Kerry Underwood

PERSONAL INJURY – A MODEST PROPOSAL

with 31 comments


Put the small claims limit in personal injury matters up to £25,000 for matters resolved in the portals but reduce it to zero for all other matters, that is cases that never enter the portal and those that exit the portal.

The recoverable portal costs are almost meaningless now and no solicitor can survive without charging the client. 25% of damages is standard and contrary to popular belief the charge is not limited to 25%.

Let us recognize that and scrap recoverable costs in the portal. This would give defendants an even greater incentive to settle early and reasonably, as otherwise they move from a no-costs regime to a recoverable costs regime.

Clients get their damages quickly and lawyers get their fees quickly. Everybody is happy except those firms who are unable to generate enough work and have to fatten up every file like a pig for market. Those firms need to be driven out.

Increase general damages by 20% to reflect the saving to defendants and to reflect the fact that clients will be paying all of the legal costs out of damages if matters settle early.

A 20% increase in general damages will mean that more money goes to the injured client and we all agree that that is a good thing don’t we?

Where the case is low-value but complicated, and this does not go in the portal, for example clinical negligence, the lawyer gets a proper fee, without the fear of an adverse costs order.

Scrap Part 36 for all work in the portals, pendulum litigation and Fixed Recoverable Costs Schemes, bringing them in line with the Small Claims Track where Part 36 has no application.

Scrap Qualified One Way Costs Shifting and make it One Way Costs Shifting.

Limit the consequences of a claimant failing to beat a defendant’s Part 36 in any personal injury matter to non-recovery of costs, that is remove the draconian penalty of having to pay the other side’s costs, and thus remove the need for After-the-Event insurance. The penalty of not recovering post Part 36 costs is sufficient to incentivize solicitors and clients to accept good offers.

No medical report without leave of the court in any claim worth less than £25,000. In 95% of low-value cases they are unnecessary. Employment Tribunals deal with the most complex issues such as disability, life expectancy and ability to work, without medical reports.

Pendulum litigation for all personal injury claims up to £50,000 where liability has been admitted and the only issue is quantum.

Pendulum litigation is successfully used in some European jurisdictions. At a quantum hearing each party must submit one figure and the Judge must choose one or the other figure; s/he cannot choose something in between. Thus each party tries to make its figure as reasonable as possible to ensure that that is the figure that the Judge goes for. We have the beginnings of that in the portal system; now is the time to go the whole hog. It works.

All personal injury claims not settled by way of a Settlement Agreement or in the Pendulum Litigation process to be dealt with in a new Personal Injury Tribunal. This will be chaired by a Judge sitting with two lay assessors, very much based on the old, successful Employment Tribunal system.

There would be a system of one way Fixed Recoverable Costs with the defendant only able to recover costs in the event of unreasonableness as in the Employment Tribunal Rules.

There will be no court fees and the lay assessors will consist of one from the claimant side and one from the insurance side, again based on Employment Tribunals where there was a trade union nominated tribunal member and an employer organization nominated member.

It is striking in the Employment Tribunal system how rarely there is a split decision. A similar system in personal injury work may help to end the deeply damaging “them and us” culture that has grown up between the claimant side and the defendant side.

Appeal, with leave, will be direct to the Court of Appeal, which would be a costs-free zone in accordance with powers under the new CPR 52.9A.

Cases must be determined on paper within 14 days of notification to the Personal Injury Tribunal that liability has been admitted. There would be a right of appeal, but the Appeal Judge would still have to choose one or other figure. (Those of you who have attended my lectures will have seen my party piece on this).

Clinical Negligence

A no fault scheme, that is where proof of injury cause by medical treatment is sufficient with no need to prove negligence.

This would not risk opening the floodgates, and given the enormous budget of the NHS, and its 1.7 million employees, extra payments to compensate those injured, whether or not it was anybody’s fault, makes no noticeable financial difference.

In any event society often ends up, through the benefit system, paying out in respect of people severely injured through medical treatment.

A new, Specialist  Clinical Negligence Tribunal, along the lines of the Personal Injury Tribunal above would deal with matters, that is essentially decide quantum.

Allow out and out contingency fee agreements in all personal injury work, and indeed in all civil work.

Scrap Damages-Based Agreements. Pointless and useless. Contingency fee agreements and Conditional fee agreements do the job. CMCs are currently allowed to enter in to DBAs, which is wholly wrong. This does away with that anomaly.

This can be achieved by amending Section 57(2) of the Solicitors Act 1974 which already allows contingency fee agreements in non-contentious business, and by the repeal of section 45 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 and the consequent scrapping of the Damages-Based Agreements Regulations 2013.

Careful drafting of a section 57(2) agreement and a bridging agreement allied to a concurrent Conditional Fee Agreement allows this to be achieved anyway.

A maximum percentage of damages to be charged to the client should be introduced, maybe 30% in personal injury work and 40% in clinical negligence work, such percentages to include everything to be charged to the client with recovery of costs from the other side to continue in the circumstances set out above.

Contrary to popular belief the current law does not impose any limit on the percentage to be charged to the client; it is merely the percentage to be charged by way of a success fee or DBA that is limited.

Scrap the indemnity principle. It is the single biggest cause of the increase in legal costs. There is no logical reason why recovery should be limited to the notional charge to the client. Conditional  fee agreements have rendered it almost meaningless anyway.

Reduce limitation period to six months. If you haven’t lodged a claim in six months then it could not have troubled you much. Make this subject to existing Limitation Act exceptions.

Extend system of Interim awards as per portals.

Ban ABSs from dealing with personal injury work – qualified lawyers only.

Ban Claims Management Companies from having any involvement of any kind in personal injury work. Referral fees in personal injury work are now banned so what justification is there for the continued involvement of CMCs in personal injury work?

Allow barristers direct access in personal injury matters.

Amend Compensation Act to provide for 2 year prison sentence for paying or receiving referral fees, in line with other Compensation Act offences.

Full details of all cases issued should be available to everyone online, with all decisions to be published electronically and on Twitter the day that they are given. This would introduce “Sunshine in Litigation” and works well in those states of the United States where it operates.

Unsolicited telephone calls or text messages soliciting claims to be punishable with a six month prison sentence.

No fee to be recoverable from the other side if a qualified lawyer has not physically met with, and advised, the client.

If this has not happened then the client should be treated as a litigant in person.

The diversity and independence of the legal profession should be encouraged and promoted and the statist big-business mentality that is wholly inappropriate in relation to the practice of law should be discouraged. To help with this, the limit on partnerships must be reintroduced, but perhaps now at 30, rather than 20, with a 25 per cent fee enhancement on Fixed Recoverable Costs for firms with five or fewer partner, and for barristers who should have direct access in all personal injury matters.

 

Third Party Capture and Settlement Agreements

No personal injury claim of any kind to be settled without the injured party taking advice from a qualified, insured lawyer.

Thus any settlement direct between a claimant and an insurance company will be non-binding unless supported by a Settlement Agreement where the claimant has been advised by a solicitor, Fellow of the Chartered Institute of Legal Executives or a barrister. No paralegals here please; this is sufficiently important to justify qualified lawyers only. Barristers should be allowed direct access for the purpose of dealing with Settlement Agreements.

This is exactly what happens in employment matters and for the same reason, that is to prevent exploitation of the weaker party in an unequal relationship – see section 203 Employment Rights Act 1996.

Settlement Agreements in employment work exceptionally well. As the signing of the agreement and payment of the damages, after the receipt of qualified legal advice, debars the claimant from going to court the custom has grown up of the defendant/respondent employer paying the claimant’s legal costs, even though there is no obligation to do so, employment tribunals generally being costs-free zones.

In employment matters the usual fee in a straightforward case is £350.00 plus VAT. For personal injury the appropriate fee may be £750.00 plus VAT, payable by the insurers.

The benefit to the client is very rapid settlement with no deduction from damages. Insurers get the matter off their books at a reasonable cost without the risk of the matter exiting the portal to Fixed Recoverable Costs. It will also cover all non-portal matters, such as clinical negligence.

Quick settlement for the claimant without deduction of damages; reasonable fee for proper lawyers. We are all in favour of that aren’t we?

These are some initial, uncontroversial proposals which I am sure will attract general agreement and I would welcome some more radical proposals from readers 🙂

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Written by kerryunderwood

September 26, 2013 at 1:36 pm

Posted in Uncategorized

31 Responses

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  1. Six month limitation? It would take a major public awareness excercise to alert accident victims to this – how many times do clients come to us 12 months after the event because they have undergone a series of surgical procedures and “wanted to see how it was all going to turn out”?

    Julie Carlisle

    September 26, 2013 at 2:36 pm

    • Employment matters – far more nuanced as employees often still working there in discrimination claims – time limit is 3 months less a day, yet everyone is aware of that limit. I specifically said leave existing Limitation Act exceptions in place, which would appear to cover above example – date of knowledge being key.

      Maybe the answer is to have a one year time limit in personal injury generally and 3 months in RTA.

      kerryunderwood

      September 26, 2013 at 2:43 pm

      • I can just see some really harsh situations arising, even arguing date of knowledge…
        Love some of the other ideas though especially on settlement agreements – let’s start a campaign!

        Julie Carlisle

        September 26, 2013 at 2:51 pm

      • I can’t disagree strongly enough with your suggestion that everyone is aware of the 3 month limit in ET claims. Lawyers – yes. General public – no.

        domcgraham

        September 27, 2013 at 10:30 am

      • I have been doing employment work for 38 years now and it is very rare indeed for a client to contact us after the 3 month period, which incidentally was 28 days when I started work. In any event you have that problem whatever limitation period you have. The problem with employment work is that limitation is jurisdictional and not just a defence.

        kerryunderwood

        September 27, 2013 at 10:36 am

      • There is significant difference between approaching a solicitor within 3 months and being aware of the 3 month limitation period. Are your clients aware of the deadline?

        domcgraham

        September 27, 2013 at 10:46 am

      • Yes, generally.

        kerryunderwood

        September 27, 2013 at 10:47 am

  2. Count me in Kerry – where do I sign and do I get a badge?

    We have been crying out for clarity in PI for decades yet seemingly every change brings with it more and more satellite litigation.

    Good luck with persuading the Defendant Insurance Industry – sorry I meant “the Government” – of the obvious benefits of these proposals.

    Adam Penn

    September 26, 2013 at 3:05 pm

    • Thanks Adam. Acorns and oaks and all of that. There is benefit to both sides in these ideas. Whatever side anyone is on, far too much legal time is spent dealing with low-value claims. This is very much the fault of an archaic system, not those working within it.

      You have to design the badge for us! 🙂

      Kerry

      kerryunderwood

      September 26, 2013 at 3:43 pm

  3. Some good radical thinking Kerry. I could live happily with all of the proposals except:

    1. No medical reports without consent under £25k – unlike most employment cases, medical injury is at the core of PI claims, so it is only logical to have a medical report to use in assessing damages. Otherwise the only evidence for quite substantial claims (£25k , or even £2500, is that to many people) is likely to be layman’s/lawyer’s speculation and medical notes often cobbled together in haste by GPs or at A & E.

    2. 6 month time limit – too short. I agree with Julie on this.

    Thanks for the ideas – especially the settlement agreements.

    Tim Howarth

    September 26, 2013 at 3:14 pm

    • How about 6 months limitation period for RTA?

      Most countries do not use medical reports. Trained, experienced and qualified lawyers – with case management systems being banished to the outer circle of hell – are more than capable of assessing effect of injuries on client, and that is what damages are for.

      kerryunderwood

      September 26, 2013 at 3:39 pm

      • The more I think, the more I disagree with you on the med reports. Surely the point is that the tort feasor picks up the bill for treatment – not the NHS? I can’t quite believe that even a trained assessor would be in a position to recover future costs for treatment without medical evidence in support, or even be in a position to forsee what those future needs will be,

        Julie Carlisle

        September 27, 2013 at 9:25 am

      • I agree that the tortfeasor should pick up the bill for medical treatment – the issue here is whether medical reports are necessary in relatively low value claims. If significant future medical treatment is required it is unlikely that the claim will be below £25,000 and in any event all I am saying is that leave of the court be required to obtain a medical report, and in such a case surely leave would be given.

        What I am questioning is the routine assumption that a medical report is necessary. In whiplash claims they are a waste of time and money, money which would be better going to the client or solicitor, or dare I say it, staying with the insurer.

        Other jurisdictions manage perfectly well without medical reports in cases of this kind.

        Thanks for taking part in the debate.

        Kerry

        kerryunderwood

        September 27, 2013 at 9:34 am

  4. If we want to turn around the PI system, can we make it into a game show like Deal or No Deal.

    The two sides negotiate on the contents of the 15 boxes, which reveal the various outcomes at trial. Rather than gather evidence, we simply ask the Judge to take a box at random. Claimant can then open 3 boxes before Defendant makes an offer. If the offer isn’t accepted, open 3 more etc. If it doesn’t settle, then the Judge opens the last box and gives Judgment for that amount.

    harry

    September 26, 2013 at 3:21 pm

    • No, that is pretty much the way it works at the moment. I am suggesting a new scheme.

      kerryunderwood

      September 26, 2013 at 3:35 pm

  5. I have a few worries with the small claims limit rising. I attended a recent pi conference in which some legal minds were advising us to ensure that we have a process in place to deal with small claims. If we all have the right IT we can survive on a DBA making £500 a case. A few flaws I could see with this and why I’m not bothering to prepare other than to run files down.

    1. They assume every pi claim is worth at least £2500 (and they forgot to take into account the VAT so just over £415 really). What if its a 3 month injury? Can you still afford to run it for £200?

    2. They assume all insurers will deal with claims in the portal and not contest any andake reasonable offers on every case. What if they don’t!?

    What happens when direct line realise that if they ignore solicitors for long enough we will all be starved of cash and close down!? Who can issue a case and attend trial for £85? Why would they bother to deal with any claim at all? If they refuse to deal with any whiplash claims at all how many solicitors would run them? How many claimants would run them? If I was an insurer I would ignore every pi claim and pay the likes of beachcroft and keoghs £150 for defending it at court, that’s if the claimant bothered to show up or if the solicitor was still in business to afford to show up. Oh and What about the advocacy?

    There is a huge misconception that DBA’s will work or even contingency fees should the limit rise, they won’t, clearly! The only real tool we have left to settle a pi claim is costs. Regardless of how low they have become the incentive is still there for insurers to pay up and there are sufficient penalties to ensure that they are dealt with reasonably and adequetly.

    Should the limit rise this will lead To a huge windfall for insurers. There is no incentive whatsoever to deal with anything. This has already become apparent in the credit hire industry now the limit is £10k. Insurers are taking advantage of the unequal footing and refusing to make reasonable offers on these, safe in the knowledge that the only adverse costs they face is couple of hundred quid against a potential saving of £3-4k or even more.

    I can see how Kerry’s model would work and it seems reasonable. What I think is more reasonable is the current model. Insurers have saved around £1300 a claim and that’s just on portal cases, issued cases are much more.

    £500 to seek the advice of a fully qualified solicitor to deal with your claim from start to finish is more than reasonable in a civilised country like England. The only valid reason I can see to raise the limit is to stop pi claims in their tracks. Even successful claims run the risk of being vastly under settled as insurers will undoubtably take the stance of take it or issue and get to court in 12 months time- it makes no odds to them!

    The moj need to seriously reconsider this and what’s more alarming are the few solicitors out there that think the limit rising is not fatel to their business!

    Some comments out there

    Sam

    September 26, 2013 at 4:09 pm

    • oh well at least this is one thing that we do not now have to worry about for a while! 🙂

      kerryunderwood

      November 28, 2013 at 6:46 pm

  6. No medical reports up to £25k is a bad idea. It will lead to undersettlement, misdiagnosis (or non-diagnosis) of serious injuries, and will increase fraudulent claims.

    The suggestion that lawyers with no medical training can assess injury/prognosis period/recommend treatment etc is misplaced. Let’s stick to what we’re good at and what we have trained for.

    Apart from the above, medical reports are an additional and essential layer of protection from fraud. They are especially needed in lower value cases. Pre-med offers, for example, have encouraged fraudulent claims to a huge degree.

    I also agree with others that 6month limitation is far too short.

    domcgraham

    September 27, 2013 at 10:41 am

    • But pre-med offers are bound to be the norm with the new portal and Fixed Recoverable Costs scheme, and why can’t an experienced and qualified lawyer analyse the medical evidence and the effect on a client and form a view? It happens the whole time in the employment tribunal system and indeed in Care Home refund cases. Significantly in each of those types of work the cost of medical reports is not recoverable, and that changes behaviour.

      kerryunderwood

      September 27, 2013 at 10:47 am

      • Why can’t a lawyer analyse the medical evidence and form a view? Because they’re not medical trained. They are not an expert, yet you are suggesting they should offer expert opinion evidence to the court.

        The fact it happens elsewhere is irrelevant. If lawyers are giving expert medical evidence in other types of cases then I suggest it is they who should change.

        Solicitors have a duty to the Court. Pretending to be an expert in a subject is effectively lying to the Court.

        I agree that pre-med offers will continue, but I don’t like it and would prefer them to be banned.

        domcgraham

        September 27, 2013 at 11:07 am

  7. Completely disagree with you, but hey that is the whole point of blogs and comments – thanks for taking part. 🙂

    kerryunderwood

    September 27, 2013 at 11:10 am

    • Kerry great blog and great proposal on dealing with portal claims. Million doller question…..what is your view on the rise in the small claims limit? If you were a gambling man what would you bet on?! If it does Come in, what do you think it will rise to and when?

      Kevin

      September 27, 2013 at 11:43 am

      • Thank you! I regard it as inevitable that the personal injury small claims limit will rise to £5,000 sooner or later, so £5,000 on 1 April 2014, but that is only a guess. Longer term it is blindingly obvious that costs following the event will NOT be the norm, and that is what we must all prepare for and that involves contingency fees and cutting the actual money paid out for disbursements, such as medical reports, and shortening the process and the timescale, that is reducing both the amount of work needed on a claim and the time in months and years that it takes to conclude.

        kerryunderwood

        September 27, 2013 at 12:06 pm

  8. Wise words Sir!

    Sent from my iPad

    Helen Niebuhr

    September 28, 2013 at 7:45 am

    • I agree. Many claimant personal injury lawyers seem unable or unwilling to take a full and detailed Proof of Evidence from the client; if you do that you will rarely need a medical report in a relatively low value claim. I think this is related to the paid for work don’t see the client culture, which, thankfully, is coming to an end. Generally medical evidence should be part of the fixed recoverable costs, which should be increased to take account of that fact, with solicitors free to get a report, but the cost not being recoverable unless the court has given leave.

      That would change behaviour.

      Kerry

      kerryunderwood

      September 30, 2013 at 8:41 am

    • Thank you!

      kerryunderwood

      September 30, 2013 at 8:42 am

  9. Hi Kerry,

    Re no medical reports on low value claims save by court agreement. Couldn’t agree more, how many do we see where you can replace a claimant’s details for any other and they read exactly the same, get the ink stamp out for a prognosis, throw in some treatment for good measure and there you go, one expert report. I put forward an idea that at day one for claims in the portal an agreement should be reached that the defendant agrees to fund an initial treatment report from an agreed provider. If claim can be settled on the back of that report all well and good, if not wait the end of treatment report and then settle. If complications in respect of the injury is apparent then agree mutually to have the relevant disciplined expert examine and prepare a report, again defendant funded. This way defendant insurer’s will have the control of costs, claimant solicitor has no need to outsource (or in source) work to an agency where without doubt we will be seeing much satellite litigation as firms strive to increase fixed fees. Also by reducing the limitation period say to the 3 months for RTA as you suggest then the treatment becomes beneficial not just a mandatory add on, as the claim is presented in time for treatment to be effective. It would also act as a natural deterrent for would be fraudsters.

    Andy

    September 28, 2013 at 8:05 am

    • See above – lot of comments on this one and think reply got out of order, but I agree with you.

      Kerry

      kerryunderwood

      September 30, 2013 at 8:43 am

  10. Some good radical thinking Kerry. I could live happily with all of the proposals except:

    1. 6 month time limit – too short. I agree with Julie on this.

    Thanks for the ideas – especially the settlement agreements.

    Zanes Law

    September 28, 2013 at 2:44 pm

  11. […] PERSONAL INJURY – A MODEST PROPOSAL | Kerry Underwood – Sep 26, 2013 · Put the small claims limit in personal injury matters up to £25,000 for matters resolved in the portals but reduce it to zero for all other matters, that …… […]


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