Fire at will

The government has now unveiled its proposals for fees in the Employment Tribunals, to be charged with effect from the second half of 2013.

It's an understandable, and on the face of it right, move to reduce the cost to the taxpayer of the tribunal service in two ways.

First, fees received will help to defray the cost of providing the service. Secondly, and more important, those fees will act as a deterrent to claims so that tribunals 'are used as the option of last resort to resolve employment disputes'.

There will be different levels of fees but those of greatest interest will apply to unfair dismissal, discrimination and similar claims. The government proposes a charge at issue of £250 and a hearing fee of £950, so total of £1200 in all cases.

So what is the likely impact of that? Let's take an example.

Someone in their late-20s with a salary of a little under £20,000 per annum is quite likely to be taking home somewhere in the region of £1200 per month after deductions. They may have worked for a little over five years before they are dismissed- they say, unfairly.

If successful in a claim, they can expect to recover approximately £2500 for basic award and loss of employment protection. Three months loss of net earnings on top of that would be unremarkable giving such a claim a total value in round figures of £6000.

Regardless of worth, many unfair dismissal claims can be of sufficient complexity, certainly to the employee in the street, to demand the assistance of a lawyer and outrageous though it may seem to some, lawyers also need to be paid.

It is reasonable to suppose that the jobless client will only want to instruct a representative who is prepared to work on speculative terms. Under the present regulations that apply to contingency fee arrangements, or damages based agreements, the maximum that can be charged for fees and VAT is set at 35% of compensation. One presumes that the fees payable to the tribunal fall to be classed as disbursements which fall outside the cap.

In my example a little over £2000 could be charged, inclusive of VAT, for the lawyer's costs. The "successful" claimant would also pay their tribunal fees of £1200 out of the balance. After discharge of one or two further reasonable expenses, they might be left with a net result of just over two months net pay.

The question for them at the outset is whether they want to gamble a month’s income (at a time when they have no income) on the prospect of recovering two months' worth. It's hardly an attractive proposition, before one begins to consider the emotional cost and investment of time required to run such a claim even with professional assistance.

And how does it look for the lawyer?

In this example, he or she may reach the happy point of being able to invoice £1750 plus VAT. All of that will have been at risk of the claim failing completely, of success on liability but a reduced award and in all cases inability to recover the compensation awarded from the respondent.

How much work will the lawyer have done? There’s no tariff here where the work necessary to take a claim to a successful outcome varies and may require the skills of representatives with different levels of experience and charge.

There are employment law “consultants”, operating nationally, who market themselves on the strength of their ability to provide a high standard of representation at comparatively low hourly rates of around £130. Not having to pay for practising certificates, compensation fund contributions or for professional indemnity insurance helps, of course.

In my example, if these providers were to generate a reasonable return, they would need to run the entire case within a maximum of around 13 hours.

Assume the hearing takes a day (and many are longer) - that means six hours in tribunal. Travel on the day may occupy another two hours, often more.

Only five hours are left to take initial instructions, evaluate the case, advise, draft the ET1, deal with disclosure of documents, draft witness statements, deal with and attend any interim hearings, correspond with claimant, tribunal and opposition throughout the case and prepare for the hearing.

By and large, it just can't be done - not by them or by solicitors charging maybe half as much again. We don't even get to the question of winners paying for losers - an essential feature of speculative fee-based litigation.

The key ingredients that is missing here is, quite simply, costs shifting. Loser pays.

I'm one of many who believe that's a noble and just proposition. It seems that our government doesn't. The concept is under constant attack within our civil justice system, mainly at the behest of large insurers, and consistent with that there remains steadfast resistance to a costs shifting regime within employment tribunals.

The consultation document reminds us that costs may be awarded where a party has conducted their case unreasonably. Contrary to the belief of many, including employment law practitioners, tribunals do make awards of costs (I secured my fourth last month) but they are rare. The consultation document tells us that such awards are made in only 1% of cases.

Within the present proposals is the suggestion that tribunals will have a discretion to direct that the fees of a successful claimant should be paid by the respondent. There is no mention of the wider term "costs" and there is emphasis on the discretion in relation to fees.

Experience suggests that the combined outcome will be that whilst the recovery of the fees paid, even by a successful claimant, is far from certain the existence of a discretion to make that much of an award will render unreasonable conduct costs orders even rarer than they are now.

As with the proposed increase in the small claims track limit for personal injury cases and Sir Rupert Jackson's take on proportionality[1] the result is a significant barrier to claims, regardless of the merits. The rewards for the lawyers who might take the risk of not being paid, let alone the funding of disbursements for their unemployed client, is too uncertain and too small to sustain a business model based on conditional or contingency fees.

For the successful claimant, the outcomes even after inadequate remuneration of their champions may not justify the financial risk and general heartache of pursuing their rightful entitlement to a significant sum of money and repairing a piece of their life.

The government points to the need to resolve disputes by other means. This translates to the expectation that within the short period of time (3 months) limited for commencement of an unfair dismissal claim, claimants will persuade the employer who sacked them illegally to mediate and to offer an acceptable alternative to litigation[2].

Let's not think for the moment about how that alternative might be facilitated.[3] Instead just consider the likelihood that the employer who has had the courage to unfairly dismiss is likely to volunteer payment of a number of thousands of pounds in the face of a risk that otherwise they may have to pay, er, nothing in the way of a penalty for fighting the claim against a financially and emotionally weak opponent.

It simply won't happen and so this is, again, a denial of justice to all but those whose pockets are deep.

From a broader perspective, the effect is to ditch any incentive to resolve disputes with integrity, in a manner consistent with principles of natural justice and in particular the requirement to listen to the other side.

We’re back to the conclusion that what matters more to the MoJ and this government, in the name of economy, is the stifling of claims and the silencing of complainants[4]. The truths and values for which this country has been admired and followed globally are to be further eroded.

[1] See Solicitors Journal 10 July 2012
[2] See http://legalchap.blogspot.co.uk/2012/03/mediations-achilles-heel.html
[3] See http://legalchap.blogspot.co.uk/2012/01/back-to-reality-testing-testing.html
[4] See http://legalchap.blogspot.co.uk/2012/06/legal-highs.html

Panel games

We needed to send a written reply, this morning, to one of the offices of a leading national law firm.

We looked for an e-mail address but there was none on the letter we received – by post, inevitably, in the case of this particular firm.

Curious thing is, there is no postal address either.

And no fax number.

Plainly these guys think that the rest of the world should take the trouble of finding their contact details.

Actually, there was one potentially helpful piece of information at the end of the letter - a direct dial number, with the name of the correspondent.  We gave him a call.

Voicemail message informed us that he is on holiday...until 26 June. Yes, that’s a week ago.

So, this is how things should be done?

Some of the less co-operative legal expenses insurers (BTE) will tell you that one of the reasons for refusing to instruct anybody but their “panel lawyers” is that these are approved and audited legal suppliers delivering a superior service.

Hmmm.

Dr Botox - The Epilogue

A few weeks ago I wrote about the remarkable case of my claimant client with moderately serious orthopaedic injuries directed by insurers to the distant and grubby premises of their “expert witness” – a botox injector, who eventually confessed that he hadn’t a clue.[1]

The case has settled now after a few more exchanges of correspondence but not until after client received further strange telephone calls from a withheld number – a nameless somebody wanting to arrange another medical examination, this time even further away in Gloucestershire.

Our man is reasonably sanguine but others would be justifiably anxious to know who has what information about them and what they are doing with it.

Insurers do what they like, of course, as the widespread sale of policyholders' data to claims farmers has demonstrated. I wonder incidentally when we can expect to see action by the Information Commissioner’s Office which has been levying substantial penalties on local councils and NHS trusts recently.[2]

The key point here seems to be that resistance crumbled after we latched onto the fact that insurers were actively steering this perfectly genuine and deserving claimant to an ‘expert’ who probably had no more qualification for the job than that he would say whatever insurers wanted him to say in return for not very much money.

Had any report from this guy seen the light of day it would not have been challenged at latest until trial by most ‘self-representing’ victims, or those using the monkeys that the insurance industry wants to force upon claimants one way or another.

As it is, insurers paid almost twice the five-figure sum they previously offered.

QED.

---

[1] http://legalchap.blogspot.co.uk/2012/05/abominable-dr-botox.html

[2] http://www.ico.gov.uk/news/latest_news/2012.aspx

Someday is now

Something of a guest post for mid-week, this apparently hit the web about three months ago but doesn’t seem to have gained much profile (sadly).

It’s reportedly a quote from the Principal of a secondary educational establishment in New Zealand who in turn was relating comment from a judge who deals regularly with young offenders:

“Always we hear the cry from teenagers ‘What can we do, where can we go?’

My answer is, “Go home, mow the lawn, wash the windows, learn to cook, build a raft, get a job, visit the sick, study your lessons, and after you’ve finished, read a book.”

“Your town does not owe you recreational facilities and your parents do not owe you fun. The world does not owe you a living, you owe the world something. You owe it your time, energy and talent so that no one will be at war, in poverty or sick and lonely again.”

“In other words, grow up, stop being a cry baby, get out of your dream world and develop a backbone, not a wishbone. Start behaving like a responsible person. You are important and you are needed. It’s too late to sit around and wait for somebody to do something someday. Someday is now and that somebody is you”

As the rain lashes down here on this midsummer evening, the antipodes look ever more attractive.

Legal highs

I just caught up with an article published last week spotlighting the rising cost of compensation paid to NHS patients whose illnesses were misdiagnosed, from £56m in the previous year to £98m. 

A Department of Health spokesman was quoted as saying: "Unsafe care will not be tolerated in a modern NHS. The vast majority of the millions of people seen by the NHS every year do get good quality, safe and effective care. However, if patients do not receive the treatment they should and mistakes are made, it is right that they are entitled to seek compensation.” 

Wow. Are you sure about that? 

It’s a reminder that the annual report of the NHS Litigation Authority is due soon. It will be interesting to see what Kenneth Clarke has to say about it. 

Some will no doubt remember the minister’s breathtaking ‘double-counting’ gaff last March when he announced on the Today programme that “In 2008-2009 the National Health Service did pay out £312 million worth of damages. It paid far more out to lawyers in fees - £456 million.” 

Of course it transpired that £456m was the total expense, £312m of which was compensation and the rest costs, including £40m paid to defence lawyers employed to try and escape responsibility for the cock-ups. 

The disparity between costs incurred by claimant lawyers and NHS lawyers is now perennially blamed on success fees. Too little attention is paid perhaps to the cost for claimants of expert evidence (which the NHS has in-house) and the ease with which defence lawyers paid at reduced rates for guaranteed flow of work may do nothing but delay to ‘earn’ their fees. 

One expects Mr Clarke to blame the expense of clinical negligence – which rose to £863m last year – on “compensation culture” and “fat cat lawyers”. 

Within last year’s total, in excess of £600m was paid in compensation – not costs. In a no win, no fee environment, costs only have to be paid in successful cases – those claims by people who deserve to be compensated, but had to fight (with professional help) to get it. 

This is not an expense generated by lawyers, claims farmers or greedy claimants, Mr Clarke. 

This is the cost of incompetence, Mr Clarke. 

So what’s your answer? 

Improve the service? Learn from the mistakes? Arrest the needless wreckage of lives and lost opportunities to stay alive? 

No. 

Your answer is to kneecap the claimant lawyers – stop them exposing the shortcomings. We’re not just tiresome – we also cost money when we succeed. 

Who allowed that? Well, it was Parliament that makes the law and the courts that uphold it. 

Why did Parliament make that law? That would be to relieve the taxpayer of the perceived burden of legal aid for injured people to pursue redress to which our society’s law deems them entitled. 

Mr Clarke’s response to all this is not to solve the root cause (wastage, mismanagement, incompetence etc in the Health Service) but to stop the infringement of legal rights being exposed. Cover it up. Warp the stats. 

Injured innocents can go without a remedy. Many more can fall victim as standards of essential healthcare decline still further. 

Don’t (or didn’t - when we could afford it) we spend billions valiantly (sic) crusading against regimes that deny their citizens justice whilst using the wealth and influence of the state to wage war on the more powerful and influential opponents of tyranny and champions of what is true and just? 

What sort of regime do we now have here?

To me, to you...

So, eleven weeks in and we’re getting into the stride of things with the new Money Claims Centre at Salford which so many North-West legal practitioners forecast would be a new nightmare.

Actually, our very early experiences have been fair to good. But what is happening behind the scenes and how has the long-established black hole in Northampton been keeping up, as parent of this new outpost?  Well, we had some insight yesterday.

One of the claims we prepared for issue last month was dutifully sent to Salford, indicating Yeovil as our preferred court for any defended proceedings.

Apparently it is becoming a common problem that defendants send their notice of intention to defend to the claimant’s preferred court when in fact they should send it to Salford which deals with all steps up to the filing of a detailed defence.

The time had come for us to enter judgment in default if no acknowledgement of service had been filed and as so often we rang to check the position with the court.  Here’s how it goes...

Salford can tell us that on 23 May 2012 the defendant filed an acknowledgement of service but sent it to the wrong court.  “The system” tells the operator that it was then sent to Northampton but so far nothing has been received.

Northampton told us subsequently that if they receive anything that doesn’t belong to them then they simply send it back to the person who sent it.  They were able to tell us, though, that somebody at Yeovil had sent the acknowledgement to Northampton.

The person at Yeovil when spoken to informed that she had telephoned Northampton who were currently seven to eight days behind but any documents Yeovil had sent to Northampton would be returned to Yeovil.

Helpfully, our local representative has said that when the documents are returned to them by Northampton, they will fax a copy to us...  before they forward them to Salford!

We don’t see what goes in the pack to the defendant.  Obviously it is not clear enough to ensure that the response is returned to Salford. 

What is amusing is that having arrived at the wrong (local) court, the document is then sent to the wrong “centralized” processing centre.  Yeovil helpfully explained to us that there are “three Northamptons”, being the County Court, the Bulk Centre and Salford (literally!).

Well, it’s looking like another raging success for the MoJ to chalk up (a bit like the Portal).

Exuberant nights out and beer production facilities come to mind, anyone?

Reading the Riot Act

The Association of British Insurers (“ABI”) has just published a tearful lament under the title £40 Million a Day - Counting the Financial Cost of the August 2011 Riots.

If as I did initially you read that and think “hang on, how could it possibly be that much?” don’t spend too long searching.  The simple arithmetic behind it is “insurers expect to pay out around £200m” against claims arising from five days of rioting.

So not quite what it seems at first glance. Surprise.

It’s a short article and worth a read but do have a freshly-peeled onion and a large bucket to hand before you begin.

We’re told not once but three times (in a seven-page article with wide margins, photographs and big spaces) about how “insurers expect to pay £200m in compensation”.

We read how marvellous insurers were in acting quickly despite “overly bureaucratic” and "slow and cumbersome” responses from police authorities to processing claims under the Riot (Damages) Act - “which some people wrongly thought was the fault of their insurance company” (surely not!).

But what is this piece of legislation you mention?  Well, that’s the point.

The Riot (Damages) Act 1886 provides that compensation must be paid by the police to individuals and businesses who suffer loss and damage following a riot.  There is no limit on the level of compensation. 

How does that fit with the much vaunted claim by insurers that they will be paying out as much as £200m for the costs?  Simple. Whilst they pay out in the first instance to their policyholders, they then recoup the money from the Government - or should I say the taxpayers, many of whom are, er, policyholders. 

The bottom line is that it’s all about cash flow. 

The article tells us piously that “insurers worked around the clock handling claims from their customers” - for which no doubt they will reap reward ultimately from the taxpayer.  “But”, the ABI tell us “a number of factors mean that a handful of claims await final settlement” (it’s worth reading the actual percentage stats on the preceding page.)

The pinnacle of this sickly sermon is: -

“Insurers are doing everything possible to ensure that any outstanding claims are fully settled as soon as possible.  Indeed there is no financial incentive on an insurer to delay the settlement of the claim.”

Except, that is, that where the Government is so slow to reimburse insurers out of the taxpayer’s money, insurers will be losing interest on the funds paid out in settlement of policyholders’ claims.  Whoops - gotcha!

The rest of what follows is a lecture about how the Act needs to be retained but updated, extending the period of time for claims but speeding up payment.  Since the majority of property owners probably hold property insurance, for whose benefit will that be?

For when my outward action doth demonstrate the native act and figure of my heart in compliment extern, ‘tis not long after but I will wear my heart upon my sleeve for daws to peck at:  I am not what I am.