Jack Straw and referral fees
Jack Straw introduced a 10 minute rule Bill in the House of Commons on 13 September 2011 seeking to ban referral fees. The Government has adopted that Bill. Referral fees will be banned in personal injury cases and it is likely to be a criminal offence, punishable by two years imprisonment, to pay or receive or offer or solicit a referral fee in a personal injury case.
I have no problem with that. I do have a problem with Mr Straw, a Cabinet Minister for the whole of the 1997-2010 Government, and Justice Secretary and Lord Chancellor from June 2007 to 6 May 2010 suddenly discovering referral fees.
The Compensation Act 2006, which licenses Claims Management Companies (CMCs) and specifically regulates and authorizes the payment of referral fees, came in to force on 23 April 2007, just weeks before Mr Straw became Justice Secretary and Lord Chancellor. His own department, the Ministry of Justice, is responsible for licensing Claims Management Companies, and the list of such companies appears on the MoJ’s website.
Thus for most of the lifetime of regulated referral fees Mr Straw was the Minister directly responsible for them.
Yesterday, 6 October 2011, the Legal Services Act 2007, surely the most disastrous piece of legislation of the last Government, and one of the worst in the country’s history, came in to effect.
It allows all comers, subject to minimal requirements, to sell legal services. The Claims Management Companies that Mr Straw dislikes so much will become Alternative Business Structures (ABSs) (the Act’s name not mine!) and will practise law.
Thus the ban on referral fees will be utterly meaningless and irrelevant as the sellers of the work, the Claims Management Companies – will simply do the whole case themselves, or carry on selling the work to other ABSs and law firms as there has never been any restriction on payment of referral fees between lawyers.
The whole purpose of the Legal Services Act is to allow non-lawyers to compete with lawyers on a level playing field. Preventing Claims Management Companies which are ABSs from trading work in the way that solicitors can would defeat that objective.
In any event CMCs which are ABSs can instruct the solicitors that they currently sell clients to on an agency basis. Thus at present a CMC sells a client whose claim attracts costs of £1,200.00, for a £700.00 referral fee.
Now the CMC can simply instruct the solicitor on an agency basis and pay the solicitor £500.00, keeping the balance of £700.00.
Thus the CMC receives £700.00 and the solicitor £500.00, exactly as now and for doing exactly the same work.
Like Theresa May and the Human Rights Act cat, Mr Straw must know this.
The Legal Services Act 2007 received Royal Assent on 30 October 2007 at which time Mr Straw was the Lord Chancellor and the Justice Minister. He is also a barrister. Hate it or love it, everyone regards it as one of the most significant Acts ever in relation to law. It is inconceivable that Mr Straw was unaware of its consequences – its whole purpose is to allow CMCs and others to compete with lawyers.
Here is the link to Mr Straw’s speech in the House of Commons seeking leave to introduce the Bill:
http://services.parliament.uk/hansard/Commons/bydate/20110913/mainchamberdebates/part004.html
Reading this no-one would ever have any idea that it was Mr Straw’s Government that has caused all of these problems, and specifically Mr Straw himself who was the Cabinet Minister responsible when the Legal Services Act became law.
Thus Mr Straw himself has ensured that his proposed ban on referral fees is totally meaningless and irrelevant, but of course it attracts favourable comments in the Daily Mail, and uncritical publicity on the BBC’s website.
I would prefer not to be governed by people like Mr Straw and Ms May.
NHS Litigation Authority: Has it misled Parliament?
“30% rise in negligence claims against NHS” screams the Daily Telegraph headline of 5 August 2011, typical of others.
No such increase ever occurred as I will demonstrate below, so where did this figure come from?
In its report to Parliament 2010-2011 the Chief Executive, Steve Walker, a Civil Servant, leaps straight in to the political arena:
“We are delighted that the Ministry of Justice is taking forward the recommendations made by Lord Justice Jackson regarding the costs of civil litigation. We believe very strongly that a regime which allows success fees and the recoverability of After-the-Event (ATE) insurance premiums makes litigation so profitable that solicitors and so-called “claims farmers” are drawn into the market thereby fuelling the rise in claims volumes we have experienced.
After large increases in previous years we saw new claims volumes for newly reported clinical claims rise by around 30% in 2010-2011 and by around 6% for non-clinical”.
The truth is very different.
Conditional fee agreements were first allowed on 5 July 1995. According to the NHSLA’s own figures the number of claims notified in 1997/1998, when conditional fee agreements were first becoming popular in clinical negligence claims, was 6,711. By 2009/2010 the number had fallen to 6,652.
Recoverability of success fees and ATE insurance premia came in on 1 April 2000, apparently causing the explosion in claims. Yet the 2007 NHSLA report said “the number of matters we receive has remained remarkably steady over recent years. This year there was a small decrease in the number of clinical matters in 2006/2007 over 2005/2006″.
The 2008 report said: “The number of claims we receive has continued to remain remarkably steady over recent years. This year, there was an increase of less than 1% in the number of clinical claims reported”.
Between 2008 and 2009 there was an increase in clinical claims of 11.30% from 5,470 to 6,088 and between 2009 and 2010 a further increase of 9.26% from 6,088 to 6,652.
The pattern of non-clinical claims very closely follows that of clinical claims, and the percentage rises in such claims between 2007-2008 and 2008-2009 was 10.74%, up from 3,380 to 3,743 and between 2008-2009 to 2009-2010 was 8.84% up from 3,743 to 4,074. Previous years show a similar close correspondence.
2010-2011
Between 2009-2010 and 2010-2011 non-clinical claims rose from 4,074 to 4,346, an increase of 6.68%.
Another measure of activity is the figure of claims open at the year end. A big surge in new claims will result in an even bigger rise in figures because it will be the older, lower, number of claims falling out whereas the new ones are all still in. On this measure non-clinical claims showed a 7.52% rise between 2009-2010 and 2010-2011 and clinical claims showed a rise of 7.51%.
So for 2010-2011 on three measures we have rises of 6.67%, 7.52% and 7.51%.
Yet clinical claims jumped from 6,652 to 8,655, an astonishing increase of 30.1%.
Very obviously this rise has nothing to do with conditional fees or recoverability of success fees and ATE as conditional fees had been in for 15 years and recoverability for 10 years, and as we have seen claims sometimes fell during the years of recoverability.
So what DOES explain it?
Nothing, because there was no such increase.
On page 12 of the report, under “Claims Received” it says:
“Formal clinical claims received under CNST [Clinical Negligence Scheme for Trusts] saw an increase of 31.6% on 2009/2010 and non-clinical claims under LTPS [Liabilities to Third Parties Scheme] rose by 7.8%. Part of the significant increase in claims under CNST may be explained to some extent by the requirement for claimants to now send us a copy of the Letter of Claim at the same time as it is sent to the defendant NHS body, at which point we now record the claim, but we are analysing patterns and trends to obtain a better understanding of the reasons behind the increase” (My emphasis).
Thus the headline-grabbing 30% increase is pure fiction and is obviously and readily explained by a change in reporting methods.
Why did Mr Walker not mention this? Why make the politically charged, and wholly inaccurate, link between “large increases” and recoverability of success fees and After-the-Event insurance premia?
Of course next year, based on this year’s higher figure and using the same, new, recording procedure the percentage increase will revert to a true figure, so it is just this one year when the percentage increase is distorted upwards.
Am I being too cynical in thinking that it suited the NHSLA to present the report to Parliament in this way this year just as Parliament is considering the abolition of recoverability?
As Disraeli said “There are lies, damned lies and statistics”.
Hertfordshire Boy
Bovingdon played local rivals Sarratt at cricket last Sunday.
Until 15 years ago the villages had not played each other since the 1940’s. Rationing was in place and a Sarratt player, a farmer, had been working all hours to bring in the harvest. With hay still in his hair he turned up at tea to be told by Bovingdon that he could not bat as he had not fielded.
Protestations that people would starve had he fielded were met with the response beloved of cricket teams and lawyers alike: Rules is Rules.
Sarratt walked off for 50 years. After being out for a duck on Sunday I nearly marched off; I had courgettes to pick and broad beans to freeze.
The Sarratt – Bovingdon cold war divided families. Between the wars the Bovingdon to Sarratt love-bus ran twice a year between the two villages to bring youngsters together and, apparently, to widen the gene pool. The jury is out on whether this was successful but most villagers over 70 have one of two birthdates.
Chipperfield play Bovingdon for the Chiltern Trophy, which Bovingdon always retains, not just because of our cricketing skills but because:
- I wrote the rules; and
- Chipperfield are unaware of the existence of the trophy.
Bovingdon has the loveliest of grounds so we rarely venture away on Sundays and we always get lost when we do, culminating in the Iver Heath incident when the four cars carrying the Bovingdon stars were each first in line at the four points of a country crossroads.
One time our convoy passed the other side’s convoy coming the other way. We turned up at their ground and they turned up at ours. As the team was Nazeing Common, 30 miles away, this was a problem. Mobile phones have prevented a recurrence.
Our Sunday team, like most others, is a mix of class, race, talent and age with representatives of every decade from our Justin Bieber lookalike teenager to our seventy-something Methuselah lookalike wicketkeeper.
25 miles from London and just outside Hemel Hempstead, the world’s best town, Bovingdon is a million miles from the chatterati of Hampstead.
Ours is a better England.
RACING UNCERTAINTIES
The Great Legal Profession De-Regulation Stakes
Westminster: 6 October 2011
| Sponsors: | Office of Fair Trading sired out of Jealousy and Nihilism |
| Prize: | Destruction of the one part of the constitution still functioning. |
| Runners: | |
| ASDA: | Fixed Price Guarantee! |
| Handicap: £9.39 million fine for price fixing. | |
| SAINSBURYS: | Handicap: Fined £11 million yesterday for price fixing. |
| Try Something New today? | |
| TESCO: | Handicap: £10 million price fixing fine. Every Little Helps. |
| NEWS | |
| INTERNATIONAL: | Won’t be able to hack it. |
| NORTHERN ROCK: | Poor on the home run, or anything to do with homes. |
| CO-OPERATIVE | |
| FUNERAL SERVICES: | Dead Certs. |
| LLOYDS HBOS: | Seeking to diversify. Might try running a bank. |
| Not one for the Journey. | |
| ROYAL BANKRUPT | |
| OF SCOTLAND: | Took £22 billion in one day! Unfortunately it was from us. |
| Would have funded 10 YEARS of legal aid. | |
| Rank. Outsider. | |
All prizes donated by the Office of Fair Trading out of fines levied on supermarkets for price-fixing; that is the same Office of Fair Trading whose report led to the de-regulation of the legal profession allowing all of the law-breaking price fixing supermarkets to become law firms.
Well done OFT!!
Going: Awful to even worse
Distance: 900 years
Rust that clings to the form that strength has left
Hard and curled and ready to snap.
T S Eliot: Rhapsody on a Windy Night
Legal Aid dies – aged 63
The death of civil Legal Aid, born in 1948, has been announced in the Legal Aid, Sentencing and Punishment of Offenders Bill.
A spokesperson for the Legal Aid family said:
“Legal Aid used to be a voucher scheme, with clients having an unrestricted choice of solicitors, all of whom did legal aid and who received the same fee.
“Clients paid means-tested contributions and solicitors paid 10% of their fees, including those received from a losing party, to the Law Society to administer legal aid, which thus made a profit in many cases for the Legal Aid Fund.
“It cost the taxpayer almost nothing, and most taxpayers had access to legal aid. It was very healthy and very popular.
“Then the big business profit centre mediocre middle management statists radicalized our Legal Aid. Individual clients meant nothing; solicitors meant nothing. Mass contracts and “matter starts” replaced justice, quality and professionalism.
“Most of Legal Aid’s friends deserted him; he had become unpleasant due to his terrible ‘big business syndrome’.
“This strange cult decided that Not for Profit organisations were the answer. These were Alternative Non-Business Structures funded by the State, but public spending cuts mean that they are all dying too; the Immigration Advisory Service and Law for All have just been buried and 18 out of 56 Law Centres are terminally ill.
“People do not realize how terrible this cult is and how it is infecting every area of British life.
“All Solicitors were friends of Legal Aid and then he lost most of them. His death is a release from this terrible curse.”
The Legal Aid family hopes that one day a cure will be found and request that all donations be sent to “Small is Beautiful”.
“Glance is the enemy of vision”
Ezra Pound
GENOCIDAL MONSTER GETS LEGAL AID
One week and we already have MORE READERS THAN THE NEWS OF THE WORLD!
Everyday, every lawyer, law student etc., especially at parties, is asked:
“How can you represent someone that you know is guilty?”
neatly encapsulating the fact that:
- All people are guilty of everything;
- All lawyers are bent;
- Only people who do not need representing should be represented.
Lawyers’ responses include:
1. Slowly and carefully explaining the presumption of innocence, the rule of law and the cab-rank rule, that is that we take the next case that comes along.
2. Saying “It could be your son or daughter”.
3. Asking how the questioner can work for X corporation which [uses child labour] [causes global meltdown] [supplies arms to not very nice governments] [used to advertise in the News of the World].
4. Pouring yet another drink.
So here is the news as non-lawyers would like it.
“Mr Johnny Foreigner, 32, genocidal drug-dealing war-lording phone-hacking slave-trafficking fundamentalist mercenary of Aspidistra Crescent, represented by Petronella Prod-Up, 14, intern at LSC firm Bustall and Co (deceased), importers of Vietnamese cross-country skiing aids, was found guilty at Guantanamo Bay Magistrates Court, Surrey, by Coronation Street star Judge Tim Tom Trotter, 16, currently starring in “I’m a Celebrity Big Brother Apprentice – get me out of here”.
Thoughts of a dry brain in a dry season
(T S Eliot: Gerontion)
Like this:
Bankrupt Thai Golf firm represents suspects
The Legal Services Commission (LSC), which runs Legal Aid, chose Bostalls, an unregulated commercial body not owned by lawyers, to provide telephone advice to suspects being held in police stations, something previously reserved to solicitors.
Bostalls has gone bust, owing unpaid taxes.
The Law Society at the time criticized the decision to allow such an unregulated body to deliver legal services, rightly describing it as an Alternative Business Structure by the back door.
Andy Scripture, Managing Director, of Bostalls Bust said:
“We were looking to do other things and distribute golfing aids from Thailand in the UK but the articles of association for Bostalls limited it to the provision of legal services”.
Lesson learnt? Not a bit of it! The LSC has transferred the contract for the Criminal Defence Service (Direct) Scheme to Shaftesbury, a new company set up by ……Mr Scripture!
Asked if such a contract should be given to a company, which in another guise had been wound-up for non-payment of taxes, an LSC spokesman said:
“The LSC is satisfied public monies are being spent appropriately”.
Really? So that will be just the two of you – you and Mr Scripture – who think that.
Kafka where are you?
Judicial enquiry in to the Legal Services Commission where are you?
National press where are you?
Like this:
Welcome to my first blog aged 55 and a quarter
Shakespeare wrote:
“The first thing we do, let’s kill all the lawyers” (Henry The Sixth, Part 2 Act 4).
As this play is as readable as a commercial lease or European Court of Justice judgment I am surprised anyone ever made it to Part 2.
Soon you may all find out if the Bored of Stratford was right as from 6 October the Government aims to kill the legal profession by allowing non-lawyers to practise law.
This has all-party support – it was the Labour Government that introduced the Legal Services Act 2007 and it is being implemented by a Conservative-Liberal coalition.
I suppose this will ease unemployment among the jobless phone-hackers and police bunga bungas but hey, maybe it is time for a bit MORE regulation of lawyers, police, politicians and the press, not less.
So, and you heard it here first, Law Abroad plc and Underwoods Solicitors are remaining just that – solicitors. No Alternative Business Structure for us. After all the legal profession, and its offspring the judiciary, are about the only parts of the British Constitution not subsumed in scandal.
This is the way the world ends
Not with a bang but a whimper
(T S Eliot: The Hollow Men)
