I'm interested in…

  • Strategy & Procedure
  • Motor
  • Fraud
  • Disease
  • Catastrophic Injury
  • Commercial Insurance
  • Costs
  • Liability
  • Local Authority
  • Professional Indemnity
  • Scotland

Jackson returns again to the reform agenda, though the SRA’s thematic review proceeds more cautiously

Recent days have given us both some further insights as to the next steps in the reform journey from the architect of the recent civil justice reforms, Lord Justice Jackson, as well as news from the Solicitors Regulation Authority of developments with their ongoing “thematic review” into work done by personal injury solicitors.

In summary

More reform in the field of civil litigation costs including an inevitable move towards more fixed costs should be expected. However, the jury has to remain out as to whether the SRA’s thematic review is likely to be of any substantial assistance in taking forwards the recommendations of the Insurance Fraud Taskforce in relation to the conduct of certain claimant lawyers.

More from Sir Rupert Jackson

His commitment to a programme of continued reform remains undiminished, and he has published a book entitled “The Reform of Civil Litigation” summarising progress to date, and looking ahead to likely next steps. Looking at what he sees as an ongoing programme of reform, his critics will be disappointed to read that he intends to remain substantially involved and to “stick with it and not walk away”.

In the government paper “Transforming our Justice System” published earlier this month, it was made clear in relation to fixed costs that the way ahead was for the senior judiciary to develop proposals on which the MoJ would then consult. It is now clear that Jackson himself will be the starting point as far as the involvement of senior judges is concerned so that his views will continue to be of primary importance.

Jackson on more fixed costs

He continues to hope for and indeed expects to see more fixed costs introduced. However, in his new book he is relatively cautious as to the scope of them, referring as he did in his Final Report only to the fast track and the “lower reaches of the multi-track”.

Similar to the position taken in his speech on the subject in January, he envisages a grid of fixed costs by reference to value bands depending on the value of the claim, but refers only to bands of “e.g. £25-50k; £50-100k, etc.” without this time referring specifically to bands reaching up as far as £250k.

He also then accepts that a set of rules would need to be designed to adjust the costs in the matrix to take account of complexity; any additional work caused by the conduct of the other party; and any wider factors such as reputation or public importance. And there may also, he says, be need to add an escape clause to deal with exceptional circumstances.

Department of Health and fixed clinical negligence costs

When writing the book, Jackson welcomed what seemed then to be the position that the DoH were postponing their plans to introduce fixed costs plans for clinical negligence cases while the subject was taken forward across all types of litigation. That issue may though have moved on as we are now more recently told to expect to see the DoH’s proposals published in October.

Whether that happens we will need to wait and see. If the consultation is released by the DoH then its influence will be wider than just that type of claim in view of the impending wider categories of affected claims and insurers generally will await its terms with interest.

Exceptions from fixed costs

Jackson notes the effect of the decision in Broadhurst v Tan that if the claimant beats his own Part 36 offer and therefore recovers indemnity costs then this may continue to provide an escape route away from fixed costs to hourly rate costs, depending on how the rules for future fixed costs regimes are drafted.

Expanding the point, in the same circumstances in a multi-track case, he sees the entitlement to indemnity costs which would arise as providing an escape from the level of costs which have been budgeted by the court, as budgeting can only apply to standard basis costs.

It will be of interest to insurers that the effect of the Broadhurst judgment is seen by him as a concern, saying that “A close watch needs to be kept on the operation of Part 36 to ensure that it does not become a method of circumventing costs budgets or fixed costs by parties who are “playing the system”, rather than genuinely trying to settle.”

Guideline hourly rates

Following the retirement of Lord Dyson, the new Master of the Rolls, Sir Thomas Etherton takes over in October. He will need, says Jackson, to grapple again with GHRs which have remained unchanged since 2010.

Noting the effective parking of the issue to date, but seeing that where costs are not fixed GHRs will continue to have a role to play, he observes that “This matter cannot stay in the car park for ever.” Over to you, new MR.

Pre-issue costs management

This of course is a gap in the rules currently and allows claimant firms to costs-build. Jackson specifically accepts this, noting what he calls “an increasing tendency for some practitioners to load costs into the pre-action period”.

In response, he says that once costs management has fully bedded-in in issued claims, serious consideration should be given to extending it to the pre-proceedings period.

Ban on referral fees

His evidence for the proposition is not stated, yet Jackson reaches the view that the ban has been “largely but not totally successful” in tackling the issues which he saw when he wrote his Final Report.

This area was also covered by Richard Collins, the Executive Director of Strategy and Planning at the SRA in his presentation to the recent PI Futures Conference – Where Next for the Market?

Mr Collins agreed that there had been relatively little sanction for breach of the ban, but thought this was broadly because solicitors had been compliant with it.

What the SRA could do on the ban was, he said, limited by the wording of the ban as set out in LASPO. While the government’s rhetoric had been stronger than the statute, the SRA could only enforce by reference to the statute itself.

What this meant he said was that there was “a fair amount” which solicitors could do in this area yet still be compliant. The SRA had examined various examples but in the main what they had seen was compliant with the law.

The SRA thematic review

The SRA have been conducting their thematic review into solicitors operating in the personal injury sector since this spring. Their initial research in relation to the sector will be published in October. The review will conclude in December and the final report would be published in Q1 of 2017.

They had chosen the sector because of the various reforms affecting it, as well as, it seems, what Mr Collins called “the noise” surrounding it.

In general terms, the SRA seem to see the PI sector as having been successful, achieving growth, with consumers assisted and compensation paid to them. This is how success is defined in SRA terms.

Listening to others

The SRA had been liaising with the Insurance Fraud Taskforce in relation to their report and the need to implement the recommendations from the IFT which were addressed to them.

The SRA had “spoken to the insurance industry and heard what they had to say”. They had also had reports of specific cases from consumers, judges, other solicitors and government agencies.

Areas being examined in the thematic review

Among the aspects listed by Mr Collins were these:

  • Solicitors’ role in fraudulent claims

  • Under-settling of claims

  • Whether the referral fee ban was being complied with (but see above)

  • How law firms used MedCo

  • Poor performance on cases – not progressing them; raising client expectations unreasonably

  • Failing to secure relevant information from clients

  • Not acting on instructions or acting without instructions

  • Lack of knowledge of part of the sector – solicitors moving into new areas e.g. disease or clinical negligence

They are currently in the phase of engaging with law firms considering these areas, and this stage will continue until October.

Conclusions

Lord Justice Jackson remains important to potential further reform in this sector, and his likely involvement in the next stage of widening the use of fixed costs should give rise to optimism that reform will be achieved. While we await the work which will need to be undertaken probably through the Civil Justice Council to work out the detail of the expected costs figures, those expected to be consulted on by the DoH will be of wider significance.

The thematic review may well have been set up in the light of the IFT report and the things it had to say about the behaviour of some claimant representatives in that area. The IFT encouraged the SRA to investigate claimant law firms involved in suspected fraud and to act robustly. We to continue to await outputs from the SRA which reflect the IFT advice .

Contact

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

Share your views

Please complete your details below to share your views. All comments are moderated and only your name and comment will be visible.

Your Comment

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.

Top