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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 754-ii House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE Constitutional affairs COMMITTEE
Tuesday 13 December 2005 ANNA ROWLAND, DAVID MARSHALL, RICHARD LANGTON and TONY GOFF DAVID FOSKETT QC and STEPHEN WORTHINGTON Evidence heard in Public Questions 52 - 106
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Constitutional Affairs Committee on Tuesday 13 December 2005 Members present Mr Alan Beith, in the Chair David Howarth Barbara Keeley Keith Vaz ________________ Witnesses: Anna Rowland, Policy Manager, Civil and Family Justice, and David Marshall, member of Law Society's Civil Litigation Committee and Council Member, The Law Society; Richard Langton, Vice President, Association of Personal Injury Lawyers (APIL); and Tony Goff, Vice Chairman, Motor Accident Solicitors Society (MASS); gave evidence.
Chairman: Ms Rowland, Mr Marshall, Mr Langton and Mr Goff, welcome. Apologies from us, I think actually you outnumber us; that is because at the last minute the Government has put on the Criminal Defence Bill this afternoon and some members of our Committee are involved in that and representing us over there, but they will all be made fully aware of everything that you say. We have interests to declare. I am a consultant to a company which is involved in the leisure industry. Keith Vaz: I am a non-practising barrister and my wife holds a part-time judicial appointment. David Howarth: I write on the subject of tort law. Barbara Keeley: I have an unresolved claim for a road accident involving personal injury. Q52 Chairman: Thank you very much indeed. I think perhaps it would be helpful if we could start by asking you what your experience is of the introduction of Conditional Fee Agreements, what view you take of experience so far? Richard Langton: My personal experience as a solicitor has been that by and large it has been successful, although obviously there have been a lot of cost issues that have been resolved or are being resolved now through litigation in the higher courts. I think there has been a sort of Alice in Wonderland approach to recovery of costs, where the losing party pays up to double the costs even if they have got a good claim that they can defend. I think that is something that the insurance industry does not like very much and is intellectually difficult perhaps to explain to some people. I think that there has been a saving to the legal aid fund from all this. People forget sometimes that when legal aid was around insurers complained that they were blackmailed into settling cases because the claimant had legal aid and therefore they could not recover their costs against them, come what may, so they were forced into settling cases. If you look at the financial statistics, the saving for the insurance industry there is much bigger than the £37 million that is sometimes quoted. Q53 Chairman: We might look at costs in more detail in a moment, so perhaps it would help if I were to focus your attention on whether you think there has been any change in the types of cases which have been pursued under CFAs, as compared with the situation there would have been before they were introduced? Richard Langton: People who have a 50% better chance of success are still getting access to justice, but I think there are some cases, lower-value cases, where perhaps solicitors are not prepared to take a chance. My experience is that people going to the right solicitor can get access to justice with CFAs, as they could in the past. David Marshall: I think there are two separate points here. First of all, Conditional Fee Agreements came in in 1995 and I think at that point they were a very valuable contribution to access to justice because they allowed those people who were not eligible financially for legal aid to bring cases, and of course there was no question of recoverability. The big change was with the Access to Justice Act coming in, in 2000, which obviously took all of these cases out of legal aid and introduced recoverability; that is what caused a lot of issues within the system. I think Conditional Fees themselves did increase access to justice and allow people to bring claims. Problems have arisen out of recoverability, although I think probably they are being resolved over a period of time. Tony Goff: I am from a group called MASS and my take on all this is that it is not so much CFAs that need to be looked at but what CFAs brought with them, which was recoverability of insurance premiums and success fees. In fact, MASS warned the Government five years ago that we thought recoverability of insurance premiums would promote a whole host of satellite litigation, which in fact it has done, because liability insurers were not going to take that sitting down. Q54 Chairman: This is a situation where having had to take out liability insurance then it becomes a cost which can be levied? Tony Goff: No. The point that I am making, Chairman, is that under a Conditional Fee Agreement you take out what is called an 'after the event' insurance policy. In the early years, that opened the floodgates to opportunists to come in and make a lot of money on the back of that. Claims Direct and TAG I think are two who came in on the back of that and made a lot of money out of selling overpriced insurance policies. With hindsight, I think that may have been a mistake. It has settled down now. This problem, I think, as David Marshall said, has now bedded in. The success fees that are recoverable are much more realistic, perhaps. I read in the evidence from last week that there are cases where there are 100% success fees, but these now are very few and far. In motor claims, which is what I am here to talk about, we have had a 121/2% success fee now for some time. The worst excesses, in fact, perhaps have disappeared, with regard to success fees. As far as the insurance premiums are concerned, they are bedding down as well. You cannot operate a Conditional Fee Agreement without insurance, they go together, you cannot have one without the other. Perhaps the worrying thing is, where we are at the moment, that if you speak to 'after the event' insurers they are considering their position as to whether they can go on; some are leaving the marketplace, others are contemplating it. The worry, moving forward, is to make sure, I think, that you can continue with the 'after the event' insurers being around. Anna Rowland: I think one of the benefits that CFAs have brought has been about who can bring claims, because the eligibility rates for legal aid are now very low, whereas CFAs have opened up the possibility of getting redress for middle-income people who would have had no hope of getting legal aid and they would not have had enough money to fund the case themselves, so there is a whole tranche of people who had no access there who will now be getting access. Richard Langton: I do not know if you are getting evidence from trade unions but I think trade unions and similar membership organisations have benefited from the CFA regime. Because in the past they have had to indemnify their members for all the legal costs, especially defendants' costs, if the cases were successful, now they have a completely cost-neutral system by acting as self-insurers. I think you would find that most of them would say this has been extremely beneficial to them and their members. Q55 Keith Vaz: Do you accept that the introduction of CFAs has led to a substantial rise in legal costs? Tony Goff: Not CFAs themselves, but obviously they have increased the cost because they have brought with them insurance premiums and they have brought with them success fees. The answer would have to be yes, but I would say that it is not the lawyers who are pocketing the increase, because the system that was put onto lawyers was not one that we asked for. Yes, you do have to have an insurance premium; you cannot run a CFA without an insurance premium and of course that is an extra cost that the insurer has to pick up at the end. David Marshall: Obviously, effectively it was Government policy to transfer the cost of funding litigation through legal aid, paid by the taxpayer, to the pool of wrongdoers, through insurance, so obviously a cost has been transferred. When people were sued by a legal-aided litigant in the past they could not recover costs, now then can, and obviously the cost of insuring for that, the 'after the event' policy premium, is recoverable. However, I think it is a little bit difficult to work out the costs which are attributable to changes to CFA and also costs which may been attributable to the Woolf reforms. There is also front-loading of cost as a result of the procedure rules, across all cases, and it is not an easy exercise to work out how much of the increase in cost is down to that and how much down to the CFA recoverability regime. Q56 Keith Vaz: Do you think these costs are generally proportionate to the damages that the client obtains? Richard Langton: I think it is difficult for the lower-value cases, because really the same amount of work has to be done to investigate issues of liability and a quantum for a low-value case as for a big one. In the very low-value cases, one can see that the ratio gets worse and worse, but then there has to be some minimum figure at which any business has to operate, employing a level of staff to do the work, to provide the client care, to understand the difficult law, the CPR, and so on. Q57 Keith Vaz: In what proportion of cases do you think that the legal costs amounted to more than 50% of the final settlement? Richard Langton: Statistically, I would think a very small number where the legal costs were more than 50%. I have seen some statistics which suggest I think that 40% is about an average, and they are not my statistics. David Marshall: Yes, and I think the insurers have quoted 30% as being a fairly consistent level, across all cases, of damages to claimant legal costs for quite a long period of time. We do not have the statistics here, but I think the vast majority of cases, of course, are settled before they actually go into court, so I suspect in those cases proportionality is reasonable, but also cases go right through the court system, to the door of the court, where settling them can be much more expensive. Q58 Keith Vaz: Has the introduction of CFAs had a disproportionate impact on libel and privacy cases and, if so, is cost-capping a potential method of resolving this problem? Anna Rowland: I think there have been some specific issues that have arisen with CFAs and defamation cases, but it is important to remember that before we had CFAs there was no mechanism for people to bring cases at all unless they were fabulously wealthy. The media could report something quite irresponsibly and the injured person would have no redress at all and with the introduction of CFAs it gives a mechanism for people to bring a claim. There have been some specific issues, mainly because the costs in defamation cases tend to be quite high. It is a very specialist and technical area, and previous to CFA it was typically only the very wealthy who could afford it, so the specialism tends to be centred on those firms whose clients are extremely wealthy, so for a combination of reasons the costs are quite high. It is also a very speculative area of law, though compared with other areas, where you can have a reasonable assessment at the beginning of what the outcome might be, that is much more difficult in a libel case. For that reason, the success will tend to be much higher, because it is so difficult to tell early what your prospects of success are and, I think, for that reason, costs to the defendant on paying costs when they lose has been felt more keenly, but it is really difficult to balance the rights of claimants to bring a case and, obviously, the experience of defendants on the other end, it is not very clear how you do that. Q59 Keith Vaz: Mr Marshall, what impact has the introduction of advertising by claims farmers had on the expectation levels of potential clients? David Marshall: On the expectation levels of damages, I think that the biggest period of advertising was some years ago and obviously those claims management companies have gone bust now. Certainly The Law Society advertising code requires the advertising to be proper advertising, that it is not creating unrealistic expectations. Anna Rowland: Yes, that it is decent and proper and fair, basically in accordance with the AFA guidelines. 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, ten 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 have been experienced 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 the regulatory issues. 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 ten 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 risk assessment 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. Q80 David Howarth: I will ask you to elaborate on that point, if you might. What is the nature of the insurers' interest? Tony Goff: That is another issue altogether. The insurance industry appears to have an agenda to change the way in which personal injury claims are handled. They have had that for some time, and I think creating the myth, the perception, shall we say, that there is a compensation culture has suited their purpose, insofar as it has helped them in their arguments, with regard to small claims and other issues. I think they have used it very successfully. Richard Langton: There is a widespread belief in the claimant side that insurers have been writing premiums that are too low to get market share for many years, that they have taken on the wrong risk or have been unlucky with natural disasters, things like the asbestosis claims that have come out they were not expecting. The number of insurers has reduced over the last ten years, there has been a lot of price competition in order to gain market share and now perhaps they are looking at ways in which they can recoup some of the losses; they were hit by the stock market crash, perhaps they underreserved for the risks involved. That is the claimants' perception and now this is a golden opportunity perhaps to get back into profitability. Q81 David Howarth: What you are saying is that if there is a sudden, unexpected reduction in the scope of liability they get a windfall? Richard Langton: The experience in Australia was that when the tort law reform stopped people pursuing claims insurance premiums did not go down, and I think we are sceptical as to whether there will be a direct cause and effect of, say, increasing the small claims limit and reduction in premiums. David Marshall: Certainly the DWP ELCI review did not really find a very close correlation between underwriting costs and premiums, and this idea that, in fact, policies were being underpriced to get market share, it may well be that is a way of recouping, if you can reduce the number of claims. I think that the media side of it and the power of anecdote, it is good stories to read in the press, it is like urban myths being carried forward and often they are very entertaining stories, but when you actually scratch the surface of them... I think I was called in once by Sky to talk about backstroke was going to be banned at a local swimming baths because of a risk of injury. I was about to go in, on the seven o'clock news on Sky, to talk about this, and, to their credit, they looked into the story and discovered it was nothing to do with that. Somebody was splashing other people in the pool and it was just a question of trying to stop overexuberant backstroke, nothing to do with compensation culture at all, but that was what they had believed when it was first said. It is good stories and I suppose it sells newspapers. Q82 David Howarth: It has been suggested that, instead of the existing court case system, there should be an ombudsman-type, inquisitorial system for smaller claims, funded by the insurance industry. I was just wondering what your view was of that suggestion? Tony Goff: This is similar to the Irish system (PIPA). Richard Langton: Our experience so far of the Irish system is that a lot of claims have gone into it but we are told very few yet have come out and perhaps when some do we will have some evidence as to how it works. It seems difficult to believe that an efficient lawyer, doing sufficient work on a case, in terms of taking instructions from a client, gathering the necessary evidence to prove a claim, putting in a letter which the insurers accept, in fact is going to do more work than an ombudsman or an administrative bureaucracy; this is just a way of shifting the cost to the ombudsman from the law firm. David Marshall: I think the experience of dealing with MIB and CICA, which are very similar sorts of schemes, MIB untraced cases, is it does not speed things up, in fact they are very, very slow and bureaucratic. I think there is an issue of public confidence really, because you talk about the insurer of the wrongdoer and I think the lawyer does add that, that public confidence. Q83 Barbara Keeley: Turning to the NHS Redress Bill now, obviously the Bill itself does not provide details of the scheme. Have you received any contact from the Department of Health explaining how it envisages solicitors acting under the new dispute resolution process which will be introduced by the Bill? Anna Rowland: We have not had any contact from the Department of Health. We have written to them very recently seeking a meeting to talk through some of the practical details about how the redress scheme might work, but that is quite recent so we have not got to a point of setting a date yet, or anything. Richard Langton: We are seeking material though. Q84 Barbara Keeley: Do you foresee difficulties currently in drafting, management or enforcement of guaranteed care contracts? Richard Langton: No. Barbara Keeley: Clearly it has not got that far yet. Chairman: Do you think it is a problem? Q85 Barbara Keeley: In terms of guaranteed care contracts introduced under the Bill, do you foresee difficulties in drafting those, managing those or enforcing those? Anna Rowland: We have not got to that level of detail. Q86 Barbara Keeley: A further question is around really the provision of independent medical reports. I think The Law Society have touched on this in your written evidence to us for today. What practical difficulties do you envisage if solicitors are not provided with that independent medical report but are still asked to advise clients on whether to settle the claim out of court? Anna Rowland: I think two issues arise. As you rightly say, there is the issue of independence, which is to do with consumer confidence. I heard a minister speak recently and say that independence would be guaranteed by the fact that the NHSLA would be involved. Certainly our view is that if the redress claim does not work and the claimant goes to court the NHSLA will then be representing the person on the other side. Clearly, there is an issue of consumer confidence there. The second issue is about how the role of the lawyer and independent advice will work, which is connected to that, to the extent that it depends at what stage the lawyer gets involved. We do perceive some practical difficulties if what is envisaged is that presumably there is an internal investigation and then an offer is made and the claimant is simply sent along to a lawyer. What the lawyer will not know is was there other information that has not been considered, has all the information been considered, so what are the difficulties, and what you do not really want happening then is the lawyer having to reinvestigate just in order to advise the client. Clearly, the issue of how independent are the documents they are seeing will be a factor, but we think there is a further factor about how does a lawyer, also from the terms of their own duty to give best advice to the client, say "Yes, this is good," or not, if they do not know whether they are seeing the full picture or not. I think what we would like to discuss at the Department of Health is how that relationship might work and how you ensure that the lawyer has enough information to say to the claimant, "Well, this is the ballpark of what I think you should get; this looks fair," or "this does not." I think that needs a little more thought, although we accept that you are going to want their involvement to be more streamlined than it is at present, in most cases. Q87 Barbara Keeley: Clearly, the aim is to avoid introducing undue costs into the scheme, clearly that is an overall aim. Is there a way, do you think, to allow for independent verification of settlements, it is a balance, is it not, costs on one side and independent verification on the other side? Anna Rowland: I do not see why it should be impossible to do that. I think the details need some further thought. I think that is something we will want to discuss in greater detail. I do not see why that should be impossible but I do not think the scheme is, we have very little detail, just saying, "Oh, you can then go along for some advice." There are difficulties with that. Certainly we would think it must be possible to create a streamlined system, but it needs some thought. David Marshall: I think it is important that the public feel there is sufficient rigour and independence in the investigation, and certainly various attempts to revamp NHS complaint regimes have not really commanded a great deal of confidence. There are lots of shades of grey in medical practice and I think it would be very, very disappointing if the redress scheme, which I think does have lots of potential advantages in bringing a cheaper system for the smaller cases, were to fail because there was not really the idea that there was a publicly accountable way of investigating the NHS. I think the lawyer does have a very important role, and you cannot just say, "Here's our report, carried out internally, is it any good?" I just do not see how a lawyer can possibly deal with that sort of situation. Richard Langton: There may even be some benefit in a lawyer at the earlier stages giving independent advice to the patient that this is a good scheme that they can trust to go through, even if the lawyer's initial involvement is relatively modest, and perhaps identifies maybe evidence that needs to be saved, just in case, at the end of this scheme, which is still going to be fault-based, the claim is rejected. In terms of consumer confidence, or the patient confidence, in the system, having an independent person there at the beginning may well assist in ensuring that this works. Q88 Barbara Keeley: My final question was going to be do you think such a scheme could operate fairly without input by lawyers, but I think you have answered that. You see it coming in at a couple of points? David Marshall: Yes. Chairman: Thank you very much indeed for giving us the benefit of your experience. Clearly there are further meetings we are going to have to have with the Department in order for them to answer some of the questions we were putting today. Thank you very much. Witnesses: David Foskett QC, and Stephen Worthington, Vice Chairman of the Law Reform Committee (and member of working party on the Compensation Bill), The Bar Council, gave evidence. Q89 Chairman: Mr Worthington, Mr Foskett, we are very glad to see you both. You have experience at the bar in these matters. You probably heard the discussions that were going on previously about compensation culture. In your own written evidence you talked about the perception issue. What do you think the Government should do about perception and the compensation culture? David Foskett: The easy answer to that is it is a matter for the politicians and not for the lawyer. I do not know what the answer is, other than to say that it is probably a matter of education generally. I think, from what I have been able to read and what the Better Regulation Task Force produced, and so on, it is largely a matter of headlines that create the perception and quite how one addresses the issue of headlines I am afraid I do not suppose I have an answer to and I do not suppose anybody else does. I think perhaps the more serious issue is whether there are professionals, like teachers and others, who feel that they are under threat from a perceived compensation culture and I am not sure that the two of us would say anything very different from what you have heard from our colleagues from The Law Society and other organisations today. I think our collective view would be that if there is a risk-averse culture out there it is probably caused by things other than a fear of claims for compensation. You have heard, for example, one gentleman talk about concerns about prosecution. I think that is something that found its way into our submissions. Again, one can only ever talk anecdotally, because of the sorts of conversations one has with people just quietly from time to time, but undoubtedly there are, for example, teachers who would be concerned about possibly risking prosecution if they did not look after some children properly in their care and a child died. One knows, of course, that there would be inquests, and things like that, which could certainly give rise to possible criminal sanctions. In terms of what one does to deal with it, as I say, in terms of the perception created by headlines, I simply do not know the answer and I am not sure anyone does. So far as the other side of things is concerned, our view, which we hope is not totally complacent, is that the law does protect those in that position, teachers and others, and will not find them guilty, as it were, of negligence if the circumstances do not dictate that finding should be made. Stephen Worthington: It is a pity perhaps that when one gets a headline to the effect, for example, that children cannot play conkers in the playground, one does not know where it comes from, and then when one hears a headline to the effect that a particular case has come before the court the next day's newspaper seems never to tell us that the claim failed. One sees what, at first sight, appears to be a ridiculous claim going through the courts; one does not then discover that actually it failed. Q90 Chairman: Usually they have not got a claim, have they, it is simply somebody feels that there might be one? Stephen Worthington: Often it is a headline from a case which has been picked up and run through the major newspapers, often a snippet from the case, which is then thrown into relief, and yet, as I say, no indication of what the final outcome of the trial was. Q91 David Howarth: Can we return to this question of Clause 1 of the Bill and just take up the point that was raised earlier about its relationship with the Tomlinson case and ask for your view of whether Clause 1 of the Bill takes us beyond Tomlinson or just leaves us in the same position in which Tomlinson left us? David Foskett: As everybody knows, the draftsman thinks that this reflects the existing law and, from a superficial reading of it, certainly when I first looked at it, I thought what difference does that make. I think one has got to examine it perhaps a little more closely than that. When we prepared our response I do not think we had checked to see whether the expression 'desirable activity' was one which had appeared in any of the other cases that had been decided over the last ten years or so. I noticed I think in the APIL evidence that they thought there had been one case in which it was referred to, but I did a search over three of the major legal databases this morning and could not find it anywhere. The only point of that little story is, that means there is a new phrase there which will require interpretation by the courts and, of course, it will always be something the lawyers can always produce in arguments one way or the other about what is desirable, it is true, and of course the courts will have to decide. I think that the short answer to the question is, it is not designed to change the law but it could well have that impact because, for all the reasons that we have set out in our paper and other people have set out in theirs, it has such a strong subjective element to it. I am afraid our general position is 'if it ain't broke don't fix it' and, again, I hope without sounding unduly complacent, we feel that the present system, as the Better Regulation Task Force said, sorts out the wheat from the chaff. Q92 Chairman: Do you think that will just open the way to cases hinging on whether scouting or paint-balling are desirable or sufficiently desirable? David Foskett: I think the short answer to your question is, yes, it does open the way for that kind of argument. One has to be frank, that kind of argument is available now. It does not require a clause in a bill for that kind of argument, or even, as I think we hint at the end of our paper, for evidence about what is socially desirable or desirable from a leisure point of view; it does not prevent evidence of that being given now, if a judge is prepared to receive it. I think the way we would advance it simply is the danger of passing this particular clause is that it may open the way for all sorts of interpretations which in fact were not intended by those who are promoting the clause itself. Q93 David Howarth: Can I just come back to the point that I put to the previous witnesses, that in Tomlinson itself Lord Hoffman uses the phrase, and several of us have used this phrase in the past out of context, the "social value" of the activity. Would it be better to use that phrase rather than the new phrase put into Clause 1? Stephen Worthington: When you put the question I was reminded of Dr Johnson, what is the difference between a louse and a flea. I think probably our view is that neither of the phrases is terribly good and is likely to bring forward satellite litigation as to the meaning of it. It seems to me that the whole point of what Lord Hoffman was saying, whatever wording he used - social utility, social value, desirable activity - is that the courts will look at all the factors and take them into account when deciding whether or not there has been a breach of duty. Richard Langton said that on different facts in Tomlinson, for example, children playing in a canoe, the result might have been different and I respectfully agree with that. The whole point about Tomlinson was that what the House of Lords was saying was that you do not have to tell an adult that it is dangerous to dive into shallow water, and therefore no breach of duty. Q94 David Howarth: Could I come to another point in Tomlinson, where Lord Hoffman talks about employees and the question about them having choice or no choice and the law there; is there any danger that Clause 1 might change the law about employees? Stephen Worthington: It is difficult to say. Two of the problems with Clause 1 are, first of all, that it relates only to claims in negligence, not as drafted to claims in breach of statutory duty. For example, on the facts of Tomlinson Clause 1 would not apply, because in Tomlinson the claim is brought under the Occupier's Liability Act 1984, so Clause 1 would not apply to that case. The second is, and I think probably this goes to the issue of risk-averseness as well, that, particularly in the field of employer/employee liability, so much depends upon health and safety regulations, which have been brought in pursuant to our obligations under the Treaty of Rome, that the result, and again I am echoing what other people said a few moments ago, is that there is a great deal of risk assessment. The moment you start risk-assessing in order to protect your employees, that is, almost by definition, going to have an effect on the way in which you look at things generally. For example, if you are assessing risks in a playground pursuant to your obligations to your employees, that is going to have an effect on what you will let the children do. To that extent, I think that Clause 1 does have an effect and one has got to look at it from a different point of view. Q95 Chairman: Possibly, if a child might be injured in a way that was traumatising to the employee? Stephen Worthington: Yes. I did not actually mean it like that really. Suppose, for the sake of argument, you have risk-assessed the playground and seen that there is a potential danger which you feel you ought to deal with, because you are taking risk assessment to its highest level, in order to protect a teacher, that may mean that then a child cannot carry out what under the Bill might be a desirable activity. Q96 Chairman: Going back to a question which was raised in the earlier session, in your written evidence you said there is a strong feeling amongst practitioners that, in the personal injury field, difficult cases are not now being pursued, I am paraphrasing the words, for the reasons that we explored earlier. Do you seriously think we could go back to the old legal aid system in this area? David Foskett: It is unrealistic to expect that will ever happen and I do not think we are suggesting that at all. I think all we were asked to do was to reflect on the effect that CFAs have had, and, like so many aspects, there are two sides to this particular coin, there are good features and bad features, as you have heard already this afternoon. One of the disadvantages may be that there are some cases which really ought to be brought perhaps, because they are hovering on the 50% viability threshold, but which now would not find a solicitor to pursue it, and that is a matter of view but that perhaps is undesirable. There are other aspects of the CFA system which are plainly desirable. They have weeded out some cases which plainly should never be brought, they also do have some costs and balances, as again you have heard from various witnesses at various times, so it is a feel, though it is very difficult to have a very clearly-defined view. Q97 Chairman: Do you think that these are rather rare cases where there is an important point to be established, or simply deserving individuals, where the negligence element may be in question? David Foskett: When I was addressing you, I was probably thinking of that, the deserving case. One of the concerns, obviously, is that the less throughput of cases there is through the courts of course the less opportunity the courts have to either develop the common law or reign it in, as the case may be, and that is a serious point. As you will have seen from the various statistics that we provided you with, and others have as well, there has been a huge downturn in the number of cases being heard by the courts and you can see the way the pie-chart is down over the last ten years or so. Stephen Worthington: One of the problems with the CFAs, I think, is that solicitors have to take a quick view on the available information. One of the benefits of the legal aid system was that a solicitor could say to the Legal Aid Board "I think there might be something in this case. I think it bears investment of some money while we investigate it and then I'll be able to give you an opinion as to whether or not it ought to proceed." That tends not to happen, I think, in a lot of CFA cases. A view is taken on a fairly sparse amount of information, in many cases. Q98 Chairman: For deserving cases, there is scope for some pro bono involvement? David Foskett: Yes, around these margins. Stephen Worthington: Yes, there may be, if you can persuade lawyers to do it on that basis. Q99 Chairman: Turning to the media issue, ought we to take seriously this concern amongst some quite well-heeled newspaper corporations that the disproportionate costs they can face under CFAs are a deterrent to free speech? David Foskett: Shall I try to field that; neither of us is a defamation lawyer so I am afraid that what we say is very much from an amateur viewpoint. I did have quite a long conversation with a couple of fairly senior people in the field, so I hope what I am about to say makes a degree of sense, but if it does not then I hope the transcript will forgive me. Yes, I think there is a concern, in monitoring high-profile cases, which I am sure the Committee know about and probably represents the origin of the question. It is the case where there is no 'after the event' insurance, as I understand it, and the newspaper loses, that they find themselves picking up a huge tab at the end of the day, if there has been a 100% uplift and, of course, the costs involved in defamation proceedings historically have always been high. The short answer to your question is that there does seem to be a problem which has been highlighted with a lot of these cases. I think you heard from Master Hurst last week about efforts that are being made at the level of the courts to try to deal with this and that capping, I think was the expression that was used, as I understand it, is becoming a rather more frequent requirement now at a fairly early stage, where there is no 'after the event' insurance involved. There is, I understand, a standard direction now which requires a specifically-designated Master to consider the issue of the capping of fees, and indeed I understand that orders are beginning to be made. Whether that will be a full solution to the problem I simply do not know and I am not qualified to say, but at least it shows that the problem has been appreciated and, as far as I can see, is being addressed. Q100 Chairman: Do you think it is harder to reach settlements in defamation cases because of the instances of CFAs? David Foskett: I simply could not tell you. I simply have no personal experience of that. Stephen Worthington: I do not know either. All I can say is that it does not seem to be a deterrent in ordinary personal injury cases. Indeed, in many cases, it seems to be advantageous to an insurer to settle early because, as you heard, for example, in simple RTA cases, the mark‑up which is permitted by the various protocols goes up the closer you get to trial. For example, a claimant whose case is settled at an early stage, his solicitor will get only a 121/2% mark‑up, but if the insurer fights it to trial and loses the mark‑up is 100%, so, there, there is certainly an indication for early settlement. Q101 Chairman: That system could be applied in defamation? Stephen Worthington: Yes, but I would repeat what David said, neither of us is an expert in that field. Q102 Chairman: It is not necessarily a bad thing? Stephen Worthington: No. Chairman: Let us turn to NHS Redress. Q103 Barbara Keeley: In the discussion earlier, we said that the Bill does not provide details of the scheme, so if any of these questions go into areas where we do not have details we will understand. What safeguards do you think are necessary in the Bill, or in fact in subsequent regulations, to ensure that potential claimants are not pressured to agree settlements which are not reflective of what they would have been awarded in court? David Foskett: I think the short answer to that is independent advice, both legal and medical, at an appropriate time, and by that relatively early in the procedure. Like everybody, I am sure we shall just simply be saying that there is not very much detail at present and when we see the nuts and bolts we will be able to give a rather more definitive view. I think, in terms of the barrister's general position, there must be independent advice on both counts at an appropriate stage to ensure that the claimant is properly advised. Stephen Worthington: I think, as was said earlier, the crucial thing to make a scheme like that work is consumer confidence, and in order for the consumers to be confident I think they have got to feel (a) that they understand they are not precluded from going to court if they choose to do so, and (b) that they have access to independent legal advice. Q104 Barbara Keeley: Thinking about consistency in quantum of offers, if that is to be ensured, do you think it would be helpful for the NHS Litigation Authority to publish tariff criteria? David Foskett: It might be. As you may or may not know, in ordinary personal injuries cases now, the Judicial Studies Board issue some guidelines, they are not binding but they do assist practitioners to advise people about what their claim is worth and assist the judges in determining what their claims are worth. That kind of set of guidelines might well be useful. Q105 Barbara Keeley: Do you anticipate a role for barristers, for instance, who often provide advice on quantum in injury cases? The NHS Redress Bill clearly does anticipate some independent legal advice on the process and I just wonder if you foresee a role for barristers in that? Stephen Worthington: That may well depend on whether or not the solicitor who is initially instructed, if instructed, is a specialist. If he, or she, is a specialist then there may be no role for the bar. On the other hand, something which perhaps sometimes is overlooked, the bar is frequently a lot cheaper than solicitors, particularly down at the junior level, but if you want a specialist barrister to give an opinion on quantum you may be able to do that more cheaply by going to the bar, a bar solicitor, than if you go and ask for a solicitor to do it all on his, or her, own. Q106 Barbara Keeley: One detail which does seem to be there is examples are given, in Clause 3, about future remedial care which may be settled, in terms of a level of compensation being settled for that aspect. Do you think there are going to be difficulties around that aspect of the Bill? Stephen Worthington: It is something which the courts are already wrestling with, with periodical payments, because under the relatively new periodical payments regime the court has to ask itself the question as to what a severely injured person's care needs may be into the future and how they should be catered for, whether by a lump sum or, under periodical payments, by so much per annum. The knowledge in that area is fairly sparse at the moment because, as I say, it is a fairly new regime. I think the courts will be able to deal with it and I think, under a regime that is being suggested under the Bill, it ought to be possible too. Chairman: Thank you very much indeed. We are very grateful for your time and the care and frankness with which you have answered the questions. Thank you very much. |