Conclusions and recommendations
Conditional Fee Agreements
The use of CSAs
1. The
introduction of CFAs was designed, in part, to widen access to
justice. The evidence appears to show that it has had some success
in meeting that aim, although perversely some cases which previously
would have received legal aid funding may not receive CFA funding
because the chances of success are not high enough. Conditional
fee agreements have not directly caused the perception of a compensation
culture. The statistics demonstrate that the number of claims
has not risen since CFAs were introduced as the primary method
of funding personal injury claims. Nonetheless, we agree with
the conclusions drawn by Citizens Advice, that the introduction
of CFAs (and with it a class of unregulated intermediaries acting
as claims managers) has adversely affected the reputation of legal
service providers, whether professional lawyers or not. The increased
awareness of the public that it is possible to sue without personal
financial risk, when combined with media attention to apparently
unmeritorious claims being brought, has contributed to a widely
held opinion that we do indeed have a compensation culture. (Paragraph
17)
2. It is not easy
to design a system whereby a claimant without funds is allowed
access to justice without exposing the defendant to the chance
that he will not recover the costs of the action if the claimant
is unsuccessful. Given the power of the press, it is right that
people should have a remedy when have been defamed; and because
of the high level of costs inherent in bringing a claim it is
likely that those with modest means will continue to have to rely
on CFAs. (Paragraph 29)
3. The uplifts which
claimant's solicitors receive should reflect the risk that they
bear. Reassessment of risk as the claim proceeds may go some way
to ensuring proportionality, but only for that stage of the proceedings.
This would require a clearly staged process. Further use of cost
capping orders may prove useful in some circumstances. The courts
need to ensure that appropriate case management takes account
of proportionality, preferably before the costs are actually incurred.
(Paragraph 30)
The Compensation Bill [Lords] and Risk Aversion
Excessive Risk Aversion
4. We
believe that the question of how to set targets for the HSE is
an important one, since it may well affect the culture of the
organisation. If the targets are set in terms of a reduction in
the number of accidents, rather than in terms of ensuring that
reasonable measures are taken to reduce risk, the likely outcome
is that activities will be stopped altogether rather than being
better managed. We believe that the basis of these targets should
be reviewed. (Paragraph 49)
5. The
HSE admitted that it was unable to conduct risk balancing exercises
looking at the dangers of different risks.
We do not accept this and believe that the HSE should find ways
of doing so. (Paragraph 49)
6. It has also been
suggested that authorities and other bodies fall back on health
and safety arguments when they are unable to provide a service
for financial or other reasons. Such practices should be identified
and eradicated. (Paragraph 50)
7. While we accept
that health and safety issues can be an easy scapegoat for many
problems, far more has to be done to educate the public that responsible
risk management does not equate to the avoidance of all risk.
(Paragraph 51)
Clause 1 of the Compensation Bill [Lords]
8. Methods
of stemming current levels of risk aversion go to the heart of
the compensation culture debate. While the number of people claiming
compensation may not have risen in recent years, a contrary perception
remains. The fear of prosecution by the Health and Safety Executive
is likely to combine with the exaggerated fear of being sued to
discourage people from planning or undertaking activities which
require risk management and may also impact on the competitiveness
of business. (Paragraph 52)
9. We agree with the
majority of the evidence that we have received that clause 1 to
the Compensation Bill [Lords] is unnecessary. We have concluded
that it should not be in the Bill. While it is undoubtedly well
meaning, it satisfies neither those who wish to reduce risk aversion
in society, nor those requiring legal certainty. It is impossible
to encapsulate the law of negligence in a single sentence. (Paragraph
67)
10. If clause 1 were
implemented, it would undoubtedly, at least in the short term,
lead to an increase in costly satellite litigation to define what
is a "desirable activity". Moreover, the wide breadth
of that term (or any alternative proposed such as "social
value" or "utility") could have unforeseen consequences,
since while the Government states that it is not intended to change
the law, it is likely that interested parties will seek to rely
upon the clause before the courts in order to improve their shield
against liability. This could result in possibly inconsistent
decisions where judges try to refine further the concept of "desirable
activity". (Paragraph 68)
Regulation of claims management companies
11. We
are pleased that the Government is now moving to regulate claims
"farmers" who act as intermediaries referring cases
to solicitors. This work is undertaken by a range of organisations
including not only commercial companies but also trade unions
and voluntary bodies. The system of regulation and redress needs
to ensure that claimants are protected and that enforceable codes
of practice apply. Regulation is long overdue and we hope that
it will assist in restoring the reputation of the many legal professionals
and others in the field who fulfil a necessary function ensuring
that deserving claimants receive adequate compensation. (Paragraph
81)
12. The Compensation
Bill [Lords] lacks detailed proposals on how the Government intends
to regulate claims management companies. There are a number of
important issues that need addressing, including advertising,
potential mis-selling of insurance products and the quality standards
that an authorised person needs to meet. Self-regulation of claims
management companies would be insufficient and undesirable. The
market is relatively new, too diffuse and many different services
can be offered to consumers, from financial products to quasi-legal
advice. (Paragraph 82)
13. We favour a system
whereby claims managers would be subject to the same type of overarching
supervision that is being proposed by the Government for the legal
profession. We also believe that all persons involved in the claims
management process should meet minimum standards. Finally, we
suggest that some limits need to be placed on the nature and placement
of advertisements by claims management companies. Given the obvious
benefits that all of these changes would bring, we do not see
any benefit to consumers in granting organisations exemptions
from regulation. (Paragraph 83)
The NHS Redress Bill [Lords]
Independent legal and medical advice
14. It
is surprising that the Department of Health has brought forward
an ambitious Redress Scheme, without setting out in detail how
it will be run. During the course of our inquiry, the NHS Litigation
Authority was still unaware as to whether it would definitely
be responsible for running the scheme. We were informed that contact
had not been made, either with lawyers or medical experts, about
whether they would work for fixed fees and to the timetables
envisaged. These lapses appear to threaten the viability and effectiveness
of the scheme. (Paragraph 94)
Potential difficulties
15. Given
the particular concerns which have been expressed about the potential
expenditure and difficulties inherent in the Redress Scheme, it
is essential that it is piloted, and that the pilot be comprehensively
assessed, to ensure that the benefits that it will bring are sufficient
to outweigh the costs. We are alarmed that the Department of Health
is "relaxed" about the possible cost implications of
the scheme, since we believe that it is difficult to forecast
the potential demand accurately. (Paragraph 103)
16. The Government
has modified the proposals for a redress scheme and restricted
the scheme to low value cases. There is a danger that the scheme
will not be cost-effective. Some of the objectives which the Government
has set out for the scheme could be achieved by other means, such
as more open and transparent handling of claims and the willingness
to admit mistakes of health professionals on a more extensive
basis than has previously been the case in the Health Service.
Another concern is that claimants may be ineligible for legal
aid if they fail to use the Redress Scheme. This would arise if
it became a requirement for obtaining Legal Aid that the scheme
be used first. The impact of this would be greater if, as seems
possible, the threshold of £20,000 were to be increased in
the future. Where so much is to be done by secondary legislation,
it is unfortunate that such issues have not been adequately addressed
in the main body of the Bill. (Paragraph 104)
Care contracts
17. We
recommend that further consideration be given to the proposal
in clause 3(3) (a)of the NHS Redress Bill [Lords] to offer a 'contract
to provide care or treatment' as part of the Redress scheme. On
the basis of the evidence that we have received, we believe that
relatively little attention has been paid to this area of reform,
although we accept that this may be because the relatively low
threshold of £20,000 means that patients in need of a significant
period of remedial care are unlikely to be affected by the Redress
Scheme. (Paragraph 110)
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