Tuesday, 21 March 2017

Concerning Discount Rates and a Donald Trump moment!

I have to confess to having a Donald Trump moment last night. And you won’t hear that very often!

I was so incensed on reading an article in the Guardian that I headed straight to Twitter.

Before I go on, here is the link to the offending piece –

This was all about the discount rate which came into effect yesterday. This is to do with the process for calculating how much compensation a severely injured victim will require to ensure that their care needs are met – often for life.

I wrote about this a few weeks ago and explained why it was so important to disabled people –

For many years, victims faced a real risk that their compensation would run out. This was because of the assumed return of 2.5% on investment of damages at a time when interest rates have been historically low. This situation could not continue and was rectified when the MOJ announced that the rate would be -0.75%.

The first problem with the misleading Guardian article is that it fails to explain any of this. They briefly quote the victim’s lawyers but then spend far more time bemoaning the impact on public finances. They do not mention at all, that the burden of care will fall back on the state if the damages run out.

The article then goes on to complain about the cost of motor insurance! So a person’s care package can run out years ahead of time, so long as drivers can get a small reduction in their insurance costs – a reduction that no one realistically expects to happen.

But what is most offensive is the lack of any information at all about the poor victim. We are told that she is a 10 year old with cerebral palsy. That is it. We know nothing about the extent of her disability, about what level of care she needs, about what her life expectancy is, about her level of intelligence – none of these merits a mention. But we get 7 paragraphs about the impact on car insurance.

The victim herself is irrelevant. She is not treated as a real person. She is just a statistic used for the venting of journalistic outrage.

Proper compensation can change a person’s life. I shared this true story two years ago –

This is the problem with justice. It is ultimately about real people.

These changes are designed to protect the most vulnerable in our society.

It is alarming that the mainstream media fail to or refuse to understand any of this.

Friday, 17 March 2017

Saving workers' lives is not 'red tape'

On December 2014, 25 year old Benjamin Edge was working on a roof in Ramsbottom near Bury. He fell from the roof, suffering catastrophic injuries from which he died shortly afterwards. He had been working at height, in windy conditions without any safety equipment.

Following the incident Benjamin’s work colleague placed harnesses nearby so that it would look like the fall was Benjamin’s own fault. His bosses James Brown and Chris Brown later forged Risk Assessments to make them look that they has been done earlier.

Some justice was done yesterday when the Browns were jailed for 20 months perverting the course of justice. The work colleague was given a 4 month suspended sentence.

Mr Edge’s accident was avoidable. If his employers had paid more than lip service to Health and Safety Regulations he would not have fallen to his death. This is why these regulations exist. They are there to save lives and to avoid workers suffering injuries whilst doing their job.

Some politicians and the media continue to refer to Health and Safety as if they are dirty words. Back in 2012, former Prime Minister, David Cameron pledged to kill off the health and safety culture for good. He declared the regulations to be 'out of control'.

The reality is that many lives have been saved because of a shift in thinking which has put workers safety at the top of the agenda. Those who criticise Health and Safety confidently quote fictional stories to try and show that regulation has gone too far. Following Mr Cameron’s comments, the Health and Safety Executive published the Top 10 Myths – stories that regularly appeared in the media but which were entirely fictitious –

Protecting workers from injury is an expensive exercise. Steps have to be taken and costs have to be incurred which can impact on profits. But in a modern society the safety of those who go out to earn a living must be a priority. A young father should be able to go to work in the knowledge that he will be safe. Employers who flout the regulations should be punished.

I hope that as a result of this tragic case, the message is heard loud and clear.

Health and Safety Regulations are not simply inconvenient red tape. 

They exist to save lives. 

Monday, 27 February 2017

MOJ announcement is Not about 'more' - it is about right!

Today was one of those peculiar days when a piece of news sent some lawyers rushing to their laptops to share one of the most exciting developments in recent years. Some were happy, some were angry but nobody ignored it. It was one of those announcements that was of great interest to lawyers, insurers and possibly accountants. The rest of the world would happily have let it pass them by. They would probably wonder what the fuss was about.

This was the news that the discount rate on damages is to be reduced from 2.5% to -0.75%.

It has led to some shockingly poor reporting from some quarters – particularly the BBC. It is not clear whether the misleading stories are based on a one sided sympathy for insurance companies or whether it is simply a lazy way of reporting a story that is important if not well understood.

It looks like a story about people getting more damages and our car insurance premiums going up. In fact it is all about bringing common sense to a formula that has been used to reduce compensation payable to victims of the most serious injuries.

So what is it all about? Here is a very oversimplified example.

Alan, who is 45, has an accident at work. He is so badly injured that he will never work again. He earns £20k a year and would have worked to 65. So he has lost 20 years earnings at £20k. But if he wins his case he does not simply get 20 x £20k - £400k. Because that would not be fair on the insurers who pay the damages. Alan would be receiving money now that he would not otherwise have earned for many years. If he was to put that money on deposit, it would earn interest and he could end up with a lot more that £400k in 20 years time. So the number of years that he actually receives is calculated by reference to what his money might be worth at that time. Under the current rules the assumption has been that the money would earn 2.5% per annum. A victim is assumed to place the money in sensible, safe investments. This significantly reduces the amount of any lump sum that the insurers pay out. The £400k will be discounted to less than £350k - the idea being that he ultimately ends up with his £400k. There are complex tables used by lawyers to help with the maths.

So far so good, so long as compensation earns 2.5% per annum, the rate that we have had for 16 years. But in reality we have not had interest rates of that sort of level for years. The current Bank of England Base Rate is 0.25% per annum. It hasn’t been 2% since 2008. So Alan is in fact worse off if the payment he receives would not get him to £400k in 20 years. This is why the rules have had to change. And this is why the rate announced today, is the right one.

In Alan’s case we have talked about earnings. The issue is even more important for victims who need to be looked after for many years. Let’s say Alan is so badly disabled that he needs constant care for the rest of his life. If the amount of compensation is not calculated properly, the money could run out in the future with catastrophic consequences. In fact it isn’t as simple as that but you get the point!

The differences will be significant. This table from NESTOR is helpful. Under the current rules £100k a year for 10 years will cost defendants £886,000.00. When the new rules come in on 20th   March they will pay £1,038,000.

But today’s announcement is not about people getting more money. It is about victims getting the right money. Insurers and their media friends complain about the cost. But in fact, victims have been under compensated for years.

You will not often hear me support the current government. But on this issue that have it right and have removed an injustice that has affected victims of negligence for years.

Wednesday, 8 February 2017

Responding to the Fixed Costs Consultation - in the real world!

One subject that is going to exercise lawyers seeking justice for victims in 2017 is Fixed Recoverable Costs or FRC to its friends. The process has already begun in earnest.

Last week saw the publication of the Consultation Paper from the Department of Health on the extension of FRC to clinical Negligence cases claims up to £25k (Why is the DOH deciding how much they should pay in legal costs to victims of its own negligence?) 

I have published a brief summary of the main points on LinkedIn –

Under the proposed scheme costs payable in a case that settles pre issue will be a maximum of £4k and issued cases that settle post listing will result in maximum costs of £9k. The biggest surprise is that cap on experts fees at £1200 for all reports on breach of duty, causation, condition and prognosis. The good news is that the scheme will not extend to all cases up to £250k – at the moment. The NHSLA is thought to prefer an extension to cases up to £100k. On the basis of the options set out in the consultation, firms that act for victims will face significant challenges.

The date for responses is 1st May 2017 and work needs to begin now. In addition, Jackson LJ is working on a report on FRC generally. He began his fact finding road trip in Leeds yesterday and will report by the end of July. He is known to favour an extension to all civil cases up to £250k.

So here are some thoughts on possible responses now that the dust has settled a little.
I think we have to be realistic and accept that we are going to see the extension of FRC to Clinical Negligence and other types of litigation. 

Jackson has nailed his colours to the mast. Indeed his terms of reference are – to develop proposals for extending the present civil fixed recoverable costs regime in England and Wales so as to make the costs of going to court more certain, transparent and proportionate for litigants and  to consider the types and areas of litigation in which such costs should be extended, and the value of claims to which such a regime should apply.

Note that his brief assumes that there will be an extension of FRC.

Fixed costs themselves are not necessarily a bad thing. In fact they can produce good returns for those who work quickly and efficiently. They also introduce a level of certainty and reduce the likelihood of expensive costs litigation.  Commentators including Kerry Underwood have been saying this for years –

Like it or not I think we must accept the inevitable. This is why I don’t think that a response to the Clinical Negligence Proposal should oppose the idea altogether. That will a bit like hiding in a tent to escape an avalanche.

But we should still respond robustly, particularly in relation to the payment options. Table 3 in the Consultation (Page 16) is flawed. This summarises claimant’s legal costs as a % of damages from 2013/14 – 2015/16. Those cases will include many – possibly a majority that pre-date LASPO but have concluded after 2013. So the figures are skewed by those cases where the NHS paid out success fees and fully recoverable ATE Premiums. If an analysis is limited to cases begun post LASPO then the comparison is bound to be less stark. So the first thing we need to do is come up with a realistic assessment of costs as a percentage of damages once those additional liabilities are stripped out. Those who do a lot of Clinical Negligence work should also look at their own cases and suggest realistic alternatives based on their experience.

Kerry Underwood has done a similar exercise in relation to FRC generally –

His calculations come up with significantly higher figures than the DOH. A measured, carefully calculated response is more likely to be effective than a simple rejection of the idea altogether.

We all face months of uncertainty. Could the Clinical Negligence Consultation be torpedoed by Jackson in July? But that does not mean we can sit back. There needs to be a carefully co-ordinated response focussing on realistic payment for the work required to secure justice for victims. 

It is encouraging to see that Leeds Law Society has made a start –

Wednesday, 21 December 2016

Christmas, homelessness and Joe Strummer

I normally send my Christmas cards for re-cycling after 6th January. But one which I have always kept is the one with the image of the late Joe Strummer from The Clash giving to a homeless person in New York.

There is something particularly poignant about homelessness and Christmas. The classic nativity story is about a young couple with no place to go. Whatever one’s religious view the story of Jesus is inevitably wound up with the homeless and dispossessed, as seen in this sculpture from Timothy Schmalz which will shortly be arriving in Manchester.

All of which leads us to a story in this week’s Guardian about homelessness and access to justice

Huge numbers of people are losing their homes because they cannot get access to lawyers to help them challenge evictions. There has been a chilling rise of 53% in the number of evictions in the rented sector since 2010. These were the cases that got as far as eviction by bailiffs –

Whilst there can be many different reasons for evictions, it is becoming clear that many could be avoided if tenants were able to obtain affordable legal assistance to challenge the action taken. There has been a decline of nearly one fifth in those cases where challenges are made. The decline is attributable to a combination of factors including –

‘Deep cuts to other forms of housing legal aid introduced by the Legal Aid, Sentencing and Punishment of Offenders (LASPO) Act 2012, bureaucratic obstructions and poor hourly rates have progressively driven most lawyers specialising in housing out of the market, leaving few practitioners.

It is the starkest evidence of the legal advice waste land that has been growing since 2013. 

Technically legal aid remains available to someone at risk of losing their home. But if the root cause of the problem is an issue such as benefits claims then there are fewer opportunities to ‘nip problems in the bud’. 

It is often too late to save the day by the time the tenant gets to see a lawyer. A justice system which focusses only on the last minute crisis is of little benefit to anyone.

This is a time of year when many people do great work giving up their time and money for the homeless.

But one thing we must resolve to do for the New Year is to all in our power to ensure that not one person finds themselves on the street because they could not find a lawyer to help them.

Tuesday, 13 December 2016

Responding to the MOJ Small Claims Proposal

Responding to -  Reforming the Soft Tissue Injury (Whiplash) Claims Process. 

This is perhaps the most misleading title to a consultation in the history of misleading consultations! It is obvious to anyone who has read it that it is really the biggest attack on access to justice for accident victims that I have seen in my 30+ years of practice. For anyone who has been on another planet in recent weeks, it includes the proposal to move all personal injury claims into the small claims court if they have a value of up to £5k. This in turn means that successful claimants pay their own legal costs even if they win.

These are some of the points that we have made in relation this wide sweeping proposal. I am limiting comments here to the general issue of small claims. These may help others in drafting their response–

1.     The general small claims limit is £10k. Personal injury claims were always treated differently. But this means that if a victim has a personal injury claim valued at say £4750.00 and vehicle damage at £5k this will be a ‘small claim’. This is equivalent to about 2/3 of the annual take home pay of a person who is ‘just about managing’ on the living wage. This is by any reckoning a significant sum.

2.     Paragraph 100 argues that legal assistance is not essential because there is help and support available for litigants in person. This may be so but is in fact little comfort to litigants who are trying to work their way through the complex maze of the CPR in a very alien world. It does not help them obtain appropriate medical evidence. Nor does it assist them in their dealings with highly sophisticated claims teams or the top end law firms who will inevitably be instructed by insurers.

3.      The consultation says that there has been no increase in the limit for 25 years. A quick visit to the Bank of England’s Inflation Calculator shows that in today’s figures the £1k limit from 1991 is now worth £1936.50. So an increase to £2k might be justifiable. A 500% increase is neither rational not justified,

4.     Paragraph 17 of the consultation argues that moving cases to the small claims track ‘would mean that claimants would now have a direct financial interest in decisions about pursuing their claims in that they would be responsible for their own costs’. This was exactly the same argument that was used in 2013 to justify removal of the right to recover success fees from the losing party. Claimants have a stake in the claim already. They stand to lose up to 25% of their damages for injury and past losses. They will also have to pay for any insurance out of their damages. Claimants who can recover no legal costs against someone who negligently injures them simply cannot afford to pay for legal costs that would at least wipe out the value of the claim. Either they will not bother or they will act in person, with all of the complications which that can bring.

Two other general points are worth a mention. Kerry Underwood has pointed out the serious error in the consultation in relation to the suggestion that a claimant should need permission to discontinue a claim within 28 days of trial or risk having to pay other sides costs – something which is already provided for in the rules –

It is also worth persevering to page 78 and paragraph 6 which invites views on the assumption that 85% of savings will be passed on to consumers! One wonders why this final piece of humour is buried right at the very end of the document.

I would encourage everyone to respond. It is highly unlikely to make a great difference to politicians who do not want to listen. But that does not mean that we should not make ourselves heard as loudly as possible.

If anyone would like a copy of our answers to the consultation question please let me know. The more responses the better!

Friday, 9 December 2016

Let's get Law Students to fill the justice gap!

One consequence of the cuts in Access to legal advice has been the growth in the number of DIY litigants, those who represent themselves in court because they cannot afford to get anybody else to do it. I can remember when a Litigant in Person was a rare phenomenon, often a person who had fallen out with a series of legal advisers. Everything has changed. The numbers are growing by the day. We all knew that such litigants had become a major feature of our courts’ system when they became LiPs. Once you have an acronym you have arrived!

The problem is that for most people, our justice system is a strange and scary world. 

This leads to litigation which takes longer, is less certain and which carries a far greater risk of injustice. That is particularly the case where one side, say an insurer in an accident claim, is represented by top lawyers and the other side is battling alone. In view of the recent proposal by the government to bring most accident claims into the small claims court, we will see an explosion of LiPs.

The problem has been highlighted today by Lady Justice King who referred to a case involving litigants in person and which saw a - ‘slew’ of emails from both parties to the judge and the court, which made the case ‘nearly impossible to case manage effectively’

She called for there to be powers to curb the activities of such litigants. There is a risk that out justice system could become log jammed and ultimately a laughing stock.

The need to address this is recognised by most lawyers and judges. 

One of our most senior judges talked about the problem earlier this week. Sir Terence Etherington, Master of the Rolls acknowledged the real need to improve access to justice in the face of deep financial cuts. His suggestion was that law graduates could fill the gap. He called for a joint initiative involving universities and pro bono agencies enabling students who have passed their exams to assist litigants in person. 

‘They would do so as trainees registered with the university or pro bono advice centre, but only following training akin to that already given by such organisations. And they would be supervised by lawyers – permanent employees of [advice centres] or other lawyers provided pro bono by law firms or chambers.’

This sounds promising, but in reality it is a hopeful fantasy. Universities already do a sterling job trying to fill the justice gap. One such initiative is the Legal Advice Clinic run by Liverpool John Moores University. They provide free advice in relation to Family, Employment and Wills/Probate. The students provide a high quality service with help from volunteer lawyers. It is a demanding project. Students have to be carefully trained and supervised. Resources are stretched to the limit. To suggest that they could take on full responsibility for advising hundreds of litigants in person is simply not realistic. This is not to diminish the value of law students. We have all been there. Even Lord Pannick QC was once a student! But they and their teachers cannot be expected to fill the massive gaps in access to advice. Not without far greater resources. Those resources could just as easily go to funding established advice agencies.

Universities will do what they can.

Pro Bono lawyers will do what they can.

Underfunded advice agencies will do what they can.

But until justice is seen as a political priority we are really just maintaining the deck chairs on a sinking ship.