Maria Penny (Associate & Personal Injury Solicitor)

It was reported this morning that scaffolders tried to claim thousands in compensation after a council van collided with their lorry – at less than 2mph. The full article can be read here.

Low velocity is an argument raised frequently in road traffic cases.  It essentially means that the speed of the collision was not sufficient to have caused injury to the occupants of the vehicle.

Such arguments are based on ‘studies’ carried out in controlled environments and each case will turn on its own facts.

What would injure you may not injure me and each claim must be considered carefully.  In this case it seems the claimants’ account of the injuries and losses sustained were found to be false and therefore the claims failed.

Costs orders will inevitably follow if a claimant is found to be untruthful therefore in a case involving arguments of low velocity it is imperative that you know your client/your case well.  GP records, a detailed statement from the client, witnesses, friends, and family confirming the injuries sustained, effect on daily living and any damage sustained to the vehicle, however minor, will all assist in establishing whether your client’s/your claim has merit and is likely to succeed.

Maria Penny (Associate & Personal Injury Solicitor)

The proposed changes with regard to abolition of success fees and payment of costs out of damages will benefit no one but the insurance industry.

The same are, to my mind, intended to placate the insurance industry and are not intended to increase or ensure access to justice.

Litigation is, certainly in cases I deal with, a last resort and is never entered into lightly.  Cases without merit are not freely litigated and a careful assessment of the risks should always take place as it is the solicitor concerned who takes the risk on behalf of the Claimant.

Litigation usually arises as liability is in dispute and the parties cannot reach agreement or, as in most cases I suspect, due to the fact the insurers fail to respond in good time.  This in itself drives up the costs of litigation and it is interesting to note that the insurers do not count their own failures and apathy as being a valid reason for legal costs increasing year on year.

Success fees are not routinely granted at 100% and are often fixed.  For example in an RTA case settling before trial the success fee is limited to 12.5% which is hardly extortionate bearing in mind the risk associated with litigation. Removing this and implementing 10% increase in damages is an insult to all Claimants.  It is akin to the contingency fee agreement and would not adequately raise damages to account for the litigation risk associated with most cases.  Why should the insurer avoid the risk and why should the innocent claimant (in the event the claim is successful) lose out? Who does this benefit if not just the insurer?

I have several cases proceeding against a well known insurer who flat out refuse to negotiate settlement.  They have admitted liability, made on offer of settlement deemed too low and despite my continued attempts to negotiate settlement with them they refuse.  I have also taken the step of insisting that their legal advisor confirm they are aware that if the matter proceeds to disposal (which counts as a trial for success fee purposes) they will pay 100% success fee on our base profit costs.  This is even if we fail to beat their part 36 offer.  It is clearly in their interests in a case such as this to try to negotiate rather than bear their own fees for counsel etc and then pay the Claimant’s fees at conclusion. 

The Courts also have the power to assess costs and consider conduct when doing so.  If they feel a case is issued prematurely the costs can be reduced and limited therefore it is not the case that a Claimant can issue proceedings and recover substantive costs when doing so.  I recently appeared before a DJ on behalf of a Claimant for disposal, the Defendant did not attend and was not represented despite being informed throughout of the stage of the claim.  The DJ in that case reduced the Claimant’s legal fees significantly despite there being no opposition to the same.  Successfully recovering all legal fees is not an easy task and in most cases the same are scrutinised if not by the Defendant then by the Courts.

Clearly the insurers are to my mind the authors of their own misfortune yet they routinely refer to the ‘compensation culture’ as an excuse and reason for spiralling legal costs.  They should look closer to home to find the reason costs often exceed the value of the claim.

Maria Penny (Associate & Personal Injury Solicitor)

I read yesterday that a  company has been fined after one of their workers suffered acid burns to his face and neck as he tried to unblock a sink. The full story can be read here.

Every employer is under a duty to ensure that risks are assessed and that adequate training is provided to employees.  Clearly in this case the necessary risk assessment was not conducted to ensure Mr Kelly was carrying out his duties in a reasonably safe manner and furthermore the clothing he was provided with was completely inadequate considering he was working with sulphuric acid.

Whilst we all have a duty to take reasonable steps to ensure we do not unduly expose ourselves to risk it is difficult to see what Mr Kelly could have done in this case, he used the paper overalls provided and presumably carried out the task in the usual way.  What is clear is that his employer did not ensure that he was carrying out the task safely by providing adequate training and failed to protect him, where possible, by providing suitable overalls.

We all know that accidents can and do happen, and whilst I am not advocating a ‘nanny state’ simple steps must be taken to protect us all where possible at work.  Had the company concerned carried out a risk assessment, provided training and suitable clothing the accident may have been prevented or at the very least Mr Kelly’s injuries may have been less severe.  Such steps do not cost very much to carry out and certainly would amount to much less than the fine levied by the HSE and any additional costs which may follow from a civil claim for personal injury.

Maria Penny - Personal Injury Solicitor

In repsonse to the Law Society Gazette article Personal injury solicitors rebuff ABI claims over ‘excessive’ costs

I am astounded at the comments made by the ABI.

The entire system of handling low value RTA cases has been overhauled so as to implement a fixed costs system which will not take account of “claims management companies… racking up high legal costs”.  If a claim is worth less than £10,000 to include general damages (the compensation for the actual injury) and special damages (other financial losses excluding vehicle damage) and settles without the need for litigation base profit costs have been limited to a nominal figure agreed following consultation between Claimant representatives and the insurance industry. 

We have all had to change our system of work to accommodate the new process to include in most cases new IT systems and staff recruitment/retraining. The cost of the same has not been recoverable and has had to be swallowed by individual firms at a time when some practitioners are struggling to survive.  I would not be surprised if the cost of updating their own systems and processes is a factor which has driven up premiums.

It is interesting to note that the ABI do not refer to the actions of insurers which materially contribute to the “high legal costs”, such as failing to respond or failing to make a reasonable offer of settlement, whether in time or at all, which essentially forces the hand of the Claimant to commence litigation. 

As stated by John Spencer, this is old news and all low value claims (for accidents occurring on or after 30^th April 2010) will now proceed via a new process accepted by the insurance industry following consultation.

Maria Penny (Personal Injury Solicitor)

Henry Engelhardt, head of Admiral, recently commented that the insurance group had increased motor premiums by 12pc over the last year to “compensate for claims inflation”. He also predicted that the trend would continue this year.

However, it is also noted that premiums are likely to rise due to comparison websites, which give the consumer access to cheaper prices without the hassle of telephoning different insurers direct.

It should not be forgotten that we have also seen one of the worst winters in many years which will undoubtedly have led to accidents which will not always have involved personal injury and year on year we see many claims involving uninsured and untraced drivers which has a knock on effect on the costs for the insurance industry.

Those who sustain injury and loss as a direct result of someone else’s negligence are entitled to be compensated so they are essentially put back in the position they were in before the accident, where possible.

A protocol governs claims for compensation so as to keep costs to a minimum yet compliance with the protocol, often on the part of the insurer, is usually an issue in most cases.  It is interesting to note that Mr Tarling thinks costs should be reduced yet he does not seem to want to address the real issue of compliance with the protocol, early disclosure and the speed at which claims are handled by the insurers.  If these issues are addressed by the insurers I have no doubt costs will be reduced.

Of course there is also the new claims process due to come in to force at the end of April 2010 for all Fast Track (up to £25,000 in terms of value) claims which the insurers vehemently fought to bring in which provides for fixed staged costs payments in response to the insurers’ calls for costs to be reduced further.

I am not sure what else can be done to pacify the insurance industry without seriously jeopardising an individual’s right to compensation.

Maria Penny (Personal Injury Solicitor)

The Jackson review and report is not, as yet, law but the report highlights several areas likely to be subjected to reform.

The main areas of concern for a Claimant are the suggested ban on recoverability of success fees from the opponent. Under the current scheme when a party enters in to a conditional fee (or no-win no-fee) agreement and succeeds in their claim the success fee or uplift is added on to the costs claimed from the opponent. The new proposals envisage the success fee being recovered from the Claimant. This would mean that the Claimant would lose part of their damages to pay the success fee, which it is suggested should be capped to no more than 25%.

These proposals whilst on the face of it may not seem too radical do, in my view, leave Claimants exposed to costs risk unnecessarily. The idea of deducting costs from damages is akin to the contingency fee agreement system. The recoverability of success fees from opponents was introduced to ensure those with limited financial means could pursue an action without costs risk and to essentially prevent claims being defended without merit or on matters of principle. By removing this risk from the Defendants there could be a sharp rise in cases being defended rather than settled which essentially goes against the principles of the Civil Procedure Rules and the pre-action protocols. There would be no real costs risk to the Defendant save for their own costs which is the position in any case.

In an attempt to lesson the blow to Claimants in personal injury claims it is suggested that general damages figures be increased by 10% to account for the success fee risk. I am not convinced this would resolve the issue or assist the Claimant as it is often difficult to agree damages at an appropriate figure with offers usually coming in several hundred pounds below what a claim is worth, leaving the Claimant with the difficult choice of whether to issue proceedings, thereby increasing costs in any event. Recent case law regarding part 36 offers and whether a Claimant has acted reasonably in rejecting the same and proceeding to a final hearing or issuing proceedings are of real concern as essentially, a Claimant can be held to have acted unreasonably in rejecting an offer then recovering a sum a few hundred pounds above that offer.

The proposals refer to fixed fees across the board for all Fast Track cases and does not limit reference to Road Traffic Accidents. It is difficult to see how realistically fixed costs can be rolled out across the board whilst still ensuring it is viable for solicitors to deal with such claims and still effectively stay afloat and make a profit. Claims may be ‘cherry picked’ by solicitors leaving those with claims involving risk exposed and possibly without legal representation. It is all too easy to look at charts and figures across the board and say that costs are too high and refer endlessly to proportionality as being key but little emphasis is placed on the conduct of parties which in most cases is the sole reason costs escalate, whether for example, due to failure to respond in good time or disclose documentation. Also the new fixed fee procedure for RTA work does not come in to force until April 2010 therefore it is perhaps a little premature to suggest fixed fees for all Fast Track cases.

There is also the suggestion to abrogate After The Event insurance policies. An alternative method of costs shifting is referred to for those who merit protection against adverse costs orders, i.e. those of limited means. Essentially the Claimant, if they lose, will only make a nominal contribution towards the Defendant’s legal costs but this again leaves the Claimant unnecessarily exposed. I do not think this is the answer and note that in any event the Court has the power to limit costs recovery and use the various rules within the CPR to do so. The level of insurance policies is open to challenge in any event therefore I am not convinced simply abolishing them is the way forward, certainly not, if as his report suggest, access to justice is the driving force behind the review.

With the election looming it will be interesting to see whether, and if so when, the recommendations will be implemented and ultimately the overall effect on access to justice.

Maria Penny (Solicitor)

Following on from my previous comment, found here, I am concerned about access to justice as some firms may decide not to deal with straightforward claims with a value of less than £10,000 where liability is admitted.

In the alternative claims may be dealt with by more junior members of staff who may undervalue claims meaning more supervision would be required, the cost of which would not be recoverable.

This could ultimately lead to more instances of third party capture, which may lead to claimants receiving less favourable compensation awards without any option of redress against the insurer.

It takes time to build a case and obtain the relevant evidence and the costs proposed are woefully low and in reality are clearly of benefit to the insurance industry only not the claimant.  Claimant solicitors cannot provide a quality service for the sums proposed as the same do not allow for detailed investigations to be carried out and may encourage a slap-dash claims farm culture to develop.

It is also disappointing to note that unlike the current predictive costs scheme, hire and repairs are not to be included for the purposes of valuing the claim but can still be claimed by those acting for the innocent party.  This will undoubtedly mean that those firms dealing with hire and repair claims are likely to suffer financially as such claims are often disputed and contested and many hours can be spent dealing with the same, time which under the new procedure will not be recoverable.  This could mean that in straightforward cases solicitors may not deal with claims for hire and repairs and leave the same to the claimant’s insurers, a move which will simply increase the workload of the insurance industry.

I also note claims involving employers’ liability and public liability are not covered within the scheme which I would assume will mean claims for those injured on public transport where the driver of the vehicle is at fault. The new scheme does not cover the entire spectrum of RTA cases and I would therefore have to question the need for the review and indeed the new scheme as a result.  

A protocol already exists for personal injury claims and the previous predictive costs scheme was introduced to ensure claims were dealt with swiftly.  In reality the predictive costs scheme means many firms are already operating at a loss as the scheme from experience does not encourage early settlement on the part of the third party insurer and relies solely on the value of the claim for the purposes of costs calculation.

Under the proposed scheme the matter will leave the scheme if causation is disputed however the suggested wording for an admission as set out in paragraph 3.1.9 suggests that an admission raising causation is acceptable, either liability is admitted or it is not.

I still remain sceptical as to whether the scheme will work and I also note the lack of sanctions if third party insurers fail to adhere to the same.  Currently the matter would simply revert to the predictive costs scheme which, as stated above, does not encourage early settlement.

Maria Penny (Solicitor)

Insurers’ ads to increase over Christmas

Last weeks Law Gazette featured an article on the increasingly controversial subject of Third Party Capture.

The article, Insurers’ PI push, reported that insurers are launching ad campaigns to persuade motorists to “bypass Solicitors and deal directly with the responsible party’s insurer.This is an area of growing concern as essentially the insurance industry may seek to exploit those who are involved in accidents so as to ensure they can settle claims quickly and for as little as possible.

It is no secret that an insurance company has an obligation to their insured to keep all payments on the policy to a minimum and ultimately this will result in claimants being left out of pocket. This will often take the form of an early offer designed to tempt the claimant to accept for the sake of a quick payout but the insurer is unlikely to consider the costs of care and assistance, loss of earnings, prescription charges or other out of pocket expenses within the initial offer. Therefore what may seem to be a fair offer may, in reality, be the opposite.

I am contacted regularly by insurance companies to discuss whether my clients would be willing to consider settling their claims without the benefit of medical evidence and I know this is a tactic often adopted so as to keep costs down. This is dangerous territory and claimants should be wary as once settlement is reached the claim cannot be reopened at a later stage even if their injuries are later found to be more serious than originally thought. I have acted for claimants who were originally thought to have suffered soft tissue injuries only but, following investigation, were found to have sustained far more serious injuries (and in some cases have later required surgery) therefore I would advise every claimant to see an independent medical expert before considering settlement.

The FSA need to act quickly to ensure that regulations are implemented to govern the conduct of the insurers and to ensure the claimant in each case would have a right of action as against the insurer in the same way they would against their solicitor for professional negligence.

Most claims can be dealt with on a no-win no-fee basis and there is very little risk, if any, to a claimant instructing a solicitor and I would strongly advise anyone injured to seek independent legal advice so as to ensure they receive adequate compensation and impartial advice.

If you wish to discuss the above or if you have been injured and wish to discuss your options contact one of our team today.