News Category 2
Insurers trying to make fools of Government over whiplash savings - Phil Sherwood, President of CILEx
05/06/19. The Association of British Insurers recently reported that following the personal injury reforms enacted by the Civil Liability Act, they are passing savings on to consumers in the form of lower motor premiums which saw a fall of £24 in the first three quarters of 2018. Whilst this is good news, it simply isn’t plausible to relate this to reforms that are yet to be implemented.
As well as raising the question of whether the reforms were even needed in the first place, this announcement has raised concerns amongst our members working in personal injury, that this narrative may be used to justify a failure to pass future savings on. If so, this would go against the promises the Government made during the Act’s passage through Parliament.
CILEx has voiced these concerns in its recent response to HM Treasury’s consultation on how insurers will report on the impact of the reforms on their businesses.
For us it is vital that a direct causal link be drawn between the Act’s implemented reforms and reductions in insurance premiums, independent of any other possible factors. We want to see strong measures put in place to force insurers to publish relevant, detailed data so that the true savings can be understood and seen to be reflected in premiums.
This means insurers disclosing complete data sets for premiums and settlements, not just averages alone, so that the impact of the reforms can be properly understood.
The current proposals to allow firms to self-determine whether they fall within the scope of the reporting requirements are not sufficient. Instead all insurers should be automatically considered unless they are able to provide the Financial Conduct Authority (FCA) with clear evidence that they do not meet the thresholds set. If the government does go ahead with self-reporting, the FCA must be clear on what punitive measures will be applied to those who declare wrongly.
One of the central points of contention around the passage of the Civil Liability Act was that unrepresented claimants would be required to go up against lawyer-represented insurers. We want to see insurers provide data on their legal costs and whether any reductions fall in line with the loss of legal support for injured persons. Regulations requiring insurers to disclose their spending on legal costs in defending claims, both for external lawyers and in-house legal costs, would allow for an assessment of whether the reforms have resulted in an inequality of arms between defendants and claimants in personal injury cases.
When finalising the process through which savings will be reported, I hope that the Treasury makes sure that insurers are reporting detailed data, not just averages, and are not able to side-step scrutiny by failing to opt in. Both insurers, and the public, deserve to know what penalty would be in store for those who failed to declare.
There remains a question mark over whether these reforms are needed at all, but given the legislation has now been passed, we need to ensure that, assuming the promised savings materialise, that it is consumers, not insurers who benefit.
Phil Sherwood is President of the Chartered Institute of Legal Executives (CILEx)
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Herbert v HH Law [2019] EWCA Civ 527] - Qamar Anwar, First4Lawyers
31/05/19. A recent Court of Appeal decision has left PI lawyers in no doubt about what they need to do before setting successes fees, but leaves a bad taste in the mouth, writes Qamar Anwar, managing director of First4Lawyers.
In Herbert v HH Law [2019] EWCA Civ 527, the Court of Appeal ruled that solicitors handling low-value personal injury claims since LASPO should have undertaken individual risk assessments before setting success fees – rather than just applying 100% across the board. Unfortunately, it is another appeal court decision that fails to recognise the reality of modern legal practice.
Claimant Nicky Herbert was advised by her Liverpool solicitors HH Law (better known as Hampson Hughes) to accept an offer of £3,400 for a rear-end shunt by a bus, of which £829 would be deducted as the firm’s success fee (25% of damages) and £349 for ATE insurance, leaving her to bank £2,222.
She accepted the offer but subsequently instructed JG Solicitors, which has become well known for its work challenging deductions from personal injury clients’ damages.
JG argued that HH had failed to conduct a risk assessment justifying the level of success fee and that the 100% uplift was out of step with the fixed success fee of 12.5% under the previous costs regime for RTA claims which settled before trial.
In its evidence, HH said that, like most of the market, it had changed its model as a result of LASPO to routinely charge a 100% success fee, capped at 25% of the damages.
The court at first instance reduced the success fee to 15%, finding no clear evidence the claimant had approved the cost to be incurred “with full knowledge”, and that there was no risk assessment on the file to justify the 100% success fee sought. This was upheld in the High Court.
Dismissing the appeal on this point, the Court of Appeal said the burden was on the solicitor to show there was informed approval of the success fee. The amount of a success fee is traditionally related to litigation risk, and HH had not told Ms Herbert that her success fee was not.
This ruling will worry a lot of firms – HH Law was right to say that the model of a standard 100% success fee capped at 25% of damages has been widely adopted since LASPO, irrespective of the individual risk of a case, and they are now at risk of an avalanche of challenges by former clients. Firms that did not change their procedures after the earlier rulings in this case should be doing so immediately.
It is a frustrating decision as well. The court expressly found that all the paperwork that HH gave Ms Herbert – the retainer, conditional fee agreement and a ‘What you need to know’ document – provided her with “a clear and comprehensive account of her exposure to the success fee and HH’s fees generally”.
Is that not informed enough consent? Would a client with no previous experience of the claims process expect the success fee to relate to risk? Ms Herbert had the information she needed to ask questions of the firm about it.
The model operated by HH and others was adopted out of necessity because of the LASPO reforms, which put a major squeeze on profitability. If anything it harks back to the whole ‘basket of cases’ theory that underpinned the extension of CFAs back in 1998.
The decision reflects a lack of understanding about the efficient, technology-led way that law firms handling high volumes of low-value litigation need to operate nowadays. In that respect, it is similar to another Court of Appeal ruling earlier this year on Bott & Co’s flight delay practice, which is heavily automated, especially in relation to uncontested claims.
With Ryanair adopting the practice of going around Bott and dealing with its clients directly, including paying them their damages, the court said the firm was not conducting litigation when the claims were not contested, and so did not have an equitable lien over the compensation. As a result, some clients did not pay on the fees that they should have done.
Speaking after the ruling, senior partner David Bott said he had hoped the court would recognise “the way the law was going” in terms of firms becoming more efficient using technology to process matters and said it had taken a lot of investment for claims to be handled in what the court described as a “mechanical and formulaic” way.
“If I’d had 100, 10-year-qualified solicitors with pens and paper instead, it would not have been a problem,” he observed.
It may well seem to claimant lawyers that efforts to provide a valuable service to consumers while generating a reasonable profit are stymied at every turn. Access to justice is not being well served.
Qamar Anwar is managing director of First4Lawyers
Image ©iStockphoto.com/olaser
The case for Regulation and Regulated Qualifications for Paralegals - Amanda Hamilton & Jane Robson, NALP
24/05/19. One of the most difficult issues to reconcile in the legal services sector is the extensive statutory regulation for solicitors, barristers and chartered legal executives. Each of these professions has a membership body and a regulator as well as an overseeing independent regulatory body.
The knock-on effect for consumers is that the cost of such regulation filters through in respect of the fees that are charged to them for services rendered.
Paralegals, on the other hand, are not statutorily regulated but are subject to voluntary or self-regulation and that means that they can charge a consumer a reasonable cost for access to justice, since they do not have to pay the extensive fees for regulation.
As a personal injury solicitor or firm, the most important factor is to keep costs down. Utilising the services of a paralegal professional, either as a consultant or on a contractual basis, may be a way of succeeding in this regard.
What is the difference between statutory regulation and self-regulation?
Statutory regulation is where an organisation is checked by the Government under an Act of Law. It is an offence to practice a statutorily regulated profession without being listed on the relevant register for that profession.
Where a profession is not governed by an Act of Law, it is often subject to voluntary or self-regulation. Such regulation can be drawn up and enforced by any appropriate body within that professional sector but will often take the form of a ‘membership’ body for the professionals operating in that sector. It relies on its members voluntarily joining and agreeing to abide by the codes and ethical principles of that body.
The consequence of this is that anyone can describe themselves as a paralegal (whether or not they have qualifications experience or training), but it is illegal to describe or infer that they are a solicitor or barrister or chartered legal executive unless they have actually qualified through the prescribed route set by the regulatory authorities for their respective professions.
The argument against statutory regulation for paralegals is based on the false premise that all paralegals work for solicitors and are would-be solicitors and therefore come under the umbrella of the solicitor for whom they work. This is most definitely not the case. Many paralegals are offering services to consumers who cannot afford the fees that the regulated professionals charge. Many are also working in different environments (other than legal services) both in the private and public sectors.
The current trend for solicitors to dismiss the role that paralegal practitioners play in the modern legal services sector is a dangerous path down which to venture since paralegals are taking up the slack left by the virtual eradication of legal aid. The benefits for personal injury (PI) solicitors and consumers are overwhelming and should not be ignored.
The most difficult issue to tackle for consumers of paralegal services, is how to distinguish between them regarding their competency to do the job.
Are Paralegals competent to perform legal services?
Since there is no statute prescribing how a paralegal gains their title nor is there any fixed and regulated format for qualification, how can a PI lawyer or consumer know that they are competent? If the paralegal has voluntarily joined the membership body for paralegals, and has gained regulated paralegal qualifications, then surely this should be evidence in favour of their competency to do the job.
Even though solicitors have qualified through a prescribed route, does that give them the monopoly on good practice? Does it make them more competent than a paralegal who has agreed to abide by the code of conduct of his/her membership body and gained a nationally recognised qualification? Statistics regarding the number of annual complaints about solicitors’ conduct made to the Solicitors Regulation Authority (SRA) and about their practice to the Office of Legal Complaints (The Legal Ombudsman) speak for themselves.
Regulated or unregulated paralegal qualifications
There are four qualifications regulators in the UK – Ofqual (England), Qualifications Wales (Wales), CCEA (Northern Ireland) and SQA (Scotland) – all of whom have statutory powers under various Acts of Parliament. Because of the strength of regulation behind the qualifications that they recognise, and the reputation of these regulators, qualifications which hold any of these brands are accepted worldwide. They are the same regulators covering our GCSEs and A-Level qualifications that people use for entry into University.
Awarding bodies who have gained recognition by one or more of these regulators have to have shown that their qualifications are of a very high standard and are ‘fit for purpose’ – that the people who hold a certificate have all attained the same level of skills, knowledge and understanding for the same qualification. In other words; they can be relied upon.
Previously, professional membership bodies would offer their own qualifications, and these were generally accepted in their sectors, but over the last decade, more and more have become recognised awarding organisations because they have seen the value of having a regulator’s logo (their stamp of approval) on their certificates. Employers across the world accept it as a badge of quality; an assurance that the person holding the certificate has the level of knowledge they are looking for.
So, despite the fact that the paralegal profession is not statutorily regulated, anyone utilising the services of a paralegal should be looking to confirm their status by checking if they are a member of a recognised membership body, for example, the National Association of Licenced Paralegals (NALP), and that they have gained a regulated paralegal qualification. At the very least, a paralegal who has such a membership and qualification should be regarded as being on the same playing field as his/her statutorily regulated counterparts.
The downside? There is no requirement for a paralegal to join a membership body nor is there to gain a qualification. Persuading them to do both is the challenge, but ultimately it does make sense: it will provide them with more professional status and ultimately, will give the PI practitioner and consumer as well as the paralegal, confidence to offer the legal service that is so desperately needed.
Overall, we believe that regulating paralegals – both in terms of their training and the work they deliver – is absolutely essential. Keeping standards high and maintaining trust is imperative; without it no profession can survive. Consumers and employers need to be able to trust the people whose services they use or employ. They need to be sure that the person has a recognised qualification and has attained a minimum level in their training. Consumers and employers also need to know that the person has signed up to a code of ethics and will abide by them, and that if the paralegal doesn’t, then the consumer knows there is a body to whom they can complain that will take the matter seriously and act on their behalf.
Now is not the time to fight regulation or try to weaken it – now is the time for the profession to embrace the benefits that regulation can bring and step up to show just how important and how knowledgeable paralegals are within the legal profession.
ABOUT THE AUTHORS
Amanda Hamilton is Chief Executive, and Jane Robson is compliance and regulatory officer of the National Association of Licenced Paralegals (NALP), a non-profit Membership Body and the only Paralegal body that is recognised as an awarding organisation by Ofqual (the regulator of qualifications in England). Through its training arm, NALP Training, trading as National Paralegal College, accredited recognised professional paralegal qualifications are offered for a career as a paralegal professional.
See: http://www.nationalparalegals.co.uk and https://www.nalptraining.co.uk/
Twitter: @NALP_UK
Facebook: https://www.facebook.com/NationalAssocationsofLicensedParalegals/
LinkedIn - https://www.linkedin.com/in/amanda-hamilton-llb-hons-840a6a16/
Image ©iStockphoto.com/Choreograph
PI Practitioner, May 2019
16/05/19. Each issue a particular topic is highlighted, citing some of the useful cases and other materials in that area. You can also receive these for free by registering for our PI Brief Update newsletter. Just select "Free Newsletter" from the menu at the top of this page and fill in your email address.
This month we consider the Court of Appeal decision in Christopher Goldscheider v Royal Opera House Covent Garden Foundation and (1) Association of British Orchestras (2) Society of London Theatre (3) UK Theatre Association [2019] EWCA Civ 711.
In this case, the Royal Opera House Covent Garden Foundation ("ROH") appealed the decision which found that it was liable for breach of statutory duty causing injury to the hearing of a viola player in its orchestra...
Image ©iStockphoto.com/EmiliaU
FREE BOOK CHAPTER from 'A Practical Guide to the SRA Principles, Individual and Law Firm Codes of Conduct 2019 - What Every Law Firm Needs to Know' by Paul Bennett
Chapter Two - Legal Ethics: Back To the Future?
The language and underlying philosophy of legal regulation has, over recent decades, moved from an ethical starting point, from say 1920 onwards, using the language of compliance and the compliance agenda of other regulatory frameworks. The SRA Handbook 2011 owed much to the financial services model then in vogue but which of course had been under intense scrutiny and reform itself following the 2008 financial crisis. The SRA adopted a model which was already behind the curve in 2011.
Compliance is a concept which is based around having and using a set of rules and thereafter putting in place systems and processes to ensure the regulated professional or professionals comply with those rules. Under compliance based regulatory model it is not necessary for the individual professional to understand why the rules exist so long as they simply follow them. You could suggest that this model is one of black and white rules which should be applied irrespective of personal judgement.
By contrast ethical application requires judgment and value decision making.
In the 1980s cult film ‘Back to the Future’ the main character, Marty McFly, struggled with the unintended consequences of his actions when travelling back to the 1950s. The SRA seek to take us from a compliance model towards an ethical decision model. What will the unintended consequences be? Time will tell.
Since at least Roman times lawyers have been regulated, and not unsurprisingly, the manner of that regulation has evolved and developed over the intervening period. Until the SRA introduced Outcomes Focused Regulations (OFR) on the 6th October 2011 it was arguable that in addition to the regulatory framework there was also an underlying concept which practitioners needed to apply of not just following the rules, but looking beyond the rules and understanding why those rules existed, and thus ensuring they applied them having understood the ethical concept which underpin their role and behaviour as a solicitor.
In fairness to the SRA, the SRA Principles 2011 were clearly intended to underpin, by way of an ethical approach, this concept through the 10 simple rules known as Principles. In a press release from the SRA dated the 13th June 2017 their Chief Executive, Paul Phillip, stated:
“Clear, high professional standards are at the heart of public confidence and solicitors, law firms and a modern legal sector. Our consultation confirmed that a shorter, clearer Handbook, with a sharp focus on professional standards, is the way forward.”
The SRA’s language for ethics continues to be “professional standards”, but practitioners approaching the new SRA Principles and the Code of Conduct for Individual Solicitors and the Code of Conduct for Law Firms should not misinterpret the use of the SRA’s language of professional standards as to be anything other than professional ethics.
A Little History
It could be argued as recently as 1960, and arguably still today, that there is a very simple formula to regulating any of the professions, whether that be the legal profession, or indeed any other profession. The Secretary-General of the Law Society of England & Wales, Sir Thomas Lund, wrote in the Guide to the Professional Conduct and Etiquette of Solicitors 1960 as follows:
“You may well ask for a short summary of solicitors’ duties. I suppose, really, it is the old principle:
“Do unto others as you would they should do unto you.”.”1
The SRA’s 2010 consultation on OFR2 indicated that the SRA’s thinking could be summarised as thus in 2010 ahead of the introduction of OFR:
“Our current rulebook is detailed and prescriptive. It tends to lead to the use of resources which could be better deployed on higher risk areas and does not help us to get the best out of our relationship with the profession. Even in the current marketplace it becomes increasingly difficult for detailed rules to keep pace with change. This will be even more so with the liberalised legal landscape starting in October 2011. A rulebook needs to be fit for purpose;”
This extract from the executive summary of the 2010 document highlights that the SRA’s aims, both in 2010 with the introduction of OFR, and in the SRA Regime [2019] with the introduction of the simplified SRA Principles [2019] and the introduction of a Code of Conduct for Individuals [2019] and a Code of Conduct for Law Firms [2019], are, in effect, partly an acknowledgement that the 2011 reform aims have not been met and they need to be met in order to reflect the changing legal services market following the radical regulatory overhaul which occurred through the Legal Services Act 2007.
Ethics in Other Jurisdictions
It is not just the Romans that focused on ethics for legal regulation.
The culture of ethical practise is an integral part of much of the world’s common law legal system and whilst the statutory3 attempts to address professional regulation appear to have moved the jurisdiction in England and Wales away from legal ethics, that is not true of the rest of the world. Legal ethics is taught widely and in detail within the United States regime and is an essential part of the course. Those attending law school in America have to undertake the essential component parts of the curriculum sitting alongside traditional legal subjects, and every law school has a professor of ethics. In England and Wales the briefest of mentions arises on the Legal Practice Course (LPC) and legal ethics are not a core research activity (with some very notable voluntary academic exceptions).
Why are Ethics Back in Fashion?
The move under the SRA’s OFR regime to prosecute individual solicitors for breaches of the SRA Principles 2011 as well as the substantive rules has made ethics key again, whether this is before the Solicitors Disciplinary Tribunal, or indeed to make decisions through the SRA Adjudicators in relation to certain aspects of legal practise such as being a Compliance Officer for Legal Practise (COLP) or Compliance Officer for Finance and Administration (COFA). This means that in practice in recent years the regulatory failures of the recent past are being acknowledged and are being addressed against the existing regime in a manner that was not envisaged and sometimes enforcement is unnecessarily difficult. For that reason the underlying ethos when reading the new SRA Principles [2019] and the new Code of Conduct for Individuals [2019] and new Code of Conduct for Law Firms [2019] stems from principles that Sir Thomas Lund would have recognised back in 1960.
Ethics is a concept which works more effectively when dealing with individual solicitors and their conduct. By contrast, the Outcomes Focused Regulation regime was aimed at introducing an entity based regulatory system (i.e. the firm was responsible for the actions of those within it). It is an approach which has ultimately failed and the revised approach with its separate codes for individuals and firms acknowledges this.
Unethical Shift?
The focus now under the forthcoming regime is to ensure that individual solicitors and also those managing law firms understand that as a member of their profession they have to behave ethically because their work has wider consequences than the individual matter in which they are working. Put simply, the SRA has determined that framing behaviours around ethical rules rather than black and white compliance rules will achieve better outcomes: they are almost certainly right.
Since the SRA started its consultations in relation to the new Handbook in 2016 there has been an explosion of articles, books and webinars focused on ethical practise as a solicitor. Why? The absence of ethics from compulsory academic degree level teachings during the LLB degree and the absence of ethics as the dominant force in practise for many years means that when the SRA first published its proposals, those of us working in the regulatory field immediately recognised the re-emergence of ethics.
The guidance that Sir Thomas Lund gave in 1960, other than its old fashioned language and its inappropriate use of “he” in a profession now dominated by “she”, does, however, hold true, and those reading the Principles and the Individual/Firm Code of Conduct moving forward would want to keep these ethical principles at the forefront of their mind. As Sir Thomas Lund put it:
“If I had to advise, very briefly, a young solicitor on the guiding principles of conduct when he comes into the profession, I think I should say to him that it is clear that only the very highest conduct is consistent with membership of this profession of ours. Your clients’ interests are paramount – that seems to be clear except that you should never do, or agree to do, anything dishonest or dishonourable, even in a client’s interests or even under pressure from your best and most valued client; you had better lose them…you should refuse to take any personal part in anything which you yourself think is dishonourable; you should withdraw and cease to act for that client, even if he presses you to go on. So far as you possibly can, consistently with not actually letting your client down, you should be completely frank in all of our dealings with the court, with your brother solicitors and with members of the public generally. Finally, I think I would say that where your word has been pledged, either by yourself or by a member of your staff, you should honour that word, even at financial cost to yourself, because his reputation is the greatest asset a solicitor can have, and when you damage your reputation you damage the reputation of the whole body of this very ancient and honourable profession of ours.”4
Those guiding principles which set out an ethical basis for putting the clients’ interests first except where they conflict with public interest and duties to the court remain the same in the SRA Principles and Codes [2019] as the SRA introduce its new ethical code book. Make use of those basic and guiding principles in light of your practise, and your practise will never be too far from appropriate.
Ethics are back. Like the previously mentioned cult film ‘Back to Future’ the SRA’s approach intended or not is changing history by moving away from mere compliance and restoring ethical judgment to prominence.
MORE INFORMATION / PURCHASE THE BOOK ONLINE
1A guide to the professional conduct and etiquette of solicitors by Sir Thomas Lund, Law Society, 1960 in the Introduction.
2Outcomes Focused Regulation transferring the SRA’s regulation of legal services 28th July 2010
3The Legal Services Act 2007 Section 1 (1) merely states “(h) promoting and maintaining adherence to the professional principles” the details of ethics, standards and professional principles are left by legislators to the regulatory bodies.
4Ibid.
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