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Latest developments from the MoJ and elsewhere affecting future claims handling

Michael Gove has now been Minister for Justice for 6 weeks and earlier today he gave his first speech in his new role. It seems a good time now in the early days of the new government to look at both the speech itself as well as some other recent developments to see what signs there are of future changes which will affect claims handling.

The Gove speech

We were of course looking to see what approach he would take to further civil justice reform. The speech shows us that as had we expected, it is not top of the MoJ’s agenda. That is even though, as was already clear, the new government’s intentions to replace the Human Rights Act with a new British Bill of Rights are going to need more careful thought before they can be brought forward.

Again, as we had expected, it is clear from the speech that it is criminal justice which is currently concerning Mr Gove most. When he moves to commenting on civil justice, it is family cases which seem next in line.

The strap lines from today’s speech were about “a one nation justice policy” for the justice ministry, with it working “for everyone in this country”. It’s about, says Mr Gove, delivering “faster and fairer justice for all citizens”.  He suggests that at present our justice system provides two very different levels of service, the gold standard for wealthy international litigants, and then “a creaking, outdated system” for the rest of us.

While at least in part he is speaking of criminal processes, he complains that “our courts are trapped in antiquated ways of working that leave individuals at the mercy of grotesque inefficiencies and reinforce indefensible inequalities”.

Mr Gove and civil justice

A section of the speech was devoted to this. The Sunday Times on 10 May was referring to the view that it was likely that Mr Gove would be interested in “faster and fairer access to justice” and we speculated at the time that what he had in mind was the Civil Justice Council report from earlier this year in favour of the introduction of Online Dispute Resolution (ODR) in 2017, and we can now see that this is indeed the case.

He specifically mentions that CJC report and says that he sees a “huge opportunity” to take certain types of dispute online and wants to see the ability for litigants to easily file cases online, and to be able to deal with court queries online. He does not say so directly, but probably with less legal representation as well.

He does not say that the sorts of cases dealt with by insurers are ones he would include in that category however, and government thinking in this area still seems to be forming in response to the CJC report.

One reason for this approach would be to save money. Mr Gove says that around one-third of his budget is spent on the “ageing and ailing court estate”, in other words the court buildings themselves.

The bottom line for insurers are that the speech today suggests that we will have to wait some time longer while the civil justice issues that will impact on claims faced by insurers rise up the government agenda.

Court fees increase

While with some of the criminal justice reforms covered by Mr Gove today he saw a need to “monitor their effects to make sure that justice and fairness are served”, he had nothing to say about doing the same in relation to the recent substantial court fees increases for civil claims, on which his views are awaited.

On the rise in employment tribunal fees which were implemented in July 2013 and which can therefore be looked at as far as potential trends in court fees are concerned, the most recent HCMTS data for Q4 2014/15 released this month showed that while there had been an initial substantial fall in the number of new claims, this had begun to recover.

The pre-increase quarterly average number of new employment tribunal claims stood at around 47,000. This fell by as much as 82% to 8,500 by the third quarter post-reform, but has increased in each of the three quarters since, and now stands at 20,300, up to 43% of the previous average. That market has, it seems, had sufficient time to adapt itself to the challenges presented by the new fees.

We will need to wait for release of the Q1 and Q2 data for 2015/16 from the MoJ before we can see the impact on the number of issued court proceedings of March’s court fees increase, and assuming there is a drop, to see if that is followed by a recovery, and if so how long the recovery will take.

Other MoJ changes

Like of course most other government departments, the MoJ has more savings to make from its budget this financial year. It needs to find another £249m of savings, or to cut 4% of the budget.

Yesterday it announced as part of its plans an intention to reduce staff numbers by 400, or 2.5% of its workforce. While Mr Gove’s expected move to ODR and a reduced need for court buildings may tie in with this, both are some way off, and a reduced number of front line staff in the court service will give rise to concerns about a further deterioration in the level of service offered to litigants.

PiCARBS

You may have heard before of the Personal Injury claims Arbitration Service. Though it is not new, it had what was described as an “exclusive launch party” yesterday evening. Its architect is Andrew Ritchie QC, fellow of APIL and chairman of the Personal Injury Bar Association, who is instructed by claimants in larger claims.

PiCARBS sets out as its aim to establish an arbitration process for injury claims. It now has detailed arbitration rules on its website. It rolls back the clock to the pre Jackson position, so avoiding for claimants their concerns around the risk of strike out for default (though it accepts the risk is reduced post Denton), their dislike of costs management, and the issue of having to pay increased court fees (the PiCARBS entry fee is £1,600 per case). There are 15 QCs including Mr Ritchie whose names appear on the website as “panel arbitrators”.

Mr Ritchie hopes to catch 30-50 cases in his first year, and eventually to secure around 10% of the litigation market. He sees it as a 3 year project.

The launch party unsurprisingly seemed to be attended mainly by claimant rather than defendant representatives. Mr Ritchie says that he has had discussions with insurers and with the NHSLA, and hopes that defence interests will “eventually come aboard”.

It is clear that looking at alternatives to litigating claims, and the need to consider carefully various types of ADR is perfectly proper. We are yet to see the impact of the significantly increased court fees on the market, though they are likely to speed up rather than slowdown interest in this area as claimant lawyers will be seeing greater advantage in alternatives to litigation. Opportunities for insurers will inevitably arise and will need careful thought and planning.

Fixed fees and deafness claims

The substantially increased area of claimant lawyer activity in all types of claims where hourly rate costs can still be achieved is already well known. The avalanche of new NIHL claims is clear to see.

Against that background, the ABI published last week the first in its series of papers “Tackling the Compensation Culture” on the subject of NIHL claims. Sensible solutions were proposed around extending fixed costs to disease claims outside the portal; amending the portal process so that multiple defendant cases could be included within it; and considering an extension of MedCo to cover expert evidence in this type of claim.

The publication was launched by the ABI at an event last week on 16 July, at which there was some consensus with the claimant representatives present that there was opportunity to work together to improve the current position, though it seems to us that it is probably likely that external input from the MoJ will be required as well to be able to achieve a cross industry solution involving all parties.

Leaving the final word to the MoJ

Which brings us back to where we started – what is the MoJ position going to be on further claims process reform, and when are we going to hear it? While Mr Gove’s speech does not really assist in providing answers, perhaps the ministers remaining in post at the department, Lord Faulks and Shailesh Vara, will be relied on to pick up the baton again while the priorities for Mr Gove himself seem to lie elsewhere?

It did emerge from Kevin Rousell, Head of Claims Management Regulation at the MoJ, speaking at a conference on 19 May, that the MoJ was aware of the significant activity in NIHL claims, apparently caused by the disease costs regime which he noted was different than for other injury claims. “There seems to be an awful lot of waste in the system” said Mr Rousell.

Perhaps this does mean that when we hear more from the MoJ in relation to civil justice reform, filling the remaining gaps in the fixed fee regime, including for NIHL and other disease claims, as well as for clinical negligence claims, will be at or near the top of its agenda.

Contact

For more information please contact Simon Denyer, Partner on +44 (0)161 604 1551 or email simon.denyer@dwf.co.uk

By Simon Denyer

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This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

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