PIBULJ
What Next for ATE? - Alexandra Anderson, RPC
14/07/13. The introduction of the Jackson Reforms has fundamentally changed the landscape of the litigation market. No more can a claimant take out After The Event Insurance at whatever cost insurers might choose to charge, safe in the knowledge that, so long as the claim does not fail, the defendant will be paying that cost. Whilst lawyers acting for defendants will be celebrating the introduction of the changes, those on the claimant's side of the fence will have very different feelings. But what about the insurance industry, which has been making considerable returns on the ATE product it has been selling to claimants over the last 10 years?
Some have suggested that the ATE market will be wiped out by the changes. That is highly unlikely. Whilst there may be some consolidation within the industry, there will always be a market for insurance wherever there is a risk and, as all litigation lawyers know, there is always a risk in litigation. What is likely to happen is that insurers will have to review their pricing structures and the type of cover they will provide, whilst looking for innovative ways to maximise their margins, despite the fact that their clients are likely to be considerably more discerning when considering their options for insurance.
That is evident by the fact that there has been a host of new and revised products launched in the run-up to 1 April 2013, and since. This reflects insurers' confidence that claimants will still wish to take out insurance, to protect themselves against the risk that a claim fails. The key issue for insurers is that claimants are likely to be infinitely more price sensitive than they have been in the past, now that they will actually have to pay the premiums themselves.
Where personal injury litigation is concerned, there is no doubt that the introduction of qualified one-way cost shifting (QOCS) will significantly reduce the risk for claimants in the event their claims fail. However, the provisions of the new rules will not totally eliminate the need for insurance as they still allow for defendants to recover their costs from claimants, in certain circumstances, and whilst it is very rare for a claim to be struck out on the basis that this is an abuse of process, to trigger an adverse costs order, there is a real risk for claimants should they refuse to accept a Part 36 Offer which they then fail to beat at trial. This is a risk against which claimants may well wish to take out insurance, particularly if the value of the claim is significant and the defendant's costs of conducting its defence may also be substantial.
The issue of the value of the claim will almost certainly become of ever-increasing significance, not just for clients and the lawyers acting on their behalf, but also for insurers. This will be particularly the case now that the courts are actively managing the costs of litigation, to implement the requirement that costs should be proportionate to the value of the claim. Active costs management does have the benefit for those purchasing insurance of giving greater transparency of the potential downside of litigation, which should in turn lead to a much better understanding of the costs risks involved in a claim and therefore more competitive pricing. Gone are the days when a claimant would take out a policy with a limit of indemnity of £250,000 for a claim of the same value, because that claimant will know that, even if the claim fails, it is highly unlikely that it will face an adverse costs order for such a significant sum.
Whilst some insurers are still prepared to offer deferred premiums, others are now offering damage based agreement style premium options, to allow the claimant to defer any premium payment until they have an award of damages. It is likely that, where insurers are prepared to agree such a deal, it will only be for claims worth a substantial sum of money, and where the percentage to be deducted is also quite substantial. However, this model is unlikely to work for lower value claims, where the likely return is going to be too small to attract investment from the insurers.
In summary, any rumours of the demise of ATE insurance are greatly exaggerated. Whilst the risk profile of personal injury claims has changed quite significantly with the introduction of QOCS, some claimants may still wish to protect their position, particularly where the defendant has made a Part 36 Offer that might put them at risks on costs. Whilst the market may contract, there will always be a place for good products sold at competitive rates and there will always be insurers ready to innovate to find new products that will sell to those involved in litigation.
Alexandra Anderson is a Partner in leading City law firm RPC
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A version of this article originally appeared in the Solicitors Journal on 7th June 2013.
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Jackson: When Is a Deadline for an Order Not 'Written in Stone'? - Ian Miller, 1 Chancery Lane
13/07/13. The case of Re Atrium Training Services Limited [2013] EWHC 1562 (Ch) is the latest judgment from the High Court which considers the new rules. The judge was faced with an application to extend time to comply with a court order for a massive disclosure exercise. This came against a background of a history of breaches of a timetable set by the court. The judge underlined the strictness of the new regime but tempered it with comments which are likely to be cited for a long time to come about the dates for compliance with some court orders not being ‘sensibly regarded as written in stone’. He granted the extension of time sought but made an Unless order for compliance.
The judge was clear that the application was for an extension of time made before the deadline for compliance with the court order had passed. It was therefore to be decided under the overriding objective and not as an application for relief of sanctions. The Court of Appeal set out the guidelines for applications for extensions of time in Robert v Momentum Services Ltd [2003] EWCA Civ 299. Since then the overriding objective has been amended to include the enforcement of and compliance with orders. Henderson J said that a court would examine an application for an extension more rigorously than it might have done before 1st April and he discouraged the easy assumption that an extension would be granted just because there was no prejudice to the other side.
However Henderson J went on to counterbalance this by saying that it was important not to go to the other extreme and to avoid encouraging unreasonable opposition to extensions which are applied for in time and which involve no significant prejudice to other parties. He said “in cases of that nature, considerations of cost and proportionality are highly relevant, and the wider interests of justice are likely to be better served by a sensible agreement, or a short unopposed hearing, than by the adoption of entrenched positions and the expenditure of much money and court time in preparing for and dealing with an application that could have been avoided.”
In fact he went even further saying: “although all court orders mean what they say, and must be complied with even if made by consent, there are some orders relating to the completion of specified stages in preparation for trial (such as disclosure, the exchange of witness statements, or a timetable for expert evidence) where there may be so many imponderables when the order is made that the date for compliance cannot sensibly be regarded as written in stone. Everything will always depend on the circumstances of the particular case, and the stage in proceedings when the order is made, but in many such cases it should be understood that there may be a need for reasonable extensions of time or other adjustments as the matter develops. It would, I think, be unfortunate if the new and salutary emphasis on compliance with orders were to lead to a situation where, in cases of the general type I have described, a reasonable request for an extension of time were to be rejected in the hope that the court might be persuaded to refuse any extension at all.”
It is undoubtedly better to be applying for an extension of time before a deadline expires than for relief from sanctions afterwards. The pragmatic approach of Henderson J will be particularly useful if you find yourself in that situation.
Ian Miller
1 Chancery Lane
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Payment by Outcome: Don’t Tell the Expert - Ian Gascoigne, Eversheds
12/07/13. Like an unwanted Christmas present returned to the store with its gift receipt on any 28th December, the inception of damages-based agreements has not brought joy. We have been told that they are unworkable, principally because it is unclear whether they preclude any parallel financial arrangement between client and lawyer. The Ministry of Justice is reported to be considering early amendments to the Damages-Based Agreements (DBA) Regulations 2013. The Law Society stopped work on drafting a model agreement. And there is, as yet, no indication that many lawyers are using them.
This does not sound like the time to be worrying about the potential impact of a DBA on the independence of an expert witness.
But older litigation hands will recall similar concerns when conditional fee agreements were introduced in the 1990s. Like those, DBAs will become more popular in time, and no one would seriously suggest that CFAs led solicitors to favour their own interests to their clients’ detriment in practice.
Where does the expert come into the DBA equation? An expert witness cannot enter into a DBA himself as it would impair his independence from the party which is paying his fee. But is that cherished independence impaired, at one remove, if the solicitor who selects and instructs the expert witness is himself acting on the basis that he will be paid a share of the damages his client recovers in the case?
If the expert is unaware of the case funding arrangement, there is no issue. It would not be an obvious thing to tell him. But it may be disclosed inadvertently. Here’s an example.
In a personal injury claim, the solicitor holds a conference with counsel to discuss a party-chosen expert’s draft report into the cause of the accident which the expert and injured client both attend. Barrister and solicitor are each acting on a DBA. Substantial damages are anticipated. The barrister goes through the draft report and, in conclusion, states that he hopes the expert will continue to retain confidence in his explanation of the accident as it is supports the client’s case. The client intervenes to the effect that he supposes both barrister and solicitor are hoping that too. They all laugh. The expert goes away understanding that by his comment the client meant the lawyers would benefit from a successful outcome in favourable financial terms.
The honest expert will do his best to put that remark out of his mind, But he would not be human if it didn’t keep coming back to him. He knows his fee is hours-based, estimated in advance of instruction in order to get the court’s permission to use expert evidence at all. And payable by the client in any event. The other participants on the same side, as he is aware from hearing the chance remark, are being paid in a different way and have ‘skin in the game’. They will not be paid at all if the claim fails.
Would this knowledge have any impact on the expert’s work? Most of the time, probably not, but it could do. Maybe the expert would be encouraged to stretch his opinion towards the claimant’s side on a difficult aspect of the case if he thought it would help those alongside whom he was working.
Experts, of course, are mindful of their reputations beyond the immediate case and will guard them carefully. An expert with knowledge of how the claimant’s claim is being funded is, however slightly, tainted with that information, If an attack is being made on his independence in cross–examination, that aspect could be thrown in too, even as guesswork on the cross-examining advocate’s part. The problem here is the perception of partiality, not actual influence on an expert's opinion.
Assuming DBAs will become commonplace in litigation involving party-selected experts, there are three ways to attempt to kill this issue. The first is the exhortatory approach to solicitors, via guidance that they should ensure experts are shielded from any knowledge of the financial arrangements under which the case is being conducted by the lawyers. Easy to accept and intend, but harder to guarantee.
A second way of achieving the separation of the expert from the money side of a case is to put a duty on a solicitor, as an officer of the court, to prevent an expert witness instructed by him from becoming aware of any DBA in the case. That would seem a little harsh given the information could come out without anyone intending it to do so.
The final suggestion is to make it part of an expert’s statement of truth given in his report to the court that he is unaware of the financial arrangements used by his instructing solicitor. An addition could easily be made to the end of the current wording (shown in bold below) in the expert’s statement of truth, so it would read:
“I confirm that I have made clear which facts and matters referred to in this report are within my own knowledge and which are not. Those that are within my own knowledge I confirm to be true. The opinions I have expressed represent my true and complete professional opinions on the matters to which they refer. I have no knowledge of the basis on which [the party] on whose behalf I have been instructed has agreed or is liable to make any payment to the solicitor and/or counsel for acting on his behalf in this claim.”
Requiring the expert to add those words to his report shoud ensure that: a) he will do his best to avoid asking about or learning such funding information; b) the solicitor has an incentive to prevent that; and c) this would not be a topic for cross-examination if the case reached trial as the expert’s statement would have ruled it out. No judge would allow the advocate to go behind the statement without a very compelling reason.
Ian Gascoigne
Eversheds
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Lack of Post-Accident GP Attendance: a Poor Indicator of Psychological Symptom Severity in Adults - Dr Jacquie Hetherton, Clinical Psychologist, Hugh Koch Associates
10/07/13. It is often assumed that there is a linear relationship between symptom severity and GP attendance. Thus a lack of GP attendance is taken to denote mild symptoms even though a claimant may report symptoms that are severe and disabling. In my clinical experience there are multiple factors that disrupt the relationship between symptom severity and GP attendance.
Specifically, there are many reasons other than a claimant having mild symptoms that account for a lack of GP consultation post-accident. These include: having a poor relationship with one’s GP, having previous negative or dismissive consultations with the GP, a belief that a GP is not psychologically minded and therefore will have little interest in one’s symptoms, an expectation that a GP’s response to report of psychological symptoms will be to prescribe psychotropic medication, shame and embarrassment about reporting psychological symptoms (particularly relevant in men), not wishing to have psychological symptoms detailed in one’s medical notes, a belief that one’s symptoms are trivial relative to the GP’s other patients and having an independent coping style such that going to one’s GP takes place only as an absolute last resort.
The above reasons explain why, in many cases, individuals do not consult with their GP and live instead with severe and enduring accident-related symptoms, sometimes years post-accident. Thus although an absence of GP attendance can be viewed as weakening a claimant’s case, there are many reasons why this is not necessarily so.
Dr Jacquie Hetherton regularly holds clinics in London.
More information can be obtained via www.hughkochassociates.co.uk.
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Never Assume When It Comes to Injuries - Bill Braithwaite QC, Head of Exchange Chambers
09/07/13. Still on predicting the future, it is so important not to assume that people are the same as other people. You do sometimes hear, even now when we should all know better, phrases like “a standard paraplegic”. A version I came across not long ago was: “If X achieves a level of independence usually found in spinal cord-injured patients at T10”. There was absolutely nothing wrong with that phrase in itself, and the person who used it did so in a correct way. But it is very open to misinterpretation, because it is only a short step to saying either: “why hasn’t he achieved the standard”, or “he probably will achieve it”.
It is because all patients are individuals that the (old fashioned???) phrases disability and handicap were used by the WHO. The point those words make is that the same apparent injury can produce different effects on different people – the commonly used example is the concert pianist who suffers a small injury to a finger – trivial to most, but profoundly disabling to the pianist.
Ongoing pain in spinal cord injury, and memory problems in brain injury, are two common examples, but there are many others – as many as there are catastrophic injuries.
Bill Braithwaite QC, Head of Exchange Chambers
This article was first published at http://billbraithwaite.com/blog/
Image ©iStockphoto.com/kali9
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