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Wednesday, 28 September 2016

SRA - one rule for you and one rule for me

There are increasingly heated discussions about how and where Solicitors can offer legal services to the public. To most people this seems fairly obvious. You go and see a Solicitor. But in a rapidly changing world this is could become the exception rather than the rule.

Under the present regulations a Solicitor can only provide legal services to the public via an organisation regulated by the SRA or other approved regulator. Some legal work is ‘reserved’ and some is ‘unreserved’. Reserved work can only be carried out by an authorised person such as a Solicitor. This is a surprisingly limited category of work and includes the power to conduct litigation, to appear before certain courts and the drawing up of certain documents. Almost all other legal work is unreserved which means it can be provided by anybody. So you don’t have to be a Solicitor to set up a business offering advice in say, employment law or welfare benefits. But if you are a solicitor you have to operate through a regulated body – such as a solicitors’ firm. The reason for this is that there are standards and protections that go with the solicitor brand. For example all solicitors’ firms have to carry professional indemnity insurance.  They also have to contribute to a compensation fund.

So if a client instructs a solicitor they know that if anything goes wrong there are levels in protection in place. If solicitor is negligent then the insurers have to meet any claim. If the solicitor is guilty of misconduct, including failing to take out insurance, then the compensation fund is a safety net. This has been a foundation stone of our legal services.

The SRA are planning to change all this.

In a consultation that has recently closed they plan to have two separate sets of professional rules. One will cover individual solicitors and one will cover regulated firms. The proposal is that solicitors will be allowed to provide ‘unreserved’ services through unregulated organisations. So someone can set up an HR Consultancy and will be able to employ solicitors to offer legal advice to the public even though that consultancy is not regulated. The thinking behind the plans is that solicitors are a commercial disadvantage. The cost of regulation means that some organisations can provide the same advice at much lower cost. Insurance is one of the biggest overheads in most forms.

I think this is a recipe for disaster. Firstly, it threatens to devalue the solicitor brand. If someone can see a solicitor in an unregulated firm with no insurance or other regulatory protection then the security of knowing that there are guaranteed protections will disappear. This is not something that can be defined purely by cost. 

I can also see dangers, particularly for young lawyers. The SRA say that solicitors will be subject to the rules that will apply to all of them regardless of where they work. But this will put huge pressure on some individuals. If an inexperienced solicitor is working for an unregulated organisation they can find themselves conflicted between the demands of the business and their personal professional rules. 

The Legal Ombudsman has echoed this worry in its response –

“While a solicitor retains many of their obligations, such as competence, conflict of interest, complaint handling, these are not requirements for an unregulated firm. What should a solicitor do when these obligations come into conflict?”

The plans have also been criticised by the Legal Services consumer Panel and the Law Society. I recently attended a forum in Liverpool where almost all of the lawyers present were opposed to the plans.

We should all encourage moves to bring legal services into the 21st century. The more bodies provided access to legal advice the better. I am also all in favour of easing the burden of regulation. That would give compliance officers like me fewer sleepless nights! But there are also minimum standards of service and protections that have to hand in hand with instructing a solicitor. Without this we will have a two year profession offering services to a confused public.

I hope that the SRA will listen to all of these criticisms and abandon what are badly thought out and dangerous proposals.

Thursday, 22 September 2016

No, Lord McNally I will not shut up about Access to Justice

The Con-Dem coalition already feels like something from the distant past. One name that we will always associate with the attacks on Access to Justice is Lord McNally. As many Liberal Democrats try to distance themselves from the excesses of their years in power, he has robustly defended the cuts which he engineered. In a speech last week he also criticised lawyers, saying –

‘A plea to all the lawyers – those coming up and those already there. You have got to accept that bandying about access to justice, it’s really quite fraudulent. To govern is to choose. Is £1.6bn access to justice? Or is it £2.4bn?’

Leaving aside the obvious insult, his final sentence is very telling. His definition of access to justice is limited to varying sums of money. Access to Justice is neither £1.6bn not £ It is not a commodity it is in fact the foundation stone of a justice system. Why have rights if ordinary people cannot rely on them? 

This cheapening of justice is nothing new. Back in 2015 the former Justice Minister Lord Faulks QC described litigation as  - ‘very much an optional activity’.

So seeking compensation for a catastrophic injury is the same as collecting stamps or going out to a nice restaurant.  Losing the right to pursue or defend their rights can have a devastating effect on a person’s life.

The other problem with McNally’s comment is that he focuses on lawyers as if they are the only ones who are affected – lawyers, as ever, are the easy target!  In fact there are hundreds of voluntary agencies who have lost funding and can longer help the most vulnerable. Back in 2013 I wrote this –

‘Advice on welfare benefits is removed entirely from the scope of legal aid. The Liverpool Citizens’ Advice Bureaux have been among the leading providers of advice in this field. In the last few years they have been able to assist 2500 people in debt cases and 6270 people with welfare rights issues. That is a total of 8770 people is the direst of need. After 1st April they will be able to advise…. None. Of course their dedicated workers do not want to let people down and many will continue help clients on a voluntary basis. But the reality is that thousands of our most vulnerable are going to be deprived of professional advice and assistance.’

Earlier this year the Head of the Supreme Court, Lord Neuberger warned that shrinking of legal aid contributed to threat to Access to Justice –

I for one have no intention of shutting up about this matter. It goes to the heart of a justice system. 

People rights cannot be reduced to simple mathematics or dismissed as optional activities.

Lawyers do not complain out of self interest.

They complain because they tend to be concerned about justice which is what brought many of us into the profession in the first place.

Wednesday, 31 August 2016

Insurance Premiums and other fantastic tales

One recurring theme of this blog has been the relentless attacks on victims of motor accidents by the insurance industry and their friends in government. The constant justification for this has been that car insurance premiums are too high and that so called ‘reforms’ will benefit all of us.

Former MOJ Minister Helen Grant nailed her colours to the mast back in 2013 –

“These proposals were advanced in a consultation exercise which closed on 4 January (2013) and, together with wider civil law reforms, are intended to make lawyers’ costs proportionate, and create an environment where insurers can pass on savings to their customers through lower premiums.”

It is fair to say that there has been some scepticism surrounding these claims. Back in 2013 we saw huge cuts in the amounts of legal costs recoverable by victims. Even then a representative from LVI said -  ‘premiums have already come down and we might see about 3% but - “I’m not hopeful of much more” ‘ 

I said back then that we might have a long wait before we saw any significant reduction –

In August 2013 we saw the report of the Parliamentary Committee on Whiplash Claims. This mentioned the familiar question of reductions in premiums –

We recommend that the Government explain how it will monitor whether or not motor insurers honour their commitment to ensure that any cost reductions resulting from proposed legal reforms are passed through to consumers in the form of lower premiums.’

Into 2014 the ABI were still going on about a ‘whiplash epidemic’, despite growing evidence that the number of claims was dropping. In other words – don’t expect any drop in premiums while there is still this mythical epidemic!

In April 2015 we were warned that motor premiums were going up! And they were going up because of dodgy whiplash claims. This announcement was made in the run up to the General Election when we all had our minds on other things –

Then in November 2015 the former Chancellor George Osborne announced further attacks including the proposed abolition of the right to seek damages for whiplash at all –

Part of his reasoning was that this would see a reduction in motor premiums. He even put a figure on the saving that we could all expect. He said premiums would come down by about £3-£4 a month. Did he know that he would not be around long enough to justify his claims!

So where does that leave us today? 

We have over 3 years of attacks; cuts and rhetoric that makes victims look like criminals. Surely we must start to see some savings.

In fact it is the opposite.

The Times has recently reported that premiums have in fact gone up by a fifth in the last 12 months. The report, covered by Legal Futures, went on –

“It suggests that the overall cost to the insurance industry of these claims has dropped from more than £4.1bn in 2013 to £3.6bn last year. Motor insurance prices, however, have actually risen over the past 12 months.”

So has the penny finally dropped? 

Those representing claimants have been banging their heads against the wall trying to get this message across. The cuts have all been about maximizing the profits of the insurance industry. No serious commentator has ever expected any benefits to be passed on to drivers.

It is a shame that it has taken this long. But let’s hope that the government will now stick to its word. 

The ‘reforms’ were built on a lie. 

There was never any real chance that we would all get cheaper insurance. The government should now say enough is enough. Now is the time to roll back the cuts.

Will it happen?

Friday, 5 August 2016

Justice for victims. A game of snakes and ladders?

Litigation is becoming more and more like a game of snakes and ladders!

Earlier in the week I posted an article on EAD’s website about the Third Party (Rights  Against Insurers) Act 2010 that finally came into force on 1st August 2016. That Act makes it possible to lodge claims directly against the insurance companies of defunct companies –

Although it will be a few years before victims see the full benefit of the act it is certainly a positive development and rare piece of good news. 

So this was one of those ladders that don’t take you very far but at least keep you moving forwards. That is always the moment when you hit that scary snake that takes you right back to where you started. The ‘snake’ in this case it is the proposal by Companies House to destroy of the records of dissolved companies after 6 years rather than 20 years.

This does not sound particularly earth shattering. But it could change everything for victims of work related diseases. Such diseases take time to develop. I once acted for a man who had developed mesothelioma caused by asbestos exposure. He had first been exposed in the 1940s when working on the construction of railway engines. Asbestos related illnesses take many years to develop and it is a rare case that does not go back to the 1980s.

Workers who suffer from noise induced hearing loss have normally been exposed to high levels noise over a long period of time, often with a number of different employers. The same goes for vibration white finger, asthma etc. An essential part of the work is to build up a work history.  A search will be lodged with HMRC to obtain details and dates of employment. These searches themselves take over a year but that is a rant for another day! But you still need to carry out company searches to identify the status of employers, their correct title and, in many cases, insurance details.

To limit the search to 6 years will remove one of the most important resources available to victims and their advisers. There is no logic to this or any justification. Why should the families who have lost loved ones because of exposure to asbestos at work be deprived of justice. And that is what the result of this will be.

This is a shocking proposal which should be opposed by anyone and everyone!

Thursday, 28 July 2016

If you think we're out of the woods today - you're in for a big surprise!

The Court of Appeal has just handed out a salutary reminder to anyone who thought that the horrors of Mitchell were a thing of the past.

The very mention of the name Mitchell can strike fear into the heart of most litigators. This was the decision that saw actions being struck out for the most minor breaches of directions orders. The nightmare lasted for several months until we had the more sensible approach in Denton v TH White which was designed to calm things down a bit. It is fair to say that, overall, this has been achieved  –

The good news continued with the decision in The Police v Abdulle where the conduct of lawyers was criticised to the point where the judge doubted that they understood ‘the rudimentary requirements of being a litigation solicitor’. The solicitors were guilty of breaching a whole series of court orders but were let off the hook because the failings of the lawyers had not actually prevented the timing of a trial. I did express surprise, at the time, and warned that this did not necessarily mean that we could safely revert to the old days when procedural breaches were broadly tolerated –

I warned that there could be no room for complacency. 

This has been borne out with a vengeance in the alarming case of Jamadar v Bradford Teaching Hospitals –

What started all of this off was the failure of Andrew Mitchell’s lawyers to serve a costs budget in time during his libel claim against the S*n. Under the Civil Practice Rules the consequence of such a breach is that the lawyer’s fees are limited to court fees only. So in effect the lawyers do not get paid for their hard work, and they also have to cover all other expenses. The Jamadar case involved allegations of Clinical Negligence and the value of the claim was about £3m. Liability was denied. The case was allocated to the multi track meaning that costs budgets were required. The NHS then admitted liability and judgment was entered for the claimant. The claimant’s solicitors decided that they did not need to file a budget. The Defendants lodged their budget and reminders were sent to the claimant's lawyers.

The matter proceeded to a Case Management Conference at which the solicitors costs were capped at court fees only. The judge also allowed 5 experts for each side and allowed for a 5 day trial to assess damages.  So the catastrophic outcome for the solicitors is that they are effectively funding the case to trial - for nothing! This would put many firms out of business. The decision has been upheld this week by the Court of Appeal with a judgment from Jackson LJ himself.

So the lesson is clear. We are not out of the woods, certainly as far as budgeting goes. You have to wonder what possessed the claimant’s solicitors to decide that no budget was required. But on the other hand it seems that this was a mistake on their part rather than a simple failure to comply. But the outcome is the same.

And the message is clear.

Any lawyer dealing with multi track cases must read and understand the rules on costs budgets. Read and digest this message from Gordon Exall –

One failure to comply could turn a high earning case into the end of the world as we know it..

Tuesday, 19 July 2016

What takes dishonesty into the realms of fundamentalism?

Two words have taken on great significance for lawyers and their clients, over the last few years – ‘fundamental’ and ‘dishonesty’. They are relevant to Personal Injury claims which can be struck out in full under s57 of the Criminal Justice and Courts Act 2015, where there has been fundamental dishonesty. In such a case the court must dismiss the primary claim unless the claimant would suffer substantial injustice as a result. So the default position is that the claim is dismissed. If a claimant is found to have exaggerated symptoms then the whole claim is at risk. The purpose of this provision is to deter fraudulent or exaggerated claims.

The words are also relevant in relation to costs, and this is main focus of this post. In 2013 the government imposed dramatic changes in the way personal injury claims are conducted. These changes reduced the levels of legal costs that can be claimed against insurers in successful cases. At the same time, we had the introduction of QOCS – qualified one way costs shifting. In simple terms this meant that a successful defendant cannot enforce an order for legal costs against a claimant. There are exceptions to this rule, one of which relates to ‘fundamental dishonesty’. A successful defendant can ask the court for permission to enforce an order for costs where a claim is found to be ‘fundamentally dishonest.’ That sounds quite reasonable on the face of it.

But there is a problem. Many of us have been concerned about what happens if a claimant takes their case to trial and loses. There is nothing unusual about that. It happens every day in one court or another. So you have two drivers whose cars collide. One driver gives one version the other a different version. The judge has to decide which one is preferred. This is the whole point of litigation. If it is clear cut either way you don’t end up at trial.

But does this mean that the loser is fundamentally dishonest and therefore at risk of shelling out thousands of pounds in costs? When does poor memory become dishonesty? What takes dishonesty into the realms of fundamentalism? Is there a liberal dishonesty?

One of my colleagues was recently faced with exactly this issue. The argument was about whether the defendant’s car had stopped short of our client’s vehicle. The other side were arguing that if their evidence prevailed then our client must be fundamentally dishonest and thus liable for the costs. In fact, our client won, but it was a genuine concern.

This has recently been considered by the County Court in the case of Nesham v Sunrich Clothing; reported in Legal Futures. There had been a car accident and the judge preferred the Defendant’s evidence.  The Defendant's lawyers asked for costs saying that the claimant must have been fundamentally dishonest because his version of events was rejected –

HHJ Freeman summarised the dilemma –

The claimant - “gave me his version of events. I have preferred not to accept that version, but it does not necessarily follow that he was fundamentally dishonest”

He went on - “And it is the experience of everybody who litigates in this field that drivers involved in an accident will give different and contrary versions of accidents to the extent of not just which lane they were in, but where they came from, the route they had taken and so forth… which may not constitute dishonesty, far less fundamental dishonesty.”

The judge criticised the defendants for using the threat of fundamental dishonesty as a tool to pressurise claimants to abandon claims. The judges analysis must be right. Otherwise any unsuccessful claimant is at risk of bankruptcy just because the court prefers the others side’s evidence. This would defeat the whole point of QOCS which is to enable ordinary people to pursue claims without worrying about costs. This is only a county court decision so is not binding on any other courts.

I hope the higher courts give us some clarification on this as soon as possible. The introduction of QOCS has seen a few problems but if we get this issue wrong, wipe out any benefits altogether.

Thursday, 14 July 2016

Clinical Negligence, Soap Operas and Fixed Fees

I recently settled a Clinical Negligence case that had more twists and turns than an episode of Eastenders.

Carol (not her real name) went to her GP, on a Friday morning, complaining on a lump on her shoulder. In fact it was an abscess. Her doctor took a blood test which was sent to the local hospital. There was a major issue about whether the test was sent before or after lunch. This was significant as it impacted on whether the sample was tested on the Friday or the Monday. The sample was in fact tested on the Monday and confirmed MRSA. The result was emailed to the surgery on the Monday afternoon an apparently seen by a different GP. There was a delay in acting on the result and Carol developed a serious epidural abscess which caused long term problems.

The facts seem straightforward but the litigation turned out to be anything but straightforward. It soon became clear that the two GPs, who had different insurers, were blaming each other. The criticism of the first one was that he should have ensured that the sample reached the hospital on the Friday. The criticism of the second one was that he had delayed acting on the result. Then the two doctors blamed the hospital for delay in communicating the result to the surgery. So we soon had three defendants who were all robustly defending the claim.

Then came another twist. As the claim was heading for trial, there was joint meeting of microbiology experts. They threw a spanner in the works by raising a completely new issue. They agreed that Carol had been hugely overdosed on powerful antibiotics by a second hospital. She had been prescribed them for more than twice the recommended number of days. They also agreed that this overdose had contributed to her symptoms. So the whole claim had to repleaded at this stage adding to the costs. Further expert evidence was needed to unravel which of the symptoms were caused by the delay and which were caused by the overdose.

We now had four defendants in a matter as hotly contested as the Labour Leadership!

Eventually we all trekked down to London for a settlement meeting which finally resulted in a six figure settlement.

This was an interesting if difficult case. But it also demonstrates how unpredictable clinical negligence cases can be. At first blush it was a simple case of a delayed MRSA diagnosis causing a nasty injury. It was only as it developed, that the issues became more and more complicated.

All of which raises a question mark over the merits of fixed fees in these cases. The Government proposes the introduction of fixed fees in Clinical Negligence claims with damages up to £250k. The reasoning is that they are lower value claims and the costs are disproportionate.  Carol’s case would come within that figure and is a classic example of how costs can quickly build up due to unpredictable hazards. 

The Bar council made this very point in its response the consultation paper of fixed fees –

‘The value of damages recovered is a very poor predictor of the extent of the legal and expert input required to establish liability and ensure that such patients receive proper compensation for injuries. The introduction of a FRC scheme, which does not allow for the factors individual to each case, risks making this highly complex and specialised area of litigation financially unviable for solicitors, counsel and medical experts.’

Concerns were also voiced by senior costs Judge Master Cook earlier this year –

He talked about conduct by the NHS which can cause costs to rise –

According to the Law society’s Gazette – ‘The judge pointed to a raft of behaviours by hospital trusts and the NHS’s litigation arm that drive up costs, including failure to disclose documents or respond properly to claimants, failure to admit liability early on, and ‘needless opposition’ to making payments on account of costs, or to embracing split trials.

I am not against fixed fees in principle. They certainly reward speed and efficiency and have a place in straightforward cases. But a broad brush application to all cases depending on the value will have a significant impact on access to justice. A case like Carol’s which presents new issues by the day could lead to recoverable costs which will ultimately raise questions over the viability of taking on such cases.

It is expected that the recent political turmoil will delay any proposed ‘reforms’ until next year. I think that some form of fixed costs is inevitable but would hope that the limit will be a more manageable £25k or possible £50k and with some flexibility in those cases which turn into a soap opera through nobody’s fault.