Both claimant and defendant solicitors expressed themselves dissatisfied with the Ministry of Justice’s conclusion that the part 2 LASPO reforms have largely achieved their goals and do not need any change.
Paul Nicholls, chair of the Motor Accident Solicitors Society (MASS), said it was “quite frankly astonishing” that, despite the way the market has changed since LASPO, the Ministry of Justice was not proposing any amendments.
“Not a single one. It is clearly that much fabled creature, the absolutely perfect piece of legislation.”
He argued that LASPO’s ‘one size fits all’ approach “does not necessarily work in all aspects and has a detrimental impact on the rights of some groups, for instance, vulnerable people such as children and protected parties”.
Mr Nicholls said that while MASS has no objection with the principle of fundamental dishonesty or qualified one-way costs shifting, if used as intended, “there remains a clear imbalance in the absence of a similar sanction for defendants”.
He said: “The reality is that the LASPO has made very little difference to the payment of referral fees which have been either rephrased as something else or by-passed through alternative business structures.
“It is simply not good enough for the government to sideline the issue by saying that ‘we didn’t receive any detail proposals about strengthening the ban so we’re not going to do anything about it’.
“Stakeholders have highlighted the problem and it is the role of government and regulators to create the appropriate regulatory structure.”
Gerard Stilliard, head of personal injury strategy at Thompsons Solicitors, insisted that there was “nothing in the review that even starts to effectively redress the huge imbalance of power created by part 2 of LASPO between the claimant and the insurer-backed defendant”.
He said: “The reduction in costs that the government trumpets as a success has been at the expense of claimants’ access to justice and early settlement is as much an indication of non-union backed claimants being unable to afford to press on to trial as it is any new realism in offers from insurers.
“There is a distinct lack of evidence to back up the government’s suggestion that unmeritorious claims have reduced as a percentage of the total number of claims.”
Mr Stilliard accused the government of bowing to insurance industry pressure by not extending QOCS to areas such as actions against the police and employment-related civil litigation, where it would help access to justice.
By contrast, Nigel Teasdale, past president of the Forum of Insurance Lawyers and a partner at DWF, praised the government for resisting claimant arguments for reforms, which he said were “largely driven by a desire to increase profit”.
He continued: “However, there are a number of areas where the Ministry of Justice has missed an opportunity to correct some obvious flaws in the Act’s interpretation of Jackson’s reforms and FOIL will continue to press change in those areas.
“LASPO should be seen as part of a broad reform programme which is moving civil litigation in the right direction but is not yet complete.
“To continue the reform process, it is important that the Civil Liability Act and associated reforms are implemented and that the process of implementing Lord Justice Jackson’s supplemental report on fixed recoverable costs is commenced as soon as possible.”
Damages-based agreements (DBAs) were the one area where the Ministry of Justice indicated that further changes may be required.
Colin Gibson, a partner and head of dispute resolution at City firm Fieldfisher, said: “The question is raised again whether hybrid DBAs should be allowed. I think they should.
“DBAs are very difficult currently. In smaller-to-medium-sized cases, they do not work because the costs recovered as a percentage would not justify the law firm taking the risk. In the big cases, a straight DBA involves nail-biting risk for the law firm.
“Allowing the risk to be shared, through hybrid DBAs, would not increase the incidence of unmeritorious claims; on the contrary, all involved would only wish to proceed in the event that recovery was likely, but it would share the risk so that access to justice is improved.”