Fun and games

Ever play a board game without first reading the rules?

What happened? You probably had arguments about what should be, from a viewpoint biased by circumstances, disagreement on then reading the rules about their interpretation (again coloured by the situation in hand) and generally too wide a gap between at least one person’s expectations and reality.

Then what? Tantrum? “I’m not playing”? Game ruined?

So it’s only a game.

Well, no - it wasn’t just a game. It was an opportunity for entertaining and rewarding joint venture, fulfilment and to set a precedent for future collaboration. Something really important was lost or never came to pass.

Why? Because there weren’t any rules or because not enough people understood them or had chance to do so. Games are only fun if you have rules.

In the game of Life we have rules. Whether or not they have an overwhelming moral or religious platform, they’re to be found within that centuries’ worth of assembled wisdom we call Law.

Law is good – really. To a large extent the mere fact that society, or the majority of it, has written a rule that you shouldn’t kill, rape or steal is enough to stop it happening. Monitoring and audit, by a system of penalties, adds to the effect.

But it’s not just the criminal law, to which many people’s thoughts immediately turn, but also – and in fact to a greater extent – our civil law that makes the game worth playing.

Individuals and businesses need to know that if they commit themselves and their assets in reliance upon the assurances of others then they’ll have a remedy when let down, deliberately or otherwise.

People whose livelihood is damaged or being hindered, whether as a worker or business owner, need a solution and repair.

Innocent victims of accidents need a means to ensure that they are not left with the burden of somebody else’s carelessness - the unfairness and misery of a life damaged or wrecked by misfortune.

So how are our rulemakers – government and the courts – getting on with ensuring the game is fair and effective, one that the overwhelming majority of participants are keen to play?

Government isn’t. It’s headed firmly in the opposite direction.

It’s hiking the price, raising the barriers to entry, restricting the number of players (See Kick ‘em when they’re down, Fire at will)

It’s taking away the means for those who don’t understand the rules to get help from those who do (Whiplash backlash, Five grand, Cabaret Voltaire)

I don’t necessarily believe that government as a whole has any agenda other than (largely misconceived) efforts to economise, although the private interests of some key players in the insurance market don’t help to nurture any such confidence against the background of selfishness and corruption that was exposed in Westminster recently.

But the ruling classes are seemingly driven by those with nothing but their own commercial and political interests in mind. Liability insurers – our equivalent of the US gun lobby – have been repeatedly exposed in the last year yet seem still to hold sway in Downing Street (Business as usual, Reading the Riot Act and many more…)

The NHS, consistently wrecking lives through incompetence and carelessness, seems blinded to its inadequacies by the professed belief that lawyers are the cause of its problems. Which came first - the cock-up or the lawsuit? This is not chicken and egg . (See Legal highs, Repeat prescription)

What of the courts? Judges have a nasty tendency on occasion to stand up and tell ministers that they’re wrong, as they should if there is to be - and remain – effective separation of powers vital to our democratic constitution.

But the squeeze is on the court system, tighter and tighter, so that in many respects it has become a sickening joke (To me, to you) Disillusionment and fear for own livelihoods amongst many but the most senior judiciary of independent means and uncompromised principle will take their toll.

The only visible hope for preservation of service standards appears to be the enthusiasm to welcome Russian oligarchs and other well-heeled litigation tourists.

And the lawyers – the game-testers, guides and champions? How many of them will be around this time next year?

The direct assaults on ordinary players’ ability to take part are being supplemented and the effects compounded by the indirect attack that is the destruction of funding sources and models. Legal aid has almost disappeared. Conditional fees and recoverability are now three months away from virtual destruction.

Lawyers as a whole won’t break the rules but they will leave the game (No more heroes) and those who don’t know how to play will spend forever arguing about rules they don’t understand, that were badly or only half-written in the first place, until anyone left who had a clue will despair and quit (See DIY litigation disaster)

Game over. What then? There’s plenty else to play of course. Look around the globe right now for examples - a glimpse of the future.

“Gang Rape”, “Drugs Cartel”, “Civil War”…

Want to play?

No, neither do I. 

Mine's a double!

We have an employer's liability claim where the injury sustained is not your every-day case. It’s so unusual that we need a particularly clever medical expert. We found one who is so well qualified that he charges £450 per hour plus VAT.

I thought it would be a damn fine idea, before signing up to his terms and conditions, to ask for an estimate of the likely total cost of examining the client, reading the records and producing a report.  We sent as much information as we had, including copies of all the relevant records.

We were given in response a range which had a top end of £3,000 plus VAT.  More than we had expected, but we worked with that along with our client and legal expenses insurers.

So the claimant sees the expert and the expert writes a report but before he will send the report he wants his bill paid.  Sensible enough even in healthier times.

But wait – what’s this?  The invoice is for over £5,800 plus VAT!

This very clever doctor has not helped the situation by, first, failing to offer any explanation whatsoever and, secondly, this…

In response to my observation that the invoice was almost twice the estimate, he writes me a letter denying it, and comparing the VAT exclusive figure billed with the VAT inclusive figure estimated.

Now, I don’t particularly care whether we compare £3,600 with £6,980 or £3,000 with £5,800 plus.  Either way it’s nearly double.

The discussion is continuing, as you might expect, but whilst I was dealing with my outrage I couldn’t help but wonder what the Solicitors Regulation Authority would make of it if I or any other solicitor did something similar.

At present this sort of thing may not raise the eyebrows of some lawyers and medical advisors. It may raise a few more when costs management in the new post-Jackson era really takes off. 

Cheers!

Whiplash backlash

Liability insurers seem to have got their way (surprise) as the Government launches its 'consultation' on proposed measures to tackle the evil as it is said to be of claims for compensation for whiplash injuries.

Let's be clear about one thing from the outset. Whiplash is not a myth. It's real - and it can have devastating effects. Hyperflexion and hyperextension of the cervical spine can in some cases result in brain and/or spinal cord injury, even death.

Often the outward signs are minimal, as they were in the case of a wholesale store manager I acted for a few years ago. But time went on and he couldn’t work, couldn’t play sport, couldn’t maintain his family life. Happy man lost his job, his marriage and his home.

He recovered significant compensation because, in addition to the orthopaedic reports, we commissioned expert psychiatric evidence that confirmed the causal connection. It was entirely genuine.

So, what's the problem? If these claims stand or fall on the basis of expert medical evidence - as, ultimately, all injury claims must and will - why worry?

Insurers have two main beefs. The headline, very reasonable, concern is that it's fertile ground for fraud. Faking or exaggerating a whiplash claim is easy, if you're willing and able to lie about your symptoms, it is said. There can be little doubt it happens.

The key problem seems to be the inability of many medical practitioners to validate claims.That stems from two problems. First, they lack the expertise and the technology - or both - to make an objective appraisal, independent of what they're told by the patient. 

Secondly, they are either unable or unwilling to test the truth of the subjective account they hear.

Well, you would be forgiven for thinking that one of a judge's key functions is to consider the integrity of the evidence, expert or otherwise, supporting a claim. The court is the gatekeeper. Here lies the second gripe.

Insurers say it’s too expensive to defend these claims, even if they win ultimately because many fraudsters aren’t worth powder and shot to enable costs to be recovered, or the sums are not worth chasing. They say they pay up because it’s cheaper, but they still complain about it and blame rising premia on claimants, their solicitors and costs.

Now a two-part “solution” is proposed.

First, we effectively scrap whiplash claims. Baby out with the bathwater. Genuine claims swept away along with, courtesy of, the fraudsters.

A bit like the current approach to disability allowance claims, some might say.

Second, take away the ability of claimants to properly pursue their rights – not just whiplash sufferers but all claimants with injuries worth plebeian amounts of less than Five grand.

A bit like the current approach to legal aid to challenge disability allowance decisions, and much more, some might say.

Overkill? Of course it is. In the typically disingenuous manner of the insurance industry the real attack is on the small claims limit to try and wipe the majority of claims that cost them money and that wouldn’t happen if claimants had no legal representation. Without lawyers claimants will almost always be at the mercy of wily claims handlers and all their tricks.

Until hauled up in front of the Court of Appeal these powerful institutions will do as they like, even if the law says otherwise. See the verdict of Lord Justice Longmore in Brown-Quinn yesterday.

The minority of fraudulent whiplash claims needs a proportionate and discerning solution, targeted at the problem – not to be exploited cynically to deprive deserving accident victims of justice to which they are entitled.

B-reath T-aking E-xhibition

Condemnation in the starkest of terms was handed to legal expenses insurers by the Court of Appeal yesterday.

The court was delivering judgment on the appeal by before-the-event (BTE) insurers in the case of Christine Brown-Quinn and others v Equity Syndicate Management Limited and Motorplus Limited. It was all about that now ancient chestnut of BTE insurers trying to restrict their policy holders’ freedom of choice of solicitors.

Lord Justice Longmoor, in a judgment with which Lords Justice Lloyd and McFarlane agreed, reached this overall conclusion:-

“It is quite wrong that, despite the warning shot delivered to legal expenses insurers by this court in Sarwar v Alam [2002] insurers should many years later be issuing policies which do not comply with the Regulations. General Conditions 2.3 and 5 are in breach of the Regulations in the ways I have explained and must be either deleted or comprehensively redrafted”.

Earlier in his judgment (Paragraph 8) his Lordship had observed that:-

“The facts of this case have revealed that the insurers exhibit an insouciance to their obligations under the Directive and the Regulations which leaves one quite breathless”.

He went on to explain that whilst the European Directive and Regulations made it entirely clear that a policyholder’s freedom to have the lawyer of his choice should be expressly stated in the contract with insurers, the terms and conditions before the court provided “almost the opposite”.

It’s all too familiar a scenario for personal injury claimant solicitors, despite the fact that the Court of Appeal has been telling the insurance industry for at least a decade not to do it.  For those unfamiliar, briefly it works like this…

When a claim is made upon the policy, because the insured has had an accident or otherwise needs legal assistance, insurers appoint one of their “panel lawyers”.  They will tell you that these lawyers are carefully selected to be on insurers’ exclusive panels, rigorously audited etc.

They won’t tell you that the defining feature is agreement in return for a steady flow of work to perform it at much lower prices than most other solicitors, not blessed (?) with the same arrangement, are prepared to charge for their work.

But a European Directive going back as far as 1987, and subsequent Regulations and decisions say that freedom of choice of solicitor cannot be restricted.  BTE insurers have long argued various ways around this, because it’s not commercially attractive for them to have to deal with and pay anybody but their tame panel lawyers.

The simple answer to most of their woes has been to meet requests from policyholders to appoint their own chosen lawyers with something in the vein, “sure, as long as your lawyers are prepared to agree our terms”.  Seems fair enough?  The problem is – as described above – that insurers then refuse to pay any more than they would pay one of their panel members.

So, in this case, when the policyholders wanted to instruct a non-panel firm, insurers’ response was to refuse the appointment because that firm was not prepared to work at the very low rates that panel lawyers accept.

(Incidentally, if you wonder how they can safely do it then it will help to reflect on what we have seen recently in the way of an increase in professional negligence claims – see Peanuts, Panel Beater and Solicitors Journal 23 October 2012.)

The Court of Appeal disapproved, finding that:-

“ It must be right that a refusal to accept the appointment of an insured’s lawyer of choice on the basis that he will only be accepted if he charges no more than the non- panel rates would be a serious inhibition of freedom of choice and thus contrary to the Regulations.”

Some comfort for the insurers in the finding that there may be circumstances in which the insurers were obliged to pay only the “non-panel rates” stated in the standard terms and conditions and that would be so in this case.

There is an important point to note for the personal injury claimant industry generally at Paragraph 29 of the judgment.  The court observed that:-

“We were not directed to any evidence before the judge that solicitors (other than Webster Dixon) were not prepared to conduct the cases of the insured for the non-panel rates of £125 (rising to £139) per hour. In the absence of such evidence it does not seem to me to be possible to say that the insurers cannot rely on their terms of their contract restricting the insured’s indemnity to the non-panel rate. It is not enough merely to point to rates set out in the HM Courts and Tribunal Service Publication “Guideline Rates for Summary Assessment”.

United we stand?  This may not go very far unless the general public, particularly drivers, are informed and educated about the binding nature of terms and conditions which, when they take out the policy, they will never even have seen.

But as the court’s conclusion indicated, it’s a long overdue clip round the ear which may pile on the pressure now for BTE insurers.  As for other concerns, you will have to read my article in the current issue of Personal Injury Brief Update Law Journal! 

Obiter, in the context of this post, I noticed his Lordship’s statement that “the court’s duty is to decide the parties’ legal rights, whatever the distaste with which it views the behaviour of the parties in the lead up to the hearing.”  Too true, and possibly one to remember during the whiplash debate over the days and weeks to come.

Regulation issue

I had the joy yesterday of completing the application to renew my firm’s authorisation - by the Solicitors Regulation Authority - and my own individual practising certificate, using the now legendary MySRA web portal.

It is only right to observe that – so far – we have not had a problem with the software this year.  Antony Townsend and his staff appear to have done what they set out to do.

One hopes it is part of a broad improvement.  I would have dealt with the renewal earlier but it is only quite recently that the regulator has understood that I am only running one business.

For most of 2012 I have laboured with the apparent belief that though I had secured recognition of my limited company as an authorised body and notified transfer of existing business to the new entity, I still wanted to operate as an unincorporated sole practitioner too…

I have had my nominations of myself as Compliance Officer for Legal Practice (“COLP”) and Compliance Officer of Finance and Administration (“COFA”) confirmed for the corporate entity.  We will see whether I am taken to task, as threatened, for not donning the same hats in a former business.

So it all looks a lot more cheerful ... except, that is, for the fees.

Mine have increased 50% this year and very little of that has anything to do with turnover.

For those who don’t know, the fees payable by solicitors, specifically, to their regulator have four components.

Individually we pay a practising certificate fee which is the same across the board and an organisation levy based on a sliding scale according to turnover.  We would always like it to be lower but these are not what stick in the throat.

This year I am paying the thick end of £1,500 by way of “contribution to the Compensation Fund”.  Again there is a personal levy which is £92 in all cases but then there is the organisation levy…

As I understand the fee structure for this year, that is £1,340 regardless of size.  So, as the sole director of a small incorporated practice – albeit with a growing number of other personnel – I will pay exactly the same contribution as a national firm with tens or even hundreds of partners.

How is that right?

Well, some point to a prejudice – sorry perception – that sole practitioners are the scourge of the industry because, obviously, we do exactly what we want and miss no opportunity to indulge in heinous activity that will require the profession as a whole to compensate somebody.

This yardstick is presumably applied regardless of whether one has policies, procedures and systems meeting and exceeding the Law Society’s Quality Management Standard.

It doesn’t matter that you have never had a negligence claim (touch wood) or that there has only been one virtually insignificant complaint in 3 years of busy practice.

Nor does it matter that big firms greedy for turnover and looking to improve tight margins compromise on service and expose the profession to further risk. In many cases, though the same firms have paid thousands upon thousands of pounds in referral fees to insurers with one consequence of fuelling the current argument for reductions of fixed fees in “low value” road traffic and other injury claims. 

They have helped give credence to liability insurers’ lie that the fixed costs were calculated to include an allowance for referral fees and now those are to be banned, then the costs should be reduced.

I have never paid referral fees and I don’t spend the equivalent of £500 and more per case in marketing to generate the business we do.

Again not wishing to tempt fate, we gain business by not screwing up what we do in the first place and gaining repeat business and referrals from happy clients.

You might be forgiven for thinking that we take a pride in our service delivery, don’t plan to compromise on quality and aim to maintain those standards despite the government’s relentless assault on funding.

I expect there is a fair chance that the cowboys will ride out of town when they can no longer make a quick buck.  It wouldn’t surprise me that firms like mine then get stung with yet more levy.

Meanwhile, having paid through the nose for this year’s renewal one way or another, I will be doing a big part of the SRA’s job for them with effect from 1 January.  Every time there is even a minor occurrence that is not strictly in accordance with the rules – even though it may not be within our immediate control – I will have to put on one or both of my COLP and COFA hats and decide whether I report myself and then wait…for what?

This is regulation.  David Cameron doesn’t want onerous regulation for the media because it is important to have a free press.

What about the legal system, Prime Minister?  Do you not think that is something we should also try to retain? 

Cabaret Voltaire

"I disapprove of what you say, but I will defend to the death your right to say it" – often misattributed to the French philosopher & writer Voltaire - was said by his biographer Evelyn Hall to illustrate his beliefs.

Freedom of speech, access to justice and the right to be heard are cornerstones of our society championed by a legal system that retains the respect and envy of the modern world - despite the battering it is taking from the current administration.

With the revelation, courtesy of a Freedom of Information Act request by the Daily Mail, of the cost to the taxpayer of Abu Hamza’s legal bills the Law Society is to step in to help the government bolster public confidence in the legal aid system.

Ironic? Or a demonstration of the objectivity, compassion and altruism that are essential components of the rule of law?

One of the longest-running shows on the London legal scene is said to have been maintained by payments from the legal aid fund to Hamza’s lawyers totalling some £680,000. That’s on top of the Treasury’s legal bill, of course.

The government is squirming, anticipating popular uproar. The Lord Chancellor and Secretary of State for Justice (not bad for someone with no legal background at all) has ordered an “immediate review” explaining that “he is concerned about public confidence in the legal aid system”.

The Law Society has already warned HMG not to lose sight of the “constitutional importance” of legal aid which “was devised to ensure that nobody is unable to enforce or defend a right for want of the means to do so”.

Justice director, Angela Patrick, has observed that ‘Human rights cases can involve complex challenges to some of the most treasured government policies; without legal aid, the state could be insulated from effective scrutiny’.

Like it or not, it has to be right. A more adept administration, relying less on common rhetoric and more on cultured debate, might have brought the curtain down far earlier but you can’t simply close the theatre.

Are you still to learn that the end and perfection of our victories is to avoid the vices and infirmities of those whom we subdue? (Alexander III)

Invest in the best

I read this morning that a green paper on plans to expand the Territorial Army will be announced on 8 November. It’s going to include financial incentives for businesses to employ members of the TA and a provision for two weeks paid leave for any reservists employed in the public sector.

Also this morning I posted on my website a report of how a government department – the paradoxically-named Department for Communities and Local Government – got caught out on a contractual dispute and was successfully sued in the High Court for more than £760,000.

Why did it lose?  Because, to quote from the report, the contract was “not drafted by lawyers”.

Fantastic.  How much money did our government waste in costs of the litigation only to blow the best part of a million pounds which, one infers, could have been saved if it had spent by comparison a modest sum on people who knew what they were doing.

What are these reservists, paid for out of the public purse and/or by struggling businesses that the government is currently trying to help (work that one out) going to be doing? 

Will we be sending them out in place of the highly-trained marines and others who continue nevertheless to be killed by a very capable enemy in Afghanistan? 

Just two examples of how this country now seems to be wedded to a strategy of second-rate performance.  They’re two of many – read all about the legal system and the health service in many earlier posts on this blog.

This is all done in the name of economy, because we need to cut expenditure.  Show me where any of it is working.

The contract dispute – expensive mistake.

The NHS – paying out millions every week for its incompetence,

The Ministry of Injustice dismantling our legal system to save virtually nothing.

The MOD (already quite proficient at some of the above) killing off anybody to save money.

We have to get back to doing what Great Britain has for the last few hundred years done so well - leading the field - even if it costs a few quid.

Invest in the best. All else follows.

Electric shocker!

We had the good fortune recently to snap up a neighbouring office suite which gave us extra space that we sorely needed. It comes with all the usual necessary evils, of course, including a couple more electricity meters. 

EDF seems to be the supplier of choice in this building and we already have one contract with them for the original office space so we decided to put the new eggs in the same basket.

The first thing that irked me was that our suppliers would not send us a written agreement if we wanted to take advantage of the discounted price in preference to the standard tariff. I am a busy chap but amongst a splendid team of people here I have a very hardworking practice manager who is more than willing and able to deal with this sort of thing.

But not when a supplier insists that the only way they will deal with this is by verbals over the telephone, with the director of the company – that’s me.

Like any other litigious primadonna, I feel I have hundreds of better things to do and I am suspicious in any circumstances where somebody absolutely refuses to show me a copy of the contract before I “sign”. 

The problem is that I am busy, changing supplier is actually a big deal and I have that awful feeling that we shall just be heading for another frying pan, if not a fire.

So, I end up speaking to a thoroughly charming young man called Sam to whom I explain – calmly – my misgivings. He is, throughout our discussions, a model of discretion and loyal to his employer whilst acknowledging that I am not a lone voice on this point.

After some good-natured wrangling and reassurance, we start the spiel. Unusually for a Friday, I am wide awake by now and listening carefully.

Part of the information I am given is that as I am entering into a “Fixed Term Period Contract” (one year) the prices that I am about to agree will not change, unless of course I am in breach of my obligations by non-payment etc.

Oh, and hang on – there is something else....

…the “fixed” price may also change if, to quote:-

“Any cost imposed on us in connection with processing, distributing, transporting, selling or supplying energy is increased, or calculated in a different way, or a new cost is introduced, which affect our costs of providing your supply”.

In other words, it’s a fixed price unless, err, prices rise.

Not to worry! Sam reassures me that even if supply costs do rise, EDF will not necessarily pass that cost on. Why not? Because consumers might be unhappy!!

I never knew that utility suppliers were blessed with such profound emotional intelligence.

Naturally, I asked Sam for a copy of the wording. He confirmed that I would receive a written agreement by post but said that they do not send out copies of “the script”.

Reason? “It’s considered commercially sensitive”.

You bet it is!

Peanuts..

Last month I wrote about the case of the Manchester motorbiker whose Bristol solicitors, appointed by legal expenses insurers, settled his case for £500,000 – when as subsequently demonstrated it was worth £1 million+ - http://legalchap.blogspot.co.uk/2012/08/panel-beater.html

This month the Law Society Gazette reports on the rise in professional negligence claims against personal injury law firms citing “reliance on under-qualified staff, a lack of face-to-face contact with clients and failure to understand medical reports” as “all factors in the trend”.

Surrey firm BakerLaw reported a recovery of £700,000 for a client whose original solicitors had achieved an award of £16,000.

An associate at Withy King who said one claim was worth nine times the £10,000 settlement agreed by other solicitors added that most claims were by victims represented by panel solicitors located in a different part of the country.

Another professional negligence lawyer spoke of “the proliferation of claims lawyers where there are just one or two partners and a bank of paralegals” generating the problems.

None of this is surprising. The flat, wide pyramid structure represents a risk in many types of business. In an environment where an element of judgment informed by experience will always be required, it signals failure.

Why do it?

Many of these firms are trapped in the business model created by legal expenses insurers whose policies sell for peanuts and only buy monkeys.

It’s not a universal problem. There are decent panel lawyers and there are BTE insurers who cut a fair deal. See for example http://legalchap.blogspot.co.uk/2011/08/bte-angels.html

But in my experience the good guys are the exception and the evidence is beginning to show that so many who have taken the insurers’ shilling and sold their souls are delivering a shoddy service.

From the victims’ point of view, that is.

What about insurers? Well it looks fine for them. They are driving the price of legal services down to increase their margins and passing the risk to professional indemnity insurers – by and large a different market.

Another commentator has made the valid observation that some if not all of these wicked under-settlements are driven by liability insurers who care nothing about injured people, their representatives or their indemnity insurers.

One hopes that (indemnity) market will quickly decline to continue underwriting the risks generated by law firms who facilitate the greedy aspirations of insurers with no care for the standard of service delivered to injured victims.

Until then this problem will only grow worse.

Brass tax

We posted a news story this morning reporting on a decision of the First Tier Tax Tribunal (no, wake up – this is actually quite interesting!) allowing an appeal against penalty for late payment of PAYE and NI by a limited company, Browns CTP.

See http://www.mrw-law.co.uk/news/2012/09/20/taxpayers-entitled-to-rely-on-first-class-post/ for the summary but the nub of it was that the company had a “reasonable excuse” as provided for by the Income Tax (PAYE) Regs 2003.

That reasonable excuse was identified in this case as the reasonable expectation that the payment would arrive on time. In turn, that relied on the belief that a cheque sent by first class post would arrive the next day.

“Taking all these matters into account we consider that a reasonable employer, having due regard to his responsibilities in relation to PAYE, is generally entitled to rely on next day delivery in the ordinary course of first class post”, the tribunal judge concluded.

Well, if you didn’t nod off four paragraphs ago, you may be forgiven for now rolling about on the floor in response to the idea that Royal Mail can be relied on to deliver next day, whatever grade of service is chosen and paid for. See http://www.legalchap.blogspot.co.uk/2011/10/bottom-of-class.html for one of many sparkling past performances.

More important though is the question of why people are spending time and money, some of it the taxpayer’s, in some dark room in Manchester having this antediluvian debate.

Cheques, “first class” post? Why is anyone – certainly a business owner and employer - still messing around with these antiquated forms of payment when it’s cheaper, faster, greener and more secure to pay by BACS or similar online means?

The answer is, largely if not entirely, that our antiquated tax collection services perpetuate these out-of-date practices. They even try to persuade those who already live in the modern era to regress - http://www.legalchap.blogspot.co.uk/2012/05/junk-mail.html.

A well-informed source told me last year that the money collected in income tax does no more than to fund the entire revenue collection system, with the net effect that the only profit is on VAT, Corporation Tax etc. I don’t know if that’s true but it wouldn’t surprise me.

Let's get down to basics. Somebody needs to give the whole operation a colossal kick up the backside to the point where even the people sitting there licking envelopes and juggling cheques understand the importance of not filling a sack full of holes.

Then stop asking me and the rest of the population to scrimp and save so that those stuck in these mindless routines need not get off their comfort level and move with the times.

Business as usual

As motor insurers continue their efforts to put yet more hurdles in the way of innocent victims, we eagerly await more news from the Office of Fair Trading (“OFT”) which has been threatening to spoil the party.

Liability insurers constantly complain about the cost of dealing with claims by the victims of motor and other accidents.  As with clinical negligence claims[1] it’s all the fault of the claimants and their lawyers – nothing to do with their own fat cat salaries and meaty shareholder returns.

Strange in a way that the OFT should have come to the view at the start of this summer that “insurers compete in a dysfunctional way that may push up premiums (sic) for drivers by £225 million a year”

The OFT’s market study provisionally found that an average of £560 is added to the cost of replacement vehicles by:-

• Insurers of the not-at-fault drivers, brokers and repairers referring those drivers to credit hire organisations that charge inflated hire rates, in exchange for a referral fee of between £250 and £400 per hire.
• Drivers being provided with replacement vehicles for longer periods than necessary, whilst they wait for repairs to be carried out by the garages nominated by insurers (also paying referral fees – see below).

The OFT’s report also provisionally found that the cost of repairs was inflated by an average of £155 each time by:-

• Certain insurers receiving referral fees from repairers and associated trades; 

• Certain insurers having agreements with approved repairers to charge higher labour rates when repairing a vehicle belonging to their insured.

So, insurance company A takes the backhanders from the car hire companies, garages and anybody else who’s willing to pay them and promotes the levy of hire charges and delays in repairs to help those that pay the referral fees get their money back and more.

That additional expense is passed on to insurer B (the policy holder will get nobbled for any shortfall) whose costs rise.

 

But it all evens out because in the next scenario the insurers will swap roles.

Ultimately the winners are those who can manufacture more in referral fees than they pay to fund all the artificial charges created by their cronies.

But they will all win because they can moan about these costs, blame them on lawyers (who, note, don’t figure in these scenarios at all) and take some more money off the punters.[2]

Repugnant?  Of course it is.

As the president of the Association of Personal Injury Lawyers, Karl Tonks, said “insurers have finally been caught with their hands in the cookie jar. What the OFT calls ‘dysfunctional’ and ‘inefficient’ actually reveals a host of grubby practices to line insurers own pockets”.

Business as usual then.

---

[1] See Repeat prescription

[2] See e.g. Win, win, win - and win again and The real culprits

Five grand

What does “five grand” mean to you? Is it a significant sum of money?

If you’re entitled to both components of Disability Living Allowance at the highest rates then it’s a little over 8 month’s income.

If you’re a legal secretary it may be around 4 month’s net income.

If you’re a comparatively high earner managing to allocate the 10% of gross income that some recommend you should, you’ll buy a very decent family holiday with it.

If you’ve lost a finger, broken your arm or have significant facial scarring as a result of an assault it may be what you are awarded as compensation for criminal injuries.

It will buy ten laptops, five large televisions, a complete range of white goods for your kitchen - or one Segway.

According to the Office for National Statistics, it represents nearly 3 months average UK household spending in 2010.

I’d bet a significant sum of money (but nowhere near £5,000) that it means a lot to the majority of folk in this country.

But not to the Government or the insurance industry.

They want to raise the ‘small claims’ limit for personal injury claims from the current level of £1000 to £5000 – a 500% increase. What does that mean?

It means that unless an injured victim’s claim is worth at least £5000, they will not be able to recover any lawyers’ costs in pursuing their claim. If they need to use a solicitor or a barrister, they’ll have to pay for it out of the compensation they recover.

Compensation they may sorely need to replace weeks or months of income lost because of the negligence of another car driver, their employer, a highways authority, a doctor – and so on..

The idea is that they don’t need a lawyer to run a claim for such an insignificant sum of money. They can deal with it themselves.

Familiar with court process are you? Happy to learn at a time when the rest of your world is falling apart?  Content to wait, with no money coming in, for months…and months…and months?

Because you will. Insurers employ claims managers and lawyers whose primary function is to delay, discourage and frustrate claims. It’s a key element of their commercial ethos. They are really good at it and the only people who can beat them are the claimant lawyers who know the ropes.

They pay these people as part of their overheads that form part of the calculation of the insurance premium that they charge to all of us. They try to justify the assault on costs recovery by pointing to the cost of insurance to the general public.

This is the same general public who, having paid the premia, will be shafted when they have a claim but can’t afford the services of the only people who know how to deal with these cynical, selfish creatures.

Will the cost of insurance fall? Look at the annual accounts of some major insurers, see the value of the packages paid to executives and read what they aim to make for their shareholders. Read it and you will weep.

Sure, there is always a line to be drawn, a point at which it can only make sense to forget it and move on.

But it’s not £5000 or anywhere near. Even now there are pensioners and young kids who desperately need to be compensated for losses of less than £1000 but whose only true hope of a result lies in the compassion of lawyers that Clarke, Bojangley and chums deride as ambulance chasers.

This is a political issue. If you’re not lying in a hospital bed or struggling with a plaster cast right now, it may not seem important. It is.

Think of those who are and think of those who will be in the future – it may be you. Speak out - now.

By the way, current fees at Eton are £10,689 per “half” – which is a term – and there are three in a year.

You'll have to excuse me a while...

Panel beater

My attention was drawn this week to a report of the Bristol law firm sued by a paralysed motorcyclist who said they "bungled" his claim.

54-year-old Kenny Jordan, wheelchair-bound after a road accident in May 2004, was referred to what the news article describes as "insurance panel firm Clarke Willmott (CW)", in Bristol. Mr Jordan lives in Manchester.

It seems they recovered a chunky £512,000 for him by negotiation. Mr Jordan talked to other people after the event who suggested that he should have received at least £1 million. CW have now agreed to pay Mr Jordan £500,000 (on top of the original settlement) plus his legal fees in bringing the negligence claim against them.

Unfortunately, these things can happen (though less frequently in this industry than in some others) but some of the facts of this case as stated by Mr Jordan's current solicitor are remarkable.

He says that in the course of dealing with the claim for Manchester-based Mr Jordan, his former lawyers never went to see him, never took a detailed statement, never interviewed any witnesses, never obtained any expert medical evidence. On that foundation they settled a £1 million claim at half value.

We’re talking about one of the big national law firms receiving so much of their work from legal expenses insurers. These are the insurance companies whose policy is usually bolted on your main road traffic insurance policy or household insurance for tens of pounds. It's called before the event, or BTE, insurance.

Many claimant lawyers do not seek membership of panels for various reasons. Those include that they are unwilling to pay "subscriptions", unwilling to pay referral fees to the insurers for individual cases and unwilling to receive discounted remuneration for doing the work.

Some believe that such arrangements lead inevitably to a squeeze on margins so that the cost-effectiveness of the case becomes more important than the injured client’s best interests.

BTE insurers have told me (when denying my clients/their insured freedom to choose their lawyer) that the determining feature of panel solicitors is that they are specialists - subject to high quality standards and rigorous audits…

There are plenty of top class expert personal injury (and other) lawyers in and around Manchester who would have done the job properly, with the client on their doorstep. Why does a case like this end up on the books of a law firm 200 miles away who, probably for that reason, don’t deal with it properly?

The only answer is that it serves the commercial interests of insurers, who control the process. It doesn’t serve the interests of the injured victim, plainly.

How many others out there? This was a big case, easier to identify and almost a no-brainer on the reported facts for a negligence claim but what about smaller claims being pushed through the mill with similar lack of attention. They’ll maybe never come to light.

Accident victims may think they are better off retaining a local lawyer. Someone they know. Someone who only gets paid on results. 

Someone whose masters are not the insurers.