Thursday, 14 March 2013

Holy grail

This one’s for embattled personal injury lawyers up and down the country but you needn’t be one of those much maligned creatures to read it. Chances are you’ve only heard one side of the story and that it’s the garbage peddled by the Association of British Insurers (“ABI”) and their members.

The backdrop is the decision by our Government  to slash the costs that insurers must pay to lawyers representing victims of what Mr Cameron and his Eton chums term “low value” road traffic accidents. Currently it’s £10,000 and it’s set to rise very soon to £25,000. Small change, eh?

As one of the so-called “fat cat lawyers” I think these are very significant sums. See Five grand for more of that and The Lions Share for more of latest events.

Already, law firms are going to the wall, having conceded that they can’t operate at these levels. Many people may not shed a tear, believing that they deserve it for having been part of a ‘compensation culture’. 

Unbelievably, in the present climate, this Government doesn’t seem to give a damn about the job losses and the knock-on effects of these businesses going bust. It’s going to cost us all (not just lawyers) millions.

So, guys – where are we at?

The vast majority of RTA claims must be run for £500. I haven’t yet talked to a lawyer who believes it can be done – not properly. We all know there are outfits who will say it can be done. They are the creation of the insurance industry that has fed them and will in time cast them aside. Pay Peanuts, you get monkeys.

It can’t be done.

The next dilemma will be the increase in the small claims limit, probably to a minimum of £5,000 (see above). That will mean no costs at all are recoverable, other than what you can charge your client.

I’ve heard heart-warming tales of rival firms agreeing that they won’t break ranks on this in the coming months, that they’ll do the only sensible thing and pass on some of the cost to the claimants they represent. If they don’t then the only blessing of the internecine scramble that follows is likely to be that it’s soon over.

Of course, the amount that you’re allowed to charge even a very happy and contented client has been restricted. In most low-level claims it will turn out to be a sum which to the claimant is a noticeable chunk of compensation and which to the lawyer makes little difference. Bear in mind the extra marketing and PR you’ll need to do to persuade potential clients that your involvement will result in at least 33% more in damages to fund the cost. How much more? Will it justify the wait?

On the other side of the fence the happy smiling faces at Aviva & Co will be telling these unfortunate people that they could have a sensible and fair deal right now, cheque tomorrow and all that. Just cut out the lawyers. I’ve seen it at very close hand – Livin’ Aviva Loca.

Will any independent claimant lawyer really stand a chance of winning this business? Think about it. Insurers control the gateway to these claims – that’s how they’ve made so much money from referral fees for years and created the claims management companies that have brought such shame on the industry as a whole (with help from a lot of lawyers).

Motorists don’t routinely have lawyers but they must have insurance. The first or second call most make after a crash will be to their insurer. Whether it’s through them, the recovery people or the police, the third party insurers will have the victim’s details within hours if not minutes.

How many distressed accident victims will resist the instant offer of a courtesy car, an interim payment and swift handling of their claim to insist that they must first find and speak to a lawyer who is going to cost them money which they may not recover at the end of what will be an even longer day?

So you stand there, like Monty Python’s King Arthur asking a Frenchman on the battlements if his master will join you in your quest for the Holy Grail to be told “Well I’ll ask him but I don’t think he’ll be very keen…you see, he’s already got one….it’s a very nice!”

And insurers will tell you “Now go away, or I shall taunt you a second time”

The current system is broken. It will not work from here. Time for a new approach...

Aviva’s charming claims director, Dominic “Just give them a bunch of flowers” Clayden, recently renewed the call for legislation requiring claimants to deal direct with insurers who will give them a fair deal (coughs) and cut out all the unnecessary expense of lawyers.

OK – well let’s run with that – subject to a few modifications.

Nobody can argue with the ideal of a compensation procedure which sees insurers deal direct and cut the costs provided that claimants receive what they are entitled to by law. Theoretically it’s the best antidote to the twin evils of cost and delay.

The only question is whether one can trust insurers to deal fairly with unrepresented claimants and the answer is unequivocally and without any shadow of a doubt, “no”.

In principle the conflict of interest is undeniable and the temptation would be irresistible. In practice we’ve all seen the evidence so many times. See Foxes and chickens for one of the best examples of ruthless insurers prepared to rip off a naïve teenage farmer’s daughter for tens of thousands of pounds.

They can’t be effectively regulated – even if the current administration were to do anything but turn a blind eye whilst its generous sponsors plunder the plebs to bankroll their bribery. It was a rare event for the Fundamentally Supine Authority to uncover forged signatures and other deception in complaints documentation and fine Direct Lying and The Bull****dog a little over £2 million.

But such a system could be effectively monitored by the very people who have to date ensured fair play by and large and maintained some level of integrity in this otherwise very grubby industry. Yes, I do mean claimant lawyers – the real ones, not the insurer stooges.

The way to do that is simple, and I know I’m not the first to suggest it. Construct similar safeguards to those that exist in relation to compromise, or severance, agreements in the employment law arena.

Make it impossible for the defendants or their insurers to secure a legally-binding agreement unless the claimant has been independently advised on the settlement, along with other formal requirements – such that it must be in writing – as we see in s203 Employment Rights Act 1996 and mirror provisions.

But go further in prescribing an adequate fixed sum (should appeal) to cover the cost of advice, provisions for more where negotiations ensue, and outright release from fixed costs regimes where a claim proceeds and the victim recovers more than was originally offered.

What have insurers to fear? They say they’ll deal fairly with Joe Public. This model will only catch those profiteering by undercompensating innocent victims.

For lawyers there’s an attractive portfolio of a regular flow of standard fee cases with the prospect of more remunerative work if any insurers should happen to slip up and offer too little. Costs should incorporate penal elements, certainly where there are Colossal errors.

For ordinary members of the public there would be a continuing assurance that someone is there to look out for them and fight their corner if necessary, someone with the skills to challenge Goliath and win.

This, I suggest, is the line that the claimant lobby should now consider. Let go the impossible dream.


Accident Experts Advice said...

such a superb information and it will be very helpful. Thanks a lot for sharing.

Anonymous said...

If the ionsurance companies are advising on legal issues ( suitable level of compensation etc) then will they be regulated by the SRA?
If so then they will all close down within just a few months!