SETTLEMENT AGREEMENTS IN PERSONAL INJURY

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