Claims Process: What are they driving at?
On 20 April 2007 the consultation paper 'Case track limits and the claims process for personal injury claims' was published by the Ministry of Justice (MoJ). After receiving responses from a number of interested parties, the response to that consultation was released on 21 July 2008. The document makes for fascinating reading. Most importantly, it sets out the government's response with details of the next steps. These changes will have a dramatic effect, in particular on the motor industry, and both claimants and defendants will have to make some real changes in their processes to cope. It is clear that the motor landscape will change significantly as a result. As is the norm in these situations, only the strong will survive.
Case track changes
As was generally expected, the small-claims limit for personal injury claims remains at £1,000, with the limit for non-personal injury claims remaining at £5,000. There have been some obvious concerns that if the limit had increased, many personal injury lawyers would have little alternative but to leave the personal injury marketplace. The con¬cerns expressed about access to justice won favour. The small-claims limit remains as is.
Things are not quite the same when it comes to the other tracks. The limit is increasing on fast-track cases from £15,000 to £25,000, which was recommended in the consultation paper. This applies to all cases. There is clear guidance in CPR rule 26.8 on factors that should be taken into account on allocation by the judge. From experience, allocation to a particular track is mainly based on the value of the claim. It is likely that solicitors will seek to rely more often on the provisions set out under Part 26.8 to persuade a district judge that the case is not suitable to be heard in the fast track and should be allocated to the multi track for one of the reasons set out in that section. The most obvious arguments are that the case is particularly complex and/or the number of parties involved mean that the case is unlikely to be heard in one day. Thus the courts will probably see an increase in allocation hearings. This change also raises a further question: what happens when more cases go over one day for trial - will there be some obvi¬ous court-listing difficulties? We must acknowledge mat there is an advantage that the procedure will be simplified, but it remains to be seen whether the advan¬tages outweigh the disadvantages.
No change on ATE
A particularly contentious aspect of the consultation paper was in relation to after~the~event insurance. The proposal was that an ATE policy should not be issued at the outset of a claim but should only be taken out by and for clients when there was a dispute on liability or quantum. It was also only applicable where the claim exceeded £2,500. The government has decided not to take this forward. This may not be off the table for good but merely to ensure the ATE market will adapt successfully to the new claims process.
Effects on the motor industry
In July Bridget Prentice, Parliamentary Under-Secretary of State at the MoJ, announced, that the new claims procedure would only be applicable to motor claims up to £10,000. There is some controversy over this decision, with motor solicitors arguing that they see no significant dif¬ferences between motor and, say, public liability claims. The government has taken the view that motor claims account for 70-75% of all personal injury claims and involve fewer complexities than, say, employers' liability claims.
Since the 1980s the motor industry in particular has certainly known the meaning of the words 'change manage¬ment' and never more so than as a result of this consultation. First there were credit-hire issues, credit repairs, the conditional fee agreement changes as well as ATE and before-the-event insurance changes, the introduction of the CPR, rehabilitation, the Motor Insurance Bureau and of course the per¬sonal injury protocol. It now appears to have come full circle with the introduc¬tion of a 'simplified procedure' for motor claims. This will clearly change the landscape for both claimant and defendant practitioners and all those suppliers associated with the motor claims market. This new process is broken down into three stages with fixed costs at each stage. It is applicable to claims over £1,000 and less than £10,000. These fixed costs have not yet been agreed and the process for agreement is still being discussed at the MoJ.
What is the new process?
The first stage is where a claims notifi¬cation form has to be completed and submitted within five days as soon as the claimant solicitor has gathered all the information to complete the form. Further work needs to be done to clarify exactly what this means and how detailed an investigation needs to be carried out at this point. If a claimant does not have a solicitor, then they can complete a specific type of form. The days of form filling are not dead.
At stage two, if liability is admitted in full, then the claim stays in the new process. Where liability is denied or con¬tributory negligence is alleged then the claim falls outside the procedure. If, of course, there is no admission within 15 days then the claims fall outside as well. The onus is on the insurers to carry out all correspondence by e-mail and adopt a mail-box system for delivery of settle¬ment packs. This is particularly onerous for many insurers as there are some who do not allow access to their claims-han¬dlers. The insurers then have 15 days to submit a response on liability. No time extensions will be allowed.
There has been some discussion on the wording of the admission of liability. The conclusion has been that where an admission is made it should be clear that it is only in relation to breach of duty, and the issue of causation is subject to med¬ical evidence. If an issue on causation is raised then the claim will fall out of the new regime. Further discussions are taking place on this particular aspect. Furthermore, claims where contributory negligence arises are excluded from the standard claims process.
In the original document and in the industry there has been talk of develop¬ment of an assessment tool for general damages. The government has con¬cluded that it is not appropriate at this stage but further work will be done on standardising special damages. Many insurers use one type of assessment tool to a greater or lesser extent and its suc¬cess can vary. Work is continuing in this area. Furthermore, the government has confirmed medical reports will not be limited to just one, and a stay in the pro¬ceedings can be agreed if a prognosis is not reached.
For stage three, where quantum cannot be agreed or either party fails to act within the timescales, an application can be made for a quantum hearing. This can also be on paper. A final offer to settle should also be made at this stage.
Judicial discretion
The Part 36 provisions are to remain as they are but with more emphasis on judicial discretion. If an offer is unrealis¬tic and has unnecessarily caused the need for a quantum hearing then the party responsible should be penalised. There is the potential for satellite litiga¬tion to arise as a result of this and the many factors based on quantifying a claim, but that is for another day. There is still work to be done on claims where liability is disputed, and which fall out¬side the standard procedure, but first things first.
This is, of course, all subject to costs being agreed. The government has referred this thorny issue to the Advisory Committee on Civil Costs. A number of meetings are taking place this autumn with! relevant stakeholders. They will examine both the different stages of the process but also the level of fee-earner required at each stage. The Civil Procedure Rule Committee will be looking at draft rules and practice direc¬tions. Work still needs to be done on how the new claims process fits in with the current personal injury protocol. This whole consultation arose, let us not forget, out of the perception that the costs of pursuing these claims were dis¬proportionate to the damages recovered. Motor is the only area where predictable fees are in place and, with the introduc¬tion of fixed costs, costs recovery on these claims will only diminish.
There is some time until these changes are put into practice. The MoJ had a target consultation period of 12 weeks (end of October). This is now looking unlikely and we probably will not see the changes in place until 2009. Many in the market are already looking to see how their business will adapt. Trials are being carried out on mail-box processes. Solicitors are working on set¬tlement packs and case management systems to adapt to new processes. Insurers are looking at agreements on special damages. No doubt there will be some, more particularly on the claimant side, who will eventually pull out of the motor market.
This article appeared in the September 2008 edition of the Personal Injury Law Journal
Fiona Fitzgerald is Partner at colemans-ctts Solicitors and Chairwoman of the Associations Women Solicitors