The Legal Services Act 2007: a seismic development

The world of personal injury claims and clinical negligence claims is fast changing.  Recent legislation and further proposed changes by the new coalition government are going to seriously impact on injury & accident claims.

The essential changes of interest to injury clients are as follows:

• Success fees to cease to be recoverable from losing Defendants.  This means up to 25% of clients’ compensation will be deducted upon successful conclusion of the claim, this radically alters the whole concept of “no win no fee”.  The idea is to involve clients more closely, by taking away the concept of a completely free service and involving them financially in the outcome of their claims.  To offset this, the government proposes increasing compensation for injuries by 10%.

• Insurance premiums also to cease to be recoverable.  However, the government proposes “one way costs shifting”.  This will mean that a successful claimant will still recover costs as now (subject to the above), but a losing Claimant will not be required to pay costs to a winning Defendant, unless they have behaved unreasonably in some way ( still largely undefined).  This costs shifting will make insurance policies unnecessary in most cases.

• Tighter controls over referral companies.  This is a good thing, there are too many rogues and charlatans out there whose interest is only in their profits, not in clients’ welfare.

• All low value claims (i.e. under £10,000) to be subject to predictive costs and go through the new government’s portal, which is supposed to speed matters up.  It probably will, but with fixed predictive costs very low, it may well impact upon the quality of service solicitors are able to provide in such cases.  At the moment, only RTA claims under £10,000 go through the portal.

• Road accident claims up to £25,000 to go through the portal subject to predictive fixed costs.

• Medical negligence cases under £10,000 eventually to come under the same regime.

• The ending of legal aid for medical negligence claims.

• The introduction of USA style contingency fees, whereby a winning client pays his lawyer a percentage (and nothing if he loses).  The percentage is likely to be about a third.   This may be of interest in the larger cases.

• As for when these seismic changes will come in, this is not yet known with any certainty.  The ending of legal aid for medical negligence claims and the ending of recoverable success fees may well be as early as April 2011.  The planned changes to low value claims may be April 2012.

Relervant documents to download and view.

The Legal Services Act 2007 – briefing

Legal Services Bill Full Regulatory Impact Assessment

Legal Services Bill Supplement to Regulatory Impact Assessment

Proposals for the Reform of Legal Aid Download

Legal Aid Reform: Scope Changes

Legal Aid Reform: Provision of Telephone Advice

Proposals for Reform of Civil Litigation Funding and Costs in England and Wales Download

If you have any comments on these changes, please do use our blog.

Referral Fees, Health & Safety gone mad and the Future for PI Claims

The Legal Services Board Discussion Document & Lord Young’s report to the Prime Minister.


Referral fees are quite controversial.  Until fairly recently, they were banned completely, but since the rules were relaxed, a whole plethora of companies has set up, all offering claims management services to claimants and leads provision for Solicitors.

The report given here is by the Legal Services Board, published in September 2010.  It is a preliminary working document and makes interesting reading for claimants, defendants and all those involved in the industry.  The second document is Lord Young’s report dated October 2010 addressed to the Prime Minister, and this deals with this and wider issues as well. 

Most PI Solicitors will buy their work, paying referral fees to providers.  The fees vary from £50 to as much as £1000.  Some lawyers find the idea of paying for work distasteful, others welcome it.

At Gordons, we have no objection in principle to the idea of buying work, but we do believe the industry needs much tighter regulation, especially in the sphere of advertising.  There are too many dubious companies out there, all wanting to make big profits out of peoples’ misfortunes and all too often supplying leads that are out doubtful quality, forcing Solicitors to keep raising the bar when it comes to initial acceptance criteria.  This is not necessarily a good thing, as many claims could end up being  rejected which might otherwise succeed.

If access to justice is a good thing, do referral fees help or hinder?    Is there really a compensation culture?  What steps can be taken to improve matters?  Will bringing all PI claims under £10,000 into the new rapid claims online system from April 2012 and consequent fixed costs help or hinder?  If it speeds claims up, but reduces the time Solictors can spend on each claim, is that improving justice or not?  Has Health & Safety gone crazy?  If so, what can be done to restore a balance?

This is the big debate at the moment.  Lord Young’s report, published October 2010 for the attention of the Prime Minister, addresses these issues and more.  This report, together with the Legal Services Board working paper, are both given here in full.

If you have any comments or questions, please feel free to use our blog.

CICA and future care claims

Forum: Criminal Injuries Compensation Authority Panel (“CICAP”)

Date of hearing: 17 March 2009
Date of judgment: 7 April 2009

In this case the applicant, born on 10 October 1986, sustained severe injuries (including severe brain damage) as a result of at least one assault by his mother on 19 January 1987 when aged 3 months. The case came before the CICAP for assessment under the “old” Criminal Injuries Compensation Scheme 1990. Unlike the present day “tariff-based” system, assessment of loss under the 1990 scheme is “on the basis of common law damages”.

Eligibility to receive compensation was not in issue.

The principal head of claim made by the applicant was for future care. At the time of assessment the applicant was living in residential accommodation at the cost of about £2,400 per week. The cost of that care was being met by the local authority.

It was argued on behalf of the applicant that the effect of the Court of Appeal decision in Peters v East Midlands Strategic Health Authority [2009] EWCA Civ 145 was to give the Claimant in a common law action the absolute right to elect whether care should be paid for by the tortfeasor or the local authority under its statutory duties (s.21 National Assistance Act 1948).

The CICA advocate submitted that while the Scheme broadly followed common law principles it did depart from it on occasion. It was argued that Peters only applied to the tortfeasor who was not able to avoid the payment of damage. It did not apply to the CICA jurisdiction where the state was providing the compensation.

The CICAP held that Peters did apply to the CICA jurisdiction. Relying on the principle enunciated in R (on the application of B by his litigation friend) v CICAP [2007] EWHC 180 (Admin), the Panel noted that there was no provision in the Scheme requiring a departure from the common law basis. Accordingly the applicant, on the basis of Peters, was entitled to elect to choose to fund his care and accommodation privately rather than rely on the local authority.

For good measure the Panel held that they could not be satisfied that the applicant’s reasonable care needs would continue to be met, and that it would be reasonable for the applicant to elect to fund his care regime privately. This was reinforced by the fact that the local authority could give no guarantee of future funding.

As in Peters an assurance was given on behalf of the applicant that no application would be made to the local authority for funding without the permission of the Court of Protection in order to prevent double recovery.

The CICAP therefore made a full lifetime award in relation to future care.

Frank Burton QC and Joel Kendall appeared on behalf of the successful applicant

See our Blog post for more information on Criminal Injuries Compensation Claims

Justice Jackson's Report on civil litigations costs

There are big changes planned ahead.  The following is a summary of what Lord Justice Jackson has proposed.  Any such changes however, if they are ever actually implemented, will be some years away.  An incoming government is unlikely to see this as a priority.

"In some areas of civil litigation costs are disproportionate and impede access to justice. I therefore propose a coherent package of interlocking reforms, designed to control costs and promote access to justice."

This is Lord Justice Jackson's foreword to his eagerly-awaited Review of Civil Litigation Costs: Final Report, which was published today, 14 January 2010.

The review has been preceded by a decade of debate between stakeholder groups. Jackson LJ's final report is the culmination of 12 months' work in which he has gathered information and views from over 80 stakeholders, between whom there was considerable disagreement on all the major issues. It represents a "root and branch" review of civil litigation in England and Wales; the biggest undertaken since Lord Woolf's report, Access to Justice, in July 1996.

Top ten recommendations in the report

Many of the recommendations are bold and potentially far-reaching, such as:

• Ending the recoverability of success fees and insurance premiums under conditional fee agreements.
• Introducing one-way costs shifting in some types of claim.
• The abolition of the indemnity principle.
• Making contingency fee agreements available for contentious work.
• Repealing large parts of the Practice Direction on Pre-action Conduct.
• Replacing standard disclosure with a "menu" of disclosure options in some cases.
• Stronger use of judges' case management powers, including costs management.
• Increasing the damages awarded to a claimant where a defendant has failed to beat the claimant's Part 36 offer at trial.
• Extending electronic working to the High Court, county courts and district registries.
• The creation of a Costs Council, which will decide on guideline hourly rates and fast track fixed costs.

What next?

At the press conference at the Royal Courts of Justice on 14 January 2010, the Lord Chief Justice, Lord Judge, described Jackson LJ's report as a "remarkable analysis" which, if adopted as a whole, would result in a welcome improvement on the costs of litigation and access to justice in England and Wales. The Master of the Rolls, Lord Neuberger, expressed his support for the report and indicated that he would ensure it receives judicial support. He hoped that it would be adopted by the Ministry of Justice:

"The time for discussion and debate is over: it is now time for action."

However, the extent to which these recommendations will be brought into force remains to be seen. With a general election taking place later this year, the reformation of civil litigation procedure is unlikely to be high on the government's agenda, so it may be some time before any necessary changes to primary legislation (identified on page 472 of the report) are enacted (if at all). In addition, in a number of key areas, Jackson LJ indicates that further periods of consultation will be required.

In spite of this, the report is essential reading for all those involved in civil litigation and dispute resolution. It is an indication of possible changes to civil litigation procedure and there are matters that practitioners may wish to take into account now in the way they conduct proceedings.

PLC Dispute Resolution is preparing a detailed review of the entire report (which is over 500 pages long). We aim to publish this by the end of January 2010. In the meantime, Jackson LJ's major recommendations are summarised below. The final report should be read in conjunction with the preliminary report, published on 8 May 2009.

Please do give us call on 08000 815815 if you would like to learn more about the planned changes.