Five years after Lord Woolf introduced his reforms that included better and quicker access to justice, the insurance industry seems to be suffering under burgeoning claims and spiralling legal costs Two lawyers give their opinions on the effects of Woolf.
Tom Jones
Partner at claimant law firm Thompsons
Lord Woolf was a decent man trying to do the right thing. But he ignored, or at least underestimated, the power and the craven obsession with profit of the insurance industry.
Because he did not heed the warnings of those representing the claimants, injured people have been the losers in these years following the Woolf reforms.
There used to be an easy to understand principle: loser pays all, including lawyer's costs. But then Lord Woolf introduced the concept of streamlining civil justice and limiting costs.
Opening up access to justice for claimants was and still is a laudable objective for any government. But it seems that anything the establishment tries to do is distorted and bastardised by the insurance industry. The insurance industry is interested in neither the consumer nor the interests of society unless there is a profit in it.
In any case, Lord Woolf's brief always appeared to have more to do with the cost of the court system and ultimately in keeping cases out of court than in access to justice. Hence the introduction of rules to stop cases being issued unless the insurers were given a lot of information and plenty of opportunity to buy off claims before they reached court. At the same time, the costs of issuing cases were increased substantially, which hardly constitutes access to justice.
Frustrating claims
Woolf has also pushed up costs through bureaucracy, front loading, pre-action protocols and a general increase in the work that is needed to pursue a claim. There has been a lack of an audit or any review to assess what elements of Woolf have worked and what has been a failure.
We know that Woolf has certainly failed to stop the insurance industry denying, delaying and frustrating claims in the hope that the injured person will give up or accept lower compensation. That's why the Department for Work and Pensions is developing a pilot scheme - on which Thompsons and the TUC is working - giving another chance to the insurance industry to speed up employers' liability compulsory insurance (ELCI) claims.
We've managed to steer the pilot away from an emphasis on settling claims to one where insurers have to investigate claims themselves. It's what they should have been doing all along.
The problem with ELCI for British industry is not that there are too many claims or that legal costs are too high. The number of claims has gone down and trade unions and their lawyers remain responsible in only pursuing those cases with merit - when the employers are at fault. The problem for insurers is that premiums have been historically too low and have never rewarded those employers with a good health and safety record.
Lawyers like Thompsons want to see fewer claims and for the insurance industry to pay less damages and costs as a result of fewer injuries - not because claims are bought off cheaply.
Claire McKinney
Partner at the accident and injury division of Davies Lavery and president of the Forum of Insurance Lawyers (Foil)
It's been five years since Lord Woolf introduced reforms to the Civil Justice System and changed the way litigation is conducted for the better.
We now have a much speedier resolution of lower value claims with 'fast track' cases often proceeding from issue to trial in only 30 weeks. The introduction of pre-action protocols now helps influence the behaviour of parties pre-litigation and encourages a more transparent and open approach.
While the reforms have helped to establish the concept of proportionality with regard to costs, ironically it is in the area of legal costs that they have failed. This is not just down to the reforms (although pre-action protocols have led to the front-loading of costs) but also due to the hasty introduction of conditional fee agreements (CFAs) to replace legal aid.
With CFAs came the notion of a success fee for the claimants' solicitors and the recoverability of after-the-event insurance premiums, all of which add to cost.
A statistic often referred to in recent months is that 40% of claims cost is legal spend. Of course the cost of claims is directly linked to the level of insurance premiums and both employers and motorists have seen a massive increase in premiums over recent years. There are also reports that some employers, mainly those engaged in high-risk activities, have been unable to secure employers' liability compulsory insurance.
Claimants themselves are not interested in how much their solicitors charge as they are reassured that, whatever the outcome, they will not have to pay a penny. The justification for the success fee is that the claimant's solicitor takes the risk - if he loses the case, he will not get paid. Although this sounds very worthy, the reality is that most lawyers are unlikely to take on risky cases and very few cases are lost. Claimant lawyers may be reluctant to take on difficult or novel cases and this contradicts Lord Woolf 's idea of 'access to justice'.
A lot of money has been spent arguing over the level of success fees and the enforceability of CFAs. This may appear as lawyers trying to make money out of litigation. In fact, it is about defining parameters and interpreting the imperfect legislation which was thrust upon us.
The Civil Justice Council has done a wonderful job in bringing stakeholders together to compromise costs issues. We now have fixed fees and fixed success fees in motor cases where the claim is less than £10,000. And the issue of success fees in employers' liability cases has recently been resolved.
Mediation schemes
The rules relating to CFAs are being revised and this, together with the decisions in test cases should lead to fewer challenges in the future.
Mediation might also help to reduce cost and a number of county courts are offering, and sometimes imposing, low cost court-led mediation schemes.
Foil members have reported good experiences which might encourage the use of mediation as a tool in the resolution of more personal injury claims.
We have come a long way since the reforms were introduced but the journey is not at an end. The Department for Work and Pensions is setting up claims pilots with industry representatives to investigate a different approach to low value employers' liability cases (under £10,000). The Better Regulation Task Force published its report Better routes to redress in May and is recommending that the Department for Constitutional Affairs research the potential impact and effectiveness of contingency fees.
Looking ahead to the next five years, further progress will be stunted unless all stakeholders - including claimant and defendant lawyers - adopt a more socially responsible approach. This means better risk management to stop accidents happening in first place, along with greater use of rehabilitation to help the victims of accidents get back into the workplace quicker. Claimant and defendant lawyers are never likely to see eye to eye on every issue. But unless we enter into a meaningful dialogue by considering the views of every stakeholder and adapt to the inevitable changes taking place around us, the danger is that we will do a disservice to our clients in the long-term.
