In its regular monthly column, Weightmans Solicitors address the current key legal issues and their impact on you
The Lord Chancellor has bowed to pressure from practitioners and the judiciary to abolish the £80 allocation fee paid to hear defended cases for disputes involving small claims.
Claimants currently have to pay an initial fee to the court which is based on the value of their claim. This varies from £20 to £70 in claims worth between £200 and £1,000. If the defendant then disputes the claim, the person bringing the case also has to pay an allocation fee to the court of £80 – the fee that will now be abolished.
The change is expected to take effect in April and could lead to a rise in litigated small claims.
Changes to personal injury protocol on the way?
Changes to the personal injury protocol contemplated in the near future are likely to include:
- A recommendation that lists of suggested experts be sent to the insurer not the insured
- Confirmation that the 14-day period for objecting to an opponent's nominated expert runs from the 21 days when the first letter of claim is acknowledged. This is to avoid the abuse by some claimant solicitors who nominate an expert in the first letter of claim which may not be received until the deadline has passed
- Clarification of the instruction to an expert nominated under the protocol – the expert is not, as some think, a joint expert whose report both sides are entitled to see at the same time but an expert instructed by the nominating party to whom the other party may address questions.
What should insurers be doing?
The appeals on the level of general damages awarded to injured claimants started on 28 February. Whether the Court of Appeal will endorse the Law Commission's recommendations remains to be seen – but rises are predicted.
The key steps you should take are:
- settle appropriate cases as soon as possible
- where cases cannot be settled, review Part 36 offers/payments into court
- adjust reserves accordingly
- settle injury claims where liability is not in issue
It looks as though insurers will soon be faced with the prospect of paying increased damages to claimants and additionally having to pay a success fee to the claimant's lawyers. As Lord Woolf tries to drive down the cost of litigation, it seems the overall cost of settlement is going up.
999 calls – police and fire service immunity from claims challenged?
Tracey Kent's £360,000 damages in the Court of Appeal after she suffered brain damage when an ambulance took 34 minutes to reach her does not affect the immunity of the police and fire service from claims in similar circumstances – although the Human Rights Act might.
Although the court in Kent stressed that the position with the police and fire service was different it did touch on the case of Osman v UK when the European Court of Human Rights (ECHR) stated that the police should not enjoy blanket immunity for claims of negligent investigation.
In the Osman case, the ECHR said that where a cause of action arose, one should weigh the interests of the individual in being allowed to sue against the interests of the state in enjoying an immunity.
A blanket immunity without the performance of this balancing exercise amounted to a breach of Article 6 – the right to a fair trial. After October 2 our courts must consider Article 6 in deciding 999 cases. The immunity of the fire and police services is set to be challenged.
Dimond v Lovell – delay causing uncertainty
The Dimond v Lovell appeal to the House of Lords has now been heard – although we are unlikely to receive the decision for at least a month – maybe even longer.
This delay is causing uncertainty all round. If you are eager for the decision to be brought forward please contact Mr Valance White, Judicial Office, The House of Lords, Westminster, London SW1A OPW.
Success fees – a no-win situation for insurers?
Conditional fee arrangements – or 'no win no fee' agreements – have not troubled defendants and their insurers in the past because the uplift and the insurance premium have come out of the claimants' damages.
This will change later this year when the government introduces measures to enable uplifts and premiums to be recovered from the losing party and even to allow bodies such as trade unions to recover a percentage of their self insurance costs.
The enabling legislation, section 27 of the Access to Justice Act 1999 which establishes the principle of recovery, is expected to come into force on 1 April.
Under a 'no win no fee' agreement:
- lawyers fund the action on the basis of only being paid if the claim succeeds;
- the claimant agrees to pay a success fee – an agreed uplift of 100% on top of the lawyer's usual fees – to reflect the risk to the lawyer of losing and recovering no fees;
- in most cases the claimant takes out insurance to protect against the risk of paying the opponent's costs in the event of losing.
Shifting the burden of risk to the losing party could mean that defendants will be unfairly penalised for losing defensible claims. After all, why should defendants pay higher costs when there are legitimate arguments for fighting claims? And how can a payment of a 100% success fee sit comfortably with the overriding objective of proportionality and be reconciled with fixed fees?
We will have to wait and see how the courts exercise their new powers, However, it is safe to predict that the reforms will increase the financial burden on insurers as a result of:
- a surge of claims currently held back in order to take advantage of the new rules and an increase in the number of 'no win no fee' agreements offered to those whose claims would previously have been funded by the Legal Aid Board. It is no coincidence that the opening up of alternative funding arrangements comes at a time when legal aid is being phased out;
- an increase in the cost of losing defended claims – if 100% success fees are allowed in 50/50 cases, claimants' costs will double;
- an increase in lower value claims which are uneconomic to pursue if the uplift and premium are deducted from damages;
- more claims arising from accidents at work? Claimants who have been turned down by their union may get a more receptive response from a high street lawyer, with limited knowledge, less able to assess the risk and perhaps more inclined to accept a partisan version of events.
There are some advantages for defendants:
- speculative claims will be discouraged if prospective litigants have to convince their lawyers and insurers that cases are strong enough to take a risk. Lawyers with an eye to their profit and loss may take more convincing than the Legal Aid board;
- successful opponents should benefit where the claimant has insured against the risk of losing.
Despite these benefits, overall it has to be acknowledged that if insurers have to dig deeper to meet rising costs associated with new funding arrangements – be it by way of uplift, premium or contribution towards self-insurance costs – increases in premiums are likely to follow.