Cabaret Voltaire

"I disapprove of what you say, but I will defend to the death your right to say it" – often misattributed to the French philosopher & writer Voltaire - was said by his biographer Evelyn Hall to illustrate his beliefs.

Freedom of speech, access to justice and the right to be heard are cornerstones of our society championed by a legal system that retains the respect and envy of the modern world - despite the battering it is taking from the current administration.

With the revelation, courtesy of a Freedom of Information Act request by the Daily Mail, of the cost to the taxpayer of Abu Hamza’s legal bills the Law Society is to step in to help the government bolster public confidence in the legal aid system.

Ironic? Or a demonstration of the objectivity, compassion and altruism that are essential components of the rule of law?

One of the longest-running shows on the London legal scene is said to have been maintained by payments from the legal aid fund to Hamza’s lawyers totalling some £680,000. That’s on top of the Treasury’s legal bill, of course.

The government is squirming, anticipating popular uproar. The Lord Chancellor and Secretary of State for Justice (not bad for someone with no legal background at all) has ordered an “immediate review” explaining that “he is concerned about public confidence in the legal aid system”.

The Law Society has already warned HMG not to lose sight of the “constitutional importance” of legal aid which “was devised to ensure that nobody is unable to enforce or defend a right for want of the means to do so”.

Justice director, Angela Patrick, has observed that ‘Human rights cases can involve complex challenges to some of the most treasured government policies; without legal aid, the state could be insulated from effective scrutiny’.

Like it or not, it has to be right. A more adept administration, relying less on common rhetoric and more on cultured debate, might have brought the curtain down far earlier but you can’t simply close the theatre.

Are you still to learn that the end and perfection of our victories is to avoid the vices and infirmities of those whom we subdue? (Alexander III)

Invest in the best

I read this morning that a green paper on plans to expand the Territorial Army will be announced on 8 November. It’s going to include financial incentives for businesses to employ members of the TA and a provision for two weeks paid leave for any reservists employed in the public sector.

Also this morning I posted on my website a report of how a government department – the paradoxically-named Department for Communities and Local Government – got caught out on a contractual dispute and was successfully sued in the High Court for more than £760,000.

Why did it lose?  Because, to quote from the report, the contract was “not drafted by lawyers”.

Fantastic.  How much money did our government waste in costs of the litigation only to blow the best part of a million pounds which, one infers, could have been saved if it had spent by comparison a modest sum on people who knew what they were doing.

What are these reservists, paid for out of the public purse and/or by struggling businesses that the government is currently trying to help (work that one out) going to be doing? 

Will we be sending them out in place of the highly-trained marines and others who continue nevertheless to be killed by a very capable enemy in Afghanistan? 

Just two examples of how this country now seems to be wedded to a strategy of second-rate performance.  They’re two of many – read all about the legal system and the health service in many earlier posts on this blog.

This is all done in the name of economy, because we need to cut expenditure.  Show me where any of it is working.

The contract dispute – expensive mistake.

The NHS – paying out millions every week for its incompetence,

The Ministry of Injustice dismantling our legal system to save virtually nothing.

The MOD (already quite proficient at some of the above) killing off anybody to save money.

We have to get back to doing what Great Britain has for the last few hundred years done so well - leading the field - even if it costs a few quid.

Invest in the best. All else follows.

Electric shocker!

We had the good fortune recently to snap up a neighbouring office suite which gave us extra space that we sorely needed. It comes with all the usual necessary evils, of course, including a couple more electricity meters. 

EDF seems to be the supplier of choice in this building and we already have one contract with them for the original office space so we decided to put the new eggs in the same basket.

The first thing that irked me was that our suppliers would not send us a written agreement if we wanted to take advantage of the discounted price in preference to the standard tariff. I am a busy chap but amongst a splendid team of people here I have a very hardworking practice manager who is more than willing and able to deal with this sort of thing.

But not when a supplier insists that the only way they will deal with this is by verbals over the telephone, with the director of the company – that’s me.

Like any other litigious primadonna, I feel I have hundreds of better things to do and I am suspicious in any circumstances where somebody absolutely refuses to show me a copy of the contract before I “sign”. 

The problem is that I am busy, changing supplier is actually a big deal and I have that awful feeling that we shall just be heading for another frying pan, if not a fire.

So, I end up speaking to a thoroughly charming young man called Sam to whom I explain – calmly – my misgivings. He is, throughout our discussions, a model of discretion and loyal to his employer whilst acknowledging that I am not a lone voice on this point.

After some good-natured wrangling and reassurance, we start the spiel. Unusually for a Friday, I am wide awake by now and listening carefully.

Part of the information I am given is that as I am entering into a “Fixed Term Period Contract” (one year) the prices that I am about to agree will not change, unless of course I am in breach of my obligations by non-payment etc.

Oh, and hang on – there is something else....

…the “fixed” price may also change if, to quote:-

“Any cost imposed on us in connection with processing, distributing, transporting, selling or supplying energy is increased, or calculated in a different way, or a new cost is introduced, which affect our costs of providing your supply”.

In other words, it’s a fixed price unless, err, prices rise.

Not to worry! Sam reassures me that even if supply costs do rise, EDF will not necessarily pass that cost on. Why not? Because consumers might be unhappy!!

I never knew that utility suppliers were blessed with such profound emotional intelligence.

Naturally, I asked Sam for a copy of the wording. He confirmed that I would receive a written agreement by post but said that they do not send out copies of “the script”.

Reason? “It’s considered commercially sensitive”.

You bet it is!

Peanuts..

Last month I wrote about the case of the Manchester motorbiker whose Bristol solicitors, appointed by legal expenses insurers, settled his case for £500,000 – when as subsequently demonstrated it was worth £1 million+ - http://legalchap.blogspot.co.uk/2012/08/panel-beater.html

This month the Law Society Gazette reports on the rise in professional negligence claims against personal injury law firms citing “reliance on under-qualified staff, a lack of face-to-face contact with clients and failure to understand medical reports” as “all factors in the trend”.

Surrey firm BakerLaw reported a recovery of £700,000 for a client whose original solicitors had achieved an award of £16,000.

An associate at Withy King who said one claim was worth nine times the £10,000 settlement agreed by other solicitors added that most claims were by victims represented by panel solicitors located in a different part of the country.

Another professional negligence lawyer spoke of “the proliferation of claims lawyers where there are just one or two partners and a bank of paralegals” generating the problems.

None of this is surprising. The flat, wide pyramid structure represents a risk in many types of business. In an environment where an element of judgment informed by experience will always be required, it signals failure.

Why do it?

Many of these firms are trapped in the business model created by legal expenses insurers whose policies sell for peanuts and only buy monkeys.

It’s not a universal problem. There are decent panel lawyers and there are BTE insurers who cut a fair deal. See for example http://legalchap.blogspot.co.uk/2011/08/bte-angels.html

But in my experience the good guys are the exception and the evidence is beginning to show that so many who have taken the insurers’ shilling and sold their souls are delivering a shoddy service.

From the victims’ point of view, that is.

What about insurers? Well it looks fine for them. They are driving the price of legal services down to increase their margins and passing the risk to professional indemnity insurers – by and large a different market.

Another commentator has made the valid observation that some if not all of these wicked under-settlements are driven by liability insurers who care nothing about injured people, their representatives or their indemnity insurers.

One hopes that (indemnity) market will quickly decline to continue underwriting the risks generated by law firms who facilitate the greedy aspirations of insurers with no care for the standard of service delivered to injured victims.

Until then this problem will only grow worse.

Brass tax

We posted a news story this morning reporting on a decision of the First Tier Tax Tribunal (no, wake up – this is actually quite interesting!) allowing an appeal against penalty for late payment of PAYE and NI by a limited company, Browns CTP.

See http://www.mrw-law.co.uk/news/2012/09/20/taxpayers-entitled-to-rely-on-first-class-post/ for the summary but the nub of it was that the company had a “reasonable excuse” as provided for by the Income Tax (PAYE) Regs 2003.

That reasonable excuse was identified in this case as the reasonable expectation that the payment would arrive on time. In turn, that relied on the belief that a cheque sent by first class post would arrive the next day.

“Taking all these matters into account we consider that a reasonable employer, having due regard to his responsibilities in relation to PAYE, is generally entitled to rely on next day delivery in the ordinary course of first class post”, the tribunal judge concluded.

Well, if you didn’t nod off four paragraphs ago, you may be forgiven for now rolling about on the floor in response to the idea that Royal Mail can be relied on to deliver next day, whatever grade of service is chosen and paid for. See http://www.legalchap.blogspot.co.uk/2011/10/bottom-of-class.html for one of many sparkling past performances.

More important though is the question of why people are spending time and money, some of it the taxpayer’s, in some dark room in Manchester having this antediluvian debate.

Cheques, “first class” post? Why is anyone – certainly a business owner and employer - still messing around with these antiquated forms of payment when it’s cheaper, faster, greener and more secure to pay by BACS or similar online means?

The answer is, largely if not entirely, that our antiquated tax collection services perpetuate these out-of-date practices. They even try to persuade those who already live in the modern era to regress - http://www.legalchap.blogspot.co.uk/2012/05/junk-mail.html.

A well-informed source told me last year that the money collected in income tax does no more than to fund the entire revenue collection system, with the net effect that the only profit is on VAT, Corporation Tax etc. I don’t know if that’s true but it wouldn’t surprise me.

Let's get down to basics. Somebody needs to give the whole operation a colossal kick up the backside to the point where even the people sitting there licking envelopes and juggling cheques understand the importance of not filling a sack full of holes.

Then stop asking me and the rest of the population to scrimp and save so that those stuck in these mindless routines need not get off their comfort level and move with the times.

Business as usual

As motor insurers continue their efforts to put yet more hurdles in the way of innocent victims, we eagerly await more news from the Office of Fair Trading (“OFT”) which has been threatening to spoil the party.

Liability insurers constantly complain about the cost of dealing with claims by the victims of motor and other accidents.  As with clinical negligence claims[1] it’s all the fault of the claimants and their lawyers – nothing to do with their own fat cat salaries and meaty shareholder returns.

Strange in a way that the OFT should have come to the view at the start of this summer that “insurers compete in a dysfunctional way that may push up premiums (sic) for drivers by £225 million a year”

The OFT’s market study provisionally found that an average of £560 is added to the cost of replacement vehicles by:-

• Insurers of the not-at-fault drivers, brokers and repairers referring those drivers to credit hire organisations that charge inflated hire rates, in exchange for a referral fee of between £250 and £400 per hire.
• Drivers being provided with replacement vehicles for longer periods than necessary, whilst they wait for repairs to be carried out by the garages nominated by insurers (also paying referral fees – see below).

The OFT’s report also provisionally found that the cost of repairs was inflated by an average of £155 each time by:-

• Certain insurers receiving referral fees from repairers and associated trades; 

• Certain insurers having agreements with approved repairers to charge higher labour rates when repairing a vehicle belonging to their insured.

So, insurance company A takes the backhanders from the car hire companies, garages and anybody else who’s willing to pay them and promotes the levy of hire charges and delays in repairs to help those that pay the referral fees get their money back and more.

That additional expense is passed on to insurer B (the policy holder will get nobbled for any shortfall) whose costs rise.

 

But it all evens out because in the next scenario the insurers will swap roles.

Ultimately the winners are those who can manufacture more in referral fees than they pay to fund all the artificial charges created by their cronies.

But they will all win because they can moan about these costs, blame them on lawyers (who, note, don’t figure in these scenarios at all) and take some more money off the punters.[2]

Repugnant?  Of course it is.

As the president of the Association of Personal Injury Lawyers, Karl Tonks, said “insurers have finally been caught with their hands in the cookie jar. What the OFT calls ‘dysfunctional’ and ‘inefficient’ actually reveals a host of grubby practices to line insurers own pockets”.

Business as usual then.

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[1] See Repeat prescription

[2] See e.g. Win, win, win - and win again and The real culprits

Five grand

What does “five grand” mean to you? Is it a significant sum of money?

If you’re entitled to both components of Disability Living Allowance at the highest rates then it’s a little over 8 month’s income.

If you’re a legal secretary it may be around 4 month’s net income.

If you’re a comparatively high earner managing to allocate the 10% of gross income that some recommend you should, you’ll buy a very decent family holiday with it.

If you’ve lost a finger, broken your arm or have significant facial scarring as a result of an assault it may be what you are awarded as compensation for criminal injuries.

It will buy ten laptops, five large televisions, a complete range of white goods for your kitchen - or one Segway.

According to the Office for National Statistics, it represents nearly 3 months average UK household spending in 2010.

I’d bet a significant sum of money (but nowhere near £5,000) that it means a lot to the majority of folk in this country.

But not to the Government or the insurance industry.

They want to raise the ‘small claims’ limit for personal injury claims from the current level of £1000 to £5000 – a 500% increase. What does that mean?

It means that unless an injured victim’s claim is worth at least £5000, they will not be able to recover any lawyers’ costs in pursuing their claim. If they need to use a solicitor or a barrister, they’ll have to pay for it out of the compensation they recover.

Compensation they may sorely need to replace weeks or months of income lost because of the negligence of another car driver, their employer, a highways authority, a doctor – and so on..

The idea is that they don’t need a lawyer to run a claim for such an insignificant sum of money. They can deal with it themselves.

Familiar with court process are you? Happy to learn at a time when the rest of your world is falling apart?  Content to wait, with no money coming in, for months…and months…and months?

Because you will. Insurers employ claims managers and lawyers whose primary function is to delay, discourage and frustrate claims. It’s a key element of their commercial ethos. They are really good at it and the only people who can beat them are the claimant lawyers who know the ropes.

They pay these people as part of their overheads that form part of the calculation of the insurance premium that they charge to all of us. They try to justify the assault on costs recovery by pointing to the cost of insurance to the general public.

This is the same general public who, having paid the premia, will be shafted when they have a claim but can’t afford the services of the only people who know how to deal with these cynical, selfish creatures.

Will the cost of insurance fall? Look at the annual accounts of some major insurers, see the value of the packages paid to executives and read what they aim to make for their shareholders. Read it and you will weep.

Sure, there is always a line to be drawn, a point at which it can only make sense to forget it and move on.

But it’s not £5000 or anywhere near. Even now there are pensioners and young kids who desperately need to be compensated for losses of less than £1000 but whose only true hope of a result lies in the compassion of lawyers that Clarke, Bojangley and chums deride as ambulance chasers.

This is a political issue. If you’re not lying in a hospital bed or struggling with a plaster cast right now, it may not seem important. It is.

Think of those who are and think of those who will be in the future – it may be you. Speak out - now.

By the way, current fees at Eton are £10,689 per “half” – which is a term – and there are three in a year.

You'll have to excuse me a while...