Thought Leadership, Industry Updates

March 2020 blog for Claims Magazine

5 minutes

Qamar Anwar, managing director, March 18, 2020

The Ministry of Justice (MoJ) did not surprise the market by announcing a five-month delay in implementing the whiplash reforms – the overwhelming response was one of relief that the worst-kept secret in the legal world was finally out – but the decision to ditch the alternative dispute resolution (ADR) element of the new claims portal did catch many unawares.

Lord Chancellor Robert Buckland said: “No practicable solution which gave sufficient coverage of ADR for claims could be found”. Instead, he continued, “We will ensure access to justice by developing bespoke processes to enable litigants to go to court to establish liability”. What these processes will look like is anyone’s guess, although we do know that litigants in person will still have to pay a court fee to access them.

This is awkward for the MoJ because it had previously highlighted the key role that ADR would play. In a letter last year to justice select committee chair Sir Bob Neill, MoJ spokesman Lord Keen said: “For those claims where liability is wholly denied by the defendant compensator, the claimant will have the ability to access the bespoke alternative dispute resolution process. This is being created to support the new service and is wholly funded by the insurance sector.

“This will provide an independent view as to whether the compensator is right to wholly deny liability. The insurance sector has agreed to be bound by this process, and so if the ADR outcome is that liability should be in part accepted by the compensator, then the claimant will then have their medical report paid for by that compensator at that point.

“If the independent review process does not find that the compensator should accept liability, then the claimant could of course exercise their right to start court proceedings.”

At the MIB London seminar that took place the week after Mr Buckland’s announcement, there was a little more detail from Richard Hutchinson, head of the whiplash reform programme at the MoJ. He explained the main problem was that, to avoid a challenge under article 6 of the European Convention on Human Rights (the right to a fair trial), this facility would have had to be made available to represented claimants as well.

This meant that many tens, or even hundreds, of thousands of cases could have ended up needing ADR. He said: “What became clear… was that we can’t design and deliver a service that has got the ability and scope to provide access to ADR for all the parties who may wish to go into it, when you look at the number of cases that may well come into the service.”

But the problem ADR provision was meant to solve has not disappeared. So, first, how easy will it be to design a slick process to take people from the portal to the court? And second, can the small claims court cope even if the MoJ manages this? The latest official figures say it currently takes 37 weeks to get from claim to court and that is on the basis of around 50,000 trials a year.

Mr Hutchinson at least acknowledged that this was an issue. He said the MoJ was discussing it with the courts service and would monitor the impact closely. But, interestingly, he said the ministry still expected that, overall, the reforms would lead to a net reduction in sitting days in the civil justice system.

Nonetheless, the spectre of a significant inequality of arms between litigants in person and defendant insurers looms large. I shouldn’t have thought that insurers particularly welcome the thought of facing thousands of small claims just to determine liability (if the claimant succeeds, the case returns to the portal) and the MoJ needs to provide clarity urgently on what the process will look like.

As Matthew Maxwell Scott, executive director of the Association of Consumer Support Organisations, put it, the portal is not looking like “the sort of slick, modern claims process we were promised”. There is, as a result, a “high risk” of consumer detriment.

While we rush towards the new August deadline with still a lot to do, it is striking how different the debate is on raising the small claims limit for EL (and by extension PL) cases. Trade union Usdaw has built a broad coalition, including the Association of British Insurers (ABI) and British Safety Council, to campaign for excluding workplace injuries from the increase to £2,000.

Usdaw general secretary Paddy Lillis said its main objection was that this would “unnecessarily restrict access to justice for tens of thousands of injured workers. It will also have a negative impact on health and safety standards in workplaces”. Injured people forced onto the small claims track would most likely end up litigants in person, which would place “unnecessary strain on the justice system”.

The government has excluded vulnerable road users from its whiplash reforms, and Usdaw argues that as “the employment relationship and the evidential complexity of cases mean that injured employees are also vulnerable claimants” and so should be excluded too.

I am sure I was not the only person surprised to see the ABI throwing its weight behind this campaign. James Dalton, the ABI’s director of general insurance, said: “Workplace safety is an absolutely critical component of the world of work. What has never been the priority for us is employer liability and public liability cases, so we’re happy to support this campaign.”

This is a great sign of common sense prevailing, but begs the question of why a far higher increase is being introduced for RTA. The concerns outlined by Usdaw apply equally for RTA victims, and of course there is a far higher volume of cases, meaning that many more people will be adversely affected. But, sadly, it is a long time since common sense was applied to whiplash reform.

 

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