Modern claims magazine issue 4 by Charlton Grant

Linking the Industry Together

November 2013 | Issue 04 | ISSN 2051-6495 The perfect model: David Downie at the BGL Group shares his thoughts on what model works for claims and how the Group has created a new kind of ‘perfect’. Frances McCarthy: The Past President of APIL speaks to Modern Claims about the post-reform landscape for claimant lawyers.

Modern Claims Magazine | November 2013 | Issue 04

“Lawyers have to concentrate on the important issues in a case… what directions are needed in the light of those issues. There should still therefore be consistent quality but with more focused expenditure of costs” Hon. Mr Justice Ramsey

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Introduction

he need to provide claims services at an economical cost for both the professionals and, ultimately, the customer has strengthened in the past six months as we move into the ‘new normal’ (for now) in the claims arena. This requires an understanding of what firms can successfully deliver in certain parts of the claims industry in terms of skill, capacity and deliverability and how they can provide these services in accordance with costs budgeting procedures. So what makes for a ‘perfect model’? Underpinning deliverability is the need to look at process, but as Andrew Grech, Managing Director of Slater & Gordon contends (page 15), technological efficiencies alone do not make a successful legal brand in the claims sector. Efficiencies need to, he told me, be matched by a philosophy that ‘puts the client, not the lawyer, at the top of the tree’. The ability to have proven success and client-centric attitudes and successful strategies to forge a clear link between action and brand identity will keep, he believes, consumers coming back for more. However, it’s been said many times that a ‘one size doesn’t fit all’ approach doesn’t work in the claims industry, highlighted by the various business structures that have come out of the woodwork post LASPO and Jackson reforms. Some insurers and law firms are working well together and others are happy to fly solo, but it’s evident that the ‘perfect model’ is starting to involve more collaboration and less isolation from partners and even competitors. The recent news that some of the leading personal injury firms are uniting to provide a volume budget to purchase cases from those firms looking to exit the market is indicative of this. Collaboration is also key in the preparation of those essential cost budgets. What makes the ‘perfect’ claims model is discussed by the David Downie BGL Group on page 60. While not everyone may agree, there is certainly a trend to get one’s house and business plan in order to survive further reform and meet the changes implemented by Jackson and his

Modern Claims Magazine

advisors, such as the Hon. Mr Justice Ramsey (page 11). The acceleration of reforms seems to have slowed somewhat with the government’s delay to increase the Small Claims Limit to £5,000 Whether this is due to ‘letting the reforms bed in’, finance or the need to look more closely at an alternative to litigation at this level, it seems collaboration it more likely over the coming months as all sides face stricter cost assessments and more strategic use of claims management processes. These aren’t simply my thoughts but also those raised at the recent MASS annual conference, which provided a vehicle for claimant lawyers to exhale a collective (and perhaps brief) sigh of relief over the MoJ decision to defer the Small Claims Limit extension. As Charlotte Parkinson, who attended on behalf of Modern Claims, reports: ‘Keynote speaker, Mr Justice Foskett, from the CJC said: “The cost of going to court raises real questions about access to justice”. Des Hudson of the Law Society reiterated this point as he announced the costs section, which will be launched next year to help Law Society members work under the new regime. The call for a collaborative sector approach was the lasting message and all the speakers were aligned in their approach that what is key is keeping the consumer at the heart.’ So, a busy autumn ahead, but nothing those leading the way in the ever-changing and ever challenged claims sector can’t cope with, I’m sure. It will also make for a more collaborative-focused programme for the first Modern Claims Conference, due to be held in 2014. Look out for details in the next issue of Modern Claims.

Emma Waddingham, Chief Editor The Modern Claims team would love to hear from you. Please do drop me a line with your feedback and news via email at: emma.waddingham@charltongrant.co.uk

Issue 04 – November 2013 | ISSN 2051-6495

Project Director Kate McKittrick

Chief Editor Emma Waddingham

Head of Events Julia Todd

Accounts Director Karl Mason

Group Editor Charlotte Parkinson

Interview Editor Bippon Vinayak

Contact t: 01765 600909 e: info@modernclaimsmagazine.co.uk w: www.modernclaimsmagazine.co.uk

Advertising Rachael Pearson

Production Lindsey Thomson-Heley Design Richard Berry

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 // November 2013

Contents

CONTENTS 03-08 Intro & THE News 07 Ant Gould talks news

The FCA interest in ethical behaviour (or not) is growing, leaving insurers to instigate a step-change in their firms, ensuring they act in the best interest of the public as well as drive a culture of non-negotiable integrity within the business. Ant Gould reports.

11-19 The INTERVIEWS 11 The Hon. Mr Justice Ramsey

Charlotte Parkinson speaks to the Judge about his view of market and consumer reaction to the reforms, further reform to costs budgeting, Part 36 and his role as an â&#x20AC;&#x2DC;implementerâ&#x20AC;&#x2122;

15 Andrew Grech, Slater & Gordon

Emma Waddingham speaks to the Managing Director of Slater & Gordon, Melbourne about what distinguishes the ever-busy ABS over any other legal brand, in terms of structure, culture and client services.

18 Frances McCarthy

The Past President of APIL and Managing Partner of Pattison Brewer, speaks to Charlotte Parkinson about the postreform landscape for claimant lawyers.

21-39 The Opinions 22 Sector Soapbox

ABI, BIBA, Craig Budsworth, MASS, Rod Evans, FOIL

24 Evidencing the case

Peter Horton, LV=

24 Reputation first

David Williams, AXA Insurance

25 Costs pressure

Alistair Schuberth, Willis UK Retail

25 Avoid exclusivity

John Latter, Zurich and Kieran Jones, Weightmans LLP

27 Marketing claims

Matthew Waterfield, Simply Lawyers.

Editorial Columnists Alan Nesbit Managing Partner Nesbit Law Group &Chairman, ARC

Craig Budsworth Chair, MASS & RTA Partner, Glaysiers

Jim Toole Operations Director First Response Law

Michael Davidson Head of Strategy & Sales Goldsmith Williams Solicitors

Richard Clark Director Xuber

Alan Strange Underwriting Director LAMP Group Limited

Darren Gower Head of Marketing Eclipse Legal Systems

John Keates Chief Technology Officer Lysanda Ltd

Michael Nixon CEO Inter-est Ltd

Richard Forth Managing Director Forths Forensic Accountants

Alistair Schuberth Risk Management Consultant Claims Defensibility Team Willis UK Retail

David Jabbari CEO Connect2Law

John Latter ACII Director of Technical Centre, UK Claims Zurich Insurance plc

Michael Wolstencroft Head of Noise Induced Hearing Loss Roberts Jackson

Karl Fischer Managing Director Wolf Law Solicitors

Nik Ellis Managing Director Laird Assessors

Richard Houseago Partner & Head of Property Risks and Coverage Greenwoods (Part of the Parabis Group)

Katherine Baron Casualty Claims Manager XL Group

Patrick McGuire Partner Thompsons Solicitors

Katherine Price Senior Associate Lyons Davidson (Scotland)

Paul Coulter Group Marketing Director Brilliant Law

Keith Crosier Managing Engineer Legal & Technical Assessors

Peter Horton Chief Operating Officer - GI LV

Andy Watson Chief Executive Ageas Andy Whatmough Director S & G Response Ant Gould Director of Faculties Chartered Insurance Institute Anthony Hughes Chief Executive Horwich Farrelly Solicitors

David Williams Managing Director, Underwriting AXA Insurance Dez Derry CEO MMA Digital Donna Scully Partner Carpenters Eddie Longworth Sales & Marketing Director Parabis Claims Solutions

Bernard Thornton Integrity Claims Management

Gerry Lee Senior Partner P R Hanna (Belfast)

Bippon Vinayak Chairman & CEO Doctors Chambers

Emma Bell Director Clifford James

Bruce Bourne Bruce Bourne Associates

George Bladon Corporate Account Manager ARAG plc

MC // November 2013

Kieran Jones Peter Parry Head of the Insurance Department Managing Director Weightmans LLP Independent Accident Investigations Lisa Beale Head of Checkaprofessional.com Raymond Southern Joint-Head of Fraud Matthew Waterfield Berrymans Lace Mawer LLP Head of Legal Development Simply Lawyers

Rod Evans President FOIL Samantha Ramen Policy Advisor Compensation System ABI Tim Wallis Mediator, Solicitor, Director Expedite Resolution Zoe Holland Managing Director ZEBRA Legal Consulting

Contents

27 Second class lawyers?

Katherine Price, Lyons Davidson

45 Great expectations

29 Value-added rewards

John Keates, Lysanda Ltd

29 Alternative routes

Bruce Bourne, Bruce Bourne Associates Bernard Thornton, Integrity Claims Management

31 Reform realities

Katherine Baron, XL Group

Richard Forth, Forths Forensic Accountants

34 Jealous? You should be!

Patrick McGuire, Thompsons Solicitors.

Eddie Longworth, Parabis Claims Solutions

35 Mobile, as standard

Nik Ellis, Laird Assessors

35 Selling? Act now

Zoe Holland, Zebra Legal Consulting Jim Toole, First Response Law

37 Keeping check

Alan Strange, LAMP Group Limited.

Peter Parry, Independent Accident Investigations

39 Accident avoidance

Keith Crosier, Legal & Technical Assessors

Darren Gower, Eclipse Legal Systems

41-62 The Features 42 Here come the brands

Over the past year a number of new brands have emerged and are beginning to disrupt the market. Modern Claims speaks to Paul Coulter and Zoe Holland about the value of the brand and how they are shaking up the market.

Aside from the referral fee ban, none of the regulatory and legislative reforms in England and Wales have been implemented in Northern Ireland. The distinctions have a variety of impacts. Gerry Lee explains why.

An upward trend in major fires associated with recycling plants, now suggest the terms of that cover require detailed review to avoid heated claims risk, says Richard Houseago.

61 Best in class

39 Integrating customer experience

From the recent scale of Work in Progress for sale, fraud and diverting the expertise of senior lawyers into management, our columnists Raymond Southern, Donna Scully, Alan Nesbit, Anthony Hughes and Michael George Davidson report.

58 A hotbed of risk

38 Be wise, be bold

57 Standing strong

37 Polished, profitable processes

Michael Wolstencroft provides a timely update and lists the core concerns regarding the Mesothelioma Bill, now the Ministry of Justice consultation has come to a close.

51 Legal opinion

34 Embrace change

David Jabbari pinpoints true meaning of ‘affinity’ in the modern legal sector – highlighting the value in locality networks and legal affinity partnerships.

49 An agenda for reform

31 Tomorrow’s lawyer

George Bladon highlights the work being done by the insurance sector to innovate process, services and meet customer expectations.

47 What is affinity?

30 The end of personalisation?

Emma Waddingham grilled David Downie, Group Director of Legal Services at the BGL Group to see why he thinks the group’s service models are ‘best in class’ and challenged him to identify the ‘perfect’ claims model.

62 5 minutes with…

Des Hudson, Chief Executive, The Law Society of England & Wales

62 Record-breaking growth

A personal injury heavyweight enjoys post-Proclaim growth explosion

47 MC // November 2013

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Ant Gould talks news

Ant Gould talks News… The lack of ethics and integrity-focused cultures in professional services – such as banking – have been blamed for recent economic crises. As a result, the FCA interest in ethical behaviour (or not) is growing, leaving insurers to instigate a step-change in their firm, ensuring they act in the best interest of the public as well as drive a culture of non-negotiable integrity within the business. Ant Gould, Director of Facilities at the CII, reports.

ehaviour dictates culture, which dictates behaviour – or conduct. That is something that I firmly believe and it is also something that is embedded deep into the thinking of the Financial Conduct Authority. As Martin Wheatley, Chief Executive of the FCA (writing in the FCA’s Risk Outlook for 2013) states, exactly what the regulator wants is for firms to ‘compete effectively, with the interests of their customers and the integrity of markets at the heart of how they run their business’. We all know a culture when we see it in the businesses and services we use on a personal level. We may not be able to put our finger on what it is exactly – be it a good or bad culture – but we certainly recognise it. The reality is that all firms have a culture no matter what size they are. It is this that influences how a firm goes about its business; how employees view the world and respond to clients and customers. Put more simply: ‘how things are done around here’. Culturing ethics Culture is also central to the Chartered Insurance Institute’s membership proposition, with all members expected to adhere to our Code of Ethics. As David Macintosh QC (Hon), chair of the CII’s Professional Standards Board explains, “Ethical conduct and integrity are central to how a

“The reality is that all firms have a culture no matter what size they are. It is this that influences how a firm goes about its business; how employees view the world and respond to clients and customers. Put more simply: how things are done around here”

good professional should conduct him or herself. It must be in the DNA of each reputable individual and firm operating in the market place. “In the public mind, this issue is of rising importance and concern and particularly so in relation to financial services. The banking crisis has greatly damaged public confidence in the banking sector and to an extent, in the wider family of financial services as well. In truth though, financial services has had an enduring issue with securing public trust that has predated recent crises. “There are clear signs that, alongside public pressure for reform, these next few years will see a much greater focus by regulators on the conduct and behaviour of individuals and firms. The regulator is starting to address issues in advance of consumer detriment, rather than after the damage has been done. They will put the culture of regulated firms and how they conduct their business firmly in the spotlight. “So, while there is a clear understanding of the need for change, many individuals and firms could struggle to find a practical way of articulating, incentivising and demonstrating how they pursue high standards of conduct. This is not an easy area for those who are used to working with clear cut compliance rules. Practical support for culture change It is in response to this challenge that the CII has launched a series of ethical guides, designed to be practical tools to help individuals on their own or firms – to drive a stepchange in the culture of financial services for the long-term benefit of the public. The first paper in the CII’s ethical culture guidance series is aimed at helping to embed a culture of integrity within organisations. To do so, it builds on research conducted by the authors - the Real Integrity research project – and is written by Jim Baxter of the Inter-Disciplinary Ethics Applied (IDEA) Centre at Leeds University, As the report says, ‘Integrity is a word that is widely used but infrequently understood. It is distinct from legal and regulatory compliance and from ethical behaviour, though it has a key role in ensuring all of these. Integrity is an aspect of character

MC // November 2013

Ant Gould talks news

“The regulator is starting to address issues in advance of consumer detriment, rather than after the damage has been done. They will put the culture of regulated firms and how they conduct their business firmly in the spotlight” that leads people to behave ethically even when it is not in their interests to do so. The idea of ethical culture is also widely referred to, though difficult to grasp. A lack of ethical culture has been blamed for many scandals that have hit organisations in general and financial services organisations in particular.’

developed by Duncan Minty ACII, is focused on a firm’s ethical culture; in other words, that part of its culture to do with how people behave at work. The guide is designed to help readers understand how they can steer their firm’s ethical culture in a more productive and trustworthy direction.

A ‘top ten’ guide to integrity This guidance proposes a ten-part framework for promoting integrity, which is built around the central principles of setting the right tone, supporting ethical decision-making, promoting openness and managing incentives. The following specific techniques are discussed in detail in the guides:

The guide identifies four important steps for changing a culture and is targeted in particular at SMEs.

• setting the right tone from the top; • developing and embedding an effective value statement; • promoting an open culture within the organisation; • developing a whistle blowing procedure; • providing impartial, confidential advice on ethical issues for employees; • developing and embedding an organisational code of conduct; • training staff in ethics; • rewarding ethical behaviour; • ensuring disciplinary procedures are effective; • monitoring organisational integrity, and the effectiveness of techniques. Steering a culture of integrity The second guidance paper, this time

The first step involves assembling a clear rationale for why a firm needs to improve its ethical culture. This needs to be expressed in simple but compelling terms, framed in positive language and presented as nonnegotiable. It should set out how the firm wants its people to behave in the future so that they can understand what is being expected of them. This step helps create the motivation in people to give up the old and established way of behaving that is now recognised as a problem for the firm. One ingredient that helps a lot in this is emphasising a clear business benefit to making this change, framed in language that everyone can absorb: for example, ‘our firm will be better off after this change because we will no longer have to waste time and money doing...’ The second step involves showing people how they will be supported in moving from that old and established way of behaving, to that new and perhaps unfamiliar way of

“Showing people an example of successful change that they can relate to helps them to overcome any hesitation about making the change themselves. It also backs up the compelling, non-negotiable nature of the change being sought”

behaving. The training this invariably entails needs to be freely available, relevant to the problem behaviour and presented using scenarios built around routine situations. This step gives employees greater confidence to abandon their old practices, by giving them a clear learning pathway to the new practices. The third step involves making sure that the policies and processes touched upon by the old practice (the one being abandoned) are changed so as to be consistent with the new practices being sought. This step removes vestiges of the old practice that employees may be tempted to latch on to and use as an excuse not to make the move to the new practices. If the new practices are non-negotiable, then that should be firmly stamped into your firm’s systems. The fourth and final step involves providing positive role models around the new practice so that employees can see that it is happening and what it looks like. Showing people an example of successful change that they can relate to helps them to overcome any hesitation about making the change themselves. It also backs up the compelling, nonnegotiable nature of the change being sought, through the message, ‘if they can do it, so can you’. The key to all the challenges firms and individuals face is really about seeing a culture as a positive force to be used, rather than a constraint to be overcome. The guides are part of an ongoing series of initiatives from the CII to help our members embed strong ethical cultures but are just as relevant for any firms in the claims arena. Both guides are available from the CII via www.cii.co.uk Ant Gould is the Director of Faculties at the Chartered Insurance Institute.

MC // November 2013

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Interview with Justice Ramsey

Interview with... The Hon. Mr Justice Ramsey Charlotte Parkinson, Modern Claims speaks to the Judge about his view of market and consumer reaction to the reforms, his thoughts on the expected further reform to costs budgeting, Part 36 and his role as an ‘implementer’.

Q A

If there have been delays in costs reform as part of the Jackson reforms, what are they and why have these issues been delayed? The main part of the Jackson Reforms was contained in the Legal Aid, Sentencing and Punishment of Offenders Act 2012, which received royal assent in May 2012. The necessary statutory instruments (Recovery of Costs Insurance Premiums in Clinical Negligence Proceedings Regulations 2013, The DamagesBased Agreements Regulations 2013, Conditional Fee Agreements Order 2013 and the Offers to Settle in Civil Proceedings Order 2013) were made and rule changes approved by the Civil Procedure Rule Committee (CPRC) before 1 April 2013. It had been hoped that the expansion of the RTA Protocol both in terms of the increase in the financial limit for such claims and increase in scope of claims to include Employers’ Liability and Public Liability claims would have been in place by 1 April 2013. Whilst the changes to the Protocol were approved by the CPRC, the process for dealing with the fixed costs that should apply to the relevant stages caused concern. This led to Government consultation that ended in January 2013, on which they received over 700 responses and the final figures were not produced by 1 April 2013. Otherwise, there were a number of Recommendations in Lord Justice Jackson’s Final Report which, it was known, would not be dealt with by 1 April 2013. These included the preparation of a new bill of costs to align with the costs budget and the wider introduction of fixed costs for non-personal injury cases in the fast track. The new bill of costs is now proceeding with the necessary consultation on changes to electronic billing codes (J-codes) followed by a number of phases before final approval of the new bill format by the CPRC. The wider implementation of fixed costs in the fast track is a matter of Ministry of Justice (MoJ) policy which, it is hoped, will be implemented as soon as possible. There is also a need to review the scope of DBAs in the light of the uncertainty

“Those affected have now had to come to terms with the reforms and change their business practices. I would not say that there has been unexpected reaction”

as to hybrid DBAs; this is something, upon which (again), work is needed by the MoJ. There are then a number of recommendations that are longterm goals. Some of which may need primary legislation, such as pre-action directions and preaction cost management. These and other such recommendations are now being progressed.

Q A

Have you been surprised by the reaction to costs and the significance of some issues over others? The recommendations in the final report were formed after very detailed consideration by Lord Justice Jackson. Many vested interests have stood to lose or gain as a result of the implementation of the recommendations and that has been reflected in the reaction to the implementation. However, as time has passed, those affected have now had to come to terms with the reforms and change their business practices. I would not say that there has been unexpected reaction.

Q A

Is the judiciary consistent in its approach to costs under the Jackson regime?

As we are now only six months into the reforms and the transitional arrangements are still having a large effect; it is difficult to judge the overall position. There has though, been consistent judicial training and the general message of the Jackson reforms appears to be consistently applied, as reflected in court decisions.

An extension to costs budgeting and a radical reform of Part 36 is expected next year; will these additional changes be more in line with Jackson’s review than in their current form and what impact will this have on the sector? Do you think claimant / defendant lawyers and service providers (as well as insurers) are able to take on more change in the current market?

MC // November 2013

Interview with Justice Ramsey

The question of whether there should be any cases automatically excluded from costs budgeting is still being considered by the CPRC. Even cases automatically excluded can be the subject of costs management. Also, cases included in the costs budgeting rules can, as a matter of discretion, not have a costs management order made on the basis of agreed or approved costs budgets. This latter discretion means that appropriate cases can be subject to costs budgeting and inappropriate cases need not be subject to it. Exclusions can then be dealt with on a case-by-case basis which would seem to be a better approach than automatic exclusion. The Jackson changes to Part 36 have already been made and the proposed Part 36 changes form part of the usual review of rules by the CPRC. I do not see either of these changes having a great effect on the market.

Q A

What has been the effect or impact of the reforms on the claims process for consumers? The main change has been that, because CFA success fees and ATE premiums are no longer recoverable, claimants now face the prospect of having to fund litigation, at least in part, through sums awarded as damages. There has been a degree of compensation in the uplift in damages by 10% in Simmons v Castle, as recommended by Lord Justice Jackson. The process of costs budgeting and reforms in the areas of disclosure, witness statements and expert reports should reduce the overall costs of litigation and lead to a party recovering properly budgeted costs. The increase in third party funders may over time lead to more litigation being funded in this way. The risk of a claimant having to pay the defendantâ&#x20AC;&#x2122;s costs - which was covered by ATE insurance - is no longer necessary in personal injury cases with the introduction of QOCS. The overall impact will take time to be seen but, as can be seen, it depends on the complex interaction of the various reforms.

The rise of professional negligence claims against solicitors, post-Jackson, is being touted by professionals as the next mine of work for lawyers. Are judges expecting this reaction by lawyers and their clients?

MC // November 2013

â&#x20AC;&#x153;The process of costs budgeting and reforms in the areas of disclosure, witness statements and expert reports should reduce the overall costs of litigation and lead to a party recovering properly budgeted costsâ&#x20AC;?

The Jackson reforms have sought to emphasise the need to comply with rules, practice directions and orders and this reflects a stricter approach to non-compliance. It can be seen in the changes to the overriding objective and relief from sanctions in the CPR. Where there is non-compliance then that might be because a solicitor has not acted properly. This may lead to some claims but as solicitors become accustomed to this change in approach, I do not see any long-term effect.

It has recently come to light that budgeting has been extended to detailed assessments; Master Haworth has also predicted that litigation is moving towards an era of fixed costs for lawyers and experts. Was this always on the cards? Are law firms innovating quickly enough to ensure they can still offer consistent quality in their claims handling process as well as keeping costs proportionate? Costs budgeting is a powerful way of keeping costs proportionate and one of the results may be that the costs in the costs budgets fix the level of costs paid by the client. Also any increase over budgeted costs, unless it leads to a revised agreed/ approved budget, is not likely to be recoverable. There will be pressure for lawyers and experts to set and keep their fees at the proportionate levels in those budgets. The changes in court procedures (disclosure, witness statements and expert reports) are intended to make it possible to run cases at proportionate cost. That means lawyers have to concentrate on the important issues in a case and think what directions are needed in the light of those issues. There should still therefore be consistent quality but with more focussed expenditure of costs.

Costs budgeting: is either side getting it right? What has been the most surprising outcome of cases that have gone through the court so far under the 1st April 2013 regime?

When the costs budgeting pilot started in the TCC there was initial uncertainty and less agreement than is generally the case now. Costs budgeting is being recognised as a new skill being learnt by lawyers and judges. The time taken to deal with costs is initially high but as experience is gained the areas of dispute reduce, as does the time taken. I do not think there have been surprises but there has been a realisation that, with proper costs budgeting, the party winning may well be awarded the sums in the costs budget as costs, if they have been spent, without the need for detailed assessment.

Has the sector as a whole collaborated in light of change or have the reforms driven or extended the divide between claimants/defendants/insurers? How have the reforms affected the relationship between the sector and the MoJ? There were obviously vested interests: who foresaw wins or losses in the reforms and they fought hard to protect those vested interests, particularly with the MoJ. However, now that the reforms have been implemented, all parties, some reluctantly, are working within the new reforms, there has not been any longterm change in relationships.

Q A

What role will you be taking in the continued implementation of existing and further reviews going forward and how do you feel the sector perceives your role? I, together with Mr Justice Stewart and District Judge Lethem, have a continuing role in reviewing the changes and looking at the future implementation of recommendations. I have taken the opportunity to speak at conferences and seminars and to interest groups and law firms to explain the reforms in context, sometimes speaking several times a day. I hope that this assisted the implementation process. I think that the sector has a perception of my role as being to implement rather than to reconsider the reforms.

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Andrew Grech Interview

Interview with... Andrew Grech Emma Waddingham speaks to the Managing Director of Slater & Gordon, Melbourne (still the largest acquiring ABS in the UK legal sector, which recently acquired Fentons and John Pickering & Partners) about what distinguishes the provider over any other legal brand, in terms of structure, culture and client services.

Is it difficult to balance the need for scale and process commoditisation for claims departments in Slater & Gordon with other practice areas in firms acquired by the brand? I think one of the errors made by some commentators (not Modern Claims, I’m sure!) is to equate the use of process systems engineering to poor quality services. This isn’t true at Slater & Gordon. We use this as a way of administering successful, client-focused services. In fact, our successes are due to the use of process systems engineering toolkits to achieve our overall goals; to deliver professional, expert, clientcentric services in an economic way. It can take many, many years to achieve professionalism in certain service areas. If we get to a point where we can’t achieve a high level of expertise in one segment of the market then we’ll stop servicing that area.

Q A

Does there continue to be room for growth in the claims arena? Conversely, is there room for niche claims practitioners? Do I think the UK personal injury (PI) market large enough to sustain large, dedicated practices and niche / boutique law firms? Yes,

“We are certainly the beneficiaries of the reordering of the profession that’s taking place in the UK”

I do. Some of the drivers in the UK PI market at present are to drive volume, not value, due to the compressed market environment, so there is still room for growth, as this doesn’t add value to the consumer. There is still no dominant player in the UK legal market; we want to be that player.

Q A

How long will that take?

A good question and one I don’t really know the answer to! Having said that, in Australia, Slater & Gordon went from 5-15% growth in five years. We then went from 15-25% growth in three to four years. I expect this level of growth to be achieved in a compressed period of time in the UK market, thanks to forces driving consolidation. These are regulatory issues – such as increased competition from new legal structures - and legislative issues, i.e. the way claims are managed and people handling those claims are remunerated. We are certainly the beneficiaries of the reordering of the profession that’s taking place in the UK.

How will the rise of the legal / insurer joint ventures impact the claims market? Do these claims-focused ABSs have the upper hand in terms of investment in process and technology? It’s hard to say if insurers have the ‘upper hand’. Certainly, insurers have a great deal of experience in handling the technology but this won’t be enough. Only those with a compelling client experience will survive. In itself, technology isn’t a sustainable advantage over clinical, technical ability and client service.

Andrew Grech, Managing Director (Melbourne), Slater & Gordon

Andrew joined Slater & Gordon in 1994 and has worked as a lawyer in most areas of its litigation practice. Since 2000 Slater & Gordon grown substantially, expanding from six locations to a network of 70 locations across Australia and 11 UK locations, thanks to the acquisition of key brands. Andrew has been at the forefront of the successful acquisition and integration of more than 30 law firms including Russell Jones & Walker in the UK, since the listing of Slater & Gordon on the Australian Stock Exchange (ASX).

MC // November 2013

Andrew Grech Interview

Are lawyers just managers in the modern claims environment? What does this mean for the make up of the modern claims team? Is there room for more lawyers of qualified and non-qualified practitioners (and apprentices?)? The nature of legal work changes over time, especially in the PI claimant arena. It’s not a new phenomenon but change has been far greater in the UK in terms of the ability to leave process work to non-legally qualified individuals. This is due to the surplus of lawyers and the availability of law graduates who are unable to become qualified. The latter are able to fill the gaps left by the qualified legal technicians, to help us provide the service economically. We are optimistic that we can engage the leading legally qualified individuals and non-legally qualified to contribute to a better client experience, in a more economical way. Over time, Slater & Gordon will consist of managers, lawyer-managers (like myself), those who provide that clinical legal advice, those who support them and client services.

Q A

How do you deal with culture change both internally and with customers in the rapid expansion of Slater & Gordon UK? The honest answer is that we hasten slowly and respectfully (a key word for us), to select a firm on the basis of cultural compatibility. We have to understand the needs of stakeholders to help map out and integrate the acquisition, to avoid the risk of losing key clients and staff. We have had a lot of success with that model.

Q A

So, in a nutshell, what type of mindset and culture do you look for in a firm you are looking to buy? It’s important that the firm already has a client-centric approach. Also, if not already, they have to be prepared to accept that, for too long, lawyers have been at the top of the tree; that’s where we need to put the client. It might be a motherhood statement but it’s central to our philosophy. We recruit for, train and structure our organisation on this premise. In addition, we need to see an attitude that promotes the independence of the profession, to provide the best advice, unfettered by other interests. The UK market has become quite distorted in this sense, with insurers and law firms providing a claimant service. We are certainly mindful of this when it comes to looking at other businesses.

MC // November 2013

“We need to see an attitude that promotes the independence of the profession, to provide the best advice, unfettered by other interests. The UK market has become quite distorted in this sense...”

Q A

What have acquired firms added to the claims process / technological mix at Slater & Gordon or have they been equipped with Slater & Gordon processes? This is a work in progress. We already have a good technological base to integrate into new practices - especially the smaller ones. We are also looking at Fentons’ case management system as an alternative one, to see if there is anything to be learned from its system. However, the magic isn’t in the software itself but in the people behind the process. We have highly informed and intelligent design-focused experts working with us to create our CMS, to design a ‘best of breed’ solution for the future.

Are UK law firms as disparate in their claims handling, process, utilisation and measurements as has been reported? What effect has / will this have on the consumer and costs? Certainly. Of the 40 to 50 organisations that we’ve spoken to (including claims management companies), there are some very disparate practices in place - the good, the bad and the ugly. We’ve had a good look under the hood of the sector; we’ve seen that the benefits of consolidation haven’t yet been passed onto the consumer. This is a very exciting prospect for us, as we believe we are able to do that.

Advocates and the use of experts: in the long run do you see the use of barristers and experts as an in-house function or remain as a consultancy service? Is this still the most economically effective solution and in the best interest of the client? Generally, professional services – including legal services – are showing a trend to move away from employed status towards contractor status. The futurists would say that by 2020, approximately 40% of the knowledge industry workforce will be contracted in. The legal profession is not immune to this and it

has profound ramifications over time. The beneficiaries will almost certainly be clients, as it provides us with the ability to tap into much deeper levels of expertise than we might be able to economically employ in-house. The changing nature of work and the workplace is a challenge but it’s a problem that can be solved.

When a legal entity says it is ‘renowned’ for doing certain types of work, is this more likely to mean in light of the wider claims arena rather than with the general public? How will the advertising push by Slater & Gordon address this in a way that’s not been done before? The broad answer is that advertising alone isn’t the only way to build a brand – it has to be supported through other means. Much of our success has been focused around brand identity, ensuring it communicates our ability to remain independent and put clients at the centre. This can only be achieved by creating a good outcome for clients and really ensuring they come first. To do this consistently and across all tiers of the organisation is difficult but each acquired firm has a track record of ensuring this.

Q A

Are legal entities only able to become a ‘household name’ by frequency and placement of advertising – especially as claims are a distress purchase? A question often asked of a brand – and one the consumer always asks – is ‘are they the real thing?’ No one would question John Pickering & Partners’ passion and commitment to those affected by industrial diseases. Going back to your former question about what we look for in a firm, this level of reputation is also a key factor. It’s certainly something we have. In Australia, the second largest source of new enquiries comes from our existing clients. That’s something we’re looking to achieve in the UK. So, advertising alone is useless, unless you can deliver the service.

INNOVATIVE CLAIMS OUTSOURCING SOLUTIONS

Frances McCarthy Interview

Interview with... Frances McCarthy The Past President of the Association of Personal Injury Lawyers (APIL) and Managing Partner of Pattison Brewer speaks to Charlotte Parkinson, Modern Claims, about the landscape for claimant lawyers – especially in the field of industrial disease – post reform.

What were your biggest challenges during your time as President of APIL and how do you feel the role of APIL as an organisation has changed since it was established in 1990? The challenges I faced when I was President were around the introduction of the Woolf Reforms and European Prison Rules (EPR) as well as funding arrangements, which were a massive change to the way in which personal injury was practiced. The funding reform started a costs war and we worked very hard to try and introduce a more collaborative approach. We made huge strides with the introduction of the Civil Procedure Rules (CPR) and working together to set up the Pre-Action Protocols and rules for experts but unfortunately, the costs war did damage that relationship and that collaborative approach for some time. The other real challenge I had to deal with was to do with asbestos. There was ongoing litigation being conducted where insurers were doing their best to avoid paying out for asbestos cases - the Fairchild case for example, where insurers were trying to avoid paying out if somebody had been smoking and a whole host of other issues. As my background is work place injury and disease cases, that was obviously a cause that was

dear to my heart so I did focus a lot on that. In terms of how the organisation has changed, it has always been fantastic for personal injury victims that an organisation like APIL existed by the time those reforms came in, so there was a body of support there to give a voice to injured people.

You have been described as ‘robust and tough, but sensible – a fighter and knowledgeable with it”. How do you apply these qualities to your managing partner role at Pattinson Brewer? The way we deal with things and keep our culture going at Pattinson Brewer is by remaining to do the very best for our clients. Being the Managing Partner has given me much more of an overview to determine the strategy of the firm and the way the running of the firm is dealt with - making sure we keep this at the forefront of our minds. The other value I try to instill as Managing Partner is the way in which we deal with the people that we come across who are not our clients; the insurers, defendant lawyers and judges. We try and act in a civilised way so that we can convince the defendant lawyers that an early admission of liability, an interim payment, collaborating with regards to rehabilitation and utilising

“As a firm we still have a lot of obligations we have to talk through with our clients at the beginning of the process in terms of money laundering and explaining CFAs and ATE premiums. All of this takes time, so it is easy to have spent all the money that could be achieved through fixed costs during the first explanatory meeting”

MC // November 2013

mediation, for example, are much better ways to get to the end result. I don’t like tit for tat litigation or when people get involved in acrimonious correspondence because that’s not acting in the best interest of our clients. We listen to what our clients say, which is effectively ‘I want my life back’. We try and keep that at the front of our minds and maintain a sensible approach.

What are the key challenges ahead for your firm and the wider claims sector?

Frances McCarthy Interview

“I don’t like tit for tat litigation…because that’s not acting in the best interest of our clients. We listen to what our clients say, which is effectively ‘I want my life back’. We try and keep that at the front of our minds and maintain a sensible approach”

The key challenge for us as solicitors is to keep helping our clients. Despite the current state of the market, we want to stay doing what we do but we have to adapt dramatically in order to be able to do that. We have to resist the pressure to dumb down and we are doing that by implementing efficiency and we have always had an approach whereby we make sure that the right person does the right job and the right section of a case. Chasing up medical notes and records is not left to a senior partner. We do not operate on an ‘ownership’ of a file basis, we have always picked out the more routine aspects of cases and allocated them to people at a more junior level within the firm. If you want to continue doing this work because you believe in what you are doing and are not in it just ‘to make a buck’, then a balance of efficiency and ensuring standards are maintained needs to be achieved. There will be a huge pressure on those solicitors operating on a fixed costs regime who accept the first offer that is made because they are not going to get paid if they work harder. We have put in strategy, supervision and IT in our firm to ensure this doesn’t happen and make sure the work is done efficiently and safeguards are maintained throughout.

Q A

How do you see regulators adapting to market change in the future? Regulators have to work harder at helping lawyers, rather than focusing on making their lives harder. The way in which the rules and regulations are perceived is that they appear to make things very difficult. We are beginning to see a much better approach emerging from the SRA in that it is starting to talk to us and they are now available at the end of the phone. This is much better than the cryptic responses we have been given in the past, especially with regards to outcomes-focused regulation (OFR). I completely understand the thinking behind OFR but we want to do a good job and understand what is expected

of us. We now have a very good relationship with our contact at the SRA and although it will never give you the rubber stamp of approval, it is good to be able to discuss things through over the phone. The Law Society is a body that needs to be standing up arguing the cause of solicitors. As a firm we still have a lot of obligations we have to talk through with our clients at the beginning of the process in terms of money laundering and explaining CFAs and ATE premiums. All of this takes time, so it is easy to have spent all the money that could be achieved through fixed costs during the first explanatory meeting. I am concerned that some of the obligations are quite heavy when you are dealing with that kind of litigation.

Q A

How beneficial (or not) has the introduction of ABSs been to the market as a whole so far? It is difficult to gauge how successful they are going to be because there is such a wide variety of them - the corporate entities, right down to the sole practitioners. The model should allow for external investment which will assist with firms’ IT and marketing but the most important thing for any firm at the moment is to be flexible and adaptable - not to be rigid in their approach. It is not black and white and there are different models that suit different people.

The Mesothelioma Bill currently being passed through Parliament has received widespread support but some have criticised possible ‘holes’ in the act, specifically the low level of compensation and the fact not all asbestos related diseases are covered. What are your views on the government’s handling of this bill to date? Do you feel the report is comprehensive enough? As a lawyer, the worst case that you can deal with is a Mesothelioma case because they know the disease they [the clients] are

suffering from is fatal. The lawyers know it will be an agonising and drawn out death. There is nothing that can be done, except try and get some compensation; it is not a case of rebuilding worlds, as with other clients. They are the most deserving of victims because they have just gone to work, they haven’t done anything wrong and employers have exposed them to asbestos, having known for decades and decades that it is dangerous. Insurers have also taken the money from the employers for the premium and yet feel this isn’t paying for it. Employer’s liability is not compulsory. If you are knocked over by a car and the driver is uninsured, you will get compensation through the MIB. We have argued for years that there should be something similar for employers’ liability cases. This Bill is intended to be a safety net, to cover those cases where the employer has gone bust and the Insurer can’t be traced. The principal is fantastic. The only problem with it is that there seems to be no justification or logic in taking 25% of the claimants’ damages. The proposed start date is also totally illogical because it excludes people unnecessarily. The other cause for concern is that the Bill only covers the mesothelioma sufferers, not the asbestosis or lung cancer sufferers. There should be no discrimination between the types of illnesses that get compensation and those that don’t, that’s completely irrational. We are engaging in extensive briefing with the Government as the Bill is passed through Parliament, but it needs to be looked at by people who understand the issues.

“There should be no discrimination between the types of illnesses that get compensation and those that don’t, that’s completely irrational”

MC // November 2013

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MC // November 2013

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Sector soapbox Those representing the views, expertise and professionalism of sector professionals in the claims industry are the first point of call for a ‘helicopter view’ of how each sector component reacts to change, how fast they can adapt and what can be done to improve outcomes.

ur sector representative columnists for this issue: the Association of British Insurers (ABI); the Motor Accident Solicitors Society (MASS) and the Forum of Insurance Lawyers (FOIL), were asked to address the impact of ‘innovation’ and the impact of the Ministry of Justice’s response to the Transport Select Committee Consultation: the protection of the current Small Claims Limit and the creation of an independent medical panel.

Has ‘innovation’ been excised from the legal lexicon?

t’s official! According to the Legal Services Board (LSB), Alternative Business Structures (ABS) are 13 times more innovative compared to other law firms. In one sense this is not surprising, bearing in mind that a number of the ABSs are new bodies that are more likely to look at things differently and have attracted new entrants to the legal market. Never mind, thank goodness I am now part of one of them. At the same time, Professor Stephen Mayson stated in a recent lecture that legal businesses have to follow a model that charges on the basis of the value that they provide to the client. This is not an earth shattering statement. However, any neutral observer that has read the comments and commentary following the introduction of the Jackson Reforms must wonder whether the word ‘innovation’ has been deleted from all versions of the legal dictionary. Perhaps the real surprise is that only 13% of ABSs were found to be innovative by the LSB. So how does this impact upon claims resolution, in particular, in the field of insurable claims? Well this brings me round neatly to the expansion of my empire. I was reading a CV the other day for a litigation executive who is currently being employed by a claimant law firm.

“There was I thinking that adding value to the client would involve training in ‘minimising’ costs and obtaining appropriate compensation at the earliest moment. Silly old me! How anybody can then sensibly argue that one party in a dispute should not have an economic interest in the cost of the outcome, beggar’s belief”

MC // November 2013

This proudly stated that she had been ‘extensively trained in all aspects of client care, as well as maximising costs’. Yes, I had to read it twice too. And there was I thinking that adding value to the client would involve training in ‘minimising’ costs and obtaining appropriate compensation at the earliest moment. Silly old me! How anybody can then sensibly argue that one party in a dispute should not have an economic interest in the cost of the outcome, beggar’s belief. Until legal businesses really do try to add value to the client rather than themselves in a cost-efficient manner, innovation will remain absent from our profession’s lexicon. Rod Evans, President, Forum of Insurance Lawyers

For the better, or worse? The government’s decision not to raise the Small Claims Limit to £5,000 has been as welcome relief for many claimant lawyers but there are a number of other measures in place to support a cut in the cost of motoring, including the formation of independent medical panels to detect fraudulent whiplash claims. Modern Claims asked Craig Budsworth, Chair of the Motor Accident Solicitors Society (MASS) whether the proposed panel will have an impact on the number of medical reports issued and what impact DBAs have had, six months on.

Will we see more or less medical reports under the newly proposed independent medical expert panel? There is a perception of a compensation culture and part of that perception is contributed to by the fact that some claimants are paid compensation without attending a medical examination. The Transport Select Committee commented in its report about the fact that no compensation should be paid without a medical examination; the MoJ response to the consultation has said the same.

The Opinions

MASS has long lobbied on the fact that there should be no compensation without a medical and we are pleased that the Government has agreed. What we now have to see is that the ABI will work with its members to bring this in and the FCA to enforce the fact that the insurers will stop this practice. So, far from fewer medical reports we should in fact be seeing more.

“Far from fewer medical reports we should in fact be seeing more”

Q A

Are DBAs having a positive or negative impact on your business? Do they force firms into reconsidering their approach to customer care and management, for the better? The ‘Don’t Bother Agreements’, as they have been touted by some commentators. The very reason for this is how the rules have a major impact on conflicting with the indemnity principle. Within the RTA sector there are few, if any of these agreements that have been entered into because of this conflict and so a real opportunity for change has been missed. We are aware that the MOJ is being asked again to look at this problem and it will be interesting to see how it develops but for the meantime this alternative method of funding is unlikely to appear soon. Craig Budsworth, Chair, MASS.

‘Half happy’... Justice Secretary Chris Grayling said there are ‘good arguments’ for increasing the Small Claims Limit, to ‘raise incentives to challenge fraudulent or exaggerated insurance claims’ but decided instead to give other reforms a chance to settle down. Despite widespread disappointment by the insurance sector, it is positive about the scope for future change. Further reform to cutting out ‘disproportionate cost’ would of course be welcomed by the Association of British Insurers (ABI), which believes that without ‘committed reform’, the objective of lowering the cost of motoring can’t be achieved. As Samantha Ramen tells Emma Waddingham, Modern Claims.

e anticipated the MoJ response, that the Small Claims Limit wouldn’t be increased. This is a disappointing outcome but it’s positive that the Government wants to make wider changes. There is, of course, plenty more detail to come and we are very, very keen to see the changes made to the Small Claims Limit and will be speaking to the Government about this in the coming months. However, we’re also very keen to safeguard the genuinely injured, so any increase to the Limit must

be joined by education and awareness of the system for potential claimants. Our recommendation – which is broadly the standardisation of damages at this level – in raising the Small Claims Limit to £5,000 means that potential claimants use a system similar to the RTA Portal and file their own case into the system. This means the process has to be easy to use and joined by the right level of information and support to guide them. There would be no negotiation, therefore no need for claimant lawyers at this level, combatting disproportionate costs. Damage settlements would be based on the current settlements that happen in cases today. We know claimants are happy with the level of damages they receive in settlements – otherwise, why would they settle? There will be individuals who can’t file a claim by themselves or who don’t have access to the internet, so there is a need for employed administrators to be provided to help administrate paper applications, also funded by the portal. The technology already exists to help create a portal for these cases, listing all variables of injuries to help identify the claim. Insurers already use the technology that could be used to create the system (such as Collosus), but we can’t create something if there is government commitment to such a process.

“The Government is keen to see motor premiums reduce but unless the Small Claims Limit is raised we will continue to see disproportionate costs and frivolous claims come through, which will have an impact on premiums”

More work to be done

e were pleased to hear of the agreement and the MoJ confirmation of an independent panel of medical experts. We all wanted to see this and now it’s time to put together to make this work. It’s a positive step and, importantly, good for claimants. However, the proposal is still at a very early stage. There is a great amount of details required to make this work and to create a culture of practice and code of conduct. The ABI is of course focused on what we want to see happen with both the independent panel and future change and an increase of the Small Claims Limit, so we’re half happy. The Government is keen to see motor premiums reduce but unless the Small Claims Limit is raised we will continue to see disproportionate costs and frivolous claims come through, which will have an impact on premiums. The Government has done a lot and what we don’t want to hear is that ‘insurers have been given some concessions’ and that’s our lot. We don’t want to compromise access to justice but there is clearly lots more work to be done to make the process as effective as it could be for all parties. Samanthan Ramen, Policy Advisor, Compensation System, ABI.

MC // November 2013

The Opinions

Evidencing the case

nsurers are under pressure to reduce premiums and are often berated for not challenging fraudulent or speculative claims strongly enough, yet there needs to be a shift in our legal system to make a more even playing field for insurers disputing claims. Whilst theoretically the burden of proof is on a claimant to prove their claim, the reality is different with the only evidence required by the majority of courts being the claimant’s word that they were injured. That hurdle needs to be raised to ensure that only genuinely injured people receive compensation. In France the legal system puts a higher burden of proof on the claimant, which has resulted in French insurers receiving far fewer personal injury claims than we do in the UK. At present, it costs almost as much to successfully defend a whiplash claim in court as to make an early settlement, which is completely untenable. Unsuccessfully defending a claim, owing to the low threshold of proof required by many judges, can cost tens of thousands of pounds. This provides a powerful incentive for insurers to compromise suspect claims – an approach which is then criticised for driving up costs. The proposal to increase the small claims track to £5,000 would capture more than 75% of personal injury claims and is the most effective way for the Government to make it economically viable for insurers to defend the current high volume of opportunistic claims. Tougher medical validations by well trained and qualified, independent, peer reviewed experts in full possession of all of the facts and evidence would also deter some of the more spurious claims. The Transport Select Committee in its report accepted that without reform, the current system provides medical evidence that was in some cases ‘likely to be of very limited value’. No surprise then that insurers will sometimes elect to settle a claim early without waiting to incur the additional cost of that ‘evidence’. We are still faced with the problem that it is impossible to prove or disprove a whiplash injury entirely; but if a claimant had to have a proper objective medical assessment in order to submit a claim, it would put an end to some of the more spurious claims. Fraud has been seen as a victimless crime for far too long and one that is very easy to get away with. The only way we can change this mindset is to make it more difficult for opportunistic fraudsters to escape detection and to insist on the toughest sentences for those that are caught. Peter Horton, Chief Operating Officer - GI, LV=

Q: The number of claimant law firms advertising has been ramped up, with Slater & Gordon the latest to focus on personal injury claims in its intent to become a household name. Are lawyers getting advertising right yet – particularly in the field of PI?

An interesting question and I suppose the key thing to clarify is, are we talking about success in securing business, or the wider brand reputational piece? Let’s briefly look at both.

In terms of acquiring business, law firms have been kicked in to action. You can call it lazy but previously all they had to do was pay a large referral fee to another party who did all that ‘clever’ marketing stuff. With the ban in place, suddenly it does matter what Joe Public thinks of you - if they have heard of you at all. Now legal services are not just being provided by the highest bidder. There are some marked variations in approach. The most common seems to centre around a professional service, your interests being looked after and, if that appeals, I certainly see that as the most sustainable approach. I say ‘if that appeals’ however, as in this day of brash promises (and with a history of ‘compensation’ adverts being based around ‘guaranteeing’ specific large sums of cash, protecting you from other parties who just can’t be trusted), is that more subtle professional approach going to work? The other issue is the concern that, with lawyers (AND insurers, before anyone thinks I’m having a go!) pretty much towards the bottom of the league table in terms of who the public trusts and respects, are we past the point of no return? Should law firms just accept they aren’t trusted, liked or respected? Should they choose a less professional, brash approach, sailing close to advertising and SRA standards, scaremongering and promising unreasonable returns? Some clearly are and maybe they will be successful in the short term. Yet I can’t help but think (and hope) that those who are trying to rebuild the reputation of their sector and ‘sell’ based on a professional and ethical approach will be those who succeed in the long term. It is early days however; only time will tell. Certainly, partners / employees of those who try to rebuild the reputation of the sector can feel less embarrassed about their chosen career, which must be a good thing. David Williams, Managing Director, Underwriting, AXA Insurance.

MC // November 2013

The Opinions

Q: How insurance companies can monetise value added services (VAS) through pay as you drive (PAYD) insurance telematics?

Pay as you drive, or even how you drive is a perfect platform to create added value. Being with a driver and understanding habitual driving can at last allow marketers to delve into a part of a person’s life, which up until now has not been accessible.

Simply by adding a reasonable understanding of the time and distance someone covers in a vehicle - along with some of the more subtle driving habits, or even non-driving habits - an example such as idling can allow targeted up-selling of additional services. Think of a car as a mobile billboard that not only provides insurers with information about the driver but also the ability to push targeted information back. Helping the driver/vehicle owner to gain benefit simply by allowing access to driving behavior seems to make sense. Imagine a scenario where the weather takes a turn for the worst and a driver that would normally only ever cover short journeys (such as dropping off and picking the kids up from school). These types of journeys most likely incur frequent idling, so when combined with cold, wet weather, the chances that will lead to a flat car battery are pretty much guaranteed. Ping! This now presents the chance to push a short, simple message to your customers’ phone, informing them that their battery is not looking too good and may well end in the car struggling to start in the mornings. A simple link can be tagged to this message for one of the many breakdown organisations as well as advice to seek a quick check and possibly sign up. Without even caring about where a driver actually goes, you can start to provide smart marketing to up sell additional services. This is not new a concept but a new application of it. It’s just the same loyalty type scheme that has been used by companies such as Nectar, which monitors how you spend money and then push that little extra value to your inbox, to entice you to spend a little more on their discounted item. Used carefully and targeted well, telematics pay as you drive platforms could become as clever at providing revenues streams as the Tesco Club Card. But used badly, well; we all know what happens to junk email… John Keates, Chief Technology Officer, Lysanda Ltd

Q: The Association of Costs Lawyers (ACL) has strongly supported a recommendation recently made by Professor Stephen Mayson that law costs work should only be carried out by regulated experts. Is this a necessary and positive move for the claims sector?

Lord Justice Jackson’s message that it is no longer acceptable for practitioners and Judges to view costs as an ‘alien discipline’ also resonates with lawyers’ clients. In 2012, the insurance industry alone spent hundreds of millions on legal costs, with the actual figure very likely being over a billion pounds. Therefore controlling spend on these aspects of a claim is key. The costs market has grown substantially in the last 15 years, though the initial rush of new entrants brought with it, a mixture of good and bad operators filling the vacuum that the ‘no win, no fee’ world created. Some of these operators did little to assuage concerns around governance that was designed to ensure customer care or that professional standards were met. The ACL has implemented various measures aimed at and ridding the costs industry of this stain and to professionalise operations. It saw the introduction of formal qualifications for costs experts and the creation of the Coawyers Standard Board to ramp up governance. This has paid dividends; the ACL is now a much-respected organisation in its own right which has done much to raise the right profile of costs lawyers within legal circles and government, especially during the civil litigation reform debate. That said; the legal landscape is changing dramatically. There is a customer requirement that their chosen specialists can guarantee quality, service, security of data and excellent IT systems. Clearly the scale of costs work has stretched beyond what can be done by costs lawyers alone - business models will need to adapt to more sophisticated levels for some providers to meet customer demands. Making costs work an exclusive club at a time when there is a government push to deregulate reserved activities, therefore seems counter intuitive. In the short term, the solution that many insurers have adopted will hold good. Many have elected to keep costs work with their legal panel. Many law firms now have substantial costs teams who preserve the specialism of costs and also supply the governance and back office facilities to meet customer requirements. For many customers, especially in the era of costs budgeting, lawyers and costs experts need to work symbiotically, to achieve the best solution. John Latter, Director of Technical Centre UK Claims, Zurich (pictured) and Kieran Jones, Head of the Insurance Department, Weightmans LLP.

MC // November 2013

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The Opinions

For the first time, we are seeing a relatively high level of spending on claims advertising and lawyers trying to create branding. In its recent campaign, Slater & Gordon spent £1million with M&C Saatchi on a TV advertisement with the main objective being to increase awareness of their brand name and as part of their on-going strategy to establish a nationwide household legal brand. Although large scale TV campaigns like Slater & Gordon’s can establish a household brand - and subsequently lead to it becoming one of the first firms you think of for personal injury - the cost of doing so, by way of television advertising, is very high and the return on the investment they will make will be a long time coming. Not withstanding, it is not always the case that the brand will entice people to claim using that firm. A TV advertisement can often simply be the trigger to claiming rather than utilising their specific brand, especially once the consumer starts to shop around. In order to get the right balance, law firms will need a high-level profile campaign which needs to be supported by both digital and more conventional marketing to ensure that the return on investment is sufficient. Law firms can take advantage of the opportunities available through new media such as search engines or social networking sites, which are usually lower budget techniques. A targeted online campaign is a very useful technique as it reaches many consumers very efficiently based on various traits such as tracking online or mobile web activities of consumers and consumer demographics. Those who are capitalising on these techniques, especially smaller firms working together in collectives, will find they can avoid being squeezed out of the market by the larger firms with bigger budgets. Matthew Waterfield, Head of Legal Development at Simply Lawyers.

Q: The launch of the Higher Apprenticeship in Legal Services has been launched in both England and Wales now; with a high uptake of candidates from law firm and ABSs that specialise in claims. Is this a positive sign for the claims industry – that non-qualified employees will now be recognised (and potentially boost bottom line) or could the scheme create a layer of ‘second class’ legal services support in the claims industry?’

Non-qualified staff have well and truly made a place for themselves within the claims industry over the years and have proved that ‘it’s not always the degree that makes the man (or woman, as is often the case). Without doubt, some would consider there is already a ‘second class’ within legal services – with graduates on top. From experience we know this simply isn’t the case. Fortunately there are more and more employers and decision makers opening up to the reality that the required knowledge and experience can be acquired and tested in other ways – ways that don’t cost £40,000. At Lyons Davidson, we have a long history of enriching our workforce with people who have either come to law from another walk of life or are keen to get their feet under a desk without diverting to university first. We have a strong training department, staffed by ex fee-earners and we help our staff take advantage of formal and informal learning opportunities that they can complete alongside working. Many of our staff (qualified or not), tell us they get more supervision and more training with us than they have anywhere else. Learning the theory alongside gaining practical experience is not new and the benefits are valued in many professions – nursing being one where they are looking to return to it. It means people can apply and cement the knowledge and put the learning into context, which for some makes it easier to relate to. Apprenticeships can only strengthen what companies like ours already do and hopefully encourage others to do the same. Rather than create a layer of ‘second class’ legal services, we hope it will break down misconceptions about those who have followed an alternative route to working in law. We also want to create more opportunities for those who don’t want to build debt in order to build a career. Speaking personally, I truly believe that if every firm invests in and values their apprenticeship scheme properly, an apprenticeship will be as sought after as a training contract. At the end of the day, the only opinion about quality that really matters is that of the clients. Most will want a service that is accessible, efficient, and delivered to a high standard. How we achieve that is part of our challenge. Katherine Price, Senior Associate, Lyons Davidson (Scotland).

MC // November 2013

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The Opinions

Q: Will the use of medical experts in personal injury decline in cases worth less than £25k - mirroring that of employment tribunals where lawyers often research complex issues without medical reports. Will this have a beneficial effect in the long term?

On the basis this is a concern triggered by the recent implementation of the Jackson reforms, I consider we are unlikely to see a reduction in the use of medical experts for cases valued at less than £25,000. Lawyers rarely possess medical training and as such are wholly unqualified from a medical perspective to assess the nature and extent of an injury no matter how minor. The potential risk for the lawyer to underestimate their client’s injury is likely to be a significant deterrent. There is also a strong implication from the Civil Procedure Rules that medical reports will still be required by the Court. Paragraph 7.1 of the Pre-Action Protocol for Low Value Personal Injury (Employers’ Liability and Public Liability) Claims deals with stage two of the process and states: ‘The claimant should obtain a medical report, if one has not already been obtained’. There is unlikely to be any costs saving incentive to remove medical experts from the personal injury claim process, as Civil Procedure Rule 45.19(2) still allows

recovery of disbursements in respect of the cost of obtaining a medical report (or medical reports if opinion from more than one medical discipline is required). What is not clear is whether ‘the cost of obtaining a medical report’ includes any medical agency fees associated with this process. On occasion a solicitor may use an agency to select and arrange a medical examination. These agencies charge a fee which, under the outgoing costs system, the solicitor could recover. Should the Courts decide that in the future, such fees are not recoverable between the parties, I would expect to see a significant reduction in the use of medical agencies. In conclusion, I consider it highly unlikely for us to see a reduction in the use of medical experts. I consider that such a development would be hugely detrimental to claimants who run the risk of a non-medically qualified lawyer significantly undervaluing their claim. However, should the Courts hold that medical agency fees are no longer recoverable between the parties this is likely to benefit losing Defendants through further costs savings. Alistair Schuberth, a Risk Management Consultant within Willis UK Retail’s Claims Defensibility Team.

Q: Why do you think claimants opt to use mediation as opposed to the usual litigation process?

The perception by most is that claimants who want to win their dispute and attain justice can only do so by going to court. There is however an alternative in the use of one form of alternative dispute resolution - mediation. Once the claimant commences proceedings against a defendant (usually with the help of a legal adviser) they start to collect the evidence. It then becomes clear to them that either their case is not as good as their first thought or that the cost of taking the matter to trial will be a disproportionate amount. However, they still want justice for the wrongdoing. They can look to mediation as a way of settling their dispute, without the disadvantages of proceeding down the litigation route. Mediation allows claimants a number of things. They will be able to maintain control of their dispute rather than handing over the control to a judge or arbitrator. A compromise could be agreed at mediation rather than the win/loose scenario of a court and they will usually be able to conclude the matter more quickly while minimising the costs. Attending court is not a pleasant experience for either claimants or defendants. Although some claimants

at the beginning of the dispute want ‘their day in court’ they are often not aware of how stressful and unpleasant the experience is. With the right mediator, mediation will be considerably less stressful than court proceedings. This is particularly prevalent to the elderly and vulnerable. There are disputes involving parties who have an ongoing relationship. For instance, this could be within a working environment or a contract. If the dispute proceeds to court it is very unlikely that the on-going relationship will be workable because of the ‘win’ and ‘lose’ nature of traditional litigation. This level of bad feeling could make their relationship very difficult or unworkable. Mediation allows both parties to settle their dispute by negotiation using a skilled mediator to reach a compromise. There have been several well-known cases where a large corporate has won a case against a private individual at trial; the public backlash of ‘big brother’ overpowering the ‘little man’ has caused considerable damage to their reputation. Mediation can offer a great alternative for those who want to steer clear of the more stressful traditional litigation process. Bruce Bourne, Bruce Bourne Associates

MC // November 2013

The Opinions

Q: Has the concept of a personalised motor claims service disappeared forever?

Whatever one’s opinions of the cuts in fees recoverable for personal injury claims, it is clear that there will be significantly less money in the system and this will inevitably affect service levels seen by claimants.

All the talk is now about reducing handling costs, ‘streamlining’ systems and automating processes. Volume is king and customer service nowhere to be seen. Because fees payable for personal injury have effectively subsidised other aspects of claims, this trend holds good, not just for injury claims, but for repairs, ULR and all the other components of a motor accident. This is not to say that the system is inherently flawed. If it works well, the offer of repair facilities, like for like replacement vehicles, and sympathetic handling of a genuine injury claim (backed up by medical evidence of course) can be a positive customer experience. All too often however, market feedback is of ‘one size fits all’, take it or leave it offers, and call centre staff who are

either inexperienced or go missing when most needed. The insurance purchase process also presents concerns. The FCA’s Thematic Review of Motor Legal Expenses was straight to the point: ‘Our consumer research showed that, while people have a high level of awareness of MLEI, they do not understand it’. Educating the public will be a lengthy process. So far, the cost of Motor BTE cover has remained fairly static, but it is surely only a matter of time before customers are forced into a choice between foregoing the cover altogether or paying much higher premiums for something of which they have little understanding. Clients of commercial insurance brokers in particular are demanding in their claims service requirements, and justifiably so. Brokers could be faced with the option of reinforcing their own claims teams to ensure consistent service standards or carefully choosing a claims handling partner who shares their commitment to quality service. Six months on from LASPO there is still a long way to go before the full effects on the Motor claims market are seen. Bernard Thornton, Integrity Claims Management

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The Opinions

Q: How should insurers react to the recent introduction of Section 69 of the Enterprise and Regulatory Reform Act 2013 and are they flexible enough to move in response to the new legislation?

From 1 October 2013, the right of individuals to bring a claim for breach of a statutory duty contained in health and safety regulations was removed. Most claimants now have to establish liability in common law negligence to recover damages, rather than relying on a breach of statutory duty. This year has brought about dramatic changes in the way civil litigation is dealt with. This is a further issue that insureds and insurers will need to review and decide on their approach. Education is key. Insurers need to inform their insureds of the documentation that is required to defend claims brought against them and to provide it much earlier than before. Documentation production, retention and retrieval are vital. Early and stringent accident investigations are required. Ideally insurers should be able to access insureds’ own databases of information, to facilitate an early review of the relevant documents. Since the introduction of the Claims Portal, assessment of smaller liability claims must be made at a much earlier stage. With these legislative changes insurers need to be mindful of the cases they wish to defend, the information

that can be obtained to enable them to make a decision within the time frames, and the costs consequences to both admitting and defending claims. This all has to be considered against the backdrop of Qualified One Way Costs Shifting (QOWCS.) On one hand the recent changes have made it possible to defend cases that weren’t previously considered realistically defendable, but if insurers win, they still have to bear their own legal fees, arguably making any costs savings negligible. Another issue is losses that span a period of time such as disease claims. A liability claim for disease may now have to be assessed differently pre and post 31 October 2013; the possibility being that part of the claim is payable and part defendable. As ever, with changes in the way civil claims are handled, further litigation is expected to test the robustness of the changes in the EERA. Would it take very much for a court to find the insured’s system of inspection and maintenance of equipment is inadequate - returning us to a position akin to strict liability? If so, do these changes actually assist in the government’s goal of reducing litigation and keeping costs down? Katherine Baron, Casualty Claims Manager, XL Group.

Q: Is the future of a personal injury solicitor to be as a manager of paralegals (running task-based work) as PI becomes more output and volume focused? What impact does this have on attracting future talent into the claims industry?

A lot has quite rightly been said about the requirement for innovation and automation in the processes involved in handling personal injury cases in the post LASPO / reduced recoverable costs environment, to enable there to still be a commercial argument to undertake this type of work. However, the market is not homogeneous in that there is a significant differential in terms of size of case, broadly split between small quantum / higher volume and high quantum / lower volume cases. In the context of the small quantum / higher volume section of the market, the success of participants will undoubtedly be dependent upon the efficiency of their systems. Therefore, on face value, the role of the PI solicitor in smaller cases will be the management of paralegals and processes. Nevertheless, this overview role will be very important in identifying and resolving problems that occur on such small cases. Perhaps more importantly, identifying those cases which are ostensibly small but have features

which could indicate that they are, in fact, much bigger cases - with more significant orthopaedic / neurological / psychological injuries than first thought. In my view, whilst I believe that there will not be the volume of PI solicitors working in the lower value claim area (as has historically been the case) it is fair to say their importance is greater than ever, in that they are the final appropriate line of defence against under settlement and potential negligence. Their role has changed but is still very much relevant. In terms of larger and catastrophic accidents, I see no reason to assume that there will be any material reduction in the incidence of the same and, consequently, there will be the same opportunities in the future for those individuals who have been attracted to undertaking this work in the past. On a slight tangent, there may also even be an increase in opportunities for PI solicitors undertaking PI-related professional negligence work, as a result of the inevitable failure by some firms to manage the required automation in the volume side of the market and the consequent missing of large cases / deadlines. Richard Forth, Managing Director, Forths Forensic Accountants

MC // November 2013

Advertorial

Four leading personal injury (PI) lawyers have joined forces to launch Pi Gateway, a new organisation aimed at helping PI firms in England and Wales make a clean and managed exit from the market. David Bott from Bott & Co, Martin Coyne from Ralli Solicitors, Hilary Meredith from Hilary Meredith Solicitors and James Maxey from Express Solicitors form the Pi Gateway consultancy team and have pledged a significant seven figure sum to help firms facilitate a structured retreat from the PI sector. Why did you choose to be involved in this Personal Injury Consortium?

s members of the consortium we have all known each other for many years and share the same views, compassion and standards. We have met regularly in the past to discuss updates, changes and strategies, but more recently with the unprecedented changes in the industry, we began to formalise our meetings to examine real areas where we felt we could make a difference. We are all the decision makers in our various firms and shape the way we conduct our businesses. Each member of the consortium has years of experience and sustains their own successful law firms, some have been granted ABS status and all carry the LEXCEL kite mark. We are all equally concerned about the image of the profession and what we see as the declining PI market and access to justice for those victims of injury. It’s a sad fact that we know of many law firms out there who are in a critical situation. We hear this from banks, ATE providers and medical agencies, but we can’t step in to help without a contact being made. Equally there are many without succession planning, or wishing to exit the market, but an elongated run off will not maximise value. The incredible amount of compliance now levied on law firms is also time consuming and costly especially for the smaller practises. By forming this consortium we feel we are providing a dignified exit from a profession that in most cases has been a life’s work. A sale could provide a tax efficient cash fix, just on time. I have witnessed the collapse of law firms where the senior partners have hung on for too long without seeking help or are too proud to admit they need it. Ultimately, it’s the bank that pulls the plug, and then the SRA step in. My own view is by calling us; this could be explored and avoided with a dignified exit strategy put in place. My motto for our consortium is “lawyers for lawyers with dignity” Hilary Meredith, Hilary Meredith Solicitors

What do you think differentiates your consortium from the others and what will make it work?

undamentally we are a group of seasoned lawyers looking to assist and help other lawyers, who are either in distress or looking to capitalise their personal injury clients. This might be due to all manner of reasons, some they do have control over and lots that they didn’t. We have seen what has happened over the last few years and we want to provide insight, care, a way out and a sympathetic ear. Most personal injury practitioners started and stayed in this area of law because they cared about their clients. They just wanted to do a good job. But being a personal injury lawyer has got harder and harder. Things such as: 1. Increased regulation from the SRA 2. Increasingly expectant clients 3. The increasing difficulty in getting affordable professional indemnity insurance 4. LASPO 5. The introduction of fixed fees and the extension of the fixed fee regime 6. The significant potential threat of a rise in the small claims track limit All the pressures that go with running your own firm have all ganged up to cause havoc, redundancies and misery in our industry. I can totally understand why someone might say “enough is enough”. But once that you have had enough what happens next? How do you solve the problem? Pi Gateway can solve the problem and we will ensure taking care of their clients is our priority. We can utilise our decades of industry knowledge and offer discrete, friendly help. We can advise on management, compliance, TUPE, CFAs etc. We believe that the consortium is uniquely placed to provide help in an acceptable way to every type of personal injury lawyer. David Bott, Bott & Company

MC // November 2013

Advertorial

The Pi Gateway (from left to right) Martin Coyne, Ralli Solicitors; Jude Mason, Bott & Company; Hilary Meredith, Hilary Meredith Solicitors, David Bott, Bott & Company

What are the benefits/drawbacks of being part of a consortia as opposed to a Joint Venture (JV) or merger? A consortia - A cooperative arrangement among groups or institutions. Joint venture - business enterprise in which two or more companies enter a temporary partnership. Merger - the combination of two or more companies, either by the creation of a new organisation or by absorption by one of the others. Why have we set up Pi Gateway? We wanted a vehicle to allow the four member companies to retain their own identity whilst working to a common goal. As Aristotle said “The whole is greater than the sum of all its parts”. By joining together we create a vehicle that can deliver a great service, whilst helping law firms who are in essence our brothers and sisters in the law, by giving them a way out with both dignity and knowing that their clients will get the best possible service. The consortia that is Pi Gateway gives us this. Pi Gateway has been put together to last. It’s not a short term arrangement and has many goals that will allow the members of the consortia to work together whilst maintaining their own identity. We see Pi Gateway as being not the last option but one of the first options law firms would chose when they have made the decision to leave the PI market. A merger! Can you imagine the complexities of merging 5 different firms all at once, and I’m not just talking the legal complexities. Think of the personalities involved and then times it by 10. Just to come up with a name and logo that incorporated all of the 6 members would take 6 months of negotiation and you would still have half the members unhappy. A consortia was the right and best way to go. We all have our own firms with their own identities. We all have our own strengths and weaknesses but together we cover all the bases with strength, expertise, knowledge and flair. We know that any firm be it large or small will get the best we can offer both them and their clients safe in the knowledge that they are not dealing with a fly by night middleman but a group of respectable law firms. James Maxey, Express Solicitors

What will being a part of the group offer you / your firm that differentiates you from the competition?

he team at Pi-Gateway are all hugely experienced in operating successful PI and multi-disciplinary practices, and have enjoyed a strong mutual trust as professional colleagues for years. So we know the business inside out, and as solicitors will be able to provide a sympathetic, proportionate and less “take it or leave it” approach, with interested vendors. We are independently and financially strong. Additionally, if we are contacted before the banks or the administrators / liquidators move in, we may be able to offer a quick turnkey solution to a fellow professional, who is worried sick believing that they have no other choice but to face inevitable financial ruin. We are regulated professionals and not middle men. Pi-Gateway will not commoditise clients when dealing with vendor firms, and will effect the transfer of client cases with care and professionalism to minimise potential client uncertainty. Ralli will benefit from the collective expertise of the group in dealing with financial, professional and regulatory issues, which will inevitably surface when an acquisition is in progress. We all trust each other, having known each other professionally and socially for years, so we can all be certain that all aspects of any transaction will be compliant. Each PiGateway member is financially strong, so as a group we can make a speedy acquisition, and tackle a larger proposition than we would be able to as independent firms. Finally, as a consortium, we do not offer to vendors a “one size fits all” solution, which must be attractive to those who want to get out of the PI market quickly with a minimum of fuss. Martin Coyne, Ralli Solicitors

To find out more about Pi Gateway visit www.pi-gateway.com or contact 0843 506 8597 for a confidential discussion. MC // November 2013

The Opinions

Jealous? You should be! We are through the looking glass now, folks. F*$K me!”

ne of my favourite quotes from one of my favourite television characters, which sums up pretty much exactly how everyone felt when they woke up on the morning of 1 October 2013. We discovered that it hadn’t been a dream; the Con(not so)Dem government had allowed Section 69 of the Enterprise and Regulatory Reform Act 2013 to come in to force. It is a piece of legislation which proudly sticks up two fingers at workers; rights; any concept of the UK’s EU membership obligations; and any notion that the law should be fair, impartial and ensure a balance in the employer / employee relationship. There are many theories as to why ‘call me Dave’ Cameron, our esteemed Prime Minister, has pursued such a relentless attack on victims of accident since coming into power. Some say it is a payback for big business and insurers who supported him; others say it is good old-fashioned Tory union bashing. It has even been suggested he actually believes there is a compensation culture needing to be tackled although not even I would discredit him with such little brainpower to think that he has bought the compensation culture narrative. There is, however, another view up here in the frozen wastelands of the North. I do not go much for conspiracy theories. I am beginning to wonder, however, if a theory I have recently heard about Section 69 holds water. It is said that to ensure future parliamentary monopoly, David Cameron actually secretly wants Scotland to vote for independence in the historic vote we face in less than a year. If that is correct, his one man assault on victims’ rights is certainly the right way of going about alienating the Scottish population and fostering anti-union feelings. I however think Dave has misjudged the Scottish people as much as he has misjudged the power and resolve of the Scottish Parliament. Health and safety is a matter reserved to Westminster. However, Scots private law is devolved and a matter within the legislative competence of the Scottish Justice Department. The Scottish Parliament has proven itself time and time again to listen to the demands of Scottish people and to act with fleet of legislative foot, pushing the boundaries of the devolution settlement wherever it can. The Scottish Parliament found no difficulty in overturning the anathema that was the Rothwell decision through the Damages (Asbestos Related Conditions)(Scotland) Act 2009. The lobbying has begun and the head of political steam is forming such that I fully expect a consultation document to reverse the impact of Section 69 in Scotland - to be presented at Holyrood within the next few months. My message to colleagues south of the border – watch this space and be ready to be jealous of what we can do in Scotland with the devolved powers we already have. Patrick McGuire, Partner, Thompsons Solicitors.

MC // November 2013

It is inevitable, In the light of reducing income per case and (possibly) reductions in volumes as regulatory or legislative changes impact the typical PI claim, that lawyers will need to closely examine how they process the work that comes in to the office. At the same time, it is entirely legitimate to question the level of skills, knowledge and experience really needed to provide the appropriate level of service to claimants - and who within the organisation should be delivering that service. However, this does not imply any diminution in outcomes for claimants. Arguably, the use of highly specialised paralegals and processes for standard PI cases helps to ensure a speedy, equitable, and cost effective delivery that maximises the overall package of benefits to the claimant. One could go even further and argue that the use of paralegals for many aspects of a PI claim need not be restricted to that of a UK base. There are many administrative aspects of a claim that can be handled in lower cost offshore environments that deliver equally high non-voice processing capability as that of UK based personnel. The driving force behind any business enterprise is the optimisation of the operating model to meet the needs of the customer, which in turn will generate the necessary incomes and profits that the business needs to thrive and prosper. If, in this case, this requires a change in the role of the PI solicitor to primarily one of people and process manager rather than knowledge distributor, then that is simply an adaptation to a changing market environment and customer demand which is to be welcomed. So where does this leave the specialist PI solicitor with his/her extensive skill and knowledge base? The separation of function is between the high-end PI specialist and the paralegal world of lower value claims is nothing new. It is merely the increase in volumes of these lower value claims in recent years that have led to the undoubted explosion of paralegal involvement. True, the managing solicitor now needs (or must recruit) a new skill set of people and process management but that is an inevitable consequence of what up to now has been a growing sector. The challenge ahead is not to bemoan the need for these skills but to develop and enhance the service delivery at all ends of the claims scale such that standards are maintained, or even increased, whilst the costs of delivery are managed downwards. Eddie Longworth, Sales & Marketing Director, Parabis Claims Solutions

The Opinions

Q: How mobile is your practice and case management? Should work be retained in the office or is there room for mobile / homeworking in the claims industry?

Motor Engineers by their very nature are mobile creatures, so the forward thinking amongst us have embraced the phenomenal developments in mobile technology over the last decade. In the past, our mobile solution would be a clipboard, pen, film camera, a selection of A-Z maps, calculator and Thatcham books. If the office needed to communicate with us they would have to leave message with the garages we visited. All this has changed with the development of tablets like iPads - which allow easy communication between engineer, office, client, body-shop, principal; all tracked in a transparent log so everyone is clear who has done what. Maps now not only guide us around the country but track where we are, record and analyse our mileage. Our photographs are timed, geo-tagged and uploaded directly to the cloud, so are instantly available. Likewise the legion of data we receive and record is available to everyone immediately. We can even put systems in place to check work: for example, ensuring the engineer’s salvage categories are mathematically allowable. If iPads made coffee it would be the perfect Swiss-army gadget! The increased communication and sharing of information across the firm not only escalates our speed and knowledge base but means we can receive and return salient, accurate data to & from our clients very rapidly. Our case management system was built with mobile ability at the forefront of our priorities. Not only is this incredibly time saving for our engineers, but allows our office based team the flexibility to work from home to suit their personal needs. This makes for a happier staff coupled with the ability to allow us to work out of hours. Homeworkers need a different style of management to office staff; targets and expectations need to be clear, regular appraising and training is important. Being more isolated means they need to feel included in the team building and social aspects of the business. Regular meetings are therefore imperative. Our business is just one cog in the claims machine but I have no doubt that these processes can be applied to rest of the claims process. Some effective, userfriendly and reliable IT together with motivated, welltrained and effectively managed staff would have few insurmountable issues becoming a mobile workforce. Nik Ellis, Managing Director, Laird Assessors

Q: Simon Gibson, SGI Legal, recently announced that personal injury firms looking to sell their Work in Progress (WIP) have around three months to sell their books if they want to achieve more value in the sale. Is this actually the case – are some PI firms in such a position that a WIP sale (before it reaches a buyers’ market) is the only way forward?

With the SRA announcement earlier this month that 175 law firms have failed to secure PII, undoubtedly this will include firms with personal injury WIP books. The spotlight on the injury sector has also been increased by the recent announcement that high profile serious injury and clinical negligence specialists, Harris Cartier, entered into a prepack deal with prolifically acquisitive firm Neil Hudgell Solicitors. The last two months have seen an increase in buyers entering the market, ready purchase an increasing number of WIP books for sale. This has included, PI Solutions, DBS Law, S&G amongst a growing number of other smaller acquirers entering the market. Enquiries to Zebra from firms looking to acquire, has significantly increased. In last few weeks alone, this has involved three due diligence projects, with WIP values exceeding £2 million. Good WIP books have acquirers competing for purchase and this is putting pressure on driving prices upwards. Our experience shows that deals such as these are strategic sales. The decision to off-load a personal injury caseload will have been well thought through, and time will be spent ‘packaging’ the caseload for sale, sometimes involving a bid process. If more law firms approach a sale in this way, there is the ability for ‘market making’ to drive prices further upwards. In these scenarios, this is not a fire sale. A survey this month carried out by Zebra of 15 acquisitive firms, revealed that 13 of these are actively looking for strategic offloads. Serious injury and clinical negligence caseloads have the potential to attract some big players, particularly if the selling firm has a high profile and a good web presence that is generating leads. In more distressed sales, market prices can be more difficult to achieve. Clearly, the risk is greater. Buyers need to have the infrastructure to move at significant pace, with the need for funding, legal documents, due diligence, and PII to be in place without delay. The reality is that such buyers are less in abundance. I agree with Simon Gibson; for any firm needing to sell a personal injury WIP book, the sooner they approach the market and with the correct support, the greater the opportunity to secure best price. Zoe Holland, Managing Director, Zebra Legal Consulting

MC // November 2013

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The Opinions

Any business, not just legal practices are driven by profitability and there will or should be an owner, financial director or book keeper, whose focus is to manage the purse strings and review ways of increasing profitability by completing the same work more efficiently. Pretty basic stuff then? However the real fun begins when the amount you can charge becomes fixed. (To add insult to the injury - no pun intended - you had an arguably less than reasonable input in to the setting of said remuneration.) Throw in to this the ban of the business generating referral fee from 1 April 2013 onwards - despite protestations - plus there’s the professional obligation to work under a strict code of practice audited by your industry regulator. You’re now someway to understanding the world of personal injury litigation. So, why get involved in PI at all? The truth is that there are firms that have devoted considerable funds and resources to the streamlining of the road traffic claims process and do so without compromising on service or professional standards. The bulk of this streamlining is managed by investment in software; if utilised properly can almost automate the client journey. When this process is polished it means that there is little need for a solicitor to deal with every file. Rather, claims can be handled by non-qualified, well trained, experienced and properly supervised staff delivering the same end result. The difference is that the salaries paid are much lower than for qualified, well trained and experienced staff. This model is adopted by the majority of companies practicing in personal injury and I doubt there’s a firm in the country that could make profit working any other way. I’m sure there are many readers who will know a solicitor or partner in a legal practice. Ask them how many will be recommending their sons or daughters to enter the legal profession and you have the answer to the question? Jim Toole, Operations Director, First Response Law.

Q: Are Damages-based Agreements (DBAs) having a positive or negative impact on your business? Do they force firms into reconsidering their approach to customer care and management, for the better?

DBAs were much talked about in the run-up to ‘LASPO day’; with much discussion around whether there would be any take-up of the agreements from solicitors. Examples abounded, showing scenarios of where the solicitor would be better or worse off using a DBA as opposed to a CFA or fixed recoverable costs. Most commentators agreed that for the majority of cases the solicitor would be worse off under DBAs and so said that the new type of agreement was dead in the water. But now the dust has settled, has this been the case? Well I can’t speak for the market, but we have certainly seen a high take-up of DBAs within the solicitor firms that we deal with. Key is the solicitor analysing their portfolio of cases - working out which types of cases they would be better off using DBAs and which ones they would be better off sticking to CFAs and fixed recoverable costs. Generally speaking, high quantum cases that can be settled quickly work best (for the solicitor!) with a DBA. But what difference does it make to an after the event (ATE) insurer whether the solicitor is working under a CFA or a DBA? Well the main behavioural concern is the attitude to a Part 36 Offer by a defendant. When acting under a DBA the solicitor will be keen to maximise the damages recovered – not just for their client’s best interests, but also because the solicitor stands to take a cut of any increase in damages achieved. That’s not to say this is contrary to the client’s best interests. In fact, it could be in their client’s best interests too but it may well counter the defendant’s new found trump card: of QOCS not applying after a Part 36 Offer that should have been accepted and is not then beaten. As an insurer covering the adverse cost risk in these cases, we also need to be wary of solicitors taking the view that they should plough on regardless as the cost risk has been insured against. That’s not to say that we won’t be allowing solicitors to make their own decisions with regards to accepting or rejecting Part 36 Offers – but we will be keeping a close eye on those decisions that are often the wrong ones! Alan Strange, Underwriting Director, LAMP Group Limited.

MC // November 2013

The Opinions

The foresight of when to sell is a worthy attribute indeed. From an investigators view, there is little doubt solicitors are finding it more challenging to secure new business funding if needed. There is greater competition, higher service expectations and all for a reduced profit. If you don’t like the sound of that - maybe it’s time to sell and move on, this is a recession. High street retailers are losing business to large retail parks and both to the Internet. Everyone wants more for less but that’s not new, evolution has demanded this my entire lifetime. Simon Gibson also predicted a 50% legal market reduction - he may well be correct but I’ve witnessed this before in other professions. The consequence being that those who survive have fewer competitors so greater opportunities. Decided to sell yet? Well consider this, what will you do post sale? Will you realise your projected WIP? Will this all end in tears? We have reduced our fees adjusting to the ever-changing market. You will know you should analyse your position and

consider your options. In these last 12 months, many of our law firm clients have been interested in acquiring ‘blocked’ claims from other law firms who didn’t have the appetite for battle - there is a market for this. The new breed of ABS type claims managers (not CMCs) have efficient processes to streamline claims and maximising profit but they will also collect ‘blocked’ cases. That requires different skills and maybe that’s where the experienced solicitor’s future is. Scientists can correct me but everything consists of multiple ingredients. This is why you should include our investigation service into your team. No matter how good you are, you will be better for having a good team with you. Where ever your future is I hope there is a place for you (and us). Generations who have committed to studying, qualifying, developing (accepted the odd King’s coin) have value, I know there is a place knowledge. I fully support regeneration, innovation and strategists; there are roles for varying levels of skill, but there is a balance. When you require open-heart surgery you are better in the hands of a surgeon than a first aider. Be wise and bold. Peter Parry, Managing Director, Independent Accident Investigations.

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The Opinions

Moving towards accident avoidance, as standard

olvo’s Collision Warning with Auto Brake was introduced in 2007. This system is powered by a radar and camera fusion. If the driver does not react, the system pre-charges the brakes and increases the brake assist sensitivity to maximize driver braking performance. Later versions now automatically apply the brakes to minimize pedestrian impacts. The V40 also included the world’s first pedestrian airbag and at the 2013 Geneva Auto show, Volvo introduced the first cyclist detection system. All Volvos now come standard with a laser sensor that monitors the front of the roadway. Other manufacturers have done their own take on this, Ford came forward with Collision Warning (a benefit it came away with after selling Volvo), Audi has PSP, Honda CMS and Mercedes now has PSB, to name but a few. It therefore seems quite obvious that this sort of technology is here to stay and with BMW now announcing heavy investment in autonomous driving. Such things as City Safety are designed to avoid slow moving collisions. Volvo City Safety is an autonomous emergency braking system designed to help a driver avoid a low-speed crash or to reduce its severity. At vehicle speeds between 3.6km/h and 30km/h, City Safety uses a lidar (Light Detection & Ranging) to monitor an area 10m ahead of the car for vehicles which might present a threat of collision. If a collision is likely, City Safety first pre-charges the brakes and makes the Emergency Brake Assist system more sensitive so that, if the driver should notice the risk, the car is ready to respond more quickly to his braking action. However, if the driver still takes no action and a collision becomes imminent, City Safety independently applies the brakes very hard. If the relative speed between the car and obstacle is less than 15km/h, the car will be able to brake so that the collision is avoided. At higher relative speeds, City Safety will not be able to prevent the collision but will reduce the impact speed. The introduction of these systems will obviously have an effect on the number of collisions and undoubtedly the number of resultant PI claims but it is a long way off before we are all driving vehicles with such systems fitted as standard. The infrastructure for full autonomous convoys is also a long way away and until this happens the main thing that will never change is human error. Keith Crosier, Managing Engineer, Legal & Technical Assessors.

Q: Are insurers and law firms utilising a clear business strategy and operations model before implementing a new IT integration – especially if merging / joint venturing together? What are the most common issues which, left unresolved, could afford long-term repercussions?

Not a clear-cut question by any stretch of the imagination - there are many factors at play here which dictate how such projects should be approached. I’ll attempt to give just a brief outline here…

1. Is there a need to roll out one consistent system across the whole venture? Sometimes when faced with an integration project, an appetite appears for a ‘swapout’… ‘Can’t we all just use the same system?’ Not a bad question, and certainly worth investigating to save having to keep and maintain multiple systems. But this needs extremely careful consideration - depending on the size of organisations involved, this can be a sizeable and time-consuming task. It shouldn’t necessarily be the default response, if true integration options are available. 2. Which bits need integrating? If going down the integration path, then it must be clear which elements need integrating. This sounds overly simplistic, but there have been many integration projects in the past driven by a desire for a ‘complete merge’, rather than a focus on what actually needs doing, the benefits of it, and the resource / cost associated. 3. How is the customer experience impacted? Often overlooked, but this element is critical. Ok so you’ve decided upon a plan of action - to either ‘swap out’ or integrate. But does any of this impact upon how your services are delivered to your end customers? Your customer wants to see either a) no change to the type and quality of service they receive, or b) vast improvements to the type and quality of service they receive. They absolutely do not want to experience any drop in service, or periods of ‘work in progress’ where things are not quite how they should be! Darren Gower, Head of Marketing,  Eclipse Legal Systems.

MC // November 2013

Embracing injury litigation futures

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The Features

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The Features

MC // November 2013

Features

Here come the brands Over the past year a number of new brands have emerged and are beginning to disrupt the market. Charlotte Parkinson, Modern Claims, spoke to Paul Coulter (PC), Group Marketing Director at Brilliant Law and former Head of Marketing at established brand ‘webuyanycar.com’ as well as Zoe Holland (ZH), Managing Director of up and coming legal brand ZEBRA Legal Consulting, about the value of the brand and how they are shaking up the market.

How do you view the marketing landscape for claims at the moment and which firms are doing it best?

ZH: The personal injury sector has been hit by a Tsunami of change. Accident and claims management companies have formed ABSs and they are not shy in shouting about their ambitions of providing Paul Coulter integrated services. Sheffield law Group Marketing Director firm Proddow Mackay has linked Brilliant Law up with a claims management firm, an insurer and a broker in separate ABSs. Other new brands include Outspire Group – a onestop service for the niche clinical negligence sector. Its Chairman, Sajid Hussain, has a clear vision for the future and as a non-lawyer, has seized market opportunity with no apology for his aggressive entrepreneurial approach. PC: It is fair to say that there’s a lot of room for improvement. No-one has really seized the sort of pre-eminent position Zoe Holland in the marketplace that puts Managing Director them at the top of consumers’ ZEBRA Legal Consulting minds for when the need to claim compensation arises. Everyone in the claims sector currently says pretty much the same thing, focusing solely on the need to generate an immediate return on marketing spends. While I understand the commercial imperatives behind that, it’s a very short-sighted strategy - not to mention a very limiting one. After all, if everyone is talking

about ‘no-win no fee for slips, trips and RTAs’ it’s hard for consumers to truly differentiate between providers.

Paul, you have a history of running those hard-hitting marketing campaigns yourself, such as those for St Helens Glass, Freedom Finance and webuyanycar.com. Aren’t you guilty of the same thing?

PC: Webuyanycar.com is a classic example of creating a brand by ‘going loud’ from the outset and storming the market. It’s an effective strategy in as much as we had 90% plus unprompted brand recall with consumers, putting us very much ‘top of mind’ when anyone in the country wanted to sell a car. The disconnect can come with the actual brand experience though, if consumers aren’t happy with the price they are eventually offered or the service they receive, ultimately the brand’s credibility and long term profitability can be effected.

Q A

What opportunities have arisen for new and innovative brands entering the market?

ZH: There is opportunity for those who create the right brand. New entrants to the market such as Brilliant Law (backed by Betfair founder Bert Black) and Bobby Dhanjal Legal Services (set up by an IFA in Leicester) see a market ripe for a new way of delivering services. They have the advantage of starting with a blank piece of paper and none of the equity table history that so often inhibits firms’ from innovating and flexing quickly enough to seize market share.

“No-one has really seized the sort of pre-eminent position in the marketplace that puts them at the top of consumers’ minds for when the need to claim compensation arise” Paul Coulter

MC // November 2013

Features

“Someone is going to have to think about the need to build a brand for the long term, instead of simply worrying about what will make the phone ring in the next five minutes” Paul Coulter PC: There’s a massive opportunity for an ethical – and educational – brand to emerge that offers consumers more than just a number to call when they trip over a paving stone or get rear-ended in the car. What they really want is a brand they can trust. Naturally, creating a brand property that puts you at the top of everyone’s mind when the need arises, such as Churchill’s dog or Aleksandr the Meerkat, takes time and money. It also requires a certain amount of courage. While most boards of directors are happy to pay for direct response ads that will make the phone ring or drive website traffic right away, it’s often tougher to justify the expense of ads that simply build brand understanding and awareness. In the long run however, if a big player is going to emerge as a ‘white knight’ in the claims market, someone is going to have to think about the need to build a brand for the long term, instead of simply worrying about what will make the phone ring in the next five minutes.

Q A

What other routes are new entrants exploring and how have these new entrants disrupted the market?

ZH: The land of ABS has perhaps not been quite as exciting as observer’s thought, with firms restructuring to include non-lawyer partners such as a spouse or a finance director. Whilst this was groundbreaking a few years ago, it isn’t setting the world alight now. Joint venture ABSs, such as those between Admiral and Ageas and specialist personal injury (PI) law firms holds more interest. These will be handling policyholders’ claims and are a response to post 1 April, in particular the ban on the payment of

referral fees in personal injury. NonABS initiatives caused a stir, such as Stobbart Barristers – the arm of the famous logistics company that now connects consumers directly to a barrister. I recall a drive to Liverpool where a Stobbart lorry caught my eye as it passed a bright yellow billboard offering personal injury claimants a free iPad. It was a moment in time that crystallised for me that a new dawn had arrived.

Q A

What about those brands who have taken on external investment?

ZH: Private equity is becoming more prominent. Zebra was approached in September to carry due diligence on a private equity house investing in serious injury and clinical negligence. There is flavour that further projects will ensue. Insurance law firms Parabis and Keoghs have received investment from Duke Street Capital and LDC. We have also seen former Dragon’s Den star James Caan’s investment in Staffordshire firm Knights and latterly ‘virtual’ law firm Excello. Another virtual practice, Everyman Legal, became the first firm to receive investment from private individuals. Its six private investors have become shareholders of the firm, which specialises in acting for entrepreneurs.

“There is opportunity for those who create the right brand” Zoe Holland

Q A

Finally, which new entrants and brands will ultimately be successful in the new marketplace?

PC: Current brand strategies in the claims market are very limiting. The claims market is here to help the public with a vast range of issues, from the mis-selling of financial products to employment issues; not just slips and trips. Yet most companies continue to perpetuate the ‘ambulance-chasing’ image that does our industry such a disservice. So no matter how intrusive and responsive their ads become, they can only ever offer a short term fix if they aren’t creating a brand that the public can trust. That’s why I really believe that it’s time for a ‘white knight’ brand to emerge, with a mission to broaden the public’s understanding of the claims market’s role: a clearly ethical company that offers support for those seeking natural justice as much as simply financial recompense. ZH: Pricing pressures and increasing sophistication of clients are driving innovation. This is set in the context of economic pressures, and unprecedented legal reform. Every firm has to be focused on how to deliver their services for less whilst at the same time feeding the appetite of technology-savvy clients, who desire instant access to straightforward advice. It is clear that there are further market entrants to come and the continual fluidity in the landscape will no doubt evolve further over the coming months. Expect the unexpected!

MC // November 2013

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Features

Great expectations In an age where legal entities have to innovate to meet the needs and best interest of consumers, insurers face the same challenges. So what does innovation mean for the insurance sector and limits its ability to meet customer expectations? George Bladon reports.

oo often companies trot out marketing speak highlighting their dedication to their customers and how important customer service is in their company values but, in many occasions, it is just lip service. The situation is different in my company as our ethos is founded on a commitment to customer service - which we think helps to distinguish us from other providers in the legal expenses insurance (LEI) market. The connection with the customer is more immediate and more manageable when a company is small and means it can be more responsive and adaptable which is something easily lost as an organisation grows. It is a case of being small enough to care but big enough to cope. The need for optimisation In our view, ensuring that customers get the best from products involves both providing innovative products that are understood by the customer and delivering great levels of service. The foundation of strong effective products is decent technical, market and customer-focused research which will ensure that policies are drafted to respond effectively and fully. Dealing with claims becomes so much more straight-forward when terms are clear and unambiguous and the policy delivers what the claimant expects. We want to design products that are bang up to date and that will fully protect the insured when they come to rely on us. Products with many excesses, numerous exclusions or complicated stringent advice conditions can prove problematic. Offering gimmicky benefits of questionable value confuses consumers and makes it difficult to evaluate the real worth of the product. Thoroughly researched products make commercial sense in a competitive market. For example, our products team engages closely with sales teams and claims experts (both in house and external suppliers), throughout the design process to ensure an attractive offering that will work well in the

arrangements we have with preferred suppliers really work as a partnership and all parties benefit from the synergy this generates. If our suppliers are pleasing our customers, they are also pleasing us and our distributors. If they are unable to meet expectations because of a weakness in the product we listen and aim to adapt and improve.

“Improving customer awareness is critical to managing customer expectations. Unless product features are visible at the point of sale there is a risk that customers may not claim when entitled to” market and for the target buyer. Improving customer awareness is critical to managing customer expectations. Unless product features are visible at the point of sale there is a risk that customers may not claim when entitled to, or that their expectations are unrealistic causing disappointment and a perception that the product has not performed well in the event of a claim. Supporting innovation So, what works best to support insurers (depending on size and market, of course): in-house support, joint ventures or outsourced for claims handling? Where do the conflicts arise and are there any pitfalls in joint ventures? While we currently outsource claims we adopt a collaborative approach with our service suppliers. On the one hand our function is to manage and monitor claims service standards while on the other we value feedback and advice from our suppliers which can help us to clarify and improve policy content. The

What about the BTE market? In June this year, the FCA published its Thematic Review on Motor Legal Expenses Insurance and concluded that - while motor LEI was beneficial - it was complex product. This can mean it is difficult for consumers to understand. As a result, they made recommendations regarding methods of sale and in relation to providing clarity to consumers. The FCA also has an on-going market study of add-on products, so the consumer BTE market is responding positively to these by increasing efforts to clarify and simplify product messaging. Features that will enhance consumer value will emerge. The FCA has said it will conduct a future review of sales practices and products and will expect clarity around key product limitations, such as ‘reasonable prospects of success and the fact that motor policies respond to accidents that are not the insured’s fault. Customers will in future find either that they cannot opt out of LEI, embedded within a core motor or household policy, or that they are required to opt-in. We do not expect to see a ‘stand-alone’ legal expenses market any time soon. The effects that reforms to civil litigation funding have had on the ATE market and access to justice have highlighted the need for BTE. Yet we must make sure that BTE products are fit for purpose if we are to build a positive reputation and deliver the quality service that customers expect and deserve. George Bladon is a Corporate Account Manager at ARAG plc.

MC // November 2013

ACORN ASSESSORS CONSULTING AUTOMOBILE ENGINEERS

Features

What is Affinity? Affinity’ is one of those words that we use in the legal world without really having a clue what it means but, as David Jabbari explains, a better understanding of it could provide new options to those in the modern claims arena.

‘A

ffinity’ is a marketing term. It means a method for one company to sell its goods and services through partnerships with similar companies and brands. Affinity marketing is the opposite of normal competitive marketing because the aim is to increase brand loyalty and sales for both companies. It is thought to have originated in the US in the 1970s with the co-branding of MasterCard credit cards. Affinity partnerships have at their heart an exchange of value for both brands. The affinity group wishes to boost its value to its members or customers by offering a new product or service from another recognised brand, and the supplier wants to acquire new customers by trading on the value of the affinity brand and the receipt of customer data. Enhancing the brand? In the legal world there are relatively few genuine affinity relationships where both brands are being enhanced in this way. In most cases, what is called an affinity relationship is no more than ‘white labelling’, and there is nothing at all wrong with this. The legal provider, while deriving revenue, is often invisible and will not necessarily be seen by the affinity brand holder as enhancing their brand. If there is an enhancement it is that the affinity group is able to offer their clients a wider range of services. In some instances, e.g. the new ABSs, it is explicit that the legal provider should be relatively invisible because the attempt is to create a separate, new consumer legal brand. These are not affinity situations in the strict sense. One barrier to true affinity relationships is that there are still no established consumer brands in law. With the consolidation of the legal services market, and the possible

Understandably, brand holders do not want their customers treated in that way!

development of these brands, there may be more scope for mutual brand enhancement. Much will depend on the attitude of the affinity group. Do they want to be seen as a legal provider in their own right or seen to be enhanced by a partnership with a legal provider? The former is hard to square with a true affinity relationship. This is because the legal services provider is increasingly likely to have their own direct B2C brand which could lead to brand confusion rather than enhancement. None of this of course gets in the way of a big B2C legal brand running separate B2B “white labelling” operations that provide these services to affinity groups. But as they get more established, there has to be a question why they would want to do this, rather than advertise for the work directly. Also, if the B2B operation is a form of ‘process factory’ outside the lifeblood of the firm, there is a very real risk that the quality of work and interaction with the clients of the affinity legal brand will be less than the experience of consumers who deal directly with law firms. Process factories tend to say things like “you will get a certain number of mistakes because that’s part of the volume model”.

“With the consolidation of the legal services market, and the possible development of these brands, there may be more scope for mutual brand enhancement”

Behind the scenes sophistication My interest is in the use of a tightly controlled network of independent law firms as an affinity concept. This gives the prospect of higher quality for the customer, brand enhancement and less risk of confusion between brands. The network model is not based on centralised volume delivery: its appeal is to brands which require a geographically dispersed network focused on high quality face to face delivery of legal services by independent law firms. Of course, behind this must sit sophisticated process, helplines, quality assurance, benchmarking and MI to ensure that the customers of the affinity organisations contracting with the network are assured of the very highest standards of service. In addition, a network legal brand is less likely to interfere with an affinity brand even where that brand is a legal one. The network brand does not represent any one particular B2C provider of legal services; it stands for the value of independent law firms. It is a legal equivalent of ‘Intel Inside’ for the customer. The customer’s experience will be of a well known law firm in their area, backed by the power of the network. A high quality network of regional firms is extremely well positioned to take on affinity contracts from large corporates, insurers and their ABSs. Crucially, this network approach can also offer affinity partners more opportunity to use local solicitor networks to partner their products with local business and consumer audiences. This may be anything from consumer or commercial LEI through to opportunities for affinity brands to engage with local businesses. Locality is still vitally important in our fragmented legal market and this is why a network can benefit an affinity group. David Jabbari is the CEO of Connect2Law david.jabbari@connect2law.com 07887 242322

MC // November 2013

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” You expect quality....We deliver! “ ” “ ” Having worked with the team at Atrium Legal Services for almost 5 years, I can confidently say that their prime concern is the wellbeing of each potential client who contacts them. From a solicitor point of view, they offer a very slick service enabling me to fully assess the merits of a claim at the outset.

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The management at Atrium Legal Services demonstrate how to operate efficiently in a complex market, not just from a compliant perspective but ensuring the best interests of their clients are prioritised at all times.

Karen Jackson, Director Roberts Jackson Solicitors.

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Features

An agenda for reform Michael Wolstencroft provides a timely update and lists the core concerns regarding the Mesothelioma Bill, now the Ministry of Justice consultation has come to a close.

esothelioma is a cancer of the smooth lining of the chest, lungs, heart or abdomen. It is a rare and aggressive cancer. The most common cause is asbestos exposure. Each year in the UK approximately 2000 people generally aged between 50 and 70 years old die as a result of developing this terminal disease. Worldwide figures are expected to peak circa 2020. The typical latency period (period of time from exposure to manifestation of symptoms) is between 20 and 50 years, with some studies finding a median of 30 to 45 years. From the date of diagnosis, life expectancy is generally no more than 18 months. If the victim came into contact with asbestos whilst in employment then the victim may claim against his or her former employer. Problems occur when the employer is no longer solvent and locating the Employers’ Liability insurance company becomes complex and lengthy. The Mesothelioma Bill As part of the Queens speech in May this year, a Bill was announced which would provide payments for Mesothelioma sufferers where a liable employer or insurer is untraceable. The proposed scheme under the Bill will make payments to those with Diffuse Mesothelioma and to eligible dependants of those individuals who have died from contracting this terrible and terminal disease. However there are flaws and limitations. These are mainly as follows: • It is proposed that 100% of damages will not be paid – 70% has been suggested and debated • Compensation is only available where there has been a diagnosis after 25 July 2012 or the individual has died on or after this date. The Bill in addition is not proposed to be retrospective • The Bill only compensates victims of diffuse Mesothelioma. There are other

debilitating asbestos related conditions which can be caused by work however these have been overlooked During the second reading of the Bill in the House of Lords, it was proposed that a cap should be imposed for the recoverability of damages and that all damages should be limited to 70% of their true value. The fact of the matter is, not only will those claimants diagnosed prior to the cut-off date be unable to claim, if they could they would receive a substantial reduction in their damages. The Bill is expected to have its second reading debate on a date yet to be announced. The Bill completed its House of Lords stages on 22 July 2013 and was presented to the House of Commons on 29 August 2013. MoJ consultation: Reforming Mesothelioma Claims The Ministry of Justice opened a consultation on the creation of a new PreAction Protocol for Mesothelioma Claims in July 2013, ending in October this year. The consultation discussed a package of reforms to the procedures governing Mesothelioma claims in England and Wales. It must be noted that these reforms are completely separate to the Mesothelioma Bill. The consultation paper dealt with three main issues. The first is to encourage more upfront disclosure of information in order for the insurer to make a decision on liability at the earliest stage. Secondly the consultation proposes to create a dedicated Mesothelioma Portal system, which reflects almost all aspects of the current Employers Liability Portal. Thirdly it is suggested that a Fixed Costs Regime is introduced in these cases. A response from the Government is expected in the coming months. Michael Wolstencroft is an Associate and Head of Noise Induced Hearing Loss at Roberts Jackson.

“The fact of the matter is, not only will those claimants diagnosed prior to the cut-off date be unable to claim, if they could they would receive a substantial reduction in their damages”

Careful consideration Karen Jackson, Director of Roberts Jackson Solicitors, adds her concerns for the potential loss of expertise and access to justice for claimants if only one side of the consultation responses are taken into consideration.

Whilst I am in favour of anything that speeds up the compensation process for sufferers of this terrible disease, new processes, systems and a significant reduction in legal fees (which has been proposed) may result in delayed settlements. It may cause problems and uncertainty to the victims and their families and result in claims handlers with little or no experience running these cases. These are complex multi-track claims and we must remember that central to this debate is the Mesothelioma victim and his/ her family who are suffering as a result of simply going out to work to earn a living. If fees are reduced to an unworkable level this will result in access to justice being compromised - that is not what this country is about. I urge the Ministry of Justice to give careful consideration to all responses that it has received including those from specialist solicitors, charities and various interest groups and to consult with all relevant parties before making a decision.

MC // November 2013

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Features

Legal opinion Modern Claims gathered a pool of legal practitioners on either side of the claims fence to hear their views on the widely discussed and feared issues facing claims lawyers today. From the recent scale of Work in Progress for sale, fraud and diverting the expertise of senior lawyers into management, our columnists Raymond Southern, Donna Scully, Alan Nesbit, Anthony Hughes and Michael George Davidson report.

The questions Modern Claims put to the panel: Q: Do law firms have a realistic view of what they can achieve through a sale of Work in Progress (WIP) and what they will then go on to do? Q: Is the future of a personal injury solicitor to be as a manager of paralegals as PI becomes more output and volume focused? What impact does this have on attracting future talent into the claims industry? Q: The number of claimant law firms advertising has been ramped up, with Slater & Gordon the latest to focus on personal injury claims in its intent to become a household name. Are claims lawyers getting advertising right yet? Q: Are dishonest and fraudulent claimants facing the cold after Summers? Q: Is the future of a personal injury solicitor to be as a manager of paralegals (running task-based work) as PI becomes more output and volume focused? What impact does this have on attracting future talent into the claims industry?

Get real! Q: Do law firms have a realistic view of what they can achieve through a sale of Work in Progress (WIP) and what they will then go on to do?

The main problem in this area is that there is very little by way of track record of legal businesses being sold. The vast majority remain simple partnerships and the partners in those businesses have long since assumed that they will work until retirement, take out their capital account and pass the business on to the next generation. A quaint notion that most businessmen or entrepreneurs think is bizarre, if not laughable. This simply highlights the fact that the profession works for income as opposed to capital profit. The whole pack of cards has been thrown in the air in recent years with the advent of alternative business structures, allowing the potential for external investors to enter the market. They are not interested in a partnership; they quite simply want capital gain and multiples of it. The personal injury sector has of course received a secondary shockwave in the form of LASPO. We are now seeing signs of this reshaping the market - consolidators such as Quindell and Slater & Gordon are very active. The milliondollar question is of course what valuation do you place on a business?

In my view it is relatively simple, if there is the potential for on-going work and therefore some form of income stream into the future I would look at a multiple of profitability. If however it’s simply a run-off situation, then the best I would consider would be a percentage of the WIP value. The problem with the latter is that the majority of claimant PI firms value their WIP at nil for tax reasons so how do you agree a price? Certainly anybody thinking they are going to realise close to 100% of the WIP value, in my opinion, is having a senior moment (to put it politely). The saying ‘buyer beware’ has never been more appropriate. Consider just a few of the major risks in taking over a book of business; TUPE and the potential redundancy costs; recoverability of additional liabilities when the client moves; clients deciding to vote with their feet. All three of these are major risk factors for the buying business. In a nutshell, I think that there is an unrealistic expectation of the value a personal injury book of business. As far as what lawyers can do next, who knows? Some may move with the business as an employee others may retire, it seems to me that that is personal choice and without wishing to sound brutal, not a concern of the buying business. Anthony Hughes Partner & Chief Executive , Horwich Farrelly Solicitors.

MC // November 2013

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Consequential concerns Q: Is the future of a personal injury solicitor to be as a manager of paralegals as PI becomes more output and volume focused? What impact does this have on attracting future talent into the claims industry?

Recoverable legal costs have been dramatically reduced, not only in the Portal (April) but in fixed recoverable costs (FRCs) and post issue costs. There have also been huge cost reductions in EL/PL work too since July this year. The Government said the aim of these reductions is to make the cost of running personal injury claims more proportionate. This will have the knock on effect of stopping referral fees being paid (as there will not be enough money in the system) - ultimately to reduce insurance premiums. What are the other effects of reducing legal costs allowed to run a PI claim? Well, it goes without saying that it is likely to force ‘de-skilling’ and ‘dumbing down’ of the claims process. You have to cut your cloth, etc. Some might say this is a good thing and there are certain aspects of the process (particularly in the Portal) that do not require legal knowledge. Their school of thought is that you de-skill what you can and the lawyer only touches the case where necessary, e.g. quantifying the claim or taking the case to Stage Three. Does this mean that we are only going to see paralegals running Portal cases and perhaps the odd qualified lawyer supervising them? Is that the right level of representation for the injured client? Is the Government saying it thinks this is what is sufficient by setting costs at £500? The dye is now cast and costs recoverable are set at £500. This will force firms to use paralegals more and it is therefore likely that the PI industry will not attract young, up and coming lawyers to it. They will not see a future there or enough places for them to get qualified. Even outside the portal and at the point of issue of proceedings, costs have been dramatically reduced. So, again, it may force some firms to de-skill in this area too although that is not to be recommended. These cases get more complex and the injured party needs to be represented by a person with sufficient knowledge and expertise to do a good job. So yes, I do see less lawyers being attracted to PI going forward and I see those already doing PI having to think about re-training into other areas of law. This is sad because what can be more important that restitution for a genuinely injured person carried out by an appropriately qualified professional. Some say we are ‘facing a race to the bottom’ in PI as a result of the recent reforms - you can see their point. Whilst I accept PI reform was inevitable and necessary, I do not think the potential impact of the reforms was properly assessed before implementation. I also think the reforms were rushed and badly drafted. Above all I worry greatly about the ‘unintended consequences’ of the reforms and that they could make matters worse, not better, which none of us want. We shall see.

The branding race Q: The number of claimant law firms advertising has been ramped up, with Slater & Gordon the latest to focus on personal injury claims in its intent to become a household name. Are claims lawyers getting advertising right yet?

Part of the fuelling of the recent boom in PI advertising spend could be attributed to a number of law firms possibly caught in the regulation headlights. A mass re-allocation of budget and resource has occurred, with some firms moving from historic CMC B2B-C model to B2C. This activity was clearly evident pre-Jackson when every other advert on TV was a play for personal injury help and advice enquires. Slater and Gordon’s presence in the UK is certainly of interest to the rest of the legal pack. A well-known Australian entity entering the UK through strategic acquisitions is of course going to create headlines within the industry, but as far as becoming a trusted household brand name to the UK public? Only time will tell. It is a well known fact growth through acquisition can be a huge cultural challenge and needs a strong; collaborative and innovative management team driving the vision and change throughout. One major frustration as a senior industry strategist is the constant focus on personal injury; the facts really don’t lie. The UK legal service market was recently valued at £8bn pa and yet personal injury accounted for 10%. It is an area with reduced costs and diminishing claims frequency, surely now is the time for service and product diversification, greater collaborative partnerships and, dare I say it, ABS? The genuine lack of whole of market legal service brands in the UK simply means one firm alone cannot satisfy the complete legal needs and demands of their customer base. This inevitably increases the risk that a customer will shop elsewhere, thus creating a barrier to achieving and deriving customer loyalty. This lifecycle makes the task of creating a legal household brand difficult in the UK. Enter the world of affinity distribution. Affinity distribution is best described as B2B-C and can be a highly effective way to service the legal requirements of customers through the aforementioned ‘household brand names’ of others. The end game of either B2C or B2B-C is fundamentally the same at the end of the day each results in a transaction with a customer. ROI & COA over the medium to long-term on both models are interesting, as the costs of advertising direct versus the costs of servicing the needs and demands of third party brands, can be very similar. Are lawyers getting advertising right? I remain skeptical. Those who take their differentiation and diversification strategy seriously will win through. There is no reason why hybrid B2C & B2B-C strategies cannot co-exist effectively in a world of modern law. Michael George Davidson, Head of Strategy & Sales, Goldsmith Williams.

Donna Scully, Partner, Carpenters Law. MC // November 2013

Features

Out in the cold?

Experts, not managers

Q: Are dishonest and fraudulent claimants facing the cold after Summers?

Q: Is the future of a personal injury solicitor to be as a manager of paralegals (running taskbased work) as PI becomes more output and volume focused? What impact does this have on attracting future talent into the claims industry?

It was encouraging to see the Supreme Court (Summers v Fairclough Homes, 2012) confirm that, in theory, a genuine injury claim could be struck out if elements of that claim were found to be dishonest and exaggerated. However, this decision was somewhat clouded by an air of disappointment with the confirmation that this power was, in fact, a draconian measure and would therefore only be exercised in exceptional circumstances. So how effective has this judgment been in regards to fraudulent cases since it was handed down in 2012? The first genuine case to be stuck out following the Summers decision was in October 2012, Fari v Homes for Haringey, which had a true value of no more than £1,500 against the £740,000 claimed. Clearly echoing the reasoned judgment in Summers, the amount claimed was outrageous, grossly exaggerated and consequently the claimant received nothing. Earlier this year, Exeter Court took identical steps in another claim presented at £75,000. Investigations revealed dishonest exaggeration and the case was struck out prior to trial, the court finding over 90% of the claim was dishonest. Again, in August 2013, Central London Court was the venue for another successful pre-trial strike out application in a far more serious, but evidently false, claim in which there were allegations of traumatic brain injury. There is an ever-increasing onus on representatives of suspected dishonest claimants. Historically, there may have been a possibility of recovering some of their costs from the genuine aspect of claims of this nature. That is not now the case post Summers and the Jackson reforms. Recent decisions have criticised legal representatives for the way they have investigated and conducted suspected dishonest claims and now presents a considerable challenge for that sector. The Summers decision was the required catalyst in what is an emerging thread of consistency in judicial attitudes to grossly exaggerated claims. Even if the claimant has suffered a genuine injury, any dishonest attempts to inflate the claim will result in substantial difficulties. Claimants who act dishonestly may either be unable to convince the court to believe any of the evidence presented or may even fail in their attempts to bring the case to trial. The Summers case indeed marks a more rigorous judicial approach to fraudulent claims as well as spotlighting an increasing appetite to consider criminal sanctions, particularly by proceedings for contempt of court. Raymond Southern, Joint-Head of Fraud, Berrymans Lace Mawer LLP.

I think simply, the answer to this question is no. I think proper managers are far better placed to manage paralegals carrying out portal work. Indeed the problems faced by such managers are ones more likely to require HR training and management required people skills. Although many solicitors have these skills, their training is in litigation, case resolution and dealing with these more mundane problems means that those skills can go to waste. It is a common mistake of practices to move their best fee-earners into managerial positions and in the process lose their best fee-earners to the rigours and time-constraints caused by managing. A much better use of certainly junior solicitor’s time is to have them deal with the inevitable drop out of cases. Then they can issue proceedings to ensure speedy settlements out of the portal with maximum damages for the client and maximum costs for the law firm. The more senior solicitors will deal with those cases that may have previously been run on the Multi-Track or what I would term ‘high value Fast Track cases’ (over £10k) but will now feature in the fixed costs regime. These cases are simply not appropriate for task-based work and solicitors will still be required to deal with those cases. Of course, any niche practices will need to retain a team of solicitors dealing with high value and more complicated cases, although it cannot be missed that the number of such cases is very much in the minority. I therefore expect that such jobs will fall only to the most skilled of solicitors. I still believe that future talent will find its way to the industry. It may be that personal injury is no longer the favoured sector but a training contract is still difficult to obtain and good quality solicitors will take what they can. I have seen many an aspiring commercial solicitor change their mind part way through the training contract and they are now top quality PI litigators. Alan Nesbit, Managing Partner, Nesbit Law Group.

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Features

Standing strong The multiple and far reaching reforms which have been introduced as part of the Post Jackson era across England and Wales have made a huge impact since their implementation earlier this year. Aside from the referral fee ban, none of these changes have been implemented by Northern Ireland, Gerry Lee explains why.

part from the legislation confirming the referral ban introduced in May 2013 in Northern Ireland (NI), the multiple and far reaching changes that have occurred in the post Jackson era in England and Wales have not been replicated in NI. The disparities between the two jurisdictions are growing and this trend seems set to continue, even increase with the NI assembly seemingly reluctant to even piggy back onto recently introduced libel law legislation from Westminster. Perhaps of more immediate concern to the layperson and their legal advisor are the dramatic differences between the two jurisdictions on employment law, with the recently introduced two-year qualification for unfair dismissal not followed in NI. Expected differences Some marginal differences are, however, to be expected between the jurisdictions and only very recently Scottish proposals have been issued, with the eventual outcome more likely to reflect the English and Welsh experience than the NI one. For example, referral fees, subject to transparency, may be permitted. However, when one examines closely the current legal framework in NI, the most recent report on the subject (the Bain report), rules against legal disciplinary partnerships between solicitors and barristers, multi-disciplinary partnerships and external ownership of legal firms. To date, the report has not been implemented in legislation. Its proposals are essentially modest reform with greater lay representation on the professions’ complaints and disciplinary panels and an Ombudsman with an oversight role of the latter processes. Additionally, the report recommended against allowing alternative business models in NI. Exclusivity in practice Accordingly, NI has not participated in the radical regulatory reform of solicitors’ practices in England and Wales. Essentially, the Law Society of

there, is not a ‘qualified person’ for the purposes of the 1976 Order. There are no transitional or ‘recognition’ procedures to enable a solicitor from England and Wales as such to establish a solicitor’s practice in NI other than by qualifying to be a Northern Ireland solicitor under Article 4 of the 1976 Order.

“When one also then considers the relatively recent devolution of policing and justice powers to NI from Westminster... it seems likely the status quo will continue for some time to come; NI will remain a hostile environment to an ABS” Northern Ireland (LSNI) continues to perform the dual role of regulation, complaints and discipline of Solicitors on the one hand and, on the other hand, the role of promotion of the interest of the solicitors. This, most importantly, is in the context of NI being responsible for its own legislation and regulatory provision. Pursuant to the Solicitors (NI) Order 1976 as amended, solicitors in NI continue to enjoy a monopoly in regard to certain elements of practice in NI. For instance, under article 19 an unqualified person must not act as a solicitor or as such act in any litigation in any court or criminal jurisdiction. In this context ‘unqualified person’ means any person who has not qualified under Article 4 of the 1976 Order by being admitted as a solicitor in NI with a current practising certificate issued by LSNI. Accordingly, a solicitor duly admitted in England and Wales with a current practising certificate

Realities of NI procedure The practical consequences of the regulatory framework meant that firms of solicitors from outside NI did not venture to establish in NI, or even to carry out NI legal business on behalf of their clients. Instead they would appoint NI Solicitors to act as their ‘agents’ in carrying out all aspects of the NI work and this largely (save especially for the commercial and corporate law sphere) remains the current position. When one also then considers the relatively recent devolution of policing and justice powers to NI from Westminster (2010), it seems likely the status quo will continue for some time to come; NI will remain a hostile environment to an ABS. Further areas for review Legal Aid for civil claims is another area presently under consultation in NI and it seems an increasingly likely outcome will involve the state refusing to retain its role as a general large funder. In order to fill this vacuum,the private sector will be expected to come up with answers that will include bespoke, tailor made ATE products. The latter is already happening and on a personal level, it represents an outcome that has been long-desired but up until now seemed unattainable. Going forward, the only feasible and regulatory compliant model should involve instructing solicitors based in NI with the requisite experience and expertise. In addition, those solicitors should desirably have available to them a bespoke ATE product that helps give claimants proper access to justice. Gerry Lee, Senior Partner, P R Hanna (Belfast)

MC // November 2013

Features

A hotbed of risk The explosion of the recycling market has spawned an industry for which insurers have been keen to provide cover. Yet an upward trend in major fires associated with recycling plants, now suggest the terms of that cover require detailed review to avoid heated claims risk, says Richard Houseago.

remanufacture, shredded tyre products or dry processed combustibles intended as commercial fuel, often in Europe. The flow of waste into the site for processing is constant, but slackening demand means that not only is the recycled product stockpiled, the processing itself may slow down so that the received waste simply accumulates. That is almost a facet in itself of the industry drive to reduce the materials simply going to landfill.

wo recent events, almost certainly not unrelated, have focussed increased attention on the incidence of fires involving waste and recycling operations. The first was the major fire in July at the Smethwick Recycling Centre in which 100,000 tonnes of plastic recycling material was set on fire, seemingly by a Chinese lantern. The second is Parliamentary interest in this subject over the Summer during which Environment Agency statistics given in response to a question in the House of Commons confirmed that between 2001 and 2012 there was, on average, one fire per day at a recycling or waste management site in the UK; with a particular spike in 2011 when there were 425 such fires. In September, the Environment Agency updated its own guidance on “Preventing Fires at Waste Sites”, with the Health & Safety Executive also publishing fresh guidance as to the design and operation of “Material Recovery Facilities” in July 2013. The spike in the number of such fires over recent years echoes my own experience in assisting various insurers with an appreciable increase in claims arising in the waste and recycling sector. Despite being an industry sector of obvious risk, recycling has in the past attracted significant interest from insurers, albeit this may have waned in a sensitised and precautionary way given the spate of high profile major losses; there are definite lessons of experience which

feed through into the insurance sector. Fire is the most obvious risk in this sector either from the combination of heavy equipment featuring many moving parts with the presence of huge volumes of combustibles; the potential for certain waste to spontaneously combust or from arson. Perfect storm If combined with a period of slowdown in the business then a perfect storm of circumstances is created that comes to a head in a major loss. The stand-out scenario is one of the decreased demand for the bulk produce generated by the recycling process itself, whether plastics for

“The spike in the number of such fires over recent years echoes my own experience in assisting various insurers with an appreciable increase in claims arising in the waste and recycling sector” MC // November 2013

As main processing buildings on-site become full, an untoward extent of externally stored recycled product and waste accumulates around those buildings, in many instances filling all the available surrounding yard space right up to the site boundary. A very heavy fire load, often stacked to considerable height and threatening every access to the site, is created impeding fire-fighting in the event of a blaze and driving up the risk of arson from the outside. An interruption of throughput can be a significant feature in many large losses. A hotbed of risk Another factor is the effect of the interruption of throughput on the handling of biodegradable or mixed waste of the type usually associated with spontaneous ignition. The heat generated by decomposing rotting waste, if left unchecked, has the potential to lead to self-ignition. Normally this is not an issue because such waste is not on-site long enough for critical temperatures to be reached. Where circumstances lead to stockpiling, however, only thorough and regular turning will be effective in dissipating the build-up of heat; but it is precisely this kind of careful management of accumulated waste that tends to be lost or confounded as a static accumulation builds. These are fertile conditions in which usual operational risks become

Features

“It is worth reminding underwriters offering combined insurance in this sector of the lurking and potentially very extensive public liability risk in the event of a major loss and a fire spreading outside the site boundaries” magnified. The machinery associated with recycling centres inevitably carries its own degree of risk in combination with its being required to handle combustibles of unreliable make-up likely to feature “tramp” metal. Frictional heating against moving conveyors, spark generation and the usual risks associated with electrically-operated and hydraulic machinery will all feature. Insurer concerns So what are the considerations for an insurer keen to be involved in the underwriting of recycling businesses but wanting to ensure so far as possible that the risk does not become unquantifiable? The most careful assessment of the operation is needed both by formal risk presentation and by regular on-site risk survey. This is still a relatively immature sector attracting new entrants who may not fully understand all of the operational hazards. It is paramount to capture in some detail the precise nature and history of the operation, compliance with waste licence and Environment Agency oversight, the make-up of the waste to be handled and the key aspects of the on-site operational standards. Even the most careful policy drafting will not pre-empt every possibility and it can never be discounted that the underwriter might need to refer back to important aspects of the risk as conveyed to him

and which lead to a judgement of the insurance being acceptable. Beyond that the policy terms and conditions are themselves never more critical than in this sector. Maybe only in the context of Hot Works conditions on building contractors’ policies is the careful delimitation of the risk actually to be accepted by the insurer as vital. Some lynchpins are worth emphasising in principle, as is the need to ensure the policy drafting in each case meets the required objective of precisely and effectively delimiting the risk accepted; usually by way of strict condition precedent to indemnity in the event of a claim. Machinery and Plant will need to be made subject to a requirement of regular maintenance with written records to be maintained to be evidence compliance. The Electrical Installation requires the same careful control by documented inspection. Hot Works will require particular control in respect of the use of hot work equipment in the maintenance of the processing machinery and plant and in the use of cutting equipment in particular in the specialist recycling of waste electrical and electronic equipment especially fridges and freezers. Minimal required standards will include a proper permit to work system ideally by reference to RISC published guidance standards RC7 (“Hot Works”) and RC54 (“Waste Centres”).

“Especially important will be the regulation of external storage. Experience suggests that a majority of large recycling losses involve some adverse degree of external storage of waste far beyond what the plant’s insurer had ever bargained for”

Especially important will be the regulation of external storage. Experience suggests that a majority of large recycling losses involve some adverse degree of external storage of waste far beyond what the plant’s insurer had ever bargained for. Minimum clearance of externally stored combustibles from buildings at the site helps protect against the spread of fire back to those buildings. Minimum clearance from site boundaries protects against the escape of fire from the site and helps to limit the deliberate or inadvertent risk of fire being started from outside the plant. In the case of really large sites it is also wise to provide fire-break access ways in large accumulations of externally stored stock. Such external storage conditions can be written into the policy. Public liability risk Finally, it is worth reminding underwriters offering combined insurance in this sector of the lurking and potentially very extensive public liability risk in the event of a major loss and a fire spreading outside the site boundaries. Under common law, it is very likely that the recycling site operator would face an almost strict liability to adjacent owner for such spread of fire, unless there was no negligence either in the initiation or the propagation of the fire. It is then straightforward for a third party to suggest the existence of such negligence, where poorly-managed externally stored combustibles have been allowed to accumulate. For that reason, whatever protection might be written into the Property and Business Interruption sections of the policy ought to be made to sit across the entire policy – including Public Liability risk. Richard Houseago is a Partner & Head of Property Risks and Coverage at Greenwoods, part of the Parabis Group.

MC // November 2013

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Best in class Emma Waddingham grilled David Downie, Group Director of Legal Services at the BGL Group – to see why he thinks the group’s service models are ‘best in class’ and challenged him to identify the ‘perfect’ claims model. David Downie, Group Director, Legal Services at the BGL Group

for the major insurance underwriters in the UK. Change has put some of the power in the hands of the defendant but it’s important for this power not to be abused on behalf of genuine claimants.

ime will tell what makes a perfect model in the claims industry. However, there’s still plenty of space left in the personal injury field for full service law firms, such as BGL Group’s Minster Law, the Co-operative Legal Services, Lyons Davidson, NewLaw, Quindell or Parabis. What’s unique about our offering is our history. BGL started off as an insurer, then insurance broker - and still is - but our customers need claims services managed effectively. The move to expand into legal services was a customer-led proposition; the core of our business. We expanded to meet the needs of our 2.5 million policyholding customers and the need to handle around three million RTA claims. We are also now the biggest provider for EL and PL insurance and there’s a direct consumer market there too. We have the scale to handle these claims, so does that mean there is no room for niche services? What is apparent to me is that it will be firms led by businessminded individuals that will continue to exist but in time, there will be around four to five core personal injury models. We will be one of them. Under pressure There are definitely two main commercial pressures applying to the claims industry. Firstly LASPO, which is putting financial pressure on firms and secondly, regulatory and compliance pressures. Firms have to ask themselves if they have an efficient model at its core to service customer need. The

recent professional indemnity insurance issue has also had an effect. So, why do I think the BGL Group has been a success? Because of our core structure, we have: the backing of a private company; the finance in place to invest; technological capacity and economies of scale. This enables us to work effectively on the largest personal injury workflows and WIP books in the UK. Embrace change Like others, we haven’t welcomed the recent regulatory change but we have embraced it. We’ve looked at our services to see how we can help the customer in new ways (such as self-service). We also work with both defendants and claimants to make the industry more efficient for the customer, especially in terms of non-fault work

“So, why do I think the BGL Group has been a success? Because of our core structure, we have: the backing of a private company; the finance in place to invest; technological capacity and economies of scale”

Cultivating success So, we’re looking at how we can move the industry forwards, looking at what we can do to take cost out of our profession. This is a huge factor in terms of sustainability. Another key to success in the claims sector is an understanding of why people use legal services. The sector is so diverse, which is why a number of different models will survive in this market. A successful model will understand why people use legal services and offer the best way to service that need. A successful model will also have a customer-centric approach; be able to build key partnerships with brands that can help provide a leading service as well as have the technical knowledge. We have been able to build, not only scale and process but our knowledge of the customer journey. We do this throughout the BGL Group, most recently in Minster Law. We have been able to apply market logic from the insurance sector to our legal services and most importantly, we have been able to invest. One of the investments is to develop online legal services. This requires a huge investment into website capabilities, applications and mobileready sites. These have to be easy-touse and appropriate. A mobile journey and self-service offering has to be right and if it is, the customer wins. It’s quite an exciting time to be working in the legal services sector and we’re making sure we partner with sector leaders (such as Premex, the National Accident Helpline and bike specialists, amongst others) to ensure customers get ‘best in class’ services, consistently and across the board. David Downie is the Group Director of Legal Services at the BGL Group.

MC // November 2013

Features

5 minutes with... Des Hudson, Chief Executive of The Law Society Q: Has the industry changed drastically since you started working in it? A: Since I qualified as a lawyer the industry has changed drastically, even since I joined the Law Society in 2006 the industry has experienced significant changes. These changes have accelerated even further over the last three years or so. This is due to a combination of the recession, the changes in the sophistication of consumers and the beginnings of the impact from the Legal Services Act 2007 after the introduction of ABSs. Q: What has been the key positive or negative impact of change in your market? A: The key positive is that English law continues to go from strength to strength, so the power of our major international firms and our judicial system continues to adapt and to meet the needs of a growing international market. The big negative for me has been that the changes that this government has made in terms of LASPO and the changes with the Jackson reforms and the wider personal injury sector are very serious backward steps in terms of access to justice.

Q: Did you plan to be in the profession? A: Yes, I did, I made a conscious choice to study law. I would have hoped originally to have been a barrister but I chose to become a solicitor instead. Q: Who inspires you and why? A: I don’t subscribe to the idea that there is one role model out there that I have as a mentor or inspiration, but one of the things I do find inspiring is that in my job I have the privilege of meeting lots of lawyers in different spheres - from very small humble high street practices right up to the major international lawyers. It is the qualities of those individuals that I meet that I am impressed by, I find that quite inspiring. Q: If you weren’t in your current position, what would you be doing? A: I would be having a much more relaxing and less stressful time, probably pursuing a more plural career. I sit as a volunteer on a charity as a trustee and I find that very fulfilling. I also sit as a lay member for the institute of the faculty of actuaries and for the taxation disciplinary board and I find my involvement with that extremely stimulating. If I wasn’t doing this I would definitely like to do more of that sort of work. www.lawsociety.org.uk

Record-breaking growth Personal Injury heavyweight enjoys post-Proclaim growth explosion

irms that embrace innovative and efficient practice processes and IT are the law firms recording exponential growth and making the news headlines. Asons Solicitors is one of those breaking its own growth records doing just that; investing in processes during one of the most challenging time for legal service providers. Asons Solicitors is one of North West’s largest firms, founded only five years and now employing 250 members of staff based at its central Bolton premises. The firm implemented Eclipse’s Proclaim Practice Management software

MC // November 2013

solution at its inception in 2008, when there were just three employees (equating to a staff growth to date of over 8,200%). Proclaim is utilised by all Asons staff, the system providing a core centralised solution for the full range of injury claim types - from complex high-value cases (Asons recently won a six-figure settlement for a client, after a significantly lower initial insurer offer) through to minor RTA claims.

“The personal injury sector is fluid and challenging - the right software solution, one that is flexible and adaptable, is utterly vital” Proclaim has enabled the firm to structure its business so that 88% of staff are revenue generating, with

only 12% dedicated to ‘support’ functions. Future strategic aims include the expansion of its industrial disease team to be the UK’s largest (it currently numbers 110 staff), and the implementation of a dedicated clinical negligence department. Imran Akram, CEO at Asons, said: “Our aim right from day one was to build a sustainable and solid business. The personal injury sector is fluid and challenging - the right software solution, one that is flexible and adaptable, is utterly vital. Proclaim has provided us with the power to continually enhance our processes, drive out waste and increase margins.” For further information, please contact Darren Gower (Head of Marketing) at darren.gower@ eclipselegal.co.uk, call 01274 704100 or visit www.eclipselegal.co.uk

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