Personal Injury Litigation after APRIL Cambridge Medico-legal society

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1 Personal Injury Litigation after APRIL Cambridge Medico-legal society ANDREW RITCHIE QC 9 Gough Square LONDON 1

2 Before 2003 In PI cases in claimant work: Solicitors were paid by the hour The courts supervised solicitors fees at detailed assessment Solicitors hourly rates were set by the courts annually Barristers were paid as a disbursement Medical experts were paid as a disbursement 2

3 Before 2003 The disbursement basis If a solicitor wanted to instruct counsel or a medical expert he could do so The choice was cost neutral The solicitor was paid to instruct Counsel was paid by the losing Defendant Or counsel was paid nothing if the case was lost (no win no fee) This allowed injured claimants full access to the specialist personal injury Bar Medical experts were paid win or lose Solicitors tried to delay paying until they received the costs on winning 3

4 Since Commoditisation Commoditisation is a business principle It involves paying the same fixed fee for every PI case in a category even though the work involved is different 4

5 The Vital Rule of commoditisation to maintain access to justice to ensure victims can still bring their claims the commoditised price must be the average for the category of cases mid way along the Bell Curve: 5

6 Failure to follow the Vital Rule If the commoditised price is too high The insurers pay too much for the claims in the category Claimant lawyers get rich Society suffers due to excess insurance costs 6

7 Failure to follow the Vital Rule If the commoditised price is too low: Claimant lawyers cannot make money on the claims in that category when they do a proper job So they do a lot less work - a cheap job a bad job Or they refuse to do the claims at all Access to justice is blocked or damaged 7

8 Benefits to Insurers of commoditisation The benefits for the insurers (D) are: [1] complete certainty about the C s costs [2] insurers can behave as badly as they like (deny everything, object to everything, refuse interims, fail to give disclosure) and there are no adverse costs consequences to them - C s costs are fixed - Only C s lawyers suffer so insurers have the whip hand 8

9 Commoditisation: the effects on Claimant lawyers work Fee certainty promotes certainty in planning for accommodation, staff, salaries Fixed fees means taking the rough with the smooth Solicitors are paid the same price for a whole range of different cases Solicitors make profit on easy cases (low level of work needed) Solicitors lose money on the difficult cases (high level of work needed) Obviously this will promote cherry picking the easy cases 9

10 Commoditisation: The effects on C s solicitor s behaviour Fixed fees put commercial pressure on solicitors to: Set a maximum number of staff hours which can be spent on each case Keep expenses down to the minimum Stop instructing counsel: Ø Instructing counsel costs money Ø D will not pay for counsel even if D loses unless counsel is a disbursement 10

11 Commoditisation of counsel s fees To maintain access for victims to advice from barristers and doctors Will MoJ commoditise these? Not barristers fees as I will show? Medical experts fees to be commoditised? 11

12 Effects on injured victims from commoditisation which is too low: Anyone with a difficult case in the category: Will either be refused legal help Or will have the case run by low qualified, inexperienced, para legals Will not have advice from counsel Will probably recover damages (if they win) below the level to which they are entitled in law Will receive poor quality medical reports. 12

13 The 1st commoditisation: The Fixed Recoverable Costs scheme 2003 Introduced for liability admitted RTAs under 10,000 Fixed fees for solicitors who settled cases before issue Barristers were excluded from the list of allowed disbursements Costs Forum 2002, result: Bob Musgrove the then CE of the CJC stated: Disbursements and Counsel s fees are not included: It was agreed that careful and specific wording in the Practice Direction should aim to avoid out-sourcing or possible shifting of costs into disbursements 1 medical report for C generally. The Musgrove Principle 13

14 Effect of victim s blocked access to advice from the bar FRC scheme: solicitors paid % of damages No extra for instructing counsel to advise on quantum So solicitors rarely instruct the bar 1 cheap medical report obtained for C Clients know no better so the risk of under settlement arose 14

15 The second commoditisation: The Portal Flush with the success of the FRC insurers pressed on lobbying government for more commoditisation So Labour created and introduced the Portal A commoditised system for dealing with all RTA claims under 10,000 where liability is admitted. Fixed fees: 400 stage 1, 800 stage 2 and 500 stage 3 (to trial). 15

16 Disbursements counsel and medics Following the FRC pattern, counsel was excluded from the list of disbursements. As a result solicitors stopped instructing counsel Only 2 medical reports allowed, generally only 1, often no medical notes supplied. Generally no follow up questions asked D has no right to obtain own medical evidence in reply Therefore reports no scrutinised 16

17 Under settlement So since 2010 victims who have been advised to take settlements in Portal cases have faced a high risk of under settlement Low grade staff do the cases No profit for the solicitor in fighting for the extra 10-20% No advice from the independent bar Poor medical reporting Professor Fenn analysed the Portal results and concluded under settlement of 6% was occurring on pain, suffering and loss of amenity alone (7/2012). 17

18 Expanded Commoditisation: expansion of the Portal April 2013 The MoJ will expand the (liability admitted) portal in July 2013 It will expand horizontally to cover EL and PL claims. It will expand vertically to cover claims up to 25,000 The fees were announced recently: fixed and half of old fees. Counsel will be permitted to advise as a disbursement at stage 2 in exceptional circumstances over 10,000 18

19 This commoditisation breaks the vital rule: The fees set by the labour government in 2010 were fixed through negotiations between insurers and claimant lawyers This government has proposed much lower fixed fees (cut in half) at levels requested by insurers at and since the Downing Street summit on Submissions made by all claimant lawyers and the Law Society and the Bar Council in consultations since that time have been ignored Fix the fees far too low and access to justice is blocked 19

20 The Fourth Commoditisation The Fast Track The most recent consultation paper from MoJ proposed to commoditise Fast Track fees. The same pattern is proposed namely: commoditise (fix) solicitors fees ignore the bar (namely do not fix barristers fees) thereby abolishing access for victims to advice and pleadings from the bar Fixed figures for claimant legal team announced today counsel not a disbursement 20

21 What does the future hold? Successive ministers for justice have been briefed to: tackle the compensation culture bring down the costs of personal injury litigation with a view to reducing the costs of RTA and EL insurance Whilst maintaining access to justice 21

22 Steps taken/proposed so far Government has: Abolished referral fees; Made success fees payable only by the injured victim out of damages; Capped success fees at law % of past loss. Made ATE insurance premiums payable by the victims out of damages Commoditised 95% of all PI claims those in the Portal and on the Fast Track by fixing fees. Excluded victims from gaining access to advice from the bar by abolishing the disbursement basis 22

23 Other threatsincrease the small claims limit In February the Minister for Justice announced that he is considering increasing the small claims limit to 15,000 in PI No legal fees are paid in small claims Who will this affect?. 23

24 What s involved in running a small RTA claim? Get the police report (how?) Interview witnesses and draft witness statements (time consuming) Draw a plan Write your own witness statement on liability and quantum 24

25 What is involved in running an employers liability claim? For instance a manual handling or dermatitis claim: Obtain and engineering report on the item lifted or the substance which caused the dermatitis (how? Who?) Find the relevant safety regulations and identify which was breached Interview witnesses at work Obtain disclosure of policies and procedures of employer re manual handling or skin protection 25

26 Small claims procedure Find the appropriate medical expert (where do I start?) Instruct the expert Get a medical report from the expert Find the insurance company or the MIB (who?) Write to the insurance company or MIB Make the claim (what is a head of loss?) 26

27 Suing Draft the claim form (where do I get that?) Get the court issuing papers (what?) Copy them (where?) Send a cheque for the correct amount (how much?) plus the right number of copies Send to the Central processing unit in Birmingham 27

28 Getting to trial Deal with directions (What are directions anyway?) Make part 36 offers (Sorry what are they?) Draft a schedule of loss what? Turn up at trial with no barrister Meet the insurance company barrister and get cross examined Have the case heard by a District Judge with no copy of Kemp on Quantum because the MoJ refuse to provide the DJ with their own copies. Produce comparable cases for quantum (where do I find them?) Lose or achieve under settlement 28

29 Justice MoJ style Who could do this? Middle class well educated people? Yes Elderly people? No Mentally disabled people? No Socially disadvantaged people? No Immigrants? No Poor People? No Who cares about them anyway? 29

30 The role of medical experts in PI claims Traditionally the role of medical experts in PI claims has been to report on the injuries Get paid win or lose Funding: by the solicitor s firm Or a medical agency who strike a deal with a bank to fund the fees pending the end of the case. Agency takes a cut of the fees in exchange Now legal fees in Fast Track work are so low agencies will be cut out. Medical experts need to have a website and agree to defer fees. 30

31 Multi-Track cases Costs Budgeting In cases over 25,000 On issue solicitor must file a costs budget in Form H If they fail to do so legal fees disallowed completely. So they need to know: How much the reports will costs How many reports will be needed How many supplementary letters will be needed How much a joint experts meeting will cost Court attendance and cancellation fees. 31

32 Changes to the CPR: Costs budgeting New CPR apply to all multi track cases commenced after : all parties must file and exchange budgets By the date in the AQ notice in CPR 26.3(1) Failure: CPR 3.14: treated as only asking for court fees Relief: CPR 3.9: altered: now proportionate cost and compliance with the rules are the first two factors. 32

33 Out of budget items of work Will automatically be disallowed Prior approval will need to be sought from the court High cancellation fees for settled cases are a thing of the past, stop charging them Delay in requiring payment will get you more work 33

34 Lets talk about your work Questions: 34

35 Thank You Andrew Ritchie QC 9 Gough Square 35

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