Woolf's progress

Teething troubles for the Woolf reforms were inevitable. As with the introduction of any new regime considerable practice is needed before perfection can be achieved. The intention of the reforms was to speed up the process of litigation. Strict timetables were introduced and cases were sorted into fast track or multi-track procedures. The reforms were meant to ease cases through the courts and settle disputes as early as possible. It is now almost two years since they were implemented and the true effects on the marketplace are now starting to be seen.

The first positive impact the reforms have had result from the pre-action protocols, which are thought to reduce pressure put on claimants. This is because liability is clarified earlier than it was previously.

Andrew Twambley, partner at Amelans Personal Injury lawyers, says: "Insurers always say I'm not paying, it's not my fault. They think that if they deny liability and mess around with people, bearing people down and wearing them out then they'll give in. Now insurers have got no time to do all that; their weapons are blunted. The way the rules are drawn up makes it far harder to prevaricate."

Tracy Head, partner at Davies Lavery, also believes the pre-action protocols have had positive consequences. The company is now seeing fewer claims but they are not losing out on work. "The files that we get through now are bigger claims - we are generally dealing with fewer files but we are having to do more work on them."

Drift towards a claims culture
Much concern, however, has been raised concerning the front loading of costs. Some law firms believe that this may be putting off potential litigants. Head comments: "All of this has increased costs. Files are being front loaded - a lot of work has to be done very early on. It does mean that now costs are probably higher than they have ever been. It is a fact of life."

One major development arising from the Woolf reforms has been the introduction of Conditional Fee Agreements. Shane Sayers, partner in Kennedy's Mark Lane Office in the City, believes that these have opened the door to more litigants. "Previously the middle classes did not litigate because costs were too high. Now that the costs are coming down, they are more likely to be involved in the courts than they were previously." But the validity of claims made through CFAs has been questioned, with a number of sources fearing that we are quickly drifting towards the American claims culture.

There has been a proliferation of claims since the reforms came in, and due to the booming CFA industry it is impossible to say whether this is a result of the reforms or not. It is likely also that the number of claims will increase further once people become more aware of the fine print of their insurance policies.

"The interesting thing is that a lot of people don't realise that they have legal expenses insurance and it is tucked away in their homeowner policies." Sayers says. "But they are now becoming increasingly aware of the options open to them should they wish to make a claim. Television exposure is hard to escape, where injured parties seem to be encouraged to take action against whoever they possibly can - hence the turn towards the American claims culture. At the same time, simple word of mouth is passing the message around to other potential claimants."

The debate continues
After-the-event insurance policies are by no means the most cost-effective means of cover, according to some market players. Keith Teare, head of PI litigation and partner at JST Mackintosh, says: "One can say that in the market there is much abuse of after-the-event insurance policies as a profit device. Another issue is that the premiums that are being bounced about in no way reflect the true underwriting risk that the insurers will take. These policies have incurred £400, which would buy you £50,000. Costs average between £5000 and £6000 so why do you need that much cover?" He believes that before-the-event cover has long been the most cost effective way for both the general public and businesses to take out appropriate legal expenses cover. He most certainly believes that it will remain the most cost effective cover, and this is reflected in the fact that a number of insurance companies are now including legal expenses cover on their policies as standard.

It is true to say that professional companies are becoming increasingly aware of the need for liability insurance, as they have watched huge amounts of money exchange hands within the courts. They have become fearful of lawsuits being taken against them - be it for unfair dismissal or sexual discrimination - because of the sheer value of claims being awarded. This has made many of them take preventative measures should the worst happen.

However despite the increasing awareness, Ian Willett, head of claims and operations at Folgate, says: "I don't think the Woolf reforms themselves have created a proliferation of claims but I think there is a general growth in professional accident management companies."

Away from the debate over after-the-event and before-the-event cover, one positive part of the Woolf reforms has been expressed by NIG. A spokesperson says that their view is that Woolf has helped speed up the settlement process slightly and it has been particularly helpful with Part 36 offers in speeding up these settlements. The part 36 offers to settle do seem to have been welcomed with open arms from all sides. Terry Renouf, partner at Berrymans Lace Mawyer says of the part 36 offers: "It used to be the case that there was an expectation on the claimant that offers had to be made by the defendant. I was never able to understand that mind set. As professionals they must have formed their own view of the value of their claim. With the opportunity to recover additional professional fees and penalty interest on damages, the claimant's solicitors mind set is altering."

Consistent rules
A major worry which has arisen since the introduction of the rules concerns a perceived inconsistency in applying them within the courts. JST Mackintosh's Teare says: "In my experience we get huge differences in how district judges around the country issue the rules. I have had cases where the court has refused to put back trials to allow time to collect medical evidence. In others, time has been allowed. I think there must be more consistency." He adds: " It is not surprising that there are these growing pains while the case law is established. In its very nature, law is based on precedent and so it must follow that there will be more consistency."

But speed is not necessarily the key to the Woolf Reforms. David Murray, head of liability at Crawford & Company, says: "It is disappointing that some of the pro-active solutions developed and advocated by insurers, such as rehabilitation programmes, have not been given greater credence and merit by the reforms."

He believes that there appears to be too much focus on reducing the costs and risks to a claimant of pursuing a claim, as evidenced by the rapidly increasing use of conditional fee arrangements. However, he concedes: "We must accept that without legal aid, an alternative means of funding legal action is necessary, but the concept of proportionality - one of the original aims of the reforms - is at risk of falling by the wayside."

Another feature of Woolf's reforms was the intention of encouraging the use of computers and undertaking more court work online. Financial resources seem to be lacking and this area is well behind schedule. Amelans' Andrew Twambley, says: "I think it will eventually speed things up. Those solicitors who have invested in IT are the ones who will reap the benefits. A lot of things can be done without waiting for snail mail."

These things include video conferencing and telephone conference calls, which save time and money. In fact, to find out the case facts and to conduct meetings using modern technology could result in huge savings. But as for the computer revolution, Twambley believes that all of the parties involved are too far behind for any rapid changes to happen.

"The insurers are so behind in IT that they could never cope; - their investments are so behind - about three years - the courts are miles behind too - 60% of solicitors have not even got access to e-mail."

All in all, it seems that Lord Woolf's reforms still need time to become firmly ingrained in the legal system, but that the effect of them so far has been mainly positive for both law firms and insurance companies. Both sides are relishing the speeding up of the claims process.

The main concern for insurers and lawyers alike is that much of the costs are front loaded, but, on balance, this is outweighed by the realisation that the new system produces a much faster turnaround of claims.

The greatest disappointment concerns the area where the ever present lack of resources and funding is causing delay in implementation, that is to say in the field of Information Technology. Two years down the line, this part of Lord Woolf's reforms has yet to have much of an impact. Most parties believe that once the much needed cash can be found, the claims process can only get quicker, and that this is indeed the way forward.

While acknowledging the proliferation of claims, they do not attribute this to the reforms, citing instead the increasing awareness of access to justice, mainly because of television.

On the whole, the future is looking bright, with much of the evidence pointing towards a still faster process in years to come. Perhaps the changes have not happened as quickly as was hoped and anticipated, but, given time, the combination of new technology and experience of working with the new regime should pave the way for a quick and efficient system of litigation for all. After all, as the saying goes, practice makes perfect.

Test case
A test case at Chester Crown Court may lead to liability insurers in the legal expenses market being forced to pay out for policies taken out before proceedings take hold.

Amelans Solicitors, based in Manchester, emerged triumphant when it won its case against the former CGU at the end of January.

The judge said that insurance premiums could be recovered even in cases where proceedings included the contemplation of proceedings.

Anthony Hughes, of Peter Rickson and Partners, which acted for the insurer, warned in the Law Society Gazette: "Insurers would now have to review their reserves because of the potential increase in costs liabilities."

The ruling means that Amelans can now collect on its Temple Legal Protection policies, contested by CGNU.

Andrew Twambley, partner at Amelans, said: "We wounded the insurance industry viciously."