Accident Claims
Click on the titles below for more information:
Should legal language be illegal?
Fight for every penny!
Would you trust an insurance company?
Are people clients or commodities?
Why the Middle Man costs
Fired but fighting back
The fraud business
What value the lawyers?
Person or data entry?
Compensation Culture
Why compensation is paid
Who
can claim
Responsibility for the accident
The man of straw
Costs – what does ‘No Win No Fee’ really mean?
EXIT fees - who charges?
Damages
Claims Management companies
Should legal language be illegal?
Lawyers are notoriously pompous. Barristers especially so as they parade around in their wigs and gowns coming out with their Court room turns of phrase like:- "may it please the Court" or the real old chestnut "I put it to you..." You would be within your rights to think that speaking in this way is just play-acting. Often it is. Often, however, it is deadly serious.
I have previously written about how prevalent fraud is within the motor claims business. The use of legal language at its most pompous is a perhaps an odd, and unintended, consequence of the warfare between claims solicitors and insurance solicitors.
You may imagine this is just an insignificant aside, but it is not. In my view this is a indicator of how far the pendulum has swung away from fairness and balance. If our legal system had any common sense, the kind legal language I refer to below, would be struck out with a big red pen long before anyone would need to ask whether it was serious or not.
In one of our cases, language has been used by a barrister that would cause Charles Dickens to guffaw (sorry, not meant to be pompous) with pleasure!
The other side's barrister has written in a Court document that the nature of the job done by one of our clients "infers suspicious familiarity with the instant issues".
I would love to say that this phrase is meaningless! I would love to say that the person who wrote the phrase had simply consumed too much Single Malt Whisky before coming up with this overblown rubbish! Sadly, I fear it is very serious indeed. I fear he means what he says.
What this means, I think, in less pompous language, is this: our client is a fraudster because he is a fraudsters by trade. He is, they suggest, a director of a company associated with the motor insurance claims business. So, the Defendants argue, he MUST be a fraudster.
If I have understood "suspicious familiarity with the instant issues" correctly, then, I think the barrister appears to be saying that the job a person does may be evidence that he is a fraudster.
It would follow that all MPs are fraudsters (they are suspiciously familiar with expenses fraud). Or all professional footballers are losers (they are suspiciously familiar with losing to Germany).
Or perhaps better still, all solicitors who defendant fraudsters are themselves fraudsters - they certainly must have "suspicious familiarity" with the frauds alleged (the same argument could apply to barristers!).
Or, as I started, all barristers are pompous. Oh dear! Or, without overstating the argument: being a barrister would be evidence supporting a claim that you, the barrister, are pompous.
During the 1990's attempts were made to turn the law into an accessible open profession. The change extended to lawyers using "plain language" - Latin phrases were to be dumped in the long grass! Maybe Latin has gone but Victorianism certainly hasn't!
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Fight for every penny!
For most of my working life as a solicitor, I have queried the relationship between insurance companies and the law. Insurance companies want us to believe they are the guardians of our lives. Their advertising is littered with words and expressions suggesting they protect us, or they give us peace of mind etc etc.
Whilst insurance companies do provide some element of a safety net against some of life's accidents, they are also, in my experience, the cause of much antagonism and dispute. There is a simple reason for this: profit. And when it comes to profit, we are back to the age-old battle between money and the law.
If profit is the motive, why would an insurance company fight all the way to Court over £205? This seems senseless. The cost of going to Court, surely, must be massively greater than a mere £205!
This is precisely what happened to my firm. We had paid out for a report intended to show the layout of a road. The insurance company denied the accident was their insured's fault. The road layout mattered because it was necessary to show where witnesses were standing and therefore what they could see (or what they could not see). The insurance company settled the claim but refused to pay the report fee.
We pointed out to the insurance company that the fee is payable under the Court rules. The insurance company said (through their solicitors), in effect, we don't care what the Court rules say, we are not going to pay - take us to Court if you like. So we did. We got our £205 plus the costs of having to go to Court.
If this was a one-off incident, then all well and good. It would be easy enough to say there was a rogue claims handler who just picked a fight. Or perhaps the claims handler in the insurance company couldn't lose face by admitting that he (or she) had got it wrong.
But this is not a one-off incident.
The calculation made by the insurance company has nothing to do with the law. It is a shrewd financial judgement based on the knowledge that most solicitors, just like most non-solicitors, will not go to Court over £205. It is the behaviour of a corporation that does not give a stuff about the law, but knows that by the use of financial muscle they can save themselves thousands and millions of what matters most - pounds, shillings and pence.
Such an approach does not just apply to the petty details of my firm's expenditure. It applies across the spectrum of claims made to insurance companies by those who have suffered real loss. And in these times of wobbly economic prospects, it is likely to get worse.
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Would you trust an insurance company?
I have a problem with trust.
A few weeks ago, a director from the Association of British Insurers (ABI) said at a conference run by the Association of Personal Injury Lawyers (APIL), the following: it is in everyone's interests to have a low cost system.
Like most people, I really do want to believe that I am being told the truth by people who speak on behalf of powerful institutions, like insurance companies. But their words and their actions frequently conflict.
My firm was recently instructed to deal with a serious road traffic accident claim for a teenage girl. She was a passenger in a car. The driver lost control and drove into a tree. The girl suffered a fractured spine along with complicated internal injuries. The responsible insurance company is now, perhaps appropriately, in administration!
The insurance company's rep contacted the girl's mother by mobile telephone, met her in a local café, and sent her text messages. He made an offer to settle the girl's claim to the mother of £8,000. He said it would be good to get it all wrapped up early. He made no mention of how he had come to this figure, or whether it might be sensible for the girl's mother to seek some legal advice on the level of compensation that a Court would award her daughter.
Another tactic used by the insurance company's rep was to try to induce the mother to agree settlement by saying they'd pay her expenses immediately, including her loss of earnings, if they could agree settlement of the whole claim - she'd not worked for a month (or so) because she'd had to look after her daughter.
No mention was made at any time by the insurance company's rep that her daughter may have complications for the rest of her life, nor that Court rules state that the settlement of the claim of a person who is a minor (under 18), MUST be approved by a Judge.
The girl's mother did not accept the offer. When we were instructed, it was clear that the girl would be entitled to damages of probably well over £100,000.
I do not suggest that all people who work in powerful institutions behave like this. This is a dramatic example of very poor behaviour. But my point remains. Would the bosses of the insurance company have complained if the claim had been settled for £8,000? Of course not! This is because there is a conflict between the interests of financial institutions and those of the private individual.
Large companies are bound to consider the benefit to their shareholders ahead of others. When they say they act in the best interests of everyone, this should be treated as nothing more than spin. The job of the spokesman is not to tell the truth, it is to sell his message.
Who knows, maybe independent lawyers have a role to represent private individuals against the misleading statements and actions of large companies and large institutions!
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Are people clients or commodities?
For most the 20 years and more that I have been working as a litigator, the Civil Justice system has been on the receiving end of public and private complaints. And not without good reason! Delays are systemic. Mistakes are legion. And the administration, although usually done by thoroughly decent people, is often appalling.
At one of our local County Courts files are routinely lost. With some Central London Courts, if you expect a reply to a letter, or a date for an application to a Court, sooner than 3 months, think again.
It is like the Crown Prosecution Service (CPS) used to be in 1980s when it was originally set up. At that time, our advice to clients was plead not guilty. This was because there was always a very good chance that the CPS would simply lose the file, so the charges would be dropped. The Civil Justice system is now as badly run as the CPS was then.
It is probably not fair to attack the Country Courts because it is they who are so poorly resourced by the Ministry of Justice. It probably is fair to attack the Ministry of Justice itself which is in charge of the administration of Justice.
The simple truth is that the Civil Justice system is low on the politicians agendas. It is a thorny and ancient system which everyone wants to reform but no one can work out how to do it. What the politicians really want to do is to shunt it out into the commercial world, to privatise it. It would suit politicians of all colours if Justice could be turned into a saleable commodity.
This is exactly what is being done with Personal Injury claims. What is being put into effect for Personal Injury claims, is likely to be put into effect for other Civil Justice disputes in the future.
For a large proportion of road traffic accident cases, legal redress will be about filling in forms, then shooting those forms down an internet portal. This doesn’t look much like a legal system, more a retail activity. You submit your list of orders, then a few weeks later, a delivery van appears at your door with the goods.
At Legal Solutions Partnership, we shall learn the new system and make work it with maximum efficiency. As lawyers, we shall argue the legal points that need to be argued in the interests of our clients (after all, the Solicitors Code of Conduct requires that we should – this is our reason for existing!).
The question is: who wins out of this dramatic change? It’s too early to say. The new legal process comes into effect on 30th April 2010. But I know where I’d put my money. It would be in the hands of the big corporates, especially the insurers. Perhaps that is all the more reason for a small maverick firm to exist – to fight the big corporates by offering a real service that is about clients and not commodities!
John Holtom
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Why the Middle Man costs
The [Law] Society hopes that the impact of the changes proposed under the review would remove personal injury work from the claims farm industry which we agree adds no value to the process, only middle man’s costs
Press Release 14/1/10 issued by the Law Society in reply to the report prepared by Lord Justice Jackson entitled Civil Litigation Costs Review
Complaints have been made because of my published attacks on Claims Management Companies (CMCs). People in the CMC business have asked why I have said that the whole sector is rife with fraud when they are legitimate businesses.
In January this year, an eminent Judge, Lord Justice Jackson, published an influential report. In the report the Judge considers what CMCs do and how they are paid. He makes various points I agree with 100%:
The lifting of the ban on referral fees in 2004 has not proved to be of benefit either to claimants or the providers of legal services. The only winners are the recipients of referral fees [my emphasis] (paragraph 4.16 of Final Report).
There have always been Middle Men. In some areas of trade or commerce, the role of the Middle Men has mattered more than in others. In the residential property sales business, for instance, whilst we all love to hate Estate Agents, most people use their services. Whilst they overcharge for what they do, Estate Agents are the classic Middle Men. They bring buyer and seller together.
Much as I hate to admit it, Estate Agents probably do usually add some value to the buying and selling process.
Does the CMC business add any value? Well, no! None. Infact, they do what the endangered Middle Man invariably does. They claim possession of one side of the buyer/seller process. And they use this possession as a way of trying to squeeze every last penny out of the commodity they claim to own. Here are Lord Justice Jackson comments on the point:
In my view, it is offensive and wrong in principle for personal injury claimants to be treated as a commodity…. It is equally unacceptable for claims management companies to buy in personal injury claims from other referrers and then sell them on at a profit. Indeed the very language of the claims management industry characterises personal injury claims as a commodity (paragraph 4.11).
10 years after the original CMCs, the twin evils of Claims Direct and TAG, went bust, the Law Society has finally endorsed the view that the whole CMC sector is nothing but a drain on the provision of legal services.
I am sure that CMCs will still howl in protest. Whether they are authorised by the Ministry of Justice or not, whether they are fraudsters or legitimate businesses, the tide is turning against them for one very simple reason. They add nothing and they take out much.
Solicitors do everything that CMCs claim they can do. It is as simple as that. Go direct. Cut out the CMCs.
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Fired but fighting back
Whether you love or hate the European Union, whether you love or hate Mr Blair and his gruff successor Mr Brown, in the last decade it has become harder for employers to dump their workforce without consequences. As well as this, our society has become so conscious of personal identity that it seems to take only a stray thought for there to be a justifiable discrimination claim against an employer.
The law relating to employment has become very complex and very far reaching. So complex that there are relatively few lawyers who have a good grasp of the legal issues.
I know from my own experience running my own business, that if I don’t do right by those who work for me, I run the risk of finding myself on the receiving end of an employment case. Even with people who work for me who are specialists in employment law, it is not easy to navigate around the complexities of employment law.
If I say an inappropriate word about a woman (or a man), I could be done for sexual discrimination. If I write a policy that says noone can wear a crucifix, am I discriminating on grounds of faith, or religion, or perhaps even race? If the door into my office is not wide enough for a wheelchair, am I discriminating against a person who is wheelchair-bound? If I advertise for a job stating that I am looking for a young person to be an office junior, am I discriminating against a not-so-young person?
And the thing about discrimination is that the damages that may be awarded are potentially huge. We’ve all heard the news stories.
Employers hate having to spend time and money on employment disputes. Even if they fight a case to a trial, and win, they will never get the cost back. Perhaps because of this, unlike in the rest of the civil law system, there is an organisation placed at the heart of the employment dispute process whose job is to actively encourage compromise – this is ACAS – the Advisory, Conciliation and Arbitration Service.
You may find yourself one of those many tens of thousands of persons who thought you had a reasonably safe job before the recession, but now your job’s gone.
If your ex-employer hasn’t followed the proper procedure, or has picked you as the person to dismiss or make redundant for improper reasons, or has just picked on you, or humiliated you, you may have a case. And you almost certainly do need legal advice to work out whether you do have a case. Consult a lawyer. In my firm, call either Paul Haddon or Neelam Afzal. They can help navigate you around the numerous regulations, directives and rules. If you have a case, they will fight it for you.
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The fraud business
Fraud is endemic in the world of motor insurance claims and personal injury claims. It didn't use to be this way!
What has changed? How has the claims business been turned into such a fraud hotspot? And why does it matter if an insurance company loses a few quid in paying a few dodgy claims?
Starting with the last question, it does matter. It's not a question of profit for insurance companies. That doesn't matter! If a few shareholders get a smaller dividend, I don't think anyone is going to choke into their teacup.
I do not hold a candle for insurance companies. It should be said, however, that it is often argued that we are all loser from fraud because premiums go up. There may be some truth in this. But for me, this is not the key issue.
The real losers, I believe, are legitimate Claimants. This is because the distrust within insurance companies means that countless genuine claims are disputed which shouldn’t be disputed. Settlements are delayed. Claimants don’t get their money when they should. This causes immense frustration.
Innocent Claimants rightly ask: why have I not been paid yet? And when Claimants are on the receiving end of a ridiculous inquisition from an insurance company, they rightly ask: why am I being made to feel that the accident was my fault, when it clearly wasn't, when the other party admitted that it was their fault?
Why is fraud rife in the claims business? I can’t properly answer this question in the few words I have in this article. However, depressingly, I believe that at the core of the fraud business is the Claims Management industry.
I don't mean to suggest there are no bona fide claims management companies. I know there are. As a business we have dealt with both the fraudulent companies (before we knew of their frauds) and the honest companies who would like to continue in business despite the fraudsters.
But the simple truth, as I see it, is that the monitoring of claims management companies by the Ministry of Justice is feeble. The result has been an explosion of small businesses run by entrepreneurs who know how to make a fast buck but have little interest in anything that could be described as a proper legal process.
The point about professional fraudsters, is that they are good at what they do. They avoid detection until the money is safely in their pockets. The usual frauds are: claims made in the name of non-existent people using someone else’s ID, cloned car registrations, hire cars that are never hired, written off cars that were never involved in accidents, witnesses who give statements because they’re bribed. No one needs claims management companies. There are numerous solicitors with proven expertise and proven experience. Don’t support the fraudsters. Go direct to a solicitor.
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What value the lawyers?
We live in a world obsessed with regulation. There are regulators of one kind or another almost everywhere you turn. There is a regulator for trains. There is a regulator for utilities. There is a regulator for telephones, for data protection, for schools, for health services, for financial services etc etc.
With so many regulators whose role is protect the public what is the point of lawyers? Surely the regulators do the job the lawyers once did? Surely they protect the public against the wrongs of other State institutions and big business?
Well, in my opinion, no, they don’t! I believe it is quite the opposite. The more institutions of State there are, and the more there are regulators who are acting like small dictators in their little empires, the more value the lawyers have!
The job of the lawyer, in my opinion, is to fight cases for individuals - not against other individuals but against the State and big business (although it may also be that small or big business has to fight the State too!).
This sounds very high and mighty. We would all like to be waving the flag for Human Rights (many very expert lawyers do). But even at the lowly level of a High Street solicitors practice our job as lawyers is still to fight for individuals against big business and the State.
It doesn’t matter how many regulators there are, there are always the insurance companies, employers, and Government Departments, including the police, who present false evidence, who argue points of law that have no merit, and who try very very hard to pay to deserving Claimants less money to compensate for wrongdoing than they should.
Lawyers, of course, also have regulators. Infact, for the whole legal profession there are seven separate regulators! Solicitors have to act in every single transaction in accordance with the Solicitors Code of Conduct. At the beginning of the Code you will find what are called Core Duties. Three of these are: to act with integrity, to act with uncompromised independence, and to act in the best interests of each client.
In order to become a qualified solicitor whose job is to act in accordance with the Code there is a long period of study, followed by two years of full time training.
It would be very naïve to suggest that because of the extent of the qualifications required, and the number of years of training, all solicitors businesses will always get it right. Indeed, there are many complaints about the failures and weaknesses of the legal profession. Despite this, I believe that lawyers do have a value which is embedded in our society and very often lawyers are better at protecting the public than the regulators or the institutions of state, although rarely is credit given to the lawyers!
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Person or data entry?
Do you sometimes feel you are not really a person but just a big business data entry?
In an age of automated telephone systems, key-pad selections, endless "security questions", and call-centre operatives based thousands of miles distant from the UK, you would be forgiven for having this feeling. Whether it's a retail enquiry, or a financial services dispute, or an insurance claim, it's the same.
What about the law? Are solicitors any different? My answer is that some are, but only some!
Hundreds of thousands of people, real people, are involved in road traffic accidents every year. Some are seriously hurt. Most who are hurt get better within a few weeks or months. Many make claims and many of those claims are relatively uncomplicated.
Because most road traffic claims are relatively uncomplicated, it suits big legal services businesses to treat people making claims as data entries. Data is far easier to manage than people! It can be dropped into software packages. It can be processed for reports. It can be used to justify financial commitments in Excel Spreadsheets.
If you sign up to the big business approach you, the person making the claim, will never see the person who is dealing with your claim. If you want to talk to that person, you may be lucky enough to find a "team member" to speak to - that is, if you get through the voicemail system. Even then, the "team member" will say: can you hold on a moment whilst I look at your case on my database?
I don't think The Law is about data. Nor do I think that it should be about data. In my experience even relatively uncomplicated claims can be stressful and can and do become mired in senseless arguments with insurance companies.
If, for instance, the other side's insurance company says that you, the person making a claim, do not fall into the category of persons known as "impecunious", would you have any idea what this meant? It is pure legalese, jargon, gobbledygook!
Unfortunately, "impecuniosity" is a hot topic within the world of motor insurance claims. It is used in small claims just as much as in larger claims. So a claim for hire which is for £1,500 will be treated in just the same way as a claim for hire worth £10,000.
Can a non-qualified fee earner who has to ask a computer software package to answer questions help you deal with the difficulties of making a claim? Sometimes, possibly. Frequently, not.
Solicitors should be accessible to their clients.
Pick your solicitor because the firm is about providing you with the service that you want. If you want to be treated as a person, not a megabit of data, chose a firm that is accessible and will take the time to see you.
Article written by John Holtom Managing Partner, Legal Solutions Partnership
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The Compensation Culture
Our society is plagued by THE COMPENSATION CULTURE. It must be true because The Lord Chancellor and Secretary of State for Justice, Jack Straw MP, says so. Even Dr Who has caught the plague. Or rather not Dr Who himself, who is, of course, a national hero, but the story writers. In the first episode of the new Dr Who series with Christopher Eccleston (he was great, wasn’t he?) Rose Tyler’s mum, Jackie Tyler, tells Rose she ought to be entitled to compensation after the department store she worked in blows up. She even went to the police to get a form.
I don’t want to be too rude but I find it hard to be polite about Jack Straw MP. Of course, you can dismiss what I say even before I say it by simply drawing attention to the fact that Jack Straw MP is an important and powerful man who is criticising the Legal Profession. I would disagree with him, wouldn’t I? So what’s the point of listening to my diatribe against him.
There is another reason why I can’t be as rude about Jack Straw MP as I might – I am bound by a book of rules called The Solicitor’s Code of Conduct. Right at the beginning of the Code is rule 1.06 which says:
1.06 Public confidence
You must not behave in a way that is likely to diminish the trust the public places in you or the profession.
If I was to attack Jack Straw MP, who is, after all, my ultimate boss, I could perhaps be said to be seeking to diminish the trust the public places in the Legal Profession. Having said this, in the Times Online article linked here, there are those far more erudite than I, who hold substantial positions in the public domain, who criticise Jack Straw MP solely on the facts.
I have a couple of questions for Jack Straw MP:
Which Government re-wrote the rules in 1998-1999 using the commercial success and model of Claims Direct PLC as the blueprint for the privatisation of the personal injury claims process thereby enabling personal injury claims to be stripped out of the Legal Aid budget? I don’t think I need to answer this question.
Which Government wrote into the 1999/2000 legislation and regulation the principle of recoverability of the success fee, and the after the event insurance premiums, thereby stoking up a feeding frenzy within both the Legal Profession and the newly born Claims Management sector? I don’t think I need to answer this question.
We have a ridiculous situation, don’t we Lord Chancellor and Secretary of State for Justice, Jack Straw MP? Does the word “hubris” apply here? Or it “nemesis”? Because if I remember rightly it was the appalling practices of Claims Direct PLC and The Accident Group whose business models were effectively licensed by the Labour predecessors of Jack Straw MP who created the furore of “No Win No Fee” advertising that even now blitzes our TV screens.
The culture of seeking compensation is not new. It is not 21st century nor is it 20th century. It is to be found in the Victorian novels of Charles Dickens and it is to be found in Georgian novels of Tobias Smollett written between 1750-1775. The professional claims maker is not even remotely new in our society.
More people make claims for compensation today because more or less everyone can read and because more or less everyone can read, more or less everyone can work out how to claim a loss, and because more or less everyone can read, the Law and the Legal Profession are accessible to not just the monied classes, but to everyone who can ask questions of the lawyers. In this context the internet is a great leveller.
Another very simple reason for their being more claims has to do with cars – or, to be more accurate, road transport. Statistics suggestion there are in the region of 500,000 personal injury road traffic accidents per year in the UK! That probably means there are at least as many road traffic accidents that do not involve injury. Are you to be accused of being part of The Compensation Culture if your car has been written off in accident and you’d like to have the money for the damage?
I hasten to say this is only the beginning of the issues.
John Holtom
27 January 2009
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Why compensation is paid
The legal theory of compensation is that the money is intended to restore the victim
back to where he or she was before the accident. When the compensation is paid it
should be as though the consequences of the accident never happened. Of course this
is fiction. Especially for people who have suffered serious accidents and are left with disabling injuries. Nevertheless, this is the legal theory, and this is what we at Legal Solutions Partnership aim to do, in so far as it is achievable.
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Who can claim
Many advertising companies and marketing departments have created slogans intended to sell the services of parasitic companies like The Accident Group and Claims Direct (both of which went out of business) for instance, Where there’s blame there’s a claim. But summing up in a few simple words the key legal principles cannot be done.
Anyone who has been injured, or suffered a loss, can bring a claim.
The question is not whether a claim can made, but whether the chances of succeeding make the expense of bringing the claim worthwhile. This question is the same for the person who wants to claim, and for the lawyers.
Another key question to which there must be a clear answer is: against whom can a claim be brought?
For a compensation claim to get off the ground, there must be a person, or a company, or an institution (like the local authority), on whom legal responsibility can be pinned. If you cannot determine who to claim against, you have no claim at law. And even if you think that someone is responsible but you cannot prove they are, the claim will fail.
If you wish to discuss bringing a compensation claim, either email claims@lspartnership.co.uk or telephone 01582 417208.
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Responsibility for the accident
With a road traffic accident responsibility is usually clear cut.
For instance, if you are sitting at traffic lights when another car driver rams into your boot, the driver who hit you is going to struggle to escape responsibility. Or if you are a pedestrian hit by a drunk driver who mounted the pavement, the drunk driver is clearly to blame.
But there are many circumstances where responsibility is far from clear. Accidents at traffic lights, on mini-roundabouts, and changing lane collisions are often disputed and it is often less than clear who is responsible.
Accidents at work will usually be the responsibility of the employer. However, as with most things legal, this may not be as straightforward as it sounds. This is because of the enormous number of agency workers and contractors who are doing jobs that used to be done by employees.
The kinds of accidents where it can be difficult to pin down responsibility are usually what the lawyers call public liability claims .
You trip on a step outside a shopping centre at night when you have been doing your Christmas shopping. Who is responsible? The lighting subcontractor, or the shopping centre itself, or the security guards whose job is to check the lighting? This is a serious on going case which is yet to be finally sorted out. Everyone is blaming everyone else. In the end one (or all) of them will pay!
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The man of straw
There is no point making a claim against a man of straw.
That is to say, don’t make a claim against someone who has no money or no insurance, unless it is a road traffic accident claim in which case the Motor Insurers Bureau (MIB ) will deal with the claim on behalf of the uninsured driver. The simple reason for this is that you, the Claimant, want to get paid your damages, and we, the solicitors, want to get paid for our time. If neither is going to happen, even if the claim succeeds, you won’t get what the law sees as justice and we will go out of business!
The only exception to this rule is the Motor Insurers Bureau (MIB). Something like 15% of drivers do not have motor insurance. The MIB exists to pay out damages to the victims of uninsured drivers. So even if the person responsible for a road traffic accident is a liar and a cheat, or if simply forgot to renew their motor insurance, you will still be able to recover damages for injuries and financial losses.
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Costs – what does ‘No Win No Fee’ really mean?
For most clients, or potential clients, there are two inescapable questions:
- If I lose will the solicitors come after me for their costs?
- If I win, will the solicitors take a chunk out of my damages to pay their costs?
If we could a categorical one word answer to these two questions our lives as solicitors would be a lot easier. Sadly this is simply not possible. Our Terms & Conditions of Business do aim to answer these two questions, as well as many other questions relating to costs.
But the truth is that even though the rules relating to the payment of solicitors’ costs have been brought more up-to-date, absurdly ancient legal principles still control how we are paid.
The key legal concept is known as the indemnity principle. It is the source of considerable debate by lawyers and academics. It may not be from the Dark Ages but it is certainly from the time before typewriters existed, let alone computers. It is a legal concept more applicable to quill pens and ink wells. Nevertheless, as solicitors regulated by the Solicitors Regulation Authority, with a book of Professional Conduct Rules 100s of pages long, we are stuck with it for the time being!
Without going in to all the interminable details, a simplified answer to the two questions is:
- If we fight the case and lose, we will not ask you, the client, for our costs
unless
we have lost because you, the client, did not act in good faith (we were misled or we were told us lies).
If this happens, we shall certainly want to be paid our costs and we shall pursue the payment of our costs by all proper means. Although this does happen once in a while, it is very rare indeed.
- If we win the case, the other side pay our costs - which means that unless something has gone wrong, or there are very good reasons that we have brought to your attention, we will not charge any of our costs against your damages.
A further consideration is the operation of Legal Expense Insurance (LEI). It will be a very unusual case when there will not be in place either LEI which was provided by the motor insurer, household insurer, or broker, or After The Event Insurance (ATE) that we have arranged.
The purpose of LEI or ATE is to protect against the risk of having to pay legal costs whether you win or lose the case.
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EXIT fees - who charges?
I wonder if you know what EXIT fees are? My guess is that you probably don't. And you wonder what this has to do with you, and what it has to do with personal injury claims. I'll explain.
Solicitors are accused of all sorts of sins. For instance, our clients complain that they are never clear about what we charge. Or, if our clients know what we charge, they express fear that we shall bankrupt them in order to get paid for our much overcharged work. And, of course, there is the compensation culture. So the story goes, this was created by Solicitors as a way of making Solicitors rich at everyone else's expense.
In short, Solicitors as a profession are regarded as only marginally below all those bankers who we rightly blame for the present acute recession that is hitting everyone.
Well, let's take a look at EXIT fees. The idea is in the word.
In order to get out of the door, there is a payment that has to be made. In this case, the door is the settlement of your personal injury claim. The person at the door who is charging you the EXIT fee, is the Claims Management Company that you signed up with before your case was referred to us. The EXIT fee charged is usually a few hundred pounds.
The next question is: what is the EXIT fee paid for? What has the Claims Management Company done to earn this fee? I don't think I can answer this question. Perhaps as the Claimant you can tell me. Is the value of the service provided to you, the Claimant, equivalent to what the Claims Management Company charge to let you out of the door?
Solicitors do not charge EXIT fees. If Solicitors did charge EXIT fees they would be called contingency fees. This matters to any solicitor because contingency fees cannot be charged by solicitors as a general rule. Infact, a solicitor who is charging a contingency fee is committing a disciplinary offence, unless this is done in certain very particular circumstances. Also under the authorisation rules that govern how Solicitors deal with Claims Management Companies, a solicitor cannot deal with a Claims Management Company which is charging a contingency fee.
But an EXIT fee isn't a contingency fee, is it?
And by God don't the press love to attack solicitors who have, or appear to have, committed some form of offence against what the press regards as public morals. Look at the whole furore over the Miners compensation scheme.
Back to EXIT fees. So who does charge them and what are they?
The answer is: CLAIMS MANAGEMENT COMPANIES charge them.
Not content with the referral fees paid to them by solicitors, Claims Management Companies routinely charge EXIT fees. This is in addition to other commission which they will earn from medical agencies, after the event insurance companies and no doubt other service providers.
We do not take anything from your damages (unless there is a specific agreement, or you have messed something up, like a charge for failing to attend a medical). We are often asked whether we will take anything. There was a time when the disbursement funding arrangements meant that Solicitors would routinely charge interest against damages. But this kind of arrangement has died a death. Which means that Claims Management Companies can now take their slice, instead.
The fee is always paid at the end of the case because until the case is ended there is no money from which to take the EXIT fee. To my mind, that sounds pretty much like a contingency fee. But evidently I am wrong. It is simply an EXIT fee. It is a fee charged by someone who has provided a service and deferred the payment of their fee. Or… I leave it to you draw your own conclusions.
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Damages
Damages is legalese for compensation. One of the dictionary definitions of damage is: “loss or detriment caused by hurt or injury affecting estate, condition, or circumstance”. Although this is a very old use of words, it is still close to the mark.
In the real world, of course, damages, or compensation, means money, because money is the way our legal system hands out some measure of justice to people who have suffered injury and loss caused by the fault of another.
Clients often ask: how do you put a value on physical injury? The same clients will often say they would prefer to have the full use of their limbs returned to them, rather than be given a sack of gold bars. Unfortunately, we are stuck with what we have got, insufficient and full of contradictions that it no doubt is.
The legal principles of what damages should be paid fall loosely into two parts. Damages for injury called General Damages, and damages which are to reimburse specific identified financial loss, which are called Special Damages.
What you are entitled to be paid as General Damages is codified in The Judicial Studies Board: Guidelines for the Assessment of General Damages in Personal Injury Cases. This book is the bible that is used by solicitors, barristers and Judges. It provides brackets for all kinds of injuries. It therefore provides a way for all lawyers to try to be consistent – although there are always disputes.
In serious cases, Special Damages are usually far more difficult to assess. How long would you have worked for in a particular job before getting a promotion? How much would a taxi driver have earned if he had been able to work over the Christmas period? How can you assess the amount of time spent by friends and family who helped you when you were incapacitated?
The test for all losses is the but for test – but for the accident would you have had to pay the expense? This sounds simple but often isn’t. There are rules and there have been important cases that try to give guidance on what can be claimed and what falls outside the but for test.
What is always key is evidence. If you cannot prove a loss, why should the other side pay? The golden rule is KEEP RECEIPTS FOR EVERYTHING.
A second golden rule, is that if you think that you have suffered a loss but are not sure whether you are legally entitled to be reimbursed, tell us about it. If you don’t tell us about the loss we cannot either claim it back for you or advise you why it may not be something you are entitled to be reimbursed for.
Whatever you are awarded, or whatever the negotiated settlement amounts to, it will almost certainly be modest. Damages in England and Wales are not comparable with jury awards in USA.
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Claims management companies
23rd April 2007 was supposed to be a “Big Bang” day. Not because the Large Hadron Collider in Cerne created a black hole into which Earth, Life, and our known universe collapsed, but because The Compensation Act 2006 came into force. The new regulatory regime (please see the Claims Management Regulations page of the Ministry of Justice website) was supposed to reign in the notorious excesses of the late Claims Direct PLC and TAG (The Accident Group), and the followers they spawned. The new rules required claims management companies to be authorised before they would be permitted to wander with their large pots of cash into the problematic business of personal injury claims.
Unfortunately, when I receive spam emails from authorised claims management companies asking me to bid for personal injury claims, and when I find myself paying referral fees to claims management companies for cart loads of fraudulent claims, I remain less than convinced that the new regime is more than a mere fig leaf.
Legal Solutions Partnership has contracts with a number of authorised claims management companies with whom we work very closely.
We have terminated contracts with claims management companies that have no interest in keeping up their side of the agreement. We are involved in litigation with those we believe are fraudsters. Sometimes we have been able to enter into contracts with sub-agents of claims management companies because the main front business wasn’t paying the sub-agents. The sub-agents were happy to deal directly with us. We have worked with claims management companies to help them become authorised and we have advised claims management companies about what being authorised means according to the letter of the Regulations.
We pay large amounts of money to claims management companies and we expect good quality referrals along with genuine litigation support in return for our money.
I set up and ran a claims management company before the new regime was devised, let alone brought into force, so I think that I have some liberty to express an opinion on the new regime. Although there are claims management companies whose aim is to provide a genuine service to their clients, there are many who have no interest in their clients.
The reality is that the core drive of all claims management companies is capture. Solicitors have traditionally not been skilled at capture. So guess what? The claims management companies capture the clients and sell them to the solicitors. This is not an edifying arrangement. But it is not going to change. I would prefer to have all my clients come to my firm directly. But I am pretty certain that my business would shrink into non-existence over a couple of years.
Since the advent of Claims Direct PLC and new world of the CFA in around 1995, and since the removal of Legal Aid for personal claims, solicitors have gradually lost control of access to clients. Unless your firm has a decades old association with a trade union, or has the buying power to purchase a contract from a legal expense insurance company, the route to volume personal injury claims is through the gateway of claims management companies.
I do not have a problem with referral fees. Nor do I have a problem with claims management companies (afterall, I did set up a claims management company myself). I do have a problem with regulation that misses the target.
I do not want to pay the level of referral fees that I pay presently. Rumour suggests to me that some solicitors pay referral fees at such a ridiculous level that they cannot possibly run profitable businesses, or if their businesses are profitable. Sadly this is no more than evidence of the stupidity of some solicitors who allow claims management companies to imagine that their referrals command the absurd values they place on them.
This article was written by John Holtom
4th December 2008
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