Modern Claims Magazine Issue 14

Linking the Industry Together

July 2015 | Issue 14 | ISSN 2051-6495 The Doctors Chambers Modern Claims Conference 2015: Charlotte Parkinson, Modern Claims looks back on the second of Modern Claims’ annual conferences.

We need to talk about ADR: Brian Dawson explains why practitioners must adopt a robust approach to dispute resolution by reference to clinical negligence and catastrophic injury cases in particular.

Modern Claims Magazine | July 2015 | Issue 14

“It is time we got back onto the front foot and re-fashioned a system which generates pride on the part of those actively engaged, and admiration from the public it serves”

Dr Nicholas Braslavsky QC

Philippa Luscombe “We have seen the growing trend for use of non-qualified staff for PI claims, and a market driven by overt marketing by claims farmers and other marketing companies” Supported by Charlton Grant

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03

Welcome to

W

elcome to this special edition of Modern Claims! As the second annual Doctors Chambers Modern Claims Conference took place in May, we have increased the size of this issue in order to bring you all the conference coverage, as well as three special Roundtables, which took place throughout the event (read all the coverage from page 45 onwards). After the event, I interviewed conference Chairman and Managing Director of Lyons Davidson, Mark Savill, who picked out his highlights of the day (page 50-51).

As well as our extensive event coverage, this issue of Modern Claims has a very deliberate focus on clinical and medical negligence claims, as well as a wider personal injury focus, in light of the government’s plans to impose a cap of £100,000 on legal fees in clinical negligence cases. Our news writer, partner at Atherton Godfrey, John McQuater addresses the potential impact of the cap (page 7), and I spoke to our front cover star and head of the personal injury team at Penningtons Manches, Philippa Luscombe, about why some types of claim are becoming more common than others (page 13). I also spoke to Barrister, Dr Nicholas Braslavsky QC of Kings Chambers, who told me what a fixed fee regime could mean for clinical negligence cases and what he calls a need to get the sector “back on the front foot” (page 17).

A huge thank you to our contributors to this issue of Modern Claims, I hope you enjoy this issue and if you have any feedback or ideas for a future issue, I’d love to hear from you, please get in touch with me via: charlotte.parkinson@charltongrant.co.uk or call 01765 600909.

Charlotte Charlotte Parkinson, Group Editor, Modern Claims Magazine

Modern Claims Magazine

Issue 14 | July 2015 | ISSN 2051-6495

Project Director Kate McKittrick

Group Editor Charlotte Parkinson

Business Development Manager Martin Smith

Events Director Julia Todd

Production/Editorial Assistant Charlotte Lamb

Project Manager Ben Longbottom Modern Claims Magazine is published by Charlton Grant Ltd ©2015.

All material is copyrighted both written and illustrated. Reproduction in part or whole is strictly forbidden without the written permission of the publisher. All images and information is collated from extensive research and along with advertisements is published in good faith. Although the author and publisher have made every effort to ensure that the information in this publication was correct at press time, the author and publisher do not assume and hereby disclaim any liability to any party for any loss, damage, or disruption caused by errors or omissions, whether such errors or omissions result from negligence, accident, or any other cause.

MC // July 2015

04

CONTENTS 03-08 Intro & THE News 07 John McQuater talks news

One Nation or Two? The partner and head of litigation at Atherton Godfrey explains the risk of becoming a two nation legal system when taking the bigger picture of changes in the industry into account.

11-20 THE INTERVIEWS 13 Interview with...

Philippa Luscombe

Charlotte Parkinson, Modern Claims spoke to the head of the personal injury team at Penningtons Manches about whether certain types of clinical negligence claim are becoming more common and the importance of making use of data relating to claims brought against the NHS.

17 Interview with…

Dr Nickolas Braslavsky QC

Charlotte Parkinson, Modern Claims, spoke to the head of Kings Chambers about staying on top in a changing environment, what a fixed fee regime could mean in clinical negligence cases valued up to £100,000, and why the legal sector needs to get back on the front foot to secure a sustainable future.

17

21-42 The Opinions 22 Sector Soapbox

Modern Claims’ panel of Associations address recent developments in the claims market, and asses what they mean for the industry.

25 The rise of the machines...

Phil Swinburn, slicedbread

25 Planning ahead...

David Williams, AXA

27

26 Have customers become more

challenging?

Ashley Potter, DWA Claims

26 As easy as ATE

Martin Doyle, Amberis ATE

27 The real story...

Hilary Meredith, Hilary Meredith Solicitors

27 What Brokers do best...

Cathy Taylor, Ageas Insurance Limited

29 A question of Culture

Keith Tracey, Aon Risk Solutions

35

29 Back to basics...

Michael George Davidson, Parabis Consumer Law Services

31 A wider debate

Gerry Lee, P R Hanna Solicitors

31 The number one priority

Scott Whyte, Watermans

Editorial Columnists Andy Whatmough Managing Director S&G Response

David J Williams Managing Director, Underwriting AXA

Kamran Akram Principal Asons Solicitors

Paul Shenton Managing Director Just Costs Solicitors

Ashley Potter Director DWA Claims

Donna Scully Partner Carpenters

Keith Tracey Managing Director Aon Risk Solutions

Paul Sykes Managing Director Audatex (UK) Limited

Brian M Dawson Practice Group Leader Walker Smith Way Legal (part of Slater & Gordon)

Emma Holcroft Director 2020 Investigations

Martin Doyle Director Amberis ATE

Philip Swinburn Head of User Experience Slicedbread

Emma Tindall Associate BLM

Michael George Davidson Head of Business Development Parabis Consumer Law Service

Rob Cummings Manager, General Insurance ABI

Gerry Lee Senior Partner P R Hanna Solicitors, Belfast

Mike Hallam Head of Technical Services BIBA

Scott Whyte Managing Director Watermans

Hilary Meredith CEO Hilary Meredith Solicitors

Mike Klaiber UK Disease Claims Manager Zurich

Sucheet Amin Managing Partner, Aequitas Legal Founder, inCase™ mobile app

John K Dobson CEO smartsearchuk.com

Nick Parsons President FOIL

Cathy Taylor Head of Commercial Underwriting and Operation Ageas Insurance Limited Darren Gower Marketing Director Eclipse Legal Systems, part of Capita plc David Simon Chairman Triton Global Limited

MC // July 2015

Susan Brown Chairman Motor Accident Solicitors Society (MASS) Tina Coles Owner TC Legal Solutions Victoria Rawlings Media and Marketing Manager TRS Claims

05

33 Insurers have rights too

Mike Klaiber, Zurich

33 Here to stay

56 Credit Hire Roundtable

Paul Sykes, Audatex UK Limited

35 Proven results...

Emma Holcroft, 2020 Investigations

35 Learn, refine and improve

Sucheet Amin, Aequitas Legal & inCase™ mobile app

from paper documents to electronic verification for AML Compliance?

John K Dobson, smartsearchuk.com

37 Be aware...

Paul Shenton, Just Costs Solicitors

39 Loyalty and trust

Victoria Rawlings, TRS Claims

realistic solution?

Kamran Akram, Asons Solicitors

41 Luxury or necessity?

Andy Whatmough, S&G Response

41 An holistic view or a tick box

David Simon, Triton Global

your customers

Tina Coles, TC Legal Solutions

Lesley Graves, Citadel Law

43-70 The Features Claims Conference 2015

On 19th May, the second annual Doctors Chambers Modern Claims Conference took place at Stamford Bridge, Chelsea F.C. Charlotte Parkinson, Modern Claims summarises the event.

50 Interview with...Mark Savill

Charlotte Parkinson, Modern Claims, spoke to the Managing Director of Lyons Davidson and Chair from the Modern Claims Conference, about the main themes from the day and what is on the horizon for his firm over the next year and beyond.

54 Costs Roundtable

The costs landscape has altered beyond recognition in recent years, but are the new regulations clear enough, and how is the industry coping with costs budgeting?

Charlotte Lamb, Modern Claims, reports.

Brian Dawson explains why practitioners must adopt a robust approach to dispute resolution by reference to clinical negligence and catastrophic injury cases in particular.

69 First blow landed in propaganda

45 The Doctors Chambers Modern

Robin Selley considers the potential impact of the government’s decision to introduce fixed costs for clinical negligence claims worth up to £100,000.

65 We need to talk about ADR

42 A load of PAP

Modern Claims’ panel of resident legal experts tackle the top issues in the claims industry. Emma Tindall, Associate at BLM asks whether the benefits of drones outweighs the risk and Donna Scully, Partner at Carpenters considers the likely impact of askCUE PI.

63 It’s Negligent, clinically?

process?

42 How to keep the personal touch with

Uncertainty over the costs of making a claim has meant third party funding has risen up the agenda for those seeking to make a claim, but how do those funding cases assess whether they are viable and what are the most attractive ways of funding litigation? Charlotte Lamb, Modern Claims, reports.

61 Legal Opinion

39 askCUE PI: white elephant or

45

58 Funding Roundtable

37 - Q: When and why should I change

The world for those in the credit hire industry has changed dramatically in recent years, so what do cases such as Stevens mean for the sector and what does the future look like for Credit Hire?

Charlotte Lamb, Modern Claims, reports.

war on clinical negligence costs: will the legal services industry be able to fight for access to justice?

65

Sarah Crowther at Outer Temple Chambers considers how the legal profession might respond to the announcement of fixed fees in clinical negligence claims to promote access to justice.

70 5 minutes with...

Kelly Hall

70 Eclipse announces J-Codes

compatibility

Eclipse’s Proclaim solution enables lawyers to share consistent billing data

69 MC // July 2015

John McQuater talks news

07

John McQuater Talks News...

One Nation or Two? The partner and head of litigation at Atherton Godfrey explains the risk of becoming a two nation legal system when taking the bigger picture of changes in the industry into account.

O

ccasionally a number of topical news stories, when those individual threads are drawn together, weave a bigger picture which puts those stories into proper, and relative, context. We have recently been through one of those times in the legal world where the bigger picture, emerging from separate strands, is of particular significance to injured people and those acting for them.

So what is this bigger picture?

The broader canvas is surely about the increasing inequality between litigants, and indeed their lawyers, in those areas of the law that matter most to individuals (which in turn raises issues about the values of our society). An area of the law which is of real significance to individuals is personal injury.

That, indeed, has historically been recognised by the courts.

In Parkinson v St James & Seacroft University Hospital NHS Trust [2001] EWCA Civ 530, Hale LJ said: “The right to bodily integrity is the first and most important of the interests protected by the law of tort…”

But before returning to this bigger picture what are these individual stories? The first, and most directly relevant, is the inaugural policy speech of the new Lord Chancellor, Michael Gove, when he asked “what does a one nation justice policy look like?”1, that followed on from the Prime Minister’s vision for a one nation Britain which he set out on 22 June.2 The Lord Chancellor, in his speech, recognised that there are “two nations in our justice system” with “one for the rich and the other for everyone else”.

Aligned views...

In that same speech, the Lord Chancellor also observed that the courts of England and Wales are “the best place in the world when it comes to resolving matters by law” and identified a figure of £20 billion earned each year as a result of that global leadership.

Just the day before the Lord Chancellor’s speech the Chancellor of the High Court, Sir Terence Etherton, had made a speech advancing the same points, which the Law Society Gazette3 reported by stating: “Etherton stressed the importance for the domestic economy in getting these matters right, with increasing competition for commercial work from New York, Hong Kong, Singapore, the Hague, Dubai and Qatar.”

Sir Terence Etherton also stressed the need for efficiency, in order to meet that competition, making specific allusion to cases with an international element including those that have “nothing whatever to do with the United Kingdom other than that the parties have provided for an adjudication under

‘The increasing divide between litigants, and indeed their lawyers...across the range of legal work with particular importance for individuals, makes all the more troubling the perceived need to introduce fixed costs for claimants, but not defendants, in many clinical negligence claims’ English law or by English courts in the event of dispute”.

These views echo those made on many previous occasions referring to the international competition for dispute resolution and the need for the justice system of England and Wales to remain at the forefront in that arena.

An obvious link?

There is no doubt that an increasing amount of such work is being litigated in London. In 2013 it was reported that litigants from abroad had increased by 30% over the previous 4 years and already accounted for over 60% of the litigants in the Commercial Court4.

MC // July 2015

08

John McQuater talks news

There has not, however, always been a consistent approach to the litigation, in this jurisdiction, of cases with an overseas element. For example, in a case brought by a claimant domiciled in England and Wales but arising out of an accident in New South Wales, the Court of Appeal made reference to “a tendency for forum shopping”5.

With this increase in overseas work, it is worth noting that only last year the Lord Chief Justice suggested steps must be taken to examine why the cost of legal services here was increasing despite changes in the legal market and the expectation that competition would reduce cost.6 There is surely an obvious link between the influx of overseas work and the cost of domestic legal services.

Simple economics suggest that if there is increased demand for a finite supply then cost will increase. In June The Times7 reported the salaries of American lawyers working in London were pushing up rates across city firms.

Unsurprisingly an increase in the cost of legal services in the City of London will push up legal costs, because of a knock on effect on salaries, across London, the south east as a region and the nation as a whole. That is inevitable when good quality legal advice is a scarce commodity. The solution is not just to rely on pro-bono activities.

Most of the work identified by Sir Terence Etherton is undertaken by major firms in the City of London.

That connects with another recent story, which suggested, according to the Government’s Social Mobility and Child Poverty Commission, such firms are “systematically excluding bright working-class people from their workforce”. This has been described by some commentators as a “poshness test”.8

‘Those who chose the jurisdiction of England and Wales to litigate international disputes do so because they respect all that this system embodies’ Unfinished business...

The news about “poshness” might be seen to chime with yet another story,9 though at first sight very much on a tangent, that the first students have been sitting finals at AC Grayling’s New College of Humanities. That is an institution which promises a quality education for those (or perhaps more accurately those whose parents), can afford it. The cynic might regard this as education with the appropriate gloss of “poshness”. The increasing divide between litigants, and indeed their lawyers (if there is such a thing as a “poshness test”), across the range of legal work with particular importance for individuals, makes all the more troubling the perceived need to introduce fixed costs for claimants, but not defendants, in many clinical negligence claims. Any such measure, at least without steps to fix and make more predictable the process, are likely to further tip the scales of justice from the weaker to the stronger and better reward the “posher” end of the legal profession.

As well as making it more likely there will be “two nations” of legal consumer this also militates against stated governmental aspirations towards greater social mobility, particularly in the professions (which in turn ultimately shape the judiciary).

It is also worth remembering there is unfinished business from the last round of fixed costs, namely the promised review of defendant’s costs and the need for those to be fixed for exportal claims - just as they have already been for claimants.

Whilst fixed costs may have a part to play in work (subject MC // July 2015

to a largely predictable process) it might be thought that applying this approach in other circumstances is a somewhat statist, and potentially anti-competitive approach as it fails to reflect, in either direction, market forces.

Those who chose the jurisdiction of England and Wales to litigate international disputes do so because they respect all that this system embodies; a history of recognising the rule of law and equality before the law as well as impartiality and efficiency. Ultimately, if the system is undermined for the domestic user it will become less attractive for the overseas litigant. On this basis it might be said the cost of providing a world class service for the domestic, tax paying, user is essential expenditure in ensuring the substantial inflow of earnings, highlighted by the Lord Chancellor in his recent speech as well as, quite simply, being the right thing to do.

The real risk...

Whilst it could be said the recent increase in court fees will mean users of the court system rather than the taxpayer, will fund the justice system that rather misses the point.

Significantly increasing court fees is unlikely to deter the wealthy overseas litigant but certainly acts as a bar to the domestic taxpayer who needs recourse to the law on matters that may involve less than the sums involved in high value international litigation, but which are of no less importance to the individuals concerned. All of this has particular resonance for those practicing in the fields of personal injury and clinical negligence law and, of course, for their clients; those unfortunate enough to be needlessly injured.

When looking at the bigger picture that emerges from all these recent stories, there does indeed appear to be a real risk of a “two nation” legal system. The words of an individual litigant, who had to fight his case all the way to the Supreme Court, are telling. James Rhodes, recognising the help he had received from supporters such as Benedict Cumberbatch and Stephen Fry, said this: “What would it take for someone from Rotherham or any of these countless millions of others who don’t have these resources or connections?”10 It is notable these stories have all been run at a time when the 800th anniversary of Magna Carta has been celebrated; surely the principles then enshrined are as important today as they were all that time ago.

The candour and incisiveness of the new Lord Chancellor is very welcome. Of concern, particularly to those practising in the fields of personal injury and clinical negligence, is that the proposed solutions, in some areas, do not address the problems faced in those areas of the law by both litigants and lawyers. Indeed, other proposals point in the opposite direction and seem hard to square with the ideals of increased equality and the related issue of social mobility.

We must not have a two nation system. The rule of law must prevail. This is an important issue about national, let alone international, values.

John McQuater is a Partner and Head of Litigation at Atherton Godfrey.

1.

2.

3.

4.

Speech at the Legatum Institute 23 June 2015 Prime Minister’s Office 22 June 2015 Law Society Gazette 25 June 2015 Hogan Lovell’s partner Jeremy Coles speaking at a seminar organised by the Russian Legal Information Agency September 2013.

5. Sir William Aldous in Harding v Wealands [2004] EWCA Civ 1735 6. The Lord Chief Justice’s Report 2014 7. The Times 17 June 2015 8. Law Society Gazette 15 June 2015 9. The Times 23 June 2015 10. The Times 25 May 2015

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The Interviews

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Interview with... Philippa Luscombe

13

Interview with...

Philippa Luscombe Charlotte Parkinson, Modern Claims spoke to the head of the personal injury team at Penningtons Manches about whether certain types of clinical negligence claim are becoming more common and the importance of making use of data relating to claims brought against the NHS.

Q A

Has the PI market now begun to stabilise following 3 years of comprehensive reforms, or is there still a way to go?

The PI market has stabilised in the sense that, with the various reforms, lower value PI cases are being streamlined and in the main run by firms with teams set up to service these types of claim with appropriate systems in place. With reform of referral fees, again the market has stabilised with a reduction in ‘claims farmers’ entering the market and more transparency. In terms of the larger PI claims, the full effect of the reforms has yet to be seen. Some firms who were only doing a small amount of PI work have decided not to continue. Others are waiting to see how profitability will be impacted and how that affects what work they do and how they do it. Our concerns remain that for those with complicated/difficult cases, the reforms may make it difficult for them to access legal representation and/or result in pressures to accept settlements that do not really reflect the loss that they have suffered.

Q A

Have you noticed a rise in the number of clinical negligence claims being made? If so, why is this?

There was a big rise in the number of clinical negligence cases taken on before the Jackson reforms came into effect in April 2013. Clinical negligence practitioners and others made a conscious effort to inform the general public of the impact of the changes and I think most firms saw a surge in new cases opened in the few months before April 2013. Aside from that, the number of clinical negligence enquiries we see continues to increase. In part this is due to our own growing size and profile as a team but a large part is due to better public awareness of problems with certain Trusts/treatment and of the ability to bring and benefits of bringing a claim. As PI work has reduced in profitability, some firms have started to do clinical negligence work but without the experience of doing such work. At least for the moment that seems to be resulting in an increase in claims made but will not necessarily result in more successful cases and these firms may not stay in this market long term. The growing number of patients with potentially valid and important claims who

MC // July 2015

14

Interview with... Philippa Luscombe

‘The growing number of patients with potentially valid and important claims who are now finding it difficult to obtain representation because of the value of their claim and/or complexity of their case is a concern’ are now finding it difficult to obtain representation because of the value of their claim and/or complexity of their case is a concern. I would say therefore that in terms of numbers of claims actually made, these will potentially reduce because of the costs pressures.

Is there any difference between claims brought against the NHS and private practices/practitioners?

Q A

In terms of how a case is brought, there is, in practice, little difference between NHS and non-NHS cases. The exception to this is in certain areas of practice like cosmetic procedures and podiatry, and with care homes where a defendant may not be represented by a specialist clinical negligence team but by a general insurer (or in some cases may not be properly insured at all), which can introduce some different issues into a case. Otherwise, broadly speaking cases operate in a similar way although we often find the defence organisations slower to progress things than the NHSLA.

Q A

Are certain types of clinical negligence claim more common than others? If so, why?

I suspect to some degree this will turn on any clinical negligence practitioner’s locality and expertise/ reputation. However I would say that as a team we see a lot of cases involving the following: • Knee replacement surgery • Missed diagnosis of cancer (particularly breast, lung and bowel) • Birth injuries and deaths • Cauda equina cases • Elderly care issues – particularly falls and pressure sores • Missed fractures and dislocations.

What type of clinical negligence claim represents the highest value in terms of compensation?

Q A

Generally, the higher value claims are those involving birth injuries and brain damage, usually with the child developing cerebral palsy. Other high value cases generally relate to fatal cases and those involving brain injury, spinal injury or amputation(s).

‘We have seen the growing trend for use of non-qualified staff for PI claims, and a market driven by overt marketing by claims farmers and other marketing companies’ MC // July 2015

Q A

What is the highlight of your professional career and why?

It would be hard to pick one highlight but the three things I find most rewarding are, firstly, dealing with young brain injured clients who often have a poor prognosis when I am first involved but because of the claim and the way in which we manage it are able to access the best rehabilitation and support and return to at least some elements of a normal life, and exceed all expectations for recovery. The second most satisfying is where a patient or their family has felt very strongly that things have gone wrong with medical care but have been met with brick walls and/or denials, and for whom we get an independent opinion confirming their views and ultimately an admission, and the process of working with them to achieve that. The third is working closely with people who start with us as trainees and seeing them develop their skills, knowledge and practice to become empathetic and top quality PI or clinical negligence solicitors.

Q A

How have personal injury and clinical negligence claims changed since you started working in the sector?

Enormously! Since I started in 1998, we have had the Woolf reforms and introduction of the CPR and pre action protocols which have made a huge difference to litigation in terms of openness and speed. Costs reforms have been extensive and frequent throughout my career.

On the whole, litigation has become more co-operative and sensible. Part 36 reform has been ongoing and beneficial to achieving sensible settlements early, and ADR has become more common too. On the down side, the constant development and change of the costs rules have made it increasingly difficult to both do the best job for your clients all the time and sustain a profitable business. With such a focus on reducing recoverable costs there is a constant balancing act between what could be done to get the best result (not just in money terms but speed), and what the courts would say ‘should’ be done with a case, and the net result is a restriction of access to justice. It also delays and puts increasing pressure on Claimants to accept offers which may not be a fair settlement of their claim. The other big change has been in terms of marketing and specialism.

When I started, the field of PI and clinical negligence lawyers was relatively small, most people were specialists and lawyers did all their own marketing. Over time, we have seen the growing trend for use of non-qualified staff for PI claims, and a market driven by overt marketing by claims farmers and other marketing companies, and one where many non-lawyers have seen the opportunity for business ventures and profit. To some degree, the recent reforms

Interview with... Philippa Luscombe

15

‘The perception of personal injury and clinical negligence lawyers by the general public has changed very significantly’ have corrected that but I think the perception of personal injury and clinical negligence lawyers by the general public has changed very significantly.

Q A

Philippa Luscombe Philippa heads the personal injury team at Penningtons Manches and the clinical negligence team based in the Surrey office. She has been with Penningtons since training and qualified in 1998, becoming a partner in 2006. She also works out of London and has clients nationwide, particularly in the South East and West.

She and the personal injury team are recognised as Leaders in their Field by Chambers UK and the Legal 500 and her expertise is particularly recognised for serious brain and spinal injury and fatal accident cases.

She deals with road traffic and workplace accidents as well as public liability cases.

Philippa and the clinical negligence team are also recognised as Leaders in their Field by the legal directories. Her practice focuses on brain and spinal injury cases - particularly cauda equina cases and surgical incidents, and on cases involving delayed diagnosis, particularly cancer and meningitis.

A member of the Law Society Clinical Negligence Specialist Solicitor and Personal Injury Specialist Solicitor panels, Philippa is also an Association of Personal Injury Lawyers (APIL) Senior Accredited Litigator and is on AvMA’s recommended specialist solicitor panel. She is a contributing editor for Butterworth’s Personal Injury Litigation Service and regularly provides comment in legal journals and press on current issues relating to personal injury and clinical negligence.

The NHS has set aside £26.1bn to cover medical negligence damages, do hospitals and practitioners need to be more open about clinical errors to avoid claims and do you see this happening in future?

It never ceases to surprise me that as clinical negligence lawyers we do not do ourselves out of a job. When you see exactly the same errors happening over and over again, particularly within a certain Trust you assume that ‘someone’ will look at it and take action to make sure that that error stops being repeated because it is costing money. However, in reality we rarely see any evidence of that. If proper use was made of the data as to what claims are successfully brought then it must be possible to learn from mistakes and reduce repeated errors and subsequent claims. The complaints procedure is continuing to evolve and has great scope to reduce claims. Often people are not seeking money, what they really want is an explanation, acknowledgement and/ or an apology. Some Trusts are very good at operating a thorough and open complaints procedure but many are not. Often it is the response to concerns being raised that drives people to lawyers and litigation. A more open process of acknowledging errors and taking steps to prevent recurrence would, in my opinion, significantly reduce the number of claims made.

Q A

What’s next for the wider PI team at Penningtons?

We have continued to expand our team over the last few years, now with over 30 partners and fee earners across 5 of the firm’s offices. We continue to build on sub specialisms of types of claim within the team and on accreditations and directory rankings. We plan to continue our growth and to expand our geographical spread but our key focus over the next year or two needs to be to assess the impact of the recent costs reforms, and how we can manage to continue to provide a high quality service to clients whilst achieving the best results. At the same time, we must sustain the team as a viable business taking into account reduced recovery, the natural reluctance to deduct costs from damages, the lock up of work in progress and high cost of funding disbursements for clients.

MC // July 2015

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Interview with... Dr Nickolas Braslavsky QC

17

Interview with...

Dr Nickolas Braslavsky QC Charlotte Parkinson, Modern Claims, spoke to the head of Kings Chambers about staying on top in a changing environment, what a fixed fee regime could mean in clinical negligence cases valued up to £100,000, and why the legal sector needs to get back on the front foot to secure a sustainable future.

Q A

What are the biggest challenges of running a Chambers in an evolving legal market?

The biggest challenge has been a radical change in ethos implicit in the question. Barristers chambers have always been organised in a way which is simply not alive to notions such as business development and financial astuteness. I sometimes think how utterly bewildered my first head of chambers would have been at these issues. My upbringing as a barrister was rooted in that old-fashioned, gentle world. It has been the putting into effect of the realisation that chambers could not survive in that way in the modern legal ‘market’ (he would have loathed that word) that has been the greatest challenge.

It is not for me to judge the extent of that success. The rest has been much easier. Barristers are keen to express a view (on anything) but are generally compliant individuals prepared to put their trust in me to run things properly.

Q A

How has the clinical negligence/personal injury market altered since you started your career in 1983?

The changes have been remarkable. Much stemmed from the way in which litigation has been funded.

When the availability of legal aid ended in PI cases, the conduct of litigation moved from the provision of traditional, professional legal services to the introduction of business models and funding arrangements with the involvement of satellite business interests playing a key role in the litigation process. Whether or not connected to this, there was an explosion in claims (mostly of low value) which eventually led to fixed fee regimes and other governmental strategies to cap escalating costs and increasing insurance premiums. Along that pathway, the introduction of the Civil Procedure Rules produced a more efficient procedural framework with an increasing emphasis on ADR rather than trial. The birth of conditional fee agreements (with which I fundamentally disagree in principle) have affected most aspects of litigation conduct. I have always believed (perhaps naively) that a highly qualified, dedicated professional advisor should be expected to provide a high level of service for guaranteed reasonable remuneration (and that financial ambition should stop there).

‘Barristers are keen to express a view (on anything) but are generally compliant individuals prepared to put their trust in me to run things properly’

MC // July 2015

18

Interview with... Dr Nickolas Braslavsky QC

‘The administration and management of the courts becomes poorer in quality every year as a direct result of funding cuts’

Q A

Has the clinical negligence/PI (low and high value) market now stabilised post-reform and what impact could further reform have on practitioners and claimants?

Stability does not seem to have been the status of PI/ clinical negligence litigation in the last twenty years or so and I doubt whether we have reached the end of change. I do not see many law firm’s business models surviving even the current level of reform and it would not surprise me if the conduct of litigation lay in the hands of far fewer, larger firms in a few year’s time.

Q A

What is your view on the government proposals to cap legal costs recouped by lawyers in claims against the NHS? A fixed fee regime in clinical negligence cases with a value up to £100,000 is likely to have a radical effect on the preparation and conduct of cases of significance. The ceiling value is high and will affect many cases. The issues are often complex. They demand careful investigation by both experts and lawyers. Meeting the challenge of increasing cost is not fairly met by the imposition of arbitrary, arithmetical cost recovery to raise the ‘bottom line’.

‘I do not see many law firm’s business models surviving even the current level of reform’

Q A

Have the Jackson reforms had the desired effect or are further reforms/amendments required?

If the ‘desired effect’ is merely a reduction in legal costs (particularly those of the NHS) then I doubt whether we have seen the end of the process. The changes have proceeded from a particular set of ambitions.

We should be asking different questions. For example, ‘how can we produce a civil justice system of authority which will produce fair determinations of genuine disputes at reasonable and proportionate cost?’ We have to accept that a civil justice system is not capable of being fashioned by reference to market forces or economic modeling. We need to define what ‘success’ means in justice reform. To me, taking another ten million pounds off the overall cost does not begin to meet criteria of success. The administration and management of the courts becomes poorer in quality every year as a direct result of funding cuts. The sustained degrading of the system of justice over the last twenty years has led to a sense of pessimism amongst the administrative staff, the judges and the lawyers within that system. It is time we got back onto the front foot and re-fashioned a system which generates pride on the part of those actively engaged, and admiration from the public it serves.

MC // July 2015

Q A

What is next for Kings Chambers?

We have been very fortunate to have attained a prominent position in the legal world both locally and nationally. Over the past six years as head of chambers I have been merely the custodian of a strong legacy of hard work and determination throughout the various practice areas in chambers. The greatest challenge barristers chambers have faced in my thirty years of experience is not so much attaining a successful position in the legal world but actually staying there for more than a brief spell at the top. That demands the most careful thought and planning with the assistance of the clerks and other staff members. It won’t be long before that challenge will pass to someone else here at Kings with, I’m sure great enthusiasm.

Dr Nickolas Braslavsky QC Nick has practised in the medical law field for over thirty years. He was called to the Bar in 1983 following a degree in law and a doctorate in philosophy. Nick became a QC in 1999, a Recorder in 2000 and a deputy Judge of the High Court in 2007. Head of Kings Chambers since 2009.

He acts for claimants and defendants in highest value personal injury cases involving catastrophic injuries to the brain or spine. Regularly appears in litigation involving claims between one and ten million pounds.

Acts for claimants in high value or complex clinical negligence claims including claims arising from profound injury at birth, delayed diagnoses of cancer, radiological and misinterpretation.

Specialist injury practice in the field of sports and outdoor activity pursuits. Has acted in complex injury cases in football, rugby, cricket, skiing to name a few. Nick has acted in many cases arising from fatal/catastrophic injuries to adults and children during outward bound activities, skiing, roller-coasters, jet skis, karting and mountaineering.

Nick has acted in a range of military cases involving fatal and catastrophic injuries during training activities in the UK (including SAS assessments on the Brecon Beacons) and abroad in Iraq, Bosnia, Germany and Afghanistan.

Nick also acts as mediator and arbitrator in civil and sports disputes. Member of Sports Resolution Panel since 2012 and is an honorary lecturer in law at Manchester University. Nick also has specialist interests in neuroradiological interpretation, technological advances in treatment following catastrophic injuries and the impact in damages claims.

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The Opinions

21-42

The OPINIONS

21

Sector Soapbox Modern Claims’ panel of Associations address recent developments in the claims market, and asses what they mean for the industry.

Surges – Communication key to setting customer expectations

T

he insurance industry’s reputation is always under the spotlight during times of surge such as the 2013/14 winter floods. For all the good work that we do, negative media coverage harms this reputation. Newspapers will always focus on that one case study that portrays the industry in a bad light such as someone who hasn’t moved back into their home many months after a flood. When we face flack, we do so as an industry, whether it be for the slow settlement of claims or people not being able to move back into their flooded properties.

Communication as to what is happening and the scale/ size of the problem is key to help setting people’s expectations. Regular updates can be provided by pushing out photographs and video footage to social media and the media in general. This helps to keep customers informed and engaged with the issues, rather than just putting out statements and consider the job done.

Fortunately, in the United Kingdom we are not as prone to surge events as many places in the world but we do need to be prepared for such scenarios. By having guides and

procedures prepared in readiness to go for future events the communication process can start that much sooner when such an event should occur. This helps to engage with our customer’s right from the outset.

Lessons may also be learnt from overseas. For example the Insurance Council of Australia is a council of members established to handle the issues. In response to extreme events, the council activates a disaster hotline, employs a disaster team to work directly with policyholders, works with government and emergency services to liaise with communities and works with the media outlets to provide accurate information. This joined up approach assists customers and communities following any such event and importantly is reviewed after each event to see how it can be improved.

On the whole, we are getting better. The industry to a large extent now understands that setting expectations as to the time involved in dealing with claims is very important in managing customer opinion during surge situations. After any surge event lessons can, and must be learnt for the future both in terms of communication and being better prepared.

Mike Hallam, Head of Technical Services, BIBA.

Tackling Noise Induced Hearing Loss Claims

I

n recent years, there has been progress in tackling the UK’s compensation culture. Improvements have been made to help crack down on frivolous and exaggerated personal injury claims, especially for whiplash and unnecessary costs, which impact on premium paying consumers, have been removed from parts of the claims process.

The job is far from complete though. Most of the attention to date has been focused on tackling the compensation culture resulting from road traffic accidents (RTAs). As claimant lawyers have turned their attention to more profitable types of claims, compensators, including public sector bodies, have been experiencing a significant increase in the number of claims for Noise Induced Hearing Loss (NIHL) which have remained largely unaffected by the recent reforms.

Claimant lawyers and claims management companies (CMCs) looking to replace revenue lost from pursuing whiplash claims, have been driving the huge increase in NIHL claims being notified. Between 2011 and 2014, NIHL claims notified with insurers increased by 189%. Insurers

MC // July 2015

are committed to ensuring that genuine claims are compensated fairly, quickly and at proportionate cost but this increase has been driven by spurious claims. Around 70% of NIHL claims are unsuccessful.

These claims come at a cost not just to insurers but businesses and the taxpayer. Those claims that do succeed attract costs that are totally disproportionate to the level of damages paid to the claimant and to the work required to be undertaken by the claimant lawyer.

In order to stem the increase in the number of NIHL claims and tackle disproportionate legal costs, the Government should: • extend the fixed costs regime to disease claims; • amend the Claims Portal to enable multi-defendant disease claims to be submitted through it; and • extend MedCo to cover claims for NIHL. These reforms will ensure that genuine claimants can receive fair compensation in a timely and efficient manner while cracking down on those claimant lawyers and CMCs looking to make excessive profits from NIHL claims.

Rob Cummings, Manager, General Insurance, ABI.

Sector Soapbox

23

What lies ahead

R

eforms to the criminal justice system may have dominated Michael Gove’s speech on 23 June, his first since he became Justice Secretary, but there were also elements relevant to civil law. His commitment that “there is a responsibility on government to make sure that those in the greatest hardship – at times of real need – are provided with the resources to secure access to justice” was welcome. But his definitions of “greatest hardship”/“real need” may be queried by many claimants who are dissuaded from bringing legal claims on financial grounds.

Access to justice is about equal access to the legal system, and to deny someone legal assistance in seeking justice is to deny them equality before the law. The growing numbers of litigants-in-person is indicative of the challenge ahead.

Access to justice is not just a convenient slogan for solicitors to hide behind. It is an unbreakable principle at the core of our justice system, not a price tag. In that vein, we will be pushing the MoJ to conduct a statutory review of the RTA fixed costs regime to ensure claims within the fast track (up to £25,000) are receiving full access to justice, and will continue to argue passionately that those with

claims of lower value must still have access to professional legal advice.

His wider vision of a more technologically efficient, less complex and bureaucratic civil justice system will, in principle, be welcomed by most claimant solicitors working in RTA, familiar with the Claims Portal and now MedCo, despite its well documented early problems.

Efficiencies that equally benefit claimants and defendants are to be welcomed.

There are of course many other important issues that we hope Mr Gove will turn to in the months ahead. Insurers’ current focus seems to be on noise-induced hearing loss claims, but they must not be allowed to forget their commitment to cease making pre-medical offers ahead of independent legal advice, and must also end the practice of third party capture. Mr Gove built a reputation in the education sector for not shying away from taking on vested interests. We hope that the Secretary of State will adopt the same approach with the worst elements of the insurance industry.

Susan Brown is Chair of the Motor Accident Solicitors Society (MASS) and a Director of Prolegal.

Sights on extension of costs regime

F

ixed legal costs in personal injury litigation are not always popular with lawyers. Hourly rates generally allow the exercise of professional judgement regarding how much work a case demands, subject to client agreement. Fixed costs, however, impose a budget. If a case cannot be concluded within budget, the lawyer is working on his own time, at his own cost. This dynamic has shaped much of the legal debate about litigation costs.

The Jackson and related reforms have introduced a significant extension of the fixed costs regime, with the horizontal and vertical extension of the Claims Portal, as well as fixed costs outside the Claims Portal for RTA/EL/PL claims up to the fast track claim limit. By one estimate, the reduction in legal fees to Claimant solicitors in low value RTA work was in the order of 60%.

call for fixed fees to apply to all fast track cases (value up to £25,000) and smaller multi-track claims. He has challenged the MoJ to state publically if they object. The Civil Justice Council, responding to the Insurance Fraud Task Force interim report, added its weight to the call for the extension of fixed fees to reduce litigation costs and, indirectly, to reduce incentives to commit insurance fraud.

The ABI has launched a campaign to extend the fixed fee regime to disease claims outside the portal. Similarly, the Law Society is holding focus group sessions with members around the potential for the introduction of fixed costs in clinical negligence claims. With all these developments, a betting man might put money on there being a further significant extension to the fixed costs regime.

Little surprise that Claimant solicitors have moved into areas where work still commands hourly rates. Noiseinduced hearing loss and clinical negligence have seen significant spikes in claims and associated costs.

It can be a challenge to work within such a regime.

However, the current position cannot continue. There is too much waste and disproportionately high costs in lower value claims. The time is right for reform. In the upcoming consultations and negotiations, I hope Claimant and Defendant lobbys can work together to produce a regime that delivers a good quality service for clients at a fair and reasonable cost to the matters in dispute.

There are signs, however, that the extension of fixed fees will continue. Lord Dyson M.R. has repeated his long-held

Nick Parsons, President of FOIL and Partner, Browne Jacobson LLP.

MC // July 2015

carpenters

The Opinions

The rise of the machines…

F

or many years, the techniques, processes and methods of financial product and services development have been dominated by supplyside issues and constraints, giving rise to a financial industry oriented towards price and profits rather than consumer need. Against a backdrop of shifting economic conditions, complex regulatory requirements, direct sales and increased competition through comparison engines, pressure continues on price, margins and profitability.

To achieve the levels of complexity, flexibility and time-tomarket required by consumers, a radical shift is required in the definition and delivery of highly personalised products and services with a more demand-centric view; leading to solutions which will be delivered transparently, in line with expectations of a highly competitive landscape.

Already, there are some signs that this approach is being adopted by the industry, as innovative models emerge that focus on the design and delivery of products and services rather than the pure distribution of ‘packaged’ offerings and access gateways to niche markets. In fact, many Brokers now feature various value-chain functions historically performed by insurers, as part of their standard service offering.

Start your engines…

Traditionally, organisations have failed to deliver against this promise of new models and client service personalisation, due to the increased levels of operational and regulatory complexity, at both a micro and macro level, that the delivery of this innovation requires. Fundamentally, the issue herein lies not with the design but with the complexity of delivery.

It is at this juncture where the rise of smart-systems, underpinned by complex event processing engines (CEP), will address these needs by focusing on information flow as streams of observable and actionable events. The key idea is that these events can be filtered and transformed to enable the exploration of temporal, causal and semantic relationships among the events, and to make sense of them in a timely fashion. Fundamentally, CEP engines reveal opportunities and threats before or as soon as they emerge and can serve to diagnose and execute decisions in a timeconstrained fashion.

It is clear that to remain competitive, there is a real need for Brokers to engage with smart-systems in order to deliver products and services that are truly relevant to clients, that respond quickly to their needs in a complex market, and move away from a discussion based on price to one based on value.

Phil Swinburn, Head of User Experience at slicedbread.

25

Planning ahead...

At the recent Modern Claims Conference, Jo Causon, Chief Executive of the Institute of Customer Service said that the general UK trend for customer service was that ‘customers have become more challenging’ but that ‘some organisations had taken their finger off the pulse.’ Is this the case in the claims industry?

W

hilst I wouldn’t agree that a large number of organisations have let their service standards slip, there is likely to be a degree of truth in this, and there have been reports of some firms, particularly those finding themselves squeezed financially in the new legislative framework, not delivering with the same customer focus you would expect.

Jo raises another very valid point, customers have become more challenging, and specifically their expectations have risen substantially, and this is where I think we have a disconnect. Many firms have quite rightly planned ahead, seen what their competitors are doing, maybe even wisely looked outside the claims space to other industries and seen what they thought was best market practice. They have then planned in detail how to deliver that standard, and begun what might have been a painful (and expensive) process to bring people, systems and processes up to that level.

The problem is the world doesn’t stand still, and neither do customer expectations. Whilst all this good work has been ongoing, the best at customer service have got even better and customers liked what they have seen and begun to expect this as the norm. Compared to this, companies involved in the claims process, whilst genuinely improving how they deliver, are seen to still be some way behind the best, and with increasingly demanding customers, it feels like they are falling further behind.

This suspicion was confirmed in a recent survey for the CapGemini World insurance Report which stated that whilst service had undoubtedly improved, customer satisfaction had sadly gone in the opposite direction.

The report talked about an ‘alarming drop in customer experience’ underscoring an increase in customer expectations. European Insurers saw a deterioration in customer satisfaction of 3.4 points (a 10% shift), and particularly troubling was that when a customer experienced a claim, only 24% of them reported a positive experience, compared with 47% when they had not sampled a company’s claims services! The harsh reality is that there is no point in planning to be as good as the best are now, we need to plan to be as good as the best will be in 2-3 years time, and not underestimate the massive rate of change in this increasingly digital world.

David Williams, Managing Director, Underwriting, AXA.

MC // July 2015

26

The Opinions

Have customers become more challenging?

I

n this age of smart phones, mobile internet and one click purchasing, the customer has become more discerning and with the vast array of options open to them, they have the ability to choose. When a customer has choices, you have to offer the best service to attract and retain that business. All too often in this industry, it has been forgotten that the customer is not just a meal ticket and way to earn money but that they have been the victim of circumstances beyond their control. Is it any wonder when you have the repairers, hire car companies, engineers, medical agencies, doctors, solicitors, brokers and insurers all vying for the custom of someone (who a couple of days ago had no need for those services), find the process daunting and therefore becomes a challenge. Not really.

Being bombarded with phone calls, texts messages and emails constantly would try the patience of a saint.

It is clear that now, more than ever is the ‘time of the consumer’ and as such we need to look at them not just as a commodity but as someone who needs our help, expertise and guidance. They find themselves in a situation they did not choose and need our support.

Profit seems to be a dirty word but since it doesn’t say DWA Claims ‘registered charity’ above our door, we are still here to make money. However, we are also here to support the needs of the customer and this is paramount. With a demographic as niche as the licensed vehicle industry, this has never been more important. Those who rely upon their vehicles for their living seem to suffer the most and this is where the customer service factor comes into play. Reducing the time off the road and minimising their inconvenience is not just helpful, but crucial. The days of ‘here’s a car just carry on as you were’ are long gone. The customer has a choice and you need to stand out from the crowd with those choices. Give them something they can’t do without: service.

Ashley Potter, Director, DWA Claims.

As easy as ATE...

H

ave you reviewed your current ATE arrangements post-LASPO? Based on the fact that it’s over 2 years since the changes you will have renewed your Professional Indemnity Insurance twice! I am certain this will have been reviewed and alternatives sought by way of comparison, so why not your ATE scheme, both are just as business critical.

It could be argued that Pre-LASPO ATE was standard across the market, however now the policy holder is paying, there is far more variety from premium levels to cover. Insurers have had to act fluidly over the past two years to balance risk, cover, premiums and compliance, which has resulted in a broad range of structures with many different requirements and methods of administration.

You should always be confident that what is being provided fits both your clients’ as well as your own buying criteria. This should be an on-going process with regular reviews of what’s available i.e. additional cover, lower premiums and more streamlined administration. It is unlikely if you are insured directly they will come to you to advise you on what’s new in the market.

LASPO brought awareness that in order to secure clients, solicitors need to compete on price as well as service.

A 25% deduction seems a significant amount but this was already regularly accepted as the norm by other sectors, such as PPI. You cannot guarantee a new case will settle in the portal despite the initial straightforward appearance. If liability is not admitted and it exits portal, what then?

Do you insure now? What if you have to issue? What if a low part 36 offer is made or a strong defence made?

At each point, availability of ATE is reducing and the premium increasing. ATE schemes work on the basic principle of insurance: the premiums of the many pay for the losses of the few. When advising a client on their funding options as required under CFA, ATE needs to be mentioned and the client advised.

As with your general insurance arrangements, significant benefits exist when utilising the services of a broker.

Services come free of charge as they are only paid if a suitable scheme is found. Let a broker undertake a review of your scheme now, it should only take one meeting for them to establish enough information to approach the market with your buying criteria. They will then report back to you with their findings and recommendations.

What could be easier?

Martin Doyle, Director, Amberis ATE.

MC // July 2015

The Opinions

27

The real story...

What Brokers do best...

Your firm is acting in the Brecons Beacons Inquest. How accurately is it being reported in the media and what lessons can we learn?

How can commercial brokers show they are adding value in an increasingly competitive marketplace where price is no longer the only deciding factor?

T

his inquest is examining the deaths of three soldiers during a training exercise. Mike Yardley, an ex Army Officer was recently interviewed and was totally incorrect in his interpretation of the law. Contrary to Mr Yardley’s views there are no “ambulance chasing” lawyers involved but rather conscientious lawyers – often acting free of charge – who have been assisting military personnel since 1987. Without inquisitive specialist lawyers there would be no checks or balances to question the MoD and improve systems for the better.

This is not the first time I have been troubled by inaccurate reporting. A recent national news article stated that a senior General, Sir Frank Kitson, is being sued by a widow of a Catholic man killed by loyalists at the height of the Troubles in Northern Ireland. This story is inaccurate as it is mixes up the repeal of S10 of the Armed Forces (Crown Proceedings) Act in 1987 and the rights of our own soldiers to sue the MoD if injured out of combat. The fact is that most conflicts will be combat immune and free from prosecution. It is Human Rights Law that is paving the way for civilians to sue the MoD. The loophole in the Legal Aid system which allowed non-UK residents or non-UK tax payers to make a claim on the fund has now been plugged. The difficulty our military has, in the heat of battle, is difficult enough and I support the removal of Human Rights legislation from conflict operations or the Theatre of War. However this is not to be confused with our own soldiers’ rights. Since 1987 and the repeal of S10 of the Armed Forces (Crown Proceedings) Act, armed forces service personnel have been entitled to claim for accident injury or death in service.

The idea behind this was to place members of our armed services, working alongside civilians, in our dockyards, on a level playing field when in contact with asbestos and the rights to claim. These claims are similar to a factory accident – if there are dangerous procedures resulting in injury or death there is the right to claim. Again this should not to be confused with the MoD’s own, in house, employer’s scheme, the AFCS, which gives financial redress for death or injury in service and is deducted and repaid to MoD, from any S10 claim as above.

Hilary Meredith, Chief Executive Officer, Hilary Meredith Solicitors.

T

he commercial insurance market for SMEs has evolved significantly over the past few years, largely due to advances in online trading platforms and the imarketportal, as well as the increasing sophistication of insurer specific digital trading solutions.

With the advent of digital trading, brokers have been freed from a great deal of the time-absorbing administrative work that kept them pinned to their desks and drained precious resources. This has not only meant they can quote and secure cover on the spot, providing a slick and efficient service, it has allowed them more time to build genuine relationships with their clients through the delivery of their valued advice and expertise. In essence – they have the opportunity to offer the ‘human touch’.

A broker that can demonstrate they have taken the time to really understand the nature of their client’s business and can advise them on the covers that will reduce the specific risks to that business, at an acceptable cost, will naturally earn trust, respect and loyalty. For example, unintentional underinsurance could leave a firm in dire straits if the worst happened (such as a fire sweeping through the premises resulting in loss of stock and premises), a broker that has worked with the client to calculate the maximum exposures will help mitigate the risk of underinsurance and a claim not being fully met.

But it’s not just at the underwriting stage that a broker can add real value, the claim is, after-all, when insurance cover really shows its worth. Brokers know which insurers deliver a great service when it comes to claims and can advise their clients accordingly, highlighting for example, where an Insurer has won claims awards and/ or accreditations. If brokers can also demonstrate that they have a strong relationship with a reputable, awardwinning insurer, the customer can rest assured that if things ever go wrong, they are in the best possible position and will be looked after by the expertise of both the broker and the insurer.

Identifying clients’ needs and providing expert advice is what brokers do best. They need to be able to relate to their clients, show them the products that are going to protect their businesses, even if they are not the cheapest options. The broker that understands the needs and concerns of their clients business is the broker that they will stay with.

Cathy Taylor, Head of Commercial Underwriting and Operations, Ageas Insurance Limited.

MC // July 2015

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The Opinions

29

A question of Culture

Back to basics...

Aon Risk Solutions published its biennial Global Risk Management Survey at the end of April, which revealed that damage to brand and reputation was deemed the top overall concern facing global organisations. How should these organisations be managing their reputational risks?

How can commercial brokers show they are adding value in an increasingly competitive marketplace where price is no longer the only deciding factor?

I

t is questionable if “reputation risk” as such exists, since damage to reputation is a consequence rather than a root cause or risk event in its own right. It remains however a current major concern. Reputation is best analysed and managed as an aggregation of other business risks and the solution lies initially in having appropriate risk management in place. This includes the classic framework: identification, assessment, treatment and ownership. Reputation exposures however have particular characteristics.

It is worth considering what can go wrong. Errors of judgement and decision-making may be forgivable and not lead to damaging reputation events. Organisations can invite reputation damage by departing knowingly from their principles. A less clear area is that of ethical decisions.

Ideally, these are mapped with some hard lines but perfect knowledge of what is going on in the organisation is not possible. Additionally, dislocation problems can be created by outsiders if ethical lines shift with unforeseen consequences.

Responsibility has therefore to lie with the top group, with appropriate delegation paying attention to the right risks, some of which may not appear on conventional risk registers. It is thereby the role of governance to anticipate and contain potentially damaging behaviour. You can of course design rules to contain risk but you are never sure what an individual may be doing. This is a complex area for risk averse organisations that have growth objectives and are populated by entrepreneurial types. Culture is the main issue.

Risk identification can usefully be supplemented by a wider scan of the risk horizon. Thus scenario planning and stakeholder analysis can play valuable roles. One particular challenge is that reputation events require immediate attention, irrespective of apparent severity. These events are characterised by what the risk management community terms “velocity”: things happen very quickly and action is needed potentially without a full grasp of the situation.

Cyber-attacks are a case in point.

Reputation events may be black swans but are possibly more likely to be “predictable surprises”. Organisations that are resilient (prepared), have a better chance of managing the risks successfully. Having a crisis management team in place with access to the right resources is vital.

Keith Tracey, Managing Director, Aon Risk Solutions.

T

he commercial broker market, while challenging, is forecast to see continuing growth during the rest of this year and beyond with most commentators remaining positive for the medium term.

Getting the basics right is key for brokers. Often in competitive and buoyant market environments it’s easy to lose sight of the fundamentals. Customers still need and rely on buying their cover through an intermediary requiring their professional advice to source the right product.

Buying the right insurance and cover may be the most important business decision a commercial customer makes, especially as most commercial risks remain complex and with the ever-present threat of increased regulation. Asking the right questions is vital. The better the picture an intermediary has of the client the more bespoke the advice, and the better able the broker is to help mitigate genuine risks.

Keeping abreast of the latest market developments relevant to your expertise is also vital but can be overlooked when the pressure is on to retain policyholders and win new clients. It also helps to develop new specialist areas to differentiate yourself.

Diversification can, of course, be service-based or product-based. For example, customers are ever more demanding of their online connection with insurance.

Brokers and insurers need strong trading platforms and document management solutions which make full and best use of cloud/mobile delivery.

From a product diversification perspective, looking into associated markets for additional customer needs can offer significant benefits for both broker and policyholder. For example the legal services market for SMEs is now worth in excess of £10bn pa and is largely untapped with one-in-four business owners failing to obtain the right legal advice when they need it most.

Having their trusted commercial broker available to assist in matters outside of core insurance requirements could prove attractive for many. Most business owners, no matter how large or small, are not served well by the standard LEI offering for which many are charged an additional premium.

A competitive total-market pay-as-you-go legal service available through an intermediary channel warrants serious thought if you are looking to add value and differentiate yourself from your peers, potentially unlocking additional revenue from an untapped £10bn market.

Michael George Davidson, Head of Business Development, Parabis Consumer Law Services.

MC // July 2015

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The Opinions

A wider debate

N

ighttime curfews appear at first sight to be a nice straight forward idea to help deal with what many see as the scourge of young male drivers. In practical terms an already over stretched Police Service will tell you enforceability problems mean other measures such as educational programmes, additional mandatory training and most controversially, an increase in the age limit to legally drive are much more likely to be effective.

A bill encompassing some of these including a graduated driver’s scheme is currently making its way through the Northern Ireland (NI) assembly. Interestingly and perhaps tellingly, after debate it was decided not to include a nighttime curfew element.

Evidence seems to suggest that curfews have only been partially effective in countries such as New Zealand with large rural areas. The operational enforcement by the Police in such areas can be less onerous when compared to large densely populated cities that are prevalent in the UK. One can only imagine the difficulties the Police would face all over the country in trying to maintain the effectiveness of a nighttime curfew, not to mention the multiple issues that would undoubtedly arise within families. The impact on local courts, if criminal sanction was included as part of the legal framework, would again raise operational concerns at a time when resources are already under severe strain.

There is undoubtedly the prospect of reduced premiums should such legislation be introduced, but in light of the operational and enforcement problems, the benefits are likely to be only notional. Similarly, it really isn’t contentious to suggest that lives will be saved but again interested stakeholders want to find realistic solutions that Society as a whole and (in particular) young drivers can buy in to. The recent and unwelcome spike in fatal and serious injuries through the UK and, unfortunately for the writer, in NI, is currently the subject of much investigation and careful analysis of data. Preliminary findings seem to suggest that young drivers are again over represented in these types of accident and clearly, although the suggestion by the ABI is a radical one, perhaps in light of the recent unwelcome rise in serious and fatal injuries, it is time for the suggestion to be included in a much wider debate.

Gerry Lee, Senior Partner, P R Hanna Solicitors.

31

The number one priority...

At the recent Modern Claims Conference, Jo Causon, Chief Executive of the Institute of Customer Service said that the general UK trend for customer service was that ‘customers have become more challenging but that some organisations had taken their finger off the pulse.’

Is this the case in the claims industry?

I

particularly enjoyed Jo Causon’s talk at the recent conference and the panel discussion that followed it as it put the emphasis right back to where it always should be when it comes to this industry – with the client.

Forgetting your client (or customer) or at least putting them to one side whilst your focus is elsewhere is a mistake made by many and in the broader sphere of customer service generally, some organisations may have taken their fingers off the pulse in recent times. The self-help gurus and business coaches of this world would tear their hair out (or rub their hands with glee at the improvement plan they could implement and the fee that would accompany it) upon finding an organisation that wasn’t as customer-centric (one of my all-time most loathed “buzz” words), as ultimately, a business without customers is not a business at all.

However, the claims industry has, over the past couple of years, been one of the more proactive sectors in trying to improve both its public perception and its customer service, or at least those who have thrived during these recent times have. From a claimant lawyer’s perspective, the prospect of losing business that had previously been drip fed meant that businesses had to look at what they offered the public and without any disparity on the price charged for the service (by way of deduction from damages). The key differentiating factor that they could influence is the way they dealt with that client throughout the claims process. By doing that right, businesses create walking, talking testimonials of their service and happy customers breed more happy customers.

Claimant lawyers face the added challenge of trying to attract people who are generally quite vulnerable and making a distressewwd purchase (as people do not set out to become injured despite what some insurers may have you believe) and that those seeking to pursue a personal injury claim have been demonised within the media and other channels by a well-orchestrated campaigning from the insurance industry. This makes the need to provide excellent client care the number one priority for our business to ensure that we can deliver them the justice they are entitled to.

Scott Whyte, Managing Director, Watermans.

MC // July 2015

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The Opinions

Insurers have rights too

I

n our recent case Zurich v IEGL Limited, a landmark ruling by seven Justices of the Supreme Court unanimously decided that in claims for mesothelioma, insurers are only responsible for liability in the policy period, where the employer remains solvent.

The Supreme Court has recognised that fairness to claimants, ensuring that they receive full compensation of damages, should equally apply to insurers covering employers who have caused the exposure.

In a line of authority starting with Fairchild in 2002, the courts and parliament have rightly ensured that victims of this terrible disease should receive full compensation from those guilty of causing the exposure. Contribution between joint exposers was dealt with by the Compensation Act in 2006 but the position of insurers has never been addressed.

Until now.

ABI guidelines introduced in 2003 provided a framework for insurers and uninsured employers to share the cost of claims according to the time on risk. IEGL (based in Guernsey) challenged this long accepted practice, arguing that because the insurer was on cover for six years of the employee’s exposure, that insurer should pay the full 27 years’ worth of damages and costs. Excess insured 2 years and the remaining 19 years were uninsured, either because the IEGL had no insurance or was unable to trace its insurance records. Prior to EL insurance becoming compulsory in the UK in 1972, many large companies decided to save money by self-insuring. EL insurance only became compulsory in the Channel Islands in 1993.

The ABI guidelines were based on the principle of fairness between the contributing parties, whilst at the same time ensuring a claimant would receive full compensation. Zurich took the decision, supported by the ABI, to challenge IEGL, arguing that although liable to meet the claim in the first instance, the employer remained solvent and the insurer would have an equitable right of contribution in respect of the uninsured period. We ensured as part of our case that a claimant’s entitlement to full compensation should remain unaffected. Fortunately, the court found in our favour and insurers are only responsible for the period for which they provided cover.

Contrary to popular belief, premiums collected for the years when asbestos exposure occurred have proved in many cases to be woefully inadequate. A decision in IEGL’s favour would have resulted in dramatic consequences. Liabilities for mesothelioma would have extended many years beyond the period of cover. Advancing knowledge, technology and development of the law could have led to far reaching consequences with new and developing diseases.

33

Here to stay

I

n less than a decade, social media has empowered businesses of all shapes and sizes, across a number of industries worldwide, to attract and engage with customers, and the wider industry. 91% of Generation Y (those born between 1989 and 2000) will tweet about businesses or brands. The flip side to this, if not managed carefully, is that the increased brand exposure has the potential to turn sour and cost a business millions.

The social media relationship is one that by definition, has to work both ways, particularly as the new Generation Y has grown up with the internet. Technology is embedded into these people’s digital lifestyle to the degree that the first thing 72% of Generation Y do in the morning is check their smart phone and then on average another 110 times throughout the day. They also spend approximately 30 hours using on average 27 apps per month, an increase of 65% more time than just 2 years ago. In fact, in 2014 mobile device time overtook TV screen time.

It is this frequent engagement and advancement of technology that offers businesses, including the insurance industry, a big opportunity to connect with the customers of the future. For example, in 2011 Generation Y accounted for 41% of individuals involved in motor accidents and by 2020 Generations Y and Z (those born after 2000) will account for well over 60%. So as an industry we need to change how we do things and how we engage and interact with these customers, not just now but in the future.

Today, more than ever, consumers want to hear about a brand from their friends and other consumers, not from the brand itself. Closed discussion groups like Snapchat and WhatsApp are fast becoming the norm, whilst texting and apps like Facebook are regarded as ‘off trend’.

Activating the voices of happy customers is one of the best things a business can do for its brand, but it’s also one of the most difficult.

Gamification - when businesses embrace the interactivity of games within its apps - is fast becoming a marketing tool as it creates an emotional connection with customers to build a longer relationship. By 2015, 70% of global firms will already have at least one gamified solution.

In the next 10 years, 80% of your core business will be Generation Y so the time to act is now. We should be under no illusion – digital is here now and here to stay for the future.

Paul Sykes, Managing Director, Audatex UK Limited.

Mike Klaiber, UK Disease Claims Manager, Zurich.

MC // July 2015

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The Opinions

Proven results...

T

he ‘ABI Campaign for Safe Young Drivers’ proposes a number of changes aimed at improving the safety of young drivers. They want a one year minimum time period for learning to drive. Young drivers would be able to apply for their provisional licence at the age of 16 and a half but would not be allowed to take their practical test until they are 17 and a half. They propose a ban on intense driving courses as the sole means of learning to drive and young drivers would need to evidence driving in all seasons, conditions and on all types of roads before taking their test.

For new drivers under the age of 25, they propose a 6 month period after passing their test when they would not be allowed to carry passengers under a certain age. They also want a zero tolerance on alcohol. Young drivers would only be allowed 20mg of alcohol per 100ml of blood in their system. A 20mg limit would act as a zero limit as consuming any alcoholic drink would push them above this limit.

The curfew on nighttime driving would last for 6 months after the driver has passed their test and would mean that young drivers would not be allowed on the road between the hours of 11pm and 6am. This new scheme would largely rely on young people and their parents abiding by this rule, which leads to the question of how it would be policed, although some insurers are currently using telematics to monitor their own curfews. There would be exceptions to this rule allowing young drivers to get to work or education.

The figures from the Department for Transport (DfT) state that over 50% of crashes involving male drivers aged 1719 years old that result in death or serious injury occur at night. Simply by banning young drivers from the road at statistically the most dangerous times should reduce the number of accidents, providing it is sufficiently policed.

In terms of insurance premiums, the cost of any type of insurance has to reflect a risk. Currently, young drivers between the age of 17-20 are twice as likely to make an insurance claim than other drivers and on average, their claim cost will be three times higher than other claims.

This is reflected in their premiums. In the future, if these campaign proposals are made compulsory and their implementation is proven to reduce the risk to insurers of young drivers then theoretically this should be reflected in insurance premiums.

Emma Holcroft, Director, 2020 Investigations.

35

Learn, refine & improve At the recent Modern Claims Conference, Jo Causon, Chief Executive of the Institute of Customer Service said that the general UK trend for customer service was that ‘customers have become more challenging’ but that ‘some organisations had taken their finger off the pulse.’ Is this the case in the claims industry?

J

o Causon was spot on with her assessment. From memory, she was talking in more general terms but I believe that in the claims industry and the legal profession in particular, organisations haven’t kept up with the demand from customers.

I’m of the view that customers have become more challenging/demanding not to be awkward but simply because they want a better experience. Customers are looking for more than just the end results of a service or product. They want to be more involved and consulted during the buying or service process than ever before.

They need to know what is going on and the reason for it.

Evidence of this exists in the ascendancy of online review sites. Consumers now will consult reviews to determine whether they will engage with that organisation.

Tripadvisor is a well-recognised and trusted online review site for holiday destinations and hotels. More general sites like Trust Pilot provide an online facility for businesses to collect reviews. These sites have only grown through the demand of consumers to understand what the experience will be like for them.

Applying that to the legal claims market, organisations can do more to not only collect reviews but implement a robust system for learning, refining and improving on customer service. For example, at the start of this year, my own legal practice implemented a project using mystery shopping to better understand the needs of our prospective clients and how we were handling them. We learnt that by making some very simple changes in how we spoke to our prospects, it brought them closer to us.

Building on a relationship built on trust is much easier and far more rewarding not just for our prospects but for us as well. Within months our conversion rates increased by 3%, significantly increasing turnover without having to spend any money.

The legal profession should be looking to learn from other industries to see how we can better serve our customers/clients. I’m not saying mystery shopping is for every organisation. It could be that a business needs to change the way it communicates with its customers or; spend more time educating their customer about the service they offer. Neither of these examples is without risk or cost but the consumer will spend very little money with that business if it doesn’t look to meet their demands head on.

Sucheet Amin, Managing Partner of Aequitas Legal & Founder of inCase™ mobile app.

MC // July 2015

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The Opinions

Q: When and why should I change from paper documents to electronic verification for AML Compliance?

A:

The quick and simple answer is ‘probably’ when you consistently recruit ten or more new clients per month. There are four primary considerations when changing; cost, convenience, risk and full compliance.

Like some you may consider paper verification as free. You have the staff anyway so it doesn’t cost you anything, an interesting viewpoint! If you are recruiting ten or more clients per month, you are likely to consume at least one person chasing Partners for information, chasing clients for documents, attempting to check Sanctions and PEPs and investigating any matches, photocopying, archiving all relevant materials and returning client documents via secure post or carrier. All of a sudden it sounds more like £15,000 to £20,000 per year minimum - a far cry from free.

New clients having to produce documents or certified copies to prove their identity is an irritating and costly inconvenience when more secure electronic alternatives takes less than 3 seconds to process. Processing ID documents is not what you would expect from a firm that has arrived in the 21st century, and it’s certainly not convenient or cost effective.

The risk of forged identities only exists with paper documents. Interestingly, all recorded fraud cases since AML regulations were introduced have involved the use of client documents. It is very difficult to create a fraudulent electronic credit footprint and it would take at least three years to be recognised by the three Credit Reference Agencies, hence the fraudsters have little or no interest attempting this route.

The final challenge is to complete compliance; checking Sanctions and PEPs is time consuming and costly using a paper based system and monitoring regular changes to Sanctions and PEPs is impossible. Many still choose to rely on that old adage, “our clients are not the type of people that would be on a Sanction or PEP list and I know most of them anyway.” Some Banks and Financial Institutions have found it very costly to ignore or short cut this aspect of AML Compliance. With fully compliant AML solutions starting from as little as £600 per annum why would anyone want to take the risk of “paying lip service” to AML Compliance with a half-baked document based solution?

37

Be aware...

Are commercial litigation solicitors routinely incurring costs over and above the agreed level?

Y

es - a new survey has revealed that 69% of commercial litigators have incurred costs over and above the agreed level - but just 11% have made an application to revise the agreed costs budget upwards. Just Costs Solicitors surveyed 912 commercial litigation partners at the UK’s top 200 law firms. This research suggests that the majority of solicitors (89%) are either unaware that a mechanism exists for budgets to be revised or believe that any such application will automatically fail so there is no point in pursuing it.

It is very difficult for solicitors to recover an over spend without applying to revise the approved costs budget upwards. If clients are paying win or lose, this is a potential professional negligence issue and if law firms are limited to what they recover then they are effectively working for free.

In other findings, all respondents said that when a costs budget is approved or agreed they monitor the costs they incur to ensure they remain within budget for each phase of the litigation. The Courts have sent a number of stark warnings to lawyers that a failure to conduct litigation within the confines of the budget is going to result in a proportion of the costs being irrecoverable between the parties.

The fact that every one of the respondents has confirmed that they monitor their ongoing costs indicates that solicitors are aware of the need to ensure that litigation is conducted within the budgeted amount. However, if solicitors are monitoring their costs on an ongoing basis, there are obviously flaws in the process due to the overspend in so many cases.

Paul Shenton, Managing Director, Just Costs Solicitors.

John K Dobson, CEO, smartsearchuk.com

MC // July 2015

victoria.rawlings@trsclaims.co.uk

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The Opinions

Loyalty and trust At the recent Modern Claims Conference, Jo Causon, Chief Executive of the Institute of Customer Service said that the general UK trend for customer service was that ‘customers have become more challenging’ but that ‘some organisations had taken their finger off the pulse.’ Is this the case in the claims industry?

T

he number of businesses (not just in the insurance industry), that fail to deliver a good level of customer service continues to surprise me.

Without the customer, there wouldn’t be a business. The customer is King.

However, it’s a fair comment to say that customers are more demanding. Today, with information readily available at the click of a button, why would you want to wait? From a personal experience, aggregator websites have completely revolutionised how I shop and having the internet displaying quotes in seconds (much more appealing), instead of being handed around a call centre is a perfect example of how organisations have taken their finger off the pulse. Innovation is key to staying ahead and exceeding the expectations of customers. Self-service solutions are the way forward, and I would urge companies to research some very effective software that is already out there!

In a recent survey, 98% of clients reduced their expectations due to disappointing claims experiences. The reason for this? Admittedly, 24% of problems were down to speed and responsiveness but shockingly, 41% of all problems were issues with staff. This was based upon competence, attitudes and not keeping their promises. To tackle such problems, organisations need to consider leadership, skills and employee engagement. Setting a clearer vision from the top and recognising that customer service is a central objective is so important, as is investing in training and the development of their staff. From a marketing perspective, having insight and measurement tools to monitor the behaviour of customers, helps me to identify changes. Our marketing objectives can change depending upon our customers’ requirements. The use of social media has also cranked up the pressure, with 72.3% of customers reporting problems with an organisation online. It has already been proven that our industry is way behind in this area also.

As insurance is a product that is bought but rarely called upon, it may seem to be a more difficult line of business to form a loyalty and trust with your customers. Retention of customers in the industry may seem a challenge, but organisations need to create differences and give an incentive for customers to renew their policy.

Victoria Rawlings, Media and Marketing Manager, TRS Claims.

39

askCUE PI: white elephant or realistic solution?

Claimant solicitors have been urged to register for the new enquiry service, askCUE PI to try and prevent fraudulent claims. Will the service work in practice?

I

n April 2015, 14 people were sentenced for their roles in a ‘crash for cash’ scam. Over a 15 month period until January 2012, this group defrauded the insurance industry of over £1m by smashing cars into buses in Chester.

A bus driver, various car drivers, ‘journey organisers’ and bus passengers were all involved in knowingly organising seven collisions, after which those involved would make more than 200 personal injury claims.

If a system such as askCUE had already been in place in 2010, these frequent injury claims would have been spotted and questioned sooner. As it is, this gang cheated the system for 15 months before any arrests, and they then received a variety of punishments, ranging from suspended sentences to six and a half years in prison.

If prevention is better than cure, then the use of askCUE PI, and its mandate for the prevention of fraudulent claims, might keep money out of the hands of criminals and save on time and effort expended by law firms on claims that should never exist. While the information provided by askCUE cannot be the only basis for the decision to accept, or reject, a claim, it can give an indication and lead to further investigation.

At Asons, we have designated that our Pre-litigation Director, Bilal Akram, should have the responsibility for the office management of askCUE PI. All askCUE queries go through this senior manager, ensuring that its first use is in the hands of an experienced personal injury solicitor.

Bilal commented on askCUE PI: “In instances where insurers claim that a client’s name is incorrect or even non-existent, we use askCUE to obtain accurate details or prove that they exist. Our vetting procedures have also improved. If a search on askCUE PI fails to produce any results, we reject the case. If a client seems to have too many recent home addresses, it raises suspicions. We’d like to see askCUE PI develop further with time, preferably by the addition of further data such as the types of insurance that potential clients have held.”

The service is still in its infancy and its usefulness will be proven over time, but as it is a mandatory system, it must work and prove effective, as otherwise it risks being a white elephant that the legal industry is made to pay for and receives little benefit from.

Kamran Akram, Principal Director, Asons Solicitors.

MC // July 2015

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The Opinions

Luxury or neccessity?

The role of the non-executive director (NED) in the claims industry: do NEDs have a viable/useful role within the claims sector, and if so, how can companies attract the right, experienced talent?

I

n owner-managed businesses, one of challenges of growth is finding the time to stop working in the business and allocate time to work on it. We’ve always worked with the mantra “we don’t know what we don’t know” and having access to objective experience provides numerous invaluable benefits.

Of course, one of the advantages of having done it before is that a good non-exec’s address book is to die for. And that’s not just necessarily from a sales perspective - it can provide value to all aspects of the business.

Different experiences, viewpoints and new ways of thinking - the day to day can be like living in a bubble. It becomes comfortable and easy to assume that everything is going as well as it should be. Having a fresh set of eyes on a problem or opportunity can open up a new direction of travel, or set of solutions, which may not have been considered.

Finance & Funding - access to working capital has to be one of the top agenda items for any Board. Whilst the claimant space is particularly cash intensive, especially in credit hire and repair, all businesses need to wrestle with this challenge. A board of non-execs with knowledge of the funding pressures and where to go for expansion capital can resolve many headaches before they start.

Regulation - the claims sector is a regulated market whether that be SRA, FCA, or MoJ; the greater the knowledge around the table of the regulatory framework can only be a business benefit.

Some may view non-executive directors as an expensive luxury, but for us, they have repeatedly proven themselves to be a critical part of the management decision making process. They deliver a level of insight and acumen that is difficult, if not impossible, to grow internally and will remain a key component of our expansion strategy.

Andy Whatmough, Managing Director, S&G Response.

41

An holistic view or a tick box process?

T

he insurance sector has relied for years on finding various ways to delegate powers and functions.

This derives from the fact that underwriting has tended to be run on a lean business. Thus “delegated authority” and “outsourcing” form part of the language of insurance.

Many of these arrangements, encompassing claims and/ or underwriting, have traditionally been informal and light on paperwork. Despite, in many cases, such a lack of detail, many of these arrangements have been perceived to work well over the years. This may be partly because the extent of control or “policing” of such outsourcing has consisted of some rigid audit processes. During the process, auditors appointed by the underwriters carry out a check to ensure that the delegation had been carried out strictly in accordance with the insurer’s stated requirements, to demonstrate objective standards such as speed of response or percentage of files closed, and so forth.

In other words, the emphasis has been a matter of looking at the letter rather then the spirit of the arrangement and success has been judged accordingly.

That emphasis is not, however, one that accords with the FCA’s view of the world, with its expectation across all parts of the financial sector that regulated parties will “treat the client fairly”.

Inevitably, when the FCA reviewed the effect of delegated authority arrangements in the Insurance sector, it found the picture to be unsatisfactory. Its principal complaint is that insurers have failed to keep adequate control and supervision of delegated authority arrangements with the result that many are failing to deliver “fair outcomes” to customers – something that old-style underwriters only paid lip-service to but which modern insurers are much more determined to achieve.

It is not difficult to see what needs to be done. Good providers of outsourced claims solutions are not just efficient but are quite able to provide a high standard of service to the consumer. This objective has to be given top priority in the process of making the delegated authority appointment. The due diligence needs to concentrate on standards of training and product knowledge, as well as a proven track record in customer satisfaction (after all, customer satisfaction is a matter for survey and assessment in other industries, so why not in the outsourced sector in insurance?). It clearly requires a more holistic view of the client’s business than that which can be assessed by a ‘tick box exercise’ at audit time.

David Simon, Chairman, Triton Global.

MC // July 2015

42

The Opinions

How to keep the personal A load of PAP financial performance touch with your customers Poor Accounting errors

S

ince the introduction of the MoJ Process, fixed costs in 2013 for Road Traffic Collisions and in 2014 for Employers Liability and Public Liability claims, we tend to forget that there is a customer at the end of the file. In an ever-automated system to streamline processes due to fixed costs, the personal touch is often lost.

Time managed systems and limited phone calls due to the volume of workload sees the customer being less of a focus and contact less personalised. This means that customers may move to another firm, fail to return their paperwork, or simply not stay in touch causing loss of profits to the firm, limited as they may be to start with.

Using a document service company can change the perception customers are beginning to have about solicitors and put back the personal touch by enabling home visits at weekends or evenings when it is more convenient to the customer, notwithstanding that the solicitor’s office is shut.

Solicitor’s papers are often complicated and confusing, with little or no explanation as to the potential costs that they may incur or explanation given as to whether they are covered by before the event insurance for the claim. Using a document service company facilitates a full explanation of the documents and enables the ease of obtaining signatures, identification and collection of documents for quick onward transmission to the solicitors.

This ensures a fast and efficient service with knowledge that the claim will be dealt with speedily, giving the customer full confidence in the firm dealing with the matter from the outset. Customers often seem confused by the amount of pages sent, the technology of e-signs, and life does get in the way. By using alternative, inexpensive methods of completing documents or getting customers back on board, this keeps profit margins high and enables claims handlers to complete matters in a time efficient way. Add explanations of medical reports, obtaining locus reports or even statement taking by experienced staff, and this will give a whole package to complete the customer’s needs and bring back that personal touch in today’s technological world.

Tina Coles, Owner, TC Legal Solutions.

01604 709771 | www.tc-legalservices.co.uk

Post LASPO Apocalypse

A

ccording to accepted research and a recent Harvard Business Review report, the failure rate for mergers and acquisitions (M&A) sits between 70-90%. An incredibly high figure, and yet the frantic activity the legal sector has witnessed illustrates a sector undeterred. None more so than personal injury (PI) law firms, the UK market attracting significant attention from private equity both home and away.

The reasons for M&A failure are not understood particularly well; otherwise the success rate would have increased. The Harvard Report suggests that the impediments to success are unrealistic expectations, (over) confidence, promoters and external advice, distrust and group dynamics.

In the field of PI M&A a new impediment to success may be “aggressive accounting” in respect of WIP valuation, i.e. overstating WIP value and “accounting errors” in cash flow statements and “poor cash flow” i.e. not settling claims and billing efficiently. The recent headlines in The Law Society Gazette describe a law firm’s accounting errors in detail. References to aggressively growing WIP in recent years and not being as successful at converting WIP into cash as the market previously believed has brought all of the WIP accounting into question.

This is, I predict, the tip of the iceberg as the M&A spending spree in the wider PI market melts down. Those who have focused on aggressive acquisition may now find themselves considering the accuracy of their due diligence and their pre and post integration strategy.

To “bulk buy” PI cases you must have a tightly run ship in terms of your people, process and WIP accounting methodology. Without that, opening the doors to the scramble of incumbent others looking to be purchased during a LASPO Apocalypse means your business is growing with the stability of a house of cards. We are advising in several PI deals that have not turned out as expected to ensure WIP realisations are met. Questions are being asked of the quality of the advice given at the time the deal was done.

Over trading is hitting its peak in industrial disease and clinical negligence and investors, bankers and law firms are still waiting for the profit to come in. WIP and capital lock up, and poor cash flow now presents a significant challenge to overtrading businesses and the corporate advisers who have feasted on the acquisition hungry deal machine may now have their advice analysed to see if it was indeed a load of pap.

Lesley Graves, Managing Director, Citadel Law.

MC // July 2015

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The Doctors Chambers Modern Claims Conference 2015 On 19th May, the second annual Doctors Chambers Modern Claims Conference took place at Stamford Bridge, Chelsea F.C. Charlotte Parkinson, Modern Claims, summarises the event.

T

he second annual Modern Claims Conference was once again a sell out event and over 400 delegates made their way to Chelsea F.C to hear the latest market updates and news from the leaders in the claims industry. The focus of this year’s conference was the client, and the format of the event, including panel sessions and a spark talk, allowed for deep exploration into the clients’ experience and journey throughout the claims process.

The changing face of the client Mark Savill, the Managing Director of Lyons Davidson and Chair for the day, took to the stage to welcome delegates and kick-start proceedings. The Keynote Panel ‘A Brave New World – The Client is King’, included Jo Causon, Chief Executive, The Institute of Customer Service; Colin Campbell, Costs– ADR; Neil Kinsella, Chair, Slater & Gordon UK; Keith Tracey, Managing Director, Aon Risk Solutions and David Williams, Managing Director, Underwriting, AXA. Savill began the debate by asking the panellists how customers needs differ from 5-10 years ago, to which Causon responded that overall there has been a “steady increase” in customer satisfaction across all industry sectors, she went on to say however, that in the last two years, there has been a “fundamental decrease” in levels of customer satisfaction. She continued by explaining that there are two fundamental reasons why the levels of satisfaction have decreased, “customers have become

Professor Dominic Regan

more demanding and savvy and we have less money, whether in a B2B or B2C environment”. She added however, that some organisations have “taken their finger off the pulse”. Williams picked up the debate, adding to Causon’s comments, “companies such as Amazon have set the trend for what customers now expect and our industry is woefully behind that benchmark”.

There have also been considerable changes in the market around the awareness of the ability to bring a claim argued Kinsella. “We have created an expectation around access

Delegates

MC // July 2015

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Delegates

to justice for the lower value claims,” he continued, arguing people have to “get to grips” with more complex claims.

Kinsella argued that there is a “squeezed middle,” where value and liability do not match up, and reminded the audience not to forget those people who have “genuine claims,” but went on to agree that it can be difficult to provide an holistic service “under the costs constraints.”

Price has become an increasingly important factor in terms of buying decisions but Tracey argued that “the ability for businesses to compete has now become much less”. Tracey went on to say that clients have become “increasingly intolerant” of complacency, adding that if companies are trying to defend the competition it is important to closely watch competitors because “they are very keen to attack you”. There is a direct correlation between customer satisfaction and trust, and when clients have greater trust with an organisation, they are much “more likely to engage” with and support them, argued Causon. Williams countered Causons’ comments, arguing that companies make it “too easy” for people to complain, and that there are organisations out there that “encourage people to claim.”

Another important factor to consider in the customer journey is how the structural changes, such as Alternative Business Structures (ABSs) have impacted the customer.

Savill questioned the panel on this issue, to which Kinsella responded, “ABSs are not the answer to everything, they are another tool in the box allowing businesses to face up to

‘What does the future hold for the client’ Panel

MC // July 2015

‘Identifying the Client’ Panel

challenges.” Williams added that following the referral fee ban in April 2013, AXA were quick to announce they weren’t launching an ABS venture as they didn’t want to “dirty themselves by doing it.” Regulatory reform has also had an impact on the customer and Campbell picked up this point, explaining that since the Jackson reforms, the client has become much more involved with costs. “If a client is unhappy about a bill, I would encourage them to consider mediation as it can help avoid enormously expensive and cumbersome proceedings,” he said.

The client: under attack?

The second panel, ‘The Confidence to Claim – The Voice of the Client’, comprised Susan Brown, Chair, MASS; Jon Cawley, Head of Claims, Towergate Underwriting UK; Deborah Evans, Chief Executive, APIL and Kevin Rousell, Head of Claims Management Regulation, MoJ. Savill began by asking the panel whether changes made to the claims process had altered the client’s confidence to claim.

Rousell responded first, explaining that consistency is key and that the outcome of the General Election should be positive for the client, but he said “there is an interesting time ahead and we need to make the customer process as quick and cheap as possible”. Brown highlighted there are still many people who are looking to make a claim but are “struggling to get representation” and are “under attack”.

Evans concurred, saying that it is not the clients confidence to claim which has been effected as “they wouldn’t have

Mark Savill

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Delegates enjoy Lunch

known any different’, but the “lawyers confidence to claim” has “reduced”.

The question of whether the client really feels the changes in the industry at all was raised by Cawley, who argued they do not. “We have seen changes in the volumes of claim and it is yet to be seen whether we have got the balance of changes right in the industry”. Rousell concurred with Cawley, stating there is a lot of “waste in the system” and that the industry needs to work to reduce this as it begins to “creep in” to areas such as Noise Induced Hearing Loss (NIHL) claims. In response to Savill’s probing around the insurance lobbying which has “had the ear of the MoJ”, Rousell called government consultations “genuine” and said the MoJ “does listen” and will make changes “where appropriate”. The main objective of the MoJ is to “reduce costs in the system” and “rebalance the equation” between the claimant and defendant side of the market, said Rousell. From the claimant perspective, Evans argued that many of the changes “felt rushed” and that the Government “did not use evidence based decision making.” She added that she disagreed with Rousell over whether the Government put the client at the heart of everything they do, saying the last Government “put businesses and money at the heart of the reforms.”

Online feedback and social media platforms have become an increasingly important aspect of the customer journey, and claims practitioners at all stages should be aware of their online presence. Brown picked up Savills question over customer feedback, explaining that from her perspective as a Director at ProLegal, if complaints arise it is important to be seen to “act properly and put things right.” She went on to say complaints can often be dealt with “as part of the client service” and that potential clients increasingly look online to find a lawyer, which is why good ratings are “important.”

Cawley agreed, saying that utilising Net Promoter Scores is an effective way of measuring customer satisfaction.

However he did add that sometimes these scores can be “a

47

Tim Dixon-Phillip

worry because they can be negative as well as positive” and that tools to measure customer satisfaction require “a high level of investment” if used properly.

What really matters to the client?

In a modernising market, how do claims professionals identify their clients and understand their needs? This was the subject of the third panel session, which brought together leaders in marketing and included Dez Derry, CEO, mmadigital; Joby Russell, Marketing Director, Confused. com; Andrew Twambley, Founder, Injurylawyers4U and Duncan Watts, Industry Manager, Google. Savill first asked the panel whether brand was important to the client.

Twambley ignited the debate explaining that a lot of people “claim to have a brand” but that “there are very few recognised brands around,” he continued, “if clients have a choice between a brand they know and one they don’t, they will choose the brand”. He added that brands “cannot be built overnight” and “cost money”. Russell added that for Confused.com there is a clear correlation between “brand preference and market share” and the familiar brands convert to sale “at a far higher rate,” adding that for a price comparison website “brand is more important than price.” The biggest challenge for the claims sector is to create a brand that “means something” argued Watts, because “claims are a low interest category,” the challenge is to “bring the brand to life for people that don’t care.”

Utilising online platforms to identify and target specific audiences also plays a key role in identifying potential clients. Derry explained, that by using tools such as Mosaic and Acorn, it is possible to place adverts in front of specific types of people to target marketing spend and “create focussed, relevant and compelling content.” Twambley concurred adding “the secret in our market is to be in the mind of the customer before they need you.” Watts went on to say that searches on mobile devices had risen from “35% to 50% in 12 months”, illustrating that mobile

“The secret in our market is to be in the mind of the customer before they need you” Andrew Twambley, InjuryLawyers4U MC // July 2015

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was companies being “passive when closing a phone call” and “not agreeing the next step.” He argued “somebody needs control end-to-end” of the process, to “avoid losing potential clients.” Finally, he said, the companies that “measure the quality of their customer contact are the winners,” as “customer experience is your brand.”

‘Building a client focussed business’ Panel

compatibility is “essential” in order to be in the mind of the customer at the time of the distress purchase.

Measuring satisfaction An increasingly effective way of objectively conducting a litmus test of the sales and service culture in a business is through mystery shopping. The afternoon began with a spark talk by Tim Dixon-Phillip, Founding Director at customer experience auditor, Service Reality. In his talk, Dixon-Phillip illustrated some examples of customer service in claims companies at the new enquiry stage. During his time as Business Development Director at Pannone (now part of Slater & Gordon), Dixon-Phillip mystery-shopped all 12 service lines within the business and within 6 months of starting, “doubled the conversion rate” on new enquiries.

Dixon-Phillip went on to describe that investing in the company and its marketing, but not handling the clients experience of the new enquiry journey effectively was like “having the central heating on with the windows open.”

People are less tolerant of a mediocre or poor service “than they have ever been”, said Dixon-Phillip.

The solution, he suggested, comes from the leadership mentality and how embedded the brand values are “with those on the frontline.” Service Reality has undertaken just under one hundred “deep dive” mystery shops into the claims sector and he highlighted that there are “recurring themes” that repeatedly crop up. In serious injury, claimant’s “browse more” than they do for fast track work, and DixonPhillip described how “over and over again, search functions deliver nonsense”, meaning the customer is more likely to get bored and search somewhere else. Dixon-Phillip also highlighted that often due to time pressures, potential clients are “rushed through” the initial process and can be made to feel as though the people they are talking to “do not care.” The final common theme Dixon-Phillip explained

“If you have no clients, you have no business at all” Professor Dominic Regan MC // July 2015

How to add value The fourth panel session of the day ‘Building a client focussed business in uncertain times’ included Sucheet Amin, Managing Partner, Aequitas Legal; Paul Bennett, Partner, Professional Practice Team, Aaron and Partners; Brian Hodge, Head of Claims Operations, LV= and Bippon Vinayak, Chairman & CEO, Doctors Chambers Ltd. As expected, Savill was quick to question the panellists over the implementation of the MedCo Portal. Vinayak responded first, saying the implementation had been “rushed” and called the Portal “powerless” to deal with current issues. Amin echoed Vinayak’s concerns, highlighting that whilst he recognised some of the “theories” behind the reforms, MedCo is an example of them being “poorly implemented.” He added that Medical Agencies are an extension of a law firm and that if the agency does not perform to the standard that has been agreed, it can have a “hugely detrimental impact” on the firm’s relationship with the client, and their experience.

Savill then questioned the panel about how their firms use technology to enhance the customer journey. Bennett responded, arguing that whilst technology clearly plays a vital role in the client’s journey, the “cost and complexity” of some technology can make it a challenge for everyone to use. He argued however, that free technology such as “Skype and FaceTime” can “add value to the client experience.” Amin agreed, explaining technology allows Aequitas Legal to “streamline their services” and “remove unnecessary overheads,” he also added that InCase (the App Amin has recently developed) “dramatically improved” communication and accessibility for clients.

Choice is another important factor when building a client focussed business, argued LV=’s Hodge. “We have multiple communication channels,” said Hodge, “and we do not force our clients down one or the other, technology is an enabler for this.”

Protecting choice...

The final panel of the day, ‘What does the future hold for the client?’, included Matthew Avery, Safety Research Director, Thatcham; Mike Brockman, Group CEO, insurethebox; Phil Hodgkinson, CEO, Pure Legal Costs Consultants and Donna Scully, Partner, Carpenters. With the future in mind, Savill questioned the panel over the imminent rise of autonomous technology. Avery began by explaining that autonomous technology will “dramatically change the client experience”, because the research is now focussed on “preventing the crash in the first place.”

Brockman agreed, saying “technology will change the customer journey” but that the industry needs to be careful about the “hype” around technology. Scully added that she was “open minded” about technology but noted that she

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‘The Confidence to Claim’ Panel

49

‘A Brave New World’ Panel

was “wary about the cost of insurance going up” as a result.

Hodgkinson added a note of caution, explaining that many people are still “cynical” about autonomous technology.

Despite extensive change in the claims sector over the last three years, Hodgkinson still fundamentally believes if the market does not continue to change “it will not exist in two to three years,” and that it is currently “too profit focussed.” Hodgkinson also predicted a “high volume” of professional negligence claims against high-volume firms “who are doing it wrong” and encouraged the market to “police itself.” Scully criticised the “rushed and ill thoughtout” reforms of recent years and concluded the panel by saying the profession “cannot look after the client” if “the system keeps changing,” with Hodgkinson adding “if we are not careful, we will end up with two or three places to settle a claim, we must ensure clients have a choice.”

To conclude the day’s proceedings, Professor Dominic Regan took to the stage. Regan began by agreeing with comments from the last panel, around the risks of a rise in professional negligence claims because of what he called the “deskilling” of the profession. Regan also alluded to a need for the profession to go back to basics, saying, “we need to remember, good manners cost nothing,” and can create “happy clients.” As costs pressures continue to bite for some, Regan was quick to point out that it is not always a case of “cheap is best” and that clients will pay for a great service. Calling for those in the claims industry to adopt an “holistic” approach, Regan called the conflict in the industry “nonsense” and encouraged “greater collaboration,” as he ended with some food for thought for delegates.

“Ultimately,” he said, “if you have no clients, you have no business at all.”

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The Features

Interview with...

Mark Savill Charlotte Parkinson, Modern Claims, spoke to the Managing Director of Lyons Davidson and Chair from the Modern Claims Conference, about the main themes from the day and what is on the horizon for his firm over the next year and beyond.

Q A

What were the main points to take away from the Modern Claims Conference 2015 and why?

The interesting point about the conference for me was the opportunity to bring together different organisations within the insurance claim process and move the debate on to focus on the needs of the customer.

While there was still debate about how far the recent reforms had rebalanced the position within the process and the degree to which this impacted access to justice, there was a clear view that the customer was central to all of the businesses on the panels. There was also an agreement that collaboration could only help the customer journey, whether in relation to integration across the supply chain or practical discussions and protocols between opposing parties.

The panels also recognised that the role of choice was essential and that each customer had their own preferences on how they wished to access a service and their own needs. This issue started at the point of sale, with Duncan Watts of Google and Joby Russell of confused.com recognising both the need to cater for customers to move easily between online and off line channels, and the difficulty that this brings in tracking some of those purchasing decisions. There had been an expectation of the need to debate any changes in the government’s position after the election. However, despite the change in personality in the post of Lord Chancellor, the view expressed by Kevin Rousell of the MoJ was that the other posts at both senior and junior level remained relatively stable and so there was an expectation that the approach would be one of ‘business as usual’ in relation to the claims process. One of the most fascinating panels involved future developments, especially in the application of technology, with some impressive examples from Mike Brockman of insurethebox of their FNOL service initiating emergency services call outs, where their telematics solution recognised life threatening accidents where their involvement clearly saved lives. The whole future of the connected vehicle was discussed, with a move to this forming the basis of accident management services as well as insurance underwriting. For anyone who hasn’t understood the implications of driverless cars the discussion with Matthew Avery from Thatcham was eye opening. The arrival of this technology is clearly closer than most of the delegates thought, raising a number of interesting issues about the liability of insurers for the vehicle technology rather than the driver. The main message on change was that there was still much to do. The introduction of MedCo was seen as a disaster that wasn’t delivering its intention and was only damaging the customer process, described by Bippon Vinayak from Doctors Chambers as “Version 0”, with a proper starting point of Version 1 not expected until later in the autumn.

MC // July 2015

Q A

What was the most surprising thing you learnt at the Modern Claims Conference?

The most surprising feature for me was the openness of the debate around customer service and a refreshing honesty that businesses were struggling to keep up with customer expectation because of the speed at which it developed. There was recognition of the need to address that gap but also an acceptance that the claims industry was at risk of a market disruptor coming in to the market with a process that simplified the service and delivered a more timely service that was easier to access. There was recognition that ABSs had made a difference in both price and competition but that they were still at the early stages of what they could deliver and had the potential to expand much further.

Q A

How can firms ensure the client is front of mind and why is this so important?

The key here is to ensure that the issue of client service is part of the culture of the business rather than just a point in a business process. This means ensuring the principal needs of the customer are embedded in everything that you do as an organisation. Over the last year we developed a set of Core Values and looked to use these to emphasise the need to deliver a high level of service aligned to the needs of the specific client. The implementation culminated in a Client Care Week with a five week program of events (and games!) leading to development of a client pledge by our staff. Involving the staff in the development of the culture is key to ensuring you get your people’s buyin. Ultimately client care also needs to have a clear place in any employee recognition scheme. This doesn’t just mean performance bonuses (which can lead to the wrong behaviours if not introduced properly) but rewarding, acknowledging and showcasing across the business those people who deliver excellent customer service.

Q A

What factor will alter client experience the most in the coming years and why? (I.e. technology, costs etc).

The biggest impact could potentially come from further government reform with the risk this brings to access to justice and the ability of an individual to access advice and representation. Not surprisingly, this was a clear concern of the claimant representatives during the day, but there was even an acknowledgement from some of the insurers that any

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51

Mark Savill Mark Savill is Managing Director of Lyons Davidson Ltd, heading its national legal services and eight regional offices, including London, Bristol, Cardiff and Edinburgh. The company was one of the first legal disciplinary practices to be approved by the SRA in 2011 and became an ABS under the passport procedure in October 2012.

“While maintaining direct communication with the customer is essential it is also a matter of choice, providing clients with different channels that they can use and the ability to move between them as they wish” further change needed to be managed better, if was necessary. One clear theme from the conference was the increasing role that technology will play in terms of client service delivery and improvements in the client experience. We heard this from firms such Aequitas Legal, using mobile Apps they have developed as a key feature of their communication strategy, and Slater & Gordon looking at using technology at the front of the customer journey to drive technological improvement, where there was a clear benefit in terms of improving profitability in their business processes. At a claims level the key point about technology recognised was the need for this to be an enabler, giving case handlers the tools they need to deliver a better service, rather than merely trying to digitise the process. While maintaining direct communication with the customer is essential it is also a matter of choice, providing clients with different channels that they can use and the ability to move between them as they wish. This is one of the technology strategies for this year at Lyons Davidson with increased functionality for customers’ online access, providing them with individual activities, which form part of our business workflows. This links in with the idea of self-service that panellists such as David

Williams of AXA thought would become an increasing feature in the future. The service that is going to succeed will be one that can both support this self service and help the customer move to a fully managed service at the point that they need it.

Q A

How has the attitude of the client changed, particularly over the last few years? Are they more savvy/aware of their rights/how to complain etc?

One very clear view was not only the increased level of expectation of customers, that they understood their rights, but most significantly that they recognised the power their voice had with the ability to publish views about bad service on social media. This discussion was the only disappointing feature of the day, with the discussion (including contributions from the delegates) focussing on customers who complained because they thought that would be entitled to some compensation. While there were some clear examples of this, it did feel that there was more interest in discussing fraudulent complaints than valid complaints that arose out of service issues – perhaps something that resonates with the insurance response to

Mark graduated in law from Trinity College, Cambridge and joined the company in 1988, as one of its first paralegals. He qualified as a solicitor in 1992 and became a litigation Partner in 1997. He went on to become Business Innovation Partner and was responsible for the implementation of technology innovation, development of new services, and the improvement of processes and communication methods.

Mark has regularly spoken and advised on the implications of LASPO, ABS structures, Portal reform and other changes being introduced to the claims process and has been a member of the RTA Portal Change Control Committee. injury claims!? It was also recognised that businesses need to challenge themselves at what they can do better and take the time to seek their customer’s views on that very issue.

Q A

What’s on the horizon for Lyons Davidson over the next year?

From a customer perspective, we are focussing on further development of our business model for legal service delivery. We are doing a lot of work with our strategic partners to improve the customer journey through the alignment of business processes. We are also looking to improve our communication with a large project around tone of voice and cultural alignment. As part of this we will be setting some principles around our Core Values in terms of communication across the business. We are also aiming to widen the range of services covered within our insurer business models, particularly through building some cosourced defendant teams and looking at the delivery of wider consumer legal services to the customers of our partners.

MC // July 2015

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Costs Roundtable Modern Claims hosted three Roundtable discussions as part of the Doctors Chambers Modern Claims Conference. The costs landscape has altered beyond recognition in recent years, but are the new regulations clear enough, and how is the industry coping with costs budgeting? Charlotte Lamb, Modern Claims, reports.

Attendees ChairMAN Colin Campbell (CC), Former Costs Judge Nicholas Bacon (NB) QC 4 New Square, Guest of Costs ADR Nicholas Clark (NC) Kain Knight Ian Curtis (IC) Senior Manager Lyons Davidson Nichola Evans (NE) Partner Browne Jacobson LLP & FOIL National Executive Committee Gerry Lee (GL) Senior Partner PR Hanna Solicitors William Mackenzie (WM) Senior Paralegal DWF Lionel Marcus (LM) Operational & Client Manager DWF Alan Nesbit (AN) Managing Partner Nesbit Law Group & Chairman of ARC

CC: Existing guideline rates will remain in force at current rates for the foreseeable future Dyson MR has decided. Does this mean solicitors will be working at 2010 rates?

NB: I went to Rupert Jackson’s Harbour lecture last week, and the Master of the Rolls apologised for hourly rates still being set at 2010 rates but confirmed that the data was insufficient to arrive at confident reappraisals of rates. He emphasised that they are only guideline rates.

AN: The Costs draftsmen’s job is to reduce the cost for the paying party. So

MC // July 2015

‘When the CPR was introduced, it was always more of a weapon for the defendant than it was for the claimant’ Alan Nesbit, Nesbit Law Group the easiest target area is to go with the rate because you’re immediately taking your percentage chunk out. We argue very strongly for the hourly rates we put in our CFAs. It always comes down to a discussion around the rates. They still feel set in stone to us because it’s rare that we get a judge who is prepared to see the solicitor’s side.

NB: In London, the Costs Judges don’t pay much regard to guideline rates in the bigger cases, but in the provinces it’s likely to be different.

AN: It’s an obvious first point tactic. If I was on the other side I would certainly be arguing that, particularly if anybody at any stage puts something in that’s above the hourly rate. We regularly have very complicated fraud arguments. Normally you lose a fraud case and the defendant solicitors ask for it to be reported to the DPP. That’s in the background of the claimants mind before you get any more serious. It’s based upon the complexities of the case and as soon as the idea of fast track comes into place, we’re then

into fixed costs.

LM: We’ve had some success on the argument, in Liverpool and Manchester - that there is nothing unusual in such cases and that these should be allocated to the fast track.

AN: We’ve appealed a couple of those.

When that happens we’ve also looked at going with the 20% afterwards, which is a little used tactic.

GL: One of the things the UK benefits from is the multiple options. In Northern Ireland we have the standard hourly rate but the uplift prospects are extremely limited, mainly because the forums are so restrictive.

CC: It looks like hourly rates will be here for a bit longer until the pre-budgeting cases have worked through, and everything is budgeted by phase.

NC: Even if your budgeting is set, you’ve got incurred costs, which effectively haven’t been looked at by the court.

IC: The incurred time facility isn’t being used enough. If you have objections, they should be recorded. It is unsatisfactory

The Features

‘One of the things the UK benefits from is the multiple options. In Northern Ireland we have the standard hourly rate but the uplift prospects are extremely limited’ Gerry Lee, P R Hanna Solcitors when you’re in a situation where a claimant has been successful and there hasn’t been any previous challenge or comments on the incurred time of the cost budget, and then those attacks are coming after the event.

CC: Your case is costs budgeted and the trial overran by 2 days. If asked, can the trial Judge retrospectively increase the budget to cover the extra days? Would the position be different if you obtain an order for costs on the indemnity basis?

LM: It’s not for a trial judge to adopt that approach, if anything it would be for the assessing judge.

WM: On the last day of trial could you not apply to revise the budget upwards?

NE: The application needs to be before the extra two days have been incurred.

LM: Usually if you’re adding additional experts you tend to overrun as they may elongate the trial, but I think the contingency is the way to do it.

AN: The longer you expect the trial to last, the more likely it’s going to go over. If it’s a two-day trial, it’s probably not going to vary hugely from that, if it’s a threeweek trial then the chances of it going over are far more likely.

LM: What tends to happen is that you underestimate it with only 5 hours in the day and the reality is it does take much longer.

IC: Your assumptions would usually set out to how long you expect things to be and if you’re departing from those assumptions, there’s good reason to move along from that.

AN: We prepare our budgets without counsel and when counsel get involved (normally towards the trial period), things suddenly change as the focus shifts from the budget to the trial. Whereas if you have anything about you you’ll think that you need to amend your budget and make that application ahead of the trial.

CC: If you beat your own offer can you (as receiving party) recover anything extra under CPR36?

AN: Part 36 has to go both ways. There has to be something to make it worthwhile for the claimant and to put some pressure on the defendant to accept the Part 36 offer. When the CPR was introduced, it was always more of a weapon for the defendant than it was for the claimant.

MB: The interesting thing about Part 36 is the introduction of the rules to make offers on issues. On issues, certainly on detailed assessments, you can make individual Part 36 offers, with the costs of the issue on an indemnity basis.

AN: And work that out!

GL: One of the things that is frustrating for insurers in England and Wales who like to operate in Northern Ireland, is the lack of options that exist in regard to the equivalent of Part 36. We simply have the old fashioned payment into Court with little or no room to revise this once it’s made and very often only serves to create additional uncertainty and unfairness. The Claimant invariably still sees it as the first step in negotiations rather than the defendants’ final position.

AN: In a fraud case there is rarely much negotiation.

CC: Who does the money belong to if an extra 10% is ordered to be paid under CPR 36.17(4)?

MB: It must be the client’s.

AN: As long as you’re under 25%, there shouldn’t be a problem.

CC: Under the new CFAs it would be a lot easier.

NB: You would have to write it in.

LM: Which nobody does! We do make Part 36 offers but they’re general rather than issue based.

CC: Is it easier to obtain relief after Denton? If it was the solicitors’ fault for not complying with an ‘unless order’, will that make a difference to the blameless client prospects of obtaining relief?

NB: In live cases, people don’t seem to be taking the point about relief, they just seem to be agreeing that relief or extensions can be granted.

LM: It has diluted it.

AN: Denton provided a template for writing a witness statement. As long as the points in Denton are dealt with using a step-by-step approach, there is a fairly straightforward methodology for rectifying mistakes.

LM: A lot of judges weren’t particularly comfortable striking solicitors out; it went against the grain.

NE: The last thing we wanted to see was technical point scoring and costs being driven up unnecessarily. Post-Mitchell, 3-month delays were building up to deal

55

with the backlog. In Manchester the amount of appeals went up 40% as a result of Mitchell. The position has eased since Denton.

CC: When (if ever) is it worth applying for a hearing after the bill has been provisionally assessed?

WM: If you’ve got a point in principal, judges are quite reluctant to change their mind. They are only likely to do so when they have made a mistake, for example if they have read a case wrong or come to the wrong decision.

AN: I have a slightly different view as a business owner, it’s a simple question of maths. If the amount of adverse costs against you is less than the amount that you could potentially recover if you were successful, then it’s just a balancing exercise.

CC: If you are receiving, you are allowed 85%, aren’t you always going to end up paying the costs as it is not possible to recover an additional 20%?

AN: If my costs of the oral hearing are £5,000 but I manage to get an extra 5%, which is £20,000, then why would I not want to risk it?

NC: Our clientele are a little resistant to it because of the modest sums that are at stake with provisional assessment itself, so there is a reluctance our end to pursue it any further. It does come down to financials, if you are the business owner you can make decisions more sharply.

CC: As practitioners, would you go for binding or not binding in terms of mediation?

AN: This is about experience. You have to be comfortable with the mediator.

GL: Who gets to choose the mediator?

AN: We’ve never really had an argument over mediators; they’re all fairly neutral.

GL: If that issue of choice is largely irrelevant, I would’ve thought there should be a huge emphasis on mediation being binding.

NC: There has been an emphasis towards non-binding only because people are still dipping their toes in the water, but it does (if nothing else) provide an effective tool for settlement.

Modern Claims would like to thank all for attending.

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MC // July 2015

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The Features

Credit Hire Roundtable The world for those in the credit hire industry has changed dramatically in recent years, so what do cases such as Stevens mean for the sector and what does the future look like for Credit Hire? Charlotte Lamb, Modern Claims, reports.

Attendees ChairMAN Anthony Hughes (AH) Lead Consultant Jackson Hughes Consulting Limited Martin Andrews (MA) Director General The Credit Hire Organisation (CHO) Susan Brown (SB) Chair The Motor Accident Solicitors Society (MASS) and Director of Prolegal John Gibson (JG) Business Unit Director Keoghs LLP Alan Gilbert (AG) Technical Director Helphire Andrew Makepeace (AM) Managing Director Motor Support Eddie Phillips (EP) Claims Consultant Trinity Lane Insurance

‘Economics and rationale do not always go hand in hand with what the insurers do’ Anthony Hughes, Jackson Hughes Consulting Limited

MC // July 2015

AH: In my first job interview for James Chapman in 1992, they asked me what I knew about Credit Hire and its fascinating that the ‘war’ is still going on for all intents and purposes 25 years later, I can’t believe that the industry hasn’t managed to come up with a solution. How would you describe the current market?

AG: I don’t think there is a war going on.

AH: What about Stevens?

AG: Stevens is a blip – it goes against 100 years of jurisprudence.

AH: The decision itself may be but it’s indicative of the fact that the insurers continue to look for any opportunity to try and jump on a claim.

AG: As indeed they must! Insurers are not a force for good – they are not a social institution, they are businesses and their job is to manage debt and claims costs. If they can find a way of avoiding a particular claim then they will do it. And if you look at Stevens there’s been a fight about the Basic Hire Rate (BHR) rate forever and it’s one case. Helphire alone does over 10,000 Credit Hires a month, of which only a tiny fraction are litigated - the vast majority are settled without any problem at all.

AH: My understanding from talking to people in the industry is that Stevens is a bit like a pebble, and the ripples have spread out.

JG: I would agree with that and Keoghs is essentially a law firm but we also handle a large volume of prelitigation Credit Hire claims. We settle 80% of claims inside the first 30 days and our litigation rate is bordering at only 2%. The vast majority of the litigation comes from companies that fall outside of the GTA which represents 90% of the market. If you’ve got a protocol, format or GTA that works, Stevens at present comes into play on a relatively small number of cases in reality.

AG: It’s noise.

AH: I don’t disagree with you.

JG: It becomes a lot more ‘noise’ if insurers want a reduction in the GTA rate as a consequence of Stevens.

EP: Stevens’ could potentially destroy the GTA. AG: The GTA has been working well for 12-15 years. Do insurers really want to go back to those pre GTA conflict days? If it costs them more than they are going to save, or even the same, then it’s not an economically rational thing to do.

The Features

‘The credit hire industry was decimated by the credit crunch as was any appetite to invest in credit hire companies. This is improving now’ Martin Andrews, The CHO AH: Economics and rationale do not always go hand in hand with what insurers do. Some of these companies are beasts. Premium offers were very fashionable at one stage, did they achieve a saving? Arguably not. The insurance industry can be like sheep, one of them does something and they all follow. They’re like a big oil tanker, they take a good while to turn and that’s the problem.

JG: I disagree that the larger insurers struggle with credit hire to the same extent. A lot of insurers use outsourced providers to be more nimble. Insurers I speak to see the GTA as a compromise on technical arguments, one being on rates and inherently impecuniosity on that. We would say that the GTA rate is a discount from what was a recoverable commercial rate. That benchmark has arguably now changed.

AG: That may change; there have been decisions in Northern Ireland that are going to be influential. The impecuniosity argument has been badly seen by the judiciary.

AH: From my own experience, insurers can’t compete on service when it comes to Accident Replacement vehicles.

MA: Insurers have no intention of competing on service. They would prefer the consumer to be left completely unaware of their rights to any of this, let alone the quality of the service. The insurers would have to pay and they’d rather not.

EP: The underlying issue is the UK insurance motor market is overly competitive. If you look at Deloitte’s results, the motor market made a loss again. Premiums, despite everything that has happened over the last few years, have dropped on average for 3 years running. We get less money in, we have Jackson, we have LASPO, but actually the PI volumes still come through.

JG: Insurers have made steps to try and put volume through, deal with the people who give the market a bad name and to make costs more efficient

in the market generally. You can’t put all insurers in the same boat.

AG: The vast majority of our time is spent settling cases.

AH: Do insurers and CMC methods and operating models do enough to reduce frictional cost? Does that friction suit either or both parties?

AG: It’s a costs saving.

EP: There isn’t a costs saving, it’s just that multiple CHOs will target insurers on a given day, flood the lines and they can’t cope. I’m not an advocate of this, you’re missing the opportunity of settling the claim if you’re not answering the phone. The underlying issue is insurers can’t deal with the volume.

JG: Not everybody needs to hire a vehicle on credit.

AG: It depends upon the definition of need.

JG: Certain individuals could get a different service.

AG: Why should they?

AH: Someone I spoke to described it as a victory for common sense. Darren Bent to me didn’t need an alternative vehicle and certainly didn’t need it on credit hire.

MA: He passed the need test.

AH: Would you not advocate someone having a lesser vehicle?

AG: That’s what the Germans have decided but that’s not our law. Our law says if you deprive me of something through an act of negligence you have to put me back in the position I was before that act of negligence, that’s the law.

AH: Stevens hasn’t affected that?

AG: No. On average 70% of our business is GTA or protocol related.

MA: The credit hire industry was decimated by the credit crunch along with any appetite to invest in credit hire companies. Helphire have significantly restructured their balance sheet so it’s got the working capital it needs to take an appropriate approach to settlement whether inside the GTA, a protocol or litigation.

AH: What will the CHO/replacement vehicle market look like in 12 months time?

MA: Credit Hire and the GTA will still exist. The ratio of claims that go through the GTA may change. Insurers need a central protocol platform because they can’t cope with 150 different protocols.

AH: Wouldn’t bi-laterals go some way

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to sorting out the point I made in terms of abuses in the market?

AG: The CMA investigation did more damage to the consumer and the market place and the insurers then anything else.

MA: Insurers hoped the CMA investigation would eliminate credit hire and it didn’t happen.

AG: If the CMA review hadn’t happened there would now be a portal in place. It’s going to be business as usual; there won’t be a big change.

SB: Do you think insurers will move to put more non fault third party’s in vehicles?

JG: Change of some kind will happen in the next 18 to 24 months, insurers are now naturally exploring first party models because it could help them remain competitive.

AH: What about a credit hire portal for claims settlement?

JG: The MoJ doesn’t have the appetite to get involved in it with a new government.

EP: It would be simple to go with the CMA’s suggestions. The MoJ portal is not a slick system.

SB: Because it was built in 3 months!

AH: Portal exists for the PI claims, it can’t be beyond the wit of man to utilise some of the technology.

JG: There are far too many portals.

AH: You are in charge and have the power to solve the problems we have discussed, what would you do?

AG: I would allow the credit hire company (not the consumer) to be the claimant for the credit hire charges because enforceability for the consumer just creates a fog, which defendant lawyers try and wheedle out of.

JG: If there was a way of that being reflected in readdressing the rate. Most insurers seem to be happy with people having a vehicle after the accident, not the present cost.

EP: I would make it simpler for both sides. The underlying issue will always be how much insurers are paying.

Modern Claims would like to thank all those who attended.

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MC // July 2015

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The Features

Funding Roundtable Uncertainty over the costs of making a claim has meant third party funding has risen up the agenda for those seeking to make a claim, but how do those funding cases assess whether they are viable and what are the most attractive ways of funding litigation? Charlotte Lamb, Modern Claims, reports.

Attendees ChairMAN PJ Kirby QC (PJK) Deputy District Judge Hardwicke Chambers Matthew Amey (MA) Director The Judge Fred Brown (FB) Director Grant Thornton Emma Chown (EC) Editor Practical Law Dispute Resolution Martin Coyne (MC) Managing Partner Ralli Solicitors Carl Dugdale (CD) Director Lime Finance Mohsin Patel (MP) Legal Analyst Augusta Ventures LLP

PJK: What type and size of case can be suitable for third party funding?

MP: We only finance genuine commercial disputes such as contractual disputes, professional negligence, contentious probate, insolvency, shareholder disputes and marine disputes. We do not fund personal injury, medical negligence, defamation or matrimonial matters.

Generally speaking we do not have a minimum level of funding in respect of the level of damages or the amount of finance required and have funded cases with less than £25,000 of quantum in dispute.

MA: If £25,000 is your minimum quantum figure, what would be the number you would actually fund?

MP: We have actually financed a case requiring around as low as £5,000 of funding.

PJK: How do you decide at the beginning of the case whether you

MC // July 2015

are going to take that case or not?

Have you got assessors?

MP: We have a stringent approval procedure in place. There are three initial tests that every claim must pass before being considered for formal review.

These include economic, insurance and recoverability tests. The formal review itself is conducted by our panel of senior litigation experts, which include a former senior member of the judiciary and former heads of litigation for major city law firms.

PJK: Presumably you’re not having such senior litigation experts’ look at claims as low as £25,000 in value?

MP:Yes. The review process is consistent for all of our cases.

PJK: Has anyone got any experience in third party funding in personal injury?

MA: The Association of Litigation Funders are the cornerstone of the professional funding market around the world, they wouldn’t want to engage with personal injury even if there was a way of doing it.

PJK: They wouldn’t want to be seen taking 30% of a paraplegic’s damages.

MA: Canada is an interesting market because they have had instances where they’ve been talking about passing on the cost of funding to the opponent, there have been a couple of actions where they have considered passing some of the costs on.

‘The onus is on third party funders to do a huge amount of due diligence up front but once the case has started they’ve got to keep their distance’ Emma Chown, Practical Law Dispute Resolution PJK: Do you do disbursement loans in your PI practice?

MC: No, like most law firms we have several hundred thousand pounds outstanding at any one time, which we pay out for disbursements. A friend of mine who has a law firm that is turning over about £3 million a year, thinks that because of the quality of her work she’s going to have to find another quarter of a million pounds a year just to fund the increasing court fees.

PJK: If we end up with the decision that says you could recover the cost of funding would that change the market?

MC: It would be a game changer.

MA: With commercial litigation as soon as you introduce third party funding to a case you change its nature, you change its dynamic. That can be a positive thing for that company and

The Features

‘I was pleasantly surprised when the first reforms came about and success fees were no longer recoverable, I thought it would be a race to the bottom’ Mohsin Patel, Augusta Ventures LLP can lead to a case settling.

MP: The firms themselves have to be approved by not only us but also by our insurers. The fact that we usually ask the firm to defer parts of their fees to act on a partial CFA means that they have an alignment of interest to both the claimant and the funder, and are more likely to be cautious and diligent pushing cases forward.

PJK: You will never be able to see what the other side’s witnesses are like! As Counsel, I did a very large third party funded case that did go to trial and we succeeded. It does change the dynamic of the litigation, because the other side knew that we had the funds, which we wouldn’t have done without third party funding.

MA: In his preliminary report, Sir Rupert Jackson said that he felt that the Arkin Cap wasn’t necessary and that’s what made people nervous because without the Cap you’re asking funders to take unlimited risk.

CD: What’s the position now on the extent to which third parties can make decisions on the case?

EC: The onus is on third party funders to do a huge amount of due diligence up front but once the case has started they’ve got to keep their distance.

If they start trying to direct what happens that may be champertous and the agreement will be void.

PJK: Are CFAs still an effective means of funding litigation? If not why not?

MC: Everything we do virtually is CFA and we investigate the clients available funding. We are a purely PI business and pre-LASPO you had to jump through hoops, now we just carefully question the client to ensure whether alternative case funding is in place.

CD: It’s just become de-facto.

FB: Can you think of an alternative?

PJK: There’s no real advantage for a client not to have a CFA. MC: You do have to have them, 50% of clients are falling out of the portal so you may have to issue proceedings.

CD: The public has become educated to it so now expect it.

MC: If you go into a greengrocer’s shop you have to pay for an apple, you don’t get it for nothing, so I actually agree

with that part of the government’s policy, as the clients should have a financial interest in the litigation process.

MP: I was pleasantly surprised when the first reforms came about and success fees were no longer recoverable, I thought it would be a race to the bottom.

PJK: To what extent do the Regulations make DBAs unattractive? What could be done to make them more attractive?

MA: The problem stems from the no win no fee arrangement, they get paid nothing if the case is lost, that’s what stifles the growth of that market. There is a real opportunity for DBAs, they are happening out there under the radar but they should be a much bigger option than they are.

MP: If partial DBAs were allowed that would make them a more attractive option.

PJK: Everyone says that but the government has ruled it out again!

EC: Yes, that’s right. But I understand that the MoJ is showing an interest in sequential hybrid agreements, which would mean you could have different types of funding at different stages of a case. You wouldn’t have to do a DBA the whole way through.

PJK: Bizarrely, the DBA regulations are worded in such a way that theoretically you can have that already.

MC: A CFA is more financially viable anyway as solicitors can recover the allotted hourly rate and a fair success fee to ensure the sustainability of the business.

PJK: Is crowd funding a possibility for some sorts of claim and is there a future in it?

FB: It’s been used in product development to fund the gaps.

MP: It already exists. Websites like Kickstarter fund all sorts of things.

Litigation is essentially like any other asset and how you finance that asset could be any number of ways.

EC: Crowd funding has already been used in litigation – by Mr Beavis to fund his appeal to the Supreme Court against a parking fine.

MA: Crowd funding makes sense if you want to get a public policy on the agenda, you’re not risking a lot to see

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something happen and if it doesn’t then you’ve lost nothing.

FB: Where does that sit with adverse costs risks?

PJK: As far as disbursement funding is concerned, are you using external funders?

MC: We use our bank account to fund our disbursements. The problem comes with the disbursement increase, case acquisition costs, coupled with lower returns on fixed portal costs, because 97% of cases in the PI portal are fast track cases.

CD: If they can afford to and want to use the bank account in that way then that’s up to them, but it’s not necessarily the best business decision.

Then it is possible to take the debt off the balance sheet and free up that cash back onto your own balance sheet.

MC: Are personal guarantees required and given by the law firm?

CD: Not personal guarantees, but it’s underwritten by the law firm.

PJK: What is your primary concern when deciding to lend? Is it the strength of the solicitor, the viability of the law firm or the strength of the case?

CD: We look at the strength of the case and assess whether it is proportionate. Other than that, we don’t investigate the case for its merits, we rely on the integrity of the law firm.

PJK: What are the main challenges from a funding perspective to running a profitable legal practice?

MC: Disbursements will rocket because of the recent increased court fees which is the main challenge, particularly for fast track cases, and certainly so for multi track work. A solicitors practice has to have strong cash flow to fund the fees and the increasing overheads, which we all have to face. Additionally, the reduced fixed fees in the fast track will begin to bite over the next year, reducing most firms turnover, cash flow, and therefore in many cases, their profitability.

CD: We’ve seen a contraction in the market because access to cases is much more difficult.

Modern Claims would like to thank all for attending.

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The Features

61

Modern Claims’ panel of resident legal experts tackle the top issues in the claims industry.

Emma Tindall, Associate at BLM asks whether the benefits of drones outweighs the risk and Donna Scully, Partner at Carpenters considers the likely impact of askCUE PI.

Drones: Opportunity or threat?

askCUE PI – The Story so far

What specific challenges does the rise in the use of drones and unmanned aircraft systems for personal and commercial use represent to insurers? Does this rapidly advancing area of technology present an opportunity for the sector?

D

rones have notoriously been used for military purposes, but there are numerous potential future growth areas. Many dangerous jobs are likely to benefit from drone technology, including search and rescue, public security and fire fighting. Commercial uses include filming panoramic shots for TV and film productions, and deliveries by drones (a technological charge led

by Amazon). Private and leisure use of drones is also becoming increasingly popular (described by the Daily Mail as “this year’s must-have gadget” in December 2014) and lightweight drones are now very affordable.

Current regulations require drones to be within the line of sight of the operator at all times, which significantly restricts their current deployment. The European Commission currently envisages full integration of drones into European airspace by 2028, and it is likely that the use of drones will continue to increase dramatically over this period.

In addition to requiring cover for ‘traditional’ risks such as personal injury and property damage, parties who are involved in the manufacture, supply or use of drones will also need to consider their potential exposure in relation to invasion of privacy and data protection claims. The quantification of these unusual risks may prove challenging for insurers. Insurance cover is already mandatory for all drones which are used commercially and for those which weigh more than 20kg. This mandatory insurance regime may be widened, such that insurance is required for lightweight drones, which are intended only for personal use. The risks which may be posed by the use of drones in a personal capacity are likely to be significantly different to those used in a commercial context, and insurers have the opportunity to develop a range of products to cater for the needs of these different parties.

AIG (in addition to a number of other insurers) has been given permission to begin trialling the use of drones in the USA to assist in the investigation of claims (particularly in locations which would ordinarily be too dangerous or remote to access). Drone technology presents opportunities for insurers to investigate claims more quickly, safely and efficiently than “on the ground” investigation methods have traditionally allowed.

4 years to negotiate.

askCUE PI is a good example of claimants and insurers working together to combat fraud. The efforts put in by claimant representatives to achieve access to the system meant that we were all excited for the system to go live and looking forward to a slick process that would help to weed out fraudsters. After all, it took nearly

Implementation of the process has not reflected the good work of claimants and insurers in developing the system. On the day that I sat down to write this article, the askCUE PI system was down - again. In the first few weeks there have been issues with the site crashing and running slow which does disrupt our normal processes, but it’s understandable that there will be issues at the start. Notifications of disruptions and efforts to resolve are emailed out to registered administrators, which helps operationally. We are sure that as the system settles down that these disruptions will lessen, and it’s hoped that the increase traffic to the site will result in modifications being made so that the site can cope better.

Once it’s explained why it is necessary, claimants have not been perturbed by the searches being carried out.

Fraud checks are commonplace with insurance companies, and this search is an extension of that, helping claimant representatives identify possible issues early on. The fight against fraud has never been one-sided, despite what insurers may believe. The askCUE PI system is a very long awaited and valuable tool to add to the resources that we already utilise. The database is not 100% and also the search uses the address provided, which may have changed during the 5 year period searched.

The big problem is that when the system fails, the whole process grinds to a halt. The overwhelming majority of claimants are genuine, but they suffer delay in their claims. Notification to the insurer is also delayed, and the claims process – which we all want streamlined – is elongated. MASS lobbied for a contingency in the event of system failure, but none has been put in place. We need an alternative that means claims can still be pursued efficiently, and that does not increase costs. Perhaps the insurers could perform the search?

Donna Scully, Partner, Carpenters.

Emma Tindall, Associate, BLM.

MC // July 2015

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The Features

63

It’s Negligent, clinically?

Robin Selley considers the potential impact of the government’s decision to introduce fixed costs for clinical negligence claims worth up to £100,000. of premium was unreasonable and/ or disproportionate, and the Court of course confirmed that the premium of £5,680 was reasonable, proportionate and recoverable in full.

I

t seems ages ago (April!) since Master Leonard sat in the Senior Courts Cost Office on the case of Ms Emily Nokes v Heart of England Foundation NHS Trust (2015) which concerned an ATE Insurance policy purchased after the Jackson reforms in April 2013, which covered a Clinical Negligence claim.

You will remember that the Claimant had obtained a policy from Temple Legal Protection, which insured the cost of experts’ reports on causation and liability and so was recoverable from the defendant.

(Section 2 of the Recoverability of Costs Insurance Premiums in Clinical Negligence Proceedings Regulations 2013 No. 92 of 2013).

The premium specifically allocated to cover the cost of these reports was £5,680 plus Insurance Premium Tax for an indemnity of £10,000. In addition it was “self-insuring” i.e. there was no premium to pay if there was a claim on the policy. It was noteworthy that although the Defendants aggressively challenged the premium level, they did not offer any substantial evidence to support their contentions that the level

The battle ahead...

This was an important benchmark decision on the level of premiums for this type of cover and Claimants could therefore pursue these actions with the comfort that if the claim was successful then they were able to recover a substantial policy premium if they obtained an early medical report on liability and/or causation.

But soon after this decision was made, came further complaints from both the NHS Litigation Authority and the Government that the level of costs received by a successful Claimant were grossly excessive and generally far outweigh the value of the average claim. The Claimant side of the industry will continue to argue that clinical negligence cases are generally complex and require specialist knowledge to enable the injured party to receive the compensation they may be entitled to.

Claimants face a long and hard battle ahead as some say that the NHS Litigation Authority has a reputation for being obstinate and having a confrontational approach to claims, which means that claimant lawyers have to work hard to make progress with these claims.

So what can be done? Well it’s all too obvious to the Government isn’t it? Introduce a portal with fixed costs to ensure that the greedy lawyers do not continue to “milk the system”. The government has now confirmed that it will legislate to introduce fixed costs for clinical negligence claims worth

‘The Health Minister Ben Gummer peddles the view that some lawyers have ‘unscrupulously’ used patient claims to load ‘grossly excessive’ costs on to the NHS and charge far more than the patient receives in compensation’

up to £100,000. The Health Minister Ben Gummer peddles the view that some lawyers have ‘unscrupulously’ used patient claims to load ‘grossly excessive’ costs on to the NHS and charge far more than the patient receives in compensation.

What’s on the horizon...

This is very strange because the reasonableness of costs is currently assessed by a Judge (sometimes twice if they are subject to both cost budgeting and detailed assessment).

The Government, either (a) thinks it is wiser than our Judges, or (b) wants to pay unreasonably low costs.

But things get even stranger because the High Court has now acceded to Lord Justice Jackson’s request (yes him again) for a temporary break in costs budgeting for all London clinical negligence cases with hearings listed for between October 2015 and January 2016.

Perhaps a portal system would be of benefit to all concerned at a time when the judicial system creaks ever more loudly under the strain of budget cuts and austerity. It is all too obvious to those who work in this arena that a portal system, with time limits akin to the other portals, would see the vast majority of claims swiftly exit the portal.

What if the time periods allowed, from first notification to the point when a decision on liability is due was simply increased, to give the NHSLA sufficient time to investigate claims properly and enable them to consider such claims properly but also commercially?

If an admission of liability were given early enough, the claim could stay within the portal and costs could be significantly reduced. If contested, then costs on the standard basis could perhaps apply. Would this not also give the NHSLA more of an incentive to make an earlier admission and save costs?

Either way, if these issues are not carefully considered, we will end up with a truly dreadful state of affairs.

Robin Selley is an in-house lawyer at Box Legal Limited.

MC // July 2015

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The Features

65

We need to talk about ADR Brian Dawson explains why practitioners must adopt a robust approach to dispute resolution by reference to clinical negligence and catastrophic injury cases in particular.

C

atastrophic injury and clinical negligence cases often sit uneasily within the litigation process because of delay and uncertainty about the chances of success. To take just one issue: the claimant often requires immediate rehabilitation. I am informed for example that in neurological cases, the neuroplasticity of the brain means that early intervention can result in an improved outcome. In addition, complications such as muscle atrophy and contractures are less likely the sooner rehabilitation is commenced.

But early and intensive rehabilitation needs to be paid for and whilst dedicated and competent lawyers do what they can with tools such as the rehabilitation code and interim payments, the litigation system is not ideal for claimants and their relatives.

Nevertheless, litigation is the norm in this country. Other forms of resolving disputes go under the name of alternative dispute resolution (ADR).

The use of the word “alternative” in this context implies that litigation is the mainstream, tried and tested method and anything else has a whiff of the experimental about it; that litigation is the suit and tie and ADR the cardigan and sandals.

The bigger picture The reality is that resolving dispute by discussion predates our court based adversarial system by thousands of years and there have been audited statistics for many years now evidencing settlement rates in mediation, which are consistently above 75%. Perhaps the time has come for more of us to stand back and look at the big picture; to consider various solutions in “Dispute Resolution” without assuming any one of them to be somehow more acceptable than the others.

The legal landscape is changing and there is an appreciation that the present litigation system is slow, expensive,

and baffling to the consumer. So much is evident from the work done by Professor Richard Susskind OBE, Chair of Civil Justice Council’s Online Dispute Resolution Advisory Group. There is nothing new about this drive towards a quicker, cheaper and more user friendly system, but whether the various initiatives have succeeded in making a noticeable change in the way serious injury and clinical negligence cases are handled at the coal face is debateable. There are already measures in place, which are designed to bring about change in our approach to case handling and they are just waiting to pounce. All it needs is for the judiciary to be more robust.

It is worth looking at the Pre-Action Protocols for the Resolution of Clinical Disputes for evidence of both a different approach and the potential mechanism for bringing about change. The PreAction Protocol for the Resolution of Clinical Disputes 1998 stated: “The Patients’ Charter encourages patients to have high expectations, and a revised NHS Complaints Procedure was implemented in 1996. The civil justice reforms and new Rules of Court should make litigation quicker, more user friendly and less expensive.”

The protocol continued: “It is clearly in the interests of patients, healthcare professionals and providers that patients’ concerns, complaints and claims arising from their treatment are resolved as quickly, efficiently and professionally as possible. A climate of mistrust and lack of openness can seriously damage the patient/clinician relationship, unnecessarily prolong disputes (especially litigation), and reduce the resources available for treating patients. It may also cause additional work for, and lower the morale of, healthcare professionals.”

Pre-Action Protocol for the Resolution of Clinical Disputes: 2015.

Objectives The objectives of the Protocol include: • Openness, transparency and early communication of perceived problems between patients and healthcare providers.

• Prompt disclosure of information

to encourage early resolution or narrowing of the issues in dispute.

• Exploring mediation before issue of proceedings.

• Identifying issues that may require a preliminary hearing.

• Support efficient management of proceedings where litigation cannot be avoided.

• Promote rehabilitation.

• Encourage an early apology where appropriate.

Rehabilitation The protocol continues to emphasise the importance of rehabilitation, particularly at an early stage. Paragraph 4.1 provides that the parties should consider as early as possible whether the claimant has reasonable needs that could be met by medical treatment or other rehabilitative measures, and should discuss how these needs might be addressed. The protocol has a link through to the Rehabilitation Code. The code is in the process of review and the link will be updated as and when that code is changed.

Stocktake The Protocol provides that the parties should review their positions before proceeding are issued (as a last resort).

The stocktake is a useful opportunity for the parties to consider the appropriate tool for dealing with the case on an issue by issue basis from the methods set out in the ADR section of the protocol.

ADR Section 5 of the protocol deals with ADR identifying the need to consider: • Discussion and negotiation.

• Mediation.

• Arbitration.

• Early neutral evaluation.

• Ombudsman schemes.

If the parties do not take stock appropriately, they may wish to consider the potential consequences of failing to comply with the protocol.

Practice Direction – Pre-Action Conduct.

It is important that we review paragraphs 13-15 of this Practice Direction, which also

MC // July 2015

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The Features deals with compliance (my emphasis).

Paragraph 13 indicates that that court “will” take into account non-compliance when giving Directions for the management of Proceedings and when making orders for costs.

Paragraph 15 states that in the event of non-compliance the court may order that:a) The parties are relieved of an obligation to comply; b) Proceedings are stayed while particular steps are taken to comply; c) Sanctions are applied.

Paragraph 16 then goes on to deal with sanctions, which may include:a) An order that the party at fault pays the cost of the Proceedings or part of the cost of the other party or parties; b) An order that the party at fault pay those costs on an indemnity basis; c) If the party at fault is a Claimant who has been awarded a sum of money, and are depriving that party of interest on that sum for a specified period and/or awarding interest at a lower rate; d) If the party at fault is a Defendant and the Claimant has been awarded a sum of money, an order awarding interest on that sum for a specified period at a higher rate (not exceeding 10% above base rate) – see below.

The Court’s Approach A short period of leniency may be expected. However, failing to comply with a protocol must (by definition) be regarded as unreasonable, when protocols define reasonable behaviour.

Failing to engage in ADR as required by the protocol may be an important consideration and there are some recent cases, which highlight an increasingly less tolerant approach by the courts to a failure to mediate.

PGF II SA v OMFS Company 1 Ltd [2013] EWCA Cave 1288 Part 36: The claimant accepted a Part 36 offer nearly 12 months after it was made and just one day before the trial was due to start. In the interim, both parties had incurred a further £250,000 in costs. The court made no order for costs from 21 days after the Part 36 offer, thus depriving the defendant of a significant sum because the defendant had completely ignored the claimant’s offer to mediate.

Lakehouse Contracts Ltd v UPR Services Ltd [2014] EWHC 1223 (Ch.)

67

‘Resolving dispute by discussion predates our court based adversarial system by thousands of years and there have been audited statistics for many years now evidencing settlement rates in mediation, which are consistently above 75%’ There had been unreasonable behaviour on both sides. L had refused mediation in respect of the underlying dispute and then in respect of the costs of the petition. L should have its costs of the petition until its own behaviour became unreasonable.

Thereafter there should be no order as to costs.

Laporte & Another v The Commissioner of Police of the Metropolis [2015] EWHC 371(QB) (19 February 2015) The Claimant offered to mediate. The Defendant, despite being prompted more than once, did not accept the offer. At trial, the Defendant succeeded on every substantive issue. Further, the Court found that although there was a likely possibility of a settlement, had there been mediation, it would have been by no means certain. The Court awarded the Defendant only twothirds of its costs.

Consider the alternatives Let us consider a clinical negligence case involving birth injury. It is not uncommon in these cases for the parents to struggle for years providing round the clock care with no proper assistance save as provided by support groups, local authorities and the NHS. After a while, their relationship starts to buckle under the weight of sheer exhaustion. The child’s development suffers from a lack of early intensive intervention that proper care would provide.

Early discussion in such cases might establish whether and to what extent liability is seriously going to be in issue.

With appropriate safeguards in place, that discussion could take place almost immediately and certainly after the Defendant has served a reply. Care and rehabilitation could also be discussed at an early stage. Let’s face it, the earlier agreement can be reached on liability and rehabilitation the more money can be diverted to recovery and compensation and less to court fees and costs.

I am not suggesting that mediation, or indeed any other method of

resolving disputes should be adopted in every case, but we should be considering the alternatives on a case by case, issue by issue basis and advising accordingly. Some of us already consider the above options, including negotiation, mediation and early neutral evaluation, but perhaps we should do so earlier and in relation to more individual issues.

If we do not take a reasonable approach to dispute resolution in the future there may be financial penalties, as this article identifies and I suggest it would take just a few robust decisions of the court to bring about a change that education and information has so far failed to achieve.

Brian M Dawson, Practice Group Leader, Walker Smith Way Legal (part of Slater & Gordon).

Brian Dawson

Practice Group Leader Brian Dawson has extensive experience in civil litigation, gained from over 30 years of practising law. He specialises in clinical negligence, personal injury (including brain injuries, back injuries and disease cases), professional negligence, and costs and funding issues. As a mediator, Brian has extensive experience in mediating civil litigation, including commercial and contractual, personal injury, property claims, and has particular experience of professional negligence, probate/inheritance, and clinical negligence cases.

Brian is a deputy district judge. He is also an Association of Personal Injury Lawyers (APIL) Fellow and APIL accredited ‘Clinical negligence specialist’. In addition, he is an accredited mediator with both the Alternative Dispute Resolution Group and the Centre for Effective Dispute Resolution and a director of Trust Mediation.

MC // July 2015

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The Features

69

First blow landed in propaganda war on clinical negligence costs: will the legal services industry be able to fight for access to justice?

Sarah Crowther at Outer Temple Chambers considers how the legal profession might respond to the announcement of fixed fees in clinical negligence claims to promote access to justice.

M

any readers will be aware of the announcement that the Department of Health (DoH) wants to ‘cap’ the ‘grossly excessive’ costs of ‘unscrupulous’ lawyers acting on behalf of claimants in clinical negligence claims.

Although the manner of the announcement of Ben Gummer, Minister at DoH - made by way of press release in the early hours of Sunday, and without any apparent prior consultation with those likely to be affected – was clearly designed to catch the legal services professions and victims’ groups on the back foot, in many ways the line taken is not a surprise.

It is not that long since DoH launched a similar media broadside against ‘extortionate’ nursing and care agencies, who were blamed for charging NHS Trusts high rates for agency staff needed to meet the recruitment crisis.

Politicians of all colours have become used to a favourable public response to criticism of lawyers’ fees.

It repeats the message of ‘fat cat’ lawyers, which is extremely wellestablished both in the media and as a matter of general perception. Dividing the interests of the clients from those of their lawyers is now a tried and tested political strategy, which has already borne fruit in respect of criminal and family legal aid and formed the backdrop to the Jackson reforms of civil litigation costs.

Moreover, the message is effective because there is no natural constituency of opponents: nobody expects to

become a victim of the negligence of a health professional or institution.

Therefore, nobody imagines that one day their ability to access justice for such a wrong will be dependent on appropriate funding being available for their claim.

It is difficult for legal services professionals to advocate for their own fees: cries of self-interest drown out most rational arguments. In any event, the professions lack the cohesion needed to fight a unified battle on behalf of possible future claimants: some are guilty of over-identifying with their own clients’ positions on both sides of the litigation fence.

Time to take action So, the big question is, how, if at all, will clinical negligence lawyers be able to avoid fixed costs measures? Action needs to be taken quickly to challenge the basis of the case for ‘caps’ on costs. And the arguments need to be backed up with hard evidence, not just anecdotal experience.

Surely, the real cost to the NHS is the fact that there are still too many cases in which delivery of care falls short of the mark. This isn’t just a claimant’s issue either. It cannot be said that it is in the interests of health professionals or the wider public to permit such shortcomings to go uncompensated or rely on regulatory or disciplinary measures to weed out poor practice.

When nursing agencies were the target of DoH wrath, Mark Porter, the British Medical Association council chairman, said that is was a “sign of stress on the system and the result of poor [workforce] planning by government”. The same reasoning applies by analogy here: the average annual rise in claims (stated by

the Medical Defence Union to be 10%) is fuelled not by lawyers, but by an increase in victims with a need for redress, caused by stress in the system itself.

What happens now…

Also, the press release is very short on any analysis which underlies the suggestions both that £100,000 is the correct value of claim to count as ‘low’ and secondly that fees should be fixed by reference to a ‘proportion’ of compensation. No impact assessment is included. The assumption must be no such analysis has in fact been undertaken. What is the likely effect of such a measure on the market?

The average compensation payout to victims of the Mid-Staffordshire catastrophe is said to be £10,000. If the ‘cap’ were put at 75% of recovered damages, would any representation be available to those victims? What would be the public response to a survey asking whether a victim of Mid-Staffs should be required to litigate their claim in person? How much did defence organisations and insurers spend on average on defending such claims?

Seen in this light, it might be possible to demonstrate that the proposal would have the effect of depriving genuine victims of their right to bring a claim, without achieving the stated objective of managing excessive costs within the system. But the clinical negligence world would need to achieve something it has never managed until now: act swiftly and in a co-ordinated fashion to generate evidence to shift public opinion and promote access to justice.

Sarah Crowther is a Barrister at Outer Temple Chambers.

‘The average annual rise in claims (stated by the Medical Defence Union to be 10%) is fuelled not by lawyers, but by an increase in victims with a need for redress, caused by stress in the system itself’ MC // July 2015

70

5 minutes with...

5 minutes with...

Kelly Hall

Q: Has the industry changed drastically since you started working in it?

A: In my 13 years of practice, there have been many changes in the clinical negligence field, mainly in terms of how claims are funded. As I began to practise, Conditional Fee Agreements were starting to be used more widely, improving access to justice for many injured people who previously fell into the income bracket of ‘too rich for Legal Aid and too poor to privately fund a claim’. Latterly, the Jackson reforms have limited the amount of costs recoverable under these agreements by capping success fees and only allowing recovery of these from the injured party. The introduction of cost budgeting and the new proportionality test seek to further limit the costs which are recoverable from the negligent party.

Q: What has been the key positive or negative impact of change in your area of the market?

A: I think the most negative impact of the recent funding changes comes from the new proportionality test.

Clinical negligence claims are complex and often costly to investigate but damages are not always high, particularly in fatal claims. However, even if damages are low, these cases are of the utmost importance to injured people and bereaved families.

The new test may mean that claimants with low value claims will find it more difficult to secure legal representation, limiting access to justice for those vulnerable individuals.

Q: Who inspires you and why?

A: My clients and their families inspire me. Many of my clients are severely disabled by their injuries or have lost close relatives as a result of negligence. I am constantly amazed by their courage and perseverance when their lives are often so difficult.

Q: Have you had/got a mentor? If so, what was the most valuable piece of advice they gave you?

A: Probably the best piece of career advice I have been given was as an LPC student; a lecturer told us that the most important allies you can make in a law firm are the secretaries because they know the firm’s procedures inside out and they can make your job much easier. Absolutely true in my opinion!

Q: If you were not in your current position, what would you be doing?

A: I would probably be living on a farm in the West Country, growing vegetables to sell in my own farm shop… the antithesis of life as a city lawyer!

Kelly Hall is a Solicitor in the Clinical Negligence and Personal Injury team at Kingsley Napley LLP.

Eclipse announces J-Codes compatibility Eclipse’s Proclaim solution enables lawyers to share consistent billing data

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aw Society Endorsed legal software supplier, Eclipse Legal Systems, has announced new J-Code functionality in its market-leading Proclaim solution.

Following the announcement of the approved J-Codes in late 2014 by the LEDES oversight committee (LOC), Eclipse has confirmed that the J-Codes set synchronises with Proclaim’s existing costs budgeting categories as set out in the Precedent H. Production of the Precedent H form is a standard feature of the Proclaim Case and Practice Management Software systems. This existing costs budgeting functionality will enable lawyers to produce bills and budgets utilising the J-Codes set, even before such usage becomes mandatory.

In addition, Eclipse is currently awaiting the outcome of the consultation by LOC to reach completion regarding bill layouts and will be adding these new layouts to Proclaim’s updated Costs Drafting module. The module is due for release imminently (Q2 2015) and will provide ‘redline bill’ production for costs teams.

MC // July 2015

Eclipse’s Business Solutions Director, Tracy Blencowe, comments: “Eclipse’s product development ethos means that we are constantly enhancing the feature-set offered by Proclaim. In short, if there is a marketplace challenge - or an opportunity - for our clients, then we aim to provide the appropriate tools for them to derive maximum benefit.

“This latest implementation of the J-Codes set will enable our clients to comply immediately with ongoing legislation, and to share data in a consistent and readily usable format.”

For further information, please contact Darren Gower, Marketing Director at Eclipse Legal Systems, part of Capita plc, via darren.gower@eclipselegal.co.uk or call 01274 704100. Alternatively, visit www.eclipselegal.co.uk

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