Report threatens trade union legal services

If adopted, the Jackson Review of Civil Litigation Costs, threatens to undermine the ability of trade unions to offer free legal services to their members.

A report on the costs of legal cases, including those involving workplace accidents, has suggested changes that could rob injured people of up to half their compensation and undermines current arrangements that allow unions to offer extensive free legal services to members.

The winners from the report will be insurance companies and their shareholders who will enjoy extra profits.

Sir Rupert Jackson – one of Britain’s top judges – launched his costs review in response to constant insurance company complaints that legal costs were too high and of a growing compensation culture in the UK.

No compensation culture

All the evidence showed that there was (and is) no compensation culture. So the insurance industry turned its attack to the right of injured people to have legal representation and this report is the result of that lobbying.

If Jackson’s recommendations were to be accepted by the current or a future government (and there is heavy pressure from the judges and the insurers to see that done) it would impact on all aspects of union legal services.

The recommendations would mean:

  • The end of insurers having to pay for the risk of cases being lost. This will make backing members’ compensation claims, particularly where the case is complex and may be difficult to prove, financially risky.
  • The money that insurers pay when they lose a claim – a success fee – which is meant to cover the cost of unsuccessful cases, will no longer be paid by them. It is proposed that this would have to be paid out of the compensation. This will seriously undermine the funding of union legal services. 
  • Fixed costs (the amount of the costs of pursuing a claim that can be recovered from the defendant) in personal injury claims where the likely value of the whole claim is less than £25,000 compensation (that is well over 80 per cent of union cases).

Fixed costs might sound like a legal technicality for lawyers to worry about, but in practice it will encourage non union lawyers to take short cuts and settle early (to avoid running up costs that they cannot get back).

And it will enable employers to work out what an injury to a worker will cost them in total and therefore to calculate whether it is a cost worth paying by, for example, getting more work out of their production lines by cutting health and safety corners.

The Jackson report is not all bad news. One measure aimed at softening the blow of injured people having to pay for success fees and other costs out of their damages is a proposal to increase “general damages” by 10 per cent. But this is nowhere near enough to make up for the possible amount people will have to pay out.

General damages are paid for the injury itself and for pain and suffering. There is no suggestion that the other part of people’s compensation (and often the biggest part) – for things like loss of earnings – should be increased.

More good news

Another piece of “good news” for claimants and trade union legal services, but which is far less welcome when the detail is studied, is the decision not to increase the small claims limit for personal injury claims.

An increase to either £5,000 or £2,500 (both figures were considered by Jackson) from the current £1,000 would have denied most claimants the ability to be legally represented.

This is because the costs incurred by solicitors in investigating and proving claims below the current £1,000 limit cannot be recovered in the small claims court, even though lower value claims can be as hotly contested by defendants as high value ones (and defendant insurers still engage lawyers even in a small claims case because their pockets are so much deeper than a claimant’s if they lose).

An increase to £2,500 would have freed employers from paying costs in 50 per cent of union-backed personal injury cases and would have seriously undermined the current model of union legal services.

To deny injured people legal representation in this way would be a denial of access to justice and equality in arms.

Substantial increase?

But not increasing the small claims limit may only be a temporary thing and it could be reviewed again at the end of 2010. The risk is that, if the judge does not consider that the reforms on fixed costs, success fees and other recommendations have been satisfactory by the end of the year, he will recommend an increase and we think that means a substantial increase.

Even if the reforms are considered satisfactory, the limit will still be raised to £1,500 when inflation since 1999 – the last time the small claims limit in personal injury cases was increased – justifies it.

Thompsons will be studying the detail of the Jackson report and discussing with unions how to deal with the most potentially damaging of its recommendations so that unions can continue to provide high quality and free legal services to members.

In the meantime, workplace reps should remember that members with potential compensation claims – for injuries sustained at or away from work – should contact the union’s legal service as soon as possible in order to get their claims under way.