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Steve Rowley

Steve Rowley, business development manager, Allianz Legal Protection

Allianz Legal Protection (ALP) has launched a new after the event (ATE) insurance partnership with leading Liverpool law firm EAD Solicitors. ALP will provide ATE insurance for all of EAD’s clinical negligence and personal injury case types.

The partnership will provide EAD clients with protection against adverse costs and cost risks associated with unrecovered disbursements.

In addition to ATE insurance, ALP will also provide EAD Solicitors with access to its Paid as Incurred Disbursement model (PAID). This will enable them to make early claims for disbursements incurred and, unlike traditional funding, is available without interest or drawdown fees.

Steve Rowley, business development manager at ALP, commented “EAD is a respected and well known firm with a strong regional presence in Merseyside. We’re delighted to have been selected as their ATE partner of choice and to support their growth ambitions.”

“The flexibility and ease of our PAID model will allow EAD to manage their disbursement expenditure as we’re not prescriptive to which disbursements can and can’t be claimed for early. This will help EAD to secure improved terms with medical experts whilst taking additional cost out of the claims process which will have a benefit for all parties involved.”

Helen Barry at EAD Solicitors said “We’re thrilled to be partnering with Allianz Legal Protection as our provider for ATE Insurance. At a time of proposed Government reforms for clinical negligence and personal injury claims, it was important for our firm to be partnering with an insurer who has the financial strength to meet its commitments and one where we can be confident they are able to deliver a solution not only now but also post any reforms.”

“Being able to utilise ALP’s innovative disbursement costs solution as part of their ATE insurance facility ensures we’re much more closely aligned in the claims process which will ultimately benefit the customer.”

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Sara GouldHarmans Costs are very pleased to announce the appointment of Sara Gould as partner, as of 1 June 2015.

Sara has been with Harmans for 7 years having worked previously for a prestigious London law firm as a Paralegal. Sara qualified as a Costs Lawyer in 2014 and is used to dealing with all aspects of costs including Clinical Negligence, catastrophic Personal Injury claims and Actions against the Police.

Working out of Harmans’ Aylesbury office Sara will be working alongside Partners Matthew Harman, Mary Collins, John Moss, Steve Jones and Jim Lines.

Matthew Harman, Partner, said, “We are delighted to announce the appointment of Sara as Partner. She has proved herself to be a valuable member of the team since joining us in 2008 and her career in costs has since gone from strength to strength. Harmans are very much focused on building upon our already significant costs experience this year and Sara’s expertise and enthusiasm will certainly help us achieve our targets in 2015.”


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Now that the LASPO changes have been introduced and the market adjusts to the new regime the minds of legal expenses insurers are beginning to focus on the run-off scenario for After the Event insurance. The huge increases in the number of cases underwritten by LEI’s in the run up to 1st April have no doubt improved the look of the GWP book, but the eventual price could be a high one unless insurers take active risk control measures to prevent an increased loss ratio caused by cases lacking genuine and reasonable prospects of success. When considered alongside the issue of premium recovery accountability, the factors determining a healthy run-off become ever clearer.

Our experience at LAS paints a potentially worrying picture for insurers. A recent audit of a major personal injury law firm revealed the failure to account to the ATE insurer for a 6 figure sum of premium recoveries over a two year period. Our 2012 audit of a large practice showed a similar sum owing in respect of premiums recovered through miss-selling based claims. We are sufficiently confident of our ability to identify the failure of law firms to fully account for premiums recovered that we operate on a percentage of recovery basis. This cost-free service is proving very attractive for insurers seeking to optimise premium income, particularly where post-LASPO the relationship with the law firm is perhaps not as strong as it once was. These audits can be done remotely or via a physical visit.

The auditing of claims against technical handling criteria is normally undertaken on-site which provides the added advantage of enabling an assessment to be made regarding the efficacy of the firm’s supervisory structure, compliance regime and risk management culture. Against this background LAS are able to provide case-specific template reports containing key data, timelines and an independent assessment of Prospects of Success.

Recent live file audits have been conducted at firms specialising in Motor, Employer’s and Public Liability claims and Industrial Disease, Noise Induced Hearing Loss and Contract Law disputes. In general we recommend corrective action in c20% of the claims audited, having identified key factors that have been overlooked or steps that need to be taken. Examples include the failure to obtain available Police Reports, not acting in accordance with a supervisor’s instructions, failing to follow Counsel’s Advice, unacceptable delays in progressing matters, not communicating Part 36 Offers to insurers or clients and failing to contact independent witnesses. In an additional 13% of cases we recommend that the insurer withdraw cover due to a determinable lack of prospects which have been put to one side by a lawyer too busy to fully stay on top of matters. These concerns are more prevalent in medium/large practices where a high turnover of Fee Earners and supervisors, coupled with unmanageable caseloads, lead to a fall in standards.

As the market compresses in light of the LASPO changes, and previously strong business relationships come under increasing pressure, a greater prevalence of similar concerns is almost inevitable. Our advice is simple – manage the run-off before it runs away with you!

Dave Massey – Director, Legal Auditing Services (LAS), Bristol


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Underhill LJ: “public interest in the finality of settlements”

An insurer cannot use the law of misrepresentation to unpick a personal injury settlement made with its “eyes wide open”, the Court of Appeal has ruled.

Zurich Insurance argued that a claimant’s statements on the extent of his back injury and accounts given to medical experts constituted fraudulent misrepresentation. The insurer had, almost six years earlier, settled the case.

However, delivering the leading judgment in Hayward v Zurich Insurance Company [2015] EWCA Civ 327, Lord Justice Underhill said: “It cannot be right that a defendant who has made an allegation of fraud against the claimant but decided in the end not to have it tested in the court should be allowed, whenever he chooses, to revive that allegation as a basis for setting aside the settlement.

“It may stick in the throat that the claimant can retain the reward of his dishonesty, but the defendant will have made the deal with his eyes open to the possibility of fraud, and there is an important public interest in the finality of settlements.”

The court heard that Mr.Hayward injured his back at work in 1998, and in 2001 started proceedings against his employers, claiming damages of just under £420,000, excluding losses for pain and suffering.

Zurich admitted liability, but contested quantum on the basis that Mr Hayward had exaggerated the consequences of his injury. The insurer relied on video surveillance, which “appeared to show” Mr Hayward doing heavy work at home. But shortly before the trial on quantum in 2003, the case settled for just under £135,000.

Underhill LJ said that about two years later Mr Hayward’s neighbours approached his employers to say they believed his claim to have a serious back injury was dishonest.

“From their observation of his conduct and activities, they believed that he had entirely recovered from his injury at least a year before the settlement. They were referred to Zurich and gave full witness statements.”

Underhill LJ said Zurich began the present proceedings in the county court in 2009, claiming damages for deceit.

“It was pleaded that the statements as to the extent of the appellant’s injury in the particulars of claim and schedule of loss, and his accounts given to the medical experts, constituted fraudulent misrepresentations.”

The claimant applied to strike out the proceedings or for summary judgment – an application dismissed by a district judge, reversed on appeal and then restored by the Court of Appeal in 2011, which ruled that the settlement did not give rise to estoppel of any kind and Zurich’s action was not an abuse of process.

When the action came for trial before Judge Moloney QC the following year, he ruled that the settlement should be set aside on the grounds of “deliberate misrepresentations” by the claimant, which influenced the insurer’s decision on quantum.

Setting aside this judgment, Underhill LJ ruled that “parties who settle claims with their eyes wide open should not be entitled to revive them only because better evidence comes along later”.

He said the insurance company had not only made an issue of the misrepresentations before the settlement, but “positively asserted that they were dishonestly made”.

Lord Justice Underhill allowed the claimant’s appeal and set aside Judge Moloney’s ruling, with the result that the settlement remained binding. Lord Justice Briggs agreed, for his own reasons, and Lady Justice King agreed with both.

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Wheeler: absolute scandal

Wheeler: absolute scandal

Just one quarter of one per cent of motor claims are actually proven to be fraudulent, the Association of Personal Injury Lawyers (APIL) said yesterday after analysing the insurance industry’s own figures.

It claimed that distorted figures on fraud in motor claims have been “swallowed whole by the government” and used to target injured motorists.

“We have discovered motor insurance fraud is actually a fraction of the level so often touted by the insurance industry,” said APIL president Jonathan Wheeler.

“No fraud can ever be justified or condoned. But the fact that there is far less of it than we have all been led to believe, and that it is still being used to justify government proposals to abolish the right to compensation for some whiplash injuries, is an absolute scandal. The government has obviously fallen for the insurance industry’s smokescreen.

“A proper analysis of the insurance industry’s own figures shows that only 0.25 per cent of motor claims are actually proven to be fraudulent.

“That includes policy-holders over-egging their own claims, or making false declarations when they apply for insurance. Only a fraction of those will be whiplash claims – we don’t know how many for certain, because there are no industry figures on this.

“Yet the government claims that removing the right to compensation for some whiplash claims will fight fraud and reduce car insurance premiums.”

James Dalton, the Association of British Insurers’ director of general insurance policy, said: “The insurance industry’s fraud data stands up to scrutiny, which is more than APIL’s groundless assertions do.

“In 2014, insurers detected 67,000 fraudulent motor claims with a total value of £835m. That would represent a staggering additional cost to honest motorists if insurers weren’t cracking down on the cheats so we make no apology for doing so.

“We will continue to press for a compensation system which ensures that genuine claimants receive the compensation they are entitled to at proportionate cost, while protecting honest customers against those who continue to exploit the system through frivolous, exaggerated and fraudulent claims.

“And no doubt the lawyers will continue to complain as they see their lucrative gravy train in danger of hitting the buffers.”


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Kain Knight, a leader in the legal costs industry, is hosting a ‘best practice’ seminar on legal costs for solicitors handling Court of Protection work in the New Year.

The seminar, which is free of charge, will be held at the Crowne Plaza Hotel in the City of London on Thursday 16 January 2014, with registration from 8.00am.

Chairing the seminar will be Kelly Stedman, a senior Costs Lawyer from Kain Knight.

Expert speakers on Court of Protection work will be His Honour Judge Denzil Lush, and Katherine Scott from barristers’ chambers 39 Essex Street. Both speakers will be answering questions from the floor after their presentations.

Court of Protection cases have become a growth area for lawyers, driven by more people living into advanced old age, and by an increase in large personal injury pay outs.

To see the full details and to register for the seminar, visit the Kain Knight website or email Penny Ridoutt at


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Foskett J: purely local approach is outdated

Posted by Mr Justice Foskett, chairman, Civil Justice Council costs committee

I am grateful to Litigation Futures for the opportunity to say something about the current work of the Civil Justice Council’s costs committee, which I chair.

Our current task is to recommend to the Master of the Rolls by April 2014 what the guideline hourly rates (GHRs) should be. GHRs influence, but do not govern, what solicitors and other legal fee-earners are paid by the losing side for their civil litigation work?

It is a controversial issue and as costs expert Kerry Underwood has said, “there is more misunderstanding about guideline hourly rates than any other aspect of costs”.

The GHR have been frozen since 2010. Successive Masters of the Rolls felt an uplift based purely on an inflation-linked index was insufficiently evidence based. Furthermore, the underlying evidence for the 2010 rates was itself outdated.

Clients need reassurance that there is a proper contemporary basis for any standard rates charged. Such rates also offer a yardstick by which to judge an uplift for specialist and complex work.

It follows that our recommendations have to be evidence based. We need help from as many firms of solicitors as possible to assemble a comprehensive contemporary evidence-base for those recommendations.

We have some evidence already in the form of surveys conducted by the Law Society and others. Our own survey, launched online today, is, however, a vital part in building up an accurate picture. It is designed to supplement existing data by asking a range of questions, including questions on numbers and average earnings of fee-earners at all levels, the costs of overheads, types of work undertaken, hours billed and sums recovered.

The objective is to create as accurate a picture as possible of salaries and hours charged (and amounts recovered) for all fee-earners, from trainees to senior partners nationwide.

GHRs used to be based on locally undertaken investigations into rates charged and paid locally, reflecting the costs of running a practice and factoring in a reasonable profit margin. A purely local approach is outdated in the current market-place and we are attempting a wider view.

We recognise that some of the data we seek will be sensitive. However, the answers will be treated in the strictest confidence, held securely and used only for the purposes of the survey. No data identifying firms or individuals will be published and respondents will not be revealed to committee members (other than to me or the vice-chairman if necessary), its economic advisers or anyone else without express consent.

The committee has no agenda or pre-determined mindset. It is independent and, I emphasise, judicially chaired. Its members have substantial costs expertise and experience and the practitioner members have extensive litigation experience from differing perspectives. There is a common objective to do the best job we can and to approach the evidence with an open mind.

Our first meeting was held in April, shortly after what some labelled as ‘J-day’. We have considered whether we should try to factor in to our analysis any effect that the Jackson reforms may have. Current evidence suggests their impact is yet to be felt and the overwhelming majority of the committee took the view that there will not be a sufficiently reliable evidence base about this for the present exercise.

That may change when we review things next year, given our remit to keep GHRs under review.

Whilst we cannot engage in speculation, some of the survey questions (for example, on referral fees) may give an early indication of what is happening. The final survey question is a general one inviting respondents to make additional comments which they feel are relevant and will assist us. My invitation to respondents is to make liberal use of that question in this context.

The survey will remain available for completion until 29 November. Our expert advisers will examine the data initially and the committee will consider that analysis in mid-December. We will then decide whether to call for written submissions and oral evidence sessions and, if so, in what form. They would be in February.

In a busy world it is always tempting to ignore a survey or questionnaire. However, we have tried very hard to keep the survey short and clear, with questions that can be answered by reference to a firm’s most recent annual report and accounts together with its costs management system.

My message to all firms engaged in litigation is that this is a real opportunity to contribute to an exercise designed to provide a reliable evidence base upon which to make our recommendations. Criticising the outcome will be somewhat hollow if the critic has not completed the survey.

My final plea, therefore, to all litigation solicitors is this: don’t ignore it.

The survey can be found here.

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Doyle: IPT increase could be costly

Doyle: IPT increase could be costly

Solicitors need to understand the impact of the imminent increase in insurance premium tax (IPT) on after-the-event (ATE) insurance if they want to avoid being held pursued for any shortfall, a leading broker has warned.

IPT goes up from 6% to 9.5% on 1 November and Martin Doyle, a director of Amberis, warned that failing to deduct and pay the correct amount of IPT thereafter is likely to result in insurers coming back to the solicitor for the balance.

“On large multi-track cases this could be a significant amount in light of the 3.5% increase but if handled incorrectly on volume business the effect could be equally costly.”

Clients taking out ATE also need to be made aware of how will affect what is taken from their damages, he added.

Mr Doyle explained that ATE insurers use of one of two different accounting methods and IPT collection is treated differently in each case.

The first is the cash receipt method, which means that any premium received after 1 November attracts IPT at the increased rate of 9.5% irrespective of the inception date of the policy.

The second is the special accounting method, which means that premiums attract IPT at the prevailing rate when the policy was issued, so anything prior to 1 November is payable at a rate of 6%. However, this only applies until 1 March 2016, after which the rate of 9.5% applies.

Mr Doyle said: “If you have premiums that have been collected from defendants and/or claimants but have not been paid over to insurers and the cash receipt method applies, these should be paid prior to 1 November to avoid additional costs.

“If you pay premiums monthly in arrears as part of a delegated authority arrangement, it is important that every premium collected prior to 1 November is paid to insurers in November to ensure that the lower rate applies. The trigger point for the payment of the increased IPT is the date the premium is deducted from the policyholder’s damages. So before 1 November, 6% applies; after it’s 9.5%.”

He said that whichever applies, “it is highly unlikely that any insurer will want to stomach the bill from HMRC in respect of underpaid IPT, especially post-LASPO where premium income has been reduced considerably”. Insurers and/or intermediaries should be telling solicitors how they intend to deal with the change.

For pre-LASPO cases, with the defendant paying the premium, “it is imperative that the correct policy certificate is sent when costs are submitted on successful cases”, Mr Doyle added.

“This will either mean requesting a new certificate from insurers or obtaining a letter from them detailing the impact of the increase on the premium due.”

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Augusta VenturesMan down…

It is said that the special forces feel the loss of one of their number even more keenly than the regulars. Selected for skills found nowhere else, there are not that many of them. All know each other and share experiences, triumphs, setbacks and hardships. A demise is like losing a family member.

On several levels this might be striking chords right now in the small world of After the Event insurance (“ATE”), as on 5 July Gibraltar-based Elite Insurance Company Ltd closed its doors to new business and is now in run-off. It is organised retreat, not surrender or rout. The rugby dreadnoughts grouped on Elite’s website will complete their underwriting fixture list, but they will see no new matches. There is now one less ATE provider.


In commerce, the passing of a competitor is usually seen as an advantage, with the other players simply moving in and fighting for the uncovered – and any additional – business. That will probably happen here, too, but not without much rueful reflection on the state of the market, the factors that might have been in play, and how to avoid them.

Most people still have only a hazy idea about ATE. To many it is something unique to the call-list of slip-and-trip personal injury lawyers, an ancillary of ambulance-chasing speculators and clients lured by adverts offering the manna of risk-free recovery. In some places there persists unworthy superstition that ATE is part of the alchemy and sorcery of a litigation underclass, rubbing along ill-lit corridors with Conditional Fee Agreements, pro bono publico and what remains of Legal Aid: there is something indefinably reprehensible about it.


Few things could be further from the truth. ATE is nothing more – and nothing less – than a highly specialised insurance product that covers a key potential liability in litigation. The underwriter assesses the strength of the legal case, takes a view and quotes a premium for paying the other side’s costs if the insured loses. There are many types of legal expenses policy – some routinely offered as an add-on to others, such as with home and motor insurance – but ATE differs in providing cover not in circumstances that might arise but for those that already have. It is all in the name. The insured obtains cover not to enable him to decide whether to take advantage of a mistake or misfortune, but as protection should liability for costs fall upon him. The claim situation has arrived. In some cases a decisive hearing may already have started.


Litigation funding is similar. The funder examines the case, applies criteria and decides whether to commit cash, on terms, to enable a claimant to progress a claim for which lawyer and perhaps other expert help is beyond his available funds. The funder also assesses the merits and takes a risk. He is rewarded if the claimant is the victor, but forfeits his stake otherwise. Plainly there could be no meaningful recourse in the event of defeat. Just as with ATE, the funder can be called on after battle has commenced.

But there is, literally, another side to the coin. A losing claimant who does not himself underwrite the running of the case might be thought indifferent to an adverse costs order, happily reckoning that the successful defendant could not enforce. However, litigation funding is not confined to those lacking means. It is regularly engaged by individuals and also companies who for valid business reasons do not wish to commit their own capital, or have short-term cash-flow issues but substantial net assets that could be attached on enforcement. Regardless of that, resulting insolvency or bankruptcy could have serious commercial and reputational consequences. It is wrong to prejudge funded litigants as unconcerned about losing. As regards opposing costs they might in all senses carry the same risks as any, and have identical need of protective cover.

Looking ahead

Elite is no longer writing that, and litigant clients, their lawyers and funders have commensurately less scope for insuring contingent cost liability. Savings plans continue after the run on Northern Rock, accountancy has stepped around the wreckage of Arthur Andersen and retailing has survived the closure of Woolworths and BHS, but of course these are commonplace activities, with many providers in a market as mature as it is broad. By contrast, ATE is as new as its providers are few, and it is hoped that this latest turmoil heralds opportunity rather than downturn. In some markets, litigation probably needs – and may soon have – fewer players, but the wider business of supporting dispute resolution needs more to get involved.

Sword and shield

Just as litigation funding can energise a claim that might otherwise remain dormant for want of means, so ATE is an amulet against adverse cost liability if a case is lost. One facilitates and the other protects. Their nature, terms, objectives and origins are different. They are not dovetailing products and are frequently engaged singly. They are however complementary, with a mutually compounding effect similar to doubling rooks in chess. Whether they are symbiotic is a debate for the purists, but there is no doubt that their whole outweighs the sum of their parts.

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London chambers 4 New Square has made a significant statement about its intention to lead the costs Bar after well-known juniors Benjamin Williams and Robert Marven joined the set from Thirty Nine Essex Street

They join a team of three QCs – including one of the costs world’s highest-regarded silks, Nick Bacon – and 11 other juniors, the best known of whom to costs specialists is probably Roger Mallalieu

All four are very prominent names in the costs world and have found themselves up against each other in many cases, with all four involved in the 2008 Tankard case in the Court of Appeal for example

Last year Mr Williams acted for the claimants in the costs part of the Trafigura case, with Mr Bacon for Trafigura, and also represented Glenn Mulcaire, the private investigator at the heart of the phone-hacking scandal, over whether News Group Newspapers had to cover his legal costs

Mr Bacon told Litigation Futures that 4 New Square is now “undoubtedly the leading set” ahead of next year’s costs changes

“We have depth and breadth in a specialist team which leaves others behind

One leading practitioner e-mailed me to

say that this is a polarisation of the costs Bar which will lead to other sets being frozen out

Mr Williams has a commercial practice with a particular focus on insurance, including litigation arising from collapsed claims management schemes such as The Accident Group, as well as the long-running credit hire litigation

He also specialises in the law relating to solicitors, including costs and litigation funding, professional negligence, and regulatory and disciplinary work

He is an editor of Cordery on Legal Services (formerly Cordery on Solicitors), and is recommended as the leading junior on costs by both Chambers & Partners and the Legal 500, having appeared in nearly all of the major costs cases of the last decade

Acknowledged also as an expert on civil procedure and consumer law (including consumer credit), he is an editor of the White Book 2013

Mr Marven is a specialist in all aspects of costs law

His practice includes: costs issues arising from high-value litigation; challenges to conditional fee agreements; collective conditional fee agreements; success fees; legal expenses insurance and after-the-event insurance premiums; litigation funding; fixed costs; costs estimates; costs caps; and wasted and non-party costs orders

He has been involved in a range of high-profile cases in the Court of Appeal, the High Court, the Senior Courts Costs Office and the county courts

He undertakes both detailed assessments and appellate work

He provides commercial advice to insurers, solicitors and claims management companies

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Tracy Blencowe

Tracy Blencowe, Business Solutions Director, Eclipse Legal Systems

Eclipse Legal Systems, the Law Society’s sole endorsed software provider, has announced the release of a dedicated Subject Access Requests (SARs) workflow system.

As of May 2018, all organisations will be required to comply with the General Data Protection Regulation (GDPR), the new legal framework which seeks to strengthen and unify data protection for all individuals within the EU.

More wide-reaching and onerous than the existing Data Protection Act, GDPR also carries the threat of severe financial penalties for firms found to be in breach, with maximum fines being 20 million Euros, or 4% of the firm’s global turnover – whichever is higher.

Under GDPR, the process around SARs – the mechanism by which individuals can request from an organisation what data is held about them and why – is set to change, with organisations expected to respond quicker and waive any charges they may have once made.  As a result, SARs are expected to grow in volume and create an administrative overhead.

Eclipse has created a dedicated SARs workflow solution, seamlessly integrated into its market-leading Proclaim case and practice management software system.  The new SARs workflow is available either standalone for non-Eclipse customers, or as a unified toolset for current customers.  The SARs workflow will manage requests and automate their handling, reducing cost and aiding compliance with ongoing legislation.

Eclipse’s business solutions director, Tracy Blencowe, comments:

“GDPR needs to be taken seriously, and existing processes need to be engineered around ensuring that law firms are compliant.  We are dedicated to helping law firms make this transition as painlessly as possible, by providing ready-made tools that make compliance a much less onerous task.  The SARs workflow joins our recently-released ‘Information Asset Register’ tool and together they provide a robust and scalable platform to enable law firms to enter the new GDPR era with confidence.”

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New appointments at MRN mark the continued expansion of the law firm

Leading Costs Solicitors MRN are delighted to announce the significant addition of experienced costs people to its team. We have witnessed exceptional growth and demand on our services, largely due to the innovative and collaborative way we have tackled the area of online costs budgeting via our Prophet Costs programme.

Solicitor James May, Daniella Phillapson, Helen Appleby, Holly Archbold, Nicola Adams, Rebecca Pickard and Seamus Kelly have all joined in the last few weeks. The appointments mark the continued expansion of the law firm, who have created a number of jobs for professionals within the costs area.

Solicitor and Managing Director Elliot Mocton commented, “We are delighted to welcome colleagues to our growing team. The appointments form part of our continued expansion policy, and will ultimately strengthen the level of service we offer ensuring we are a one stop shop for clients seeking quality, affordable legal costs services and support.”



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Lidington: rate should be reviewed fairly and regularly

The government is to change the basis on which the personal injury discount rate is calculated, with the rate set by reference to ‘low risk’ rather than ‘very low risk’ investments as now.

This would likely mean adjusting the current rate of -0.75% to somewhere between 0% and 1%, it estimated.

The move would better reflect the actual investment habits of claimants and “significantly reduce overpayment”, the Ministry of Justice said today as it prepared to publish draft legislation which will be open for public comment.

In further changes, the rate will be reviewed at least every three years and the Lord Chancellor will consult a panel of independent experts when setting the rate.

The then Lord Chancellor Liz Truss announced the consultation in February at the same time that she changed the rate, acknowledging the significant impact it would have on the public finances and insurers.

Her successor, David Lidington, said today: “We want to introduce a new framework based on how claimants actually invest, as well as making sure the rate is reviewed fairly and regularly.

“In developing our proposals, we have listened carefully to the views of others, and we will continue to engage as we move forward.”

The MoJ said the shift to ‘low risk’ investments was based on evidence gathered during the consultation.

“Where they expressed a view, consultees advised that claimants do not invest in very-low risk portfolios such as one entirely comprising index-linked gilts and many suggested that it is reasonable to expect claimants to invest in low-risk portfolios instead.”

The proposals envisage that a review of the discount rate would be started within 90 days of the new law coming into force. On this review the Lord Chancellor must consult the Government Actuary and HM Treasury as now.

On all further reviews, the role of the Government Actuary as a statutory consultee will be taken by an independent expert panel, which will be chaired by the Government Actuary.

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Neuberger: figures are very disturbing

The pre-Jackson regime of recoverable success fees and after-the-event (ATE) insurance may breach the European Convention on Human Rights, with “very serious consequences for the government”, the Supreme Court suggested yesterday.

Lord Neuberger, the court’s president, said that if this argument was right, those who paid out disproportionate additional liabilities “may well have a claim for compensation against the government for infringement of their article 6 rights”. Article 6 is the right to a fair trial.

Implicitly acknowledging the tide of litigation that could follow such a decision, he did not take the argument any further at this stage, saying the government needed the chance to address the court.

Coventry v Lawrence (No2) [2014] UKSC 46 concerned a successful private claim for nuisance brought against the occupiers of a speedway track by two local residents. In a case run under the pre-Jackson costs regime established by the Access to Justice Act 1999, the residents won at first instance, a decision overturned by the Court of Appeal before being restored by the Supreme Court earlier this year. The two respondents were ordered to pay £10,350 each in damages, and 60% of the appellants’ costs.

The appellants’ base costs from the original trial were £398,000, plus a success fee of £319,000 and ATE premium of about £350,000, totalling £1,067,000. This meant the respondents were liable for over £640,000, even before the costs of the two appeals were considered.

“These figures are very disturbing,” said Lord Neuberger, giving the main ruling. “They give rise to grave concern even if one ignores the success fee and ATE premium. The fact that it can cost two citizens £400,000 in legal fees and disbursements to establish and enforce their right to live in peace in their home is on any view highly regrettable…

“The point can equally forcefully be made from the point of view of the respondents. As relatively small business operators, they are not only having to fund their own costs, which presumably would be of the same order, but in addition they are going to have to pay some £240,000 towards the appellants’ costs. It is true that the respondents lost, but they were seeking to defend their businesses and they plainly had a reasonable case, as is evidenced by the fact that they won in the Court of Appeal.”

Lord Neuberger acknowledged how hard it is to ensure that “a case, particularly one that does not involve a very large sum of money but is potentially complex in terms of fact, law and expertise, such as the present case, is both properly and proportionately litigated”.

But he continued: “It would be wrong for this court not to express its grave concern about the base costs in this case, and express the hope that those responsible for civil justice in England and Wales are considering what further steps can be taken to ensure better access to justice. It is only fair to emphasise that this concern relates to the current system and that it is not intended to imply any criticism of the lawyers in this case.”

Lord Neuberger made plain his support for the Jackson report changes introduced by the Legal Aid, Sentencing and Punishment of Offenders Act 2012, noting among other criticisms of the old regime that while proportionality had a part (albeit limited) to play when assessing the recoverability of base costs, it was excluded from consideration in relation to the recovery of success fee or ATE premium, which were simply required to be reasonable.

Lord Neuberger said the development of European Court of Human Rights jurisprudence – including in the Naomi Campbell case – in recent years meant the court could reconsider the question of whether the 1999 Act costs regime infringed the convention, despite the earlier House of Lords rulings in Callery v Gray and Campbell that it was lawful.

“In the light of the facts of this case and the Strasbourg court judgments relied on by [the defendants], it may be that the respondents are right in their contention that their liability for costs… would be inconsistent with their convention rights,” he said.

The judge also considered how the case may proceed, saying it could be that the Court of Appeal, or even the trial judge, should consider the issue first. There is likely to be a hearing to decide this with all those involved, including any relevant interveners.

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Smithers: fixed costs for complex cases totally inappropriate

Smithers: fixed costs for complex cases totally inappropriate

Lawyers have responded negatively to Lord Justice Jackson’s call last week to introduce fixed costs for all civil claims worth up to £250,000.

Gerard Stilliard, head of personal injury at leading claimant firm Thompsons, was the most outspoken, describing the judge’s speech to the Insolvency Practitioners Association as another “report from an Ivory Tower that fails to address how the changes will impact on real people”.

He explained: “Nowhere does Lord Justice Jackson properly consider the impact on the deterrent effect of litigation in health and safety, nor how defendants being able to calculate the maximum cost of negligence will impact on the risks they take with workers safety.

“Defendants in Lord Justice Jackson’s world will seemingly begin to ‘behave’ in litigation, revealing a previously unknown commitment to achieving a speedy and equitable outcome despite the huge opportunity which this newly skewed playing field would give them to squeeze claimants and their lawyers by stretching cases out as far as possible.”

Mr Stilliard said Jackson LJ had also not considered the dilemma that claimant lawyers will face – “either to do work at commercially unviable rates or to settle cases as soon as possible in order to keep their costs within what is likely to be – if the portal is anything to go by – a wholly unrealistic cap determined with no regard for evidence or expert opinion by government and their friends in the insurance industry”.

Law Society president Jonathan Smithers said the society supported the principle of fixed costs for “lower value and less complex” cases, but was “extremely concerned” at a £250,000 limit.

He said: “The application of fixed costs for highly complex cases is likely to be totally inappropriate and would raise significant questions about the ability of many people to access justice.

“A single approach for all cases, regardless of complexity, will lead to many cases being economically unviable to pursue which undermines the principle of justice delivering fairness for all. We are also concerned by the suggestion that these proposals could be consulted on and implemented within a year as we believe this is unrealistic.”

Among the conditions the Law Society set out for fixed costs were that there must be scope for exemptions and escapes for complex or unusual cases, “there must be rigorous empirical evidence and research undertaken to justify the initial setting of the rates as well as the level of thresholds”, the rates and thresholds must be regularly reviewed and increased by reference to appropriate indices, court procedures and court rules should be properly aligned with their introduction, and appropriate and efficient IT in the court system should be introduced to support the fair and effective delivery of any new fixed costs regime.

Costs lawyer Simon Gibbs of defendant costs firm Gibbs Wyatt Stone, wrote on his blog today: “It is not entirely clear whether the irony is lost on Jackson LJ of justifying fixed fees as a way to avoid unpopular costs budgeting, when costs budgeting one of the key Jackson reforms…

“A massive extension of fixed fees would make the majority of the Jackson reforms entirely redundant for the majority of cases (no costs budgeting, costs management, provisional assessment, new bill of costs, etc). Fixed fees across the board was always an easier (if not necessarily better) way to ensure proportionality than the bulk of the previous reforms already introduced.”

Mr Gibbs also suggested that the judge was looking at the issue from the wrong direction. “Fixed fees for all civil claims up to £250,000 will impact on the vast majority of claims, the vast majority of litigants and a huge proportion of the legal profession. Conversely, excluding claims above £250,000 will impact on a relatively small number of litigants and a small proportion of the legal profession,” he wrote.

“Not switching to a totally fixed costs regime for all claims will not lessen the impact for the profession as a whole; it will simply mean that the impact falls almost entirely on large parts of the legal profession whilst leaving other smaller parts almost entirely unaffected.

“Surely it would make more sense to pilot an extension of fixed fees for cases worth over £250,000 only. We have repeatedly been told that City firms are much more experienced in providing their client with clear budgets and that legal costs are less of a concern for commercial litigators. If a pilot is a success, we can then extend it downwards.”

Bar Council chair Chantal-Aimée Doerries QC agreed that fixed costs “may help” in straightforward cases, but added: “Large corporations and governments may well be willing to spend large sums of money – beyond what is recoverable – on legal disputes with individuals or smaller corporations whose costs are fixed at a much lower rate. Instead of levelling the playing field, this proposal could tilt it further in favour of big business and the state.

“There is also a risk that access to justice will be restricted. Using the value of a case to determine costs will not always be appropriate. A low value but legally complex case may demand a great deal more work than the allocated cost band will allow. This means lawyers may not take on complicated, low-value cases, thus preventing legitimate claims from being pursued.”

A Ministry of Justice spokesman said: “This government remains supportive of the principle of extending fixed recoverable costs and will consider Lord Justice Jackson’s comments carefully.”

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Thoresen: anger and disappointment

The Association of British Insurers has stepped up the pressure over the Law Society’s controversial “Don’t get mugged by an insurer” campaign targeting personal injury clients by calling for the £300,000 campaign to be pulled.

Director-general Otto Thoresen has escalated the row in a letter addressed to new Law Society president Nick Fluck which expressed his “anger and disappointment”.

In a strong-worded repost, Mr Thorensen branded the striking strategy as “a gross error of judgment” and said that it is “little more than public name-calling”.

And he has argued that the data, on which the central claims of the campaign are based, is flawed.

Last month, Legal Futures revealed the Law Society’s new advertising campaign which, for the first time, was focusing on a particular area of practice.

The society said the campaign “deliberately takes a bold, humorous and memorable approach” to gets its message across. It features posters on public transport and stations, PR coverage in regional media, radio advertising, online advertising and a video on YouTube. Firms can request A3-size posters and postcards, as well as a rotating banner advert for their websites.

The key message of the campaign is to urge personal injury consumers to not just accept the first offer of compensation from insurers.

According to Chancery Lane, research from the Financial Services Authority following a freedom of information challenge “revealed personal injury claimants who turn down an insurer’s initial offer and take legal advice from a solicitor get on average three times more compensation”.

However, after ABI director of general insurance Nick Starling hit back at the campaign, claiming it is lawyers who are “mugging” the public, and the Forum of Insurance Lawyers also complained about it, Mr Thorensen’s letter has added more heat to the debate.

Discrediting the Law Society’s data, the ABI stated that the figures are from a study of 113 cases from three insurers, undertaken four years ago.

In the letter, Mr Thoresen says that the authors of the FSA report themselves describe the data that underpins the study as “patchy”, “limited” and that it doesn’t give a “definitive conclusion”.

In his letter calling for the campaign to be withdrawn, Mr Thoresen states: “Your campaign is a gross error of judgment, represents a deeply regrettable resort to little more than public name-calling and it comes as a matter of considerable surprise that a professional and well-respected organisation such as the Law Society is prepared to lower itself to such action.

“I am more than aware that the insurance industry and some – but by no means all – of your members have taken different positions in the on-going debates over personal injury compensation reform.

“Robust debate on key policy issues is to be welcomed and, as part of those debates, the insurance industry has always been careful to ensure our contributions are based on evidence rather than the highly misleading and selective use of statistics.

“This campaign can only be damaging to relationships between the Law Society’s wider membership and insurers. I look forward to your assurance it will be withdrawn immediately.”

The Law Society had no comment yesterday.

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Keen: government ready to investigate should the need arise

There is currently no need to introduce statutory regulation of third-party litigation funders, the government said yesterday.

Justice spokesman Lord Keen said there was no reason to move away from the voluntary scheme.

Conservative peer Lord Hodgson of Astley Abbotts asked in a written parliamentary question whether the government planned “to introduce regulations to ensure that third-party litigation funders are subject to the same statutory duties and obligations as apply to law firms operating in the same field”.

Lord Keen replied: “The government does not believe that the case has been made out for moving away from voluntary regulation, as agreed by Parliament during the passage of the Legal Aid, Sentencing and Punishment of Offenders Act 2012.

“The market for third-party litigation funding (TPLF) remains at a relatively early stage in its development in this jurisdiction and we are not aware of specific concerns about the activities of litigation funders.

“The government has not therefore undertaken a formal assessment of the effectiveness of the voluntary code of conduct or the membership of the Association of Litigation Funders. The last government gave Parliament an assurance that it will keep third-party litigation funding under review and this government is ready to investigate matters further should the need arise.”

Writing on the Conservative Home website last summer, Lord Hodgson said it was “astonishing” that the funding industry – with “billions of pounds of assets under management worldwide”, and London “one of the international funding hubs for these investors” – was not regulated like other financial services.

He quoted at length a report by the US Chamber of Commerce’s institute for legal reform that identified various problems with TPLF.

The chamber has been in the UK for several years, actively lobbying against funding and calling for statutory regulation, including during the passage of LASPO.

Lord Hodgson’s article concluded: “There is a strong argument for a full parliamentary review of the extent of TPLF. This also could usefully consider potential safeguards, including transparency requirements, registration of funders and prohibition on funder control of proceedings.”

Steven Friel, chief executive of Woodsford Litigation Funding, said: “It is unsurprising that the government has no concerns about the activities of litigation funders.

“I recently carried out a survey of the law and practice of litigation funding in 16 international jurisdictions, including England and Wales. I asked legal and industry experts in each of those jurisdictions about disputes or other problems relating to litigation funding, and the feedback was that there are few, if any, problems. If it ain’t broke, don’t fix it.”

On the same day as his question to the Ministry of Justice, Lord Hodgson asked the Department for Business, Energy and Industrial Strategy whether it had “undertaken any consultation with consumer groups about whether consumers involved in the recent Mastercard court case were adequately protected by the provision of the Consumer Rights Act 2015”.

This case, using the new opt-out class action regime – which is also strongly criticised by the chamber – is backed by third-party funding.

In response, minister Lord Prior noted that the £14bn case filed against Mastercard at the Competition Appeal Tribunal in September 2016 was still in its early stages.

“It would be premature to undertake a consultation on the Act’s impact at present. The government is required to carry out a full review, consulting a wide variety of stakeholders, including consumer groups, once the Act has been in force for five years.”

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Jackson: overseeing reforms

Lord Justice Jackson is among a roster of five Court of Appeal judges named today as the core members who will deal with cases arising out of his reforms.

At least one of the group – designated by the Master of the Rolls, Lord Dyson – will be on the bench for all appeals arising from the reforms.

Lord Dyson, is one of them and as well as Jackson LJ he is joined by Lord Justice Stephen Richards (the deputy head of civil justice), Lord Justices Davis and Lewison.

The announcement implements recommendation 87 of the Jackson report, which said the Master of the Rolls should designate Lord Justices to consider issues concerning the interpretation or application of the Civil Procedure Rules arising from the reforms. The report had recommended two Lord Justices be appointed, but five have been appointed to allow for flexibility of listing.

Lord Justices Davis and Lewison have sat in the appeal court for two years. In one case last year, Lewison LJ cited with approval a passage from the Jackson report that said: “Courts at all levels have become too tolerant of delays and non-compliance with orders. In so doing they have lost sight of the damage which the culture of delay and non-compliance is inflicting on the civil justice system. The balance therefore needs to be redressed.”

He also supported Jackson LJ’s view that it is vital the Court of Appeal supports first instance judges who make robust but fair case management decisions.

Sir Nigel Davis was called to the Bar in 1975 and took silk in 1992. He became a recorder in 1998, and a deputy High Court judge in 1999. He was appointed to the High Court (Queen’s Bench Division) in 2001 was a presiding judge for the Wales Circuit between 2006 and 2009.

Sir Kim Lewison was also called in 1975 and took silk in 1991. He was appointed as an assistant recorder in 1994, as a recorder in 1997, as a deputy High Court judge in 2000, and a member of the Competition Appeal Tribunal in 2004. He was appointed to the High Court (Chancery Division) in 2003 and was a Chancery supervising judge between 2007 and 2009.

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Fees cut: benefits to claimants, argues Ministry of Justice

Slashing the basic RTA portal fee from £1,200 to £500 will cost claimant lawyers £200m a year, the Ministry of Justice has estimated.

It has also argued that it would be wrong to assume that referral fees were not taken into account when the £1,200 was agreed.

The impact assessment published alongside yesterday’s decision to press ahead with the portal reforms admitted that the government does not know “exactly how many cases will be affected” by the cut in fees, as the Jackson reforms could also impact the volume of cases.

“Assuming that 2011/12 volumes of protocol settlements (around 300,000 cases) remain, the aggregate cost to claimant lawyers of [the reform] would be around £200m,” it said.

However, the assessment said there were potential benefits to claimant solicitors in having more cases within a defined process. “Simplified, more uniform and more predictable processes applied to a large volume of similar claims may support additional case processing efficiencies, and might support new forms of business models.

“The ongoing costs of processing claims may fall as a result. The extent of these administrative and processing savings is not known and has not been monetised.”

Extending the portal and introducing fixed recoverable costs (FRCs) for cases which fall out of it will also reduce the ‘costs of the costs’, it said.

Defendant insurers would conversely benefit to the tune of £200m but would also face earlier payouts.

The assessment predicted that claimants would benefit from having to pay lower success fees, as well as from earlier payment and quicker resolution of their claims.

The main consultation response document said the government does not accept the argument that because the current rates were calculated without any reference to referral or marketing fees, FRCs should not be reduced on account of the referral fee ban.

It said: “The government considers that it would have been commercially illogical for claimant lawyers to have negotiated FRC levels which did not enable them to meet their costs (including referral fees). Even if referral fees were not separately identified as a cost during the negotiations, it would be wrong to deduce from this that they were not accounted for at all…

“In any event, whatever the basis of the negotiations leading to the setting of FRCs at their current level, the FRCs set as a result of those negotiations were evidently set at a level which enabled the average claimant solicitors’ firm to cover its outgoings and operate commercially, even though many of these firms paid referral fees.

“That being so, it is reasonable to assume that FRCs could now be reduced – whilst still enabling these solicitors’ firms to operate commercially – once referral fees are abolished, unless there was evidence to suggest that the abolition of referral fees would lead to an inevitable and commensurate increase in other costs, such as advertising.”

Dismissing the argument also that firms which do not pay referral fees may pay up to £500 in marketing costs, it said “marketing costs were likely to have been treated in the same way in the original costs negotiations as referral fees. The government therefore considers that the referral fee ban provides reasonable grounds for considering that current FRCs should be lower in future”.

The government also said it received “insufficient evidence” to suggest that £500 does not accurately enough reflect the amount and nature of work required to deal with most straightforward, liability admitted claims worth less than £10,000.

Taking on arguments about reductions in access to justice and in the quality of legal advice as a result of the reduced FRCs, the government said solicitors will be able to charge higher success fees than now and also use damages-based agreements. This could lead to “more competitiveness and flexibility in the market”, meaning it will not be more difficult to obtain legal advice in the future.

It also predicted that “claimant lawyers remaining in the market will be likely to take on the cases left by any who have chosen to exit”.

However, the impact assessment – while prepared on the assumption that claimant lawyers would be as willing to bring cases as they are now – acknowledged that there was a risk this might not happen in “cases which are relatively more expensive to process”.

Other risks were that solicitors would reduce client care – but they “would still be required to operate in accordance with professional standards so the scope of any risk of worse customer experience might be limited” – and that there might be incentives for solicitors to undersettle so as to process a case quickly.

“Whether this risk materialises would depend upon the behaviour of defendants (insurers) in such settlement negotiations.”

  • Direct Line’s 2012 results, published today, showed a fall in referral fee income from £27.9m to £21.1m; vehicle replacement referral income also fell and Direct Line said these “primarily reflected a reduction in non-fault claims volumes”. The company predicted that the impact of the civil justice reforms would be “net neutral” in the medium term. “However, there remains considerable uncertainty about the details and timing of the reforms.”

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Monique Passalaris, senior associate and regional manager of Just Costs’ London office

Monique Passalaris, Senior Associate and Regional Manager of Just Costs’ London office together with members of her highly experienced legal costs team: Darren Naisbitt, Matthew Bell, Olly Sufi, Jack Ridgway, Joe Bardoe, Wayne Spring, Chris Medhurst and Business Development Manager, Scott Jarrold have all signed up for what has purportedly become the largest annual gathering of lawyers and the judiciary in the world.

Around 10,000 of the top members of the legal profession led by the Lord Chief Justice on 19 May will undertake a 10km walk starting at the Royal Courts of Justice.

Participants will be raising money for The London Legal Support Trust which funds Law Centres and pro bono agencies in and around London who do a fantastic job in preventing homelessness, resolving debt problems, gaining care for the elderly and disabled and fighting exploitation.

Click HERE for more details on the event and how to donate towards this worthy cause.

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Craig Budsworth

Budsworth: a question of “minor changes that need to be done”

Personal injury lawyers have been warned that they face dire consequences if they fail to comply with the latest version of the consumer contract regulations, coming into force on 13 June.

Craig Budsworth, chairman of the Motor Accident Solicitors Society (MASS), said failure to comply with the regulations, which apply to conditional fee agreements signed inside and outside the office, could result in unenforceable contracts, loss of fees and fines from the Legal Ombudsman.

Mr Budsworth said one of the changes was extension of the cancellation period for contracts from seven to 14 days.

“If you sign up a lot of clients without complying, you’ll be a in a pickle. Some people are still selling without a cancellation process.”

The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 replace existing regulations introduced in 2008, covering sales made in the office or the client’s home, and earlier distance selling regulations.

The latest regulations require that consumers are given information on a range of issues, from identity of the supplier and details of how fees will be calculated, to the firm’s complaints-handling policy and arrangements for terminating the retainer.

For contracts made off the premises, or as a result of distance sales, there are detailed requirements on cancellation, such as giving consumers notification if there are no cancellation rights.

The Law Society has issued a guidance note on the new regulations. In its advice on ‘distance contracts concluded by electronic means’, the society said firms should ensure that clients acknowledge that placing an order implies an obligation to pay.

“If the client places an order by clicking a button or similar, it should be labelled clearly with ‘obligation to pay’ or something similarly unambiguous. If the above does not occur, the client is not bound by the contract.”

“This is something that needs to be on everyone’s agenda,” Mr Budsworth said. “It’s not difficult – it’s not a complicated major change. It’s a question of minor changes that need to be done, otherwise you’ll have a load of unenforceable contracts.

“Before April of last year this was less of an issue. Now, with deductions from damages, if a client complains and the Legal Ombudsman looks at the document and it doesn’t comply, the solicitor may have to repay the amount taken from damages and a fine.”

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Budsworth: blinkered view

The Motor Accident Solicitors Society (MASS) has hit out at the proposals to reform whiplash claims published yesterday by insurer AXA, describing them as “highly biased” and “largely based upon statistics that are either inaccurate or out of date, but are certainly highly selective”.

MASS chairman Craig Budsworth said the result was “a report that promised enlightenment but delivers only a blinkered view of the issue”.

As an example, he pointed to the report stating that whiplash accounts for just 3% of all bodily injury claims in France. “This figure is from 2004,” said Mr Budsworth. “Association of British Insurers research published earlier this year found that there had been a 1,000% increase and is now 30% of personal injury claims in France. Such basic errors give little confidence in the validity and independence of the other statistics used in the report.”

He argued that there are “real dangers” in trying to draw direct comparisons across different legal systems which have alternative structures, classifications of injuries and systems of award: “Other countries may have a smaller proportion of whiplash claims, but this is likely to mean that genuine accident victims are not compensated and cannot access the support and rehabilitation services that they need.”

Mr Budsworth dismissed AXA’s call for hard evidence of a whiplash injury – such as from an x-ray or MRI – to be eligible to claim. “There is no simple test for whiplash,” he said. “It is a soft tissue injury that cannot be seen on an x-ray or MRI scan. Any injury you can see on a scan is damage to the bones or supporting structures, rather than the tissue, so it seems disingenuous to recommend that one of these expensive diagnostic tools should be required for every whiplash case.”

He further questioned the recommendation that a whiplash should be categorised in accordance with a Canadian scale of 0 to 4 – with 0 being no neck pain and 4 chronic neck pain and fracture or dislocation – with only grade 3 and 4 injuries receiving compensation.

“The Quebec Task Force system was developed in the context of treatment recommendations rather than eligibility for compensation. It has always been viewed with a high degree of scepticism due to its weak evidential base. Excluding Grades 1 and 2 from the compensation process would prevent all but a very small proportion of genuine injuries from receiving damages.

“Ultimately this will push the cost from the at fault driver’s insurer to the taxpayer. All treatment costs will be borne by the NHS and the benefits system that would have to support claimants unable to work as a result of their injuries.

“Every injury is different and cannot be bucketed with others in an overly simplistic grading system. Every injury must be assessed by an experienced medical professional who knows what to look for and what questions to ask each patient. These nuanced assessments are essential for stamping out fraud and MASS has long advocated a system that requires a medical examination before any compensation is paid.

“Their experience is crucial in helping us to address fraud and they provide the best assessment of the severity of an injury.”

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Burcher Jennings200Law firm pricing, costs and funding specialist Burcher Jennings is expanding its Manchester team today with the addition of expert costs lawyer Mathew Bell and a move to new premises in Wilmslow.

Nationally, the firm now has the largest concentration of costs lawyers in the country. The announcement comes on the day new research from the legal sector regulator the Legal Services Board revealed a rise in “DIY justice” as concerns and a lack of clarity over law firm costs is increasingly driving clients away from high street law firms.

Burcher Jennings opened its Manchester operation in January 2016, and is already expanding to meet demand from North of England law firms for the kind of holistic approach to pricing, costs and funding that can both improve certainty over legal pricing and service for clients, and boost long-term profitability for law firms.

Experienced costs lawyer Mathew combines experience in commercial litigation, clinical negligence, catastrophic injury, Court of Protection and solicitor & own client disputes, together with costs management and negotiations.

The Manchester office has grown swiftly as a result of the head of the Manchester team Victoria Morrison-Hughes’ broad range of experience, having worked exclusively in a city centre legal practice, in addition to 18 years providing specialist support on legal costs to a wide range of law firms in the North West and across the country.

Mathew adds further to this unique combination of insight into the operational and technical demands of a legal business.

Victoria Morrison-Hughes, head of the Manchester office and winner of ‘Costs Lawyer of the Year’ in the 2016 Women in Law Awards, said:

“With an ever growing team there is a great deal we can contribute to the practice and potential of local law firms in the Manchester area. Burcher Jennings is an innovative force in helping firms transform costs, pricing and funding practices in order to boost profitability and achieve a competitive edge.”

Martyn Jennings, CEO of Burcher Jennings, added:

“We are proud to see this regional centre of excellence expand to meet demand and are looking forward to Mathew enhancing the team.

“As a national firm we are growing swiftly but the focus on consistently providing insightful and high quality advice and services on issues, such as maximising costs recovery and positive, profitable pricing, is fundamental to every new region we venture into.

“We look forward to continued growth over the next 12 months, in Manchester and beyond.”

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Asif Siddiq, practice manager at ODT Solicitors

Asif Siddiq, practice manager at ODT Solicitors

ODT Solicitors is implementing the Proclaim Practice Management Software Solution from Eclipse Legal Systems.

Based in Sussex with branches in Brighton, Hurstpierpoint and Haywards Heath, ODT Solicitors is a growing law firm specialising in Property Law and Civil Litigation. The firm boasts an enviable reputation for providing excellent service and value for money, to both private clients and commercial organisations.

The Proclaim Conveyancing Software Solution will be utilised firm-wide, ensuring a secure and consistent approach from all users. Eclipse will conduct a full data migration from the incumbent system, allowing the integrated Proclaim practice accounting and financial management toolset to be implemented together with the Proclaim Credit Control Centre module – boosting efficiency and providing detailed analysis of the firm’s operations.

ODT Solicitors will take the Proclaim Matter Management Solution to streamline their non-prescriptive Civil Litigation work. Effective risk management throughout the lifecycle of each file will be ensured with the adoption of the Proclaim Compliance platform.

Asif Siddiq, practice manager at ODT Solicitors, comments:

“Proclaim will be instrumental in achieving our goal of making the conveyancing process as quick, efficient and hassle-free as possible. With so many time consuming processes being automated we will reduce our clients’ costs without compromising the quality of the service we deliver. Proclaim’s inherent scalability and flexibility will prove invaluable as our operations and client base continue to expand.”


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Kirby: did client make a properly informed decision?

Solicitors need to be careful to ward against professional negligence claims for mis-selling damages-based agreements (DBAs) or under-settling cases run under them, a QC has warned.

PJ Kirby QC of Hardwicke Chambers said solicitors need to put in procedures that ensure that a full explanation – both oral and written – is given as to the various funding arrangements discussed and why the DBAs was considered suitable.

If a solicitor is not, either generally or in relation to a specific case, willing to undertake a case under a particular type of funding arrangement, then that should be explained and the reasons recorded, he added.

Several commentators have highlighted the difficulty that DBAs work very well for the solicitor, and far less well for the client, if a substantial case settles quickly.

However, Lord Justice Jackson’s recommendation that the client seek independent legal advice before entering in a DBA did not make it into the final regulations – but then the risk of mis-selling was raised again in February by the Legal Services Board.

Writing on his chambers’ website, Mr Kirby said the central issue is whether the client has made a properly informed decision about the funding of its case and whether the method of funding recommended to the client was in the client’s best interests.

“The fact that the DBA turns out to be profitable or indeed unprofitable for the solicitor is not the test as to whether the same was in the client’s best interests at the time that it was entered into,” he said. “It would only ever be the gift of hindsight that would enable the solicitor or client to know which fee arrangement in fact would end up being the best one (and it is most unlikely with the benefit of hindsight that the fee arrangement that turns out to be the best for the solicitor will have also been the best arrangement for the client).”

Mr Kirby said the clients who are most likely to be aggrieved are those who feel that their claims were settled for less than their true worth on the one hand and on the other those clients who consider that the lawyers have received a disproportionate amount of the sum recovered bearing in mind the amount of work actually done by the lawyers.

“There is concern that solicitors may be inclined to advise that claims be settled for less than their true or at least their potential worth in order to ensure that they exclude the risk of loss and no payment, and get paid whilst incurring the minimum level of costs necessary.

“Whilst under CFAs there could also have been the temptation to settle for less than the true worth of the claim in order to avoid the possibility of a loss and no payment, at least with a CFA the more work that was done the more the solicitors would be paid and the greater the amount recovered by way of uplift. Furthermore so long as the uplift was recoverable from the other party the client had no real interest in questioning the amount of the uplift.

“Under a DBA the longer the case goes on the lower the reward for work or effort ratio becomes. Indeed under many DBAs the prospect of the matter going to trial will be of real concern to solicitors who may see any possible recovery under the DBA as being less than the costs incurred on a traditional time-cost basis and much less than the amount due to the solicitor under a CFA with an uplift, yet continuing with the case to trial may be in the client’s best interests.”


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Burford: Big rises in profits and share price

Litigation funder Burford Capital has said that another big rise in profits shows that its model of investing in a “large portfolio of widely diversified and well-diligenced” cases works.

Burford reported that income from its litigation funding business for the first six months of this year was up 64% on this time last year to over £19m, driving a 56% increase in the group’s operating profits to nearly £18m.

In its half year report to shareholders, the group said the results “demonstrated its ability to invest capital wisely and profitably” in the legal sector.

“One year of good results could be a fortunate accident. Two years could be an extra dose of luck. But 2014 was our third year in a row with income over $50m, a trend that we have continued into 2015.

“It is not, we believe, a coincidence that Burford stock has risen about 40% since the end of 2014.”

Burford said the first half of the year saw its “largest recovery to date” from litigation funding – £39m in gross proceeds on an investment of £16m, leaving a profit of £23m. The report described this as “one of Burford’s many portfolio arrangements”.

The litigation funder went on: “The first half of 2015 was characterised by diversity – by size of client, by geography and by transaction type and structure.

“We closed large transactions to finance some of the world’s most complex litigation, and very small transactions to provide access to justice for struggling English businesses using our special small case product in the UK market.”

Known as ‘Sprint’, Burford launched a funding scheme in February this year for cases valued at between £25,000 and £500,000, marketed and administered by broker TheJudge.

Burford said in the report that it believed more competition would be good for the litigation funding market, with “multiple players” increasing demand by “educating clients and lawyers about the possibilities” of litigation finance.

“We do not, however, endorse the participation of capital providers with opaque structures or uncertain or undisclosed capital sources. Potential users of litigation finance need to do diligence, just as in any other area.”

As an example, Burford cited litigation finance providers “using the value of the claims they are invested in”, rather than the value of their own investments, as a “metric of its own size”.

The funder compared this to an equity manager “touting” the total size of all the companies in which they were invested, rather than their own assets.

Burford added that if it participated “in that game”, it would “dwarf our competitors”, with a claim value for its portfolio of “many billions of dollars”.

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Whiplash reform: no financial links between claimant lawyer and expert

Whiplash reform: no financial links between claimant lawyer and expert

All medical reports for whiplash claims must now be brought under the MedCo system after it formally went live yesterday.

Users of the service – both those providing reports and those commissioning them – have been warned that it can take between five and 10 days for their applications to become authorised users to be processed if they have not done so by now.

Claimants will be given the choice of one “high-volume national” medical reporting organisation (MRO) and six smaller ones, or seven medical experts.

Among the features of a high-volume national MRO are the capacity to process at least 40,000 independent medical reports each year, that it has contractual arrangements with at least 250 individual medical experts, and at registration it has a minimum of five distinct clients, which are not associated organisations with the MRO, with none of them representing more than 40% of its total instructions.

The high-volume MROs will be charged £75,000 a year to be a member of MedCo, with other MROs charged £15,000, and individual experts £150.

Lorraine Rogerson, the independent chair of the MedCo board, said: “We would encourage users to sign up at their earliest opportunity to minimise any internal disruption to their service whilst we process their registration. We are also encouraging users to familiarise themselves with the entry criteria in advance to ensure registrations are approved first time round.”

One of the purposes of the system is to ensure claimant representatives do not have any direct financial links with MROs and medical experts. MedCo has cautioned them to check that their declarations of direct financial links are up-to-date “on a regular basis”.

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Eclipse2014 200x200Eclipse Legal Systems is implementing its Law Society Endorsed Proclaim Case Management Software solution at new start-up, McDermott Smith Law.

The Liverpool-based firm has been founded by Andrew Smith and Joseph McDermott and will focus solely on Personal Injury work.

Possessing a wealth of experience from larger firms, Andrew and Joseph took the decision to establish their own practice in order to offer friendly and expert advice, combined with truly individual client service.

As a new start-up within the Personal Injury sector, McDermott Smith Law recognised the need for a comprehensive and centralised software solution. The practice has selected Eclipse’s Proclaim Personal Injury Case Management system to ensure maximum productivity from its inception.

Furthermore, Proclaim will eliminate a number of administrative duties including document production, and will enable staff to focus on building strong client relationships.

In addition, McDermott Smith Law will benefit from Proclaim’s integration with the MoJ’s RTA and EL/PL Claims portals. Access from the desktop application will be 2-way, ensuring a quick and efficient method of processing cases and resulting in full compliance with the MoJ’s claims process.

Andrew Smith, director at McDermott Smith Law, comments:

“Joseph and I have both worked with Proclaim at previous firms so we knew when starting our own practice that it would provide us with a solid platform on which to develop and expand.

“The Personal Injury sector is incredibly competitive, and involves considerable volumes of document production. Implementing Proclaim means we can overcome these hurdles and benefit from high levels of automation, ultimately resulting in our time being spent on client relationships and business development.”

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Brindle: provision will lead to more successful strike-out applications

Brindle: provision will lead to more successful strike-out applications

Claimant solicitors have been warned that they need to review their retainers and advise clients about the implications of the new ‘fundamentally dishonest’ rule being introduced shortly.

Section 57 of the Criminal Courts & Justice Act, given Royal Assent on 12 February, will also shift the burden of proof and potentially discourage claimants with genuine claims, according to barristers at 9 Gough Square.

The section provides that if the court is satisfied, on the balance of probabilities, that the claimant has been fundamentally dishonest, it must dismiss the claim unless satisfied that this could cause substantial injustice.

Jeremy Ford, head of the set’s personal injury team, said that once the implementation date is confirmed, solicitors will need to consider whether their retainers adequately deal with a case being struck out on this basis, and will also have to advise clients on the implications for their funding arrangements should this happen.

More generally they will have to contact their clients to outline the new rule and what actions might be considered in breach of it.

9 Gough Square’s John Foy QC and Simon Brindle acted in the leading case on the term to date, representing the defendant in Gosling v Screwfix, in which a circuit judge ruled last year that a claimant who exaggerated his symptoms was fundamentally dishonest for the purposes of losing the protection of qualified one-way costs shifting.

Mr Brindle said section 57 will both reverse the burden of convincing the court to exercise its discretion regarding striking out the claim, and fetter that discretion: “Under the common law, it is for the defendant to convince the court to exercise its power; under section 57, the court must strike out unless convinced that doing so would cause the claimant substantial injustice.”

There will need to be court guidance on the meaning of ‘fundamental dishonesty’ and ‘substantial injustice’, he added.

“Defendants already have a very many number of weapons in their arsenal to attack dishonest and fraudulent claims. I consider that section 57 not only strengthens that arsenal but could lead to many more successful applications for claims to be struck out.

“As a result, perhaps now more than ever, claimant representatives need to be alive to the need not to present exaggerated claims. Will this, though, lead to somewhat speculative, but otherwise meritorious claims not be pursued for fear of a finding of fundamental dishonesty being made should the claimant not come up to proof? I fear it will.”

  • 9 Gough Square is holding a personal injury seminar on 30 April at which section 57 will be discussed.

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Clinical negligence: 18% rise in claims

There has been a huge spike in the number of public liability claims, and the number of clinical negligence actions has also risen sharply, new government figures have shown.

However, the number of motor claims has fallen by nearly 10%.

The Department of Work & Pensions’ compensation recovery unit (CRU) recovers the social security benefits paid as a result of an accident, injury or disease, where a compensation payment has been made, along with costs incurred by NHS hospitals and ambulance trusts for treatment from injuries from road traffic accidents and other personal injury claims.

All claims are notified to the CRU and its newly published figures for 2012/13 figures from the show that PL claims shot up 57% to 164,973, meaning they have nearly doubled in five years.

By contrast the number of employer’s liability cases rose a modest 4% to 91,115, roughly in line with the figure in recent years.

Clinical negligence claims saw an 18% increase to 16,006 in line with the continuing growth of such cases; in 2007/8, there were 8,876.

There was a fall of 78,934 motor cases – or 9.5% – to 749,555, three-quarters of which was accounted for by fewer whiplash claims, according to figures obtained by the Association of Personal Injury Lawyers last month as part of its submission to the government’s whiplash consultation.

Overall there was a marginal increase in the number of cases registered with the CRU to 1,048,309. It recovered £133m in 2012/13, the lowest figure for some years.

Commenting on the increase in clinical negligence claims, Ian Pryer, senior partner at specialist solicitors Axiclaim, said NHS hospitals must now brace themselves for an “explosion” in claims in the wake of the Mid-Staffs hospital scandal and Francis report.

He said: “In the past, victims of medical accidents often had moral reservations about claiming against the NHS, despite having clearly suffered extreme negligence in some cases, but the shocking findings of the Francis report have now made hospitals fair game in the eyes of the public.”

  • The Ministry of Justice has published the near-final protocols and forms for the extension of the RTA portal on 31 July to RTA claims worth up to £25,000 and to employer’s and public liability cases up to the same value. Click here to access them.


A golden opportunity for the ATE market to innovate

Enrique Gomez Head of ATE DAS UK Group

With the key judgement in the BNM v MGN case not expected until the end of the year, and decisions in the fixed recoverable costs arena not due until 2019, the after-the-event (ATE) insurance sector – already burdened by ever-changing regulation – is playing something of a waiting game. But this could be a golden opportunity for the ATE sector – the chance to take advantage of what might otherwise be a relative lull in activity period to set in motion a time of self-analysis and transformation, to develop plans for what the future of ATE insurance will look like.

July 16th, 2018