Tax craven

On a personal level it’s hard to complain about the recent notification from HM Revenue & Customs.

Headed “We are writing to apologize for the late issue of your self-assessment statement”, it told me that I now have until the end of September to pay any tax due and that I won’t be charged interest as long as I meet that deadline.

Quite generous, I have to say where the essence of “self-assessment” is that I know - or to be more precise my accountant knows - how much tax is payable and that, as in every year, it is due by 31 July.  Furthermore, we all know we get charged interest if the payment is late.

But no - the Revenue say that we don’t (or rather didn’t) have to pay by the end of July - that we can have until the end of September - interest free.

Why this generosity?  Well, HMRC are feeling guilty, explaining that “because we had to send out more statements than we expected this year, we were unable to issue your statement at the usual time”.

I hope someone, somewhere - who has the ability to put things straight - understands that this is a euphemism for “because we are so under-resourced and/or incompetent the nation will have to continue paying interest on a sum equivalent to however much tax is paid two months late, and not recover any of it from  taxpayers who have had the benefit of the money for an extra two months”.

How can we ever expect to climb out of our pit of debt?  

The "expense" of counsel..

I’m reading - not for the first time - reported disapproval from the judiciary about the instruction of counsel in particular circumstances.

It doesn’t really matter from the point of view of what I have to say but this particular article arises from an old chestnut of infant settlement hearings.

In passing, there is a separate observation about that.  The court rules very properly require additional work from lawyers to safeguard the interests of children even in “small claims”.

I should be interested to know how many school kids, even in this day and age, think that £1,000 (or just under) isn’t a lot of money.  Nevertheless, the expectation of the courts seems to be that the additional work will be done for virtually nothing.

In this and other situations, judges complain about the “unnecessary use of counsel” and the like.  What in heaven’s name is the problem?

By and large, junior counsel attend many relatively straightforward hearings unaccompanied by solicitors, often travelling significant distance, and doing it all at unbelievably modest cost.  So many times it works out cheaper than sending any less qualified person from the office, or from another firm as an agent.

Encouraged by defendants’ representatives who, in the case of liability insurers, will generally run even the most tenuous arguments to try and have costs disallowed, our courts seem blinded by the reference to ‘counsel’.

So often they seem to overlook the obvious point that there has to be some expense and they should ask the obvious question - how much would that expense have been in any event?

So often the answer will be - a lot more than it was to “use counsel”.

Insurance matters...

...is the title of a visually attractive “free professional indemnity insurance guide from The Law Society” that reached me today, 2 September 2011.

The trigger for this fifteen-page feature is obviously the approaching single renewal date as it is known for solicitors’ professional indemnity insurance cover - 1 October 2011.

I flicked through to see typical warnings from brokers about, amongst other things, “timely proposal forms”.  One article I glanced through was a little thin on guidance but clear enough that sending a form in within four weeks of the renewal date (i.e. later than, 2 September) wouldn’t be good enough.

There might be lots of good stuff in this publication which I shall want to read, notwithstanding that I sent off my proposals to brokers last month.  To the extent, though, that this is trying to get the message across to solicitors to crack on with it well ahead of 1 October, why does it land on the mat as late as 2 September?

Further scrutiny reveals only that this is “Issue No 6, August 2011”.  The well-wishing forward from the Chief Executive, Desmond Hudson, informs that “a dedicated PII Helpline will be open from 23 August 2011”.

So what is the explanation?  Has it only just been printed - or was it just sitting around in a post room?  My copy didn’t look as if it had been places on the way.  

Army answerphone..

Thank you for calling the British Army. We're sorry, but all our units are out at the moment, or are otherwise engaged. Please leave a message with your country, name of organisation, the region, the specific crisis and a number at which we can call you. 

As soon as we have sorted out Afghanistan, Libya, Croydon, Iraq, marching up and down bits of tarmac in London and compulsory health and safety at work training, we will return your call. 

Please speak after the tone or, if you require more options, listen to the following numbers:

If your crisis is small and close to the sea, press 1 for the Royal Marines.

If your problem is distant, with a tropical climate, good hotels and can be solved by one or two low-risk bombing runs, please press 2 for the Royal Air Force. (Please note that this service is not available after 16.30 or at weekends)

If you have an issue which can be resolved by a warship, some bunting, flags, a damn good cocktail party and a first class marching band, please write, well in advance, to the First Sea Lord, The Royal Navy, Whitehall, London SW1

BTE angels

I confess I have never been the biggest fan of BTE ('before the event') insurance, probably because of the massive risks and lost time that it generated within the framework of the 2000 Conditional Fee Agreement Regulations.

It also has a lot to do with having had to deal too many times with the likes of DAS Legal Expenses.  It was good to see them being brought to heel in the High Court at the end of March this year.

It is not all bad by any means.  I can think of two good experiences with Churchill Insurance, for example. 

By “good experience” I mean that the client’s legal expenses insurer is prepared to appoint us at the outset of the case when the client needs us and to agree a sensible hourly rate for our services - rather than tell us to get lost because we are not on their panel of pet lawyers.

Well – here’s another good experience...

I have a client, a straightforward and pleasant bloke, who is highly-skilled as a lathe operator.  He was involved in a serious car accident as a result of which he had extended sickness absence.  There was no clear-cut case in negligence against any other road users involved.

After a year or more of absence his employer suddenly terminated his employment, without any warning.  In short, he had a reasonably good case for compensation for unfair dismissal and disability discrimination, probably worth high four figures, possibly low five.

He came to me as an existing client and asked if I would look at it on a contingency basis.  In the course of doing the proper checks we identified that he had a policy of BTE insurance.

I got in touch with his insurers and gave them a summary of the case.  I told the client I didn’t know whether they would be prepared to instruct us, warning him that some policy providers take a very narrow view of freedom to choose your lawyer.

Insurers came back to us and said they would indemnify from that point.  They would be prepared to pay up to 95% of our normal hourly rate if on examination of a claim for costs the work justified it.  They set a realistic provision as a maximum for fees.  They routinely required opinion from counsel (which was supportive) and paid for it.

The claim is now stayed and will probably be struck out.  The respondent is in administration and it seems that the best possible dividend for unsecured creditors, including my client, would be around 7%.  That means that a really good result might yield 20% of the costs reserve that insurers were prepared to allocate.

I add for the benefit of anyone who doesn’t recognize the point that this was an Employment Tribunal claim.  The relevance of that is that costs awards are few and far between (says he, who secured two the year before last and is halfway, hopefully, to another...)

Insurers here perfectly reasonably cut the cord.  We were asked to send in a schedule of our costs, which we did.

Within a short space of time, I received a letter from their solicitors who audit all such claims.  They asked for a complete copy of our file which we were able to send electronically by a series of e-mails.

That firm of solicitors looked at the matter on the same day and wrote to us with a detailed analysis of the claim.  For the most part it was to tell us that they agreed that the work was reasonable, justified the hourly rate, etc.

Their only quibble arose from some slight debate over the date on which cover had been terminated but given their attitude as a whole we were prepared to accept a proposed payment of around 85%. 

I have had better endings for sure, and there is nothing to replace the satisfaction of a good win and a happy client, but It has to be said that this wasn’t a bad safety net.

At no point can I recall any unpleasantness or awkwardness in dealing with primarily the insurer or, very briefly, their auditing solicitors.  On the contrary, it has been a positive experience that prompts me as a sometime BTE sceptic to post this blog.

The players involved?

Step forward - NatWest Legal Expenses and Keelys LLP.

Take a bow, you guys. DAS and others, take note.

Ministry of Slow

I just read a bulletin from one of my professional associations that tells me there is to be “no announcement on new guideline hourly rates for 2011 until the end of September or early October”.

So, what does that mean?

For the normal human beings amongst us, this is a reference to the arcane world of solicitors’ costs - but don’t switch off immediately because this point is quite amusing...

Since Lord Wolfe’s Civil Justice Review in 1998, we have had a process called summary assessment by which costs are quantified and ordered to be paid, by one party to the other, at the end of the majority of hearings lasting up to one day.  It’s often a bit rough and ready, but it works.

Solicitors legitimately charge different hourly rates but where costs between the parties are concerned the tendency is to use what is colloquially described as “the going rate”. To achieve consistency, we have what are known as Guideline Rates issued from London with figures to be applied in various regions all over the country.

In theory, these take effect from 1 January 2011.

Yes, you read the opening correctly.  It’s likely to be October 2011 before the MOJ manages to publish its guidelines.  Consequently, we shall have used the 2010 guidelines for at least ten months of this year

Guys, just bin it will you?  Perhaps if you start now there is an outside chance that you can come up with some (realistic) figures to apply with effect from 1 January 2012 – perhaps...

Portal of horrors

I see repeated mention of proposals by liability insurers to extend the scope of the Portal, and reduce the fees too. Will the MOJ fall for this one I wonder?

Fellow personal injury claimant lawyers know what I am talking about.  For those who don’t, this is a web-based system of exchanging information between claimants and insurers, currently restricted to road traffic accident claims with a value of less than £10,000.

The idea was sponsored by liability insurers with the insistence that the technology would cut costs and speed claims to everybody’s benefit.  The big plus (?) for claimants’ lawyers was that admittedly low fixed costs would be payable by instalments rather than at the end of the case.

It might have worked in theory, though many of us knew full well what would happen.

The fact is it has been a nightmare.  The launch was delayed because of technical problems.  When it is not beset by functional issues, it doesn’t work because insurers play their usual tricks.

Breaking out of this system is possible but it’s not clearly mapped and the potential costs, or penalties, of doing so are disproportionate.  So you are virtually locked in.

I and others say the proposal to extend it to much higher value road traffic claims and other types of claims is disastrous news.  If you want to understand why, let me tell you at first-hand a true story about how the portal works. It goes on a bit – but that’s the nature of this beast...

This wicked tale features a very large insurer, a chap called ‘Lakshami’, numerous unidentified chums of the same name and a Manchester firm of solicitors beloved of this insurer for attacking and delaying claims for costs by (successful) injured claimants’ solicitors.

It also features the claimant, our victim here, who in case you don’t pick it up as the story unfolds happens to be my employee.  In true Star Wars tradition, we’ll feature the earlier part of the saga in a little article about claims capture during the coming days.

This is how the claim runs after we receive instructions from my slightly pranged employee one day at the beginning of August last year: -

5 August 2010 - Detailed claim uploaded to the Portal.  Insurers have 15 days to respond.

19 August 2010 - We become aware that these insurers, as others, are exploiting a loophole that they have found relying on what is referred to as an “Article 75 Decision” to allege that they have up to 29 days to deal with (i.e. delay) a claim.

23 August 2010 - Insurers admit liability and the Portal shows on this date that the claim is awaiting payment. 

18 November 2010 - Medical report and prognosis received from claimant’s doctor and uploaded within what is known as Stage 2 of the Portal process.  Insurers have 15 days to respond.

30 November 2010 - On the fourteenth day, enter Lakshami, asking for payslips for the three months prior to the accident.  We provide and wait a little longer...

9 December 2010 - Insurers make a partial offer through the Portal.  In the course of doing so they ask for payslips on headed paper.  Strange, since the payslips originally provided were....on headed paper.

The same day, we telephone and speak to someone called “John”.  He looks at the file and advises that they have received all the information they require and he cannot understand why the request for payslips has been made. Well done, John.

17 December 2010 - Lakshami telephones.  He has received the payslips and wants to check who is the claimant’s employer.  We confirm that it is us – as, er, shown on the payslip!  The next request - they want our contact details?! 

Same day (assistant frustrated at this point, understandably)  I telephoned, listened to music for the best part of five minutes and eventually spoke to an operator whose incomprehensible name began with “G”.  He couldn’t help by putting me through to the Lakshami who had just telephoned because......there were too many people called Lakshami.

23 December 2010 - We speak to Lakshami (the right one, allegedly) again and ask to know the present position.  He says that he needs the employer’s address.  We ask him why that is necessary but he can’t tell us.  He will ask his case manager and telephone us.. 

30 December 2010 - Lakshami calls in my assistant’s absence and leaves a message with a secretary.  He wants to know how long she was off work and what she is claiming for loss of earnings...

4 January 2011 - My assistant returns the call to Lakshami.  She points out to Lakshami that all the information relating to loss of earnings was included in the schedule of loss that was filed at the beginning of the Stage 2 process [18 November].  Apart from that, they must know how much she is claiming because....in the course of their own partial offer they had quoted the amount claimed and asked for payslips. 

26 January 2011 - After exchanges of further offers on both sides, we chase one of Lakshami’s colleagues about our latest offer.  The operator tells us that they have not received the fax but they had received an invoice from us on 20 January. News to us. We ask them what the invoice was for and the operator starts to read the fax that we had sent on 18 January......we observe that this was the letter we were chasing.

Same call - we are then informed that... they need documentary evidence to support the loss of earnings claim!!  Eventually, we get through to Lakshami - the same one who has dealt with it before.  He has not considered our last offer yet but he will talk to his claims manager about it and telephone us 

18 February 2011 - After a period of time during which our particular Lakshami apparently leaves and there is much application of head to brick wall about the meaning of “global” we are told that a cheque for damages has been issued and the file has been sent to specialist solicitors in Manchester to deal with the costs.

21 February 2011 - Specialist solicitors in Manchester write to advise that they are dealing with the costs.  We write and ask them why when this is a Portal claim and fixed costs are prescribed by court rules. 

23 February 2011 - James telephones. He wants to check that they have all the disbursement vouchers.  Yes that ONE bill from the doctor for £50 is “all the disbursement vouchers”.  He says a cheque for part-payment of the costs is on the way but they just need to verify the success fee (this is worth £120 by the way).  Do we have a conditional fee agreement in place?  Yes - we confirmed that on the initial form submitted to the Portal at the beginning of August last year.  James will just have to check that with his manager..

24 February 2011 - James calls again.  He asks again about the success fee.  We tell him that we spoke to him yesterday about this.  He then announces that insurers no longer have a copy of the initial form that was sent to them via the Portal.  He wants another copy.  He also asks again about the disbursement vouchers and we confirm that it is just the £50 that is being claimed. Yawn.

The same day James sends us an e-mail asking for all this information that his insurer client had six months ago.  We all fall about laughing in the office here at the fact that this costs specialist cannot spell his own surname correctly in his e-mail.

2 March 2011 - After we send further copies of the information we sent at the outset through this highly-efficient portal, we get the balance of costs paid.  One wonders how much the costs specialists in Manchester earn for effectively triple-checking less than £200 worth of the prescribed claim for costs?

The answer to that last question is that it doesn’t matter to this insurer and others.

What matters is that however much it costs they make it ever more difficult for innocent victims of accidents to pursue compensation, one of the key strategies being to drive people who know how to deal with them off the playing field because it is economically insane to be in the game.

Cynical? Remember that we’re dealing with people who think it is OK to trouser secretly hundreds of pounds for selling their own policyholders’ claims, and then blame rising costs on the lawyers who champion the rights of victims.