an effect because those underwriting the cost will by various means require better standards of behaviour in future as well as upping the price of what they provide. Of course insurers, particularly those in the road traffic market, don’t see better behaviour as the only way forward.  They will fight by any means to avoid paying compensation – which achieves neither of our society’s aims (above).

Often, and quite rightly, they lose and have to pay more.  Then they whinge and want the law changed.  They are about to have some startling success with their friends in the current government - but that is another macabre tale…

So, back on the ward, how do we save money?  Well, I have two suggestions.

Before I tell you, here is a clue to what they might be.  Ask yourself why in any particular case, the NHS should have to pay compensation to somebody who claims they have been the victim of clinical negligence and costs to their lawyers. Is it as simple as somebody coming out of the hospital, accusing the medical professionals of carelessness and demanding huge sums of money? 

If you are struggling with that last question, let me help you also with the information that the laws are applied by courts staffed by judges who are generally quite clever and more to the point independent and objective people.  Contrary to what liability insurers might suggest to you, they are able and willing to sift out weak and dishonest claims - if they get that far.

Guess what happens to the people running those cases?  One thing above all – they don’t get any money, nor do their lawyers – assuming, as is almost always the case, that they are acting on conditional fee terms. 

Turn that around and you will understand, if you didn’t already, that money only spills out of the public purse when a judge decides that it should by law or those defending the claim see that as the likely end result and sensibly get to work on some damage limitation.

So the first solution is prevention – try harder not to cock up in the first place.

I am no more certain of the recipe for that than all the clever people who have allegedly worked on the problem before but I imagine it looks something like better training, improved hours, better pay in some cases, improved performance management etc.

Oh dear!  That’s going to cost money isn’t it?  Light bulb moment…that investment may ultimately save money that we are currently having to pay for messing up. Oh, and there is another minor benefit of that scenario – fewer people die or have their lives ruined along the way.

Looks good to me.  It won’t be foolproof, of course, because nothing and nobody is perfect. But even after the event, we can make things better than they are at the moment.  How? Easy…

What you do is inspire, failing that order, those handling claims on behalf the NHS to act sensibly, to promptly admit fault where they should and agree reasonable sums of compensation.  The most disarming response in most situations where a person is angry at another for what has happened to them is for the wrong-doer to stick their hands up and say “sorry”. 

That is not all of it, because people still need to be compensated according to the moral standards that we maintain in our society – but it is a damn good start!

The National Health Service Litigation Authority (NHSLA) is famed for not doing this.  Just recently we have seen a reported case where the NHS has been penalised for refusing to sit down and talk, to participate in mediation.[1]

That's a damning indictment of itself but here is the sickly icing on the rotten cake – the judge (quite correctly) hit them with an enhanced costs order so they have had to pay even more to the innocent victim.

This is just dumb.

Meanwhile, the government is after a placebo, not a cure.  In clinical negligence claims, the current thinking is to fix and cap costs of lawyers acting for the victims.

“Surely that is a good thing?” you may be asking yourselves.  That is going to cut down the costs paid in successful cases (i.e. where the claimant deserves it) because there must be (yes there are) some unscrupulous people including lawyers intent on milking the situation.

But we already have a system of costs assessment – always have had - which means that, just like the claim itself, if the defendants think they are being taken for a ride then they force the argument before a judge who will limit the payment of costs to what is reasonable and if appropriate award the defendants their costs of bringing the argument to the court.

It has already become much more restrictive than it used to be.  For eleven years, we had a very clear statement of principle handed down by the Court of Appeal in 2002[2] about the need for costs to be proportionate but carving out an exception where obstructive behaviour by defendants generated what would otherwise have been unnecessary additional costs.  In other words, if defendants mucked around and kicked up a fuss rather than focusing on resolution of the claim, they could expect to be ordered to pay for all the extra time and money wasted as a result.

Even that has gone now.  New rules on proportionality basically say that the court can scrutinise all the elements of the claim for costs, decide on a sum that is reasonable and then slash it in half or more simply because it is out of proportion to the value of the claim.

So why bring the claim if it is going to cost, say, twice or three times the value to pursue it? Assume that it is a perfectly good claim but those costs are generated because the defendants simply won’t face reality and get it resolved at an early stage.

You may say that the sensible thing for the claimant to do is to give up, perhaps even before they have started.  That is of course exactly what the insurance industry and major institutional defendants like the NHS want to happen.

We are set to go a stage further now with a scheme of fixed costs.  “Fixed” doesn’t necessarily mean “unreasonably low”, of course but I will wager that is where we get to.
 
Many lawyers will remember the initial levels of costs within the portals for dealing with low value road traffic claims, negotiated by agreement between the two sides of the industry and felt to be fair to both sides.

Subsequently the insurance industry pumped up the level of referral fees that they were trousering for handing some lawyers cases to run against them, then said that most of the fixed costs went on referral fees, rushed round for an exclusive clandestine huddle with Mr Cameron and chums in Downing Street and had the figures slashed by more than half.

Such is the way, generally, that the law is now being manipulated in this country.  Whether it is to the financial benefit of, initially, insurers or the government the response to the cost of misfortune of innocent victims and mismanagement of claims is to try and deny them justice.

Such is the culture within the NHSLA at present.  We don’t care if we ruined your life and/or the lives of your family and friends and we don’t much care if it happens again.  We are not paying you.

If the only way to ensure that is to kneecap the lawyers who will otherwise force us to pay for our mistakes, then that is what the government will do.
 
Silence the critics, so we don’t have to answer to them.










[1] Reid v Buckinghamshire Healthcare NHS Trust - 14 December 2015
[2] Lownds v The Home Office

Tuesday, 12 January 2016

Parabis lost

Details have now been published of the wreckage following collapse of the Parabis empire last autumn.

The administrators appointed in November filed their report during the interval between Christmas and New Year.  All 142 pages are available to download from Companies House or you can opt for the succinct summary from John Hyde in the Law Society Gazette of 6 January 2016.

With more than 2,500 unsecured creditors set to lose in aggregate around £46 million this is notable as the highest profile failure so far of one of the relatively new alternative business structures within the legal industry. The ABS was the legal regulatory vehicle enabled by the Courts and Legal Services Act 2007 after the report of former deputy governor of the Bank of England, Sir David Clementi, had concluded that the legal services market would benefit from permitting non-lawyers to participate in the ownership of law firms.

One key thread of his brief was to find a framework that would best promote competition, innovation and the public and consumer interest in an efficient, effective and independent legal sector”.

Hold that thought..

In the best tradition, these new reforms would not actually be implemented for another five years.  It was Spring 2012 before the Solicitors Regulation Authority finally unveiled the identity of the first three successful applicants for an ABS licence.  One of those was our old multi-talented chum, the Co-op.

Parabis was one of the first such structures to obtain private equity investment and the Duke Street equity house is listed as having £43 million or so still invested at the time of the administration. At the end of the day, they and other secured creditors will share a shortfall of around £41 million.

The list of unsecured creditors within the administrator’s report rivals the closing credits of Return of The King.  It’s not just intergroup debts, large rate bills outstanding to city councils and unpaid medical reporting agencies that make up the big numbers here. I can’t say I’ll weep for many of those responsible for the likes of The abominable Dr Botox or Fun boy three

Herds of m’learned friends are left whistling, some of them for hefty five figure sums.  The seasonable celebrations in the clerks’ rooms of a handful of London chambers must have been particularly muted.

Anyone remember old style law firms crashing and burning on this scale?

Well, so what?  I’m not in that list and hopefully you’re not either.  What does it matter?

It matters because of the damage done to the rest of the legal profession (yes, profession), the perception of the industry and the fabric of the law itself. 

People motivated by profit alone pump-up these leviathans with the aim of winning the market and part of that strategy is to take business away from the established players – even better, put them out of the game.  The cost of that – “efficiencies” as insurers love to call it – are part of the opening war of attrition and the consequent damage to the rest of the infrastructure.

The punters look on with no respect for these cheap turns, interested only in paying as little as possible (they think), if they must pay anything, and shifting responsibility for a shoddy job (which they won’t recognize, anyway) onto somebody – anybody – else.

And when they crash there are plenty of cheers for what they think is the pain inflicted on ‘fat cat’ lawyers – ‘ambulances chasers’ that they were happy to get into bed with in the heat of the moment.  

Well they’re right…and they’re wrong. “Tarred with the same brush” may be an over-worked phrase but it’s hard to find something more apt.

The point is that every time these fast-buck merchants hit the headlines with something like this they damage the perception of those who actually care about the law and how it serves the individual. People who will ultimately put reputation and pride in what they do ahead of profit.

Many of those people are disappearing from the profession. I don’t say it was difficult to foresee but I wrote of this long ago in No more heroes.

Whilst the people who know slip quietly away to escape the frustration and often loneliness of practising in an increasingly chaotic world shaped only by the venality of insurers, the law withers and dies from misuse. It’s going to be that rusty old machinery in the corner of the shed that I described in Road to Ruin.

I see in the reports the observations that Parabis entered into joint ventures with some major insurance companies but “enjoyed little leverage”. No shit?

“Having moved into the insurance market, the group was then hit by two large insurers moving significant volumes of work elsewhere, leading to the departure of key fee-earners and reduced funds to cover the costs of maintaining the infrastructure of the business.”

As one commentator on John Hyde’s report observed, if you’re going to sup with the Devil then you need a long spoon. I’d rather not even sit at the table.