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?