This month, there has been a definite sense of the government and the courts tying up loose ends before the summer holidays.
Mr Justice Mann handed down his highly anticipated judgment in Sir Cliff Richard's privacy case and whilst most of the subsequent focus was on the findings against the BBC, DWF secured a favourable decision on the issues between South Yorkshire Police and the BBC. The Supreme Court and Court of Appeal also handed down some keenly awaited judgments which we look at further below.
The MoJ responded to the Justice Committee's report following its Inquiry into the Small Claims Track limit and in doing so, announced a delay in the implementation of the whiplash and small claims track provisions until April 2020. However, suggestions on social media that this effectively meant the shelving of the Civil Liability Bill were nipped in the bud with the listing of the Second Reading for 4 September.
In other news, we report on the Civil Justice Council seminar at the end of June to kick off the government's post-implementation review of Part 2 of LASPO. Both that seminar and the government's response to the Justice Committee presented the opportunity to bring back onto the horizon a number of areas which have been quiet for a while, such as the Insurance Fraud Taskforce, McKenzie Friends, DBAs and QOCS.
A new Bill has arrived following the work of the Law Commission on Mental Capacity and the Deprivation of Liberty Safeguards and we have a new consultation from the Solicitors Disciplinary Tribunal on changing the current criminal standard of proof used in disciplinary proceedings to the civil standard. At the end of the month UK motor insurers voted to mutualise risks for terrorism claims.
We look at developments below along with our usual round up of forthcoming cases and other issues on the horizon.
Update - Police: duty of care to employees. The question in James-Bowen v Commissioner of Police for the Metropolis was whether a person who is sued in civil litigation for alleged misconduct by his employees (or others for whom he is vicariously liable) owes those employees a duty of care in the conduct of his defence. The hearing took place in March and in a judgment handed down on 25 July the Supreme Court held that there was no duty of care. Read more in our update.
Update - Negligence: banking. The case of Banca Nazionale del Lavoro SPA v Playboy Club London Ltd & Ors concerned a financial reference given by a bank to an agent acting for a club which ran a casino and whether a duty of care was owed to the club. The appeal took place in April and in a judgment handed down on 26 July the Supreme Court held that the bank owed no tortious duty to the casino.
Clinical negligence: receptionist duty of care. In Darnley v Croydon Health Services NHS Trust the issue is whether a non-clinically trained A&E receptionist owed any tortious duty to provide accurate information to the claimant about waiting times. The hearing took place on 7 June and judgment is awaited.
Local authority: protection from harassment. The Court of Appeal in CN v Poole Borough Council held that a local authority owed no duty of care in the exercise of its social services child protection functions, to protect two children from harassment by a neighbouring family. The Supreme Court heard the appeal on 16/17 July 2018. Read more on the Court of Appeal decision in our update from December.
Supreme Court cases awaiting developments. We await further official details for the following cases where permission to appeal has been granted:
Perry v Raleys Solicitors is a professional negligence claim concerning the alleged under-settlement of a vibration white finger claim. Read more in this Crown Office Chambers update.
In R&S Pilling T/A Phoenix Engineering v UK Insurance Limited the issue in the Court of Appeal was whether motor insurance extended to liability for damage to the property of third parties as a result of fire caused by repair work being carrying out to a stationary car, i.e. whether the repairs amounted to "use" of the vehicle. We understand that the hearing is due to take place on 13 December 2018.
In Cameron v Hussain & LV= the Court of Appeal held that a claimant was able to bring her claim for damages arising out of a road traffic against an unidentified driver.
Court of Appeal
Update - Asbestos: access to documents from settled litigation. Late last year Master McCloud granted an application by the Asbestos Victims Support Groups Forum UK for disclosure of the documents referred to in product liability litigation which had settled earlier in 2017. The disclosure contained "extensive quantities of historic material and records relating to asbestos safety and regulation" relating to the question of what was known and when about the safety of asbestos. The appeal in Dring (For and on behalf of The Asbestos Victims Support Groups Forum (UK)) v Cape Distribution Limited & Ors took place on 18 June 2018 and judgment is due to be handed down on 31 July. Update: the judgment has now been published.
Update - Applicable law: accident in France. The issue in Committeri v Club Mediterranee SA & Anor was whether French or English law applied where a claimant had a climbing accident in France. The answer to the question depended on whether the claim was contractual or non-contractual in nature. The judge held the claim was contractual so that English law applied and this meant that the claimant had no viable claim. The appeal was heard at the beginning of July and judgment is due to be handed down on 9 August.
Update – Professional negligence: solicitors. The case of Lyons v Fox Williams LLP concerns the failure of a solicitor to advise the claimant about his rights under his employer's insurance policies following a road traffic accident and the extent of the solicitor's retainer. The appeal was due to take place on 3/4 July but the case tracker suggests that a hearing date is awaited and also that an order is being drawn. We await further information.
Update – Legal professional privilege: internal investigations. ENRC are appealing against a first instance decision in which it was held that LPP did not apply to certain documents created during internal investigations undertaken by solicitors and forensic accountants. The appeal in The Director of the Serious Fraud Office v Eurasian Natural Resources Corporation Limited took place at the beginning of July. Judgment is awaited.
Update – Clinical negligence: ex turpi causa. The case of Henderson v Dorset Healthcare University Foundation NHS Trust concerns a claim for damages by a patient suffering from mental health issues against an NHS Trust for breaches of duty which resulted in the patient killing her mother. At first instance Jay J considered himself bound by authorities preventing such an ex turpi causa claim from succeeding. The appeal was in the Court of Appeal list for 10/11 July but the case tracker now suggests it is awaiting a hearing date. We await further information. Update 2 August: judgment is due to be handed down tomorrow, 3 August.
Update - Vicarious liability: connection with employment. At first instance in Bellman v Northampton Recruitment Ltd it was held that an employer was not vicariously liable for an assault committed by its director after a work Christmas party. 12 KBW outline the grounds on which permission to appeal has been granted and you can read more on the first instance decision in our update from last year. The appeal was in the Court of Appeal list for 19 July but the case tracker now suggests it is awaiting a hearing date. We await further information.
Update - Late acceptance of Part 36 offer. Hislop v Perde and Kaur v Committee for the time being of Ramgarhia Board Leicester, relate to the extent of a claimant's entitlement to costs where a defendant accepts the claimant's Part 36 offer after the expiry of the relevant 21 day period in cases to which the fixed recoverable costs regime applies. The appeals were heard together on 20 June and in a judgment handed down on 23 July the claimants were limited to fixed costs. Read more in our update this month.
Update - QOCS and multiple defendants: Cartwright v Venduct Engineering Ltd & Ors concerns the circumstances where a claimant obtains an order for damages against one defendant but is (subject to QOCS) liable for a costs order in favour of a different defendant. Having been heard on 28 June, judgment was handed down on 17 July with the Court of Appeal holding that a defendant could enforce an order for costs out of damages payable to the claimant by another defendant but on this occasion, recovery was denied as the settlement had been concluded by way of a Tomlin Order. Read more in the Gazette.
New - Costs: success fees in low-value PI claims. Litigation Futures has reported this month that the Court of Appeal is to consider the legality of what has become the industry model for handling low-value personal injury claims, with firms charging clients a 100% success fee as standard. The court has given permission for a second appeal in Herbert v HH Law although it does not yet appear on the Court of Appeal Case Tracker.
Update - Small claims track limit increase. Last December the Justice Committee launched a new inquiry into the government's proposals to raise the small claims track limit for personal injury claims (for RTA claims). In May the Committee published its report with the headline finding that "increasing the small claims limit for personal injury (PI) creates significant access to justice concerns" and "[t]he small claims limit for personal injury should not be increased unless Ministers can explain how it will make sure that access to justice is not affected." Simon Denyer analysed the findings in this update. This month, the government responded to the Justice Committee report and in doing so announced a delay in the implementation of the whiplash and small claims proposals until April 2020. Importantly though, the government does not accept the Committee's recommendation to limit any increase in the small claims track limit to £1,500. Read more in Nigel Teasdale's update. In response, the Chair of the Committee has written to the Lord Chancellor seeking further information on several points, including an explanation on how "the proposed increase to £5,000 for RTA PI claims is proportionate". Then at the end of last week, Labour MP and Justice Committee member Ellie Reeves tabled an Early Day Motion to express concern at the planned increase. Read more in Legal Futures and Ellie Reeves' own blog.
The following consultations are currently open:
FCA: regulation of claims management companies. In anticipation of the transfer of regulation of CMCs to the FCA on 1 April 2019, the FCA has published a consultation setting out the draft rules and guidance they propose to make in relation to claims management activities and the standards they think CMCs regulated by the FCA should have to meet. They have identified a number of harms in the sector which the proposals are aimed at addressing. Read more in the FCA press release and Legal Futures. Comments are requested by 3 August.
Nuisance calls and messages: action against directors. On 30 May the government published a consultation proposing measures to hold company directors personally responsible for breaking the law in relation to unsolicited calls. The measures would provide the Information Commissioner’s Office (ICO) with the powers it needs to hold company directors directly responsible with further fines of up to £500,000. The consultation closes on 21 August. Read more in the press release from the Department for Digital, Culture, Media & Sport.
Update - LASPO Part 2: post-implementation review. As we reported last month, the MoJ published an initial assessment of the Part 2 LASPO reforms for its post-implementation review. The following day the Civil Justice Council held a seminar on the review, where a number of speakers including Sir Rupert Jackson, Prof Paul Fenn, Prof Rachael Mulheron and claimant and defendant solicitors spoke about the key impacts of Part 2 of LASPO. The discussions covered a range of familiar issues, including: CFAs, costs budgeting, QOCS, the referral fee ban, and Part 36 consequences. High on the agenda (and so now out of Looking Ahead's long grass) was the issue of DBAs which are not being effectively utilised; in part due to technical deficiencies in the regulations and in part due to the government's reluctance to permit hybrid DBAs. The mesothelioma exemption on recoverability of additional liabilities also received a mention, as did the potential extension of the QOCS regime to police and/or professional negligence claims (bringing this issue out of the long grass as well). The CJC has published a summary of the day's discussions and different aspects of the day were also covered by the Gazette, Litigation Futures and Legal Futures. The MoJ has invited views and evidence by 24 August.
New – Solicitors Disciplinary Proceedings: standard of proof. The Solicitors Disciplinary Tribunal has launched a consultation on the making of procedural rules in relation to first instance applications to the Tribunal. The current standard of proof used in disciplinary proceedings before the Tribunal is the criminal standard. The Tribunal is inviting views on whether instead it should apply the civil standard in line with other professional regulators. Whilst the move is clearly being considered for a number of reasons, it could be seen as complimenting the Insurance Fraud Taskforce's recommendation that the SRA toughen its stance on dishonest solicitors. The consultation runs until 8 October. Read more in the Gazette.
The following consultations are awaiting official responses:
If any client wishes to request any of the DWF consultation responses referred to below they can do so by emailing email@example.com
Update - Motor insurance: implications of ECJ Vnuk ruling for UK legislation. In December 2016 the Department for Transport held a consultation Motor Insurance: consideration of the 'Vnuk judgment' to look at “options for amending domestic motor insurance law in light of the European Court of Justice ruling…" Although the government has never formally responded we know that its preferred option was for the Motor Insurance Directive to be amended in a way to avoid having to broaden the scope of insurance requirements to reflect the decision in Vnuk. The European Commission had also requested feedback on the issue in two consultations, having seemingly indicated in a 'Roadmap' published in June 2016 a preference to amend the scope of the Directive so that it only related to accidents caused by motor vehicles "in the context of traffic". It came as a surprise therefore when at the end of May the Commission presented its proposals to amend the Directive but to reflect the position in Vnuk so that "[t]he 'use of a vehicle' means any use of the vehicle, intended normally to serve as a means of transport, that is consistent with the normal function of that vehicle, irrespective of the vehicle's characteristics and irrespective of the terrain on which the motor vehicle is used and of whether it is stationary or in motion." The Commission's press release provides a short summary of the proposal and additional documents can be found here. You can read more on the proposal in our June update. The Commission requested feedback by 24 July 2018 and DWF responded. All of the feedback is available online and includes the feedback from DWF, BIBA and the ABI.
Update - Reforming the soft tissue injury (whiplash) claims process - Part 2. In February 2017 the government published the first part of its response to the Reforming the soft tissue injury (whiplash) claims process consultation, to which DWF responded. It then incorporated its proposed reforms to the whiplash claims process within the Prisons and Courts Bill which we reviewed in our update last year. That Bill's progress ended with the dissolution of parliament but the whiplash provisions were reintroduced within the Civil Liability Bill. In the meantime a second part to the consultation response is still awaited and is due to look at the outstanding proposals including, the Insurance Fraud Taskforce recommendations, credit hire and rehabilitation. This month, Part 2 of the consultation response received a mention in the government's response to the Justice Committee's small claims track inquiry with the government confirming that it "is currently working closely with stakeholders including from the insurance industry to take forward the IFT’s recommendations. Detail will be included in Part Two of the response to the whiplash consultation, which will be published shortly."
Update - Review of Fixed Recoverable Costs. Jackson LJ published his Review of Fixed Recoverable Costs, to which DWF contributed, on 31 July. His proposals are to extend fixed costs in claims worth up to £100,000 along with the remaining fast track cases not yet subject to FRCs. The report is being considered by the senior judiciary and the MoJ, and a consultation will hopefully be launched before too long. Throughout the year there have been a number of comments from ministers to the effect that the government is considering the report and will announce the next steps in due course. The latest comment in almost identical terms to previous ones came from Justice Minister Lucy Frazer at the Civil Justice Council LASPO seminar on 29 June.
Update - Review of low value personal injury claims including package holiday claims. In last October's call for evidence on measures to address holiday sickness claims, the MoJ also invited views on low value claims more generally and asked the Civil Justice Council to consider steps that might be taken to prevent unmeritorious claims and to resolve meritorious ones more quickly and with reduced costs. The outcome of the work done on package holiday claims was the introduction of the new Pre-action protocol for resolution of package travel claims along with fixed costs which came into force in May. This month, for completeness the government published a summary of the consultation responses and details of the way forward confirming for the first time that fixed costs would not be extended beyond gastric illness claims. And as we reported last month, attention has now turned to the review of low value claims more generally. A cross industry working party met for the first time on 22 May to identify areas of focus which will include CMCs, fraudulent behaviour, processes, MedCo and expert evidence generally, ADR, the portal, sanctions and technology. The group is due to report to the CJC in the summer.
Credit hire: model directions. Last June, the Civil Procedure Rules Committee issued a consultation on the "model order for directions to be used in credit hire cases". Acknowledging that the whole area of credit hire "remains a highly contentious area of litigation" the CPRC identified what they see as relatively simple steps that can be taken to narrow the issues and present the judge with the necessary evidence to make a determination. The proposed directions concern witness evidence and disclosure on impecuniosity and the agreement of hire rates. Stakeholders were urged to confer to try to achieve a consensus or risk a solution being imposed. The consultation closed on 1 August 2017 and DWF responded.
Civil procedure: disclosure. A Judiciary press release published on 2 November 2017 detailed proposals for a mandatory disclosure pilot scheme to run for two years in the Business and Property Courts. A Disclosure Working Group had been set up in May 2016 to look into widespread concerns about the excessive cost, scale and complexity of disclosure with a view to achieving a wholesale cultural change in the disclosure process. "The unanimous view of the Working Group is that a wholesale cultural change is required and that this can only be achieved by the widespread promulgation of a completely new rule and guidelines on disclosure which will apply for the majority of cases proceeding in the Business and Property Courts." There has been a slight delay in the rules being approved, as this was due to happen in March/April but last month, Litigation Futures reported that the pilot will begin in January 2019 and that final approval of the rules would be sought in July, although we have not yet seen any minutes of that meeting.
Default County Court Judgments. At the end of December the MoJ launched a consultation looking at the processes for money claims issued in the County Court. They have particular interest in views on limiting the circumstances in which an individual can have judgment entered in default against them without their knowledge. DWF submitted a response to highlight the issue of judgment being entered against policyholders in insurance claims when it is an insurer who will ultimately pay the claim – the MoJ had not identified this scenario in its consultation. The consultation closed on 21 February.
Update - McKenzie Friends. In February 2016 a Judiciary Consultation Reforming the courts’ approach to McKenzie Friends was launched following a Working Group review looking into the increasing numbers of fee charging McKenzie Friends. The consultation invited views on possible reform including the revision of Practice Guidance, or codification of the practice and procedure relating to McKenzie Friends. As part of that, the consultation asked whether there should be a ban on fee charging McKenzie Friends. DWF responded. In September 2017 the Judicial Executive Board announced that a large number of responses were received and that a further working group would review the proposals in light of the responses. This month the issue received a mention in the government's response to the Justice Committee's small claims track report. The Committee had expressed concern regarding paid McKenzie friends and recommended that "the senior judiciary seek to conclude its examination of this issue as soon as possible." In response the government has confirmed that it "will work with the judiciary to make sure that their concerns are addressed."
Update - Legal services: insurance and compensation. In March the SRA launched a consultation on changes to the legal insurance and compensation rules with proposals including limits to the compensation fund and reducing minimum PII cover. The SRA says these changes will give firms more flexibility to choose the right level of insurance to suit their business and clients, while making sure there are still appropriate protections for users of legal services. The proposals include reducing the maximum single claim limit to £500,000 (£1 million for conveyancing); keeping the need for a six year run off period of insurance after a firm closes but capping the overall level of cover at £3m for firms that have done conveyancing work and £1.5m for other firms; and removing the need for compulsory insurance to include cover for large commercial clients. The consultation closed on 15 June following which some responses had started to emerge, including criticism from both the Law Society and the ABI. This month has seen two reports on the issue from the Gazette: one on the potential for volatility to result and one from the SRA's Crispin Passmore explaining the reasons behind the proposed changes,
In addition to the Bills that received Royal Assent in May, this month they were joined by the Automated and Electric Vehicles Act.
Update - Driverless technology: Automated and Electric Vehicles Act 2018. The Bill which was introduced to the House of Commons last October covers the insurance of automated vehicles and makes provision in relation to charging of electric vehicles. The Bill quickly passed through both Houses and received Royal Assent on 19 July. A helpful Commons Briefing Note was published in June explaining the policy background and contents of the Bill and you can read more in press releases from the government and the ABI.
Claims management regulation: Financial Guidance and Claims Act 2018. This Act received Royal Assent on 10 May. The provisions relating to claims management regulation are those which came out of the 2016 Carol Brady review and the consultation on capping fees. The most straightforward provision during the passage of the Bill was the transfer of regulation to the FCA. After many debates on banning cold calling and capping fees chargeable by CMCs the final outcome was a ban on such calls in relation to claims management services unless prior consent has been given. Most of these provisions require secondary legislation to bring them into force and HM Treasury ran a technical consultation on the proposed regulations which closed on 1 June.
Data Protection Act 2018. This Act received Royal Assent on 23 May with its main provisions commencing on 25 May. The Act widens the reach of GDPR which as a Regulation is already directly applicable in the UK. In this update Jamie Taylor looks at some of its main provisions from an insurance perspective: Data Protection Act 2018: What is it and what does it mean for insurance?
Update - Whiplash reform: Civil Liability Bill. The Civil Liability Bill which was introduced in the House of Lords on 20 March contains the government's whiplash proposals to ban pre-med offers and introduce a new fixed tariff of compensation for whiplash injuries with a duration of up to 2 years. It also contains the provisions for changing the method of setting the discount rate. Last month the Bill concluded its passage through the House of Lords. There was broad consensus on the discount rate and the need to implement those provisions as soon as possible, but fundamental issues remain in dispute on the whiplash provisions. We looked at the outstanding issues in our updates on the Report stage and Third Reading. The Bill had its First Reading in the Commons on 28 June and the Second Reading is due to take place on 4 September. As we have noted above, the government, in its response to the Justice Committee's small claims track report, confirmed that implementation of the whiplash provisions will be delayed until April 2020 to allow enough time to build and test the online platform for handling whiplash claims. And albeit not in relation to the Civil Liability Bill itself, Labour MP Ellie Reeves has tabled an early day motion to express concern at the planned increase in the small claims track limit. You can follow the Bill's progress on the Bill's webpage and there is also a helpful summary of recent developments here.
Update - Online court: Courts Bill. The Queen's Speech stated that this Bill will "reform the courts system in England and Wales to ensure it is more efficient and accessible, and in doing so utilise more modern technology". We had presumed that this Bill would pick up from Part 2 of the Prisons and Courts Bill which included provision for the legal foundations for the introduction of new online procedures and online dispute resolution (ODR), and for the creation of a new online court that could deal with low value money claims below £25,000, as recommended by Lord Justice Briggs’ Civil Courts Structure Review. In March, the Lord Chancellor David Gauke said, "I hope to be able to bring forward further news on the courts Bill in the near future". In May, we reported that the newly introduced Courts and Tribunals (Judiciary and Functions of Staff) Bill which will allow judges to delegate tasks to court staff was not the Bill we expected. There also appeared to be some doubt about whether there would be legislation to implement LJ Briggs' recommendations, with Coulson J and Birss J indicating at the CPRC open meeting on 11 May that there is no over-arching online court and no indication that legislation will be put in place. However, in late May, the chief executive of HMCTS was reported to have said there will be further legislation 'to underpin the online court' as soon as parliamentary time allows. In the meantime, new Bill had its Committee Stage on 10 July and awaits a date for the Report Stage. Last month we reported on criticism of the Bill at Second Reading. This month the Equality and Human Rights Committee set out its concerns in a Lords briefing before the Committee Stage.
We have also been following progress on two Law Commission draft Bills:
Update - Deprivation of liberty: Mental Capacity (Amendment) Bill. . In 2014 the Law Commission began a review of the Deprivation of Liberty Safeguards (DoLS) under the Mental Capacity Act. The DoLS aim to protect people who lack mental capacity, but who need to be deprived of liberty so they can be given care and treatment in a hospital or care home. In March 2017 the Law Commission published its final report along with a draft Bill. It recommended that the DoLS be repealed and set out a replacement scheme called the Liberty Protection Safeguards. In February the Joint Select Committee on Human Rights launched an inquiry into the proposed reform of the DoLS and whether it is striking the right balance between adequate protection for human rights with the need for a scheme which is less bureaucratic and onerous. In March, the government published its final response in which it set out its provisional views on the individual proposals. On 29 June the Human Rights Committee published its report recommending that legislation implementing the Law Commission's Liberty Protection Safeguards is brought forward as soon as possible. It also recommended that parliament should provide a statutory definition of what constitutes a deprivation of liberty. Then on 3 July, the government published the Mental Capacity (Amendment) Bill which has already had its Second Reading, and the Committee Stage is due to take place on 5 September. The Bill does not currently contain a definition as recommended. You can follow the Bill's progress here and there is a helpful round-up of recent developments on the parliament website, including a link to a Lords Library Briefing Note which covers the background to the Bill, the differences between the Bill and the Commission's recommendations, and the Committee report.
Insurance contract law reform: draft Insurable Interest Bill. In April 2016 the Law Commission and the Scottish Law Commission published a draft Bill following their review of the issue of Insurable Interest, having previously made proposals for reform in 2008 and 2011. They were asked to return to the issue due to the increased numbers of requests to write policies which include cover for children, cohabitants and to insure ‘key employees’ for substantial amounts. The draft Bill was intended to reflect the proposals set out in the issues paper and the Law Commissions invited comments on the draft Bill by 20 May 2016 with a view to publishing a final draft Bill and report in autumn 2016. The project was then put on hold due to other priorities within the team but on 20 June the Law Commission published their updated draft legislation. Comments on the updated draft Bill are welcome until 14 September 2018. Read more in the Law Commission press release.
Also on the horizon...
Update - Insurance Fraud Taskforce. The IFT published its final report in January 2016 and in a written ministerial statement in May 2016 the Government welcomed the report and accepted the recommendations in relation to low value personal injury claims. In the whiplash consultation in late 2016 the government took the opportunity to obtain views on the implementation of certain of the IFT's recommendations. These included a recommendation to amend the QOCS rules where a claimant discontinues less than 28 days before the start of a trial. As mentioned above, part two of the consultation response, which covers the IFT recommendations, is still awaited. In the meantime, last August the IFT published a report (completed in February) outlining the progress made during 2016 on the original recommendations. Both the IFB and the MIB published their support for the report with the latter adding further updates on the current position of projects outlined in the report. As we have mentioned above the government's response to the Justice Committee's small claims track inquiry confirms that it "is currently working closely with stakeholders including from the insurance industry to take forward the IFT’s recommendations. Detail will be included in Part Two of the response to the whiplash consultation, which will be published shortly." Also this month, the Solicitors' Disciplinary Tribunal has launched a consultation on whether to lower the standard of proof in disciplinary proceedings to the civil standard, a move which could be seen as a response to the IFT's recommendation to toughen action against dishonest solicitors.
MedCo. In October 2016 the MoJ published revised Qualifying Criteria for MROs, effective from 8 November 2016. MedCo immediately suspended 134 shell companies for failing to comply with the new Qualifying Criteria and over the course of the next 6 months or so, MedCo reported on a range of enforcement action. Last August MedCo warned against "inappropriate behaviour" during the audit process and in October MedCo published an FAQ document (pdf) to address common issues arising out of the Guidance supporting the revised Qualifying Criteria. In November MedCo published its annual report and financial statements and in December gave an update on its audit programme. More details of these developments can be found on the MedCo homepage where in Maya number of revisions to the Guidance and User Agreements were published. The Guidance became effective from 1 July save for the Geographical planning section which requires further review.
Update - Claims Management Regulation. Carol Brady published a final report following her independent review of claims management regulation in March 2016. The Treasury and the MoJ had commissioned the review to examine the perception of widespread misconduct among CMCs and to make recommendations to improve the regulatory regime. It was then announced that responsibility for regulating CMCs would be transferred from the MoJ to the FCA. This is being taken forward in the Financial Guidance and Claims Act discussed further above and HM Treasury has recently consulted on the accompanying draft regulations. A new consultation published in May seeks views on proposals to give the ICO powers to impose fines of up to £500,000 on individual directors of companies which breach the rules on nuisance calling. Last month the FCA launched a consultation running until 3 August on their proposals for regulating CMCs from April 2019. This month, the Claims Management Regulator published its 2017/18 annual report from which Legal Futures has highlighted a move from holiday sickness claims into housing disrepair cases.
NIHL claims: Government action. In June 2015 the ABI published its report Tackling the Compensation Culture: Noise Induced Hearing Loss, improving the claims system for everyone which highlighted concerns about the increasing numbers and cost of NIHL claims. In response to those concerns the MoJ asked the Civil Justice Council to consider the issue and make recommendations. The CJC published its long awaited report in September 2017, although Jackson LJ had spoilt the surprise by announcing and endorsing the agreed fixed recoverable costs matrix as part of his own review (see Simon Denyer's review of the proposals). The new news then was the proposals for reform of the claims handling process. You can read more about the proposals in our comprehensive update. We also took the opportunity to comment on the handling of NIHL claims in the call for evidence in relation to holiday sickness claims and low value personal injury claims.
Update - Civil Courts Structure Review: LJ Briggs' Final Report. In July 2016, Lord Justice Briggs published his final report following his review of the structure of the civil courts. The headline recommendation was the introduction of an online court capable of handling claims with a value up to £25,000. A detailed summary can be found in the press release accompanying the report and you can read more in Simon Denyer’s analysis. In January 2017 the Lord Chief Justice and the Master of the Rolls issued a Joint Statement endorsing the report and supporting the recommendations. In the meantime a pilot began in September to trial a procedure that will allow legal representatives to file claims online at the CCMC. In April the pilot moved on to the 'Public Beta' phase. The Courts Bill proposed in the Queen's Speech was expected to reintroduce the provisions enabling the creation of the new online court but the Bill is still awaited. In May the CPRC cast some doubt on whether there will be legislation with Coulson J and Birss J indicating that there is no over-arching online court and no indication that legislation will be put in place. However last month the CEO of HMCTS was reported as saying there will be further legislation ‘to underpin the online court’ as soon as parliamentary time allows. In the meantime, this month Joshua Rozenberg has published his book (which is available as a free download) on the online court planned for England and Wales.
SRA: thematic review of personal injury sector. In February 2017 the SRA announced that it was starting a review to better understand the personal injury market, and in August it began approaching a number of firms to participate in its survey. In October the SRA published its research and in December the SRA published its review which found that firms generally had adequate systems and processes in place, yet also found some issues which could lead to misconduct. At the same time the SRA issued a revised warning notice arising from concerns about how law firms handle personal injury claims, especially when dealing with CMCs. An SRA report (pdf) published in February 2018 on its work following the Insurance Fraud Taskforce report revealed the number of complaints it had received about referral fees and cold calling, and also the scale of law firms' dependence on the personal injury market. This month, personal injury claims feature in the SRA's risk outlook for 2018/19 as part of a new priority risk for this year: managing claims. In the accompanying press release Paul Philip, SRA Chief Executive says, "... For the first time, we are highlighting how claims are managed as a key risk. This follows concerns over issues such as firms failing to properly check on the validity of personal injury claims…"
CMA legal services study. In January 2016 the Competition and Markets Authority launched a market study to “examine long-standing concerns about the affordability of legal services and standards of service.” An interim report was published in July and the final report followed in December 2016. The CMA found that competition in legal services for individual consumers and small businesses is not working well, and made recommendations to address the issues. In December 2017 the government responded and ruled out a review of legal regulation, although Lord Keen did agree that improvements to the framework can be made through incremental changes. We have also been reporting on the SRA's work in this area: in January 2017 the SRA confirmed that it was preparing rules on publishing price information for consultation in the summer. In September the SRA launched a consultation "Looking to the future: better information, more choice" which includes proposals for law firms to publish information on prices and services for certain types of work, such as conveyancing, wills and personal injury work. It is also considering publishing data collated by firms on the complaints they receive. Controversially the consultation also proposes to allow solicitors to provide non-reserved legal services outside of firms regulated by the SRA. The consultation closed in December and last month the SRA responded. The plans under which freelance solicitors working outside a regulated firm will not be required to meet minimum levels of insurance cover has already been met with criticism. See also SRA press release which sets out the other measures as well, including the information law firms will be required to publish.
In the long grass?
Issues where there has been no activity for some time:
We have kicked QOCS and DBAs out of the long grass for now as it appears they may both be looked at as part of the MoJ's post-implementation review of Part 2 of LASPO discussed further above.
Legal services regulation: removing barriers to competition. In July 2016 the MoJ announced a consultation on proposals to reduce barriers to market entry, and regulatory burdens on Alternative Business Structures in legal services. Lord Faulks’ ministerial statement also mentioned the government’s intention to consider a further consultation on regulatory independence. The current consultation closed on 3 August 2016 but to date there has been no response. In December 2017, while responding to the CMA Legal Services Market Study, the government confirmed it would not be going ahead with a consultation on regulatory independence as it believes there is scope to make more progress within the existing framework.
For further information please contact Alex Fusco, Professional Support Lawyer on 0161 603 5211.
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