Market Round Up: December 2023
It can be difficult to get useful answers from government and that is where select committees can come in – while they may not often directly affect policy, they are often a good way of at least getting some information.
So it has proven with the Official Injury Claim (OIC) portal. In September, the committee issued an interim report about the whiplash reforms – having paused its investigation pending next year’s Rabot case in the Supreme Court – in which it told the government that it needed to investigate why there was a growing number of unresolved cases in the portal.
The MoJ’s response identified the period between a liability decision and the insurer making a first offer as where the ever-lengthening delays are occurring. As of 30 September, around 385,000 OIC claims remained unresolved.
The MoJ said an increasing number of these were dormant – some for “valid reasons”, such as the claimant waiting out their prognosis period before continuing their claim, but other claims “seem likely to have been abandoned”. Many claims were also stalled to await the outcome of Rabot. There was “a significant tranche of claims which have stalled for other reasons”, such as claims which have received a denial of liability and which the claimant has chosen not to pursue but not formally closed.
The period between obtaining a liability decision and the insurer making a first offer to the claimant was the only one of the five stages of a claim where there was a significant discrepancy between the lifecycle of a claim brought by a represented claimant (217 days) and by an unrepresented claimant (74 days). “No technical issues with the service have been identified by MIB which might be causing this discrepancy and consideration is being given as to what else could be at the root of this difference.”
One reason could be the different process for seeking and disclosing medical evidence for represented and unrepresented claims; the MoJ’s recent consultation on medical reporting asked whether the processes should be aligned, meaning report providers, rather than solicitors, would upload their reports onto the OIC – claimant lawyers, however, have strongly opposed this.
In its response to the consultation, the Association of Personal Injury Lawyers (APIL) said: “It has always been the process that a party has time to look at the reports, for example for fact-checking. This is not problematic in practice and should not be changed. The information on the report is privileged and it is wrong to consider a process that removes that pre-existing right from a party and forces disclosure as soon as uploaded onto the OIC.”
The next reform off the block is meant to be fixed recoverable costs for clinical negligence cases worth up to £25,000 that settle pre-issue, due next April, but it is becoming increasingly clear that the Civil Procedure Rule Committee does not think it has enough time. With the clock ticking, APIL said recently that it was “extremely worrying” how little detail had come out about how the changes will work. Don’t be surprised to see this delayed by six months.
You might remember that the Court of Appeal last year suggested in Belsner that disputes over deductions from damages in low-value cases should go to the Legal Ombudsman (LeO). In response, LeO recently updated The Ombudsman’s Guide to Good Costs Service.
This does not change LeO’s basic position on costs issues, namely that “a client should never be surprised by the bill they receive from their lawyer”, but it includes three new sections.
The first new section, on ‘Possible future costs’, says lawyers should tell clients about the costs they will have to pay, as well as those they “might” have to pay. It may even make sense in certain cases to clarify the costs they will not have to pay. “Clients must be able to make an informed decision about whether to go ahead with the work and whether they agree to the price being quoted,” the guide says.
The second new section on ‘recoverable costs and fixed costs’ highlights the importance of clients understanding how costs recovery works and whether they will have to pay any shortfall. This connects to the third new section, on success fees and conditional fee agreements, which says that the basis on which a success fee is calculated needs to be explained to the client clearly at the outset, and the overall costs charged must be seen to be reasonable.
“If we investigate a complaint where a firm has a policy of charging a substantial success fee in every case, regardless of risk, we are likely to ask the firm to show us that the client has given informed consent to the arrangement. This would include the client being made aware that other lawyers might not adopt the same approach and that lower success fees might be available elsewhere.”
A report by the Association of Consumer Support Organisations has sketched the dramatic change in the landscape for claims management companies (CMCs) in PI, with just a “rump” remaining. As a result, complaints to the Financial Conduct Authority have fallen to “all-time lows” as their numbers continue to shrink, as have personal injury nuisance calls from CMCs (not that this has stopped APIL recently renewing its call to ban them).
In market news, Bristol-based Lysander Law has been sold in a pre-pack administration deal to Leicestershire firm RHL Solicitors, saving 46 jobs. Administrators Begbies Traynor said Lysander had traded profitably from its creation in 2016 until the OIC began in 2021. Fletchers Group, the serious injury law firm owned by private equity house Sun European Partners, acquired the personal injury division of Leeds firm Emsleys, with all 28 staff, including fee-earners and support staff, transferring over to Fletchers’ Leeds office, which opened in February.
Finally, an interesting case in Central London County Court, which rejected an application for a non-party costs order (NPCO) against listed legal and credit hire business Anexo Group over the work of its subsidiary law firm.
His Honour Judge Luba KC described Soares v Wilson [2023] EW Misc 11 (CC) as a “significant attempt” to broaden the ongoing “forensic legal war” between motor insurers and those who help claimants bring modest compensation claims, particularly around credit hire.
Anexo owns all of the businesses involved in the underlying claim – personal injury law firm Bond Turner, credit hire provider McAMS and engineering report provider PALS – while the claimant’s counsel back in 2017 was Alan Sellers, the barrister chairman of Anexo.
There was a costs order in the defendant’s favour but the claimant was protected by QOCS and in any case impecunious. So the insurer made Anexo a party so it could apply for it to pay the costs owed, arguing that the claim was “clearly a vessel for Anexo to profit from”.
Dismissing the application, HHJ Luba said Anexo knew nothing of the claimant individually or his claim. It would have been different if Anexo had directed Bond Turner to use the claimant’s name in pursuit of its own interests.
Anexo could not be the “just recipient” of a NPCO simply because it owned Bond Turner, “unless the circumstances are such that those solicitors would themselves have been made subject to a NPCO had the application been directed against them”. This had not been established on the evidence.
“The authorities binding on me underscore good policy reasons for concluding that NPCOs should not ordinarily be made against solicitors seeking to maximise the outcomes of litigation, pursued in the names of their clients, even if, as in respect of costs, they are ultimately pocketed by those solicitors.”
It also did not follow that Anexo – even though it may ultimately benefit from any overall profit made by Bond Turner – was “in any sense either the party or a party with a financial interest in the particular case”.
The judge said: “That would place all owners of solicitor’s firms in the potential frame for receipt of a NPCO. Anexo is itself owned by others. Logically, if the applicant here is right, they might also potentially be exposed to a NPCO.”
Neil Rose is the Editor of Legal Futures
