I know that it’s by no means the
first such scenario for Steve’s firm and I hope there will be many more happy
endings. Injured folk need to be properly compensated. That’s not just my view,
or the opinion of a small group of self-interested lawyers. In this country as
in many others, it’s society’s view. It’s the law.
Whilst this case is exceptional
it’s not rare for injury claims to conclude with settlements or awards that are
many times higher in value than the sum insurers were prepared to pay. One of
my more memorable cases (see Foxes
and chickens) involved an offer-award ratio of similar proportions. There
are many others where the gap is not so alarming, but still remarkable.
At this point you may be thinking
“Big deal” and wondering ‘what’s the problem?’ Insurers have a position to
protect and responsibilities to their shareholders. That’s their business. Claims
handlers and their lawyers can’t be a soft touch.
So they try to minimise outlay,
perhaps keeping in perspective the expense of that process (yes, I’m smiling
too). If they’re wrong then the claimant will ultimately satisfy the court that
he or she is entitled to more and the defendant will be ordered to pay the
costs as well. Happy days.
Well, as many readers know, it
doesn’t quite work like that. Even in the most successful cases there are costs
reasonably incurred by the lawyer and chargeable to the client that are not recoverable
from the losing party. There is the risk all along the way of something going
wrong, regardless of the merits of the claim or the skills of the lawyers.
Irrecoverable costs and
litigation risk are meat and drink to insurers. They go with the territory and
are largely neutralized by economies of scale.
But the clue to the real issue
here is in that reference to lawyers. At the end of the day it’s expert legal
representation that makes the difference. Only trained professionals can tell
or reassure a claimant that what they’re being offered isn’t enough – and then
help them do something about it.
So, fair fight then? No, it isn’t
– for these reasons.
Injured victims left without
representation will be ‘mugged’, as the Law Society campaigned to warn them two
years ago (Never walk
alone). The insurance industry knows that is the key to reducing the
expense of compensation. There are three main elements of the strategy.
First, get hold of the victim
from the outset and try to deal direct. Tell them they don’t need a lawyer,
tell them they’ll get no more money by using a lawyer, tell them it will only
delay matters and cost them money in the long run. It’s called ‘claims capture’.
See Livin’ Aviva
loca for an example of it (almost) happening to one of my own personal injury
lawyers!
Secondly, if they can’t get the
innocent claimant on their own, then insurers will try to steer the victim to a
firm of lawyers who, frankly, aren’t up to the job because their business model
doesn’t enable them to deploy staff who know what they’re doing or to exercise
proper supervision. (See Fun boy three
and many others).
Thirdly, insurers run a wider
campaign to destroy the independent firms trying to deliver best service to
deserving claimants. From the relentless black propaganda about whiplash
injuries (Hey diddle
diddle) to the slashing of recoverable costs, the war is aimed at
removing from the battlefield the champions of the innocent.
Many people I talk to about the
mythical ‘compensation culture’ display some degree of reticence about pursuing
a claim, whether it’s a current issue for them or a hypothetical situation. Insurers
have succeeded (funded by the premia that potential claimants pay) in
stigmatizing the concept of compensation for loss and injury caused by
negligent third parties.
It’s like paying a club
membership fee but being told constantly by the management of the club that it’s
not the place to go. They still want you to pay the fee, of course, and they’ll
keep promising to reduce it…
And for those mutinous, stubborn
victims who want a lawyer with integrity and ability to help them on this perilous
journey, the choice is narrowing – again because of insurers’ long-term
campaign to eliminate their guides. Good claimant lawyers are leaving the
market because it’s no longer financially viable. They won’t be replaced.
The insurance industry have made
great strides, with enormous help from a supportive government over the last
few years, in progressively reducing the amount of costs that successful
claimants are entitled to recover from the insurers of the person responsible.
Portals and fixed costs – with the rules ever changing – are all about putting
up barriers to justice.
The outgoing Lord Chancellor gave
them a considerable bonus just before he left office with an eye-watering rise
in court fees of up to 660% at some
levels. Mr Grayling and his colleagues said it would have no impact on access
to justice – on the “optional
activity” of litigation as Lord Faulks described it. Incredible.
Back here on this planet, I can
immediately think of one case where my decision to help a potentially deserving
claimant will be hugely influenced by the fact that the court issue fee is
likely to be £10,000 rather than around £1500 as it would have been less than
three months ago.
Insurers complain constantly of “disproportionate
costs” with the happy result that a supine government removed recoverability of
success fees (the lawyers’ reward for the risk of no payment at all) and
continued through costs budgeting to
limit the amounts that a winning party can recover from the wrongdoer.
The important thing to remember
about costs budgeting, and generally costs-shifting between parties, is that it
doesn’t limit the amount either side may spend on the litigation. It’s their
choice, in theory, to throw as much as they like at any particular case
regardless of where the bill lands at the end of the day.
Theory is one thing. The reality
is that whilst injured victims and their lawyers depend case by case on success
to fund access to justice, insurers always have a war chest to fight a claim
regardless of whether it seems proportionate. If funds run low, they’ll
increase the cost of insurance.
And then they’ll complain loudly
that it’s the fault of ‘compensation culture’ and ‘fat cat lawyers’.
Here is the ugly disparity between
the two camps. Deserving claimants, or more likely their lawyers, have to face
a significant risk that any individual case may fail. The ‘easy’ ones no longer
generate anything beyond the cost (if you’re lucky) of running them. That risk
has been hugely augmented over the last two or three years.
Defendants, or rather their
insurers, can always afford to fight and will justify what they do by reference
to policy and points of principle. Together they maintain a campaign which is
aimed not at the merits of an individual case but at the weakening and destruction
of those with the capability to run them. They do not care in the slightest
that an innocent victim may not receive the support they need and to which the law
says they are entitled.
Cases like the one just reported
demonstrate over and again that whilst the law of this country says you may and
should have a remedy, the barriers rise and multiply. Innocent victims need
brave and talented lawyers but the numbers are in decline. So is the law. (Road to ruin)
A client who has recently signed
a CFA with us came from the ABS to which he had been steered by his own
insurers having formed a view about their ability and, more important, their
true loyalties. He wrote of “a system obsessed with bottom-line profit at the
expense of absolutely everybody”.
Couldn’t put it better myself.
