Fraud within insurance is by no means a new phenomenon however the rapidly increasing number of fraudulent claims reported is having the knock on effect of raising insurance premiums. According to the Insurance Fraud Bureau (IFB), fraud adds as much as £50 to the price of an average policy!

Elite Insurance has never been one to sit still and allow such injustice to happen so, to counteract fraudulent activity and to protect the best interests of its customers, Elite has created an in-house fraud prevention department.

Based at the Grantham headquarters, this team will focus on monitoring, detecting and preventing insurance fraud. Fraudulent activity identified will be pursued to the full extent of the law, leaving no stone unturned to ensure the culprits are brought to justice.

As an active member of the IFB, Elite is committed to reducing the insurance industry’s exposure to fraudulent claims and ultimately the price that honest customers are left to pay. CEO Jason Smart says: “It is an absolute disgrace that a small minority of individuals are having such a negative impact on our customers and we will do everything we can to prevent this from happening.”

Grayling: “If insurers don’t challenge cases, people will try it on”

Justice secretary Chris Grayling blundered yesterday afternoon when he announced that medical experts had only three months, from January 2015 to 1 April 2015, to become accredited under the government’s new MedCo scheme.

Mr Grayling said experts “would have to get accredited”, when the MedCo portal scheme goes live in April 2015, or “be removed from the system” – the only source of medical evidence for whiplash claims.

Speaking at the Association of British Insurers (ABI) motor conference 2014, the justice secretary set out the timetable for phase two of the government’s reforms of medical evidence in whiplash cases.

He said medical experts could register for MedCo, the compulsory portal scheme for obtaining medical evidence in whiplash cases from January 2015.

At this point, the justice secretary announced that medical experts would then have “a period of time to in which to gain their accreditation” and that from 1 April 2015 “any experts who are unable or unwilling to obtain their accreditation by the deadline will have their details removed from the system”.

However, a spokesman for the Ministry of Justice said later in the afternoon that this was wrong.

The spokesman said that all medical experts needed to be registered with MedCo by April 2015 to give evidence on whiplash claims, but would not be able to apply for accreditation until after this date.

He said that registered experts had at least until the end of next year to become accredited and no deadline for this had been set.

Elsewhere in his speech, Mr Grayling said that, jointly with Chancellor of the Exchequer George Osborne, he had invited Law Commissioner David Hertzell to chair a task force to consider the issue of fraud in motor and other insurance claims.

The justice secretary said the task force, which would produce its interim findings by March next year, would look at whether “by legislation or voluntary arrangements” steps could be taken to combat fraud in areas such as household insurance.

He said that if the task force found that “one of the big problems” was the behaviour of claims management companies, he was “very open to taking action on it”.

He added: “We would not have set up the task force if we did not expect something to come out of it.”

Mr Grayling predicted that once the MedCo portal was up and running in April, it would make “very little sense” for the insurance industry to make a pre-med offer before the claimant had seen a MedCo specialist. “MedCo ought to have a significant impact on the level of success for whiplash claims,” he added.

However, Paul Evans, group chief executive of AXA UK and the chairman of the ABI, warned that only a better definition of whiplash injuries against which doctors could assess claims would stop insurance companies making pre-med offers.

“If insurers don’t challenge cases, people will try it on,” Mr Grayling replied. “If you make it easy to defraud you, people will defraud you.”

House of Lords: clause sets law back to Victorian times, says APIL

Government proposals to amend health and safety law will “put the clock back to Victorian times” and make litigation “more protracted and expensive”, peers have been warned.

According to the Association of Personal Injury Lawyers (APIL), a government addition to the Enterprise and Regulatory Reform Bill – which is being debated in the House of Lords today – will abolish a worker’s right to HP2-N36 compensation for breach of health and safety regulations; instead they will have to prove that negligence has occurred.

In a briefing to peers, it said government figures indicated that around 70,000 cases a year are likely to be affected: “This is time consuming, costly and can be a very difficult situation in which to succeed because
HP2-T16 the guilty employer holds all the cards. The situation obviously becomes even more difficult if the claimant has been killed. These are the very reasons the law was changed in the first place, in Victorian times…

“The burden of proof will transfer to injured workers, who will find it harder to claim compensation as a result – more people will lose valid claims, leaving the state to look after them rather than the guilty party. Litigation will be more protracted and expensive.”

APIL said the proposals go much further than recommended in the Lofstedt review of health and safety, which called for a review of regulatory provisions that impose strict liability.

The Bar Council and Personal Injuries Bar Association have also called on peers to challenge the government on the change. Bar Council chairman Michael Todd QC said: “If the Government’s latest proposals are implemented, justice will be denied to many, including those no longer able to work, or whose family members have been killed at work. The cost of funding their care and support will instead fall to the state. That cannot be in the public interest.”

Webber: damning statistic

The NHS Litigation Authority is increasing the cost of clinical negligence litigation by fighting more cases that it ultimately settles, according to a claimant lawyers’ group that has called for a thorough investigation of the way that claims are handled.

It was said at last week’s PI Futures conference in Liverpool that the much-delayed Department of Health consultation on introducing fixed recoverable costs in lower-value clinical negligence cases could be released next month.

Society of Clinical Injury Lawyers chairman Stephen Webber told the conference that a A freedom of information request revealed that of the 3,311 cases in which proceedings were issued in 2015-16, the NHSLA settled 76% after the claim had been issued – a figure that was absent from its annual report.

Mr Webber told delegates: “Basically, the position is that the NHSLA settles 76% of all cases that could have been settled pre-proceedings, post-proceedings – which is a pretty damning statistic.”

Mr Webber said that the post-issue settlement rate had increased in the last 12 months and expressed concern that the NHSLA’s year-long pilot to grow its in-house team would mean that liability would be admitted in fewer cases, increasing costs further. He indicated that it was generally when cases went to panel firms that settlement became more achievable.

Speaking afterwards, he added: “The question that has to be asked is why they [the NHSLA] are so poor at assessing the strengths and weaknesses of a case.”

The government, he said, was starting to look at the culture within the NHS of defending claims that should be settled earlier, but he pointed out that it will not form part of the consultation – and that the introduction of fixed fee would “no doubt mean that legitimate claims will not be brought”.

He also criticised the government for seeking to introduce further cost-cutting reforms before the full impact of LASPO, which removed legal aid for most clinical negligence claims, was known.

The government, he told delegates, was “looking to blame clinical negligence lawyers” for the fact that savings have not been made as quickly as it had wished.

Mr Webber said there remained “loads of unanswered questions” about how fixed recoverable costs would work, including who would decide the value of the claim, whether the claim would be based on settlement value, and how the reforms would control the behaviour of defendants.

He warned that it could have a variety of unintended and negative consequences, such as the removal of specialist lawyers from the area or practice, an increase in more commoditised practice, and the growth of satellite litigation.

A fall in the number of legitimate claims brought, he added, would also deprive the NHS of the opportunity to learn lessons where clinical treatment has fallen below acceptable standards.

The solution, he suggested, was a working party to look at everything across the board. “There is a huge list of drivers that affect clinical negligence costs – defendant behaviour, patient safety, experts’ fees, court fees, ATE premiums, hourly rates, delays in litigation, insurance solutions – all which need to be considered to come to a workable solution.”

He insisted that he was not opposed to an examination of claimant costs, but that all aspects of claims should be looked at by a panel from across the profession.

The real issue that needed to be looked at, he added, was why so many clinical mistakes were made in the first place. Reducing errors would reduce the number of claims and their associated costs, which would save money for the government and the NHS.

An NHSLA spokesman said: “We do not accept Mr Webber’s assertion that all cases settled after proceedings were commenced could have been resolved pre-litigation.

“Many clinical negligence claims are lodged a long time after the treatment in question and claimants’ lawyers commence proceedings to protect their clients’ limitation position. Also, settlements in cases involving patients under a legal disability have to be approved by a court, so proceedings must be commenced.

“It is wholly incorrect to suggest that either situation is the fault of NHSLA.”

Dismore: “incorrect premise”

Government plans for recoverable after-the-event (ATE) insurance for expert reports in clinical negligence cases are fundamentally flawed, it has been warned.

In its response to the Ministry of Justice’s recent mini-consultation on the issue, the Access to Justice Group, which is run by former Labour MP Andrew Dismore, repeatedly criticised the proposals for starting from the “incorrect premise” that each case is individual from the ATE insurer’s point of view, rather than part of an overall pool of winners and losers.

“Without this recognition of the need to look at the ATE providers’ market across the whole of the risk, any proposal from the MoJ will not be practical, given the high failure rate of clinical negligence claims after initial medical evidence has been obtained to enable a merits assessment to be made,” it said.

There was a similar problem with the idea of excluding recoverability where the defendant is notified of the intention to take out the policy and then responds that it either plans to settle or fund the report itself. This would encourage ‘cherry picking’, the response said, and make the ATE market unviable.

AJAG also opposed the suggestion that expert reports on quantum should not be included in the scheme. “It will usually be more cost effective to prepare the reports simultaneously, often involving the same expert (if the expert’s opinion is that the case has merit), rather than go back for a second examination and further report.

“To do otherwise may well unnecessarily increase the costs; and without ATE the cost risk will be prohibitive for the claimant. The claimant could well end up being advised that he has a good case, but cannot then afford to proceed with commissioning the quantum report, without the benefit of underwriting by the ATE provider.”

AJAG was similarly against excluding recoverability for the expert attending court.

It argued that limiting the number of reports to two could be too restrictive, pointing out that between four and six reports is not uncommon when follow-up reports are required to cover new or outstanding issues which arise in the preliminary stages of the claim, or in response to expert reports served by the defendants.

AJAG warned the government against capping the cost of reports, saying that it is a “seller’s market”. The response explained: “The number of experts, particularly in some of the more specialised fields of medicine, who are prepared and sufficiently highly qualified to pass an opinion in a critical report on their peers’ performance is rather limited. This in large part explains why the costs of reports are comparatively high.

“If the expert fees are capped, this small pool of experts could dry up, denying the claimant access to justice by default. It should be for the courts on detailed costs assessments to decide whether an expert’s fee for a report is reasonable and recoverable, particularly bearing in mind the new provisions to be introduced which reinforce proportionality in costs recovery.”

In a previous submission to the Ministry of Justice, AJAG and leading ATE insurer DAS calculated that taking into account the ratio of clinical negligence cases that do not proceed after the initial investigation, together with administrative costs and a 10% profit margin for the insurer, the total premium that needs to be recovered for successful case would be £11,024. Currently, the average ATE stage 1 premium is around £3,000, they said, meaning the proposed system does not produce a viable business model.

Leading costs, pricing and funding expert Burcher Jennings is today launching Burcher Jennings Litigation Funding.

The new service provides law firms and their clients with tailored, expert advice, on a case by case basis, on the full range of funding options.

With Burcher Jennings Litigation Funding, firms ensure that their clients can make informed decisions about financing and obtain the right funding for their case.

The service ensures firms can be confident they are meeting their SRA compliance obligations, and that profitability is driven through the retention of clients that might otherwise look elsewhere to fund and complete their cases.

The new service sees Burcher Jennings working with top funding consultants, and marks an expansion of Burcher Jennings’ ‘full-service’ approach to increasing firms’ profitability. It is a natural extension of the popular Funding for Growth service, and results from clients expressing an interest in accessing similar funding streams for litigation.

Martyn Jennings, CEO, Burcher Jennings, said:

“The law firms we work with are under unprecedented pressure to maintain, let alone increase, profitability in the face of continuing dramatic changes to the legal system.

“Our years of experience in costs and pricing help firms deliver profitability by building client trust, confidence and satisfaction.”

“Hearing from solicitors about the increasing challenges their clients face in accessing justice where litigation is required, it was a natural step for us to launch an expert litigation funding service. There is a wide range of complex funding options on the market, and lawyers aren’t financial advisers.

“As with our established and complementary Funding for Growth service, we can help firms get it right, allowing them to increase business and focus on delivering great client care”.

To find out more about Burcher Jennings Litigation Funding, please go to http://www.burcherjennings.com/user/documents/Litigation_insert_May_2016.pdf

Power: creditors are receiving less money post LASPO

Almost half of insolvency practitioners (IPs) believe that litigation work has declined since removal of the exemption from LASPO in April 2016, a survey has found.

Until then, IPs who had signed conditional fee agreements (CFAs) were able to recover success fees and after-the-event (ATE) insurance premiums from the other side if they won.

The remaining half of the 225 insolvency practitioners who took part in the survey by Ferguson Litigation Funding said there had been “no noticeable difference”. A small group of 4% said there had not been any cases.

Perhaps not surprisingly, the same proportion of respondents (49%) said it had been harder to find a law firm willing to work on a full CFA since April 2016.

Three-quarters of practitioners (77%) said the removal of the exemption had decreased the amount of money being recovered for creditors, with the rest saying there had been no change.

However, 44% said they were more likely to seek third-party litigation funding as encouraged by guidance in the Statement of Insolvency Practitioners 2 (SIP). Almost all of the rest said there had been no change.

Ferguson managing director Maurice Power said: “It is clear there is an increase in interest in the use of third-party litigation funding in the insolvency sector.

“SIPs are issued as guidance to IPs to maintain standards and harmonise approaches. SIP 2 paragraph 11 explicitly urges IPs to consider external sources of funding when investigating litigation.

“This is to be encouraged as the most worrying aspect of the survey is that creditors are receiving less money post LASPO and, that many are slow to adopt or are fully aware of the alternative means of funding litigation.”

The survey also found that three times as many practitioners (21%) believed that use of ATE had gone down since April 2016 as gone up (7%), with 60% saying it had stayed the same and 12% never using it.

Use of litigation funding followed the same pattern, with 21% saying it had declined, 7% gone up, 47% stayed the same and 25% having never used it.

Vara: review to be carried out “in due course”

The government will carry out a second review of mesothelioma claims “in due course” before abolishing the recoverability of success fees and insurance premiums, Shailesh Vara, the justice minister, has told MPs.

The High Court ruled earlier this autumn that the government could not go ahead with implementation of sections 44 and 46 of the Legal Aid Sentencing and Punishment of Offenders Act 2012 (LASPO), abolishing recoverability in mesothelioma cases, until a further review had been carried out.

MPs on the justice select committee demanded this summer that the government carry out a second mesothelioma review, following a row over a “secret deal” between ministers and the insurance industry.

Mr Vara said the government intended to carry out a review, as required by section 48 of LASPO, “in due course”, and “further details on the format and timing” would be set out at a later date.

“The court’s judgment and the committee’s report will be considered as part of that process,” he said.

In the meantime, Mr Vara announced that provisions in the Deregulation Bill would allow HM Revenue & Customs to restore their practice of disclosing the work records of deceased victims to their personal representatives or dependants without a court order.

He said the Ministry of Justice was working with the National Cancer Registration Service and Public Health England to secure resources for the implementation of expedited receipt of pathology records and imaging reports.

“Mesothelioma is a terrible disease and the government is determined to do what it can to help sufferers and their families,” Mr Vara added.

“Changes in the law over recent years, including the Mesothelioma Act 2014, have made it easier for victims to obtain compensation.

“The Ministry of Justice is working closely with a wide range of stakeholders to take forward reforms where we can improve the mesothelioma claims process further.”

Rowley: the Simmons damages were of significance

A client who was not told of the 10% Simmons uplift to damages that would be introduced post-LASPO did not provide informed consent when agreeing to move from legal aid funding to a ‘CFA Lite’ ahead of the LASPO reforms, a costs judge has decided.

Master Rowley ruled that “the failure to give advice regarding the post LASPO landscape and in particular the Simmons damages, in my view rendered the advice to be insufficient on which to found any proper or reasonable conclusion”.

He was ruling in Surrey v Barnet & Chase Farm Hospitals NHS Trust [2015] EWHC B16 (Costs), a clinical negligence case which was funded under legal aid for seven years, during which time liability was agreed.

With quantum still at issue, the client – a minor represented by his mother as litigation friend – was then moved to a conditional fee agreement and after-the-event insurance before the Legal Aid, Sentencing and Punishment of Offenders Act 2012 was implemented on 1 April 2013.

The court heard that the claimant’s solicitors, Irwin Mitchell, had asked all case-handlers to review their legally aided cases ahead of the reforms and decide whether the client would be in a better position with a CFA and ATE funding. Here the fee-earner decided that he would for multiple reasons.

After damages were agreed in November 2013, detailed assessment proceedings were begun and within the total costs claimed was a success fee of £57,000 and ATE premium of £51,000. The defendant argued that the decision to switch funding was not reasonable.

Of the various reasons given for the switch, Master Rowley considered the strongest to be the inevitability of the claimant having to pay a costs shortfall under legal aid, which would not happen with a CFA Lite.

He also said there was no objection to advice being provided to a client on the basis of a particular outcome being preferable, or “nudging” the client in a particular direction, while “there can be no criticism of a solicitor who gives cautious advice on a voyage into unchartered waters”.

But this was all predicated on the solicitor setting out the various options “fully and properly”, especially given that here the Simmons uplift would have meant up to £20,000 extra in damages.

He said: “There is no evidence before me to indicate whether the claimant or his litigation friend would have considered the abandoning of up to £20,000, which was more or less guaranteed, in return for peace of mind regarding future funding.

“They may have decided that the system that had apparently worked for seven years was unlikely to break down in the final stages and they would rather have the money and risk the funding issues. They may have taken the view that QOCS protected them sufficiently not to incur an ATE premium. The possibilities for speculation are endless.

“What is certain, however, is that the Simmons damages were of significance and so should have been explained to the claimant’s litigation friend so that informed consent to a change in funding could be given. The absence of any evidence from the litigation friend on this point, to my mind, speaks volumes.

“In the absence of being informed of these issues it seems to me impossible to say that the claimant can have made a reasonable choice to change funding arrangements. Consequently, I find that the additional liabilities flowing from the new arrangements are unreasonably incurred and as such are not recoverable from the defendant.”

Doerries: timely suggestion

The Bar Council, Law Society and Chartered Institute of Legal Executives (CILEx) have already begun talks on forming a working party that will take forward Lord Justice Jackson’s call for a contingent legal aid fund (CLAF), it has emerged.

Earlier this week, the judge said the legal profession should create the CLAF – a not-for-profit third-party litigation funder – to back both regular litigation and “deserving” cases which would otherwise not be attractive because of the level of damages sought.

The Bar Council had previously shown enthusiasm for the idea, setting up a CLAF group in 2009 to investigate the possibility. However, in his speech, Jackson LJ noted that the project went into abeyance after 2011. “Understandably the profession wanted to see what the scene would be after [my] reforms had been implemented and after any legal aid cutbacks had taken effect.”

Bar Council chairman Chantal-Aimée Doerries QC said it had already opened discussions with CILEx and the Law Society to set up joint working party to examine the establishment of a CLAF.

She said: “The Bar Council has supported the development of a CLAF for many years. The civil justice system is currently facing multiple challenges with the result that access to justice for many has become restricted. Lord Justice Jackson’s suggestion that the concept of a CLAF should be re-visited is therefore timely.

“As experience from overseas has shown, a contingent legal aid fund may provide an additional source of funding the civil justice system and thereby help to address some of the problems many people face about access to justice today. Clearly the viability of a CLAF, and its scope, need to be considered very carefully in the current context including the civil courts structure review which is being led by Lord Justice Briggs.”

CILEx president David Edwards said: “The funding of litigation continues to pose problems for many individuals who without the means to pursue cases are being denied access to justice. Lord Justice Jackson has indicated that now is the time for the legal profession to come together, and collaboratively consider the potential to establish a contingent legal aid fund. CILEx welcomes the opportunity to work together to explore the issues in more detail.”

For the Law Society, president Jonathan Smithers added: “Lord Justice Jackson has put forward some interesting proposals for legal aid funding, which we will consider carefully. The market has changed since this idea was last proposed, and it makes sense to see whether the obstacles which prevented it from proceeding in the past can now be overcome.”

Haynes: LEI market is not working effectively for non-panel firms

Posted by David Haynes, head of underwriting and marketing at Litigation Futures sponsor ARAG

A survey carried out by the Employment Lawyers Association (ELA) in conjunction with the Law Society, Association of Personal Injury Lawyers and Motor Accident Solicitors Society has confirmed that non-panel firms suffer detriment when legal expenses insurers exercise their right to appoint panel firms to deal with claims.

This right is available to insurers until it becomes necessary to issue proceedings, and where (for example, when defending employment claims) the insurer is exposed to paying civil compensation, unless there is a conflict of interest. The survey was completed by nearly 700 people, 48% of whom were employment lawyers.

It is of obvious concern to members of the ELA that 90% of respondents had experienced problems when conducting claims under LEI;

Only 14% of respondents said that it was viable for a solicitor to issue proceedings and run a tribunal case at an hourly rate of £100 plus VAT, which according to the survey is the rate commonly paid under LEI policies. This reduced to 8% for associates, 7% for senior associates and to only 4% for partners.

Some 52% of respondents stated that they had (frequently or always) lost instructions from a prospective client in favour of a panel firm, while 42% of respondents said that the LEI policy terms frequently or always limited the rate payable to non-panel solicitors.

There is no evidence from this survey that ELA’s concerns translate into consumer detriment and the survey found that actual complaints to the Financial Ombudsman Service (FOS) were rare, with firms being deterred from complaining because of alleged delays by the ombudsman in resolving complaints.

FOS data for the period April to December 2013 shows that 507 legal expenses insurance complaints were received, of which 40% were upheld in favour of the customer – around 270 complaints if we annualise the figures. Of these complaints we do not know how many are connected with freedom of choice but we suspect very few (if any), as in most cases disputes arise because of a disagreement over the operation of policy cover.

Our own position is that we adopt a flexible approach in negotiating suitable terms with non-panel firms where policyholders wish to exercise their right to choose their own solicitor; but the use of panel firms works well for our policyholders. In the main policyholders are happy to use the services of panel firms as they realise that the service standards that we demand of panel firms are beneficial and claimants remain fully protected from paying legal costs.

Policyholders can opt to pay the difference where a non-panel firm will not accept instructions at rates that we deem to be proportionate and reasonable given the nature of the claim.

We are confident (without conducting a survey!) that our panel firms would not report problems in conducting claims under our policies and the success rate of panel firms is significantly higher than non-panel firms.

Waiving our right to control the appointment of non-panel firms has a bearing on the fortunes of policyholders who make a claim. Moreover, a lack of capacity to control costs would also result in significant increases to legal expenses premiums across the board at a time when there is government support for legal expenses insurance for individuals and businesses as an affordable means by which to access justice.

What this survey makes clear is that the LEI market is not working effectively for non-panel firms because it does not deliver the rewards they seek. This is very different from a market that does not work effectively for consumers. We would question how the ELA has been able to come to the conclusion that the LEI market is not working well for consumers by conducting a survey which was not targeted at consumers but at its own members.

The ELA’s position seems somewhat delicate as it has exposed itself to debate about the true motive in conducting such a survey. Surely a survey which purports to be in the interest of consumers would not focus on the ELA’s own members?

The ELA is to publish the second part of the survey soon, which will include more detailed evidence of the problems experienced (by their members?) when conducting cases under LEI policies.

Supreme Court: overruled Court of Appeal and High Court

The Motor Insurers’ Bureau (MIB) has welcomed the clarity provided today by a Supreme Court ruling that damages for a UK resident badly injured by an uninsured driver in Greece should be assessed under Greek law.

The High Court had ruled that Tiffany Moreno should be compensated under English and Welsh law. The case was then leapfrogged to the Supreme Court.

Lord Mance, giving the unanimous ruling of the Supreme Court in also overturning two previous Court of Appeal decisions, noted that while here the claimant’s concern was that Greek law would yield less compensation than English law, in other contexts the reverse might be the case.

“There is, for example, evidence that Irish personal injuries’ damages can be significantly higher than English, and that Italian law can in fatal accident cases award significantly more (and, if relevant, to a broader range of persons) than English law,” he said.

The judge ruled that the underlying European law “proceeds on the basis that a victim’s entitlement to compensation will be measured on a consistent basis, by reference to the law of the state of the accident, whichever of the routes to recovery provided by the directives he or she invokes”. This was effectively transposed into English law by The Motor Vehicles (Compulsory Insurance) (Information Centre and Compensation Body) Regulations 2003.

MIB chief executive Ashton West said: “The outcome of this case is that the law for damages will now be applied consistently to uninsured and insured cases.

“Nothing changes the fact that Ms Moreno has been the unfortunate victim of a serious accident with an uninsured driver abroad. There is no doubt that she is entitled to damages for her injuries, however, the principle is about using the right law to decide how much to pay Ms Moreno.

“MIB is here to help UK residents with their claims for compensation while at the same time protecting the interests of UK motorists, who ultimately provide the funds on which we rely. As this relates to events which occurred in Greece, everything surrounding the claim should be treated under Greek law.”

The MIB’s role also extends to acting on behalf of its Greek equivalent, the Greek Guarantee Fund (GGF).

Mr West said: “As a result of the Supreme Court’s decision, MIB will compensate Ms Moreno on behalf of the GGF and will do so on the same basis as any other claim in Greece. Furthermore a number of MIB cases have been waiting for the outcome of this case. As the law is now clear, these cases can now be resolved.”

Rowley: in post from 2 April

The Senior Courts Costs Office will be back up to its full complement of judges from April after well-known solicitor Jason Rowley was appointed as a taxing master.

Mr Rowley, president of the Forum of Insurance Lawyers a decade ago, has been a deputy costs judge since 2006, as well as a High Court costs assessor.

The 45-year-old, who was admitted as a solicitor in 1991, worked in personal injury, briefly for claimants, before turning to defendant work and eventually becoming managing partner of Vizards Wyeth.

After more than five years at the helm of the firm – which subsequently merged into Weightmans – in 2009 he became chief executive of 12 King’s Bench Walk. Last year he joined Temple Legal Protection as senior underwriting manager.

Mr Rowley has been heavily involved in costs issues for many years. He was formerly a member of the Law Society’s new model CFA working party and the SCCO’s costs practitioners group. He is an editor of Kemp & Kemp: Personal Injury Law, Practice and Procedure, including the chapters on costs and funding, and is also on the editorial board of the Journal of Personal Injury Law.

One of his notable cases as a deputy costs judge was A v Chief Constable of South Yorkshire Police, in which he found that a Sheffield man who instructed specialist London solicitors for his action against the police should have instructed a solicitor in Sheffield. The High Court upheld his ruling on appeal ([2008] EWHC 1658 (QB)).

Speaking at the 2011 Association of Costs Lawyers National Conference, Mr Rowley highlighted some tips on “how to patronise a deputy costs judge”:

• Say “I don’t normally have to do that in this corridor”.
• Refer to a decision the judge has made, give him a copy of it and tell him how great it was.
• Look at part 52 before seeking permission to appeal. He recalled one representative who just said: “Permission to appeal.” That’s “not a compelling reason”, Mr Rowley said.
• “Don’t pinch my calculator.”
• If you are going to quote an authority, have a transcript to hand.
• Try and avoid settling at the doors of the court. Having done all the preparatory reading, “I’m the only one not excited by it”.

Lord Neuberger: “unusual number of particularly demanding cases”

The Supreme Court heard over 25% fewer appeals in the year to 31 March 2015, its latest annual report has shown.

The number of appeals heard fell from 120 to 89, and the number of judgments from 115 to 81, despite the court sitting for nine more days.

A spokesman for the court said among the reasons for the drop were longer hearings and fewer linked appeals. An increase in the number of appeals heard by seven or nine justices, from 9% of cases to 12%, was also cited as a factor.

However, the number of applications for permission to appeal considered by the Supreme Court rose by 34% to 269 during the year.

The spokesman said there was a particular increase in applications to bring criminal appeals (from eight to 19) and public law appeals involving employment (seven to 15) and housing (four to 11).

There was a big fall in the number of applications for the Supreme Court to hear appeals about legal procedure, from 38 to 22.

The justices granted permission to appeal in a smaller proportion of judicial review, immigration and family law cases than the year before, but an increased proportion of criminal and housing cases.

Lord Neuberger, president of the Supreme Court, said in his foreword to the report that for the first time since the court opened in October 2009 there were no changes of justices, bringing a “welcome period of stability”.

However, he said: “We have had an unusual number of particularly demanding cases, which is reflected in the fact that the average time between hearing and judgment has increased from last year, and the number of decisions is lower than last year.”

Lord Neuberger said he had held “regular, but not frequent” meetings with former justice secretary Chris Grayling and the Law Officers, along with his annual appearance with deupty president Lady Hale before the House of Lords constitution committee.

The president said that although it would take time for recent changes to “work their way through the system”, the increase in the number of litigants in person applying for permission to appeal had been maintained. The current figure is 24 out of a total of 231 permission applications.

Bogart: market demand

Burford Capital, the world’s biggest litigation funder, has reported a surge in funding commitments in the first half of this year.

In a trading update, Burford said the amount committed in the past six months, £36m, was five times higher than in the same period last year.

Further, £14m in cash had been generated in the past six months from the investment portfolio, an increase of 94% on the same period last year.

Since its inception in 2009, the company said 26 cases had concluded, yielding £102m in gross investment recoveries and £39m net of invested capital – a net return of 63%.

Christopher Bogart, Burford’s chief executive, said the company’s performance vindicated its approach to investment selection. “Moreover, the volume of new commitments made during the last six months shows clearly the market demand for litigation finance solutions.”

Mr Bogart added that the success of the Rurelec transaction showed its continuing market leadership. In the Rurelec deal, announced in April, Burford said it had made a £6.6m profit on a £9m investment by providing a corporate debt facility linked to an arbitration claim.

Burford added that it would release its full interim financial statements for the six months ending 30 June 2014 in September.

In a separate development Vannin Capital has announced that it provided funding for Gul Bottlers, a soft drinks manufacturer in Pakistan, in a successful High Court claim against Nichols plc, owner of the Vimto brand.

Mr Justice Cooke awarded Gul Bottlers the equivalent of £8m in damages, after Gul Brothers complained about the withdrawal of a license agreement.

Iain McKenny, solicitor at Vannin Capital, said: “Vannin successfully funds a great many cases like this every year and it is unusual that we get to talk about the results so openly as most of the awards are confidential or settle under confidential terms.

“We were confident that Gul had a strong case, having undertaken our rigorous assessment process before agreeing to fund it, and we are delighted that we were able to help the company access the justice it deserved.”

Law Society: gathering evidence

In a guest blog, Robert Khan, head of law reform at the Law Society, responds to Litigation Futures‘ Editor Neil Rose’s recent blog questioning the survey of solicitors’ experience of LEI

Neil Rose is right in saying that legal expenses insurance (LEI) problems have been on the Law Society agenda for some time. It’s also true to say that progress has been frustratingly slow in getting insurers to acknowledge consumers’ rights.

Our recent survey was deliberately targeted at changes to the LEI landscape – in particular, the Webster Dixon judgment at the end of 2012. Sadly, many insurers are now quoting it when declaring that they are free to pay non-panel solicitors whatever fees they deem fit, regardless of the nature or complexity of a case. The result has been a notable increase in the number of complaints and instances of poor insurer behaviour reported to the Law Society.

There is a legitimate commercial argument for insurers to keep costs low – but not to the point that it undermines their customers’ legal rights. What Webster Dixon actually said was that insurers could control the rates payable under LEI, provided they were not set so low as to make freedom of choice impossible in practice.

The judgment made it clear that a comparison of the rates offered by insurers to guideline hourly rates would not be in of itself enough to show that they were too low – additional evidence would be needed.

Providing this is one of the main aims of the survey. It’s in the context of Webster Dixon that we understand the Financial Ombudsman Service (FOS) is reviewing its guidance on LEI. Anecdotally, we have heard that some members have had success in challenging rates via the FOS, in some cases using surveys of local firms to show that the low rates offered were denying their client’s de facto freedom of choice.

We hope our survey results can be used to assist solicitors in the same way.

Unfortunately, the issue of rates is not the only problem our members have been experiencing with LEI. The second aim of the survey is to explore the extent of poor insurer practices that our members have been reporting to us. If we’re going to challenge insurers about these, we need to have solid data backing our concerns up.

The reaction to the survey was phenomenal – we had almost 700 responses – and so we’re confident the results will help deliver some practical solutions in this area.

Andrew Mills-Baker, chief financial officer at Sherrards Solicitors

Sherrards Solicitors is implementing the Proclaim Case Management Software Solution from Eclipse Legal Systems.

Established over a century ago, based in St. Albans with a second office in London, Sherrards Solicitors is ranked by both the prestigious Chambers and Partners and Legal 500 legal directories. In addition to the highly commended award in the exporting legal services category at the 2013 Law Society Excellence Awards, Sherrards has recently been crowned the client choice litigation law firm of the year in England Global Awards Winner 2014.

The growing law firm provides a full range of commercial services to clients including international businesses, sole owner companies and not-for-profit organisations together with conveyancing and probate services to private-clients.

Sherrards Solicitors is taking the Proclaim Conveyancing Case Management Software solution for the property team, which will have instant access to the single desktop tool – facilitating a consistent approach to each file. Proclaim will streamline a vast number of administrative processes, with features such as automatic submission of SDLT forms reducing turnaround times, resulting in a superb client experience.

The firm is also taking advantage of Proclaim’s inbuilt reporting platform to provide centralised and instantly accessible key information on each file – making responding to client and estate agent queries straightforward. As part of the installation, Proclaim’s flexibility will enable a connection with the firm’s incumbent financial system for fast and accurate billing.

Andrew Mills-Baker, chief financial officer at Sherrards Solicitors, comments:

“We pride ourselves in offering first class standards of service with a well-earned reputation for being approachable, available and dedicated to the needs of our clients. Proclaim’s streamlining of non-value adding administrative tasks will free up more quality time allowing us to perfect our clients’ journey even further, whilst greatly increasing our volume of work – surpassing the service offering of many larger London firms.”

Petyt: cost-effective source of funding

Under the arrangement, Kain Knight’s clients will be able to apply for funding from VFS Legal against bills that have been drafted and served.

VFS will loan up to 80% of the net value of the bill, with monthly interest-only payments until settlement.

Kain Knight said this allows firms “to move forward while improving the settlement negotiating position”.

Peter Petyt, chief executive officer of Kain Knight, said: “VFS Legal is playing a vital role in providing a cost-effective source of funding to our clients. VFS understands the needs of our market extremely well and knows that law firms often wait many months, even years, for their bills to be settled.

“This is why it has created an innovative product that helps bridge the funding gap without the need for a firm to renegotiate its existing banking facilities.”

Norman Kenvyn, managing director of VFS Legal, added: “Interventions by the Solicitors Regulation Authority are on the rise and no matter how profitable a law firm may be, it is the actual cash flow that is critical to enable the practice to move forward.

“It is well known how the financial climate is changing, with many banks reducing the funding options that are being made available; alternative solutions are required to bridge the cash flow gap.”

The deal is the latest sign of a re-emergence of funding since the departure of Hampshire Trust from the market four years ago. Just Costs has put in place a similar arrangement, which paid out £1m in its first three months.

Car crash: should interim damages payment be taken into account?

A recent ruling caused by “shoddy” drafting of the CPR highlights the importance of any extension of fixed costs being accompanied by “a well-drafted and fully integrated set of procedural rules”, a costs specialist has warned.

Lee Coulthard, assistant regional manager in the Leeds office of costs firm John M Hayes, said it would also be important for the rules themselves, rather than the principles behind them, to be put out to consultation.

But he continued: “Sadly, past evidence suggests that this hope is likely to prove forlorn.”

In Jones v Jones, a case in North Shields County Court, an interim payment of £1,800 was made in respect of vehicle damage, and so was not included in the subsequent part 7 proceedings. The defendant made a part 36 offer of £5,850 in respect of ‘the whole claim’, which was accepted.

The issue was whether the £1,800 should be added to the £5,850 to calculate the fixed costs in table 6B (£1,160 plus 20% of the damages as it settled before allocation). The difference amounted to £360 + VAT.

The claimant relied on CPR 45.29C(4)(b), which says: “Unless stated otherwise, a reference to damages means agreed damages.”

The defendant, meanwhile, looked to CPR 36.20: “Fixed costs shall be calculated by reference to the amount of the offer which is accepted.”

Mr Coulthard reported that the court found in favour of the claimant. “The argument that it would be absurd to exclude damages agreed outwith the scope of the final part 36 offer from the scope of costs was accepted, especially as it was obvious that if the vehicle damages had not been agreed pre-action and had been included in the proceedings then the fixed costs would have been on the whole sum.

“The court recognised the problem with the wording of CPR 36.20, and dealt with this by reading the words ‘by reference to’ as meaning ‘having a bearing on’, such that the amount of the part 36 offer had to be taken into account when determining the fixed costs but was not the only relevant sum.

“There was also criticism of the drafting of the rules, as CPR 36.20 assumes that there will only ever be one part 36 offer disposing of the entirety of the claim, but this is clearly not the case.”

Mr Coulthard, who did not act in the case, said the decision was “surely correct”.

He said: “Whilst the defendant’s reasoning is superficially attractive based on a formal reading of the wording of CPR 36.20, the result is so patently absurd that it is no surprise that the court interpreted the provision so as to avoid that consequence.

“Of course, as was recognised by the judge, the problem is caused by shoddy drafting and a failure to ensure that part 36 tallies with the provisions of part 45. This is certainly not the first time that such problems have been caused by a failure of the rules to account of the practical realities of running cases.

“It can only be hoped that any extension of fixed costs is accompanied by a well drafted and fully integrated set of procedural rules. Furthermore, the rules themselves, rather than just the general principle of any extension, should be subject to a reasonable period of consultation. Sadly, past evidence suggests that this hope is likely to prove forlorn.”

Birthday wish: that solicitors understood the difference between third-party funding and ATE insurance

Posted by Christopher Deadman, sales director at Litigation Futures sponsor Augusta Ventures

Augusta celebrated its first birthday last week. Amidst tin mugs of Buckfast Abbey Tonic Wine (no rubbish) and arrowhead sized wedges of partially defrosted Black Forest gateau, I began to ponder the lessons of the past 12 months.

Being a funder is sometimes like being Estragon in ‘Waiting for Godot’. Gnawing turnips aside, we are often told by lawyers that opportunity will be coming “surely tomorrow”. The funder can therefore wait for opportunity to knock (or not) or go out and try and make it happen. In the segment of the market in which Augusta operates, fine words butter no parsnips (or turnips). Unless we are out in front of fee-earners on a regular basis, opportunity will pass us by.

We have also learned that we still have much work to do in educating solicitors not only about the nature of litigation finance but also how it can be used as a means of attracting new business. Many solicitors continue to regard third-party funding as an option of last resort rather than as perfectly rational business decision for the claimant who wishes to reduce or eliminate their downside risk.

After-the-event (ATE) insurance is also routinely confused with funding. If I had a pound for every time I was contacted for an ATE quote, I would have £14 to my name. The reason people call me for their ATE needs is that they do not understand either the nature of ATE or funding. They know, however, that they need to look after their client’s position so they pick up the phone looking for some kind of risk protection with actually knowing what they need.

Funders and ATE insurers will have to work harder to get their message across if they are to have any hope of making case financing a mainstream option.

Lawyers too need to think harder about recoverability, not just for the purposes of making applications for finance but also for their clients’ benefit too. It is true that many firms have built hugely successful practices on the basis of ‘taking a punt’ on a case. The funder, however, has no such freedom to choose. Because it is playing in hard cash as opposed to time, it needs to be as sure as it can be that the proceeds of the litigation will be realised in the event of success.

As highlighted in previous posts, there are many accountants and similar who are prepared to undertake this type of investigative work on a conditional fee basis, so there is no excuse for not getting this aspect locked down before making an application.

In conclusion, the amount of news copy devoted to funding remains inversely proportionate to the amount of business being written. It is the responsibility of funders to continue to educate lawyers and for lawyers to explain the all the available options to their clients. We must make it happen – there is no deus ex machina to guarantee a happy ending.

Costs cut: both reasonableness and proportionality reduce claim

Proportionality has trumped necessity in the assessment of the costs of a clinical negligence case, which were claimed at 10 times the amount for which it settled.

Master O’Hare in the Senior Courts Costs Office said he disallowed three items in a bill that he considered reasonable for the claimant’s solicitors to incur, but “unfair” to make the defendant pay for.

He was ruling in Hobbs v Guy’s And St Thomas’ NHS Foundation Trust [2015] EWHC B20 (Costs), where the substantive case settled for £3,500. The claimant claimed costs of £32,329, which Master O’Hare reduced on provisional assessment first on the grounds of reasonableness and then proportionality, to £9,879, plus the £1,694 costs of the assessment (all including VAT). The claimant’s solicitors requested a hearing.

Master O’Hare explained that he provisionally assessed that it was reasonable for the claimant to incur costs exceeding £11,000 plus VAT in order to obtain medical records and appropriate expert evidence, send a letter of claim and settle it pre-issue.

“I next considered whether the sum allowed as reasonable was also proportionate. The answer would be yes if I were to apply the test propounded by Leggatt J [in Kazakhstan Kagazy PLC v Zhunus [2015] EWHC 404 (Comm)]: I had already assessed what was the lowest amount which the claimant could reasonably have been expected to spend in order to have this case conducted and presented proficiently, having regard to all the relevant circumstances.

“However, I do not think that test applies in cases such as this where the amount of reasonable costs will inevitably exceed the value of the claim. Kazakhstan Kagazy PLC was a case where the sums in issue bore no relation to the costs however high they were. However the amount of the sums in issue is one of the factors I have to take into account here and, indeed, it is the first factor listed in CPR 44.3.

“I provisionally ruled that the sum I had allowed as reasonable was not proportionate. In doing so I had regard to the factors listed in CPR 44.3(5) (especially (a) and (c)).”

Master O’Hare said that when deciding what reduction to make on grounds of proportionality, he decided against “chopping off a slice of all of the costs I had just found to be reasonable”; it was better to target particular items of work which he thought disproportionate to do in the circumstances of the case. As a result, he disallowed the £1,200 combined cost of three items “which now appear, with hindsight, to be inconsistent with the true value of the claim”.

He said: “In my judgment, although it was reasonable for the claimant’s solicitors to incur these costs it is unfair to expect the defendant to pay for these items.”

The rule against the use of hindsight in costs assessment was based upon reasonableness, he said, “which today is trumped by proportionality”.

Though the costs he provisionally allowed were still high in respect of a claim which settled pre-issue for £3,500, there were not disproportionate.

Master O’Hare said: “I did not think it right to disallow the expenditure on medical records or expert reports. Even in modest value clinical negligence claims it is necessary to incur costs on these items. I did not allow these items of costs on grounds of necessity since that is trumped by proportionality.

“I allowed them having regard to the fact that clinical negligence claims have more complexity and involve more work than do other claims of similar value.”

By Sucheet Amin – CEO of  inCase/Lavatech Ltd

2015 is full of predictions centered on technology and online media. I’ve come across a prediction of the first online political party; a public rubbish bin that alerts the local council that it is getting full and using mobile apps to direct a trained first aider within the locality of an emergency while the ambulance service makes it way to the scene. All interesting and exciting stuff but here are my top three predictions that are more relevant to the legal industry.

1. App downloads will surpass Facebook friend and Twitter followers for most brands

This is a big one not to be ignored! Mobile is not showing signs of slowing and continues to push ahead and 2015 is the year where app downloads will surpass social media followers. This means that law firms need to invest time and resource in their mobile strategy and ensuring that their client’s mobile experience is a positive one.  According to this article, it’s already started to happen with some top US brands seeing huge sways.

2. Clients want real-time information

Law firms have always needed to respond to clients needing vital information and updates. Long ago, clients would write a letter and be prepared to wait for a response. Now, email, texts and telephone has taken over with client’s needing immediate answers. This is only going to become more demanding and smart firms will embrace mobile technology to improve performance and delivering real-time information to clients.

3. Wearable tech will become more mainstream

I talked a lot about this on previous blogs in 2014. Wearable tech such as Google Glass and smart-watches are already out there. Google Glass has been a bit of a flop but don’t expect the same from Apple. Their “iWatch” will take the market by storm and consumers will queue for hours to get their hands on one. Linking direct to smartphones, wearables will provide easier access to online content and apps as well as monitoring health. Law firms should already be thinking about how they are going to be seen on a wearable.

Breach not a “serious or significant one”

The High Court this week granted libel specialists Carter-Ruck relief from sanctions after an assistant solicitor “misread” the Civil Procedure Rules and was almost four months late in sending out a funding notice.

Applying the decision in Denton, Mr Justice Warby accepted that in this case the breach was “not a serious or practically significant one” because Carter-Ruck had sent a letter, before the claim form was issued, containing all the information which should have been set out in the notice.

“Relief from sanctions should not be granted lightly,” Warby J said. “The requirement to serve notice of funding is an important one. No defendant should be exposed to the risk of an additional liability of which they have no, or no adequate notice.

“There is a purpose to the requirement of the rules that notice should be given in a particular form to specified persons at a particular stage in the action.

“It helps to ensure that all the right information is provided in advance to other parties against whom a claim might be made, or who have a legitimate interest in knowing the potential costs involved in the litigation.”

Mr Justice Warby was ruling in a libel action brought by chairman of the Commons energy select committee Tim Yeo MP, over claims in The Sunday Times that he coached a paying client before they gave evidence to the committee.

Ruling in Yeo v Times Newspapers [2014] EWHC 2853 (QB), Warby J said Carter-Ruck represented Mr Yeo under a conditional fee agreement, backed by ATE insurance. The ATE policy provided cover in respect of Mr Yeo’s potential costs liability of up to £100,000, with staged premiums.

Warby J said Andrew Stephenson, a consultant at Carter-Ruck, asked the solicitor to make sure when he filed the claim form that “whatever needed to be done by way of notification of the CFA had been done”.

The court heard that Times Newspapers was notified of the funding position and the insurance policy by a letter in December 2013, which contained all the information which should have been set out in the form.

However, Warby J said Form N251 was not filed or served when the claim form was issued in March 2014. “The assistant solicitor misread the CPR and mistakenly thought that the December 2013 letter represented compliance,” Warby J said.

“On Friday 11 July 2014 the omission was brought to Mr Stephenson’s attention by his assistant solicitor and on his instructions she filed and served form N251 on Monday 14 July 2014.”

Warby J said the claimant’s application for relief from sanctions was not opposed by the other side, and he accepted that in this instance the breach was “not a serious or practically significant one”.

“I can deal shortly with stages two and three of the Denton approach,” he continued. “The reason the breach occurred was an error by the assistant solicitor and not a deliberate decision. The error was promptly rectified once noticed. The impact of the oversight on the efficient and proportionate conduct of litigation was negligible, consisting principally of the need to make this application which was made promptly, and the additional costs incurred for which Mr Yeo has undertaken to compensate [Times Newspapers].”

Earlier in the ruling, he rejected an application by Times Newspapers for the case to be heard by a jury.

Ruck: Claims layering is a large problem

Insurers need to take a close look at suspicious treatments to avoid the danger of ‘claims layering’, a leading defendant law firm has warned after it helped uncover bogus physiotherapy treatments.

The investigation by Keoghs, working with Mulsanne Insurance Company Limited, has led to an 18-month interim suspension for physiotherapist Adeyinka Adeshina by the Health and Care Professions Tribunal, which deals with fitness to practice issues.

The investigation arose from a claim by a 13-year-old passenger in a car crash for 11 sessions of physiotherapy, delivered by Mr Adeshina, the director of Physique Rehab Ltd, following his instruction by Concise Medico Ltd.

In what Keoghs described as “a bizarre twist”, the treatment was said to have been performed over the phone, with Mr Adeshina speaking to the claimant’s mother via an interpreter.

“Even more curiously, the discharge report bearing his signature stated that the treatment provided included ‘Massage release’, ‘Spinal posture correction’ and ‘ice/heat – ice pack followed by heat pack 10 mins’.”

Keoghs said the claimant’s mother had no knowledge of either the treatment or Mr Adeshina when interviewed by a claims inspector, but Mr Adeshina confirmed that he did undertake the alleged treatment when interviewed.

The firm said the claimant’s mother later contradicted herself in court by saying the treatment had, in fact, taken place.

Last November, Mr Adeshina went before the tribunal. Keoghs recorded: “At this point he started to backtrack, alleging that he delegated the treatment to another unidentified therapist and also alleging that the method of treatment was common practise.

“Neither of these assertions were accepted by the panel who gave the physiotherapist an 18-month suspension, stating that if Mr Adeshina ‘believes this to be acceptable treatment, he will put future patients at considerable risk… he also presents a significant risk to other members of the public and companies dealing with the registrant being charged for work he has not done’.”

The claim for the physiotherapy treatment was withdrawn.

Matthew Ruck, strategy lead for Keoghs’ healthcare-enabled fraud team, said: “There is no doubt that claims layering via medical professionals is a large problem when dealing with insurance fraud.

“Whether they are enabling or instigating, it is vital that the industry takes a close look at suspicious treatments and we are delighted that Mulsanne alerted us in this case, resulting in a satisfying decision at tribunal plus a withdrawn head of claim.”

Keoghs said it also discovered that Mr Adeshina had previously been suspended from the Health and Care Professions Council register following a conviction for possessing counterfeit currency and making off without payment; that suspension also overlapped with two of the treatment sessions in question.

MoJ: new criteria to apply to shell companies from 8 November

The Ministry of Justice (MoJ) has finally laid out how it will stop the large medical reporting organisations (MROs) registering ‘shell’ companies on MedCo, a practice it said “undermined the government’s policy principles of independence and fair competition”.

The MoJ said the revised qualifying criteria for MROs included a definition of an MRO which would preclude organisations set up purely as a shell “to gather instructions and forward them on to a related organisation”.

From 8 November, existing shell companies will be judged against the revised criteria and removed from the system if they do not meet them. The criteria apply with immediate effect to new MROs registering on MedCo and those applying for reclassification as a high-volume national MRO (ie, tier 1). For all other MROs, the criteria will be implemented on 25 January 2017.

We reported recently that a host of major tier 1 MROs had created dozens more shell companies, although they argue that the purpose was to meet client demand rather than farm more work.

The definition requires the MRO to be independent (ie stand-alone companies with their own management and in separate premises from any other MRO), properly staffed and resourced, and “directly and solely responsible for all work associated with receiving instructions from the MedCo portal and instructing a medical expert to provide an initial medical report”.

Where MROs have a common third-party owner, they will not be removed from the system so long as they are fully functioning entities in their own right, with a principal function of providing medical reporting services.

The MoJ said the aim was to enable MedCo “to ensure that MROs registered on the system, or applying to register, do not undermine the system’s random allocation model”.

MROs which were removed from the system would be able to fulfil existing instructions, it added.

MedCo will be publishing supporting guidance for MROs to assist with the interpretation of the revised criteria.

Nigel Teasdale, vice-president of the Forum of Insurance Lawyers (FOIL) and its representative on the MedCo board, said: “The introduction of MedCo is an on-going process and it is important that abuses which undermine the system are tackled as they arise. FOIL sees the changes to the qualifying criteria and the declaration of financial links as significant steps in MedCo’s development: hopefully this will enable MedCo to focus its resources on improving the quality of the medical reports themselves.

“It is clear that MedCo is changing behaviours and it is important that the regime continues to develop. FOIL welcomed the MOJ’s commitment earlier this year to keep the framework under review and, in particular, hopes in due course to see formal regulation of MROs as part of the regime.”

Meanwhile, a survey on personal injury (PI) commissioned by the Solicitors Regulation Authority (SRA) – see full story on Legal Futures here – found that just 24% of (mainly claimant) respondents believed that MedCo achieved independence between MROs and firms, while 59% said relationships between solicitor firms, insurers and MROs had not improved as a result of the system.

Even more (68%) thought that the quality of reports had not improved as a result of MedCo (only 4% said they had).

The in-depth interviews conducted as part of the research corroborated the survey’s findings, but the report said “many of those critical of the portal did not disagree with the rationale behind its introduction, but rather criticised the ‘rushed implementation’ and resultant ‘loopholes’ and the regrettable ‘complication of a previously simple system’”.

The poorer quality medical reports were largely attributed to the standardisation process, increased use of drop-down lists and reduced fees for medical experts.

Both claimant and defendant solicitors commonly mentioned that the mechanisms used to circumvent portal objectives included shell companies and bilateral agreements between MROs and solicitors.

“Some interviewees also thought that large practices were able get around the MedCo system due to the scale of their operation: big firms, dealing with thousands of cases a year, could have arrangements with groups of MROs, ensuring that one would always appear on the list of agencies produced by MedCo.

“However, it was also possible for small firms to manipulate the system by filtering search results by location. Recently however, it was said that MedCo had increased efforts to prevent PI firms’ manipulation of the MedCo portal and attempts to circumvent the random allocation of MROs.

“Additionally, solicitors thought to be manipulating the system’s search function to increase the probability of known experts appearing are, it is said, being monitored.”

Deadman: no sign of the apocalypse which was predicted a couple of years ago

Posted by Christopher Deadman, sales director at Litigation Futures sponsor Augusta Ventures

Last week I had the pleasure of attending the Legal Futures‘ Era of the Entrepreneur conference in London. As a non-lawyer myself (although one with a vested interest in seeing the industry flourish), I was keen to see what a legal entrepreneur looked like and why they felt that label applied to them.

As expected, there were a handful of the usual ‘look at me I’m so busy’ types, as well as a smattering of those who, if they were fashioned from chocolate, would take great pleasure in devouring themselves. The overwhelming majority of attendees, however, were from small firms who had made the break and were, in the words of Dave Stewart and Annie Lennox, ‘Doin’ it for themselves.’

We heard a great deal about the future shape of the legal market. It was suggested that only niche firms or global behemoths would prosper. In the future, the flabby, pallid, middle will perish. Law firms without interactive websites, Twitter feeds, Facebook pages, Google+ accounts and YouTube channels will be consigned to the dustbin of history. The high street lawyer will be as relevant as Philips Laserdisc. The lawyer of the future will be sharp-suited and media-savvy who is ‘committed’ to ‘delivering’, ‘innovative’ ‘solutions’ to clients.

This is a specious argument which ignores the fact that lawyers have been having this debate for decades. Everyone acknowledges that it is increasingly difficult for mid-market firms to prosper but there is no sign of the apocalypse which was predicted a couple of years ago. The middle may need to tone up and shed some excess girth but it will continue to bridge the gap between the big guys and the niche practitioners.

We learned that the successful lawyer must also be a proficient marketer who is adroit at providing a ‘fresh and innovative’ approach to legal services. Sounds good, but what does that actually mean? With the best will in the world, the law is not noted for being intrinsically thrilling. Perhaps nude conveyancing or sub-aqua contested probate might have a future but in the final analysis, clients only demand three things from their lawyers. They want certainty regarding fees, the feeling that someone else has shouldered the burden of their problem and a lawyer who knows what they are doing.

Whilst we learned that being a good lawyer won’t be enough to survive in the future, it certainly won’t be enough simply to be a good marketer. Amidst all the talk regarding social media channels, client care, innovation and business focus, the one thing that was missing from the debate was the need for lawyers to actually know what they are doing.

In the final reckoning, clients invariably see through all the peripheral guff and give their business to those firms who actually can do the job. As it has been over the years, the only true way to flourish is to be good at what you do.

West: shared success

Ashton West, chief executive of the Motor Insurers’ Bureau (MIB) since 2003, has been awarded an OBE for services to road safety.

Mr West was a founder member of the Civil Justice Council and is a member of the Association of British Insurers’ motor committee and personal injury panel.

He was a member of the working party which developed the personal injury pre-action protocols and the code of best practice on rehabilitation. He was also involved in the negotiation of agreements on the resolution of large-scale industrial disease claims.

A spokesman for the MIB said that since 2005 the number of uninsured drivers had dropped by 50% to around one million, while the cost of claims involving uninsured or ‘hit and run’ drivers had fallen from £417m in 2008 to £247m in 2014.

The spokesman said a “key factor” in the success was investment in the Motor Insurance Database. He said that since 2011, MIB had worked in partnership with the DVLA to introduce ‘continuous insurance enforcement’, which systematically matches records of vehicle keepers with insurance records on the database.

Steve Maddock, chairman of MIB and managing director of claims and business services at Direct Line Group, said the bureau was using technological advances and work with enforcement agencies to remove “drivers who flout the law” from the roads.

“Under Ashton’s guidance, the MIB has transformed itself and while it may not be visible to everyone, its impact is far-reaching.”

Before joining the MIB, Mr West had management roles in the insurance industry at Iron Trades Insurance and Rubicon Limited, was chairman of ReIntra and a claims consultant at Bavarian Re UK.

A law graduate, he described the award of an OBE as a “shared success”.

Nothing wrong with “broad-brush” assessment of costs

A costs order of £10,000 against a woman described by her barrister as “in dire straits” has been upheld by the Employment Appeal Tribunal (EAT).

Mrs Justice Simler held that nothing in the rules required an employment tribunal to make a “precise estimate of what could be afforded”, and nor in this case did it make one.

“The reality of the claimant’s age and the prospect of her returning to work in the future were matters that the tribunal was plainly entitled to have regard to. They have not been challenged on this appeal.

“They involve a certain amount of speculation about future events about which there can be no certainty, but that is inevitable in an exercise of the kind with which the tribunal was concerned and gives rise to no error of law.

“There was no positive evidence to the effect that the claimant had no realistic prospects of obtaining employment ever again in future or of improving her financial position as a consequence. She is only 39, after all.”

The EAT heard in Chadburn v Doncaster and Bassetlaw Hospital NHS Foundation Trust and another (UKEAT/0259/14/LA) that Mrs Chadburn had unsuccessfully pursued a number of discrimination claims against her former employer.

Mrs Chadburn’s counsel argued that her financial situation was “dire”, and although the tribunal concluded that she was £600 in debt, the true position was £4,800.

However, Simler J said: “The respondents’ costs of the race discrimination aspect of this case amounted to £35,000, and the award, accordingly, amounted to less than a one-third contribution toward those costs.

“I accept that represents a significant liability for the claimant, but the respondents have been required to defend vexatious, false allegations she knew to be untrue, which had the effect of doubling the length of the hearing, significantly expanding the issues and involving witnesses who would otherwise not have needed to be involved in the tribunal proceedings at all.

“There could, in those circumstances, be nothing wrong in principle in the tribunal making a broad-brush assessment of the limit of the award of costs at a level that would give the respondents the benefit of the doubt as to the claimant’s future ability to pay but having recognised that at the current time she was in no position to pay and had significant debts.”

Simler J concluded that the tribunal’s decisions could not “be impugned as in error of law” and dismissed the claimant’s appeal.

Louise Piper, employment lawyer at Howes Percival, commented: “This is a helpful case for employers who are faced with vexatious claims and could act as a deterrent to employees seeking to make false allegations.”

When: 30 May 2018, New York

IMN is excited to announce its inaugural Litigation Finance Conference, taking place on 30 May, 2018 in New York City. The event will provide the perfect forum for all players in this developing and growing market to network, build relationships and enhance deal flow – from legal professionals involved in commercial disputes, to investors specializing in the financing of litigation and arbitration cases, to the multiple service providers involved in structuring, contracting and brokering these deals.

Speakers will include the pioneers and current leaders of this growing market, who will use their expertise to educate the audience and discuss the opportunities available for investors and legal professionals alike.

The continued growth of the industry has caught the attention of investors from hedge funds, venture capital and private equity firms who recognise the untapped potential in the market.  Legal firms and corporate counsels are also making the most of opportunities in the space and are increasingly using litigation finance as a form of risk management across their case portfolios.

With new players entering the market all the time, the one day summit will draw a diverse crowd of investors, litigation funders, brokers, corporate claimants, law firms and other entities in this exciting industry.  IMN invites you to join us at the premier platform for relationship building, thought leadership and business development in the litigation funding space.

IMN have offered Litigation Futures readers a 15% discount – to take advantage of this offer use the code LF15 when booking here.