Lord Young published his report entitled 'Common Sense, Common Safety' on 15 October 2010 following a review of health and safety laws and compensation claims in the UK.
In this article we look at the aspects of the report which address the so called 'compensation culture' and Lord Young's views on it. Many personal injury and clinical negligence lawyers are concerned that the report tries to address all personal injury claims, claimants and lawyers as one entity. However this is simply not appropriate – a person claiming for a whiplash injury from a rear end shunt cannot possibly be compared to a child rendered paraplegic by a combination of circumstances, involving several possible defendants, and who will have very specific needs and issues when bringing a claim.
Many people – not just lawyers but those involved in rehabilitation of people with serious injuries - are concerned that Lord Young's proposals, together with those of Lord Jackson, despite reducing the number and/or cost of small and unmeritorious claims, will restrict access to justice and therefore funding for needs and rehabilitation for those with serious injuries and difficult but genuine claims. Neither report addresses dynamically what may be part of the problem in the industry – claims management companies and set ups operating and encouraging high quantity low quality claims. Both identify these as issues but rather than address them specifically, try to treat all claims with the same approach.
One size doesn't fit all
One of the themes of Lord Young's report is the claims reported in newspapers that reflect large awards for seemingly trivial incidents. Such claims often reach the media and are used to trumpet the existence of a compensation culture. However, the reality is that these cases are not reflective of many of the claims brought in the UK. Many people suffer serious and life changing injuries through no fault of their own and where another party is clearly at fault. These claimants are often inspirational in their determination to cope with their injuries and get on with life – a life that will never be the same again. Because their claims can be of high value, insurance companies will fight them for as long as possible and their litigation is often lengthy and uncertain. These cases rarely appear in the newspapers as they involve individuals who do not want to talk about the money received and would without question give up all compensation to return to their pre-injury life. Sadly these individuals and their claims get tarred with the same brush as many others with minor injuries or unmeritorious claims and Lord Young makes no distinction.
The real impact of the compensation culture
Lord Young makes much of the compensation culture – but at the same time acknowledges that despite all the high profile advertising and claims management companies, the number of claims being brought is actually falling. He does not address the fact that whilst people may perceive that claims are easy to bring, tests of negligence and causation of injury are high. Claims simply will not succeed unless there is an identified defendant who has acted in a way that any ordinary individual would regard as unreasonable or reckless and in a manner that is likely to cause injury to others. Where an individual or entity has behaved in such a way, the injured person should be entitled to bring a claim. There is no way of bringing a claim without satisfying these tests. If an injury would not have occurred, had an individual acted responsibly, the injured party should be able to seek recompense. Whilst it is probably fair to say that advertising results in more claims being brought, those that succeed are only those that have merit.
Controlling claims management companies
Lord Young is rightly concerned about claims management companies and most practising specialist personal injury solicitors would probably agree with him that the concept of paying individuals to bring claims is an appalling one. It had been hoped that his review and report might bring a stop to that. However he simply identifies this as an issue but does not make any clear recommendation to stop it – albeit he is asking other bodies to investigate further.
Most would agree that the whole scenario of claims management companies selling claims is far from ideal. However their development has been permitted and their advertising ability and spend far outstrips any individual firm of solicitors. These companies have increasingly dominated the market and firms can't compete with them – and often don't wish to advertise in a similar sort of way. The domination of the market has meant that many firms which have long resisted working with such companies are reluctantly getting involved because they simply can't compete. Solicitors are not known for being good at advertising and marketing and have simply been outplayed. The recent launch of Quality Solicitors has gone some way to try and address this – a joint marketing initiative focused on directing claimants to quality firms with pooled advertising costs. However unless the reports of Lord Young and others take active steps to stop claims management companies, the problem will remain. Many specialist solicitors worry that these set ups simply result in claimants being passed to the organisation which will pay most for their claim – with no quality check of the service offered. Solicitors firms which buy in large quantities of this work have to drive their costs down resulting in the use of more and more unqualified case handlers and processed systems rather than the use of specialists and a focus on an individual client. The Law Society and the Bar Council have both raised concerns about this but Lord Young focuses just on the perception of the compensation culture rather than whether these organisations in fact may be both distorting costs and leading to claimants not getting the best advice.
Many would agree with Lord Young's view that something needs to be done about claims management companies – but his report does not indicate either that he proposes something radical or exactly what he does propose. It focuses far more on what solicitors may be paid rather than issues of quality of service and access to justice.
Are legal costs really the crux of the issue?
There are many references in the report to lawyers racking up significant fees safe in the knowledge that the losing party will pay. It is fair to say that with success fees payable under conditional fee agreements, the costs on individual cases can be high and can on occasions exceed the damages. However there are two key reasons for this that the report overlooks. Firstly, it takes two to tango – costs are incurred as litigation progresses. All too often, particularly in high value claims or in clinical negligence claims, on cases where early admissions of liability should be made, defendants drag their heels, argue points with no merit and defend the case for months and often years, then suddenly cave in as the matter approaches trial. Very often it is the conduct of the defendants that increases costs and the report does not acknowledge this. Costs in clinical negligence claims are far more often driven by the conduct of the defendant – all claimant lawyers have many tales to tell of repeated delays and last minute settlements. Further it is always hoped, particularly by those medical experts who work in this field, that these claims will draw attention to basic errors and lessons will be learned – yet we see the same cases over and over again. Lord Young talks of diverting legal costs to health care but there is a failure to take heed of the claims that arise and take steps to prevent further claims.
Secondly, conditional fee agreements were something introduced by the government for this area of litigation. It was decided that lawyers should take the risks and this was the brave new world of funding. The original intention was that solicitors would take on a range of cases that they thought had merit all on a no win no fee basis and that the winning cases would cover the costs of the losing cases. This of course encourages good risk assessment and avoids claims without merit being pursued but the trade off is that the success fees enable this system to work. For each case won it is likely there will have been time spent investigating and assessing several more cases which have not been taken on and possibly a further case which has been taken on and lost. Solicitors are paid nothing on unsuccessful cases and often do not recover all their costs even in successful ones. The report makes no acknowledgement of this.
Proposals likely to hamper valid claims
The combination of the Young and Jackson recommendations if implemented would mean that the return on winning cases will be much more limited. The net effect of this will be that solicitors will only take on 'dead cert' cases. In some ways this may be a good thing – with the focus on unmeritorious claims being reduced. However there are many cases which are valid but are difficult to prove due to the issues, evidence or even just approach of the defendants. With high risk and only a moderate reward if successful, solicitors will simply turn these cases away. This is likely to lead to those with straightforward cases and minor injuries being compensated and those like the paraplegic child with lifelong needs and a difficult claim being left without recourse. It is a major concern for those working in this area with people with serious injuries – we see first hand what a difference compensation can make to getting effective rehabilitation at an early stage and enabling people to rebuild their lives. These recommendations will reduce the number of people who will have this option – even where they have valid but difficult claims.
The report suggests that the fixed costs scheme currently in place for low value road traffic accidents be extended to cover all personal injury claims with a value of up to £25,000 and low value clinical negligence claims. However it does not recognise that the determining factors of what a claim costs to run are not its value. It is possible to have a claim worth £100,000, which is straightforward on liability and where the injuries and their effects are clear, and the matter can be resolved at a low level of costs. Equally a £20,000 claim can be difficult to investigate and prove and can have numerous issues in relation to causation and effect of injury. In clinical negligence cases a significant level of investigation has to be carried out in any case, regardless of value – to include expert evidence. One size fits all simply won't work – the likely result will be that solicitors will look at a case that could be difficult but valid nonetheless and not take it on because of fears they will not recover the majority of their costs in pursuing it, again meaning that access to justice is denied.
Lord Young supports all of the recommendations made by Lord Jackson in his recent costs review. As with this report, there are some valid points. However there are also some significant problem areas – again the restriction of recovery of success fees for claimants' solicitors will limit the cases pursued to only the strongest ones. The suggestion that claimants pay some of the costs may not have an impact in a small claim but for a claimant who needs their compensation to pay for equipment, care and assistance, losing a proportion of their damages to pay costs could leave them without the help they need and have been compensated for. To remove after the event insurance in clinical negligence claims would mean that only claimants who could afford to pay for expert reports as part of the investigation of their case would be able to bring claims – making it perhaps access to justice for the rich rather than the deserving.
Lord Jackson and Lord Young both advocate the use of BTE (before the event) insurance cover. Whilst it has a very good side in that the costs incurred by using such a policy are cheaper than in CFA claims, the concern many have is that the BTE insurers have panel solicitors who pay them to pass on cases. This results in individuals being unable to choose their own solicitors, often resulting in them having to instruct solicitors in another part of the country with no personal contact – again wholly inappropriate in cases where perhaps a fatality or catastrophic injury is involved. There is no guarantee of expertise in the particular type of claim – the client has no choice at all.
Overall whilst there are aspects of Lord Young's report that correctly highlight problems in this industry and most would agree that improvements can be made, restricting recoverability of costs is unlikely to be the solution and will reduce access to justice for those that need it. What is required is a focus on quality standards for those practising in this area to make sure that only valid cases are pursued, that the public appreciate the need to use proper specialists and learn to look for individuals and firms with accreditations like APIL (Association of Personal Injury Lawyers) and the Law Society accreditation for personal injury and clinical negligence lawyers. Claims must be pursued sensibly by both sides and we must move away from the mass marketing and press perception of a compensation culture.