Lawyers at “growing risk of claims” for under-settlement

Beaty: Discount rate change caught many off-guard

Professional negligence actions arising from lawyers under-settling personal injury and clinical negligence claims appear to be on the rise, a specialist barrister has warned.

The 2017 change in the discount rate and the “dangers of automation” were the main causes, he said.

Richard Beaty is a one-time head of professional indemnity at DAC Beachcroft but joined the Bar in 2012, moving to Hailsham Chambers from 1 Chancery Lane this spring.

Writing on the Hailsham website, he said that, though historically the volume of claims arising from under-settlements was low, “this may all be about to change”.

He said: “Publicly available and reliable market data for professional indemnity claims is scarce… [but] there is growing perception amongst our insurer and professional clients that the under-settlement of personal and medical injury claims is on the rise.”

The change in the discount rate in 2017 from 2.5% to -0.75% caught many practitioners “off guard”, he said.

“The effect on Ogden-based lump sum calculations was significant and immediate with the value of future cost of care and loss of earnings claims increasing significantly.

“Personal and medical injury claims which were compromised at around the time of the rate change are clearly vulnerable to scrutiny by litigants who feel they may have lost out.

“On 15th July 2019 it was announced that the discount rate was changed again to -0.25%. Claimants who have compromised their claims in the past few months may also have cause to complain.”

In relation to volume personal injury claims, Mr Beaty noted how trends in the market have increased “the economic necessity to rely on technology-based claims handling”.

The danger, he said, was that “unusual claimant symptomology arising from a modest fast-track claim can be much more easily missed, chronic pain claims allegedly attributable to limb or upper body injury being a paradigm example”.

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