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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 754-iv House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE CONSTITUTIONAL AFFAIRS COMMITTEE
Tuesday 17 January 2006 STEPHEN WALKER and JOHN MEAD TERESA PERCHARD, JAMES SANDBACH and ADAM GRIFITH Evidence heard in Public Questions 192 - 258
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Constitutional Affairs Committee on Tuesday 17 January 2006 Members present Mr Alan Beith, in the Chair James Brokenshire David Howarth Jessica Morden Julie Morgan Mr Andrew Tyrie Keith Vaz Dr Alan Whitehead ________________ Witnesses: Stephen Walker, Chief Executive, and John Mead, Technical Claims Director, National Health Service Litigation Authority, gave evidence.
Chairman: Mr Walker and Mr Mead from the National Health Service Litigation Authority, welcome. We are very glad to have you here this afternoon. We have one small job to do. We have to declare any interests that might be relevant to the inquiry. David Howarth: I write and publish books on the law of tort. Keith Vaz: I am a non-practising barrister and my wife holds a part-time judicial appointment. Chairman: I am a consultant to a company which operates holiday parks. James Brokenshire: I am a non-practising solicitor. Chairman: That is the sum total, I think, of the relevant interests. Obviously, our inquiry is going on at the same time as discussion of the NHS Redress Bill, but that Bill and the principles behind it is highly relevant to the compensation culture issues that we are looking at. Q192 David Howarth: Can we start with the Compensation Bill and clause 1 of that Bill, which, as you remember, attempts to offer a helpful definition of aspects of the law of negligence? Could you confirm your view of whether that clause is necessary or helpful? Stephen Walker: I am not sure it achieves a great deal, is the answer to that. I think it is a well-intentioned attempt to define the circumstances in which the courts might, as it were, look slightly differently on the application of the current law of negligence, but I do not think it adds anything to what has come before in Tomlinson in the House of Lords, for example. Q193 David Howarth: Do you see any risks in trying to put the Tomlinson rule into any sort of statutory form? Stephen Walker: I think the risk with any legislation, and I emphasise any legislation, is satellite litigation as people try to test the boundaries, and quite properly - there is nothing immoral about that being done - but I think that is always a risk and, in a world that is almost defined by negligence, it is possibly a high risk. I would go no further than that. Q194 David Howarth: One of the aims of that clause is apparently to help the public to understand what the existing law says. Are there any other ways in which that task might be carried out? Stephen Walker: Yes, I think there are probably lots of ways. It is always trite to say education and publicity, but that is how people learn about things. I think one of the big problems is that for almost everyone who comes into contact with the law their experience of the law is mediated through and by the lawyers they encounter, and in a world where there are litigation practices which are geared to handling litigation for a return, again entirely legitimately, I think it is inevitable that there are some conflicting messages given, accidentally or otherwise, about what might or might not transpire. I meet many claimants personally. I try to meet claimants face to face. It is not always easy, because claimant lawyers are not very keen on that process, but mediation has been a big break-through in that respect, for example, and I do not think expectations are terribly well-managed. Coming from a defendant, that is always going to sound like, "He would say that wouldn't he", but I have nothing to gain by telling this Committee that that is my view, and that is my view. People's expectation are not managed well, they are led to believe that A or B could be achieved, that litigation is the only route to achieving whatever A or B might be, whether it be money, or an apology, or an explanation really does not matter, and I just think that more frankness at that point, the point of contact, with the solicitor in the first instance might be a very useful mechanism for lowering expectations, not to deny anything that people are entitled to, just to, to use the colloquial expression, bring them into the right environment intellectually so they are not hoping to get something that is unachievable. I am sorry, that is a bit long-winded, but I feel quite strongly. Q195 David Howarth: I suppose that takes us on to the other part of the Bill that is about regulating claims farms. In your submission, I think you said that voluntary organisations and trade unions should be exempt from that part of the Bill. Is that right? Stephen Walker: I do not think they should be exempt from any control whatsoever. I think what we were saying was that there must be near unanimity about the need to control and manage claims farming at its worst: the dredging up, the encouragement, the finding of claimants, as it were, the dragging them in off the street with advertising and the like. Surely everyone agrees that needs to be managed and controlled. Against that, despite the fact that we are always defendants, I think we recognise that many voluntary organisations and organisations such as trade unions actually do valuable work in providing legal advice, in pointing people in the right direction and in some cases, particularly with the unions, in funding it. Q196 David Howarth: Are there any specific aspects of the regulation proposed that you would say trade unions ought to be exempt by far? Stephen Walker: No, I think all we were trying to achieve was a distinction between those organisations which we see as doing good work for the right reasons and those which are pejoratively called "claims farmers", who are simply creating claims to make money regardless of merit (and again you might say, I would say this as a defendant) frequently not in the best interests of their clients. Q197 James Brokenshire: I just wanted to follow up on something you put in the written submissions and the statements that you make that the impact of the compensation culture is largely reflected on the voluntary sector and the local authorities, but two points that you did highlight in terms of direct impact on the NHS were in the fields of pathology and paediatrics and the fact that it was becoming extremely difficult to recruit pathologists and that in the paediatric field to actually get paediatricians to take on child-abuse work was becoming quite difficult. In what ways would you seek to address the clear concerns of professionals working in the health service to try and meet those problems: because clearly there is a problem if we cannot get professionals to work in those two areas. Stephen Walker: There is a limit to what a defendant organisation such as ours can achieve. We do not employ paediatricians or pathologists, we do not train them; we do not put them to work, as it were. We do not usually try to get the law changed generally speaking. What we try to do is use the law as it currently exists. What we did vis-à-vis pathologists, for example, was to defend the claims which were made against them. Primarily in everyone's mind will be the ordinary retention claims, I guess. We tried, with considerable success, to argue that what had happened had not happened as a result of malice or ill-will on the part of pathologists but that the overwhelming majority of pathologists who had been retaining organs had been retaining them within what they thought, for very good reasons, was a proper legal framework, they were acting within the guidelines of their own college and it was generally understood, before the matter went to the High Court and Mr Justice Gage, as he was then, said that retention could be actionable in certain very narrowly defined circumstances, that (the cliché phrase was) there was no property in a body and therefore simply retaining organs could not be an actionable wrong. We were largely successful in holding the line on the law, though there was some change, but I think that by then, attempting to resolve those claims by mediation as quickly as we possibly could, what we were able to do was deflect a lot of the, in my personal opinion, very ill-informed criticism of pathologists which appeared in the media and, coincidentally, of course, in settling those claims that had to be settled that way, we also, I hope, eased the burden, eased the stress for the claimants too. It is always a tightrope that has to be walked getting that particular balance right. In terms of paediatrics, we fought the cases, we defended the cases that were brought in the House of Lords last year - JD is the lead case, and I will happily give you the references later - I will test my memory on that please - where allegations of child-abuse had been made by paediatricians at first instance. We took the view, as did many within the medical profession, that if those early diagnoses were going to be actionable it would significantly discourage paediatricians from involving social services and whoever else needs to be involved when they merely suspected child-abuse in future. The cases were contested all the way, the claimants were legally aided, quite properly in my opinion, all the way, but we were successful in defending those actions, and I would hope that that, within the framework of what we can do, is an illustration of how we would try to help paediatricians, give them more confidence that they can make the decisions, that they would be defended, et cetera. As for change beyond that, it is beyond my remit, I am afraid. Q198 James Brokenshire: In summary, you are talking more about a systemic type of issue. In other words, trying to resolve matters quickly and effectively rather than seeking a formal change in the law or a clarification of the law as is? Stephen Walker: Yes, we are. We are in a very difficult position vis-à-vis changing the law. We are very obviously part of the public sector and we are not in the same position as, say, a commercial insurer defending similar claims who might argue for a change in the law, again, quite properly - there is no reason why they should not - to protect their shareholders interests. I think we have to walk the tightrope, to use that cliché again, I am afraid, between protecting the interests of the National Health Service but also respecting the interests of patients, and we try never to advocate change unless we think there is equity between those two interests. Q199 David Howarth: You do see it as part of your role to inform the medical profession about the effects of particular cases and to produce a situation in which doctors follow adequate practice. I was wondering why it was that in these particular cases, when some of the cases have been won and presumably you are doing your normal role of putting information to trusts and to the medical profession, there was still some residual difficulty with those two areas of the profession. Is it because the profession does not understand what happened legally, or is it because there is some other risk that you are not taking into account? Stephen Walker: I think in the two examples that I have given - we referred to them in our paper too - the law had not been defined. Most people in the law, I think, thought they knew or thought they had a fair idea. One of the great values, but it can present problems, of the law of negligence is that it is quite flexible. I am not trying to teach my grandmother to suck eggs, forgive me, but it is always possible for a judge to distinguish between one case and the previous case. Amazingly, the issue of organ retention had never been fully considered by an English court - it had been considered, very rarely, in other jurisdictions - so once the organ retention issue became a big issue, post Bristol, post Alderhay, it was almost inevitable it was going to be tested, and, although we were able to mediate the Liverpool cohort of claims without litigation, there was high court litigation, as you almost certainly know, in respect of the so-called "nationwide group", and even that was indeterminate. The judge concluded there could be a liability in the event of certain fairly complex causation rules being met. I guess that ruling illustrated just what a difficult area it was. The truth is both sides were on the steps of the high court saying, "We have won", which was pretty unsatisfactory as well. Q200 Chairman: Presumably any practitioner is influenced not just by the fear that he might come out on the wrong side in a case but by the sheer protracted nature of the proceedings into which he or she is drawn and the toll that takes on personal and professional life? Stephen Walker: Absolutely so, yes. I cannot add to that, sir. Q201 Jessica Morden: Do you think there should be restrictions placed on advertising by personal injury solicitors and claims management companies? Stephen Walker: I may be unique around this table in remembering when there was no advertising allowed by solicitors. You have asked for my personal view. I think it was a bad move to allow advertising. I think the initial allowing of advertising - this is going to make me sound like a real reactionary, I realise - many of us thought it was going to be the thin end the wedge, and so it has proved. I think that advertising, except in specialist areas, is very dangerous, yes. I come back to my point about most people's experience of the law being mediated by and through the first lawyer they meet, and he or she may not be the optimum person to be handling their particular problem at that time. Q202 Jessica Morden: I expect I know the answer to this then, but is it acceptable that people can advertise in A & E departments in hospitals? Stephen Walker: No, it is not and no-one in the Department of Health or National Health Service thinks it is. You will not be surprised to know that we have investigated this as well over a number of years, and the problem appears to be that many of the sites where you see that advertising have been let on long-term leases, or long-term management contracts, and the local chief executive is as appalled by what he sees, as you or I are when we walk past them, and I think you will find that as those leases change they will add terms and conditions in as to who may advertise and who may say what, but, yes, you will not find anyone within the service or the department who thinks that is a good idea. Q203 Jessica Morden: How long will that take to happen? Stephen Walker: I am sorry. Q204 Chairman: This Committee recently recommended in the small claims report that we should raise the small claim for personal injury claims to two and a half thousand. Of course that does not address the problem of proportionality in the higher cost claims where it becomes much more surreal, and you have drawn attention to it in some of the examples you gave in your written evidence to us. What can be done to achieve or encourage greater proportionality without making solicitors likely to cherry-pick the cases with the best chance of success? Stephen Walker: You cannot stop them cherry-picking, is the first thing to be said to that, sir. We believe quite strongly that it is possible to deal with claims of a lower value, particularly those which have no real complexities within a fixed price framework, a fixed cost framework. We have obviously seen your report. We think it is terrific. You have seen what is being proposed by the Department of Health in Redress, and I am sure that is likely to come up before the afternoon is out. It is possible to deal with what we currently consider to be litigation better and quicker. The problem is, and it may be only in perception, but there is the trade-off between the claimant who has one claim feeling that he or she has not had everything they are entitled to, by which I mean investigation, maybe a ruling by a judge, the whole works. A defendant will say, "Taken in the aggregate, we can win some, lose some." I am very much aware that for the individual claimant that is a really tough call, but the truth is that it is possible to devise schemes. We run a pilot scheme, for example, with clinical negligence, which is supposed to be fairly complex, whereby we were able to resolve disputes fast to the satisfaction of the claimants who all had legal advice, for the avoidance of doubt. It is possible to do it if there is good will on both sides, but there are many vested interests. There are many people who make a lot of money out of managing litigation, and it is not just the lawyers, experts make a great deal of money out of it too, but we feel quite strongly that low-value claims can be dealt with within a structured framework without damaging or affecting the legal or, indeed, the convention rights of claimants. Do you want to add anything to this? I am very conscious I am doing all the talking. You are all staring at me, it appears, from where you sit. John Mead: Do you want me to say something about cost care? Stephen Walker: Yes, please. John Mead: We find on the larger clinical negligence cases that claimant costs are vastly in excess of defence costs regularly. We would like the courts to have greater powers to impose cost caps. They do have those powers at present under the Civil Procedure Rules, but they are rarely exercised, and we think there should be something built into the Civil Procedure Rules whereby cost caps are imposed automatically by the judges in larger cases. Going back to the late 1990s when Lord Woolf wrote his report on civil justice, most of his reforms have been implemented and most have been very successful in our view, but the one thing which he wanted to see, which has not come about, is greater proportionality of costs. Claimants' lawyers will argue the mechanism for reducing or making costs more reasonable at the end of the case, which is called the "detailed assessment procedure" for those who are not involved in the law. It is a means whereby a costs judge can assess a bill and say, "I think this is reasonable, that is not reasonable, I am chopping that bit out", but that is at the end of the case after the costs have already been incurred, and we think that the court should be much more proactive and impose cost caps towards the start, if not the very start, of cases in order to make costs more proportionate. Q205 Mr Tyrie: Just on that, if you impose a more stringent cost cap, will you not just encourage cherry-picking. John Mead: Possibly, but, as Mr Walker has said, you cannot prevent lawyers from cherry-picking. Q206 Mr Tyrie: But, if you encourage it, it will make it even more likely? John Mead: Lawyers are not going to take on cases which they think are losers. Q207 Mr Tyrie: It is all a question of odds as each case goes by. They know they are not going to win every case, but if they are not even going to cover their costs, then they are even more likely to try and identify the best cherries and leave the rest alone? John Mead: I am not suggesting that claimant lawyers should not receive a fair remuneration for their work. It is not in our interests, it is not in claimants' interests for claimant lawyers to go out of business - we are not suggesting that - but we see a large number of, frankly, disproportionate and unrealistic bills from claimant solicitors in clinical negligence cases particularly, and that is the ill that we think should be addressed. Stephen Walker: Could I add something to that, please, Mr Chairman? Our biggest cases ‑ you are aware of this I think ‑ are those that arise from obstetric and midwifery practice, children with severe neurological disability who are going to require care for the rest of their lives. Those cases where a liability is established routinely cost seven figures and the first digit is now routinely two, three, four, possibly five per case. In those cases there is invariably legal aid protection for the claimant solicitors. Quite properly, in my opinion, any family with a child in those circumstances should have legal aid to enable them to pursue their claim, so in those cases the cherry-picking issue does not arise. In every other case, whether privately funded or funded by CFA, with or without insurance, without a doubt cherry-picking takes place. We see better presented at first instance new cases now as compared to when 90% odd of our claims were being funded by legal aid. Legal aid provides, if you like, the fall-back position, you know, beyond which they cannot make a loss. If they are so structured that they cannot even break even on legal aid, that is their short-coming, I guess, but legal aid applies still to 50% or more of our cases and significantly toward the very high value cases, so I do not think cherry-picking becomes an issue there. You are absolutely right, it does further down the value scale, but are we trying to manage this system for the benefit of claimant lawyers or for the benefit of claimants? I feel quite strongly it ought to be for the benefit of claimants. Q208 James Brokenshire: I wanted to come back on a couple of the issues that we have explored in outline, which is in essence the speed of dealing with complaints and also the NHS redress scheme. If we are to assume that the NHS Litigation Authority has some role in overseeing the NHS redress scheme, how do you see the issue of conflict between the scheme and the normal litigation route playing out and that if there is not a possibility or, if something goes through the redress scheme but does not settle, it obviously remains the opportunity to go for a contested case through the normal procedures. How do you see yourselves being involved in those sorts of circumstances? Stephen Walker: Can I begin by saying thank you for pointing out that redress is not ours yet. It is a Department of Health Bill and we have been named as the possible managers. It is really important that is on the record before I say anything. If we are asked to manage the redress scheme, I really see no problem at all. In litigation management terms, there is much more to redress than just claims, but in litigation or claims management terms it is a low value, fast-track claims handling scheme and we have done that before, we do it now to an extent, but this formalises it, makes it a wider application, simplifies it and ought to just make life easier for patients; so I do not see any problem at all. When we ran a pilot, which was not identical but is a reasonable model, we found that people accepted the offers we were making, with legal advice - every claimant had legal advice; there was no question of our taking advantage of unrepresented people - we found that those who were told that there was no liability on the basis of evidence we had taken from an independent expert that we jointly agreed with their lawyers did not proceed to litigate, but there was always available, as there will be under redress, the right to litigate if someone feels sufficiently strongly that the process has not delivered what they want. I think it may be worth saying - and this is going sound awfully trite, I apologise - when people make claims for compensation (and, I emphasise, redress is about a lot more than that) the ones who get paid a reasonable amount reasonably quickly think the system is okay. They do not rave about it because they think they have been given what they are entitled to. No matter what system you devise and no matter which level of the courts you go to, if someone ultimately loses and does not get that which they were after, whether it is money or anything else, they are disappointed and they think the system is inadequate, because by the time they reach that stage they truly believe that right is on their side; so no system is going to satisfy everyone. This system that would come about under redress needs to be fine tuned yet. As you know, it is all going to be done by statutory instrument. It is not dramatically different to the way we handle low-value claims now. Q209 James Brokenshire: I can perceive that there could be a situation where you can almost go through one process and someone might seek to take advantage of the initial process in terms of the latter process, and, following that logic, in part the redress scheme is intended to promote greater openness, to promote early settlement, to promote the avoidance of a contested case at end of the day? Stephen Walker: Yes. Q210 James Brokenshire: It is interesting what you said. You do not seem to appear to think that there is any potential problem, but how does it encourage that openness under the system if, effectively, it is part of the same process when you are seeking to defend the claim and you still have the barriers in terms of trying to ensure that any loss is mitigated? Stephen Walker: I think the big change comes at trust level. I think if we can persuade trust staff - clinical and management - that we are operating a scheme here where claimants', I believe patients', perfectly proper aspirations are going to be met as quickly as we can and that we want their help, their frankness, their candour as part of the process, there will be no blame attached as a result of this. There will be risk management and learning lessons from the claims, but no blame attaching to individuals. I honestly believe that we can change the culture within the National Health Service. It will not happen over night - I am not that naïve - but I honestly believe that by formalising best practice, by (forgive the shorthand) selling it into the service as a system whereby we can deal with these issues in the same way that a complaints system is supposed to deal with many other issues, I honestly believe we can change the culture. Q211 James Brokenshire: Because I think that the indication is that there is a culture of secrecy and a culture of not wanting to be blamed for things when they go wrong? Stephen Walker: I do not think that is different in the NHS to anywhere else where people are employed in a professional capacity. It is human nature to say, "I did not do it", or, "If I did, it was not my fault." You will notice I am not saying, "Oh no, it is not", because I have not come here to tell you lies, but I think that it is a culture that can be changed. I think it is a culture that is beginning to change now, but we need to somehow get away from the issuing of proceedings as a precursor to a proper investigation, because that is what puts people on their mettle, that is what worries people. They worry about it. They worry about prosecution; they worry about manslaughter charges nowadays; they worry about coming before the GMC. We want to encourage them to not worry about litigation. Worry about getting it wrong, of course, get it right, avoid the litigation, but just because something has gone wrong, we would like to create an environment in which, alongside our colleagues at the MPSA, for example, people can say, "Yes, got that one wrong", or, "Hey, I did not realise that would happen." We need to learn from it. I think that can be done. Q212 James Brokenshire: You have emphasised the need for things to be dealt with quickly to ensure that there is not this protracted delay, and in part the redress scheme is seeking to achieve that? Stephen Walker: Yes. Q213 James Brokenshire: From your perspective (and I appreciate what you say about your role being not clear at the moment), do you see the scheme being able to deal with claims within six months? Stephen Walker: All I can tell you is that that was the target we set in the small claims pilot that we ran a few years ago, and we pretty well achieved that. There was some slippage. A dozen claims maybe did not get done in the six months. That was awfully hard work for my staff; they really had to jump through hoops. We had to change the way we were working with independent experts, because they are not used to working that fast either, but we did it. I am talking about people owning up when they get things wrong. We might have to put our hands up and say we might need to slip to seven months, I do not know, but by and large, yes, we can, if the will is there, and both at trust level and within the managing organisation, whoever it might be, I think the will is there. Q214 James Brokenshire: Following on from that, should there be a statutory maximum time limit constructed in terms of the legislation? Stephen Walker: That sounds like an invitation to tie a noose round my neck. I would be happier if the statute said that targets would be set. I would hate to think that, because we could not quite get that six-month date, I was going to be in breach of some statutory obligation, but the idea of targets came from us, so we are not averse to targets. That is an honest answer. Q215 James Brokenshire: It sounds as if the need for speed is there, and also if you have got something to focus on in terms of achieving an income---- Stephen Walker: I would rather call it a target than see it written in statute. I am sure you understand. Q216 James Brokenshire: No. It is interesting hearing your views on this more than anything else. You have talked about the pilot which has already taken place. Would you see it as a sensible step forward to have some further pilot before pushing forward with this, or is the existing pilot that you have alluded to sufficient? Stephen Walker: We are still talking about whether we need one. It may be yes, it may be no. I do not have a strong view either way. There are pros and cons. It is awfully difficult, setting up pilots, to mimic wider scale practice. Do we pick a strategic health authority and do it there, or do we say a fixed time, do we say everything that comes through the door next month, whatever it may be. How do we monitor it? None of this comes resource free either, of course, and so the debate continues. Q217 James Brokenshire: And the cons if you do not, if they are the pros? Stephen Walker: I thought they were all cons. Q218 James Brokenshire: Tell me the pros then? Stephen Walker: The pros would be that we might learn more lessons about how best to do it and whether or not we are able to set realistic targets, whether we can garner enough independent experts who are prepared to react very quickly for us at fixed fees, whether or not the legal profession is prepared to support this: because if the legal profession says "No, we will not do this for a fixed fee", it will not happen. Q219 Dr Whitehead: You have listed a number of advantages of the process in terms of transparency and change in the culture, and so on, do you think there will be any monetary savings as a result of this new process? Stephen Walker: I do not think that anyone could say that there will be monetary savings. I think that what should happen is that money should be going to the right people, namely claimants instead of lawyers. I will repeat what I said to your colleague, it is not my Bill. The department have done a great deal of costing work, and they are not talking about saving money, they are talking about redirecting it to where it should be going. The honest answer is I do not know. I would not want to mislead you. Q220 Dr Whitehead: Have you in your agency addressed any thought to the extent to which you might actually get additional claimants on the basis that some people who perhaps are not currently eligible for legal aid, who may have been deterred from bringing claims, will actually re-apply under the redress scheme and have you been able to assess what that additional claimant number might conceivably be? Stephen Walker: No, we have considered it. That is the first answer. Under our pilot we believe that almost all of the claims were claims which would not have been made but for the existence of the scheme. We were told both by the independent assessor who looked at the scheme only halfway through - he did not look at the very end for various reasons - that was the case, but I was also personally told, and I believe John was too, by quite a number of claimant solicitors, that they used the scheme for cases that they would not otherwise have (to use their phrase) bothered with probably for economic reasons. I think it is probable that we will see more claimants, and that comes to the issue of striking a balance between on the one hand providing access to justice for damaged patients, because no-one will be paid unless they establish a legal liability, and on the other hand cost, and that is always a balancing exercise. Fortunately, it is one for the department, not for my organisation, but, yes, there is always a risk that if you help people to gain access to justice it might cost you money. Q221 Dr Whitehead: Is it not a concern for your organisation from the point of view of potentially reducing the overall level of damages to claimants and also, of course, the question of whether you will require additional staff to administer the scheme? Stephen Walker: We anticipate that we will require, to begin with, very few additional staff because the hope is, obviously, that many of the claims that we currently deal with will transfer into this as it becomes more widely known and its availability becomes seen as the way to deal with these things. We are not making long-term plans at this stage, because, first of all, as we have said several times, no work has been given to the authority at this stage, but, secondly, because it is impossible to guess what the shift in volumes might be. It might be an increase, it may not, so it would be premature to do that work at the moment. Q222 Dr Whitehead: You could conceivably have a situation where this scheme would be entered into and all sorts of contingent funding will have to be sent your way subsequently, shall we say? Stephen Walker: The costing work that has been done by the department has taken into account the possibility that there will be more claims, and the department is content that the matter proceed on that basis. Q223 Dr Whitehead: In the overall scheme of things, you have mentioned that this perhaps does not save costs but puts costs into the right place, but we have received evidence from the Medical Defence Union about the extent to which the total liability for clinical negligence is concentrated in a small number of large claims, perhaps about two-thirds of total liability in a small number of large claims? Stephen Walker: That is pretty much our experience too. Q224 Dr Whitehead: Given the cap that is being suggested, what overall difference do you think the scheme would make? Stephen Walker: I think that that is in itself evidence that what the department is saying in promoting the Redress Bill is true, namely that it is geared as much to a change in culture, improving the patient experience - forgive me using these quotes, but I genuinely believe that this is not just about saving money - this is about putting the patient at the centre of the process - all of those phrases. I believe that is what they are trying to achieve. Q225 Chairman: You make those quotes sound more convincing than some I have heard make them. Stephen Walker: You have almost certainly talked me into serious trouble with that, sir? Q226 Keith Vaz: Mr Walker, clause 3 of the NHS Redress Bill gives power to impose upper limits on claims. Since these are unlikely to exceed current common law awards, what will preclude a patient awaiting an offer of redress carrying with it an acceptance of liability and then pursuing quantum in court? Stephen Walker: I think I understand the question. If I answer the wrong question---- Q227 Keith Vaz: There are no full stops. That is the problem! Stephen Walker: ----I am sure you will come back to me. First of all, it is important to note that the limits are not caps on damages; the limit is a threshold below which we will deal with the claim. The claimant, on advice, if he thinks or she thinks her claim package is worth less than whatever the limit might be (£20,000), then we will deal with it under redress. It is not a cap in any sense on what they are entitled to receive. They will be paid, in so far as we can achieve it, exactly what they will achieve in the court. The proof of the pudding, obviously, will be in the offers we make. They will either be accepted on legal advice or they will not be, but there is no question of costs being capped. Forgive me, there is no question of damages being capped. There is every question of costs being capped. What is to stop someone who has been made an offer of compensation under redress going to the court? Absolutely nothing. That will be their absolute right. We agree to be bound by the finding, the determination, made by the independent expert. We do not bind the claimant. That is part of the deal. There is nothing to stop someone moving sideways into the mainstream litigation system to try and achieve more than £20,000 if they change their mind about it being worth less than £20,000. You are absolutely right, that would just lengthen the process for them, of course. Why would they waste time coming into redress in the first place? Q228 Keith Vaz: Do you think that the redress scheme will be seen as independent, bearing in mind that claimants do not have access to independent medical reports? Stephen Walker: They will. I know that independence has exercised a great number of people. I will say something about that in a moment, if time allows, Mr Chairman, but the specific answer to your question is that there will be independent medical reports. If the trust concedes liability when they report to us in the first place, there is no issue, we would admit liability - that is what we do now. If the trust says, "Sorry, no liability", or, "We do not think so", or, "We are not sure", then, with the claimants advisers, we will identify a suitably qualified independent medical expert and there will be joint instruction to avoid any question of a lack of independence, if you like. We will pay for that independent expert, but, as you know, sir, his or her duty is to the court, notwithstanding that we pay his fee. So that is an independent report. That will be received simultaneously by the claimant and the defendant and, on the basis of that report, we will make a liability decision and/or a causation decision if that is what is at issue, and it is that document which the claimant's lawyer will have in assessing whether or not we have been fair about either repudiating liability or making an offer; and so, when we talk about transparency here (another terrible cliché for which I apologise), we do mean it. Q229 Keith Vaz: Do you believe that there is a role for either the Bar law centres or Citizens Advice Bureaus in providing independent legal advice? Stephen Walker: That is an extremely difficult question to answer. In its original conception it was hoped that a redress would have many access points, that people could come into it with or without lawyers, with or without legal advice. I think the consensus now is that clinical negligence is sufficiently complex and the levels of compensation, even at these low levels, is significantly significant for claimants for me to express the personal opinion that probably most claimants need legal advice, and the quality of legal advice from those sources varies enormously, as you probably know. Where it is good, it is very, very good and more than acceptable, but if we are prepared to pay for a solicitor, why would any of those sources not advise the claimant seeking their assistance to go and consult a solicitor? Q230 Chairman: Thank you very much indeed. We are very grateful for your evidence this afternoon and for the frank way you have answered our questions. We always like frankness and we hope it does not get people into trouble! If it does come back and tell us. There are parliamentary powers in that respect. Stephen Walker: Thank you. Witnesses: Teresa Perchard, Director of Policy, and James Sandbach, Social Policy Officer (Legal Issues), Citizens Advice, and Adam Griffith, Policy Officer, (Legal Services), Advice Services Alliance, gave evidence
Chairman: Mr Griffith, Mr Sandbach, Ms Perchard, welcome. We are very glad to have you with us representing the customers, the people who actually experience the system. Q231 Jessica Morden: What types of problems have you come across with conditional fee arrangements and what kind of advice do CABs and law centres provide to people seeking compensation claims? James Sandbach: Predominantly the issues that bureaus have dealt with, conditional fee agreements, have been people coming in after they have been through the whole process - so it is actually the issues that have arisen upon their conditional fees: because quite often consumers have signed up to conditional fee agreements not really understanding what exactly they are getting themselves into in the whole process, the costs that are going to be incurred, the liabilities that they are taking on, and because of the British legal establishment's normative way of funding PI cases and because we have had a new market involved in conditional fee agreements and industries have sort of grown up around it, there is a whole sort of class of consumers that have processed PI claims through conditional fees but have not necessarily got particularly good levels of redress. They have had a lot of problems on the way understanding conditional fee agreements, taking out loans for conditional fee agreements, to fund conditional fee agreements, and all in all over the past years we have seen about 130,000 of those cases. Teresa Perchard: To add to what James has said, in our report that we published last Christmas on no win no fee, we highlighted CAB evidence from around the country where we see people at every single stage of the process from the man who has been stopped in a windy shopping centre, he happens to have a bandage on his hand and some character in a mackintosh comes up to him and says, "Have you had an accident?" and, before he knows it, he has signed something just to get rid of this geezer and has entered into a really quite complicated contract for a loan, an insurance product and a claim coming into us trying to unravel the deal, to the people who come to us at the end of the process who find that they actually owe money because they have got locked into, as you have been discussing, quite an expensive process and the compensation they have received has not been sufficient to actually cover all of the costs and they are left with a debt and are quite surprised because that is not what they thought they were getting into. In the middle of that people are not getting good advice, a whole chain of people making money out of the signature on the form as it started and a system that is really not doing what it should do for the individual who, after all, has suffered an injury which may have lost them their job, or diminished their earnings, truncated their social life, made it difficult for them to act as normal, made them call on the public purse more through claims on benefits for example, so there may be public costs from not dealing with personal injury claims properly or quickly, and a system that does not really look at rehabilitation, helping someone to recover - it is only focused on money in a money chain - and does not get the lessons from accidents and events ploughed back into prevention. The system at the moment really is not working is what we see from all sorts of cases that come to CAB, which are illustrated graphically in the report we published last year. Q232 Chairman: I was very interested in what you said about this. How could you build rehabilitation better into the system? Teresa Perchard: We have very much supported the introduction of regulation of claims handlers, but that is really just scratching the surface, which is really just one of the problems caused by enabling this kind of business to grow up, and I am sure we will come back to that. In our report we said we need a thorough review of the whole system of compensation to look at all the different options for helping people get access to justice, perhaps take out more insurance before the event. Q233 Chairman: That is not quite what I was asking. It is how you build into the system getting someone more readily back to work, rather than leaving them waiting for a bigger sum of money at the end of the day which turns out not to be very much. How do you build that in? Teresa Perchard: There are many insurance companies who are not so much in the "no win no fee" area but who are looking how they can offer rehabilitation services to people who are making claims on their insurance policies, which may make business sense for the insurer. If you are paying out mortgage payments to cover the cost of r mortgage because the person you have insured cannot work, it may be in your best interests as a firm, to help them get back to work, to cut your insurance payments more quickly; and there is a lot of interest in the insurance industry which collides with an individual interest in not being laid-up and excluded and unwell for long, protracted periods of time and also public sector interests in helping people rehabilitate which could come together in a better system for dealing with the effects of accidents and injuries of all kinds whether in public paces or at work. We had hoped to see a much broader debate about how dealing with injuries could be put on a broader footing and was not just about claiming money one from the other, albeit we do need to protect people better in that system, we think. James Sandbach: I would add that, because we have a tall system where the trigger is, I think, some legal proof of negligence, of fault, and a process that builds up towards that, there is a sort of stand-off culture until at least the two sides are sitting down talking, and there is a process of letters, and so forth, going back and forth, and so the claimant kind of gets left on the sidelines until that ball is rolling and has been rolling for some time, and so it is a matter of building in. The system started to do this with the pre-action protocols that, before you start talking money, you actually start talking welfare and solutions. Q234 Jessica Morden: What are the main kinds of complaints that you get? Are they about the claim farmers or are they about the solicitors? What types of complaint do you deal with? James Sandbach: It is a mix, but it is particularly that the professionals involved are not really seeing the problem from the point of view of the consumer. There is a misunderstanding about where the consumer is in this process. Q235 David Howarth: You mentioned the difficulty of winning a tort claim. I was wondering what level of understanding you find among your customers about the tort system, about the compensation system. Do people understand how it works? James Sandbach: I do not think they do. I am not going to get into individual judgments, but there is a lot of evidence to suggest that the sort of concept that we are used to dealing in as legal professionals about tort law are simply alien concepts to the way the average person who sustains an injury thinks about these issues. When you are presented with something that says "no win no fee" you are going to take that literally - it is no win no fee - and, if you are approaching it at that angle, why should it be anything else? Teresa Perchard: The language that is used in correspondence from insurance companies can be extremely confusing for people when the insurer starts talking about settling on a 50:50 basis. What on earth does that mean? This is the language that has built up between professionals and firms. Yes, there will be cases highlighted where people make it a practice to claim compensation, but that is very unusual. This is something that happens to somebody once in their lives, and very few of the people who have had an injury actually get involved in making a claim, so it is not something you learn about. You do not have classes in compensation law at school, and we do not cover pensions let alone claiming compensation, so consumers coming into this system for the first time in their lives do not know what to expect. Their expectations may be conditioned by the media, and we have certainly come across people whose expectations have been too high and they have not had competent advice from the first person they have met in the system who is not required to be competent and give people good advice on their likely chances of success or even how the process works from starting it off. If you want to create a system where people know what they are getting into, then they need to be competently advised right at the beginning and know whether their case is worth pursuing, what will happen and what will come out at the other end so that they do not pursue unmeritorious cases, but, if they do have a good case, they get the right sort of support and the right strategy for resolving their injuries as well. Q236 David Howarth: I think I know the answer to this already from what you have said, but what level of understanding is there of the basic concepts of the law that there has to be fault, you cannot get compensation just because you are injured, that only certain forms of injury entitle you to compensation, there has to be causation and it is difficult to cause causation. Are those types of things at all known in the public? James Sandbach: No. Adam Griffith: I think probably the exception to this is road traffic accidents. I think that most people do have a basic understanding that if you have an accident it is probably someone's fault. Okay, usually they think it is the other person's fault, but I think many people realise that some accidents are actually your fault and you have to put your hands up or figure out what you are going to say to your insurance companies, but I suspect that is the only sense in which there is a general understanding of that. Q237 Mr Tyrie: We would worry if there was too much understanding. There would be nothing for lawyers to advise on. A moment ago you gave a pretty good description of what you felt was the downside of the new system. In fact, I think one of you said, I think it was you, that the system was not working, I think was the phrase. Is there any upside? Are there any cases which CFAs are picking up which were ineligible for legal aid? Is there any silver lining to the cloud you have described? Adam Griffith: There must be for people who are not financially eligible for Legal Aid. The best estimate is that eligibility for Legal Aid covers approximately 40% of the population, so the majority of the population is not eligible and therefore has the potential to bring claims and no doubt has done so. Q238 Mr Tyrie: It is not only that, is it, it is also people who may have been denied Legal Aid who were eligible for it, but a decision was taken that their case was not worth pursuing, which was subsequently pursued and a claim made under a CFA? Teresa Perchard: Yes. We all accept that the introduction of a system of conditional fee agreements has enabled many people to have a system for funding their cases, starting the case, without having to put money upfront which they would not necessarily have been able to do so before, either from their own cash or with help from Legal Aid. In a sense, with the legislation that is coming in to regulate the claims handling system, that is almost after the event. It could have been predicted really that you were unleashing the possibility for a whole new tribe of intermediary introducers to make some business here, coupled with advertising, which we have talked about, but also the introduction of referral fees as well. There were no measures taken to ensure consumer education, consumer protection from new market-based risk. You have opened up access to justice through a market solution, but you have not introduced the protections that might be needed to make sure that the market worked effectively for consumers and the legal services market for that matter as well. That has led to a reputational effect for the whole legal services market which we are now trying to fix up by introducing some regulation of claims handlers. It is a pity we are having to do that after the event with the introduction of regulation and the whole package of introducing CFAs was not accompanied by proper consumer protection measures in anticipation of some of the problems that we have seen. James Sandbach: I would also add the CFAs are a product of the UK's particular system of costs. The inquiry's terms of reference referred to contingency fee agreements, they are not contingency fee agreements, we do not really have contingency fee agreements here because of the costs of rules in English courts, the cost of events and the indemnity principle and so forth. What you have in the CFA is this rather complex system of people indemnifying each other for different types of costs, but it is very transparent from a consumer perspective. It is not really a straightforward contingency fee agreement, where you can see very clearly that the professional is taking X% of damages, it is rather a more complex and Byzantine type of system. I think it adds additional complexities for consumers. Q239 Mr Tyrie: Nothing can be done about it? James Sandbach: One could move to a system of contingency fees on the American model. We would not necessarily be big advocates for that. I think what you do have to look at though is really the whole system of costs in the English courts and the legal system and at how could costs be reformed so that they are first proportionate and, secondly, transparent from the point of view of the user of the system. Q240 Mr Tyrie: What is the balance sheet? Earlier we had very bad news on CFAs, now we have had something of a balance put to it; some people are getting access who would not otherwise. What is the balance sheet, from the point of view of claimants? Teresa Perchard: If this legislation comes in quickly, it is going to get better for claimants. Q241 Chairman: You are talking about the Compensation Bill? Teresa Perchard: Yes, in the sense that it introduces a power to create a specific regulatory system for claims handlers introducers. That point of entry is the point at which you need competent advice, quality customer care and those people are currently outside any kind of professional boundary, although they are working closely with solicitors and insurers. Q242 Mr Tyrie: The silver lining is at least as bright as the cloud, provided we have a few more reforms? Teresa Perchard: We do not think the regulatory system goes to the heart of the big questions about how you get a better system for dealing with compensation claims, especially in personal injury because it does not look at how you might control costs and charges between all of the parties in the chain, and it may not look properly at how you get competent advice at the front end. Often consumer protection regulations are concerned with transparency and disclosure and that is good, but it may not go as far as requiring a level of competence or knowledge, although we hope that it does. Anybody who is inviting anybody in this room to start a personal injury claim ought to be able to explain exactly how that system will work and what you might or might not get out at the end of it. If they cannot, they ought not to be taking any money from anybody in order to generate your business, I think. That is what can happen today. Adam Griffith: What may have happened may have been a slight shift in terms of who is bringing the claims. People who are not financially eligible have come in at the higher end of the market. There are certainly concerns about people with lower value claims or claims that are often described as borderline, difficult claims, ones around 50%, those people have probably lost out. What is clear is whatever system you have, the lawyers are not going to be bringing the claims unless they think there is over 50% chance of success I would think. There may have been a slight demographic shift in terms of who is bringing the claims. Apart from all the problems with claims management companies, the main issue has been costs, and it does seem on the whole that the main winners have been the lawyers and there are lots of arguments about that. I think overall there has been a shift. Q243 Mr Tyrie: The Treasury does not have a Legal Aid bill? Adam Griffith: The savings from Legal Aid are fairly small because Legal Aid under the old system essentially was an insurance against losing and the vast majority of claims are won or settled, in fact the vast majority are settled and quite a few are won. Under the old system, Legal Aid was picking up a relatively small tab for having a system where some people would lose and essentially that whole cost has been shifted on to the insurance industry and ultimately on to people who buy insurance. Q244 Dr Whitehead: You mentioned that we do need better forms of regulation. What would they practically look like? How would the man in the mac chasing the man in the van be regulated more easily in your view? Teresa Perchard: There will be some questions about whether sole practitioners are permitted, but the essential thing is how do you authorise people to operate in a particular market sector? There is a lot of regulatory experience with regulating fairly disparate business sectors, such as debt collectors and insurance intermediaries; people who sell you cars are often selling you credit and insurance at the same time and will need consumer credit licences from the OFT and come within an authorisation regime run by the FSA. I would be looking for a system where you have to get prior permission or authorisation in order to be in the business of introducing people to a no win, no fee agreement and that you close off access to market by expecting or even requiring any receiving firms, whether solicitors or insurers, to deal with authorised intermediaries only. Then you have a question about what are your standards to let people into the market in the first place: are you just looking for absence of criminal convictions in terms of fitness, or do you require people to demonstrate some knowledge or commitment in terms of having complaints procedures and certain ways of practising? Do you regulate the forms that they use and do you even get on to regulating the price? Do you regulate the advertising beyond general concepts of what is misleading? The Bill does very little about describing what the system of regulation is going to look like. Those are certainly the sorts of things that we will be looking for and we have been talking to the Government about introducing. Alongside that, how do you make self-regulation work? Could self-regulation be a way of achieving some of those standards without introducing statutory regulations and can they come together? Essentially, we are looking for consumers at the start of the process to get a good service, good advice from somebody competent to advise up to the level, not go beyond and not mislead and some redress when they do and when they let the consumers down. That is what we would hope for. Q245 Dr Whitehead: How would you include advertising in this? Would you place restrictions, put a lot of actors out of work? Teresa Perchard: There is a highly specific scheme of regulation of consumer credit advertising which deals in minute detail with things about the basis of the APR that you use for advertising and typical rates, and the prominence of certain messages and questions about responsible and misleading credit advertising. Why not the same kind of issue about responsible, not misleading, advertising relating to access to legal services including access to the personal injury claims system? Q246 Dr Whitehead: Could you have an easy elision of responsibility and the perhaps fairly widespread feeling that advertising tends to entice people into the process? Teresa Perchard: I was interested you asked the question earlier about advertising, whether it is a good or bad thing. I do not think advertising in itself is a bad thing because many consumers learn about things through advertising and marketing, and that has a much bigger reach through broadcasts, direct mail than anything my organisation can achieve or afford. Given it is getting out there and has potential to tell consumers about their rights, the possibilities, how things can work, how can we make sure that consumers are not misled and advantage is not taken. The oft-cited "Did the doctor or nurse make it worse?" advert is clearly in the area of inappropriate advertising and in the wrong place, but there would be other advertising about personal injury which would not be. How do you influence the market to make sure they do not do the wrong thing, but they can do the right thing? You need to be able to take action, take things off the market. There are lots of self-regulatory bodies that can do this; the premium phone line regulator is very effective at getting some of those premium rate phone lines stopped and closed down very quickly. I do not see why the claims industry cannot abide by a code of conduct on marketing and advertising as well. That will be good for business because ethical, good advertising, which is informative and communicates well with consumers, may well generate better business. Q247 Dr Whitehead: Do you have any evidence in terms of regulation that there is a widespread, as it were, re-selling of insurance? That is after-the-event insurance arising from the emergence of no win, no fee arrangements, where people have before-the-event insurance already. Would a regulatory regime be able to deal with that? James Sandbach: Yes, one thing often found is in some cases where insurance policies have been checked is there is before-the-event insurance that could have been claimed, but because the sales people from claims management companies are looking to achieve targets for after-the-event insurance, they are not going to check out all of those different insurance options. There has been a lot of what is effectively mis-selling, yes. Q248 Mr Tyrie: What about asking the Law Society to do self-regulation? I was very interested in what you said about self-regulation; it seems eminently sensible. Teresa Perchard: Self-regulation and claims handlers? Q249 Mr Tyrie: Yes, you say to the solicitors "if you come through a claims handler who has not done the job properly, I am afraid you cannot have the business". Teresa Perchard: I think it was four years ago we started working with the Law Society and the claims handling bodies to try to develop a self-regulatory code of practice following the Law Society discussion forum with consumers, lawyers and claims handlers. That in a sense has led to the creation of the Claims Standards Council and the formulation of a code of practice which is still under development. We are talking about a self-regulatory organisation that needs some better capability than it has today, but we have all been working on trying to find a self-regulatory route and are pleased that the Government has come in and decided to introduce regulation because I think we would still be there in four years' time if not. James Sandbach: At the same time, it was also an issue of the Law Society's own professional rules being pretty lax as to whose business they can take business from. Q250 Mr Tyrie: That was my point. James Sandbach: Certainly the Department for Constitutional Affairs is pressing the Law Society on this, I understand. Really the solicitors firms should only take referrals from claims companies that are signed up members of the Claims Standards Council and, the Law Society has had a big internal debate about the issue of referral fees and paying for business, essentially offer financial inducements for new business. That is where the whole market has been opened up a lot for case management companies because their business is generated referral fees. Q251 Keith Vaz: Concern has been expressed about the number of minor claims of the 'tripping and slipping' kind, being brought against public authorities and voluntary organisations. Do you have a view on these claims and to what extent do Citizens Advice or ASA and its client bodies represent clients of such claims through the small claims process? James Sandbach: I think the public liability claims are going down which is what the statistics show us anyway. Q252 Keith Vaz: Why is that? James Sandbach: Where the figures have shown a big rise in so-called compensation culture is in the areas of employers' liability rather than public liability. I think part of the problem of public liability has been stoked up a lot in the media. There have been particular instances, claims and cases that have been blown out of proportion in the media and there has been a powerful organisation of lobbying. In the public sector we have the problem of public liability. I do not think it is such a fundamentally big problem as it has been made out to be in some quarters. Q253 Keith Vaz: It is going down anyway. Teresa Perchard: Yes, in 2003-2004 there were fewer public liability claims than in 2001. It was a fairly static figure in the number of claims. Q254 Keith Vaz: What more can be done to ensure proportionality, so that people who have smaller claims do not incur more in legal costs than the damages that the claim is worth? James Sandbach: I think it is very much a matter for the new regulatory regime to ensure it does not happen. What is often forgotten is that a large proportion of claims are settled out of court and so some of the CFA rules are not really applying. The CFA rules do not apply because the cost rules are not applying in the same way they are applying if a judgment is made, where insurers settle between themselves. The rules on settlement need to be looked at as well. Q255 Chairman: It is too easy to carve up a generous cost settlement when you are not going into court? James Sandbach: Yes. Adam Griffith: Another part that is a problem generally with personal injury claims is the relationship between the value of the claim and the work needed to be done properly to put it forward, and the complicating factors in it. There is no particular correlation between the two. You find that the amount of work done or how complicated a case is that is worth £1,000 or £2,000 is not very different from a case worth £4,000 or £5,000. This just seems to be the nature of the beast, and something that we have to take account of. Most claims we are talking about are road accident claims, and road accident claims are subject to an agreement brought about, as I understand it, by the Civil Justice Council which regulates the level of success fees you can recover at different stages. The question, which is still an open one, is whether or not some agreement can be reached between essentially the claimant lawyers and the insurance industry in relation to non-road traffic cases. It seems to me that the other question is whether or not the parties involved can scale down somehow what they are doing in relation to the lower value claims. For instance, it seems from the research that the Association of Personal Injury Lawyers did the same proportion of cases have liability being denied that are worth £1,000 as are worth £5,000. Insurance companies are fighting every case as if it was a big case. There needs to be some kind of change in culture essentially on both sides to say, "Look, this is a small claim. Let's keep things in proportion". I do not think that there are any easy answers to this. I think there are dangers of raising the small claims limit, as you have suggested previously, to sort out the lower end of the market because the problem is not one that relates directly to the value of claims. Q256 Chairman: The ABI - the Association of British Insurers - has come up with its own scheme; I think £25,000 was the figure they suggested under which they would have time to make an offer of compensation, then there would be mediation and they would pay for legal advice and you would have to go through that before you went to court. Have you looked at that and what you do you make of it? Adam Griffith: I have not looked at it. I was here last week and I heard it being put forward. I am afraid that my ultimate doubt about that is the suggestion that the insurance industry is in the business of making fair offers unprompted. I was a bit struck by Mr Howarth's story of his wife. There is no obligation on the insurance companies to come right out and offer £4,000, of course they will offer £500 first, that is their job. There is nothing wrong with that. There are conflicting interests between what the insurers need to do, which is ultimately to keep the costs down and settle cases as economically as possible, and achieve justice for claimants. My worry then is that a system like the one they are proposing would lead to more claims being rejected and more low offers being made. Anything of that nature would have to have a really strong independent element in it, which is rather similar to the discussion that you were having earlier in relation to the redress scheme. Q257 Chairman: Small claims courts have that of course in relation to the smallest claims, but then we have the personal injury lawyers and perhaps you were hinting at "Oh, well, if people simply went to the small claims court by keeping their claim down, say, to £2,500, they might not realise they can get twice that if they go to the court system". Is it a case of the best being the enemy of the good here? Are we not producing an obstacle to at least some of the methods to get around, as you described, the possibility that people could have got more money if they had gone through a more complicated, more expensive and possibly more risky process? Adam Griffith: It is a balance that we have to strike somewhere, I am not denying that. Teresa Perchard: I think the key is it should not be painted as a hunt for money. Money is at stake here, but there should be other issues as well. If, as a result of an accident, you have lost substantial earnings, you may have paid for physiotherapy if your doctor advised you to do that and having funded that yourself, you may have had to make significant lifestyle changes as a result of the accident. The money may help people with the very real cost of the impact of the injury on them, rehabilitation and change in lifestyle, so it is not just something to stash away in a tin or go off to Brazil with really. It is about putting things right, but there should be other actions that put things right as well. The concern about simply saying "Let's put them all through small claims because they are all small value money", perhaps ignores the fact they have a significant impact. It is for the accident and the injury that is caused that you have to offer a system that helps the individual feel that is what has been taken into account and they are getting good advice at the start of it. They may not get quality legal advice if they are going through a simple process where they or lawyers would not feel it was desirable or affordable to become involved. In our report last year we did raise a load of possible alternatives to look at this vexed question of how do you keep the cost down but get people the right sort of process? There are all sorts of things like possibly increasing small claims budgets, setting case budgets, capping cost, regulating cost, looking at more ADR processes, setting up a special tribunal which is basically what we are looking at with NHS redress, value up to a certain amount, dealing with things in a specialist way because they are special. People have concerns the small claims process might not have the knowledge needed to deal with some injury cases. Then wider things like helping people take out insurance before the event as well to avoid the CFA system, using that as a strategy so people protect themselves against unexpected legal costs. We very much want to see the Government have a wider debate about how to make the whole system work. That might mean having a range of solutions for different types of cases - value, type and sector - but that debate is not happening. There is no single bullet here; there are pros and cons of different things you could do, and you certainly need to do something about consumer education and understanding and quality of advice and make sure that gets into whatever system you have got. Q258 Chairman: The starting point for our inquiry is partly "Is there a compensation culture?" You advise people who feel they have some case to take, some grievance to pursue, but presumably you are also involved with individuals who are part of providing public services and public activities who are worried from the other angle, people who may believe that there is a compensation culture and they cannot undertake the activities they want to undertake. Do you see that side of the picture in your advisory work? James Sandbach: We do tend to think that the whole compensation culture debate has been misrepresented, particularly in the public sphere because it is not supported by the evidence of the number of claims going through the system. It has become a shorthand for a lot of different issues, an increasing welfare dependency and an increasing tendency to blame other people for misfortunes. I think a lot of different issues have come together to form this phrase "compensation culture" but every objective study that has looked at this. For example, the Better Regulation Task Force report a couple of years ago, when the Government charged them with looking at the overall costs of the economy in the public sector of so-called compensation culture, came out very firmly with the conclusion that there was no such thing as compensation culture. It was simply an invention of the media and political classes, if you like. Adam Griffith: I think part of the problem is if we are talking about the kinds of things you were discussing last week, people volunteering or being scoutmasters, people think "maybe I will not do that", but they do not go and get advice. It would be very difficult for any of us, if somebody came in here and said, "Look, I am thinking of volunteering to be a scoutmaster. What is my chance of being sued?", we cannot answer that question. We can only say, "As long as you are careful, you will probably be all right". I do not think people get advice on things like that. I think it would be very difficult to give them advice on that. Teresa Perchard: If I can add on the compensation culture bit I think it is unhelpful because for people who have suffered a devastating accident in a public place or in the workplace, what it is saying is it is almost wrong to think about compensation, but raising a complaint and seeking compensation is not done by the majority of people these things have happened to. It is a very important way of finding out how safe or unsafe our workplaces are and identifying where there are problems which really do need addressing. If there are other ways of getting at some of that evidence, that is good, but it should be seen as something that is very important to find out what the problems are and look at investing that intelligence in longer term solutions. I think what the compensation culture does create perhaps is fear in the public and voluntary sector about being able to afford the cost of claims and maybe that is one of the things that is being addressed by clause 1 of the Bill. Really if you are going to be taking a group of young children on a very dangerous outward bound course in the middle of winter involving canoes in an overflowing, fast-moving stream, you should take care of them and not take the view that "it was going to be good for them so we bunged them in the water" with no regard to the safety and risks. It is very important that duty of care is not forgotten or put aside because it is overall better to be offering those sorts of opportunities than to not do so. I hope that will not be the consequence of that bit of legislation. The less we can talk about compensation culture and more about how do we put problems right, perhaps we will reduce the fear in the voluntary and public sectors about these issues. Claims handlers hanging around playgrounds is a bad thing and maybe the legislation will clean up that market and stop that happening; it should do if the system gets up and running quickly and is good. Chairman: Thank you very much indeed. We are very grateful for your help this afternoon. |