Kerry Underwood

SETTLEMENT AGREEMENTS IN PERSONAL INJURY

with 11 comments


This piece first appeared in Claims Magazine. I first published it as a blog in May 2014. I re-blog it now in relation to insurers’ conduct as set out in my Insurers At It Again series.

As the dysfunctional Jackson shamble stumbles on, albeit now being progressively overturned by Parliament, it is time to look to the future and a constructive reform of the personal injury system rather than the Jackson-cut-costs-whatever-the-cost agenda.

In employment cases, uniquely as far as I am aware in English law, it is not possible for parties finally to settle a matter without the employee taking the advice of a qualified solicitor, legal executive or barrister.  Failure to do so means that the employee can take the money and still sue, which is an unattractive prospect for an employer.

Consequently the custom has grown up whereby the employer pays the legal fees of the independent solicitor instructed by the employee.

Such a scheme in personal injury matters would solve, at a stroke, the third party capture problem whereby insurers seek to do a deal direct with the accident victim, virtually always under-settling.

There would be no point in an insurer making too low an offer as the lawyer would simply refuse to advise acceptance.  This has proved to be the case in employment cases, that is much more sensible offers are made to start with.

It takes the sting out of the small claims limit issue as the insurer would still pay the fee in what would be a small claim and it would also allow a solicitor to earn a fee for dealing with a child’s claim, thus solving a major Jackson problem – how do you act for a child when the recoverable costs are uneconomic and judges may not allow a deduction from damages?

This could be resolved by payment of the ordinary settlement fee plus a standard fee of say, £250, to obtain the court’s approval in relation to damages, that being the portal add on fee for such applications.

From the insurers point of view matters are resolved quickly and efficiently without significant defence costs being incurred and with good PR.

The benefit to the client is quick settlement and, most significantly now, no 25% deduction from damages and no need to consider after-the-event insurance.

It also knocks out the paralegal-filled factory firms as it must be a qualified solicitor lawyer who certifies the agreement. Claims management companies would become redundant in low value personal injury work.  The illegal referral fee black market would largely disappear as would the cash inducements offered by personal injury firms to clients and which are bringing the profession into disrepute.

Thus we have a quick settlement for a fair sum approved by a qualified lawyer, with no deductions from damages and no CMCs or illegal referral fees. The fee would vary from case to case and would be subject to claimant solicitor market forces, but £600 plus VAT seems about right to me.

From the State’s point of view it frees up the courts to deal with the more serious matters and those incapable of being settled.

Settlement Agreements in personal injury claims is an idea whose time has come.

See also: SETTLEMENT AGREEMENTS IN PERSONAL INJURY

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Written by kerryunderwood

May 19, 2014 at 11:51 am

Posted in Uncategorized

11 Responses

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  1. This idea already exists to a certain extent – for those who lack capacity to agree a settlement a barrister’s Advice on Quantum is required, as is Court Approval. I suppose the key idea is that without advice from a suitably qualified professional, not many outside the profession can reasonably quantify damages – attempting to do so without such advice causes inequality and benefits only the Defendant.

    One of the big issues in Personal Injury Claims, though, is collation of evidence in support and subsequent quantification of Damages, both General and Special. From expert evidence to receipts, often the lay client does not have that evidence or are aware that they are required to obtain it.

    In priniciple, the idea all claimant’s in personal injury cases should be advised by Solicitors prior to settlement, is a sound one. But its the issue of preparation to be able to be able to properly quantify damages that seems the biggest stumbling block to me.

    Stuart Downey

    May 19, 2014 at 12:10 pm

    • A barrister’s advice is most certainly not required. Court approval is always required, but it does not solve the costs in children cases problem, which many solicitors are now discovering to their cost, both in small claims and in the portal where recoverable costs are uneconomic.

      This would not be a compulsory scheme, any more than it is in Employment Tribunal cases – a party would still be free to go to court, but there are very obvious benefits, especially the client getting damages without deduction of lawyers’ fees.

      I accept that the value of this scheme is in lower value cases, but if 95% of case could be resolved this way – and that is realistic – then the total legal spend would fall sharply and lawyers and courts could concentrate on the difficult cases which would have a proper share of resources and where lawyers could be properly remunerated.

      Thanks for your comment.

      Kerry

      kerryunderwood

      May 20, 2014 at 12:39 pm

  2. A court judgment finding that an agreement to compromise a claim for general damages reached without the benefit of legal advice was voidable would be another way to go.

    In fact, this is effectively already the case for a child or protected party, anyway.

    Dominic Cooper

    May 19, 2014 at 12:20 pm

    • Yes, but you still have the problem of the legal costs in small claims -and the personal injury small claims limit is bound to go up – and the uneconomic recoverable costs in the portal. Also this has to be a qualified, insured lawyer, not a trainee or paralegal.

      Kerry

      kerryunderwood

      May 20, 2014 at 12:33 pm

  3. Would you not worry that the insurers would ‘push’ the Claimant towards the firms that, either, they already own – or those with whom they have long standing relationships.
    I am not necessarily suggesting that they would continue to under settle – or that the advice would be poor – more that the Claimant solicitor market would become concentrated in the hands of a very small number of very large firms.

    • If employment is anything to go by precisely the opposite would happen. Remember all work must be done by a qualified solicitor or CILEx Fellow. That model does not suit the big firms. Also insurance work is concentrated now in a dozen or so firms, so insurers will simply not have firms to push clients to. Also the courts have been careful about supervising the independence of firms under the Employment Rights Act.

      Full conflict of interest checks must be carried out. An insurer referring a client to a firm that they own would be a most serious disciplinary matter for the firm involved. Repeatedly knowingly acting for clients referred by an insurer who has an interest in the firm would almost certainly result in the solicitor being struck off.

      One safeguard would be to prohibit ABS’s from acting on Settlement Agreements.

      Kerry

      kerryunderwood

      May 27, 2014 at 9:26 am

  4. Reblogged this on Kerry Underwood.

    kerryunderwood

    October 21, 2015 at 2:02 pm

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