1 New developments 1.1 Call for reforming the law on psychiatric injury An early day motion has been scheduled in the House of Commons in support of the Association of Personal Injury Lawyer s campaign to reform the current law on psychiatric injury in England and Wales. The law as it stands was largely developed following the Hillsborough disaster. The motion states that the law no longer reflects modern society; the law should recognise that you do not need to have a parental or marital relationship to love someone, you do not need to be shocked to suffer psychiatric injury, and you do not need to be standing next to someone when they are killed or injured to be traumatised. The motion is currently supported by 23 MPs. 1.2 Government presses ahead with controversial court fee increases Despite sustained criticism of its proposals for steep court fee increases, the Government has announced that reforms are to go ahead. Issuing its response to the controversial consultation on court fees this month, the Ministry of Justice has acknowledged the disagreement to its plans but stated that no one could seriously argue that it is right for the taxpayer to continue to subsidise those who use the courts, by underwriting unplanned deficits in court income. The fee increases are estimated to generate an additional 105m in fee income a year. The amount of the increase is greatest for claims worth over 5,000 but under 15,000 and represents an increase of over 80% in issue fees. The package of increases came into force on 22 nd April 2014. 1.3 ABI publish know your customers tax residency: a guide for insurers and financial advisers The Association of British Insurers (ABI) has published new guidance on ascertaining the tax residence status of policyholders, as now required under UK law. The guide sets out the ABI and Association of Professional Financial Adviser s (APFA) view on how the roles and responsibilities of both the insurer and the financial adviser could be divided, how to collect tax residency information for new policies, how to fill out the suggested confirmation of verification of identity (CVI) forms, and assessing the tax residency of existing policyholders. Access the guide here.
1.4 Claimant groups: 85% of injured workers not compensated More than 85% of people injured or made ill at work do not recover any compensation, a new report has stated. The joint report, entitled The Compensation Myth, was published this month by the Association of Personal Injury Lawyers and the Trades Union Congress. They state that the most recent figures for 2012/13 reveal that around 610,000 people were injured at work, but just 90,000 successful compensation claims were made. The report identifies the most common workplace injuries to be musculoskeletal disorders such as ligament and back injuries, skin diseases, hearing problems, and injuries from slips and falls. 2 Emerging behaviours 2.1 Rising cost of actions against the NHS Clinical negligence firm, Rapid Response Solicitors has reportedly sought legal costs of 58,000 from the NHS after winning 2,500 damages for a patient scalded by a hot drink. The bill was challenged and reduced to 5,610 by the NHS Litigation Authority (NHSLA), who has raised concerns over the number of cases where costs outstrip damages awards. In another case, Rapid secured 1,000 for a client who suffered an adverse reaction after the incorrect administration of a drug, then submitted a legal bill for 81,000 this was subsequently reduced to 4,000 following a challenge by the NHSLA. 2.2 Litigator survey reveals post-mitchell game playing According to a recent survey of the London Solicitors Litigation Association (LSLA), the rigidity introduced by the Mitchell judgment has fractured co-operation between solicitors, while costs budgeting has driven up law firms costs. The poll of the LSLA s 1,500 members found that the decision in Mitchell had profoundly affected behaviour. Almost three-quarters of those surveyed stated that costs budgeting had increased costs to their firms overall and just under two-thirds said the same about the new rules on disclosure. According to one litigator, there is a lack of co-operation amongst solicitors to sensibly extending deadlines, as it is seen as a chance to get your opponent possibly struck out. Hence, there is more game playing than sensible co-operation. In other findings, more than half of those surveyed said they had stopped offering conditional fee agreements since recoverability ended. Six months ago, only about a third gave the same answer. 2.3 US law firm trials Google Glass to assist PI claims An American law firm is pioneering the use of Google Glass as a new way to convey clients evidence to judges, mediators and juries. Arizona-based Fennemore Craig launched the pilot, called Glass Action, by equipping several business and personal injury clients with the new Google Glass technology, not currently available to the public. The technology enables victims of personal injury to stream first-person accounts of their post-accident physical challenges directly to their lawyers, for example the inability to move a shopping trolley while pushing a wheelchair. The material can then be used in proceedings. According to the US firm, it s the experience of the client unfiltered. Jurors will now be able to see the nuances of a victim s daily challenges first hand. 2.4 Latest Claims Portal figures released 71,472 new RTA claims entered the Portal in March. As with the previous months, over half of the cumulative total left the process using the Exit Process Function. Approximately 28% of RTA cases are settled at Stage 2 within the Portal process. A Stage 3 court proceedings pack is prepared in approximately 1.5% of cases. 2
The average figure for general damages in March saw a marginal increase from 2,455 to 2,497. The figures for EL and PL claims now cover the eight month period from the start of the extended Portal. A slight increase in the number of claims entered the Portal for the month of March: EL Disease EL Accident PL Accident January 1,103 3,268 5,346 February 1,031 3,148 5,186 March 1,287 3,635 5,857 The average figure for general damages in March 2014 ranged between 2,538 (EL Accident) and 5,665 (EL Disease). Just 6,056 disease claims have entered the Portal in the eight month period since 1 August 2013 compared to 17,343 EL accident claims and 29,173 PL accident claims. The number of disease cases leaving the process remains high at just under 65%. EL Accident cases leaving the process are marginally over 50% and for PL cases, nearly 59%. It is notable that 31% PL cases leave the Portal process because liability is in issue. 3 Motor claims 3.1 Road conditions in state of national crisis warns LGA The Local Government Association (LGA) have responded to the Asphalt Industry Alliance s annual survey of council road conditions, warning that the deteriorating condition of roads in England and Wales has become a national crisis, with a total repair backlog standing at 12bn. The LGA said the 200m of Government funding announced in the latest Budget would not be enough to tackle the backlog. Peter Box, chair of the LGA s economy and transport board, stated it would take more than a decade to bring all local roads up to scratch, even if the funding was available. Box said, This country is now facing a roads crisis escalating at an alarming pace with every bout of severe weather and years of underfunding. Government traffic projections predict a potential increase in local traffic of more than 40% by 2040, highlighting the need for increased and consistent investment in widespread resurfacing projects. According to the report, 18% of English roads are now classed as being in poor condition with the figure rising to 19% in London. 3.2 Cox v Ergo Versicherung AG (formerly known as Victoria) [2014] UKSC 22 The appellant, Major Cox, an officer serving with HM Forces in Germany, was riding his bicycle on the verge of a road near his base when he was hit by a car, causing injuries from which he died. The driver, a German national resident, was insured by the respondent, a German insurance company. Following the accident, Major Cox s widow returned to England where she has since entered into a new relationship and had had two children with her new partner. The issue for the Supreme Court concerned whether German or English Law governed the damages that could be recovered, and, if by English law, whether by the provisions of the Fatal Accidents Act 1976 or on some other basis. Under German Law, damages awarded to a widow will take account of any legal right to maintenance by virtue of a subsequent relationship following the birth of a child, while this is expressly excluded as a relevant consideration under the Fatal Accidents Act 1976. The Court found that the relevant sections of the 1976 Act do not lay down general rules of English law, but only rules applicable to actions under the Act itself. 3
An action to enforce a liability whose applicable substantive law is German law is not an action under section 1 of the 1976 Act to which the damages provisions of the Act can apply. The Supreme Court therefore dismissed the appeal, finding that the German damages rules apply. 3.3 Post-LASPO motor insurance costs continue to fall Motor insurance prices have continued to fall throughout the first quarter of 2014, according to the Confused.com Motor Insurance Price Index. According to the index, the 7.5% reduction over the first three months of 2013 means that comprehensive prices have fallen by 19% in the last year, from 736 to 596. The last time that the average premium stood below 600 was at the end of 2009. Comprehensive policyholders in Manchester and Merseyside received the largest annual average price cuts in the country, amounting to 23% or a price saving of nearly 250. The survey also showed that telematics policies are an increasingly significant feature of the cheapest policies. 4 Disease 4.1 Now open: Mesothelioma payment scheme Lawyers representing thousands of asbestos-related disease victims have begun applying to the Government s new Diffuse Mesothelioma Payment Scheme which opened for applicants on 6 th April. The Scheme is open to people diagnosed with mesothelioma after 25th July 2012 who cannot trace the relevant Employers Liability Insurer. For further information see here. 4.2 National Asbestos Eradication Plan mooted In June 2013, the Australian Federal Parliament passed legislation to implement the Asbestos Safety and Eradication Bill. It is the first scheme of its kind; establishing a national approach to asbestos eradication, underpinned by annual operational elements. In the UK, following the Department of Education s recent consultation on the management of asbestos in schools, the Association of Personal Injury Lawyers (APIL) have called for a strategic plan for asbestos removal and containment, akin to the Australian blueprint, in order to eradicate asbestos disease and to set timelines and processes for the safe removal of asbestos materials from public and commercial buildings with priority being given to schools. APIL argue that a short term Government approach could lead to long term health problems. This follows the findings of the UK Committee on Carcinogenicity, which stated that the lifetime risk of developing mesothelioma is 3.5 times greater for a child first exposed at age five compared to an adult first exposed at age 30. 4.3 HMRC to change work history policy following judicial review HM Revenue and Customs (HMRC) will have to change its policy on providing work histories to coroners, following an initial ruling on the HMRC attempt to judicially review a request by a Liverpool coroner. HMRC issued proceedings asking the Administrative Court to quash a notice issued by the coroner under the Coroners and Justice Act requiring HMRC to produce a work history in connection with a mesothelioma inquest he was conducting. This decision will provide a route, through the coroner, for some families to obtain the deceased s work history, which is often essential in attempts to find the source of asbestos exposure that led to the death. 4
5 EL/PL 5.1 HSE Consultation Approved Codes of Practice on PUWER The Health and Safety Executive continues with its consultation agenda with the revisal of the Approved Codes of Practice on the Provision and Use of Work Equipment Regulations 1998 (PUWER); Safe Use of Power Presses and Safe Use of Woodworking Equipment. The HSE have stated the ACOPs have been revised with a light touch and most of the changes are simply removing outdated material, and where appropriate, simplifying the content. One of the suggestions made in an earlier consultation was that the three ACOPs could be combined into one single document, however the HSE have decided that a single document would be long and unwieldy. The consultation period closes on 25. Those interested in responding can click here. 5.2 EL/PL profitability calculator reveals shocking post-laspo reality A Cheshire-based personal injury law firm has gone public with a profitability calculator to make other practices realise how radically the economics of work have changed in the post-laspo era. The law firm claims that it was shocked by the analysis, which showed that paying others to generate employer's and public liability work would make it heavily loss making, and it has instead moved to generating all of its own work itself. The Cheshire firm found that 68 of every 100 leads received from suppliers were EL/PL, with the rest RTA, but that the RTA cases were much more likely to become paying cases. Once the high cost of acquisition and overheads were added together, the firm discovered that it would make an annual loss of 71,091 per EL/PL fee-earner. Access the profitability calculator here. 5.3 SMEs threatened by CMCs Claims management companies (CMCs) are, according to a recent survey, unfairly targeting small and medium-sized firms and could put many out of business. A quarter of SMEs surveyed by Axa have had a member of staff or former employee claim against their Employers Liability Insurance in the past five years and many businesses expressed concerns about fraudulent claims. Over three quarters named CMCs as the main driver behind the growing number of claims. They called on the Government to implement reforms designed to counter fraudulent workplace claims, which are having a knock-on effect on premiums. Following the survey, Axa has called for tougher sanctions for claims management companies and an industry best practice guide on health and safety, after research showed employers' liability claims continue to rise. 6 Fraud 6.1 Ghost broker jailed for First Central scam A Bradford ghost broker who defrauded both First Central and his clients has been jailed for selling invalid car insurance policies to motorists across the city. Atique Khan posed as a motor broker, selling false policies to over 50 drivers over the course of five months in 2011. Mr Khan obtained real policies from First Central, by providing false details and forged no claims documents in order to gain cheaper premiums. He then charged drivers more than the premium, in addition to a handling fee, for insurance that was immediately invalid due to misinformation. The scam was exposed in 2012 when First Central discovered all of the policies included identical email addresses. Following a guilty plea, Mr Khan has been sentenced to 12 months imprisonment. 5
6.2 Insurer uncovers 110m worth of insurance fraud in 2013 Over 45 fraudulent claims per day worth more than a total of 300,000 were detected in 2013 according to research conducted on behalf of Aviva. This represents a 19% increase compared with 2012. The most common type of fraud, representing 54% of total detected claims was found to be motor injury fraud, the majority of which was generated from organised cash for crash claims. There was also note of a growing trend towards third party, injury and organised fraud. Research findings suggest that the number of people who had exaggerated a claim had increased by 35% to more than one in eight, compared to five years ago. According to Aviva, a number of factors including the economic climate, social attitudes towards insurance fraud as a victimless crime and a lack of effective deterrents are increasing the frequency of insurance fraud. 6.3 Telematics key to uncovering 54k fraud claim A motor fraud investigation company has revealed that telematics has been key in dismissing a 54,000 personal injury claim. Three lorry passengers who exaggerated a minor accident were uncovered by data recorded on the other driver s telematics box, which enabled investigators to assess the low speed collision, determining that the claimed injuries could not have occurred. The dispute was accordingly dismissed. The three claimants did not face any charges as a result of the attempted fraud. 7 Market 7.1 Quindell signs record telematics deal with RAC The world s largest telematics deal has been signed between Quindell and RAC, with the creation of a new company, Connected Car Solutions. Initial investment in the joint venture has been 30m, with Quindell owning a 51% stake and RAC 49%. Further investment of 70m has been planned upon the achievement of key milestones. Quindell has increased its target for telematics subscribers to 10-12 million from four million as a result of the deal, equating to $720m to $2.2bn per annum in revenues. The deal will include telematics products offered through the connected car from RAC and Ingenie, with all claims being handled by Quindell. 7.2 AIM-listed Fairpoint Group to acquire Simpson Millar An AIM-listed consumer financial services business is to acquire national law firm Simpson Millar for 15m. Fairpoint Group plc is focused on serving financially stressed consumers, specialising in individual voluntary arrangements, debt management plans and claims management. Subject to Solicitors Regulation Authority (SRA) approval, the group will pay an initial 9m in cash and shares for the firm, with a further earn-out of up to 6m over the next two years. Upon completion, Simpson Millar will continue to be run by the current management team using its existing trading brands and operating as a business unit within the Fairpoint Group. 7.3 Manchester PI firm granted ABS status Express solicitors, a Manchester personal injury law firm, has converted to alternative business structure (ABS) status. The firm was granted its ABS licence from the Solicitors Regulation Authority on 1 April 2014, which means it can now take on external investment and appoint non-legal staff to executive positions. Managing partner James Maxey has stated that the ABS licence will put us in a stronger position to continue moving forward in what is a difficult climate for the legal sector. 6
7.4 Irwin Mitchell to open Cambridge office In its second regional start-up this year, Irwin Mitchell has announced that it will open a new office in Cambridge. The announcement marks the latest step in the firm s strategic growth plans. Serious injury specialist and Partner Neil Whiteley will relocate from the firm s Sheffield office to become Regional Managing Partner for the new office in Cambridge, which will have teams in place from day one covering serious injury work and military law. Partner Rosemary Giles, asbestos related disease specialist, will also relocate to the new office in order to accelerate expansion of the business that her team have been building in the Cambridge and East Anglian region for some time. The news comes in the same month that Irwin Mitchell opened its doors in Southampton. 7.5 Growth set for local authority ABS status The number of local authorities seeking alternative business structure (ABS) status for their legal departments is set to increase, according to new research. A snapshot poll of the largest councils in England and Wales shows a significant number are considering the option of an ABS licence in order to remain viable amid spending cuts and outsourcing. Cambridgeshire and Northamptonshire county councils are reportedly applying for a joint ABS licence. Elsewhere, Sheffield, Wirral and Trafford Metropolitan Borough, have all stated that they are exploring options to increase the work being carried out by legal services while reducing cost. 7.6 National Accident Helpline targets AIM float Leading claims management company, National Accident Helpline has announced its intention to float on AIM, in a move which it hopes will value the business at 100m. The initial public offering (IPO) is expected next month. In a statement to potential investors, the group said it had generated revenues of 39.7m in the last calendar year and operating profits of 9.8m, excluding commission received from a discontinued ATE product of 9.4m. The group revealed that over 72% of the enquiries it generated for law firms were in the faster growing non-rta and medical negligence sectors. As such, it aims to focus its efforts on these areas. Last year, National Accident Helpline received 230,000 contacts from the public, 7.7 CMC launches partnership with barrister s chambers First4Lawyers has launched what is believed to be the first claims management company (CMC) partnership with a set of chambers. The agreement with Exchange Chambers, based in Manchester, Leeds and Liverpool, will give law firms on its panel access to advice from counsel when screening difficult clinical negligence cases. The marketing collective is in the process of growing its panel of specialist clinical negligence law firms and also has plans to create the first TV advertisement dedicated to this area of law. 8 In Europe 8.1 MEPs approve rules for safer lorry designs in EU A large majority in the European Parliament has approved new rules to make big lorries safer for other road users and more fuel-efficient. Groups representing cyclists have urged the UK government to back the changes. The proposals were backed by 570 MEPs, with 88 against. The draft legislation states "a new cab profile will also contribute to improving road safety by reducing the blind spot in the driver's vision, including under the windscreen and to the side of the vehicle, which should help save the lives of many vulnerable road users such as pedestrians or cyclists". The European Cyclists' Federation says heavy goods vehicles are involved in 18% of fatal accidents on Europe's roads, which cost thousands of lives in the EU every year. 7
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