Examination of Witnesses (Questions 60-79)
ANNA ROWLAND,
DAVID MARSHALL,
RICHARD LANGTON
AND TONY
GOFF
13 DECEMBER 2005
Q60 Keith Vaz: You feel it provides
a useful service for consumers. Does anyone not think that it
provides a useful service?
David Marshall: Certainly there
was criticism, say, 10 years ago, that there was not sufficient
access to justice and a lot of the studies showed that many people
were not aware of their ability to bring claims. I think now most
people are aware of their ability to bring claims because of the
advertising and I think that is a useful service. The question
of whether the advertising is proper and decent is a separate
one.
Richard Langton: Going beyond
advertising though, I think the biggest problem is the cold-calling,
the knocking on doors and stopping people in the street, which
we have all experienced personally, or know somebody who has,
whether or not we have been wearing a neck-collar at the time,
and that is something which APIL would certainly like to see stamped
out completely. A lot of the drivers for that, the profits for
that, being done by unqualified, unregulated claims farmers, have
gone, but it is still happening and I think we would be keen for
that sort of marketing, rather than pure advertising, to be stopped.
Q61 Keith Vaz: Have any of you observed
claims farmers that have encouraged people with doubtful or non-existent
cases to take those cases forward?
Richard Langton: One has somewhat
anecdotal experience where marketing salesmen are targeted by
results to produce individuals to sign on the dotted line a loan
agreement, and totally spurious claims are brought forward. I
think almost all solicitors would say that we can spot those a
mile off and we would never act, because we would not waste our
time on dealing with a hopeless case.
Tony Goff: The question has been
has CFA fuelled spurious claims; if you think about it logically,
it would have the reverse effect. In any firm of solicitors you
have to do risk assessment; for each case that we take on at my
firm we have a committee and we have a look at it. If the case
is spurious or cannot win, there is no way we would put it on
to a CFA, otherwise we are working for no payment over an indefinite
period. The argument that CFAs have actually fuelled spurious
claims, I would say they may have fuelled the, what was called,
"have a go" culture some while ago, but it is solicitors
perhaps who look at the claims and say to the clients "This
can't go forward." I would say my experience is that any
firm which takes on claims in that way is heading for financial
disaster.
Q62 Keith Vaz: Are any of you aware
of cases where claims farmers have offered incentives, financial
or otherwise, for people to bring cases?
David Marshall: I cannot think
of any, this is all anecdotal really. There is quite a lot of
evidence, certainly in the investigation of the TAG scheme, in
some of the judgments of Peter Hurst, that certainly there were
incentives for those who were signing up, to sign up and issue
policies, and so on. It was a very peculiar business model and
rather different from the one which most solicitors would operate.
Richard Langton: There was an
example, I think, in Liverpool of a company, a firm of solicitors,
which advertised £200 up front, on a billboard, in the city.
Certainly in Ireland it became very common for solicitors almost
to bid amongst themselves for a new client and claimants would
go around to see who would offer the most upfront payment of their
compensation, but that has been stopped by professional rules
now so that does not happen.
Q63 Keith Vaz: Given that the Government
is proposing less self-regulation for lawyers, is it reasonable
to expect the Claims Standards Council to look after both the
interests of consumers and claims management companies?
Anna Rowland: I think what we
would like to see the Compensation Bill do is introduce a statutory
regulator. Really we would like to see the regulator set up in
the Bill, because it seems that it is too important an issue to
leave for secondary legislation, so that Parliament can scrutinise
what powers the regulator has and what sort of level of protection
that ought to provide to consumers. We would like to see the scheme
quite akin to the protection consumers have from solicitors and
to be equally robust, especially because there has been experienced
of abuses in this market so we know already what the evil is that
it is intended to address. I think the worst possible scenario
is that regulation would come in that is not effective which lends
some sort of credibility to some of the less reputable operators.
Q64 Keith Vaz: Do you agree with
that? Nobody disagrees. Given the experience which the claims
management companies have had, what would be the effect of allowing
commercial companies, like the AA or even Tesco, to enter the
market providing legal services?
Anna Rowland: I think the issue,
again, is regulatory. It is extremely important that the same
abuses do not sneak in through this route. Having seen the White
Paper, we hope, and we feel somewhat confident, that the alternative
business model which is being suggested is proposing that, even
though an external body might own the firm which operates the
legal cases, the legal department itself would have to be headed
by somebody who was considered fit and proper and who was subject
to the same rules which apply currently to law firms, and we will
be lobbying on that.
Q65 Chairman: Fit and proper, or
a solicitor or barrister?
Anna Rowland: I think the phrase
which has been used is fit and proper.
Q66 Chairman: That is a much narrower
definition though, is it not? It is broader in another sense.
I suppose they would be fit and proper, they are not going to
put their hand in the till, but they will not be professionally
qualified?
Anna Rowland: I think many of
the people working within it will be solicitors, so what we would
want to see is that the rules operating the department are of
the same standard.
Q67 Keith Vaz: What the Chairman
is saying is should the head of this legal section be a qualified
lawyer?
Anna Rowland: That is what we
would want. There is not enough detail yet in the White Paper.
I think at the moment it says something like fit and proper. Certainly
our position would be that they should be a solicitor and therefore
tied into the same regulatory regime.
Q68 Keith Vaz: Of course, there are
those who believe that all solicitors are fit and proper.
David Marshall: I think the important
thing is that the changes within the White Paper do not allow
back-door entry, to allow some of the people who abused the unregulated
system before another way in, even though claims management companies
will be regulated under the Compensation Bill, so it is very important
that is a robust system.
Q69 Keith Vaz: Such regulation should
cover them as well; there is no reason why it should not be linked?
David Marshall: Yes, indeed.
Q70 David Howarth: In terms of Clause
1 of the Compensation Bill, I was just wondering what impacts
you thought that Clause 1 was likely to have?
Richard Langton: Clause 1, as
it is drafted currently, as you will know, we think is unnecessary
and will only cause confusion by giving areas for people to argue
about which are already covered by the common law at the highest
levels.
Q71 David Howarth: Do you think that
it would be better to draft the Bill in terms of social value
rather than in terms of desirable activity?
Richard Langton: No. I do not
think the law needs to be put into a statutory format in that
Bill.
Q72 David Howarth: If we have to
have a clause, if we are stuck with a clause, what would be the
better way of drafting it between those two?
Tony Goff: It is like being asked
whether it is better to be hit by a rock or a brick.
Q73 David Howarth: If we are going
to be stuck with a clause, we must have some influence on what
it says?
Anna Rowland: I think what we
would like to have seen in it is, I do not know if this helpful,
my understanding is, what it is intended to achieve is to reassure
the public and organisations that they will not be subjected to
excessive litigation. What we do not believe is that those bodies
will be reading the Bill, so what might have been helpful is to
have something in there that requires people who are frontline
claims handlers to deliver some sort of educational information
to claimants, so that you are getting education straight to the
people who are making the claim. We do not believe that the Bill
will achieve that objective by this route.
Q74 David Howarth: You think that
no cases are going to be decided differently; you do not think
any cases are going to be decided differently as a result of Clause
1?
David Marshall: I think the danger
is that they might be. The Bill says that it is not intended to
change the law, but one wonders, when it gets before a court they
might have the clause there and will they be saying "What
is a desirable object?" and we fear there will be satellite
litigation over what that means.
Richard Langton: I do not know
how familiar you are with the facts of the leading case of Tomlinson
and Congleton.
Q75 David Howarth: I have heard of
that several times.
Richard Langton: You will know
that the young man concerned broke his neck diving into a shallow
part of the lake. In fact, the worry that the local authority
had beforehand was that children might drown, because they were
going out in small boats onto this lake and there had been a few
near-misses. I think that, possibly, if the claimant in the Tomlinson
and Congleton case had been a small child who had drowned,
or suffered very serious injuries as a result of that, the House
of Lords might have found differently, because they were certainly
looking in terms of what an adult can do on somebody else's property
and they should not be prevented from shallow-diving if that was
what they chose to do, despite warning signs. The answer to the
question is that I think, in slightly different circumstances,
with the Clause 1, the court would still find against a child
claimant, whereas previously, without this, they might not. One
struggles to find examples of how it will apply.
Tony Goff: If the purpose of Clause
1 is to try to take those cases out of court which may close down
swimming pools or may stop my son going on a school trip—
Q76 Chairman: Or, as we discovered
last week, the Lord Chief Justice going for a swim?
Tony Goff: Yes. I would suggest
it would not do that, because, I think, if you asked a schoolteacher
who was taking a group of children on a trip why did they decide
not to go on that trip with the children, I think health and safety
would be a much greater deterrent than the possibility of being
sued; they could well end up in prison. Health and safety are
very vigorous in bringing these prosecutions, so I do not think
dampening down a perceived compensation culture in those cases
would have much effect on a schoolteacher, whose decision not
to go on the trip probably has more to do with prosecution from
health and safety, I would suspect.
Q77 David Howarth: Can I come on
to that, because I think that is an important point to pursue.
We have heard a lot of evidence that there is no compensation
culture but there is a perception of it and I was just wondering
what you thought could be done to tackle the perception? One point
just raised is the Health and Safety Executive and the question
of risk assessments. I was wondering whether you have come across
the use of the concept of risk assessment that would strike you
as excessive?
Anna Rowland: I do not know if
I can do that. One of the things that has changed in the last
10 years is that the process of risk assessments has become much
more widespread. It was introduced with the Turnbull risk assessments
in the nineties, but a lot of public bodies have adopted that
voluntarily. I think the fact that lots of organisations are doing
risk assessments where they never did before is as much to do
with the overtly cautious way people are handling risk that we
hear about, rather than a fear of litigation, although that has
increased.
Q78 Chairman: If they have not done
a risk assessment, or have not followed their own risk assessment,
and you were appearing for a client, would you draw attention
to this legislation?
Anna Rowland: I think the increased
use of risk assessments is a good thing but what we have seen
is that in some cases decisions are made that are not particularly
sensible. The point of a risk assessment is to identify the risk,
decide how great it is, look at what is involved in avoiding it,
weigh those up, and how big is the risk, how likely is it to happen
and then either do something to avoid the risk or seek to manage
it. I think what we have seen sometimes is, once a risk is identified,
no matter how small or how cumbersome it is to eliminate it, some
risk managers simply ban the activity or seek to eliminate it.
I think what we are saying is that it is about managing risk,
not eliminating risk, and education and guidance are needed. To
go back to risk, I think sometimes the fear is not about being
sued but being blamed, so if you are in that position do you want
to be the person who said, "Oh, no, that's fine; it's too
expensive to do that, we'll go ahead." Really, people need
to be weighing up how big is the risk and what will be lost by
simply not doing that activity and is that reasonable.
Richard Langton: My experience
is that sometimes risk assessment, because it is done all the
time, is not done appropriately in the serious cases. I had a
client in the office on Monday, a new client, who had a risk assessment
done but the one thing they did not identify was the risk that
actually poured molten steel down his neck. It is important that
there should be proportionate risk assessment and it is taken
seriously in those serious risk cases, and it may be that there
are examples where it is overdone. I have to say, I am a director
of a Headway charity, which runs a day centre. We have seriously
injured, head-injured clients, looked after by volunteers, almost
exclusively, who have to be trained. We have no accidents. We
have them using woodworking materials, they go out on trips, they
go swimming, they go out in vehicles, they do everything at the
day centre and are out and about. We have a commonsense risk assessment
approach to this. We do not have a huge number of forms, we just
look at the really serious issues and deal with them, and I think
probably that is the approach we would advocate, targeted risk
assessment.
Q79 David Howarth: Is there anything
that other social actors might do to reduce this amount of risk-averseness
that we are seeking? Some people have suggested that insurance
companies might do that business; they make money out of risk-averseness
so that does not seem very likely. Also the media has been blamed,
such as by the Better Regulation Task Force. Is there anything
else that might be done, apart from just general education?
David Marshall: I think insurers
probably do have a role there with employers. I think that they
can promote proper risk management and perhaps link that to premiums,
and so on. Businesses have got to accept some degree of risk but
it is a question of managing it and I think insurers do have an
important role, they are directly in contact with them
Tony Goff: This might be a controversial
point. I think insurers have had an interest in perpetuating the
myth of a compensation culture. It has been one of the main planks
in their argument, to raise the small claims limit, for instance,
and they have ridden on the wave created by the media, that is
a view, I think, widely held within MASS, certainly it is my view.
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