Swift response

Defendant: lack of clarity leaves profession in state of flux

The government's recommendations form a compromise recognising some of the concerns that users of the court system raised in their responses to the consultation. It remains keen that its response should be read in conjunction with the legislation presently proceeding through parliament but practitioners will be relieved that some of the more controversial proposals for changing the civil justice system have been shelved, or postponed for further consultation and evaluation of the existing system. Insurers are likely to be disappointed that some of the more radical proposals will not be proceeding. Undoubtedly the remaining changes will still have an effect on solicitors and insurers dealing with personal injury and other claims, but they will not be as revolutionary as they looked to be from the original proposals.

Most commentators have picked up on the increase of the small claims limit to £10,000 but what may have been missed by practitioners is in the small print and applies to business-to-business disputes. There is a proposal to change CPR 26.7(3) so as to allow 'suitable cases' with a dispute value in excess of £10,000 to the small claims track without needing the consent of the parties. It will be interesting to see how these cases are defined and the types of dispute the judiciary choose to allocate to the small claims track.

Also, the government has backed away from recommending a change to the fast-track limit '“ a rise to £35,000 was rumoured '“ in light of respondents being 'evenly divided' about the idea. There is no review date for an increase in the fast-track limit.

Tackling costs

The question of fixed costs was also raised but no recommendations have been made. The government has expressed a strong desire to extend the fixed-costs regime and there will be further discussions with relevant stakeholders to see how the system can best be extended. The overall ambition is to bring in higher-value claims into the fixed-costs system and also to extend it across a broader range of personal injury claims. The majority of respondents favoured a tariff of costs reflecting the value and complexity of claims.

Continuing with the theme of how best to tackle costs, the government took views as to whether the RTA PI scheme ought to be extended and also whether the portal scheme could be extended into other areas of personal injury work.

While the majority view was that the portal scheme works and that in principle it should be extended, given that it was only introduced in April 2010, further data is needed as to its effectiveness. The government therefore recommends increasing the limit on RTA claims to £25,000 but that there will be a 'final impact assessment of the proposed extension'. Interestingly, 75 per cent of respondents favoured extending the financial limit to £25,000.

Controversially, the government had consulted on extending the portal scheme to employer's liability and public liability cases. It has now recognised the concerns of many, particularly in relation to public liability cases where causation and contributory negligence can be a tricky issue for defendants to respond quickly to claims lodged, and will therefore liaise with stakeholders on this issue.

Alternative solutions

Alternative dispute resolution (ADR) and mediation featured highly in the consultation but the initial proposals have been watered down. Small claims track cases will not be referred to a mandatory mediation but there will be 'a requirement to engage with a small claims mediator'. At the moment this is a woolly suggestion. One difficulty is that we do not know who will be providing the service: an in-house mediator via HMCTS, civil and commercial mediators or a combination of both? And who will pay for this?

It is further suggested that in the first instance those whose cases have a value of £5,000 or less should be the guinea pigs and it is only when the system is up and running that cases with a higher value should be fed in.

The majority of respondents to the consultation were also against the proposal to introduce compulsory mediation information sessions in higher-value cases. However, the government believes that there is a lack of knowledge in the legal profession as to the use of ADR and mediation. While I am sure that the majority of the profession would disagree with this statement, nevertheless the government intends to work with the Law Society 'to explain whether mediation or some other ADR procedure may be more appropriate than litigation'. No doubt there will be some kind of education exercise conducted in due course.

Respondents were divided over the suggestion that mandatory pre-action directions may assist in keeping claims proportionate and cost effective. All insurers and the majority of mediation providers supported this proposal; all the judiciary and the majority of the legal profession were against it.

However, another argument won the day, for the moment, which is that many respondents felt that the pre-action protocols were sufficient to ensure good behaviour on claims. Therefore, the government is not proceeding with this suggestion and will instead turn its focus to pre-action protocols to ensure that they provide the most streamlined and cost-effective process possible.

While the government may proclaim that it wishes to bring these changes in as soon as is feasible, believing that they 'will bring benefits both to individuals and business, creating further opportunities for disputes to be resolved at less cost, and, in many more cases, earlier, without the stress often associated with a court hearing', it is clear that a lot of work is needed before several of the proposals will be brought in with many more consultations with stakeholders. One cannot see many of these proposals coming into effect any time soon. As a result, the profession, like it has been with the Jackson reforms, is left in a state of flux. The sooner we have some certainty as to what new proposals are to be brought in and when, the better.

Nichola Evans is a partner at Browne Jacobson LLP (www.brownejacobson.com)

Claimant: extending tick-box litigation at the expense of fair

The government has proposed yet more changes to the civil justice system in response to its Solving Disputes in the County Courts consultation.

It now intends to double the small claims limit to £10,000, essentially barring recovery of legal costs within this limit. The idea appears to be that for such cases there will be an automatic referral to telephone mediation, presumably in an attempt to allay fears that the court systems would become swamped with litigants in person. This limit might be further extended to £15,000. Money claims would also now need to be over £100,000, as opposed to over £25,000, to be issued in the High Court rather than in the county court. However, the government did not change the small claims limit in relation to personal injury cases which remains at £1,000 '“ perhaps by way of compromise following the proposal to extend the new claims regime and much criticised online portal currently used for injury claims with a value up to £10,000 following road traffic accidents.

Not long before the online portal and new process was introduced in April 2010 I expressed the view that quick settlements are not necessarily the best settlements and feared that such would lead to the under-settling of cases to the benefit of the insurer industry (see Solicitors Journal 154/15, 20 April 2010, 'Mad rush').

Since its introduction insurers have generally favoured the portal because of the cost savings to them in the longer term, although many cases do fall out of the regime where the insurers are not able to meet the requirements of such swift responses. The portal system may sound modern and relevant in this era of social media and the internet, but the portal itself is surprisingly unsophisticated, extremely rigid and is frustrating for both claimant and defendant to operate.

The government also stated that there would be a review of the new claims process and online portal for road traffic accident cases, and that following this review it intends to increase this limit to encompass cases with a value up to £25,000. Given that many claimant lawyers believe the government's response to the Jackson proposals was not a true consultation, they will fear that such a decision has already been made regardless of the findings of any review of the current system.

Despite the perception of the compensation culture, injury awards in England and Wales are low. In 1999 the Law Commission recommended that general damages be increased by at least 50 per cent, which has never happened. For an award of damages amounting to £25,000, this could include people with moderate spinal fractures or multiple broken limbs as well as complex psychological injuries. By increasing this limit the complexity in dealing with such cases increases significantly and one must remember that this portal was meant to cover low-level soft tissue whiplash-type cases, which is what its protocols were designed, albeit badly, to deal with.

The response is silent on what will happen in relation to costs within this new regime from a claimant perspective. Many believe that such cases cannot be run to any degree of reasonable skill for the current costs that the new claims process attracts. When the costs of this process were negotiated between stakeholders, many claimant lawyers felt let down at the result agreed by their representatives. The discussions revolved around what would be required in such cases, and from there looking at the time it takes to go through the differing tasks required to bring such cases to a conclusion and calculate a cost that could be agreed.

Staggering naivety

The talk in the past year is that the current costs of the new claims process are disproportionately high. This is simply not the case when you consider the time and work involved in each case. Jack Straw has been particularly vocal, stating several times that the portal costs need to be at least halved, without any understanding as to how the fee came to be and the significant delight that insurers had once these costs had been negotiated and agreed to. Straw has made comments that such cases cost claimant solicitors only around £100 to run. This naivety is staggering and the logical fallacy spouted has centred on some firms paying referrals fees as evidence that the fee is too high. The cynical claimant lawyer may see this rhetoric on the costs permitted under the new claims regime as being the precursor for a rationale that costs will stay the same but would include cases up to £25,000. Such a regime will be a significant attack on the law of tort in England and Wales and would see claimants having poorer representation and without the right to put their unique account of how the accident has affected them to a court, because under such a regime witness statements are not to be used.

The government also appears to have decided that the new claims process and portal will, following consultation with stakeholder, be extended to employers' liability and public liability cases, although insurer appetite in this area is much less than it was in road traffic accidents and there will be serious resistance in any consultation responses from those who use the system, as it is simply not set up to cover such cases. An intention to create a similar regime for low-level clinical negligence cases was also announced, once again subject to consultation.

Ken Clarke hailed the government's response as being helpful to both the public and to businesses to enable them to do solve their disputes 'effectively and in the simplest and quickest way possible', but at what price to justice? Many claimant lawyers would see the price as being the further dumbing down of civil litigation and the extension of tick-box litigation at the expense of personal injury settlements, covering not insignificant injuries and losses which roughly equate to the current annual median salary for a full-time UK worker.

David Ellis is a solicitor at Thorneycroft Solicitors (www.thorneycrofts.co.uk), a member of the Law Society personal injury panel and an APIL senior litigator