INDUCEMENTS IN PERSONAL INJURY CASES
INDUCEMENTS IN PERSONAL INJURY CASES
Sections 58 to 61 of the Criminal Justice and Courts Act 2015 introduce rules against inducements to bring personal injury claims. These are largely uncontroversial and came into effect on 13 April 2015, by virtue of The Criminal Justice and Courts Act 2015 (Commencement No. 1, Saving and Transitional Provisions) Order 2015 (SI 2015 no. 778).
Section 58 applies to regulated persons, which includes solicitors, and makes it unlawful to offer an inducement to make a personal injury claim, but not if the benefit is related to the provision of legal services in connection with a claim.
Thus offering a discount, or a no win no fee agreement, or offering to pay disbursements or cover adverse costs etc. does not amount to an inducement. An inducement is an offer of a benefit that is intended to encourage the person to make a claim or to seek advice about making a claim or which is likely to have that effect (section 58(2)).
A benefit may be an inducement regardless of when or how the offer is made, when it is received, whether it is subject to conditions or whether it is to be received by a third party (section 58(3)).
Section 58(4) provides that if a person other than the regulated person offers a benefit in accordance with arrangements made by or on behalf of the regulated person then the regulated person is to be treated as having offered that benefit.
Section 58(5) gives the Lord Chancellor power to make regulations as to the circumstances in which a benefit is related to the provision of legal services in connection with a claim, including provision about benefits relating to –
(a) fees to be charged in respect of the legal services;
(b) expenses which are or would be necessarily incurred in connection with the claim, or
(c) insurance to cover legal costs and expenses in connection with the claim.
Section 59(4) provides that breach of section 58 does not make a person guilty of a criminal offence and does not give rise to a right of action for breach of statutory duty.
Section 59 also provides that the appropriate regulator, the Solicitors Regulation Authority in the case of solicitors, must ensure that it has in place appropriate arrangements for monitoring and enforcing the restriction in section 58 and empowers the regulator to make rules and allows those rules to provide for any penalty that the regulator could impose for any other breach of another restriction.
The effect of this is that the SRA can make offering an inducement a disciplinary offence resulting in a solicitor being struck off the roll. Sections 59(5) and (6) allow the regulator to make rules which reverse the burden of proof, which means that if the regulator considers that there is an offer of an inducement, then it is for the solicitor to show that it was for some other reason, or that it was a benefit related to the provision of legal services in connection with the claim.
Section 60 is an interpretation section and section 60(1)(c) wrongly refers to the Law Society as the regulator for solicitors. It is in fact the Solicitors Regulation Authority.
Section 60(2) states:-
(a) any benefit, whether or not in money or other property and whether temporary or permanent, and
(b) any opportunity to obtain a benefit;
“claim” includes a counter-claim;
“legal services” means services provided by a person which consist of or include legal activities (within the meaning of the Legal Services Act 2007) carried on by or on behalf of that person;
“personal injury” includes any disease and any other impairment of a person’s physical or mental condition.”
Section 61 provides that regulations under section 58 or 60 are to be made by statutory instrument. The only regulations made to date are the ones commencing these provisions with effect from 13 April 2015 and they are the Criminal Justice and Courts Act 2015 (Commencement No. 1, Saving and Transitional Provisions) Order 2015.
Between them the sections are an all embracing prohibition on inducements in personal injury cases.