5Implementing the small claims reforms
93.This Chapter considers the relevance to these reforms of the promised post-legislative review of Part 2 of the Legal Aid, Sentencing and Punishment of Offenders (LASPO) Act 2012. We then assess the Ministry of Justice proposals for implementing the reforms, including the introduction of an electronic platform to support PI claimants once the small claims has been increased. We consider, in particular, the issue of digital exclusion.
Post-legislative review of Part 2 of the LASPO Act 2012
94.As we have already noted, the Ministry of Justice aims to implement its reforms, including the changes to the small claims limit, in April 2019—subject to parliamentary time and approval. On 30 October 2017, the post-legislative Memorandum for the LASPO Act154 was laid before Parliament and presented to the Justice Committee, with a Written Statement by the then Secretary of State for Justice, the Right Hon David Lidington MP, on the same day.155
95.Part 2 of the LASPO Act 2012, which took effect in April 2013, introduced reforms to civil litigation funding and costs, including abolishing the right of successful claimants to recover from the other side their solicitor’s “success fee” under a conditional fee agreement (CFA); and banning the practice of solicitors paying referral fees to third parties.156 Compared to the Government’s detailed assessment of Part 1 (which deals with civil and family legal aid), the Memorandum only has a brief, preliminary assessment of Part 2, also listing the additional measures to control civil litigation costs that were introduced alongside or shortly after the Part 2 reforms.
96.The Memorandum confirms the Government’s commitment to undertaking a review towards the end of the three to five-year post-implementation period, and claims that “there has not been any body of opinion calling for an early review, or for the amendment of the statutory provisions … ”157
97.The Ministry of Justice has now confirmed that it is carrying out a post-implementation review of Part 2 this year; this will assess the impact of the reforms on civil litigation funding and costs, and the extent to which they have achieved the Government’s aims: to reduce civil litigation costs overall and to rebalance the costs liabilities between claimants and defendants, while ensuring that valid claims can still be brought. Feedback will be sought from all interested stakeholders, including through a conference hosted by the Civil Justice Council.158
98.The Association of Personal Injury Lawyers (APIL) pointed out to us that Part 2 of LASPO would appear to have had a significant impact on the cost of PI claims.159 This view was supported by Minister Law, who considered that the LASPO Act had “presided over a reduction in claims volumes and claims costs” and hoped that the LASPO review would lead to the conclusion “that the further PI/whiplash reforms are intended to remedy a perceived problem that is already being fixed.”160 The Law Society went further by arguing that “[f]urther reform should not be considered until the impact of the existing reforms has been fully assessed.”161 As noted above (paragraph 16), a reduction in the number of PI claims has been recorded by the Compensation Recovery Unit (CRU). A summary of the measures introduced to reduce legal costs in PI claims is set out in the Annex to our report.
99.We conclude that it was illogical for the Government to propose further reforms to the PI claims process before its review of Part 2 of the LASPO Act has considered the effectiveness of the earlier reforms. Before introducing further changes, we recommend that the Ministry of Justice consider the learning from its review of Part 2 of LASPO, once completed, to determine whether any adjustments should be made to the current package of reforms, including proposals for the small claims limit.
The Ministry of Justice’s proposals for implementing the reforms
100.Ahead of our oral evidence session, Lord Keen helpfully wrote to let us know of the work that the MoJ had begun “to underpin the increases in the small claims limit”162 and wrote again after the session to provide us with an update.163 In summary, the Government has set up five expert working groups to consider specific aspects of the reform programme, as follows:
- The steering group, which includes senior representatives from the Association of Personal Injury Lawyers, the Association of British Insurers (ABI), the Forum of Insurance Lawyers, the Law Society and the Motor Accident Solicitors Society. The group has discussed key issues related to the development of the new “accessible IT platform” underpinning the new system, which will deal with the pre-action stages of claims “with the aim that the majority of claims will continue to settle before they reach the small claims court.” The funding and governance of the overall project has been split into a “build phase”—for which the Government has accepted, in principle, an offer of funding from the ABI164—and the operational phase, which will involve “Board level representation” from all sectors. The group is also considering whether alternative dispute resolution (ADR)165 can be part of the new process.
- The IT sub-group, which is working closely with the Motor Insurers Bureau to develop accessible IT infrastructure that enables all users, including litigants in person, to navigate the new process, including by mapping a “user centred journey to highlight issues, questions and solutions.” This group consists of experts with both legal and technical expertise, including representatives from MedCo and Claims Portal Ltd.
- The legal sub-group, which is considering the details of a new pre-action protocol for use in the Small Claims track, underpinning the pre-action IT system. Its remit also includes reviewing the existing court rules and practice directions.166
- The liability sub-group, which has identified the key issues linked to resolving liability, has considered the potential role of ADR in resolving liability disputes and is developing guidance on liability for litigants in person.
- Support and guidance sub-group, which includes representatives from the claimant, defendant and consumer sectors, is assessing what sources of guidance and support are currently available to users of the small claims court, identifying best practice. It has considered what makes guidance accessible, including the need for language that is easily understood.167
101.The potential for an electronic platform to create barriers for certain user groups—so-called “digital exclusion”—was raised by several witnesses.168 During our oral evidence session, we asked the Minister, Lord Keen of Elie QC, what solutions the working groups had found for dealing with medical reports, liability disputes and settlements. In response, he said:
We are working, through those five groups, to identify the most appropriate way forward on all these issues, including access with regard to MedCo and independent medical reports, and the question of how those who are not digitally inclined can make sure that they can access the pre-action protocol and the claims process. We would be happy to report further to the Committee once that work has been completed, but at the moment it is a work in progress.169
102.When pressed further on his Department’s plans for dealing with digital exclusion, Lord Keen accepted that this was “a very real question that we need to address”. He explained that the Good Things Foundation, which is supported by Government funding, has a network of over 5,000 community helpers who are available to assist.170 However, the provision and funding of advice and support was “work in progress”.171 Confirming that the new IT system would be piloted, David Parkin, Deputy Director for Civil Justice and the Law at the Ministry of Justice, went on to tell us:
…the particular sectors of the population, particularly the elderly, who may be digitally excluded, is something we are particularly concerned about. We are discussing it with all areas of the industry to see whether we can offer certain support to certain groups.172
Mr Parkin was not able to provide any more specific details or to suggest how people would know that they could get digital support, explaining that “[i]t is something we will have to work through with those who represent those groups; they will put their concerns to us … .”.173
103.It is relevant to note that Ofcom figures for 2017 indicate that significant proportions of vulnerable groups are still classified as “non-users” of the internet: 14% of adults in the UK are non-users of the internet, 35% of adults aged 65–74 are non-users, as are a majority (56%) of those aged 75 and over. A quarter of adults in DE households (27%) are non-users.174 Similarly, the 2016 Impact Assessment for the Government’s Assisted Digital Court Reform Programme175 acknowledges that, when engaging with government services, only 30% of the UK population are “digital self-servers” [that is, people who need no assistance in using the internet], with the remaining 70% needing some degree of support.176
104.It is relevant to note that the MoJ’s Equalities Statement for the Whiplash Reform Programme does not specifically consider the impact of introducing an electronic platform for PI RTA claims on people with protected characteristics.177 The Statement concludes that the package of reforms is neither directly nor indirectly discriminatory, and suggests that the MoJ “will continue to make reasonable adjustments to ensure access to justice for claimants and court users with disabilities.”178
105.The MoJ’s commitment to working with stakeholder groups to understand their particular support needs in relation to the new online platform is an approach reinforced by legal needs research, which has examined the prevalence of legal problems and what people do about them. As Professor Dame Hazel Genn has observed:
We have two decades of legal needs studies that have explored how ordinary people deal with the most common everyday legal problems [ … ] We know that vulnerable groups experience everyday legal problems more often and do less about them. People’s objectives and approach vary depending on the issue at stake and the ability to obtain advice and assistance. It also depends on whether they are a potential claimant or defendant and who the opponent is. Put simply, people want different things depending on their problem and we need a system that is sensitive to that.179
106.We had evidence from other witnesses expressing enthusiasm for the proposed electronic platform. Shirley Denyer from FOIL told us:
We have looked at that in detail, and we believe that an electronic platform can be developed to make it work, so that individuals will not need legal representation for relatively low value claims. We think that can deliver access to justice in a modern way, which recognises the way people live. You do not need to go to court.180
However, in its written evidence to the inquiry, FOIL conceded that delivering the requirements of an effective electronic process “would create a significant development challenge.”
107.The ABI, which—like FOIL—is represented on the MoJ’s steering group, was similarly enthusiastic about the electronic platform, describing it as “the most important feature to support the increase in the SCT limit”. ABI also thought that the new system “will be an easy, accessible and consumer-friendly process for LIPs to use”, and was confident that effective guidance for litigants in person could be developed; it drew attention to material produced for the Intellectual Property Enterprise Court as “a good example of clear accessible guidance”. The ABI also considered the potential for the new system to resolve disputes between the parties about liability for an RTA, and was optimistic about the ability of the new system to resolve them:
Liability is only disputed in the minority of claims and for those it would be of benefit to develop an online decision-making tool that provides a provisional decision. Where liability is not accepted by the defendant, a simple dispute resolution process is likely to be required. The MoJ is currently working with stakeholders to explore the potential role for some form of Alternative Dispute Resolution (ADR) in the process.181
108.In its response to the Ministry of Justice consultation of November 2016, the Civil Executive Team (CET) accepted that the online solutions court (OSC)—a recommendation of the Briggs Review on the Civil Courts Structure182—might have a role in partly replacing lawyers so as to enable PI claimants to navigate the court system. However, “it should not be assumed that the OSC will entirely succeed in fulfilling that role, let alone in sufficient time”.183 The response also observed:
Nonetheless PI claims by LIPs against experienced professional opposition funded by insurers are not an ideal type of claim for the OSC in its infancy, both because of the inherent imbalance in the playing field (by comparison with many small money claims) and because of the difficulties and pitfalls likely to face LIPs in obtaining the requisite expert evidence [ … ]
In oral evidence HH Judge Bird explained that the online solutions court was currently being piloted, with various elements undergoing development and testing; the court was not intended to be a “lawyer-free zone”, and there would be some element of cost shifting.184 Creating online guidance for PI claims, in the form of a decision tree, remained a relatively complex procedure, but the work needed to prepare online guidance for EL and PL claims “will be much more pronounced”. It was unclear how the electronic portal under discussion for smaller PI claims would interface with the OSC, but in his view “the interaction will have to be thought through very carefully” and, from an access to justice point of view, the online method “must always allow for a fallout into the courts system.”185
109.We also asked HH Judge Bird about face-to-face support for people who cannot cope with the online system. He responded:
…you can rest assured that the judicial engagement group and other engagement groups—a litigant in person engagement group is also actively involved—realise that without adequate support for those who are, as some people say, digitally disenfranchised, or even those who choose not to trust a digital way of approaching the courts, the whole high idea of access to justice clearly goes out of the window.186
He confirmed that the judiciary was working with HMCTS on the Assisted Digital project, and that HMCTS had entered into an agreement with the Good Things Foundation. In his view, the MoJ was “paying attention” to what the CET and the judges had to say, as evidenced by the collaborative efforts being made to create the new electronic portal.187
110.There were other witnesses who were less convinced about the potential for a new online portal or thought that the approach should be modified. The Association of Personal Injury Lawyers (APIL) doubted whether litigants in person using the new portal would be able to deal with the complexities of disputed claims, such as gathering evidence and witness statements and dealing with arguments about the cause of the injury. Caution was urged by Unison, who thought the roll-out of the system should begin with a small pilot focussing on low value RTA cases where liability is admitted, and that EL claims should be excluded altogether.188
111.Referring to the staggered implementation of the RTA portal, the Association of British Insurers considered that a staged approach should be taken to the small claims changes, with EL and PL claims being introduced 12 to 18 months after the new limit is put in place for RTA claims.189 APIL agreed that EL and PL claims would create particular challenges, as multiple defendants and difficult issues of liability and causation are encountered more often: “[a]n electronic portal will never be able to address these complexities, which means litigants will need legal advice”.190
112.The submission of Irwin Mitchell Solicitors posed a series of questions about the proposal for a new online process—for example, how consumers would know about it; how vulnerable groups including child claimants would be safeguarded; how abusive practices by insurance companies would be policed; and how medical reports would be funded.191 Horwich Cohen Coghlan Solicitors asked if it was not:
…surely premature to amend the thresholds [for small claims] unless and until the online Court process has been implemented and tested satisfactorily, or at the very least until we have a confirmed and reliable launch date for it?192
113.The need for continuous testing and evaluation of all aspects of the Government’s Assisted Digital court reform programme has been emphasised by Professor Dame Hazel Genn:
Testing and development has to be a continuous and iterative process involving a wide range of potential claimants and defendants and those who advise. And the objective of testing and evaluation should go beyond usability and address questions of perceptions of procedural fairness, comprehension of the significance of procedural steps, and substantive outcome.193
114.We commend the decision of the Ministry of Justice to work with expert stakeholders in developing an electronic platform to handle the pre-action stages of lower value PI claims, and its commitment to piloting the new IT system that this platform will require. However, in the light of the evidence we received, we consider that the Ministry should take a more realistic approach to the technical challenges that may be faced in developing a fully functional electronic platform that has been properly tested with a wide range of users. We therefore recommend that the national roll-out of the new platform—and hence any changes to the small claims limit for PI claims—be delayed at least a further year until April 2020, and that the new claims process, including the support and guidance available to claimants, be subject to independent evaluation after three years. We conclude that the complexity of employer liability and public liability claims distinguishes them from RTA and that it is therefore not appropriate to bring them within the scope of the new online platform.
115.We remain to be convinced that the electronic platform will be capable of overcoming the underlying inequality of arms between professionally represented insurers and self-represented claimants, particularly with regard to disputes on liability and quantum (the amount of compensation). Similarly, we conclude that the Government has not done enough to explain how claimants of limited means with legitimate claims are expected to finance court fees and expert reports. We therefore recommend that the Ministry give a central focus to these issues during the pilot phase of the project, both to secure financial help for claimants who cannot meet the cost of disbursements and to ensure that online decision trees give effective support to claimants pursuing valid claims in the face of defendant resistance.
116.Notwithstanding the Ministry of Justice’s welcome commitment to overcoming digital exclusion, we remain concerned about the potential deterrent effect on particular population groups of introducing online-only applications, with the risk of introducing a discriminatory element into the pattern of claims. To avoid discriminatory impact, we recommend that the Ministry closely monitor the effect on different groups of claimants during the pilot phase of the electronic platform, and take steps to mitigate any adverse impacts that it identifies, for instance by providing targeted face-to-face support.
117.We consider the availability of support and guidance, including face-to-face advice, is central to the success of the electronic platform for lower value PI claims and we welcome the Minister’s reassurance that this is the focus of a dedicated working group. The Ministry should commit to producing, as soon as practicably possible after the working group has reported, a stage by stage plan, with costings, for how it will fund and implement support and guidance to assist individuals to access the new platform, including any face-to-face support that the group recommends. This plan should be sent to us so that we can consider whether it meets the recommendations of the working group and the needs of users.
154 Legal Aid, Sentencing and Punishment of Offenders Act 2012: Post-Legislative Memorandum Submitted to the Justice Select Committee on 30 October 2017. Cm 9486
156 See paragraph 4 of Annex
157 Post-Legislative Memorandum, paragraph 48
158 Speech by Lord Keen of Elie QC to the APIL conference, 17 April 2018
164 The MoJ explains that this is similar to funding arrangements for the claims portal and MedCo systems
165 Alternative dispute resolution (ADR) refers to a range of techniques for resolving disputes without seeking redress from the courts. Examples of ADR include arbitration, mediation, conciliation and early neutral evaluation.
166 In English law, a practice direction is a supplemental protocol to rules of civil and criminal procedure in the courts, used to regulate minor procedural matters. The Civil Procedure Rules contain a large number of practice directions which give practical advice on how to interpret the rules themselves.
168 Irwin Mitchell Solicitors [CLM0030]; Motor Accident Solicitors Society [CLM0017]; Devon and Somerset Law Society [CLM0002].
175 “Assisted digital refers to the support arrangements we will put in place to help users to interact with us in the digital channel. It means that where Her Majesty’s Courts and Tribunals Service (HMCTS) services have moved online, support will be available for people who have difficulty using technology. Assisted digital services are designed to meet the needs of the end user of a digital service, mainly unrepresented appellants, litigants in person (LIP) and professional users.” (Transforming our justice system: assisted digital strategy, automatic online conviction and statutory standard penalty, and panel composition in tribunals: Government response, February 2017, paragraph 5)
176 Assisted Digital: court reform - Impact Assessment. Ministry of Justice, September 2016.
178 Ministry of Justice, Whiplash reform programme equalities statement. March 2018. Paragraph 7.1
179 Online courts and the future of justice; Birkenhead lecture 2017. Professor Dame Hazel Genn, Director of University College London Centre for Access to Justice.
182 Civil Courts Structure Review: Final Report. Lord Justice Briggs, July 2016. LJ Briggs recommended that an online court be created to resolve disputes up to £25,000 subject to “substantial exclusions”. The three stages of the court would be: an automated online triage stage, to allow articulation of the claim and uploading of documents and evidence; a conciliation stage, handled by a case officer; and a determination stage, handled by a judge via a face-to-face trial, video or telephone hearing or determination on the documents alone.
183 Reforming the soft tissue (“whiplash”) claims process: consultation response by the Civil Executive Team. January 2017
184 “Cost shifting” refers to the process by which the successful party in a case can recover all or part of the costs of litigation, including the cost of legal representation, from the losing party.
193 Online courts and the future of justice; Birkenhead lecture 2017. Professor Dame Hazel Genn, Director of University College London Centre for Access to Justice.
Published: 17 May 2018