Compensation claims threatened
Tom Jones, Thompsons' head of policy and public affairs, examines the possible impact on union legal services of the Jackson review of civil litigation costs
Unions are facing a potentially devastating attack on their legal services under proposals being considered by one of Britain’s top Judges.
One of the options being considered by Sir Rupert Jackson would deter thousands of union members from making claims against employers and their insurers.
As part of his review of civil litigation costs, Sir Rupert is considering whether to increase the “small claims” limit from £1,000 to either £2,500 or even £5,000.
What may seem a minor technicality, could have huge consequences for union members and anyone else making a “small claim”.
Anyone making a claim in the small claims court has to pay legal costs out of their own pockets, even if they win. As a consequence many of them do not have legal representation.
In cases where compensation is above the small claims limit, courts can award costs to the winning side. This is the so-called “loser pays” principle. Because union lawyers usually win the cases they run, the principle makes it much easier for unions to fund litigation.
Increase in small claims
If the proposal is implemented, there would be a huge increase in the number of potential claims regarded as “small”. That would mean far fewer claimants taking their cases to court for fear of incurring legal costs.
We estimate that an increase to £2,500 would free insurers from paying costs in around 50 per cent of union-backed personal injury cases.
Just because an injury claim is valued at less than £5,000 or £2,500, it doesn’t mean that it requires less work to prove that someone such as an employer was liable for an injury.
And who says £1,000 is a “small” amount, let alone £2,500 or £5,000? The answer is well-paid Judges and insurers!
Lower value claims are as hotly contested by defendants as high value ones. Even now in the small claims court defendant insurers routinely engage lawyers. They take the risk of having to pay the costs themselves out of their own deep pockets if they lose.
The claimant is very unlikely to be able to afford to do the same. To deny the injured party legal representation in this way would be a denial of access to justice and means there would be no equality between the parties.
Sir Rupert, a judge in the Court of Appeal, is carrying out the review because of what he says are “mounting concerns” that legal costs are too high.
But claimants’ legal costs are often made much higher by the blocking tactics used by insurance companies’ lawyers. Too often they delay the process, or even fight cases where they are clearly in the wrong.
And if the court believes that costs are too high in any particular case, it can demand an explanation – and if necessary a reduction. So why the fuss?
The review, carried out at the request of the Master of the Rolls, follows the media myth that there is a compensation culture in the UK. In fact, insurance companies, which helped to whip up the myth, are trying anything to stop accident victims and those made ill through their work from receiving compensation. Fewer cases means bigger profits for insurance companies.
Sir Rupert acknowledges that unions have said that they would not have the resources to deal with the huge increase in the number of claims their members would bring in the small claims court should the upper limit be increased. We believe that any significant rise in the small claims limit, would be a gift to employers and their insurers and a disaster for both union legal services and access to justice.
Sir Rupert’s preliminary report also appears to have accepted insurance companies’ arguments that there should be more take-up of before-the-event (BTE) insurance.
This is the legal expenses insurance that is added to motor and domestic insurance policies and which trade union members don’t need.
The document suggests that it could become compulsory, like motor insurance.
BTE enables insurers to gain control of cases brought against them because the claimant who uses BTE to fund their legal claim is referred to a solicitor on an insurer’s approved list. This means injured people will be herded off to lawyers who are reliant on insurers for their work.
Any extension of BTE will considerably undermine independent legal services and will also be bad for unions and their membership.
Union members already have a legal service dedicated to fighting for the maximum compensation. Why should they be made to pay for a service that is beholden to the insurance industry? They shouldn’t be forced to use BTE.
The report is also enthusiastic about electronic (software based) assessment of damages. These computer programmes have been developed by insurers for insurers – and the only data on which they are based, comes from insurance companies.
Defendant insurers are inevitably reluctant to admit when they have used such a programme, but it is often possible for Thompsons to spot when they have. The compensation offer is almost always substantially lower than our calculation and any increased offers appear to follow low and formulaic amounts.
There is a big business agenda at play here and Sir Rupert will need to show he has genuinely listened to all sides.
One thing is for sure, if some of the ideas and proposals in Sir Rupert’s preliminary report are repeated in his final report (due in December) then there will have to be a serious fight to mitigate the impact on trade union legal services specifically and access to justice generally.