Wednesday, 27 March 2013

A matter of interpretation

I read this morning the report of a Court of Appeal decision on Monday of this week overturning a third party costs order made by a crown court judge.

It’s the latest episode in the now celebrated farce of the provision by private contractors of court interpreters for defendants with insufficient comprehension of English. As in so many cases (but see below) the proceedings had to be adjourned when the Slovak interpreter did not turn up.  The judge made an order that the provider should pay half of the prosecuting counsel’s costs wasted on the adjournment.

Now, although the case involved that old Private Eye favourite, “Crapita”, which has been the subject of three critical parliamentary and audit reports over its performance, it was not straightforward on this occasion.  Notably, the hearing had been rescheduled only the day before and it is not clear who failed to notify the interpreter.

None of that is remarkable, but this is.  

How much was involved here?  Answer - the princely sum of £23.25.

The first reaction of most people will be to wonder whether it can be possibly be right that the Court of Appeal is mobilized for the sake of twenty quid that a massive enterprise like Capita has been ordered to pay.

It seems laughable against the background of all that is headed in our direction with effect from Easter Monday, headlined by the fundamental change to the overriding objective of the Civil Procedure Rules. 

No longer will it be enough for courts to “deal with cases justly” – they must now do so at proportionate cost.  The two requirements sit side by side.

It will be for the Court of Appeal ultimately to give guidance, if necessary, on the impact of this change but I venture to suggest that it means even if you have a good case, you cannot expect to spend disproportionate sums of money pursuing it.

On the face of it you would say that this one would not get off the ground.  But of course it would because what people do, and will continue to, forget is that these rules only apply to awards of costs between the parties.

I have yet to see the full report but hazard a guess that Capita won’t have recovered their costs of this litigation, nor would they expect to.  There was an important point of principle involved for them, and that’s a right to be preserved subject to the overall debate about who funds the system in austere times.

The same philosophy applies to all those supposedly insignificant claims, albeit for a hundred times and more the value of the initial costs awarded in this case.  I’m talking about “small claims”, of all types, that people and businesses want and need to litigate up and down our country everyday.

From 1 April, the no-costs environment will apply to most non-personal injury cases worth less than £10,000.  Insurance companies continue to hammer on the door of No. 10 for a rise in the personal injury limit.

The point is that these are claims that depend for their success on the reasonable prospect of securing a costs order against the wrongdoer, when the case succeeds.  Whether it’s the litigant themselves or their lawyer taking the risk on what seems to be a meritorious case, there is hope as long as costs-shifting continues.

Unlike Capita, the majority of people for whom relatively small amounts, in litigation terms, are important cannot afford to fund their cases regardless of the outcome.

The government is now promoting contingency fees but of course has it upside down.  A percentage of very little is even less.  Contingency fees ought to be applied, if anything, to big value cases.

So, expect to see more not less of these anomalies.  Whilst our government has decreed that it’s not appropriate for ordinary folk to have a decent chance of pursuing sums of money that might be the best part of year’s net income, its fine if you can afford to do it (Five grand).

Step forward the celebrities, Russian oligarchs, the liability insurers (still raking in the premia) and the PFI outfits scooping millions out of the public purse to provide poor service and trips to the Court of Appeal to defend it.

Oh – and one final thing – who in their right mind thinks that £46.50 is adequate reward for a barrister to turn up anywhere and do anything???

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 na├»ve 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.

Thursday, 7 March 2013

The lions share

In these dark times we can all, even lawyers, now look forward to a share of the massive reduction in car insurance prices that should follow the scything of legal costs that accident victims are allowed to recover when claiming compensation to which they are entitled.

Last week two judges ruled that the Government’s decision to cut fixed costs in “low value” road traffic claims from £1200 by more than 50%, to £500. Of course, your definition of “low value” will vary according to whether or not you’re brought up in a world where three halves make one – see Five grand.

The reduction came largely because of insurers’ scuttling away from the referral fee games that they have played on each other for years and falsely claiming that if they all promised not to rip each other off in future then the job of running a claim could still be done profitably. Well, not if it’s done competently – Peanuts.

As the High Court heard last Friday, HMG was persuaded of these fallacies in a closed meeting at Downing Street and emails between ministers and their insurer friends that were not open to any scrutiny or comment from those who represent innocent victims. Lord Justice Elias explained that’s how it’s done and “if people deem it to be unfair that is a matter for the ballot box, not the court”.

Thanks for that – and roll on 2015.

But the good news is of course that our Government agreed this treacherous deal for good reason – to save us all money in these desperate times. They were assured that the massive savings in legal costs and compensation would fund (presumably meaningful) reductions in the cost of insurance for Joe Public.

So, how is it going so far?

Well, the MD of Liverpool Victoria was reported yesterday to have warned consumers not to expect vastly reduced premiums as a result of the new fixed costs. LV’s John O’Rourke said he expected a 3% reduction in premium but said he was “not hopeful there will be much more to come”.

Hmmm. Smacks of a poor bargain, without anything else considered.

If regard is had to the announcement last month that LV’s profits last year were up (are you sitting down?) by 54% you might feel that it stinks.[1]

Meantime, Direct Lying report a modest increase of only 9% to £461million profit[2] whilst AXA UK and Ireland announced a rise of 86%[3].

3%?

An AXA director lectured me last week about what he termed “the lack of profit in motor insurance since 1994”. I asked him the secret to losing money for two decades and staying in business, and why anybody should want to stay in the business. I’ve yet to see an answer to that.

This is presumably all part of things “getting better” as our current ‘leader’ has put it today. It looks more like a bum deal to me.

3% - the price of another hammer blow to justice. Just like the greedy and corrupt bankers who have wrecked our economy and reputation with impunity, the big money of the insurance industry holds sway – behind closed doors – with the Government of our country.

As Alexander the Great may or may not have said, an army of sheep led by a lion is better than an army of lions led by a sheep.

The lions share? No, they don't.


[1] Insurance Times 26 February
[2] International Business Times 28 February
[3] Insurance Times 21 February