Roundtable: Legal Reforms: Laspo: One year review

It has been a year since the Legal Aid, Sentencing and Punishment of Offenders Act 2012 was introduced, marking the widest ranging changes to the UK civil justice system since the Woolf reforms in the 1990s.  Therefore, Post, in association with Hill Dickinson, brought together specialists from the legal, insurance and health and safety sectors to discuss whether, a year after implementation, the reforms can be deemed a success or a failure. In a wide-reaching roundtable debate, the group considered the success of the claims portal, how the reforms have impacted claimant lawyers’ behaviour, the courts’ response to the legislation, and whether the next tranche of reforms will be welcomed by the industry to a greater or lesser degree than Laspo.

The Jackson reforms, encompassed within the legislation, have been described by many as the most important development for insurers in 2013. The ban on referral fees and the recovery of after-the-event insurance premiums from defendants, the introduction of damage-based agreements and qualified one-way cost shifting under the Civil Procedure Rules – as well as a new road traffic accident claims portal – have meant insurers and lawyers have all needed to adapt to a new way of working

The general consensus from the group was that, overall, the introduction of the claims portal has been positive.

Stephen Parry, vice-president Ace overseas general and head of UK and Ireland claims, said despite having to make adjustments to ways of working to incorporate it, the portal was working well within the business.

“We were never involved in the motor market so we weren’t used to the portal. However, we use quite a lot of technology in the way we do things. We were able to embrace the portal because you can measure success quite easily through it,” Parry said.

QBE claims investigation services manager, UK casualty claims, Lee Watts agreed negative aspects of the portal – and the reforms – have been in the minority.

“There has been a lot of talk around the portal not working for disease claims, and we have also had some issues with a lack of engagement from claimant solicitors. But they are in the minority, and we are all looking at the positive impact so far,” Watts said.

Hill Dickinson partner and insurance head Ruth Lawrence also said the feedback had been positive from a defendant perspective.

“Most statistics are showing reduced costs and claims within the portal,” Lawrence said, although she added it is worth remembering it is still early days in the portal’s operation.

Hill Dickinson costs head Paul Edwards mentioned another benefit of the portal – that clients appreciate the costs certainty that comes with it.

“Cost certainty is key, and that is both at the small level of the portal and also for large clients with costs budgeting,” he said.

“Cost certainty makes it far easier to plan. Before, you were fighting a case but you didn’t know whether the bill you were going to get [was going to be] £20 000 or £100 000 – [it was dependent] on the defendant. Now you know it’s going to be ‘X’ pounds, give or take, and you can fight accordingly,” he explained.

Coming to fruition

Having attended a Post roundtable on Laspo last year, where it was predicted cost savings would take time to materialise, AIG motor technical claims manager Doug Askin and RSA complex claims and strategy director Carolyn Mackenzie were asked for their thoughts on progress in this area.

Askin acknowledged a lot of changes were brought in early – within two to three months – but said the industry is only beginning to see the fruits of those changes now.

“There is still more work to be done and challenges to be overcome. We are starting to see some [new developments] in the portal and in the portal rates. That wasn’t happening this time last year, so the results are starting to show,” he said.

Mackenzie, meanwhile, highlighted how the industry is seeing a shift from costs to general benefits.

“In terms of premium costs – one of the main reasons for the reforms from a government perspective – we have seen premiums come down. However, not all the reforms have come in at the same time, so we have not seen a reduction [for small claims] yet,” she said.

Watts added the impact on costs depends on the types of claims received. “Some insurers will write a lot of disease or personal liability, where the denial rates are a lot higher – so they are going to fall out of the portal,” he explained.

Tactical manoeuvres

One issue coming to the fore since the introduction of the portal has been the tactics  used by claimant solicitors to get around some of the reforms restrictions.

For example, there was talk claimant solicitors were trying to push claims through the system before the new rules came into force, causing a pre-reform spike in claims.

Edwards, however, commented most of the tactics seen from claimant lawyers so far – such as putting incomplete information into the portal – are not new. “We were certainly prepared for a lot of that behaviour, and it will carry on evolving,” he said.

Relations with claimant solicitors

Other issues raised at the roundtable included  those surrounding claimant solicitor relations, such as receiving an automated message when calling a claimant solicitor’s office for more information – or not receiving lawyers calls at all.

However, for Parry, the new system has improved relations with claimant solicitors. “We’re actually picking up the phone. There is a lot of dialogue going on that maybe we tried to encourage before, but now they are actively trying to get some resolutions. It’s not all negative,” he added.

Asked about frontloading, Lawrence explained this was more of an issue with larger claims, which require a costs budget.

“On the larger claims, where costs budgets have to be put in and you do not have a fixed fee, some of the judges are really looking at those budgets. There is a benefit to frontloading because if you have done all the work beforehand there is nothing anybody can say about [the cost]. That is not just with personal injury claims, but with other claims as well,” she said.

However, in Edwards’ opinion, there has been an inconsistent approach from the courts in applying the reforms. “The District Court judges have had the proper training so they have really embraced it. We are seeing some extreme decisions at times, but everyone knows where they stand,” he said.

“The problems have been more with the High Court judges who don’t necessarily do full-time civil claims. They might vanish for six months to do some criminal work and then come back to civil. We have been finding the more senior judges at various times have been a bit more lenient in terms of compliance.”

Contrarily, Askin said it was evident in the insurance industry the judiciary was committed to applying the rules rigorously: “In a lot of the decisions that come down, there is zero‑tolerance to any non-compliance or extensions to time periods. The case management is very tight now, which is a good thing because it drives the claim at a fast pace.”

Impact of Mitchell

In Mackenzie’s view, judges are putting more emphasis on proportionality. “It is not just what is just, but what is proportionate. It is very early days but that is the message coming from the judiciary,” she said.

The recent Mitchell decision, where the Court of Appeal refused relief from sanctions to the lawyers representing Andrew Mitchell MP in his libel action over The Sun’s ‘plebgate’ story, was put to the group as an example of a zero‑tolerance approach from the courts.

Lawrence described that decision as sending “shockwaves” through the legal sector. “It was certainly a shock among the legal profession. [It is important] to know where you stand. If that is what the courts are going to do and that is what they are going to do consistently, that is fine,” she said.

Edwards added: “We have seen quite a lot of strict decisions. There was a motor fraud case [which was struck out] because the other side wanted an adjournment quite close to trial because they hadn’t got their loss of earnings details. [The judiciary] looked at the history of the case and told the claimants that they had no excuse for not getting the information [as they missed every other deadline].”

What’s next for Jackson?

One of the major changes proposed in the next tranche of reforms is the introduction of independent medical panels, expected to be in place by July.

The panels have already come under scrutiny, with the insurance industry rejecting suggestions by Labour MP Andy Slaughter that medical expert panels used to validate whiplash claims could become ‘insurers’ captives’.

For Askin, financial independence between the parties is paramount. “The first thing for me would be to make sure that you have financial independence [between] the doctors [and] the medical agency or the claimant lawyer,” he said.

Edwards touched on the government agenda, which he believes is aimed at stopping those people who bring spurious claims from pursuing them.

“[According to one of the justice department ministers], they are looking at it in a similar way to how they [handle] the benefit regime. At the moment, the people who have got weak claims with benefits are being put off claiming because they have to get a medical and jump through hoops,” he explained.

For Youngs Seafood health, safety and environment director Paul Fenner, the medical and legal panel will be a welcome change. “Very often we get tied in knots with medical reports and cost building. [Currently] decision-making can be very difficult, so I would support that,” he said.

Asked about other reforms that should be introduced, Lisa Meredith, Marks & Spencer assistant insurance manager, suggested an extension to the claims portal relating to disease claims, saying: “Perhaps making the portal for fixed costs around disease claims would be useful.”

As the discussion drew to a close, Lawrence commented on how long she expected the reforms to take to bed down. She acknowledged the situation is ever-evolving, but expects the industry will see large claims start to emerge from the system within three to five years.

“You would hope everything would be driven through in that kind of timescale. Part of the problem of assessing the benefit of the reforms from a monetary perspective is that the portal company will produce statistics on what is going in and out of the portal – but for the larger claims it is harder to track and keep statistics,” she said.

“I’m sure organisations will [report] individually so we will get anecdotal reports of what is happening, but in terms of industry-wide [results] it will be difficult to track those trends.”

With more reforms expected to be introduced, industry players will have to continually adapt their business to work within the new system. While it is evident many of the reforms introduced 12 months ago are having a positive impact for insurers, it is likely to be several more years before the full effect of the reforms is known and the success or failure label can be applied. 

This article was published in the 3 April edition of Post magazine.