21 December 2017Print This Post

Positive change can mitigate the risk of vexatious claims

Pipkin: Peace of mind for clients

Posted by Laurence Pipkin, operations director at Litigation Futures Associate Temple Legal Protection

Four years ago, the government introduced fees of up to £1,200 for employment tribunal claimants under the premise of reducing the number of malicious and unmeritorious claims.

Until the Supreme Court struck them down earlier this year, there was much debate about them. In one corner, the objectors voiced their concern under the ‘access to justice’ banner; in the other corner, the supporters cited the cost to the taxpayer enfeebling the UK, post-recession.

Fast-forward four years and the results are now in: the tribunal system has seen a 70% fall in claims but little or no change in the division of outcomes.

Even the most ardent supporter of tribunal fees would be unwise to suggest that the dramatic fall was due to a 70% increase in employee satisfaction, or equitable improvement in employer behaviour.

The most recent report since the Supreme Court decision, produced by the National User Group of Employment Tribunals, indicates a significant increase in submission of ET1 forms since them, with some regions reporting a 100% rise.

This all supports the notion that the cost of tribunal fees negatively affected the majority of claimants, who have limited financial reserves and particularly in cases of dismissal. In short, they simply could not afford to make a claim with front-loaded fees.

For employers, their risk exposure has significantly increased since the ruling and they recognise this. A recent survey by the Confederation of British Industry found that 90% of businesses thought the Supreme Court decision would lead to a spike in “vexatious claims”.

For law firms, there is an opportunity to deliver a structured risk mitigation strategy. Forward-thinking firms appreciate the value of long-term successful partnerships with their business clients and this may no longer be achievable using the traditional case-by-case, retainer-based firefighting approach.

With Brexit looming, stability within the workplace will be increasingly important to ensure consistent growth and law firms must recognise that their business clients need to avoid unpredictable attacks on cash flow due to litigation.

A predetermined regular fee for a comprehensive package encompassing both protection and prevention is far more attractive. Employment lawyers can provide pre-emptive audit reviews of policy and practices, HR guidance, telephone and online support services as well as legal expenses insurance.

The benefits for the client are wide-ranging and centre on the peace of mind they get from knowing that, as the inevitable issues arise, the plans are already in place to provide a swift and cost-effective resolution by preventing protracted litigation, which has closed many otherwise strong businesses.

The benefits for the law firm are equally appealing: long-term relationships with business clients, a reduction in the need for fee-earners to lose valuable billing time chasing one-off cases, a predictable cash flow into the firm and regular work for trainees to focus on and develop knowledge.

The employment law market is changing again, how law firms respond to the changes may determine their success.


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