We know much of the travails of the criminal and family Bar; this article discusses the changes afoot in the world of personal injury litigation and how the junior Bar, in particular, is going to be affected by them.
Not content with undertaking the mammoth task of managing the legal fall-out from Brexit, the government has triggered four reform programmes over the last few months:
- Reform of whiplash claims and raising the small claims track (SCT).
- Introduction of fixed recoverable costs (FRC) across the whole of civil litigation.
- Introduction of FRC in low value clinical negligence claims.
- Changing the basis upon which the discount rate is calculated.
Reform of whiplash claims and raising the SCT
On 17 November 2016 the government triggered a consultation entitled Reforming the Soft Tissue Injury (‘Whiplash’) Claims Process. Its bold claim was that it was obvious that the amounts awarded by the court for minor whiplash claims were too high and that the best thing would be if no damages for pain, suffering and loss of amenity (PSLA) were awarded at all. That was quite an assertion and a rather worrying one. If the government can summarily remove the right to recover PSLA in one area of personal injury litigation, why not in others? As a fall-back, the government proposed that there should be a tariff system with fixed awards for PSLA for whiplash injuries up to 24 months. At the same time, it proposed raising the SCT limit from £1,000, where that figure represents the PSLA element of the damages awarded, to £5,000.
Winners and losers
PIBA, the Personal Injuries Bar Association, responded along with a host of other organisations to these proposals. The net result: we lost and won. Lost in that the government’s response of 23 February 2017 confirmed that there would be a tariff system and that the SCT limit for road traffic cases would rise to £5,000. Won in that at least it was a tariff system and the SCT limit for all other personal injury claims is set to rise to £2,000, rather than £5,000.
The government inserted these reforms in the Prisons and Courts Bill and they were going to become law in October 2018, though it remains to be seen how this will be affected by the General Election. If the Bill becomes law, then claimants genuinely injured as a result of the negligence of a driver will recover fixed amounts for whiplash injuries up to 24 months, which are uniformly lower than the average figure recommended by the Judicial College guidelines. The government seems particularly pleased with this reform on the basis that it will diminish the number of fraudulent whiplash claims made. That is regrettably a non-sequitur. Anyone set upon inventing an accident and subsequent injury can continue to do so; no doubt savvy fraudsters will even make sure their fake whiplash lasts just longer than the upper limit of the tariff system. Or they can make their fake whiplash stay inside the tariff system so limiting the scope for investigation of their alleged injury.
The government was told in clear terms that if it wanted to discourage fraudsters, it needed to tackle claims management companies. Strong enough to tackle lawyers, the government is apparently toothless when it comes to claims management companies. The problem with fraudulent claimants will no doubt endure for some time yet. Meanwhile, the vast majority of claimants, who have genuine claims, take a hit. This is designed to lead to savings for all of us taking out road traffic insurance policies; vain hope as, again, the government attached no sanctions to road traffic insurers if savings from these reforms are not passed onto customers.
Judicial appetite for fixed costs
On 11 November 2016, the Lord Chief Justice and Master of the Rolls commissioned Lord Justice Jackson to undertake a review of FRC in civil claims for damages up to £250,000. Sir Rupert has engaged fully with interested parties and listened to arguments both for and against the imposition of fixed costs. What conclusions he will reach I can hazard a guess at but we are best waiting until the end of July, when the review will be completed. Whatever Jackson LJ decides will be converted into a government public consultation and, no doubt, subsequently legislation. The die will, in all likelihood, be cast with his report.
It is well known at the Bar how upset judges can become at the sight of costs in litigation. Some of this is for good reason as expense in litigation generally acts as an impediment to access to justice. But personal injury litigation is different, a point recognised by Jackson LJ in his earlier sweeping reform of civil litigation (‘Jackson I’). All personal injury claimants enter into CFAs under which they will make a limited contribution to the solicitors’ uplift if they win out of their damages. If they lose, the rule of qualified one-way costs shifting (QOCS), introduced by the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) protects claimants from adverse costs orders. So personal injury claimants enjoy access to justice under the current regime, itself introduced as a direct result of Jackson I.
Costs budgeting, another invention as part of Jackson I, has proven very successful in personal injury litigation. Further control of costs is simply not needed. And if FRC are introduced in claims above the fast track, they are fairly bound to lead to hardship for claimants. Whilst the defendant public authority or insurer will have a free hand as to the amount of costs they wish to incur, the claimant will not. There will not be reform unless the FRC are lower than the average awarded currently; the outcome will inevitably be that claimants with difficult issues but limited damages will be constrained to accept a second class legal service.
Department of Health: in on the act
Meanwhile, the Department of Health is ploughing its own furrow in relation to fixed costs for claims up to £25,000, very much as if the Jackson consultation was not taking place. Here, the government sits in what some would consider the rather uncomfortable position of seeking to limit the claimant’s costs in cases where it is the defendant to the litigation. Undeterred, it wishes to cap claimant’s legal costs at a level that makes continuing with such claims unsustainable from the purely commercial perspective for claimant’s solicitors.
Discount rate: unpredicted and unpredictable
In 2001 Lord Irvine, Lord Chancellor, set the discount rate at 2.5%, meaning that claimants were assumed to be able to make 2.5% over RPI by investing their compensation awards in index-linked government stock (ILGS). Within a few years, this was shown to be wildly optimistic and there were repeated calls for the discount rate to be reviewed. It even led to a consultation paper being produced in 2013 but still there was no change. Then, it would appear in response to further threatened judicial review proceedings, the current Lord Chancellor announced in December 2016 that there would be a review completed within two months. After a delay of 16 years, that was optimistic but at the end of February 2017, the Lord Chancellor made an announcement that the discount rate would be changed to minus 0.75% as of 28 March 2017. Thus, in one fell swoop, claims worth £5m were worth £15m. How this squared with the government’s rhetoric about ‘compensation culture’ is another issue. In any event, at the same time as announcing this change, the Lord Chancellor announced there would be an urgent review of the change. So on 30 March 2017 the MoJ produced a consultation paper: The Personal Injury Discount Rate: how it should be set in future. The overall effect will be putting settlement of substantial value claims on hold. An enormous backlog of cases will now build up until the Lord Chancellor decides what she actually wants to do with the discount rate.
Injury to the junior Bar
The raise to the SCT will inevitably reduce the work of the junior Bar unless barristers are able to offer their services directly to litigants in person. Lord Justice Briggs had the insight to suggest that, as part of his Online Court, a litigant in person could access on the computerised system a list of lawyers for discrete legal advice or advocacy services. Barristers could be put onto this list and so avoid the otherwise impossible task of advertising their services directly to members of the public ahead of solicitors.
If FRC are introduced into personal injury cases over £25,000, then it is inevitable that solicitors will make less use of the Bar. This has already happened in the context of FRC for personal injury fast track cases. Where there is a limited pot of money, paid to solicitors as part of the FRC regime, they will not rush to share that pot with the Bar. Whether or not this is an intended consequence of the proposed reforms, Jackson II will hurt the junior Bar if it bites on personal injury litigation. All eyes now turn to Jackson LJ and the outcome of his deliberations.
Contributor Robert Weir QC is Chair of PIBA, the Personal Injuries Bar Association