Linking the Industry Together
January 2014 | Issue 05 | ISSN 2051-6495 Complaint handling: Has the Consumer Insurance Act made any real change to customer experiences of the insurance market? Ant Gould reports Arms to rest: Clinical negligence lawyers join new Society, putting the competition aside to ensure healthy practices
“Changes to the costs regime are just part of the picture for us. The future is exciting and we are embracing change” Amanda Illing Modern Claims Magazine | January 2014 | Issue 05
Amanda Blanc “A business should have ethics at the heart of it and as a consequence of things like PPI, we have now got extremely tough regulation that is what we deserve for where we are now”
Supported by Charlton Grant
Association of Regulated Claims Management Companies
Sponsored by
A CENTURY OF PROFESSIONALISM
E C L I P S E
ALL YOU
NEED IS At LV= Broker we support our brokers with a wide range of personal and commercial products. This allows us to build meaningful relationships with our brokers. Relationships that stand the test of time. You’ll love LV= Broker!
LVbroker.co.uk @LV_Broker 21338615 11/13
LV= Broker
Introduction
W
hile the New Year always provides an opportunity to ask ‘what do we as a business want to be and how are we going to get there?’ the unprecedented scale of reforms in 2013 have already required that claims lawyers, experts and insurers have conducted this process already. A significant proportion of the readers I have met and spoken to in recent months have told me they have concentrated efforts into investigating the ‘true’ needs of the customer to ensure their brand vision, service offering and marketing efforts are more meaningful than ever before and create a clear differentiator to the market. That’s why this issue has a clear focus on identifying what the customer really, really wants (with a pan-sector response to that very issue on page 59) and an undertone of what organisations need to be healthy in 2014 onwards ensuring they are there to protect and represent customers to offer a speedy, proportionate and meaningful claims resolution. All of our interviewees, from our cover star, Amanda Blanc, CEO of AXA insurance to Stephen Webber, President of the Society of Clinical Injury Lawyers, agree that organisations need to be in the best possible shape, armed with certainty in order to deliver high quality, expert services for customers, whether they be a legal, insurance or expert-based brand. The positive aspect of customer focused-delivery is, of course, joined by often overwhelming regulatory requirements for effective complaints handling. The two have to be balanced. Those at the front line have been working hard with both the FSA and SRA this year to
03
ensure regulation is both meaningful and meets the needs of the consumers, which is why the Chartered Insurance Institute has conducted its own research, Ant Gould reports (page 7). Listening to the customer is one of the biggest exercises to undertake when defining brand value and vision but there are also great lessons to be learned by sharing information across the sector, as our expert columnists would attest. From the experience of referral-based experts, insurers and lawyers to the claimant clinical negligence lawyers who have downed spears to share best practice and knowledge on costs budgeting and proportionality rulings, this issue is filled to the brim with opportunities to tap into the business management and model advice from parallel operators. Of course, if you have your own thoughts, experience, best practice and procedure to to share, please let us know. Unfortunately this is my last issue as Chief Editor of Modern Claims as I am off to pastures new but I leave you in the very capable hands of Charlotte Parkinson, Group Editor (charltotte.parkinson@charltongrant.co.uk). It has been a great honour to be on the launch team for this fantastic magazine, now veering towards its first year in publication and to announce a fantastic Modern Claims conference line-up set for 25 March 2014 at Stamford Bridge (Chelsea FC), London, which will be chaired by Tim Oliver, CEO, Parabis Group (to book, visit www.modernclaimsevents.co.uk). I have no doubt that both the claims sector and Modern Claims will go from strength to strength in this exciting, more collaborative, if not challenging new era!
Emma Waddingham, Chief Editor
Modern Claims Magazine
Issue 05 – January 2014 | 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 Sarah Peel Design Richard Berry
Modern Claims Magazine is published by Charlton Grant Ltd ©2013.
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 // January 2014
04
Contents
CONTENTS 03-09 Intro & THE News 7 Ant Gould talks news
This year’s Chartered Insurance Institute Underwriting Faculty New Generation Group decided to test if the Consumer Insurance Act has made any difference to customer experience, as Ant Gould reports.
17 Amanda Illing, Hardwicke
11-22 The INTERVIEWS 11 Amanda Blanc, AXA
The CEO of AXA’s Commercial Lines and Personal Intermediary speaks to Charlotte Parkinson, Modern Claims about managing broker relationships, impact of change on the consumer and the image of the Insurer in the claims market.
Emma Waddingham speaks to the new President of the Forum of Insurance Lawyers (FOIL) about the lay of the land for defendant firms post-Jackson and what the now more vocal organisation has planned for another reform-filled year ahead.
Clinical Injury Lawyers
Emma Waddingham interviews the President of the Society of Clinical Injury Lawyers (SCIL), a new organisation designed to arm claimant clinical negligence lawyers with the tools, techniques and best practice to support their business models and, ultimately, claimants in an increasingly uncertain market.
Alan Strange Underwriting Director LAMP Group Limited Andy Watson Chief Executive Ageas Andy Whatmough Director S & G Response Ant Gould Director of Faculties Chartered Insurance Institute Anthony Hughes Solicitor Bippon Vinayak Chairman & CEO Doctors Chambers
MC // January 2014
Bruce Bourne Bruce Bourne Associates Catherine Smith Operations Director Wolf Law Solicitors Chris Marden Director Keystone Craig Budsworth Chair, MASS & RTA Partner, Glaysiers Darren Gower Marketing Director Eclipse Legal Systems David Johnson President FOIL David J Williams Managing Director, Underwriting AXA Insurance Dez Derry CEO mmadigital
20
29
Editorial Columnists Alan Nesbit Managing Partner Nesbit Law Group & Chairman, ARC
14
20 Stephen Webber, Society of
14 David Johnson, FOIL
Despite being one of the most flexible creatures in the legal claims sector, the modern Bar now faces increasing competition with their costs and role squeezed even further in civil litigation, so how do chambers react? Emma Waddingham speaks to the awardwinning Chief Executive of Hardwicke barristers’ chambers, Amanda Illing, to find out.
Donna Scully Partner Carpenters
Michael Davidson Head of Strategy & Sales Goldsmith Williams Solicitors
PJ Kirby QC Barrister Hardwicke
Eddie Longworth Sales & Marketing Director Parabis Claims Solutions
Nicholas Gordon Consultant For Mills & Reeve LLP On behalf of Willis UK Retail
Rob Cummings Policy Advisor, Motor ABI
Howard Dean Partner Keoghs LLP
Nik Ellis Managing Director Laird Assessors
Russell Thompson CEO Eclipse Legal Systems
Jim Toole Operations Director First Response Law
Patrick McGuire Partner Thompsons Solicitors
Steve Rowley Business Development Manager Allianz Legal Protection
John Latter ACII Director of Technical Centre, UK Claims Zurich Insurance plc
Peter Horton Chief Operating Officer - GI LV
Tony Rand CEO Vamco
Jonathan Appleby Head of Business Development Lyons Davidson
Peter Parry Managing Director Independent Accident Investigations
Zoe Holland Managing Director ZEBRA Legal Consulting
Martin Andrews Director General Credit Hire Organisation
Phill Witterick Commercial Director Carpenters
Contents
23-41 The Opinions 24 Sector Soapbox: fixing the system
Craig Budsworth, MASS & Rob Cummings, ABI
David Johnson, FOIL
27 Next wave of reform
Peter Horton, LV=
John Latter, Zurich Insurance & Howard Dean, Keoghs LLP
29 A question of cover
Chris Marden, Keystone
Russell Thomson, Eclipse Legal Systems
31 Costing the case:
Is the future any clearer? PJ Kirby QC, Hardwicke
33 Wise advice
33 A tool for proportionality
Bruce Bourne, Bruce Bourne Associates
Nik Ellis, Laird Assessors
Dez Derry, mmadigital
37 A lesson in protection
Paul Fox, XL Group
37 DBA on demand
Nicholas Gordon, Mills & Reeve LLP
Modern Claims asked its group of legal experts how, in the wildly changing claims landscape, do lawyers stay on top of driving their business plan forward and what tools do they need in order to attract investment and keep staff morale high. In a post LASPO world, brokers have an array of choices before them, Phill Witterick explains why personal lines brokers now need to be ever more diligent when choosing the right claims management provider.
Alan Strange, LAMP Insurance Limited
How do insurance policy and legal claims specialists find out what really matters to customers and, importantly, what do they do with that information? Emma Waddingham reports.
39 A shrinking market
62 5 mins with…
41 Who do you think you are kidding,
62 Enabling excellence
Tony Rand, Vamco
Mr Witness…
Trevor Gilbert, CEO, Witness Box (a legal training firm)
41 Is the ‘underdog protector’ age over?
44
59 What the client really, really wants...
39 Bespoke demands
Scottish independence could offer a chance to continue to lead the way for the rest of the UK in EL claims and revise the Enterprise Act for Scotland but, asks Patrick McGuire, has it recognised the opportunity?
57 Choose wisely
35 Digital contenders
35
51 Tools of the trade
Peter Parry, Independent Accident Investigations
35 New era referrals
Steve Rowley takes an in-depth look at recent developments in motor legal expense insurance and questions how the customer will be impacted in the aftermath of reform.
49 Man in tights
31 Real brand value
For the everyday consumer, credit hire can offer a much-needed lifeline in difficult times and, as Martin Andrews explores, it’s not just footballers reaping the benefits.
47 Post LASPO value?
29 Costs Chaos
David Williams, AXA Insurance
43-62 The Features
44 Playing ball
27 Costs specialists: boom or bust
05
Jonathan Appleby, Lyons Davidson How niche PI firm, AMV Law, has utilised Eclipse’s Proclaim Practice Management solution to achieve and build on its award-winning ‘excellence’ status.
49 MC // January 2014
HORWICHFARRELLY.CO.UK HORWICHFARRELLY.CO.UK
TEL: TEL: 0845 0845 388 388 3585 3585
HORWICH FARRELLY
London calling: We We have have increased increased our our national national reach reach with with aa new new location location in in the the heart heart of of London, London, meaning meaning industry industry professionals professionals can can gain gain greater greater access access to to our our expertise. expertise. If If you you are are looking looking for for more more than than just just aa legal legal adviser adviser and and aa need need aa partner partner which which can can help help you you devise devise effective effective claims claims strategies, strategies, call call us us today today on on 0845 0845 388 388 3585. 3585. LONDON LONDON The The St St Botolph Botolph Building Building 138 Houndsditch 138 Houndsditch London London EC3A EC3A 7AR 7AR
LO LO N ND DO ON N // M MA AN NC CH HE E SS T TE ER R // SS H HE EF FF F II E EL LD D // L L II V VE ER RP PO OO OL L
OUR OUR SERVICES SERVICES INCLUDE: INCLUDE: • • Insurance Insurance • • • •
Credit Credit Hire Hire Costs Costs
• • • •
Fraud Fraud Claimant Claimant
• • Claims Claims Handling Handling
Ant talks news
07
Ant talks News… In April the Consumer Insurance Act was introduced as part of an initiative that (in the words of the Association of British Insurers) would provide customers taking out insurance products with added peace of mind that their claims will not be declined if they unknowingly fail to disclose information to their insurer. This year’s Chartered Insurance Institute Underwriting Faculty New Generation Group decided to test if the Act has made any difference to customer experience, as Ant Gould reports.
T
he insurance industry is always quick to point out that its reputation amongst the general public and its coverage in the wider consumer media is unfair, insisting that in the vast majority of cases customers are very satisfied with the service they have bought. However, the fact remains - no matter what your view of the insurance industry - that there is room for improvement, particularly in the area of personal lines. That’s if the number of complaints being upheld by the Financial Ombudsman Service (FOS) is anything to go by.
The Consumer Insurance Act will: • Place a duty on insurers to ask customers all relevant questions about the specific information required at point of sale • Provide legal protection for customers that claims will not be declined for non-disclosure unless information is deliberately or carelessly withheld or misleading • Apply to all personal insurance, such as home, car and travel insurance, life, critical illness and income protection insurance, health and pension annuities. • Apply no matter how insurance is purchased, be it online, by telephone or face to face. Source: Association of British Insurers
In April 2013, the Consumer Insurance (Disclosure and Representations) Act 2012 (CIA), produced after a lengthy consultation process, came into effect. It had the aim of putting the focus on providers of consumer general insurance products to clearly deliver clarity of terms to their customers and be justified where issues of non-disclosure arise. As the Association of British Insurers, said: “We want customers to take out insurance policies with the confidence
“In the main, consumers are not complaining about problems the CIA is designed to address, citing that of all the decisions reviewed, only 17% were related to matters being tackled by the provisions of the Act… only half of the complaints reviewed would be affected by the new legislation”
that they are covered. By placing a legal duty on insurers to ask customers all relevant questions at point of sale, people will know exactly what they need to disclose upfront.” Reputation management The 2013 Chartered Insurance Institute Underwriting Faculty New Generation group (made up of eight individuals from across the insurance industry), who as part of the year long programme are asked to run a project of their own choosing designed to change something for the better, spent their year looking at the impact of the CIA. It was the group’s aim to understand if, in its words, the CIA goes far enough in terms of improving customer experience. Before it undertook the research, the group firmly believed the Act presented an opportunity for substantial positive change for consumers or that there is a very real risk the industry would rest on its laurels, so that consumer perceptions wouldn’t change. As the group report says: ‘If the industry gets this right, customer satisfaction will rise, costs in dealing with complaints will fall and loss ratios will fall.’ Analysing the Act To try and test the effectiveness of the Act, the group
MC // January 2014
08
Ant talks news
decided to look at general insurance complaints (non payment protection insurance) and whether the trend towards an increase in referrals to the FOS - the last point of appeal for consumers when a disagreement occurs – showed any signs of being reversed following the changes. The group’s final report, due to be published on the CII website (www.cii.co.uk) in January, tries to gauge what has changed for consumers and what has changed for insurers in the wake of the Act. It also tries to evaluate if the CIA worked as originally envisaged and to identify what else the insurance industry could do to assist clarity and certainty for consumers. Over the summer, the group analysed the complaint data judgments published by the FOS for the period from the 1 April to 8 August. The sample was limited - as the data contains only cases that reach an FOS decision stage and the FOS has also not published data from cases prior to 1 April 2013. Equally, there is also of course often a significant delay between the initial consumer claim and an eventual Final Adjudication decision. However, despite the limitations of the data available, the group believes that over two years on from the drafting of the impact assessment and seven months on from the implementation of the Act, it is possible to make some preliminary judgements about the success of the CIA in terms of its delivery against its stated goals. Meeting the redress needs of consumers? The group’s main finding was that, in the main, consumers are not complaining about problems the CIA is designed to address, citing that of all the decisions reviewed, only 17% were related to matters being tackled by the provisions of the Act. It adds that even in those areas where the CIA would be expected to make a real difference – non-disclosure and misrepresentation – only half of the complaints reviewed would be affected by the new legislation. Perhaps not surprisingly, by far the greatest proportion of complaints arose from ‘Remedy of Insurer’; that is, how the insurer chose to settle a claim. Whilst it might not be surprising that most complaints arise at the claims stage – the moment of truth for customer and insurer alike - it
Summary of the CII Underwriting Faculty New Generation Group findings • Of all the FOS decisions reviewed, only 17% related to matters being tackled by the provisions of the CIA • Even in those areas where the CIA would be expected to make a real difference – non-disclosure and misrepresentation – only half of complaints reviewed would be affected by the new legislation. • The biggest proportion of cases related to issues arising at the claims stage – CIA has had negligible effect on these levels so far
MC // January 2014
“Perhaps not surprisingly, by far the greatest proportion of complaints arose from ‘Remedy of Insurer’; that is, how the insurer chose to settle a claim… it is perhaps disappointing that only 3% of these complaints could be addressed by the Act” is perhaps disappointing that only 3% of these complaints could be addressed by the Act. As the group’s report states: ‘On the basis of our data, the inevitable conclusion is that if insurers want to drive down complaints, they need to be looking at issues beyond CIA compliance.’ The group adds that the second main benefit of the Act was its intended impact on the customer experience. It was assumed the Act would bring clarity to the law; insurers would know when the Ombudsman was likely to find in favour of the complainant and would settle complaints before they reached the FOS. This would lead to more satisfied customers and, ultimately, to increased sales. Unfortunately the group’s research suggests that at this early stage at least, these ambitions are being frustrated. Their impact assessment suggests that the proportion of complaints upheld by the FOS should be the yardstick for this objective – if the law is clear, and insurers know when they are in the wrong, then merited complaints should be resolved long before they reach the FOS. On the group’s analysis, complaints to the FOS about CIA related matters were more likely to be upheld than complaints about non-CIA related issues (56% upheld rate versus 44%). The group also pointed out that although the Act has only been in force since April 2013, insurers have been aware of its provisions for sufficient time that unfamiliarity cannot account for this. Reform fit for purpose If the intention of the Act was to provide a definitive basis for determining complaints, then the group believes it is clear that there is still considerable room for improvement: ‘If insurers really want to make inroads into the number of consumer complaints they will need to consider a much more radical set of reforms.’ Having analysed the FOS data and looked at the workings of the CIA, the group put together a range of recommendations for the insurance industry to consider. These are explained in more detail in the report but some of their recommendations include that the definition of
Ant talks news
‘Consumer’ should be harmonised across the CIA, the Financial Conduct Authority and the FOS - including a consistent small to medium-sized enterprise (SME) customer definition. Another recommendation is focused on insurers internal structures and processes applied in particular to the interpretation of evidence - which the group believe, if addressed, would mean a higher than average likelihood of a good solution for insurer and customer alike. In the final analysis, the group’s view is that, to date at least and based on the only data available, the CIA has had limited consumer impact and that in the broader perspective the Act itself did not go far enough. The report is not a blueprint of what the insurance industry should do to fill this gap but it does have some useful recommendations and challenges for insurance professions to wrestle with. That aside, perhaps the most heartening aspect of their report is the very fact that the future underwriting leaders of tomorrow are already putting customer outcomes at the very heart of their thinking – good news for everyone. Ant Gould is the Director of Faculties at the Chartered Insurance Institute (CII) www.cii.co.uk
09
2013 CII Underwriting Faculty New Generation Group Members Richard Sharples ACII Chartered Insurer: NFU Mutual (Regional Senior Technician, Underwriting) Chris Sendall ACII Chartered Insurer: Ecclesiastical (Casualty Underwriting Consultant) Chris Luscombe ACII Chartered insurer: Allianz (Manager, Property Underwriting) Patricia Tzortzopolous Dip CII: QBE (Senior Compliance Manager, Europe & International) Blair Arnot ACII: RSA (Portfolio Management – Liability, Construction & Engineering) Rob Forshaw Cert CII: Ageas (Household Schemes Manager - Brokers) Ian Stammars Dip CII: LV (Senior Home Underwriter) Adam Hyman Zurich Municipal (Technical Underwriter)
Trust Forths to come up trumps for you this year. Whatever hand you’re dealt in 2014, remember you can always rely on Forths for nothing but the very best advice and expertise on Personal Injury cases of all sizes. Contact us today and discover how Forths can make a real difference to the total claimed in any action.
Leeds: Manchester:
0113 387 5670 0161 237 0699
www.forthsonline.co.uk
KEEP YOUR CLIENT HAPPY – by settling their dispute painlessly. A happy is client is potentially a repeat client and with the right mediator your client will be happy. They’ll face less stress while you can maintain control of their case and manage your on-going relationship with them. As a member of the CIArb and RICS Bruce has exactly the right experience and knowledge to help you achieve a satisfactory settlement in property, workplace and company disputes. Bruce’s style is so successful because he is articulate, commercially astute and solution-focussed.
“I was delighted to work with Bruce in a commercial dispute. The issues were complex and trial seemed inevitable. Bruce’s pragmatic approach and determination helped to resolve the issues efficiently and painlessly” Call me today on 01372 878841 or email: bruce@bbamediation.co.uk to help solve your client’s disputes.
Bruce Bourne A S S O C I A T E S
Commercial and Community Media tion
www.bbamediation.co.uk
INNOVATIVE CLAIMS OUTSOURCING SOLUTIONS
Interview with... Amanda Blanc
11
Interview with... Amanda Blanc The CEO of AXA’s Commercial Lines and Personal Intermediary speaks to Charlotte Parkinson, Modern Claims about managing broker relationships, impact of change on the consumer and the image of the Insurer in the claims market.
Q A
The ABI has recently published a guide for small-medium sized enterprises (SMEs) on Employers’ Liability and Public Liability insurance. Will trends in these cases continue following reform? Really, it is too early to say but what is important is that SMEs have access to this kind of information. Too often in the past they have not known enough to protect themselves and the work by the ABI is really vital. It is so important that, as a profession, we make the expertise that we have readily available to our end users and SME clients. At AXA, we have focused a huge amount on this in the last 24 months. The most precarious time for SMEs and when they need the most support is during their development and we are here to help them.
Q A
How important is it for AXA as a brand and as an organisation to manage broker relationships. How is AXA currently doing this? If we didn’t manage our broker relationships, we wouldn’t have a business. Around 90% of the business that I look after is intermediated and it is so important for us to have good relationships with the broker bodies. We manage these relationships in lots of different ways; we have extended our branch network over the last few years and we now have 11 branches in total. We empower these structures by ensuring local brokers have access to decision makers at the local branches, meaning decisions can be made quickly and with certainty. We help the brokers to grow their business and grow their people and we give them lots of marketing support in order to do this (building websites for example). We have also undertaken a huge investment in management training for brokers in order to give them the opportunity to grow their own people. Not every broker wants to see us all the time and for those who don’t, we have made it easy for them to do business with us online. We try to make decisions quickly, be upfront and honest and if we can’t do something we say so because the worst thing is a long no, the only way we can do business is by being open.
Q A
What does BIBA offer its members and the consumer in terms of feedback, support and advice and how important are organisations like BIBA and the CII to the wider Insurance industry? Obviously, I am slightly biased where the CII is concerned but BIBA has done a fantastic job over the last five years or so. The BIBA has built the profile of the broking community and it has
“As an insurance profession, we need to be a lot clearer with our communications, full stop”
“I do agree that we have a significant issue with some of the claims management companies and I would say that this is inevitable given what the industry has just come through” now got to the point where the Government will look to consult BIBA before making major changes; that can only be a good thing. I do think the Government genuinely listens to BIBA members now, as we have seen with the recent consultation on the changes. BIBA has now reached a stage where it has an association that does what its members want it to; some associations do forget that that is their purpose. BIBA has also done a very good job of making the public aware of specialist brokers and the handling of non-standard risks. As a profession, we are very lucky to have a very strong CII in terms of route and branch operations. Last year, when I was President, I visited lots of the local branches and I was really impressed with how engaged and passionate they were. The professionalism initiative has been great, because, although not everybody agrees with it, there is a debate on it. If there is a debate it shows people are getting passionate about professionalism and I think that is really important, at AXA, we certainly have this debate on the agenda.
Q A
How do you qualify customer satisfaction (other than an increase in policies sold), how important is advertising in terms of positioning yourselves as a customer-facing brand? We have basic tools for measuring customer satisfaction, like looking at the length of time taken to settle a claim and how long it takes to insure the policy. We also have two other key measures, one of which is Customer Scope, which is an AXA wide
MC // January 2014
12
Interview with... Amanda Blanc
Amanda Blanc
“There has been countless research which shows that companies, who behave in a moral way, outperform peer-groups, maybe not in the short term but certainly in the medium to long term; companies that are exploitative will not survive” group initiative that provides methods of independently validating customer satisfaction. Another method we use, Investors in Customers, was started about two years ago. The process is conducted by an external organisation that comes in and talks to customers, staff and the brokers and comes up with an overall satisfaction rating. We receive a star rating out of three for this and while most financial services businesses do not do well with this, we have improved our rating significantly from last year and are now at two stars; obviously our aim is to get to three but this takes time. As far as our marketing is concerned, it is very important to us, even in an intermediated business because if the customer is seeing an AXA branded campaign, they will be more comfortable with that. A brand campaign on its own is never effective; it must be supported with specific advertising to back up the message of the wider campaign and we have done this with our most recent ‘little things mean a lot’ campaign.
MC // January 2014
AXA Insurance, CEO (Commercial Lines & Personal Intermediary) Born 1967, Amanda was appointed to the Board in March 2011 as Chief Executive Officer, AXA Insurance Commercial Lines. Following a review of the business in July 2012, her remit was broadened and she was appointed Chief Executive Officer, AXA Commercial Lines and Personal Intermediary. This is Amanda’s second career within AXA where she was previously Regional Director in the Commercial Lines Intermediary business from 1999 to 2003. Amanda rejoined AXA UK from Towergate where she had worked since 2006 as Deputy Group Chief Executive Officer, with responsibility for the leadership of their retail broking operations including regional offices, networks and e-trading businesses. Prior to joining Towergate, Amanda was Customer and Services Director at Groupama for 2 years and previously held posts at Norwich Union. In addition to her CEO role, Amanda also sits on AXA’s Global Property and Casualty Board and has a non-executive position on the board of AXA Art Insurance Limited. Amanda graduated from the University of Liverpool and has an MBA from the University of Leeds. In 2008, she was voted the winner of Women in the City Award. In addition, she is a Chartered Insurer and served as President of the Chartered Insurance Institute from July 2012 – July 2013. Amanda is married with 2 daughters and lives in Hampshire.
Interview with... Amanda Blanc
13
“There have been cases, not just in the case of PPI, where products have been sold that shouldn’t have been and we have all got to be big enough to say, ‘that shouldn’t have happened and it won’t happen again’ ”
Q
The insurance industry has recently received a lot of negative press following extensive reform to the wider claims industry. How and what is AXA doing to rebuild broken relationships and trust with solicitors and consumers? I wouldn’t agree that we have a problem with customer relationships; I do agree that we have a significant issue with some of the claims management companies and I would say that this is inevitable given what the industry has just come through. As an insurance profession, we need to be a lot clearer with our communications, full stop. Insurance policies tend to be over-complicated and when we have a Surge Event, as we did recently in the UK, we know that a high number of claims will follow. The reason insurance is there is for unforeseeable events, not for things that are preventable but as a profession we need to be much better at explaining, at the point of sale, what is and what is not covered. This would clear the view of some customers that we try to avoid claims which, clearly, we do not do. In that way, while I don’t think we have broken relationships with customers, we do need to build confidence.
A
Q A
You have talked of a ‘crusade of morality’ in the insurance industry, how important is this to you and AXA or is it simply about the bottom line? To me, this is fundamental, as a CEO, I have a duty to the shareholders to deliver return and that is clear but I do not accept that that return should be delivered at all costs. I firmly believe that I need to have an equal duty to employees and also to
customers. For employees, that duty is to give them the necessary training and development and for the customers, that duty is to give them the product and service that they actually need. There has been countless research which shows that companies, who behave in a moral way outperform peer-groups, maybe not in the short term but certainly in the medium to long term; companies that are exploitative will not survive. With the rise of social media, a company’s performance is so available online that people easily find out about bad service.
Q A
Has a personal/local approach been lost/damaged following reform? I don’t think that we have lost a personal or local approach; the Jackson reforms were absolutely critical and couldn’t have come soon enough as far as we were concerned. With customers, we do need to ensure that we operate at a local level but also ensure the business is as profitable as possible.
Q
What are insurers doing to combat the recent and ongoing PPI scandal and do you think the insurance industry as a whole has acted in an unprofessional manner with regards to this? Do you think government and regulatory bodies are doing enough to stop this? Insurers did not create the PPI scandal and on the whole it was not the insurers who behaved unprofessionally here, it was the banks. The banks miss-sold the products but the insurance industry does have to take its share of the blame because ultimately it was us that provided the capacity for it to happen. There have been instances, not just in the case of PPI, where
A
“A business should have ethics at the heart of it and as a consequence of things like PPI, we have now got extremely tough regulation and that is what we deserve for where we are now”
products have been sold that shouldn’t have been and we have all got to be big enough to say, ‘that shouldn’t have happened and it won’t happen again’. The CII has ethical guidelines but a business should have ethics at the heart of it and, as a consequence of things like PPI, we now have extremely tough regulation - which is what we deserve for what has happened in the past.
Q
What are the differences/ similarities of how AXA works with its commercial and personal lines brokers? Personal lines and commercial lines were joined at the start of this year, why did you decide to make this decision? There is no difference at all in how we deal with our commercial and personal lines brokers, the strategy and essence of what we are doing is the same. Clearly, there are differences with the products that they sell but since the start of the year we have had that one touch point with them. We have made it a lot less complicated and there is now a personal lines expert in every branch. It has been a very good year for pulling all our services together and next year will be when we start to place some numbers around that.
A
Q A
How have price comparison/ aggregator websites impacted the insurance industry in terms of competition and consumer knowledge? Quite rightly, it has made consumers more demanding and from their perspective, it is the perfect solution in that they have options delivered to them all on one page. The downside is that these websites appear to be largely price focused, without necessarily highlighting any differences in cover. With home insurance in particular, there can be very wide ranges of cover and it is important that customers understand what they are buying; work certainly needs to be done here. From a consumer perspective though, anything that demystifies the insurance industry has got to be a good thing and whether or not insurers like it is something we need to get over.
MC // January 2014
14
Interview with… David Johnson
Interview with... David Johnson Emma Waddingham speaks to the new President of the Forum of Insurance Lawyers (FOIL) and Partner at Weightmans, about how a lifetime of meeting insurer panel fixed fee requirements has put defendant firms ahead of the game post-Jackson and what the more vocal organisation has planned for the year (filled with further reforms) ahead.
Q
Congratulations on your new role as President of FOIL. What have the last 12 months brought for members – are things as shaky in the defendant lawyers’ camp as in the claimant? The short answer is that, 12 months on there has been an awful lot of change. In the dayto-day, Jackson has dominated but there are many elements that are a slow burn in terms of outcome. CPR 3.91 has had a more immediate effect, enhanced by the Mitchell judgment at the end of 2013. However, Jackson is also set against a background of ABS, a model being embraced by the claims industry in earnest. Combined, the scale of change is quite considerable, for all practitioners. Are things as shaky for defendant lawyers? The impact on the defendant side has been less significant than for those on the claimant side of the fence. There are fundamental changes for claimant firms to address and quickly, whereas defendant firms have always had to adapt their systems and business models to compete, ensuring fixed fees and efficiencies for insurer clients. Defendants were a fair way down the road already, before Jackson. Claimant firms now have to play catch up, adapt in similar ways but at a much faster pace. The impact for claimant firms is far more dramatic than for defendants.
A
Q
Almost 10 months on from the Jackson reforms and there is still great uncertainty about the future of claims. Do you expect practice / procedure and process to be clearer in the months ahead?
MC // January 2014
A
I think that clarity is key – having witnessed the judgment in Mitchell. Some camps have suggested there will be a more Draconian approach to procedure, others a more permissive one. In reality, many are left not knowing where they stand - this uncertainty is no good for anyone. Mitchell addressed some of the vagueness around CPR 3.9 but there are other issues on the horizon regarding dishonestly on QOCS. This, in my view, is highly likely to give rise to satellite litigation, as are issues surrounding costs budgeting. Costs budgeting is one of the most important areas of change that is only just beginning to be seen in day-to-day practice. Lawyers are still finding their way with it so there’s still a way to go…
Q A
What support has FOIL offered in the past year that has differed from previous years (especially in light of the reforms)? Two of FOILs stated goals are promoting best practice and ensuring members are up to date. With Jackson, this has been one and the same thing. FOIL members have received some excellent update material and I am looking to maintain that provision. Another pivotal role of FOIL recently has been in helping to shape the reforms, a process that is by no means at an end. What has been different in the last 12 to 18 months for FOIL has been this contributory role during the changes, to offer a strategy for the shaping of the reforms, which we now intend to push forwards for several years. Over the past two years we have demonstrated FOIL’s
“Defendants were a fair way down the road already, before Jackson. Claimant firms now have to play catch up, adapt in similar ways but at a much faster pace. The impact for claimant firms is far more dramatic than for defendants”
Interview with… David Johnson
15
“It is very easy to see claims and procedure as simply defined by others, something for defendants to have to comply with on behalf of clients. The reforms gave FOIL the opportunity to go beyond that and help shape procedure” ability to be the go-to organisation for the defendant lawyers’ perspective. Giving evidence to the Transport Select Committee on the whiplash consultation was a mark of FOIL’s current standing. We will continue to look to contribute and help shape the changes that occur in the year ahead.
Q A
What does FOIL mean to you? Has it changed along with recent reforms? I don’t think the reforms have, for instance, driven the progress of FOIL. It was in existence during the Wolfe reforms but it was however a very different organisation. It is very easy to see claims and procedure as simply defined by others, something for defendants to have to comply with on behalf of clients. The reforms gave FOIL the opportunity to go beyond that and help shape procedure, to offer its view on what is right and what’s wrong with the system. Over time, FOIL has worked to give a voice to defendant lawyers, formalising its structure and ability to do in recent years with the appointment of a permanent CEO and information officer. In addition, FOIL now has an expanded budget, allowing the organisation to move on from its former volunteer-run structure to one with a more professional footing.
Q A
What is the core focus for your presidential year?
I think the agenda, to some extent, is set by developments on the horizon. Satellite litigation, as I have already mentioned, is going to be keeping people busy and we need to ensure members are kept up to pace with the changes that affect them in their day-to-day practice as well as understanding the risk issues. The Ministry of Justice follow-up to whiplash is going to be very important in the coming year. FOIL is going to want to have a seat at the table to help shape that process, to ensure unintentional consequences are kept to a minimum. The devil will very much be in the detail in this particular issue. There are also internal issues to focus on. For example, I don’t think that FOIL has always
demonstrated its achievements and value to members to the extent it could have done. I will take steps to rectify that. All the recent changes see the claimant and defendant communities and their respective business models into a position where they are assimilate to a far greater extent. Both communities face similar concerns in term of efficiencies. With fixed costs on the claimant side for significant bodies of work, claimant firms are going to face an imperative to work more efficiently. Defendant law firms have faced this for some time. That presents a greater opportunity for FOIL to work closer together with other representative bodies, the Association of Personal Injury Lawyers and the Motor Accident Solicitors Society in particular.
insurers have been more inclined to outsource work than to keep it in-house. They do this to reduce overheads, be more flexible in determining who carries out their work and outsourcing also promotes competition for work. It also helps to maintain standards of service amongst defendant lawyers. For an insurer, taking ownership of a law firm will give rise to challenges and there may be some negative impacts from the insurers’ perspective, mainly as these models don’t promote the outsourcing benefits previously outlined.
Q
What impact will the government’s response to the TSC report (i.e. its proposal to ban pre-medical offers) have on the defendant litigation process, settlements and, ultimately, cost? Pre-med offers are portrayed as something insurers have come up with as a view to undercompensating claimants. I don’t think that’s the case. The vast majority of cases where pre-med offers are used look to avoid claimant lawyers’ costs – they are used in cases where these costs rack up quickly and often exceed the damages value of the claim. We don’t yet know whether pre-med offers will be addressed but it may be that the prevalence of pre-med offers diminishes as the introduction of fixed price costs takes effect.
Q
A
A
Q A
How have ABS Joint Ventures between historically claimant law firms and insurers – such as NewLaw and Ageas and broker, the AA – changed the goalposts for defendant lawyers. While contested work is still litigated by defendants, do the JVs blur the line for practitioners? Are there concerns these JV arrangements may lead to separate companies being set up to handle traditionally defendant work? Also, why have we not yet seen a wealth of ABS JVs established to handle claims where liability is contested – is this because the panel process is working? The emergence of some of these JVs, coming as they did so closely after the Jackson reforms took effect, along with the ban on referral fees, were widely interpreted as a way around the reforms. I think there’s a recognition that the ABS model is something insurers might consider however, defendants are vigilant and ready to react to this potential situation. The move for insurers towards JV is not seen as an inevitable or as something they will see as necessarily attractive. Neither is the competitive element an entirely new concern for defendant firms. ABSs are a new concept but defendant lawyers have always faced the possibility of insurers developing their own in-house teams. This is not entirely a dissimilar prospect. Historically,
Finally, does the recent ruling in Mitchell mean a return to more tactical litigation and will we see a rise in satellite litigation, as predicted by many in the past few days? I think in some instances we will see tactical litigation and the principle in Mitchell used as a weapon against opponents. In other cases you may see it lead to a greater degree of cooperation and pragmatism between litigants, who recognise there will be challenges for both parties during the life of any litigation. They may recognise that working together may, on occasion, represent the safer option.
1. Relief from sanctions
MC // January 2014
XL Group Insurance
Properties, transport, energy, art, manufacturing, insurance, aerospace, contracts or people. Whatever your world is made of, we’re here to help your business move forward.
MAKE YOUR WORLD GO xlgroup.com and MAKE YOUR WORLD GO are trademarks of XL Group plc companies
Interview with... Amanda Illing
17
Interview with... Amanda Illing Despite being one of the most flexible creatures in the legal claims sector, the modern Bar now faces increasing competition with their costs and role squeezed even further in civil litigation, so how do chambers react? Emma Waddingham speaks to the award-winning Chief Executive of Hardwicke barristers’ chambers, Amanda Illing, to find out.
Q
There has been a fair deal of talk that the Bar is even further behind solicitors in the bid to reorganise, restructure and meet new market conditions in light of the Jackson reforms – especially in terms of looking to meet cost conditions. Is this a fair assessment? Can the Bar really move forwards until the dust has settled or can they be more proactive in their approach to working with customers in the new claims landscape? Many barristers and their chambers indeed seem oblivious to the need to change the way they do business – they are already struggling and are unlikely to survive. Others, such as Hardwicke, where I am CEO, have long seen the need to innovate and adapt so that we can best meet the needs of our current and future customers. Changes to the costs regime are just part of the picture for us. The future is exciting and we are embracing change.
A
Q
Which section of the Bar is most ‘at risk’ in the new claims landscape? Those at the lower end of chambers or those with, say, five years plus call who have started to build a specialist practice but who might not have so much work readily available to them? What has Hardwicke put in place to support ‘at risk’ barristers or is it inevitable they will diversify? The ‘at risk’ barristers are those who take a ‘business as usual’ approach, unwilling or unable to adapt, whether just starting their careers or long-established. At Hardwicke, we recognise that different approaches will be needed by different people, depending on their particular market specialism. The common themes, however, include a closer focus on improving relationships with clients, flexibility in working to meet their needs, and charging approaches which suit the particular client and the particular case. We also place a real premium on providing a complete service, from the first email or phone call and from everyone involved – whether it’s the barristers actually providing legal advice or representation
A
“The traditional bar has resisted panels and panel appointments at their peril. They hang on to the notion of spot instructions coming from a solicitor acting for a single client. For us, that remains an important part of the mix”
Amanda Illing, Chief Executive, Hardwicke Amanda joined Hardwicke in July 2009, after nine years as the Practice Director at Matrix. Her role is to develop business and long-lasting relationships with clients. She takes responsibility for the career development of the barristers at Hardwicke, and her staff team. She is committed to meeting clients’ needs and providing solutions to engaging the right barrister for the right client/case, and working out fee structures to suit. Amanda was previously the Private Secretary to the Director of Public Prosecutions and a caseworker in the Crown Prosecution Service, handling cases such as the appeal of the Birmingham Six, and the first corporate manslaughter prosecution following the sinking of the Herald of Free Enterprise. Amanda was named the Eclipse Proclaim Modern Law Awards 2013, Non-Lawyer of the Year, is a Chartered Member of the Chartered Institute of Personnel and Development, a trustee of the Public Law Project (PLP) and a trustee of the London Legal Support Trust (LLST).
MC // January 2014
18
Interview with... Amanda Illing
“For us, closer working with clients, particularly larger clients, has included secondment of barristers into client organisations (including law firms, insurers, litigation funders and industry clients) to meet their longer term (but nonetheless temporary) work needs, as well as other cost-effective ways of working.”
or those working with them to ensure the client gets what they need. For us, closer working with clients, particularly larger clients, has included secondment of barristers into client organisations (including law firms, insurers, litigation funders and industry clients) to meet their longer term (but nonetheless temporary) work needs, as well as other cost-effective ways of working.
Q
How has the rise in the number of panel appointments across the corporate customer side of claims changed the nature of business development and customer care at the Bar? Are barristers more inclined now to see themselves as part of a bigger picture brand and champion all, rather than (as sometimes, even unintentionally, happens) just their own expertise when networking? The traditional bar has resisted panels and panel appointments at their peril. They hang on to the notion of spot instructions coming from a solicitor acting for a single client. For us, that remains an important part of the mix. But, increasingly, we have a team focus, bringing together a group of barristers chosen for their complementary skills and expertise to work alongside client teams. Increasingly, the primary relationship is organisation to organisation, rather than – as used always to be the case – individual to individual. Being on panels is now a core and vital part of our business activities.
A
Q A
Is the future bright or bleak for barristers and chambers in the claims industry and what sets the good ones apart from the rest? The claims industry is changing, fast. Many barristers will not survive in chambers and will consider going in-house or setting up alternative business structures of their own. However, those barristers in chambers who offer high levels of legal expertise and advocacy as part of a flexible, client-focused and modern
MC // January 2014
service can always thrive. For us, success means meeting our clients’ legal needs in a way that best suits them.
needed as the case becomes more complex – then we can help them to decide who they might instruct as part of their wider legal team.
Q
Q
A
A
Direct Access has brought its own plethora of business model and marketing problems. Is the Bar suited to the direct access route for personal injury / work-induced injuries and illness and clinical negligence claims? If not, why? If so, how do you juggle the needs of DA customers and the expectations of solicitors? For many, direct access (whether instruction direct from corporate clients, insurers, or public access from members of the public) has seemed like a threat. For us, it has been an opportunity providing a new way of meeting client needs but not in all cases. We believe strongly in a ‘mixed economy’ with instructions through solicitors always the core of our business. For us the priority is providing the service the client wants, on time, at a high quality and on the right financial basis, whatever the precise mechanism of instruction. Indeed, the mechanism of instruction will often evolve through the case, with a direct instruction client deciding that a solicitor may also be
“We believe strongly in a ‘mixed economy’ with instructions through solicitors always the core of our business. For us the priority is providing the service the client wants, on time, at a high quality and on the right financial basis, whatever the precise mechanism of instruction”
What does the historically referral-based Bar structure have to offer the wider claims arena (solicitors, insurers, brokers, etc.) about customer care and relationships as well as the need to cross-sell / cross-refer customers to other departments? The traditional referral bar structure (with its focus on oneto-one relationships between barrister and instructing solicitor) is still best for some cases. It can be flexible and light-footed, particularly for simple / short-lived cases or where clarity, independence and objectivity of bringing in a high quality lawyer from outside may be required. Yet the more complex cases or where corporate clients (such as insurers) have multiple cases, are often best-served by a broader-based longerterm business relationship involving bespoke teams of legal experts.
Q
How has civil procedure reform, joined by new entrants to market such as Riverview Law and other ABSs now looking to incorporate barristers into their onestop-shop fold, changed the role / direction and status of non-lawyers in chambers? (i.e. the need to become more commercially-minded and bring in as many efficiency-driven processes as possible to streamline the back office functions, therefore, reduced costs). One stop shops’ are an important new part of the legal market. But most customers – particularly business customers – still want the flexibility of putting together their own team of solicitors and barristers chosen to meet the needs of the situation, rather than simply accepting the package that is presented to them. Also, of course, many corporate clients want direct access to legal expertise (whether
A
Interview with... Amanda Illing
19
Amanda Illing was named ‘Non-Lawyer of the Year’ at the first Eclipse Proclaim Modern Law Awards 2013, suggesting that management vision and leadership at the Bar is stronger now than ever before.
“Many barristers will not survive in chambers and will consider going in-house or setting up alternative business structures of their own. However, those barristers in chambers who offer high levels of legal expertise and advocacy as part of a flexible, client-focused and modern service can always thrive” legal advice or advocacy) offered by barristers without the need for the litigation input which traditionally comes from solicitors - or where they have inhouse litigation expertise of their own.
Q
Do you envisage the Bar moving towards an ABS offering for some customer areas (such as defendant claims work) in order to compete for panel places in the future? What buy-in does this require in chambers and are barristers ready for such a move if necessary? What matters is the service we provide to our clients. Our business structure should enable that, not determine it. For many barristers, new structures and ways of working are seen as a threat. At Hardwicke we remain open-minded and ready to adapt to the opportunities they present, as the need arises. The opportunities for anyone
A
unwilling to consider change will become increasingly limited.
Q
Being named ‘Non-lawyer of the year’ at the Eclipse Proclaim Modern Law Awards 2013 was a great achievement, especially as most commentators (and often, the Bar itself) would argue the Bar is less likely to embrace change than in other areas of the legal industry. What has helped you to innovate services and potentially the vision for chambers and how will this be driven forwards to carve an even more solid foothold in the claims arena? I have spent 25 years in the legal industry, part in chambers, part not, but all in times of organisational change. I am now lucky enough to be at Hardwicke with its clear mission to innovate and remain at the forefront of delivering services
A
to its clients, particularly in the claims area. We have a great team of lawyers and non-lawyers within an organisation committed to being flexible as new market challenges and opportunities emerge. At the heart of that is close and ongoing dialogue with our current and prospective clients to ensure that we properly understand what they need by way of legal services - and how we can help them get it. Sometimes, that will require new ways of working. I thrive on embracing such change. To be named as ‘Non-lawyer of the year’ has provided exciting opportunities to help bring that about. Oh and it’s also rather nice to have the ‘winner’ logo at the bottom of my emails! 1. Modern Law is the sister title to Modern Claims, which focuses on all issues related to the business of law in the modern legal regulatory, practice and business model landscape. www.modernlawawards.co.uk
“We have a great team of lawyers and non-lawyers within an organisation committed to being flexible as new market challenges and opportunities emerge…Sometimes, that will require new ways of working. I thrive on embracing such change”
MC // January 2014
20
Interview with... Stephen Webber
Interview with... Stephen Webber Emma Waddingham interviews the President of the Society of Clinical Injury Lawyers (SCIL), a new organisation designed to arm claimant clinical negligence lawyers with the tools, techniques and best practice to support their business models and, ultimately, claimants in an increasingly uncertain market.
Q A
Why was SCIL formed and why now?
The timing is due to the Jackson reforms, a purely perfect storm of reforms that could affect the viability of specialist clinical negligence practices. The main focus of the Society, which now has over 150 member firms, is to cover key uncertainty and issues that affect the health and business of clinical negligence practices. The most pressing of these are the impact of legal aid cuts, the loss of recoverable success fees and insurance premiums. It is also key to our members that we look at proportionality definitions and costs budgeting as well as the harsher implementation of court directions, especially since Mitchell. SCIL is aimed only at decision makers in specialist CN firms that are, importantly, panel members of the APIL (Association of Personal Injury Lawyers) and / or AvMA (Association Against Medical Accidents) panels. We therefore attract department heads and senior members of clinical negligence specialists across the country to help them manage and address departmental and business concerns, such as the two main uncertainties, costs budgeting and proportionality. Proportionality is a complete unknown as the current rules don’t provide a definition. All we know is that there is work that can be reasonable and there is work that is necessary – but courts may still say that necessary work - an unavoidable factor in complex clinical negligence cases - is still not proportionate.
MC // January 2014
Q A
What practical steps has SCIL taken to support its members?
Since launching in early 2013, we’ve held a number of member meetings to give them the chance to share information on court hearing and costs budgeting issues, for example, so we can all see how things are moving forwards in the post-Jackson era. We have also pooled our resources into the preparation of documents for clinical negligence practices and have instructed a QC to prepare documentation, such as Post-Jackson CFAs. We have also arranged for ATE insurers to meet with members collectively and present their new policies and products so we know what’s available Post-Jackson.
Q A
Obviously there are a number of widespread concerns regarding Jackson but what causes the most concern, businesswise, for SCIL members? At the moment, our main focus has been on costs budgeting and assisting member firms in how to prepare those budgets, what to include, what documentation should be disclosed in the budgets and taking counsels’ advice as to what the issues would be. Part of the membership value is added by our ability to help members seek advice on cost budgeting hearings, if there was a global concern about issues, or recommending counsel from a panel of barristers. We aim to do this with any large-scale issue - if it is one that affects all the members then we will share that information. For example,
“At the moment we’re happy to share information. It’s amazing how adversity leads to such a reaction of solidarity amongst practitioners”
Interview with... Stephen Webber
21
“There are very good lawyers who do good specialist work, who abide by the regulatory rules and obligations of the profession – we need to communicate this to the public” there has been one instance where a County Court in an unreported case has asked for costs budgets on pre-Jackson issued cases. Of course that’s not the right procedure. We moved to inform the CJC to help correct that. Costs budgeting is still such a significant and a huge worry, as is proportionality, another one of the two headline focuses. We will have to wait until the Court of Appeal makes a decision on proportionality before we really know where we stand. My biggest worry is that when a client comes into the office today, we don’t know what the definition of proportionality is and by the time the case ends, it may come to light - so how do we know whether to take that case on and how do we best advise the client as to whether their £50k claim is proportionate in four years time? Of course it also depends on how the defendant acts. If they settle early then is that proportionate? It’s incredibly difficult. Lots of firms are looking at where to draw the line on which cost of claim to take forwards. It’s a difficult exercise.
that lack of speciality and whether they are the best people to be doing this type of work. Also, from the PI firm’s point of view, it’s a completely different business model to clinical negligence. The PI firm has to get a large number of claims in and process them quickly to get paid quickly. With clinical negligence cases you have to risk assess really carefully at the beginning to identify whether it’s a good case to run with. Then you spend a number of years processing the case, getting paid at the very end of it. Plus there are really expensive court and expert fees so it’s a much more expensive model for firms, therefore the business model and structure for clinical negligence has to be different to PI to accommodate for the process. A lot of PI firms that come in will find it’s not what they thought it was and then leave. This might also affect the ATE market. However, most ATE insurers are quite savvy and insure the firm, not the case, which is why they’re keen to work with SCIL members as they have a history.
Q A
Q A
If SCIL aims to keep clinical negligence practices ‘healthy’ is it then concerned by the number of personal injury (PI) firms moving into the market? Indeed. Another cause for concern is the number of PI firms coming into the claimant clinical negligence market. If you have a PI practice with an experienced clinical negligence panel member in it, then that’s one thing. If you have a PI firm with no clinical negligence experience entering the market then that’s a totally different issue. We take on a lot of cases at my firm where the wrong things have been disclosed, problems have occurred and you have to try to resurrect them. Because there has been a restriction in PI costs, in terms of the portal and fixed fees, you can understand why these firms move into clinical negligence but there’s great a concern about
Is ATE more specialist than before in clinical negligence? Are ATE insurers moving to create more bespoke products per firm? Certainly yes, they are quite keen to offer bespoke ATE insurance but there is also one large ATE provider that has one set policy and premium. It’s a very good marketing ploy to offer one premium for clients and they obviously push that quite hard. In reality, you are insuring the firm on a bundle of cases so the insurer looks to your past case handling, a firm therefore needs to have that proven ability. As well as being kept up to date on what services providers (such as ATE insurers) have to offer our members, we’re also able to attract bespoke rates and packages for members. Again, we can attract these offers because all our members are APIL and AvMA panel specialist firms.
Q A
How does SCIL vary from other associations for clinical negligence lawyers, such as certain committees of APIL and AvMA? SCIL will play an important role to ensure clinical negligence specialists stay healthy and financially viable, because if the specialists aren’t able to operate then clients won’t be able to access them. It’s also important that we help maintain the specialist spread to ensure a level playing field with defendants and this is the kind of support that differs from the skills and training APIL and AvMA provide. Both organisations do a very good job. AvMA is very good at supporting the patient and that’s absolutely right. APIL also does a very good job at supporting and training individual lawyers – offer skills and technical hygiene training as well as providing support and information for personal injury practitioners. However SCIL is about supporting practices as a business, hence why we look to attract heads of department. All the headline issues such as cash flow, proportionality, costs budgeting and hourly rates are the concerns of senior practitioners and heads of department so, for instance, if a firm were to send a trainee to take notes, it wouldn’t add any value.
Q A
So how are firms finding those frank, honest conversations about the health or concerns of their business? Are they open to discussion? In many ways, it is the first time claimant lawyers have put aside the competition between each other. It’s really refreshing to hear in meetings how they run their cases, which service providers they use, which counsel they use. They do so because they realise in these very difficult times that we’re stronger together and that supporting each other is more important than worrying about competition – who’s doing well, etc. Maybe once these uncertain times have
MC // January 2014
22
Stephen Webber Interview
“Practitioners who don’t have the experience may submit inappropriate cases to the NHSLA, resulting in huge and unnecessary costs. There is a real mutual benefit therefore for both sides to see specialists working on clinical negligence cases” died down we’ll get more competitive again. But at the moment we’re happy to share information. It’s amazing how adversity leads to such a reaction of solidarity amongst practitioners.
Q A
What kind of impact has reform had / will have on the structure of firms in terms of skill sets? It may be that once we know what a court understands to be proportionate that firms will have to restructure their departments, ensuring they work within the boundaries of what the court will allow you to do. For example, how much time a Grade A fee earner can work on a certain case. That might not happen in the most complicated cases, of course. Clinical negligence is complex, professional negligence work so you would expect a relatively high level fee earner working on these cases. Any restructuring is limited too as a number of clinical negligence firms are very small. We are, in the main, very good, very small, even one-man band departments - you can’t restructure those! It gets tricky in clinical negligence in terms of how far you can reduce your fees. It is your duty as a solicitor to advise clients if someone else could do the work cheaper. Law firms aren’t like other businesses!
Q A
Does the public know that lawyers have and uphold this duty? Well, that comes back to the point about raising the profile of specialists. There are very good lawyers who do good specialist work, who abide by the regulatory rules and obligations of the profession – we need to communicate this to the public. It comes back to branding but how do you tell clients about the specialist panels? It would be far easier if there was one streamlined panel, as we are looking at working on, to have a professional tag, similar to Corgi.
MC // January 2014
Q A
Should it therefore be down to SCIL at some point to launch a public-facing campaign? Ultimately, we need to make the public aware there are specialists in clinical negligence, those panel member firms, to ensure claimants make a more informed decision about who to deal with. Hence the SCIL objective, aimed to work out how we can promote the work of the panel specialists. This is in the future as, obviously, the impact of Jackson is a main priority for SCIL, particularly proportionality and costs budgeting. But yes, in the future I can see a campaign where all panel member firms will try and publicise the fact – particularly if we have one panel – that you are better off going to a specialist panel firm. However, ensuring the message gets out there is difficult. If I asked you, would you prefer to work with someone who has been in the industry for 20 years and has handled hundreds of cases such as yours or would you prefer someone who has never handled this kind of case before, no one in their right mind would prefer the latter. It’s an easy sell from that angle but how do you sell to people who haven’t yet got a claim to make?
Q A
How do today’s clinical negligence specialists compete with the ‘big brands’? Will we see widespread consolidation as in the case of the PI sector? We are certainly seeing consolidation such as Slater & Gordon’s acquisition of large firms all have clinical negligence departments – the former Russell Jones & Walker, Pannones and Fentons for example. We will probably see mergers between smaller firms, quite possibly in order to manage proportionality by restructuring. Yet I’m not sure the really big brands consumer brands - such as AA and The Co-operative Legal Services, are going to get into this market because it’s not the bulk market. You have to invest heavily
in clinical negligence before making a profit. In fact some people tell me it’s difficult to make a profit from clinical negligence in the first five years, so it’s a heavy investment for a return that probably won’t encourage new entrants. It’s different for those brands, like Slater & Gordon, that come in and buy existing clinical negligence departments but setting up a clinical negligence firm from scratch will be difficult. We are more likely, therefore, to see more acquisitions rather than new entrants. I suspect the clinical negligence market will be very different in two years time, with a lot less firms but, importantly, those remaining will be financially viable specialists.
Q A
Finally, will SCIL aim to cross the claimant / defendant divide in terms of working collaboratively on business issues? We will possibly look to work with NHSLA on the benefits of specialists doing the work. There is a benefit in this for them as a specialist claimant firm will properly investigate a case and then send it onto the NHSLA. Practitioners who don’t have the experience may submit inappropriate cases to the NHSLA, resulting in huge and unnecessary costs. There is a real mutual benefit therefore for both sides to see specialists working on clinical negligence cases. Stephen Webber is President of SCIL and a Partner and Head of Clinical and Medical Negligence at Hugh James.
Members welcome SCIL member firms are required to have one specialist within the clinical neglgience department who is an APIL or AvMA clinical negligence panel member. SCIL offers a twostage membership structure, firstly a firm membership fee of £200 per year. This entitles the firm to email updates and the ability to attend regular SCIL meetings. The second stage includes a bolt-on fee of £1500 per firm granting access to all of the documentation – including counsel-drafted CFAs - and support for hearings. All details via societyofclinicalinjurylawyers.co.uk
The Opinions
23
23-41
The OPINIONS
MC // January 2014
24
The Opinions
Sector soapbox: fixing the system The Transport Select Committee’s consultation on whiplash was dragged out for the best part of 2013 but December resulted in the confirmation from Chris Grayling, Secretary of State for Justice, that the Government will work to ban the practice of pre-medical offers for personal injury claims. With insurers announced to be on board with the move, as well as the claimant lawyer camp, the Association of British Insurers and the Motor Accident Solicitors Society jump on Modern Claims’ soapbox in a head-to-head about implanting the reform in practice, its impact on the public and, ultimately fixing the ‘broken’ whiplash claims system.
Reform it all or risk wider cost to motorists A
s the saying goes, ‘if it ain’t broke, don’t fix it’. Unfortunately, that does not apply to the medico-legal reporting system. The system is certainly broken and like anything that is broken, you will try and avoid using it unless you have to. That is why some insurers will pay a personal injury claim without a medical report. They do so because the current system does not consistently produce the quality of reports that are required. Given that there is no objective test for whiplash, combined with the perverse financial incentives operating in the system, there is little likelihood the medical report will result in a clinical finding other than for whiplash.
“They [Insurers] will need to have confidence that a medical report helps determine the extent of an injury and that the right system is being introduced and implemented effectively” Rob Cummings be considered. The current system is clearly not working, which is why the Government has undertaken a lengthy and extensive consultation process and why there was so much agreement from most stakeholders that the system needs to change. If change is to come, then insurers, like everyone else, have a role to play in ensuring it is a success.
The problems with the system go beyond even this however. If the claim is notified quickly and the medical professional is able to examine the claimant while they are still injured or recovering, then at least there is some potential to produce a robust clinical finding. However, the current limitation period for a personal injury claim is three years after the accident. As such, in a number of cases the medical examination will take place years after the accident, at a point when the claimant has fully recovered from any injury. Therefore, the medical report will add absolutely no value in determining the claim given that the medical professional will merely be able to report what the claimant told them.
Insurers could consider ending the practice of offering to settle claims without a medical report in certain circumstances. But before doing so, they will need to have confidence that a medical report helps determine the extent of an injury and that the right system is being introduced and implemented effectively.
This does not mean, however, that there aren’t issues to
Rob Cummings, Manager, Civil Justice and Data strategy, ABI
Any move to ban pre-med offers before reforms to the medico-legal reporting process are implemented will only serve to increase claims costs, which will ultimately have a negative impact on car insurance premiums for honest premium paying motorists.
“In a number of cases the medical examination will take place years after the accident, at a point when the claimant has fully recovered from any injury…The medical report will add absolutely no value in determining the claim given that the medical professional will merely be able to report what the claimant told them” Rob Cummings
MC // January 2014
The Opinions
25
Why delay what can be achieved today? W “I am sympathetic to the insurers’ point of hen you’ve lobbied as hard as MASS has to ensure that every case has a medical report, thus banning premedical offers, it is pleasing to see the Government confirm it is indeed going to commit to such action.
I could talk about how 99.8% of premedical offers are beaten when a solicitor is involved or how they pray on lower socioeconomic accident victims who need the money and so, settle too soon. Or I could talk about how I understand the business position of insurers who want to reduce costs and see this as a quick and simple solution that actuaries can introduce into budgets and projections. This though will not alter the public’s perception of a compensation culture or help to protect the rights of genuine accident victims. I am sympathetic to the insurers’ point of needing a more robust medical system before seeing the banning of premedical offers. However, in my opinion, the main problem is the perception of bringing a claim and we have to change this together. In my mind it means that whilst medical panels are likely to take 12 months to be worked out and implemented, both sides of banning enticements - the offering of cash incentives to bring a claim by solicitors being the other
L L P
N E S B I T B U R Y
-
L O N D O N
Association of Regulated Claims Management Companies
L A W -
L E E D S
G R O U P -
L I V E R P O O L
A member of
needing a more robust medical system before seeing the banning of premedical offers. However, in my opinion, the main problem is the perception of bringing a claim and we have to change this together” Craig Budsworth
side - have to be introduced now. I believe this can only be done by the regulators and that the MOJ must engage with them as a matter of some urgency and should be instructing them to introduce a ban. Having said that I do find myself somewhat concerned about the lack of resources available for regulators and recognise they need increased support to ensure the ban can be enforced. These steps can and indeed should, be taken now. Some will suggest this will not have the desired change on the perception of a compensation culture so we should wait until the full proposed changes have been introduced. I disagree. Why put off to tomorrow what can be achieved today? Craig Budsworth, Chair, MASS
WORRIED ABOUT SCOTTISH REFERRALS? WORRIED ABOUT SCOTTISH REFERRALS? • •• • Our RISK-FREE and LASPO COMPLIANT model can defuse that Our RISK-FREE and LASPO COMPLIANT model can defuse that potential time bomb for you, while maintaining your cash flow potential time bomb for you, while maintaining your cash flow Give your newest columnist, Patrick McGuire, a call to discuss on Give your newest columnist, Patrick McGuire, a call to discuss on • •
0800 089 8181 0800 089 8181
The Opinions
Costs specialists: boom or bust
T
here has been a lot of talk about consolidation of claimant law firms post Jackson but it’s also interesting to read news headlines of consolidation amongst firms of costs lawyers. Is this in anticipation of a blossoming market for costs budgeting advice? I have to wonder whether it is not more likely that, with fixed costs now applying to the bulk of fast track claims, work streams and turnover are diminishing - triggering a need to streamline businesses and exploit economies of scale. Certainly, the introduction of fixed costs must have created a void in the average costs lawyer’s daily workload. If that’s right, does costs budgeting represent a lifeline? In the short term, probably yes. We’re still testing the water with cost budgeting. Some remain apprehensive about drafting a Form H – daunting at the best of times. With a harsh outcome from a costs budgeting hearing having the potential to affect not only the profitability of a particular matter but quite possibly the fundamentals of how the case will be approached, there must undoubtedly be a market for advice from those who have made it their business to be ‘in the know’. Will that lifeline remain available over the long term? There must be doubts. The costs budgeting experience is still so limited at present that we remain more in the realms of guesswork than prediction. Over time, the process will surely become more predictable and more familiar. With greater familiarity must come reduced anxieties around the outcome of costs budgeting hearings and a greater willingness on the part of fee earners to ‘go it alone’. Moreover, a legal landscape with fewer but bigger firms must surely bring the prospect of a greater prevalence of in-house costs teams. If you’re of sufficient size to keep an in-house team busy, why outsource the work and leave someone else to take the profit? In short, while costs lawyers must stand to benefit from the uncertainties around costs budgeting in the shortterm, in the long-term there are uncertainties a little closer to home that must leave some uneasy. David Johnson, President, Forum of Insurance Lawyers (FOIL)
27
Next wave of reform
T
here has been a lot of discussion around the affordability of car insurance and what can be done to reduce prices, with the Competition Commission taking an active interest in the market. This has produced multiple strands which we will undoubtedly see develop over the next year, including the introduction of an independent medical panel. A more robust medical assessment approach - with independent, accredited medical panels to produce medical reports - would be a big step forward in combatting spurious claims, provided that: • Such panels are truly independent, with neither party having any financial interest; • Remuneration is fixed at a proportionate level to the claim; • The letter of instruction is on a joint basis providing all of the pertinent evidence to the case - including speed, angle and areas of impact, extent of vehicle damage and treatment received after the accident; • The report recognises and comments on all of the information in its findings, and; • The judiciary recognises these factors in their adjudications. Another suggestion for reform is banning referral fees for credit hire. Whilst seeming a natural next step following the ban of personal injury referral fees, this would be a superficial response, which addresses the symptoms rather than the causes of excessive credit hire claims costs. The regulation of any ban would be more complex given the number of different types of organisations who are involved in either the payment or receipt of referral fees – not all of which will have an existing natural regulator. Any attempt to reform the market for credit hire should learn from the PI experience. The PI referral fee ban has not worked as well as it could have done because it did not effectively address the excessive costs generated through the current system. A credit hire referral fee ban would have the same weakness. Similarly, any reduction of the GTA credit hire rates (whilst welcome) would simply drive credit hire organisations to seek other ways of generating profit. The cause of excessive credit hire cost is the separation of cost liability from cost control. The defendant insurer has to pay the cost. The credit hire organisation controls what that cost is. Only by effectively addressing that root cause will we see a genuine and sustained reduction in credit hire costs. This would deliver not only fulfilment of what an innocent third party is legally entitled to, but a reduction in claims cost inflation, which knocks on as higher insurance premiums for all. The Competition Commission has its work cut out investigating the issues that have been driving up the cost of car insurance premiums for years. Any attempt to reform the industry needs to be joined up and address the root causes of rising claims costs. Peter Horton, Chief Operating Officer – GI, LV=
MC // January 2014
Intelligent fraud solutions 1%
It is estimated that 1% of the UK adult population’s income is lost to fraud.
£18b
The value of fraud perpetrated by organised crime groups is estimated to be in the region of £18.9 billion per year.
£20b
Annual fraud losses per year is £15.9 billion for the Private Sector and £20 billion in the Public Sector.
27%
27% of the adult population surveyed had been subject of identity fraud.
50%
CIFAS, the UK’s fraud prevention service, states that 50% of all frauds identified in 2012 relate to the fraudulent use of identity details. Corroborated by banking industry data showing ID fraud up by 42%.
Clear Concise Advice
blm-law.com
iAccident Investigations
©
Where Evidence Counts
Transfer your costs onto us increase your resources for free Reduce your costs, ask us to secure your statements while you manage more claims we have experienced investigators - Face to Face interviews - Nationally anytime Free your cash-flow by instructing us on a No Win No Fee agreement Under pressure - be smart and outsource - you can trust us, we operate & represent you with integrity under ethics endorsed by The Law Society* Know your claim We INVESTIGATE, profile your client, claims history & risk assess your case electronically provide typed statements, locus reports, tracing, covert surveillance
1113
The Opinions
Costs chaos? O
n 29 May 2012, in the 16th lecture of the Jackson reforms implementation programme, LJ Ramsay set out the draft rules on costs management advising that they apply to all multi track cases commenced in the Queen’s Bench Division after 1 April 2013. Law firms have had over four years to prepare for costs management and whilst some of the larger firms with in house costs teams are ready, many are not. For some, a perfect storm is brewing. Most practitioners are able to draft directions to get the case from issue to trial but few are able to plan and budget for the various phases of the case. Costs budgeting should not come as any surprise but to some it is an alien concept, one they may not be able to grasp. As a result, they will outsource costs budgeting to costs lawyers. This does not come without risk as costs lawyers may find themselves instructed at the last minute to prepare a budget for service the next day. Where costs lawyers are instructed very late, they are likely to ask for an indemnity for failure to draft a comprehensive budget including all costs that could reasonably be anticipated. The consequences of filing a late budget are clear to all from the recent decision in Mitchell v News Group Newspapers [2013] EWCA 1537, where the solicitor was
A question of cover Q:
Is it a buyer’s market for law firms in need of litigation funding? Are products innovative / attractive enough? Is there even the demand for litigation funding models such as DBAs? Litigation funding from an ATE perspective has changed profoundly since the April reforms and questions need to be asked to gain an understanding of how the market for both law firms and ATE providers has been affected. For instance, is ATE cover required at day one (historically the usual requirement for taking out a policy)? Who is paying the premium - the client in addition to a success fee or, in a practical sense, in part at least by the solicitor out of an overall capped 25% ‘cost’ to the client? Will the firm want to insure the disbursement exposure where they are essentially paying the premium? There can only be one logical reason to do so, the claims exposure will be higher than the premium, hardly an inspiring thought for the traditional ATE market. For the client paying a fixed premium with a lower value case, will that premium (plus success fee) heavily impact proportionately on the net damages received. Issues of selection against them loom large.
29
restricted to recovery of court fees only. For paying parties, there could be the windfall of restricting an opponent to court fees only or to the budget upon detailed assessment. Either way, the old adage, ‘fail to prepare then prepare to fail’ holds true. Does the sector have enough examples of Post-Jackson proportionality? The new test for proportionality applies to costs incurred post 1 April 2013 and there are, as yet, no reported cases where it has been applied. It is likely to have been applied during costs management and upon summary assessment but is not likely to appear at detailed assessment until the middle of 2014. Before then, there is a possibility we will see some bizarre decisions in hybrid cases where new and old proportionality tests are applied to costs claimed. One of the greatest concerns about the Jackson reforms was whether the judiciary would enforce compliance with the new rules. This has been positively answered in Mitchell and now provides much needed certainty as to compliance. LJ Jackson expected little satellite litigation but one can be forgiven for thinking that until such time as guidance is given by the appellate courts, the spectre of further satellite litigation to test the new rules remains a strong possibility. John Latter, Director of Technical Centre UK Claims, Zurich Insurance & Howard Dean, Partner, Keoghs LLP
In personal injury with QOCS applying, appropriate ‘disbursement’ controls will mitigate the exposure leaving the meaningful adverse risk in the new regime to arise post Part 36 offer. This raises the issue of whether traditional ‘day one’ cover is now needed. Cover from the point of a Part 36, where that offer is not accepted, will require a radical shift in thought from the ATE market given that the basket of risk would essentially be ‘real’ immediately from policy inception. For non PI cases, the absence of QOCS and a full adverse costs exposure produces an invidious position whereby lower value cases may well be uninsurable given that a premium levels appropriate for the exposure may well exceed the damages. So whose market is it? The reality is, it’s no-ones and uncertainty abounds still in both camps: ‘do we insure, don’t we insure?’ ‘When do we insure?’ ‘Is it right for this individual client?’ – all still matters being considered by many firms. For the ATE market, selection against is potentially a major issue along with uncertainties surrounding both claimant and defendant conduct in this new world. Mutual survival is vital for many claimants if the claimant / defendant scales are going to have any balance at all. Who knows and only time will tell! Chris Marden, Director, Keystone
MC // January 2014
First Response Law provides a full outsourcing solution to businesses operating in the insurance sector to provide a transparent and ethical service to all clients, customers and business partners
Total Choice White Labelled Legal Expenses Insurance Breakdown Assistance Debt Recovery/Credit Control Misfuel Policy Key Repatriation Service Employment Law Fleet Accident Management
Total Service
White Labelled 24/7/365 Call Centre Roadside Recovery Fault and Non Fault ‘Complete’ Claims Management Credit Repair
Regulated by the Ministry of Justice in respect of regulated claims management activities
www.firstresponselaw.com Telephone: 0844 335 8265
The Opinions
Real brand value
Q:
General Insurers are pulling the client care rabbit out of the hat in their marketing messages this winter. Does this, underpinned by the joint ventures between law firms to service claims more effectively, ramp up the pressure on the claimant PI lawyers to catch up and get their marketing budget clear? Essentially, yes - it has never been more important for claimant lawyers to market themselves and their firms more effectively. The ‘client service’ message, in particular, is key. I’ve seen some great examples recently from law firms who are expanding and succeeding - despite the challenging environment. This proves that despite the obstacles laid before claimant law firms, a smart commercial approach - teamed with time and effort to present a great ‘face’ to clients - can work wonders. Recent examples include: • Asons Solicitors in Bolton - now a 250-staff practice and looking to expand further into purpose-built premises with headroom for an additional 500 people. • Michael Lewin Solicitors in Leeds - founded with 15 people and now fast approaching 150, spread across four Yorkshire locations. What these firms - and others who continue to thrive - have in common is a focus on client service, communications that tell the client precisely what to expect and transparency throughout the entire process. These firms are underpinned by robust and scalable software solutions that not only provide lawyers with the right productivity tools, but also provide clients with the means to stay in touch and communicate 24/7, 365 days a year. Service, and the overall client experience, is the differentiator. Russell Thomson, CEO, Eclipse Legal Systems
31
Costing the case: Is the future any clearer?
Y
ou’ve been to the seminars, you’ve read the post-Plebgate commentaries, you’ve struggled with Form H, yet eight months on it’s possible you’re one of the many litigation solicitors who has yet to experience a costs management conference or any judicial consideration of a costs budget.
As costs budgeting only applies to actions commenced after 1st April 2013 (save for those matters that were part of the pilot programme such as Mitchell / Plebgate) and, with court lists being what they are, first case management conferences with a costs budgeting element are only starting to be listed. Many county courts are listing costs management conferences for 90 minutes, giving enough time for the costs budgeting element of the hearing. Such listings are themselves leading to delay in matters coming before the courts. Tom Blackburn of Just Costs (costs lawyers) said they had completed more than 250 budgets in multi-track matters, yet have had only 20 of those budgets considered by the courts at this time. This may be a result of the delays in listing (many courts are already overburdened) but there is also a concern that despite the rhetoric, there is a reluctance on the part of some judges to get to grips with costs budgeting. The delays in listing hearings involving costs budgets are not helped by the fact that most of the part time judiciary (including most Deputy District Judges) have not received any specific training in costs budgeting. Therefore, most county courts can only list such matters in front of full time judges. In the light of Mitchell, costs budgeting has to be taken very seriously. The preparation of a costs budget is something that requires considerable input from not only the relevant fee earners but also from counsel and experts. Failure to file a budget will lead to claims in professional negligence against solicitors; possibly also against counsel if counsel failed to provide the necessary information. The draconian effect of the Mitchell decision may embolden district judges to take a firm line in relation to budgeting. Unless sufficient resources are made available for dealing with costs management hearings there remains a danger that costs budgeting will delay and not expedite the resolution of disputes. PJ Kirby QC, Hardwicke
MC // January 2014
Laird Advert 190 x 135mm_Layout 1 02/12/2013 12:58 Page 1
The Leading Automotive Experts for the Legal & Insurance Industries • Nationwide Coverage • Own Engineers
• Easy System Integration • High Volume Experts
• Accurate Reports • Vehicles inspected
• Desktop Reports • Forensic Reports
within 24 hours • Strict Service Standards
• Rapid Account set-up • Easy to instruct
• Trusted Reputation Laird Assessors: 188-200 Pensby Road, Heswall, CH60 7RJ Tel: 0151 342 9961 // Fax: 0151 342 7844 // DX: 744160 Heswall 2 // Email: enquiries@laird-assessors.com
www.laird-assessors.com
Hardwicke ad 135 x 190 Nov 2013_Layout 1 18/11/2013 16:43 Page 1
Hardwicke’s barristers are noted by solicitors for their clear, reasoned advice, and the excellent quality of their work.
“
”
Chambers UK, 2014
Expertise in Commercial, Insurance, Property & Private Client and Public Law For more information please contact our CEO Amanda Illing, winner of the 2013 Modern Law Award for “Non Lawyer of the Year” on +44 (0)20 7242 2523 Hardwicke Building, New Square, Lincoln’s Inn, London WC2A 3SB T +44 (0)20 7242 2523 E enquiries@hardwicke.co.uk www.hardwicke.co.uk
The Opinions
33
Wise advice N
elson Mandela apparently preached that when someone made him angry, he would go home, calm himself with time before returning to that person and try to make friends.
I too have experienced this. Having slept on it, in the morning the issue doesn’t seem as bad. The past year has been a great year for me in many ways but true to life, there have also been challenges. I consider it challenging to hear the Government (not referring to any political party) hyperbole that the bad times are behind us. I suspect its sales talk is based on manipulated performance figures. Unemployed is down but is this because it’s more difficult to claim unemployment benefit, therefore people are not registering? It has also been a tough 2013 for many PI professionals. Many claimant and defendant law firms report claims have reduced. Everyone has to work harder and smarter. Businesses are keeping hold of their money, delaying payments which causes additional business pressures. My advice is don’t abandon ship yet. History teaches us that we will all be better for working together - strong, fair and true.
Whether you consider 2013 a triumph or disaster, chances are it will have contained elements of both. The law of averages suggests 2014 will also hold both good and bad times. One of the good events of 2013 is that with hindsight, we should all now understand how the market has changed and is still changing. One unchangeable fact of life is that life will change. So the challenge for your future is can you influence that change. Make time to establish your ambitions. Where are you now - where do you want to be - how are you going to get there. The first step to earning a £1 million is earning £1. It will come to a few by luck but hard work is a requisite so get used to it. So too is a willingness to take on some risk but you must manage that risk. I wish all of you a successful 2014, my gratitude to those that instruct us. If you owe me money please pay me, remember Nelson Mandela and let’s be friends. Peter Parry, Managing Director, Independent Accident Investigations
A tool for proportionality? Q: In light of recent reforms to costs budgeting and with anticipated further change to come next year, is mediation proving to be a more popular choice since these new funding regimes have been implemented?
I am sure readers will be fully aware of the introduction of cost budgeting brought in by the Jackson reforms in April 2013. Recently the courts have sent out very clear messages to legal representatives that there will be significant cost implications (for them or their clients) if they do not comply with the provisions of LASPO. Legal advisers therefore have to be very careful when considering costs to ensure that they are proportionate to the case and reasonable. As a non-legal professional, I have watched with great interest how solicitors and insurers have been finding a way to balance providing their clients with a good service and ensuring their businesses are fit for the future. This has proved to be a real headache for some firms and has even seen the demise of others. It would seem obvious, particularly to mediation supporters that it is now the time for mediation to ‘rise up out of the ashes’ and come into its own as the answer to the proportionality problem. Just mediate the case as it brings
an economic and time efficient end to the dispute. This sounds wonderful – particularly to a full time mediator like me! So why, to date, has this not proved to be the case? Despite its fans, mediation is not used as widely as should be, for three main oft-given reasons: 1. The legal adviser has had a bad experience of mediation 2. Mediation is actually quite expensive when you add all the fees; if there is no result then it is a waste of money. 3. Recommending mediation is a sign of weakness and will be seen as such by the other side. I accept every case and every client are different but in my experience mediation could be successful if used more widely in resolving disputes, if the above concerns are addressed. 1. Choose a mediator who is proactive and dynamic. It is up to them to ensure the parties stay engaged and comfortable. 2. Discuss with the mediator how costs can be saved by reduced preparation by the solicitors and who actually needs to attend the mediation. 3. There are now reported cases that support the use of mediation within the legal process and failure to partake can have costly consequences. Bruce Bourne, Bruce Bourne Associates LLP
MC // January 2014
YOUR TICKET TO
GENERATING MORE LEADS FOR YOUR LAW FIRM SIGN UP FOR ONE OF OUR
DIGITAL MARKETING WORKSHOPS
IN ASSOCIATION WITH
CHOOSE FROM:
London
0207 416 6644
Birmingham 0121 371 9224
Manchester 0161 452 0311
Various dates available. Call our team and request a “Workshop Booking”
Or book online www.mmadigital.co.uk/workshop
The Opinions
Referrals in the new era
Q:
In the November issue of Modern Claims, Andrew Grech, Managing Director of Slater & Gordon, said its Australian arm receives its ‘second largest source of new enquiries from our existing clients’- something the brand aims to replicate in the UK. Is this level of cross-referral achievable and what do you need in your armory to get there? The vast majority of our new instructions come from our existing client base, while new business is typically referred from those valued existing clients. Why? The simple answer is that we provide a quality service virtually every time and clients love that. Easier said than done, so how do we do it? It’s imperative to listen carefully to what a clients’ expectations are; what has impressed them and what has historically frustrated them. Our clients are varied, so have differing priorities. The key here is to ensure that we bring all the important aspects together and excel at them all. All clients are important to us, irrespective of whether they provide 1 or 100 instructions. We say ‘virtually every time’ because, being humans, we do get it wrong occasionally. This is accepted, but it is essential that the staff have a clear guide to help correct mistakes quickly and using their best judgment to keep the client happy. So what about the things our clients don’t know they want yet? To progress we must continually evolve, ensuring we do not rest on our laurels. Technology is now in an era where it is our imagination rather than the restrictions of an IT system that limits our development. This allows us to expand & upgrade our service on a regular basis with offerings like direct client system integration, portal case tracking & MI live stats. We begin 2014 by launching a smart booking & updating system, with exciting projects following throughout the year. Being able to offer something a little extra is always judicious, both from a business and personal perspective. For example, we may offer significantly reduced fees for multiple instructions such as a vehicle inspection, injury photography and document sign-up at the same address. We may take clients to see the racing car we sponsor or to the races. The little things are important. So by actually doing what we say we’ll do, effectively, smoothly and with the minimum of fuss, our clients keep reinstructing us and referring new clients to us. We’re very grateful for their support, feedback and of course, their business! Nik Ellis, Managing Director, Laird Assessors
35
Digital contenders
W
hen it comes to creating strong brands through marketing, PI law firms should be no different to general insurers. But, it is not enough to simply say how much you want to spend on marketing, there is increasing need to decide how it will be divided up first.
We all know from experience that traditional marketing methods (leaflets, print adverts, radio and TV) can be expensive. While these channels still need to be considered, you should now be committing a percentage of your marketing budget to utilising digital channels. Digital channels offer a unique aspect to your marketing output in that after the initial cost of setting them up, the budget needed to maintain them will be significantly lower, and certainly cheaper, than traditional marketing methods. A good digital agency will help you decide what work needs to be done to build a strong digital presence, this could include: website redesign, mobile optimisation, video production and search engine optimisation (which moves you higher up in the rankings of search engines like Google). While this initially may take a larger percentage of your marketing budget, once this is complete much of the maintenance work needed can be moved in-house, as Sarah Boustouller, Partner and Marketing Manager at Stephensons Solicitors LLP, explains: “Our digital marketing is handled by our central marketing team but all Stephensons staff have a vital role to play due to their proximity to the market and have a robust digital marketing policy to follow.” Sarah’s last point there is important. Those who look after your digital marketing will need to receive training but the financial cost in doing this can also be relatively low cost. ‘Pay-per-click’ opportunities also maximise your budget by creating targeted advertising you pay for only when people ‘click’ the advert with their mouse. With good analysis of how well these adverts are helping to attract new clients (or interest), you can tweak your budget regularly to make instant savings, rather than waiting for a contract to finish. Marketing budgets will always be important but now more than ever a longer-term projection as to how they are divided is needed. This will ensure you really do maximise your lead generation and keep up with, or ahead of, the rest of the sector. Dez Derry, CEO, mmadigital
MC // January 2014
Accident Management. Simply. Effectively.
“It is only when you have a headache that not-having-a-headache has such a very high value” Claims Handling
Replacement Vehicles
When an accident is not your fault, S&G Response will provide you with immediate assistance and support. Every claim is personally managed by one of our experienced and friendly operators ensuring a dedicated service. You will be provided with direct dial telephone numbers and direct email, coupled with online tracking of your case and SMS updates. Your piece of mind is our priority.
S&G Response
St. Ann’s House, Parsonage Green Wilmslow, Cheshire SK9 1HG
Tel: 0845 030 9040
We will contact and manage all the parties involved in the process including the other driver and the insurance companies. We will be able to assist you with: • Vehicle repairs (you will not have to pay your insurance policy excess and your No Claims Bonus will be unaffected) • A like-for-like replacement vehicle • Loss of earnings • Out of pocket expenses
Vehicle Repairs
Fax: 01625 415970 Email: info@sandgresponse.co.uk Web: www.sandgresponse.co.uk CLAIMS CLAIMS INNOVATION INNOVATION AWARDS 2013 AWARDS 2012 WINNER
WINNER
Authorised by the Ministry of Justice in respect of Regulated Claims Management Activities CRM 22011
S&G: A straightforward solution to motoring problems… delivered with simplicity. LAMP Services Limited
We do all the leg work, so you stay in the running.
When we tailor your ATE, BTE or rehabilitation policy, we do it differently. We take the time to work with you to create the solution that really fits your needs. That’s just one of the reasons why we’re one of the foremost providers of specialist Legal Expenses Insurance in the UK. From traditional to tailored, we also support a flexible range of Medical related products and services worldwide. So if you want insurance that really makes a difference, the next step is to call us. Freephone: 0800 019 2258 or visit www.lampinsurance.com
The Opinions
A lesson in protection
E
xamining responses to major loss events can help reduce future claims. Here are five lessons we can learn from catastrophe claims:
1. Strengthen supply chains Global supply chains are especially vulnerable to disruption, and companies with a lack of alternative suppliers can find themselves unable to trade. Those choosing to rely on only a few suppliers need to manage stock levels on their own premises carefully; overriding automatic stock ordering systems to postpone deliveries can avoid damage to new stock during a crisis. Alternatively holding more critical supplies can allow operations to continue if the supply chain is interrupted. 2. Know your exposures Measures taken to protect property from physical damage must be appropriate to the business. One client facility next to a river suffered a significant loss in the 2002 floods. It has since invested around $1m in building flood defences around the site. This year the first big test proved that the company’s investment has paid off. During the Thai floods many shops avoided losses by simply moving stock to higher levels. Others were not so well prepared. Businesses in Lower Manhattan had stored important documents and valuables in vaults ahead of Superstorm Sandy. Unfortunately these vaults were inadequate and water came in anyway. 3. Have a back-up plan Sandy revealed that some of our IT and Communications clients had impressively robust business continuity plans. Their IT systems switched over automatically to alternative back-up systems that meant their operations continued uninterrupted. They also had robust plans for their physical offices, such as pre-arranged agreements with clean-up companies that would prioritise them should the need arise. 4. Keep the end goal in mind when using third parties Third parties can provide useful independent advice but if the claim becomes unreasonable and the insurer is forced to contest it, it can ultimately delay the settlement. 5. Swerve price-gougers Finally, be wary of services companies assisting with immediate business recovery. Post- Sandy, opportunists supplied urgently needed equipment like power generators for vastly inflated fees – a practice known as ‘price-gouging’. Insurers know industry standards and can help clients to get a reasonable price. Of course, you can never fully protect a business from a major loss event. However, good risk management and engaging with insurers’ risk engineers can make a real difference to the severity of a claim and the policyholder’s ability to recover its business.
37
DBA on demand
P
rior to the introduction of the Damages-Based Agreements Regulations 2013, the feeling amongst litigation lawyers was that a brave (and very profitable) new world was opening up before them. It is still far too early to assess the popularity of damages based agreements (DBAs) amongst law firms and clients alike. Yet, as in the case of third party funding, anecdotal evidence suggests many lawyers (and clients) are reluctant to break away from traditional time-based charging or the use of conditional fee agreements discounted rate or otherwise. Why is this? The answer is probably contained in the solicitor’s code of conduct, the key, relevant elements of which are that: 1. A solicitor must act in the best interests of each client (SRA Principle 4); 2. A solicitor must treat his clients fairly (Outcome 1.1, SRA code of Conduct); 3. A solicitor must only enter into fee agreements with his clients that are legal and which he considers suitable for the client’s needs and take account of the client’s best interests (Outcome 1.6). There is, therefore, an inherent tension between the best interest of the firm and the best interest of the client. This is more pronounced in the case of DBAs and third party funding models than in conditional fees agreements. Given that a DBA is a contingency fee arrangement, its attraction for a lawyer will be greatest where quantum is large and where an early settlement is likely. However, it is precisely this sort of case where a client would be best advised to use a traditional CFA or traditional hour-based charging (as the cost would be far lower). Similarly, third party funding is still prohibitively expensive (despite the new entrants to the market place) and in many cases would not offer best value to the client. It is to be hoped the market for third party funding and DBAs will develop in the same way that the market for ATE insurance developed from 2001 onwards; namely from a prohibitively expensive product to one which provided excellent value to clients and lawyers alike. Logic dictates this will only happen when those willing and able to provide funding are close to and understand the litigation process as well as the factual matrix of each case. This suggests funding from insurers and / or law firms will prove to be the winner over time. Furthermore, given the professional obligations of lawyers in terms of selecting an appropriate funding model, the role of the broker is likely to increase in importance. The brave new world may eventually be with us but it will need to be cost-effective rather than a way to turn a quick profit. Nicholas Gordon, Consultant For Mills & Reeve LLP. On behalf of Willis UK Retail
Paul Fox, Head of Claims Operations UK & Ireland, XL Group
MC // January 2014
For specialist mediators The Business of Law
www.ExpediteResolution.com 0844 879 3166
The first ever Modern Law conference: ABS: the new frontiers of law. Emma Waddingham summarises an extraordinary event
The Business of Law
Sector roundtable: MLM hosts a debate to see if the legal sector is pioneering or fearing the extensive innovations in IT.
March 2013 | Issue 5 | ISSN 2050-5744 Emma Waddingham reports exclusively from Westminster on the recent All Party Parliamentary Group roundtable on the future of legal services.
Dom talks news: Jackson: the cases you need to know!
Rob Terry, Group CEO of Quindell Portfolio PLC speaks to Modern Law about how he manages standards and clients across one of the largest legal services portfolios in the country. The People’s lawyer: Greg Shields asks if law firms are actually any good at putting people first.
“There are different points of entry for different legal needs, which will fuel (or not) commoditisation... and those that can’t compete won’t be here for long,” Helen Molyneux, NewLaw
“Barristers contribute to the reform of law, assisting government and doing so for free – you can’t label, regulate and commoditise this, which the LSB is sometimes keen to do” Maura McGowan QC, Chairman of the Bar Council
Modern Law Magazine | March 2013 | Issue 5
Modern Law Magazine | June 2013 | Issue 6
www.TrustMediation.org.uk 0207 353 3237
June 2013 | Issue 6 | ISSN 2050-5744
MILES JOBLING BT LAW LTD
“Why wouldn’t we as corporate brands want to change the rules? Consumers will look to the big brands and why wouldn’t they?”
Supported by
PROFESSOR STEPHEN MAYSON “The suggestion that ABSs are in some way unethical is a line their opponents have taken from the start... The illogical attack is nonsense and fundamentally flawed”
Sponsored by
07/06/2013 10:08
Charlton Grant
Charlton Grant SBT1426 Charlton Grant - Modern Law Issue 6 v4.indd 1
Supported by
Sponsored by
SBT1396 Charlton Grant Modern law Issue 5 v3.indd 1
28/02/2013 16:26
Have you seen our sister publication Modern Law Magazine? To arrange your free subscription please e-mail info@charltongrant.co.uk www.modernlawmagazine.com
SBT1403 Charlton Grant Modern Law Magazine Ad v4 QP.indd 1
Embracing injury litigation futures
Our advice and specialist reports are often the starting point for strategic and financial planning, funding options, acquisition opportunities, merger, sale and expansion plans.
Zebra Legal Consulting is a niche consultancy, committed to innovation in the future of injury litigation services. Our business was born out of the changing personal injury landscape, and the drive for law firms to flex, adapt and change to remain competitive and profitable. Zebra offers independent advice and support to legal practices that carry out injury litigation. This includes personal injury and the burgeoning clinical negligence sector.
Our clients tell us they like our distinctive approach.
Zoe Holland
Managing Director
0161 374 0726 07917 841560
Our team includes specialist due diligence auditors, senior injury lawyers, legal/financial management professionals and costs experts. The team’s breadth of experience offers our clients the value of legal, financial and commercial expertise. This brings together the technical competence of legal case planning and review, strategic and operational business overview, caseload due diligence, financial assessment, risk profiling and skills of case cost budgeting.
zoeholland@zebralc.co.uk
www.zebralc.co.uk
@zebralc
30/10/2013 13:02
The Opinions
Bespoke demands
Q:
Are ATE products becoming more bespoke for firms? Are some firms too high risk to sell to and why?
The post-LASPO world with its changes to the recoverability of After the Event (ATE) premiums and the advent of Qualified OneWay Cost Shifting (QOCS) has led to a fundamental shift in the risks faced by ATE insurers. Instead of firms happily insuring all their cases safe in the knowledge the premium would be recoverable, certain cases now remain uninsured – for example, low quantum cases, very low risk cases or complex cases of moderate quantum. Additionally, different firms have different attitudes to new risks. Some are happy to fund their clients’ disbursements and only seek ATE cover for any potential adverse cost orders, whilst others only want cover for disbursements and not for potential Part 36 risks. Firms specialising in certain areas of law (e.g. clinical negligence) have more specific requirements based on their own experiences and caseloads. LAMP has always provided products tailored to the needs of the individual law firm but we have seen far more demand for bespoke products in the ‘new world’. Unfortunately the changing landscape has meant certain law firms find their risk profile doesn’t match that of the ATE insurer, so are deemed too high risk to insure. Why? Well, a firm could have a higher than average failure frequency, due to its business model of taking on riskier cases and seeing if they could obtain a settlement on them. Alternatively, a firm could leave a long delay before attempting to take out ATE insurance. We see a number of applications for cover where it is clear that the solicitor has tried and failed to settle the case and has only sought ATE cover when these attempts have failed. You could also have a firm with an excellent track record in winning cases but its dedication to obtaining the highest damages possible for their clients has led to a number of claims due to failing to beat Part 36 offers. This is aggravated further now if the solicitor is acting under a DBA and so faces a conflict of interest between accepting the offer, or trying to obtain a better offer (in turn increasing their costs). Under QOCS the only adverse cost risk you face is from a good Part 36 offer, which again could make the premium appear unpalatable to the claimant who expects to win their case. In summary, post-LASPO, there is far more scope for a solicitor to demand an ATE policy specifically designed to meet the requirements of their particular clients. However some firms may well find their business model is less attractive to ATE insurers and so find it hard to obtain cover. Leaving it to the last minute to try and obtain ATE insurance is also going to be a nightmare! Alan Strange, Underwriting Director, LAMP Insurance Limited
39
A shrinking market
I
s 2014 going to be the year of mass exoduses and redundancies from the claims sector, just as everyone thought process, volume, efficiencies and marketing could offer a solution?
The one truly extraordinary feature of the tectonic changes that have taken place in the personal injury (PI) claims market over the past year has been the almost universal infection of industry participants by a legal form of climate change denial. In its heyday, the PI market was stimulated actively and effectively by claims management companies but they are moving on and, not surprisingly, the pipeline is starting to empty. The pipeline was already squeezed by the insurance companies as they promoted PI claims against their opponent liability competitors. Claims were still channelled to panel solicitors but the level of referral fees was simply stunning. None but the larger firms could afford to pay, so the smaller firm started to suffer. To cap it all insurers then started to enter into ABS arrangements either by absorption, start up or joint venture. Taking all these factors into consideration, is it unrealistic to expect a 50% decline in economic activity in the independent legal sector? Maybe that figure is an underestimation of the forces now working against injury lawyers. The belief that process, volume, efficiencies and marketing offered any remedy to these pressures was always an illusion. The problem is not process; the problem is market shrinkage. So what of the timing? Every indicator in the second half of 2013 pointed to structural shrinkage in the sector. A steady stream of redundancies, branch office closures, amalgamations and business failures underlined the concerns of the SRA over an increasing number of firms ‘at risk’. We have read about the continued trading losses of CLS and the sudden departure of 50% of the workforce. Many smaller firms have closed their doors permanently and unnoticed. Throughout 2013 the injury claims sector continued to benefit from the one positive economic side effect of the reforms. New claims have been settled faster, generating cash flow though at a reduced level. At the same time claims dating from previous years are now coming to trial and settlement on historically favourable terms. The benefits will, however, be short term. As pipelines dry up in 2014, it is hard to look forward to the New Year with any degree of optimism for the PI sector. We are already seeing applications from law school graduates and part-qualified solicitors in response to our advertising for administrative staff. In the year to come, their employment prospects in a professional role will become increasingly bleak. Tony Rand, Chief Executive, Vamco
MC // January 2014
“Leading the pack”
PERSONAL INJURY • INDUSTRIAL DISEASE • FAMILY LAW • MOTORING OFFENCES • PRIVATE CLIENT • WILLS & TRUST The key objectives of Wolf Law are to offer a superb Client experience, legal expertise, and a friendly approachable professional service for Clients and collaborators, seven days a week. The ethos of the firm is that Client care is paramount, and Wolf Law will go the extra mile whether that means weekend or evening meetings, providing the right blend of skills for the job in hand, dispute resolution or strong litigation. Wolf Law has the energy and vision to offer the very best from the legal world, above and beyond what Clients have normally expected from a law firm. In these challenging times Wolf Law is flourishing and expanding, by meeting Clients needs head on.
CURRENT OFFICES: London • Liverpool Manchester • North Wales FUTURE OFFICES: Yorks • Liverpool North Swansea • Newcastle COMING 2014: Scotland & Northern Ireland
Solicitors you can trust | Phone 0845 3409 700 | Web www.wolflaw.co.uk | Email info@wolflaw.co.uk Wolf Law Ad v2.indd 1
17/07/2013 13:34
The Opinions
Who do you think you are kidding, Mr Witness…
O
ver my 22 years as an expert witness, I’ve spent more time under cross-examination than I might have liked. Giving evidence in the witness box can be a dreadful experience for the unwary and at the risk of satirising barristers - some of them can be terrifying. Others are in a class of their own: aggressive interrogators who stop at nothing to embarrass, discredit or refute you, harass you on the smallest inconsistency or hound you to the ends of the earth - I like to call them the Rottweilers. While some of you may laugh at these comical images, you might also feel a bit of sympathy for the everyday witness. Unlike experts, witnesses of fact are often at a disadvantage as soon as they step into the court. This fact alone can lead to anxiety, panic attacks or worse - overconfidence! Going into the witness box unprepared is like playing cards with a loaded deck. During cross-examination, an opposing barrister will know exactly what hand he/she intends to play and when to play it. Witness Familiarisation is a relatively new concept and is becoming a standard risk-management tool in the public and private sectors. Its purpose is to educate, inform and familiarise witnesses for the courts, and their likely sequence of events - including cross-examination. Many of you will know that witness preparation or ‘coaching’ is strictly forbidden under UK law and the act of rehearsing witnesses, which you see in Hollywood films, is against our legal Code of Conduct. This is highlighted in the case of R v Momodou 2005, where one training firm was called into question for providing witnesses with case scenarios that were identical to their matter in court. Fortunately, case law distinguishes between ‘preparation’ and ‘familiarisation’, a process which it actively encourages. Over the years I’ve worked with a number of solicitors, businessmen and government employees, some of whom were already competent in the subject. The general consensus was that even if you can remove 1% of the risk in high-cost or complex proceedings, it is well worth the cost and effort involved. Many of these courses not only involve the basics of courtroom layouts, legal process, writing a witness statement and giving evidence. As a rule of thumb, these should be carried out or supervised or by a trained legal professional, who is often a solicitor. As an absolute surety, they should not contain facts that resemble the upcoming hearing. My own take on training combines my knowledge as an expert witness with that of a criminal QC, who provides an insight into the aims of a cross-examining barrister - that said, you should make sure to choose a course that will suit your particular needs. If you’ve been called as a witness in a court or a tribunal, then consider this line from Sun Tzu’s Art of War: ‘Anyone that rushes to the fight, hoping for victory, assumes the ground of defeat.’ If there’s an art to war and advocacy, then there’s an art to giving evidence. Learn it.
41
Is the ‘underdog protector’ age over?
Q:
General insurers are pulling the client care rabbit out of the hat in their marketing messages this winter. Does this, joined by more law firm and insurer joint ventures, ramp up the pressure on the claimant PI lawyers to catch up and get their marketing message clear?
Claimant law firms and their suppliers have worried for a long time now that the option to have them removed from the claims process could become a reality - hence much of the abuse when Aviva unashamedly talked about wanting to deal more directly with Third Parties. What would convert claimants away from those friendly trustworthy claims farmers? You know, the ones that suggest insurers can’t be trusted and make a big play of how they will help the ‘underdog’ in their battle against the big bad corporate beast (which is how they portray the average insurer). Would it be the promise of a faster service? Maybe scaremongering that using a lawyer means giving up some of your damages? These things we have already seen bandied around in the battle for early intervention. I don’t think it will be either of these. You don’t choose a party to deal with based on a belief you will get a larger payment if you also don’t trust them. That has been the real problem for insurers. So, how do you ‘capture’ the third party and convince the public they don’t need a lawyer to protect them? Simple; you provide outstanding customer service, put the customer at the heart of everything you do and then make sure as wide an audience as possible sees this ‘new’ reality. I am not saying insurers have ramped up this focus on customer care in an attempt to secure more direct access to third party claimants. It’s not that at all but I do believe this will be a happy side effect. Insurers have let themselves down in the past but now - driven by a combination of regulatory pressure and more morally righteous CEOs than the numbers-driven accountants of the old guard – insurers deliver great service across most classes of business. This is especially true following major weather events and other surge scenarios. My view is, it won’t be enough going forward for a claims farmer to simply offer to ‘stick up for the little man’. Consumers are more informed and the change to a customer-focused ‘trustworthy’ insurer market will cause issues for a segment that still relies heavily on hated telemarketing and spam text practices to secure business. Oh, that and not having to give up any of your damages in a DBA of course! David J Williams, Managing Director, Underwriting, AXA Insurance
Trevor Gilbert, CEO, Witness Box (a legal training firm)
MC // January 2014
Let it be…
Market Leading Provider of Claims and Legal Services for the Insurance Industry • First Response In House 24/7, 365 days a year • Fully Outsourced Claims Handling • Hosted IT Claims System • Treasury Function • ULR and Recoveries • Claimant Legal • Defendant Legal • Legal Expenses Insurance provider “We pride ourselves in always striving for excellence in our service to clients, with a proven track record in providing innovative solutions designed for our client’s needs” Donna Scully - Partner
For more information on our tailored solutions contact Donna Scully on 0844 249 3555
Cert No. 10259 Cert No. 10259 ISO 27001 ISO 27001
Cert No. Cert10259 No. 10259 ISO 27001 ISO 27001
www.carpenters-law.co.uk
The Features
43
43-62
The Features
MC // January 2014
44
Features
Playing ball For the everyday consumer, credit hire can offer a much needed life line in difficult times and, as Martin Andrews explores, it’s not just footballers reaping the benefits.
C
redit Hire is a much misunderstood and – for that reason – often criticised part of the insurance industry. However, it plays an absolutely vital role in protecting the rights of consumers, and ensuring that drivers aren’t left stranded when they are involved in an accident that isn’t their fault. Let’s go back 20 years. Before credit hire companies existed, motorists were often forced to go without a replacement vehicle, and were not made aware of their right to receive one following an accident. With credit hire, as the costs are recovered from the at-fault insurer, consumers are able to get a replacement car for the period that their car is being repaired. The insurance industry has often been subject to misconceptions. At the start of December this year, the RAC told reporters that soaring insurance premiums were pushing up the cost of owning a car. In fact, the AA’s Insurance Index, which has been a trusted indicator for insurers for almost 20 years, recorded this year that the average car insurance quote was down by 9.8% on last year - the biggest decrease since the index began in 1994. The Office of Fair Trading calculated that credit hire costs contribute just £10 to the average insurance policy. By contrast the Association of British Insurers (ABI) estimates that fraudulent insurance claims cost the average motorist £50. Artificial inflation? One misconception about credit hire
is that it increases insurance premiums – both due to the high value of claims, and the cost of referral fees. Insurers have repeatedly accused credit hire companies of “inflating” the cost of car hire thereby causing higher insurance premiums. However, the ABI’s own General Terms of Agreement (GTA) sets strict operational guidelines on credit hire, including the setting of discounted day rates for thousands of different types of hire car. These criticisms levelled at credit hire companies for inflating costs can largely be attributed to the Autofocus fraud scandal, where
the motoring consultancy produced fake or fraudulent rate evidence on the cost of hire cars, which were then used by insurance companies in court to challenge the true costs being charged by credit hire companies. Autofocus reports were used in over 4,000 court cases, leading to a general opinion that credit hire companies inflated costs before the fraud was discovered. These cases have now been successfully challenged in the courts, with many insurers acknowledging the fraud and retrospectively paying the correct rates.
“The Office of Fair Trading calculated that credit hire costs contribute just £10 to the average insurance policy. By contrast the Association of British Insurers (ABI) estimates that fraudulent insurance claims cost the average motorist £50”
MC // January 2014
Features
45
“Credit hire companies make diligent enquiries to ensure that they are providing these like-for-like temporary replacement vehicles to the non-fault consumers, and recovering the costs from the at-fault driver’s insurer on their behalf” The infamous case of Aston Villa footballer, Darren Bent’s use of a temporary replacement car – an Aston Martin – is frequently used as an example of credit hire’s largesse. In fact, the case illustrates the innate fairness of the industry. If someone smashes into the back of your Mercedes and it’ll take a week to be repaired, you’re entitled to a Mercedes while your car is off the road. If someone busts up your Nissan Micra, you’re entitled to a replacement Micra while that’s in the garage. It’s fair. And for people who use their car for work, driving a Micra when you’re entitled to a Merc could be detrimental to their business. Indeed, there’s even a dedicated credit hire firm, Cab Aid, which specialises in helping taxi drivers and chauffeurs who are the victims of an accident that isn’t their fault. For a cabbie, having a like-forlike replacement car could mean the difference of being out of work for a week while their cab is being repaired, or being able to get back out there and earn a living.
“Without credit hire, there would be a lot more people sat waiting for a bus through no fault of their own, and that just isn’t fair” The heart of the matter At the heart of the credit hire industry is the law, and the wish to make sure that consumers get what they are legally entitled to. Under tort law, drivers are entitled to a like-for-like temporary replacement vehicle if they are involved in an accident that isn’t their fault. Three appeal court judges upheld Bent’s legal right to hire a ‘broadly equivalent’ car while his was being repaired. And credit hire companies make diligent enquiries to ensure that they are providing these
like-for-like temporary replacement vehicles to the non-fault consumers, and recovering the costs from the at-fault driver’s insurer on their behalf. The process also serves to maximise the likelihood that liability is allocated correctly, while usually keeping cases out of the courts. Credit hire firms aren’t going to help someone into a hire car unless they’re pretty certain they can recover the costs from the at-fault driver’s insurer. In some cases, insurers have responded to the rise in credit hire by offering non-fault drivers a replacement car (albeit one that is usually of a far lesser standard than the driver is entitled to), at a reduced cost to the insurer. However, insurers have stated to the Competition Commission that they offer this primarily to avoid credit hire costs. Were credit hire to disappear, motorists would return to the situation they faced before credit hire existed in the 1980s. Referral fees are another oftencited problem with the credit hire industry. However, unlike the referral fees business that has come under such scrutiny in personal injury (and particularly whiplash) claims, these costs are absorbed by credit hire companies, and not passed on to either insurance companies or the consumer. These referral fees are absorbed by CHCs, do not impact on insurance costs and are not the reason for insurance premium rises. Indeed, credit hire referral commissions often contribute to insurers’ profits.
referred to drivers by insurers, garages and motoring organisations. So, why am I taking the time to set this all out now? Well, the Competition Commission is due to issue its provisional findings from its market investigation into the cost of motor insurance this month, and it’s possible that credit hire companies could end up unfairly criticised for raising the cost of insurance premiums. The reality is we are here to protect consumers and make sure that drivers can get back on the road after an accident that isn’t their fault at minimum inconvenience. Remember: for every footballer in a replacement Aston Martin there are thousands of mums who are able to do the school run in the morning; thousands of businessmen and women who are able to get to work; people in remote areas who are still able to see friends and family and get to the shops; students getting into college. Without credit hire, there would be a lot more people sat waiting for a bus through no fault of their own, and that just isn’t fair. Martin Andrews is Director General at the Credit Hire Organisation (CHO)
Referrals are necessary for a simple reason – most people don’t have many car accidents. Fortunately, the average driver is only in an accident once every seven years or so. However this means that most drivers are completely unaware of their legal rights in this situation, particularly their right to a temporary replacement vehicle. Consumers would suffer considerable inconvenience if they weren’t made aware of these rights – which is why credit hire companies are often
MC // January 2014
ACORN ASSESSORS CONSULTING AUTOMOBILE ENGINEERS
Features
47
Post LASPO value? Steve Rowley takes an in depth look at recent developments in motor legal expense insurance and questions how the customer will be impacted in the aftermath of reform.
Y
Protection provides the customer with an indemnity for claims against the Motor Insurers Bureau (MIB), the recovery of uninsured losses and injury incurred as a result of an RTA occurring in Europe, Motorists Prosecution Defence and cover for disputes over the purchase, sale or repair of the insured vehicle.
ou cannot open any legal or insurance trade publications these days without there being reference to the impact on solicitors and insurers following LASPO, both positive and negative. With plenty of internal naval gazing going on, the one person that has had very little ‘air time’ is the customer, and what impact the reforms are going to have on them. In general, outside of the insurance and legal world, the Jackson reforms to the customer never happened, and is meaningless to them, until, that is, they come to bring an injury claim and realise that no-win nofee isn’t quite what it used to be. The recent FCA thematic review on Motor Legal Expenses Insurance (MLEI) has, quite rightly, identified some significant issues with the way that this cover has been sold in the past, with some sales models and the financial rewards for the distributor being a significant motivator rather than understanding the demands and needs of the customer and providing a proper explanation of the cover features and benefits.
Since 1st April, the benefit for the customer to having Before the Event (BTE) Motor LEI is now even more tangible. Whilst the product coverage hasn’t necessarily changed, the type of losses where the Motor LEI indemnity is being called upon is certainly changing. Motor LEI was first introduced into the UK by way of providing customers with a service to recover their uninsured losses, namely their policy
excess and any car hire charges. This service used to be provided by the broker, although the administrative burden meant that brokers spent less time broking new and renewal business and too much time working on non income bearing work. Protecting the customer However, insurers are improving their claims processes to be far more customer centric, from excess suppression, whereby the insurer will absorb the excess as part of their subrogation claim against the third party’s insurance company to the provision of replacement vehicles, often on a like for like basis. This change in the behaviour and process of insurance companies has led to the Motor LEI indemnity principally being used to protect the customer against adverse costs in the pursuit of damages following a Road Traffic Accident. Although valuable additional features are also included under some Motor LEI policies, for instance Allianz Legal
“Whilst Motor LEI provides a real post LASPO value to customers, ensuring that they retain 100% of their damages, there continues to be a disconnect for the customer between the insurers First Notification of Loss service and the claims reporting process for making a claim under the Motor LEI policy”
Whilst Motor LEI provides a real post LASPO value to customers, ensuring that they retain 100% of their damages, there continues to be a disconnect for the customer between the insurers First Notification of Loss service and the claims reporting process for making a claim under the Motor LEI policy. This again was highlighted by the FCA, calling Motor LEI ‘complex and difficult’ for customers to understand. I don’t believe the product is complex, although Motor LEI can often be confused with the legal liability covers provided as part of the motor insurance, something I’ve recently encountered with a prospective business partner. A new challenge What is complex and confusing for customers is the process that they need to go through to make a claim against the LEI policy, something which is unlikely to improve until such time as Motor LEI becomes a standard feature of all motor policies. So where does this leave ATE insurance for RTA’s? Whilst Motor LEI continues to be sold as a separate addon, and with the volume of personal lines motor business now being transacted online through aggregators, the take up on Motor LEI has reduced, meaning that there is a market of customers without any BTE Motor LEI. The challenge for law firms however is how they can profitably manage these kinds of cases within the new fixed costs regime, and how they can generate the volume of work needed to make it viable. Steve Rowley is Business Development Manager at Allianz Legal Protection
MC // January 2014
Consultant Automobile Engineers and Assessors
We would like to wish all our clients a very merry Christmas and a happy new year. We welcome all enquiries from prospective and established clients. Laurel House, Main Street, Garforth, Leeds LS25 1HB
Prompt turnaround reporting • Tailored services to suit individual requirements Email: claims@legalandtechnical.co.uk Tel: 0113 3231777
Big enough to cope small enough to care SBT1486 Charlton Grant - Modern Claims L&T Ad v3.indd 1
17/12/2013 12:48
Let DWA take the stress away!
Had an Accident? Need a Niche Vehicle?
0800 064 5656
Talk to us now regarding provision of Niche Vehicles to your Clients or Insured MPV’s - Saloons - Executive & Commercial Vehicles
Specialist Claims Management for Hackney & Private Hire Drivers Available 17/18 Bridge Industries, Broadcut, Wallington. Hants. PO16 8SX Tel: 0870 950 7410 Fax: 0870 950 7411 Web: www.dwaclaims.co.uk
Features
49
Man in tights Scottish independence could offer a chance to continue to lead the way for the rest of the UK in EL claims and revise the Enterprise Act for Scotland (opening the door for an ‘insurer of last resort’ for EL claims, for example). However, as Patrick McGuire reports, the Scottish Government seems to have stepped into the neutral camp on such issues.
I
f 23 November 2013 was the Day of the Doctor (forgive me for the immediate, and perhaps unnecessary, pop culture reference but it was a very big day in the McGuire household), then 26 November 2013 was the Day of Questions. The White Paper on Scottish Independence was published that day, to the expected fanfare and inevitable Scottish Government website crash. When the dust settled and the pages of the White Paper began to be turned, it was evident the muchtrailed question and answer approach had been adopted by the Scottish Government and, at least at first blush, served a pivotal role in the case for independence. There were 650 questions in all. That’s a lot of questions but I have to say, when I began to read the White Paper and weeded through the short, snappy and heavily spun answers to important questions, I began to hum the Johnny Nash song fondly remembered from my childhood watching A Question of Sport – you know the one. The White Paper posed far more questions than it gave answers. In terms of the claims world, it said very little indeed.
to have given us a vision – simply because it has a vision in relation to virtually every other area of life.
A lack of vision? This was very unusual because the White Paper has been heavily criticised as being the most expensive manifesto of all time. As anyone (possibly suffering insomnia) who decides to have a read of the document will discover, at least 50% of the document contains policy promises for what an SNP government would do in its first term in an independent Scotland. It’s certainly a case of policies, policies everywhere but not a drop to do with the claims market. This is frustrating and disappointing. There are extremely important issues for Scottish citizens that ought to have been addressed, in relation to which the Scottish Government ought
Addressing the Enterprise Act What is our position in relation to Section 69 of the Enterprise Act? Will it, as any social democratic party (such as they claim to be) ought to, immediately reverse the Act? What about blacklisting? Will the Government introduce legislation that will provide proper legislation to prevent all forms of blacklisting in the future - providing proper redress for all victims of past blacklisting? What about creating an ‘insurer of last resort’ - of the ilk of the MIB - for victims of employment, injury and disease? Surely if employer’s liability insurance is compulsory, the case for such a body is unanswerable? Not, it would seem, for the SNP.
“There is little doubt that, when the Scottish Government shied away from any meaningful statements on the Enterprise Act et al, it was with an eye on how this would impact on big business and the insurance industry”
All things to all men The reason why I am certain that these issues have not been addressed is because of the general approach adopted by the White Paper. As well as the Johnny Nash song, another thing the White Paper called to mind was an English lesson from my fourth year at high school. Casting his eyes over the classroom, my teacher asked: “What is it about the character of Robin Hood that has afforded him such lasting appeal to the popular consciousness?” Given the deafening silence of my classmates’ response, my teacher suggested Robin Hood contained characteristic traits (many of which were self-contradictory) that appealed to and resonated with everyone. Robin Hood was (as the saying goes) ‘all things to all men’. The White Paper also tries to be all things to all men. The Scottish Government will reduce Corporation Tax by three pence, will reduce air duty by 50% while at the same time making significant increases in child care and education provision and killing the Bedroom Tax. The White Paper tries to appeal to Scotland’s social conscience – to care for, and give a leg up to those in most need while pandering to big business. Reform clarity? Not yet. There is little doubt that, when the Scottish Government shied away from any meaningful statements on the Enterprise Act et al, it was with an eye on how this would impact on big business and the insurance industry. As such, I am afraid to say - a telephone book sized document and 650 pages later - the Scottish claims market is no clearer as to how things might be different in an independent Scotland. Time and the Referendum vote itself will no doubt tell. Patrick McGuire, Partner, Thompsons Solicitors
MC // January 2014
Industrial Disease L e g a l M a r k e ti n g Atrium Legal Services was established in 2008 and since then has grown into the largest specialist Industrial Disease Legal Marketing Company in the UK. We work closely with our Panel Solicitors to ensure that every case is of the highest quality.
“
Matthew Horne, Managing Director For a long time I have believed that working closely with our law firms and business partners will enable us to become a cut above the rest. This award is a true testament to that!
” 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.
Steven Eldred, Partner Thomas Eggar A Legal 500 firm
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.
www.AtriumLegal.com
enquiries@AtriumLegal.com
Features
51
Tools of the trade Modern Claims asked our group of legal experts how, in the wildly changing claims landscape, do lawyers stay on top of driving their business plan forward and what tools do they need? We also asked what impact changing business plans has on the ability to secure investment from external / internal investors and bank funding and, finally, how they will maintain a strong culture and staff morale through 2014.
F
or Jonathan Appleby, Head of Business Development at Lyons Davidson, it is ‘not an understatement’ to say that 2013 ‘has been a year that has seen an incredible amount of change within the claims sector’. “Everyone who is involved within the claims value chain has been affected in one way or another; it’s fair to say some have adapted to the changes better than others,” he says, adding: “Most of the changes have been signposted for quite some time and careful business planning should certainly have helped to mitigate the impact for most firms.” Anthony Hughes, solicitor and regular contributor to Modern Claims agrees: “In the 25 years I have spent in this industry I’ve never known things to be moving so fast. There has often been talk of revolution in the past, the small claims limit going up in the 90’s and the Woolf reforms at the turn-of-the-century but neither of them had such a seismic impact as LASPO. “In one sense you could say business planning is easier because if you try and do anything particularly detailed, beyond a highlevel vision, it is virtually impossible. Certainly any strategy needs to be reviewed on a monthly basis and finessed as different opportunities or threats present themselves.” How firms navigate through the rapid sector environmental changes will be key to their survival, notes Michael George Davidson, Head of Strategy and Sales at Goldsmith Williams Solicitors. He believes the ‘what and where’ in the world of claims has not changed significantly from the customer perspective (i.e. customers will continue to drive, unfortunately accidents will still happen and those genuinely injured in the process will continue to require ethical and transparent access to justice). How and why they provide the service has, undoubtedly changed, he adds, especially the increasing number of new entrants and alternative business structures (ABSs). “A number of new entrants are coming into the legal market, looking to reduce their costs base and leverage upon their existing distribution channels to offer legal services,” he outlines. Alan Nesbit, Managing Partner, Nesbit Law, admits: “I don’t think I have ever had as many conversations with my senior management team as I have had this year. It has been a case of pruning and refining at times on almost a daily basis to ensure that we are as current as possible with changes to the rules and
“I don’t think I have ever had as many conversations with my senior management team as I have had this year. It has been a case of pruning and refining at times on almost a daily basis” Alan Nesbit
THE legal experts
Donna Scully, Partner, Carpenters Law.
Catherine Smith, Operations Director, Wolf Law
Alan Nesbit, Managing Partner, Nesbit Law Group.
Michael George Davidson, Head of Strategy & Sales, Goldsmith Williams.
Anthony Hughes, Solicitor
Jonathan Appleby, Lyons Davidson
MC // January 2014
Features
even how judges and regulators will construe those rules. “Despite that, the central ethos of our business planning has remained the same. We have as a firm seen a niche and decided to pursue that to the best of our ability. The secondary phase has been ensuring that as we spot what others are doing in the market, see how we can then take advantage with our specific niche in mind. This has taken us down some surprising routes that we never anticipated.” So how have these firms taken their business plan and put it into action, as well as judge their ability to succeed in the post-Jackson era?
Proven process
What’s worked for Lyons Davidson are process efficiencies and years of practice, according to Appleby. The firm’s case management system Filestream had already been bedded-in prior to the changes, so the firm was able to ‘absorb and adapt’ to the new cost regime, with ‘minimal impact’ on clients. The processes in place also allowed those with the grey-matter to run a series of financial scenarios involved in the MOJ portal fee changes, to see how they would work under a post-Jackson regime business plan. This provided the firm with some knowns, despite the very uncertain marketplace, which is still true almost nine months on. Diversification over recent years has helped Carpenters cope with legislative change and also driven growth, according to Donna Scully, Partner. “At our core,” she explains, “we are a claimant law firm but we also have a thriving defendant arm and are a provider of full TP and AD claims handling to a number of insurers.” This creates not only flexibility but also the knowledge to react in either camp. Carpenters also houses a 24/7 white labelled FNOL unit and provides IT services to the insurance industry, offering an own-brand FCA authorised LEI product from its insurance division. “This diversification has enabled us to secure and retain business across a range of products and services,” she adds. Scully points to the fact that reinvestment in IT and creating ‘quality’ services have been a ‘huge part of our success’. “We are in a service industry but over the years it seems this has been forgotten. We’ve always kept the
53
“The days of partner secrecy within the law should be well behind us if we are to have any kind of hope of operating like a modern business” Anthony Hughes client at the heart of our processes and ensure claims are managed in the most efficient way; it is vital to our reputation,” she says.
Robust Governance
Davidson believes ‘one significant element’ has ensured Goldsmith Williams Solicitors, with its brand partner, remains on track in terms of return on investment (ROI) delivery, that of robust governance and planning – especially for early market movers. “Joint development planning (JDP) is a widely used term and most understand its basic needs, however only a very small number truly maximise its potential. JDP has to be part of the culture of the business, spreading out to engage and engrain within key strategic partnerships. This is something we do very well. “This forensic process alone ensures we are ahead of the change curve and saves us both valuable time and frustration enabling us early mover advantage,” he says. Planning is a key element to the success for any business, offering an engagement strategy that applies both externally and internally. A plan also plays a key role in early and ongoing conversations with investors as, Davidson notes, investors - private or otherwise - often have two major requirements: • A solid ROI • A safe pair of hands
Attracting investors Catherine Smith, Operations Director at Wolf Law Solicitors, who oversees its private client work, said the firm’s business plan is ‘necessarily fluid’, having introduced new areas of law as each department settles and runs as anticipated in light of reform. This helps with attracting finance as, she explains: “The ‘sausage factory’ law firms will always exist but our view to drive the business forward is a return to the more traditional multi disciplinary practice. “Investment has been easier to source on this basis as banks seem
to shy away from the ‘all eggs in one basket’ approach,” she says. Clients have, Smith adds, been surprisingly accepting in contributing to their costs: “Older Clients may recall having to do this in the past, but for the younger ‘free iPad with every claim’ generation it has been a culture shock. “Solicitors have, at long last, shown solidarity and not attempted to ‘undercut’ - the 25% contribution is now standard. Estate Agents have always retained high rates for relatively little work – earning more than most conveyancing solicitors - because they remained united on charges. A lesson our profession ought to heed.” The advent of fixed costs for nonRTA work has provided certainty in relation to the level of fees recoverable, which can help in financial planning, Smith believes, as ‘the speed and ease of using the portal for non-RTA work has significantly shortened the lifespan of cases’. This is, she notes, a small positive, in a not so positive era. Scully lays the basis of Carpenters’ success at the door of prudency: “I have to say that is down to John Carpenter, much more than me. We’re happy to invest in something that improves the business and makes us better at what we do but there’s no room for waste; everyone in your firm must be in agreement.” In terms of securing investment, Scully claims ‘never to have had a problem’, due to the fact that ‘the banks see our commitment through reinvestment and sustained growth’. “We’ve never spent what we don’t have and I think it has to be this way. When I hear of firms borrowing to pay VAT, tax and to buy practising certificates it shocks me. Profit isn’t profit until the overheads are paid,” she stresses. In terms of securing investment and funding, the ‘appetite remains’ for those looking at large volume enterprises, to be a provider of multiple services and specialities to thrive, Nesbit believes. “New purchases, mergers and JVs are in the news on a fairly regular basis and this seems to have little in the way of signs for slowing down. Despite the
MC // January 2014
Your Telematics Technology Partner of Choice for ✓ Driver Rate & Risk through highly detailed, real-time data analysis
✓ FNOL ✓ Forensic Accident Reconstruction ✓ Fleet Insurance - Asset Management & Duty of Care Lysanda Limited, Tintagel House, London Road, Kelvedon, Essex CO5 9BP Tel: +44 (0) 1376 574400 I Email: info@lysanda.com I www.lysanda.com
Features
55
“What is often overlooked is how all the changes affect the end customer. Surely this is the most important aspect?” Jonathan Appleby fact that banks have continued to keep a nervous profile within the sector there have been a number of litigation or disbursement funders entering the market. There are clearly enough people out there who believe that the sector can provide a reasonable return on investment,” he muses. Hughes believes the amount of regulatory change has made securing investment very difficult in some areas: “Not so much from the banks in terms of modest sums or overdrafts but transformational capital from the likes of a private equity investor – who are unlikely to come into a sector which is going through such uncertainty and change. This is possibly why those law firms that are listed are stealing a march, particularly on the claimant side. “The two big names that have secured external finance on the defendant side appear to have taken a very different approach; one has been acquisitive whilst the other appears to be focusing upon organic growth. Their respective results are yet to be published and it will be interesting to see how successful they have been,” he says. The investors do indeed seem to be floating around, looking for the right investment but, as Modern Claims and its sister publication, Modern Law, have reported time and time again, firms need a sound business plan, wish list and visionary leader at the helm – something all these firms consistently show.
Teamwork
Keeping staff updated and abreast of all the legislative changes is also very important as is communicating plans and positive action by leaders of the firm, to inspire confidence and a positive reaction to any change. As Appleby says: “Without the correct information or ‘tools’ they are not able
to perform their jobs. We have run a number of internal workshops and information bulletins to ensure Lyons Davidson staff are fully up to speed. Our experience is that our staff have thrived on understanding how all the changes have applied to their individual roles. The staffs’ appetite and energy to handle change was very encouraging.” The internal engagement strategy at Goldsmith Williams is ‘critical’ in ensuring a highly motivated workforce. The firm ‘embraces the input and feedback of all employees in the business planning process’ and by doing so, employees feel part of a journey in which they can see how they contribute and consistently add value. “This ethos,” Davidson explains, “ensures any changes we have to adapt to are seen as positive opportunities, enabling all parties to move forward quickly. For this reason alone we ensure attrition rates are extremely low which is a hugely important issue when working within the affinity space as our highly trained staff are of course our brand partners’ staff.” Nesbit agrees, suggesting that the more open and honest the firm is with staff about its plans and the need to collaborate across the organisation to over come challenges, the more positive the reaction from individual employees. “The morale in our offices has remained good. We have provided a clear message as to what we are looking to achieve and what our methodology for achieving our goals is. People have got on board with this and we are steadily seeing the returns on our hard work and effort as a team. That in turn breeds further confidence in what we are trying to do,” he says. The commitment of the firm’s staff is a ‘huge part’ of Carpenters’ success, according to Scully: “Through challenging times we’ve kept them
abreast of our plans to manage reforms and change, and it’s very important that they know how hard you are working to secure their future too.” This level of reaction is even more fulfilling when you consider staff ‘have never worked so hard for so little,’ as Smith points out: “Across the board salaries seemed to have dropped and bonuses disappeared or reduced. “It can be an uphill battle to maintain staff morale when fee earners are under increasing pressure so Wolf Law made the decision that: case loads must be modest and easily turned over to give a sense of achievement; staff should work in mutually supportive teams with team based results and there is a mix of financial rewards (albeit more modest than in the past) and other incentives. These include days off, early finish days and treats. We also introduced shift work and weekend work, which has proved extremely popular.” Clarity and honesty means everything to staff in such trying times, Hughes believes. He is a firm believer that ‘the days of partner secrecy within the law should be well behind us if we are to have any kind of hope of operating like a modern business’. A point many have made both inside and outside traditional partner-based models over the past few months. Of course, what is often overlooked, concludes Appleby, is how all the changes affect the end customer, ‘surely this is the most important aspect?’ he asks, adding: “Does the average person on the street have a real feel for the changes we have witnessed over the past 12 months? Possibly not. However, creating an environment where a customer can be certain they are getting the best possible service at their moment of need has to be a good thing. We must all put the customer at the very heart of everything we do.”
A unique and modern claims service If you’re looking for an innovative and effective legal service, talk to us. Whether you’re a business or an individual, you can trust us to use our innovative thinking, clear advice and effective solutions to get the resolution you’re looking for – we’ve been doing that for our UK clients for over 40 years. Perhaps it’s no wonder that with such a great combination of expertise, knowledge and technology, our people have gained a reputation for providing a powerful and unique legal service. To experience it for yourself, give us a call or take a look at our website.
www.lyonsdavidson.co.uk T: 0117 904 6000 E: info@lyonsdavidson.co.uk
Features
57
Choose wisely In a post LASPO world, brokers have an array of choices before them, Phill Witterick explains why personal lines brokers now need to be ever more diligent when choosing the right claims management provider.
M
ore so than at any other time, personal lines Insurers in the broker channel are scrutinising who brokers use for claims management and considering taking various forms of action in situations where who the broker appoints for their claims handling, is at odds with the Insurers views and values, or where MI suggests that choice is damaging to loss ratios. Insurers in the standard motor market have long held an uneasy view of some of the CMC’s, or PI law firms brokers choose to partner with and the motivations behind those choices. Whilst for the majority of brokers choosing a law firm or CMC, customer service has always been the biggest factor behind any appointment, financial considerations were often an influence and for some the reliance on claims derived income led to choices that Insurers would have considered less than ethical. Accusations around claims farming, costs inflation and the selling and mining of client data were common but relatively little real action with regards to the relationship with the broker has ever been taken. This is likely to change now, in part motivated by motor Insurers own decisions on reducing rates by as much as 12% this year. Essentially, Insurers have banked the forecast savings from reduced claims costs as a result of the LASPO reforms well in advance of seeing any tangible benefit. The resulting ‘soft’ market, enhanced by falling returns on investment income, have placed
significant pressure on loss ratios and so any choice a broker makes that could be perceived as being potentially damaging to loss ratios, will be firmly on Insurers radars. In addition, agency and compliance teams at many motor Insurers have expressed concern over the amount, or in some cases lack, of due diligence brokers are entering into when selecting a compliant claims management provider. Post LASPO, a number of different models have emerged and some experts have commented that a number of CMC’s and PI firms appear to be in breach, doing little to change how they operate their business other than giving referral fees another name. Elsewhere a range of models exist that attempt to circumnavigate the ban and whilst they may not be considered unlawful many of them have been labelled as being in breach of the “spirit of the ban”. Simply taking a provider’s assurance that their chosen model is compliant and it has received advice confirming this should not be considered adequate. For the sake of the brokers own reputation and critically to ensure it is not at risk of being in breach of legislation itself, a broker should obtain independent advice and ask whether or not the law firm or CMC has discussed its model with the appropriate regulators. In addition brokers should look to understand both how their proposed claims management provider works
“Agency and compliance teams at many motor Insurers have expressed concern over the amount, or in some cases lack, of due diligence brokers are entering into when selecting a compliant claims management provider”
with its Insurer panel and how it is perceived by Insurers. Insurers are producing MI to look at how average claims cost, claim reporting times, claimants per claim and average credit hire periods, amongst other factors, vary dependant on who their broker panel is using for claim handling and how that might affect the brokers own loss ratio. This data can then be examined against other measures such as litigations rates, who does or doesn’t work proactively with Insurers via discussion protocols, anti-fraud initiatives etc. to build a clear view on whether a brokers chosen provider is a cause for concern and possible action. In the same way that the loading or discounting of base premiums, commission levels or even whether an agency is granted or retained by an Insurer can be varied based on a brokers processes and risk management at point of sale, similar underwriting action could become more common place dependant on how the brokers chosen claims provider affects what happens at the point of claim and beyond. Historically brokers have proven time and again that they are better equipped than most to move quickly and adapt to change. Ensuring excellent customer care and building long lasting positive relationships with their Insurers have been critical in maintaining their success. In a post LASPO world with an array of choices before them, personal lines brokers need to be ever more diligent when choosing the right claims management provider. How that provider can demonstrate its compliance, as well as its values, reputation and willingness to work collaboratively with insurers are more important than ever as not only will the regulators be watching; their own Insurer panel are too. Phill Witterick is Commercial Director at Carpenters
MC // January 2014
GW AFFINITY Claims Assist there when you need us most
24-7-365 FNOL/FNOE overflow fulfilment 24-7-365 FNOL/FNOE out of hours fulfilment 24-7-365 Third Party intervention/ assistance programme
Complimentary arrangements now available! Contact Head of Strategy & Sales Michael George Davidson today by phone - 07795 490 952 by email - mdavidson@goldsmithwilliams.co.uk or find him on LinkedIn REMORTGAGE | CONVEYANCING | PERSONAL INJURY | FINANCIAL CLAIMS | WILLS & PROBATE | EQUITY RELEASE | BUY-TO-LET Goldsmith Williams Solicitors / Mersey Chambers / 5 Old Churchyard / Liverpool / L2 8GW DX address 14186 Liverpool. Goldsmith Williams is authorised and regulated by the Solicitors’ Regulation Authority under number 48089 © Goldsmith Williams Solicitors. www.sra.org.uk
Untitled-1 1
0301/001/041213
18/12/2013 12:04
Features
59
What the client really, really wants… The delivery – or not – of consistent and ‘best interest’ customer service standards is now a very real regulatory issue for insurers, brokers and lawyers. However, this focus on putting the customer at the heart of the process is matched by increasing competition and even further pressure on cost. So how do they find out what really matters to customers and, importantly, what do you do with that information? Emma Waddingham reports.
T
here have been many articles in Modern Claims that propose investing in process, workflow and people so that customer service can be your core focus. Yet how much time do those in the insurance industry and lawyers (with claimant and / or defendant customers) take to identify and address what really matters to clients and do they then engineer their services around that need or simply give the impression of being able to deliver? Is it, actually, a bit of both? For example, one of the biggest problems lawyers face is overcoming the barriers to effectively marketing their proposal to customers in a unique, realistic and, importantly, meaningful way. It is fair to say that some insurers and brokers face the same problem, so it seems that a renewed investigation as to what the customer really, really wants could benefit an organisation at all levels in the year ahead. Of course, what works for one part of the claims arena might not work well for others which is why it’s so important to work out: what it is that draws your customers to you; what customers perceive as added-value; being able to streamline the model to ensure certain deliverables, and; marketing that USP. Delivering in moments of distress In a world where the use of insurers and brokers is based on the need to avoid and protect oneself from risk and the use of claims lawyers is a distress purchase, what makes one brand stick out from another at a time when most individuals probably can’t see the wood from the trees? “Insurance is,” says John Newnes, Claims Manager, Thomas Carroll Brokers Ltd, “something most of us buy, whether by
choice or a statutory requirement. When businesses or individuals purchase insurance it is often only when something goes wrong that you find out exactly what you have purchased and whether it is adequate.” “Policyholders are buying a promise; it is the effectiveness and application of that promise that solidifies the relationship between insurers, brokers and policyholders,” he adds. So, how do insurance professionals ensure promises are met? Newnes believes the brand promise ‘can only be achieved through excellent customer service and with a thorough understanding of their businesses and the environment in which they operate’. Jonathan Appleby, Head of Business Development at Lyons Davidson, agrees: ‘’The best thing to do when you are dealing with a customers claim is to listen to them - only by doing this can you truly understand their needs.’’ This requires a level of market research, not only in terms of brand position and competitive offerings but, importantly, speaking to potential, existing and former customers. As Craig Jones, Operations Director at claimant law firm, Simpson Millar, explains: “Clients want to perceive value through a combination of service and budget. To genuinely deliver both, we need rapport. The diverse nature of people is such that often, rapport requires effort and to achieve our objective we need techniques or processes to help establish it. “At the heart of those techniques and processes is the simple requirement that we listen. Listen to happy clients. Listen to unhappy clients – a particularly valuable source of information. Encourage feedback from silent clients and listen to that. Listen to clients at the end of their matter but listen to them at a much earlier stage of the matter – you may get a
“The claimant will have little knowledge of the process involved and what’s expected of them. Transparency and regular contact can reduce frustrations and the potential need to complain,” John Newnes
John Newnes Thomas Carroll Brokers Ltd
Jonathan Appleby Lyons Davidson
Craig Jones Simpson Millar
MC // January 2014
Features
61
“Listening without learning is pointless so take what you hear and adapt…It’s about taking a creative, new approach to old problems; with value and service at an appropriate budget at its core,” Craig Jones fantastic opportunity to put things right before they go wrong.” Great expectations So, what do customers want in the event of a claim? From the brokers’ perspective, Newnes says, a customer ‘needs empathy and they crave clarity and information on the situation and it’s progress’. He explains: “All individual claims professionals can really make a difference to a customers experience. They have a duty to promote the highest standards of service and care. At the same time, claims advisers need to adhere to the policies boundaries or constrains and communicate this openly with the client in the simplest form, also at the earliest opportunity.” This highlights the need to communicate the impact and protection customers require for their business or individual needs long before they have entered a distressed situation. While some choose to insure after a damaging incident, the need for brokers to offer advice – often their unique selling point in the market – is underpinned by a customer expectation for ‘professionals to understand their business pre loss’, which, explains Newnes, ‘will then enable advisers to exert their expertise and manage the claim efficiently’. “The client simply wants to be kept in the loop at all relevant aspects of the claims process, including the time scales involved. Knowledge and involvement is king to keeping clients calm and engaged. The claimant will have little knowledge of the process involved and what’s expected of them. Transparency and regular contact can reduce frustrations and the potential need to complain. All through the claims process, communication is paramount to maintaining expectations,” he says. At Lyons Davidson, working with a range of insurance companies means catering to their individual needs and customer expectations: “We make sure we adapt and tailor our processes to ensure that we are meeting their needs and the needs of their customers,” Appleby says. This requires flexibility and often scale for delivery and process to meet customer needs of price or
turnaround as well as the ability to manage multiple corporate customers. Appleby also notes that legal brands operating on a joint venture also have to meet the needs of those people ‘who are not involved in the legal sector’. “For them, the law can be a scary and daunting place. It is our job to ‘hold the customers hand’ through every step of the claims process so they fully understand what is happening,” he explains, suggesting a multifaceted customer focus strategy to manage both corporate and individual customers. This level of dual customer focus existed long before the advent of ABSs, particularly for defendant lawyers but also for claimant firms with links to trade unions. Are you listening? So, how do you make sure your organisation really delivers and is in a position to generate new work or cross-refer customers to other services? Feedback, feedback and more feedback is required to generate not only more information on the customer but also how things went, regardless of settlement outcome. “After every claim is settled we send every customer a survey asking them to comment on the service we have given and what we could have done differently. The results of these customer satisfaction surveys help us to maintain a high level of customer service and identifies areas for improvement,” explains Appleby. The trick, of course, is having the ability to get the customer to stick around and be honest once they have finished working with you. In the case of the claimant lawyer, where long-term relationships borne out of a distressed purchase are difficult to achieve, getting to understand the customer and what incentivised them to work with you is a far more rapid process than (perhaps) for defendant firms and brokers who often have more long-term relationships with customers. Ultimately, getting to understand what customers really, really want comes back to investing time in the listening process and implementing something valuable with the knowledge and information gained.
“When listening, it is important that we distinguish between need and want. Many businesses focus on the former, but delivering on the latter is what rewards with great testimonials and repeat business,” believes Jones. However, the world of customer focus groups, surveys and even mystery shopping isn’t all plain sailing. Inevitably you will be criticised but it’s what companies do with this information that matters. Importantly, in a critical situation, don’t, Jones advises, ‘be defensive’. He says: “If your objective is to win more business by improving your appeal to existing clients and prospects, then an adverse opinion doesn’t have to be both genuine and reasonable. If it is genuine and adverse, that is enough; the reasonableness or otherwise for the purposes of delivering what clients really want is often irrelevant. “Listening without learning is pointless so take what you hear and adapt. You may need to change your policies or procedures, and perhaps adjust your prices. Increasing your range of service levels with different prices accordingly can be a good way of meeting different needs for different clients. Sometimes adaptation will demand that you innovate – a term all too often banded around inaccurately these days. Innovation isn’t purely about technology. It’s about taking a creative, new approach to old problems; with value and service at an appropriate budget at its core.” Again, communicating the fact your law firm / insurance broker / underwriter brand really listens to customers and takes time to manage expectations through this communication can also have a positive impact when a claim doesn’t go as expected. “Although meeting client’s settlement targets is also of the utmost importance, adhering to the above and exceeding customer expectations, can also result in a negative result being gracefully received,” suggests Newnes, adding: “It goes without saying that providing a great customer service will benefit all parties involved including long-term customer relationships and brand reputation – after all, communication is king!”
MC // January 2014
62
Features
5 minutes with... Jonathan Appleby, Lyons Davidson Q: Has the industry changed drastically since you started working in it? A: I have worked within the claims sector for a number of years, having previously worked for an insurer. However, since I joined Lyons Davidson and the legal sector 18 months ago there has been an unprecedented amount of change in relation to LASPO and the Jackson reforms. There will undoubtedly be more changes to come however if these changes ultimately benefit the customer at their moment of need then that surely has to be a good thing. Q: What has been the key positive or negative impact of change in your market? A: For me, the most positive impact in the legal sector is the introduction of ABSs and similar models that allow wider access to legal services for customers. This simply just has to be a positive step, as consumers can feel slightly daunted by the legal sector. This is because it is viewed as something incredibly complex and expensive - as a non-lawyer myself I am in an ideal position to see this. The challenge for us all is to make legal services more accessible and affordable for a potential customer. After all, most legal services are what I would call a distress purchase so it is vital that the customer journey is managed with this in mind. This does not necessarily have to be through an ABS-type model, however these vehicles do present an opportunity to help us to deliver this.
Q: Who inspires you and why? A: I have been privileged to meet and work with some amazing people throughout my 25-year career across a number of sectors. The ones who have stood out for me are the folk who have achieved success through hard work, innovation and most importantly, integrity. Q: Have you had/got a mentor? If so, what was the most valuable piece of advice they gave to you? A: I have had mentors in the past although not all of them were good – I think in some cases it was me who ended up being the mentor to them! There are probably two valuable bits of advice I have received that stick out for me. The first is: ‘every customer you currently deal with, you will lose one day. Our job is to make sure that date is as far in the future as possible’. The other is: ‘when you manage people you need to know how to light fires under them without boiling their blood’. Q: If you were not in your current position, what would you be doing? A: I have always enjoyed dealing with people and understanding what makes them tick and why they behave in the way they do. Therefore, if an alternative opportunity had arisen I would have studied and practiced psychology as I think it’s a fascinating area. Apart from that I do think it’s important to try and give something back to society in some way so I have, in the past, been a school governor and been involved in various pieces of voluntary work. Jonathan Appleby is the Head of Business Development at Lyons Davidson.
Enabling excellence AMV Law adopts Eclipse’s Proclaim Practice Management solution
A
MV Law, an award-winner at the Law Society Excellence Awards 2013, has implemented the Proclaim Practice Management Software solution from Eclipse Legal Systems into its niche PI practice. AMV Law, which has gone from strength to strength since launching in 2006, is a niche London-based practice specialising solely in personal injury cases. The firm caters for the full range of injury and claimant types, ranging from straightforward RTA cases through to catastrophic injury cases. The firm has taken the full Proclaim Practice Management solution, integrating firm-wide accounting toolsets with the Personal Injury Case Management desktop. In addition, AMV Law is taking advantage
MC // January 2014
of Proclaim’s A2A (Applicationto-Application) functionality to process low-value RTA (Road Traffic Accident) claims through the Government’s Portal system. Prior to implementation, Eclipse carried out a migration of data from AMV Law’s existing case management solution.
Anna Theordorides, Principal of AMV Law (winner of the Highly Commended prize in the Legal Business Woman of the Year category at the Law Society Awards 2013, pictured), said: “In an ever changing landscape it was essential that we found a way to ensure we were able to compete and survive the new costs regime. It was imperative that the system we invested in would allow us to carry out work as efficiently and cost effectively as possible within the Portal and outside, whilst maintaining excellent client care.” For further information, please contact Darren Gower (Marketing Director) at darren.gower@ eclipselegal.co.uk, call 01274 704100 or visit www.eclipselegal.co.uk.
“Modern, Refined, Intelligent claims handling� T: 0844 815 8902 | F: 0844 815 8903 | E: info@rtasolutions.co.uk | W: www.rtasolutions.co.uk 25 Apollo - Lichfield Road Industrial Estate | Tamworth | Staffordshire | B79 7TA
Wondering how to profit in the new era of PI? The Personal Injury sector has changed – to compete, you have to use the very best Case Management system.
Proclaim is the UK’s leading Case Management software solution, in use by 20,000 professionals. Proclaim maximises efficiencies, cuts costs and enables you to provide a superb service experience. 3 3 3 3 3 3
Portal-ready for RTA and EL/PL claims Automates procedures and document production Manages your full range of claim types ABS-ready – manages everything through one system Provides instant online services for clients and customers Integrates with business partners
Get the competitive edge
Call 01274 704 100
visit eclipselegal.co.uk or email info@eclipselegal.co.uk