Compromise on compensation

The ABI's proposals for a new personal injury compensation process appear to be reasonable. What's the Association of Personal Injury Lawyers' (Apil) problem with them?

A Even in lower value cases, the system is fairly sophisticated and from point of entry people do need some representation.

What the ABI is suggesting is that if you lift the small claims limit to £5,000, people won't have representation because they'll have to pay for it out of their compensation.

We also don't think it is a practical suggestion that the person just fills in a form, letting him think the insurer will deal with it Quickly, because there's no guarantee insurers will deal with it Quickly. Letting insurers decide on the settlement before allowing the individuals to get advice will hold everything up. The claimant will go to the individual lawyer and they're going to have to probably research it all over again.

In a MORI poll, 64% of people said they wouldn't pursue a claim without having an independent solicitor helping them.

On average, cases settle for 50% more than insurers first offer. So the process of letting insurers do everything and then involving the solicitors may well add to costs and isn't necessarily going to protect the injured person.

The ABI's proposal is just a cost-cutting exercise and we don't think it's the way forward.

Q Insurers claim they don't want to reduce compensation for the injured party. They want to address the legal costs underpinning personal injury claims, which amount to Quite a significant proportion of total claim spend. How do you respond to that?

A As I said, I think people do need to have legal help. Unlike other professions, lawyers' costs can be challenged and we're only paid for work that is necessary. If the system is too expensive and cumbersome, you can change the procedures to make it more efficient, which will bring the costs down.

Q The ABI isn't proposing the removal of independent legal advice. It is saying insurers will pay for legal advice to be given to the claimant when they submit their form and when they review the insurer's proposed settlement. Isn't that sufficient?

A No, because the chances are that the insurer's investigation isn't going to be sufficient, and at the moment there's no confidence necessarily that they're going to act in such a way that it's going to be in the best interest of the claimant. And why should they? Their interests are diametrically opposed to that.

Q Isn't it in claimant lawyers' interest to resist proposals to reduce legal costs?

A Inevitably, there's going to be accusations of being self-serving, but the MORI poll indicates that people want to be represented. The system is Quite sophisticated and they need to be represented.

Q Shouldn't the ABI be commended for at least trying to come up with a proposal?

A It should be commended, but there seems to be a change of position on its part. On the employers' liability compulsory insurance (ELCI) pilots, for instance, both sides agreed, on lower value cases, what the way ahead should be.

A lot of time was spent trying to develop a more efficient, cost-effective way of conducting these cases which would still bring home what an individual was entitled to, and I think that is the way ahead.

Q I know representatives from the ABI and Apil have talked about reaching an agreement about these proposals.

A Agreement can be achieved around the procedures we were discussing for this ELCI pilot.

We don't think small claims limit should be raised, and we don't think a procedure like this is going to help people get their entitlement faster and more efficiently.We think it's just a rather cynical way of trying to save money.

Q But Apil would say at least the ABI is trying to start some debate.

A I've been in Apil now for a number of years and we've been having discussions like this for ages. The ABI process is a bolt out of the blue.

Q Has Apil put forward its own proposal?

A No, because we don't think it's necessary, because we have effectively reached an agreement, on the principles, for the way ahead. We think it would be a retrograde step for us to come out and say 'Here you are, this is what we think should be done.' We think that the way ahead is discussion on both sides.

Q So, as far as Apil is concerned, there's no value in the ABI's proposals?

A In terms of what they have said on the claims process, I don't think so, no.

Q Would you like to see the ELCI pilots being revisited?

A It doesn't have to be just in terms of employers' liability. But yes, there's many aspects where I think there's common ground, such as early notification of claim, the commitment to rehabilitation, the process of resolving cases, rather than a lengthy exchange of letters between two parties.

Q Do you think it is important that all the interested parties try to come to some agreement, or else risk the government laying down its own procedure?

A It might be because if there is a large measure of agreement, the government knows it's much more likely to work.

We do think there are huge areas where that agreement can be reached. In the lower value cases, those elements of the ELCI pilots, such as the early notification and dispute resolution, would make it more efficient.

Q Do you feel there has been some progress with individual companies?

A Definitely. That's why I feel confident that there's agreement. And I do think there's a lot of goodwill on the insurance side to try to make progress in these areas. IT