Andy Slaughter MP Chair of the Justice Select Committee has announced the Inquiry which is a call for evidence to include looking at “the impact of those acting without legal advice and / or representation on access to justice and the ways in which the legal services and representation sector is adapting post LASPO 2012 to secure access to justice across civil, criminal and family law.”
The PNLA welcomes this call for evidence. Provide your response before Tuesday 30 September 2024 at this link Your response to the Call for Evidence on Access to Justice
This appears to be the Government’s direct response in civil litigation to the recent recommendations of the Civil Justice Council in Litigation Funding referred to in our previous posts
PNLA submission on Access to Justice to the CJC
We urge all those involved in civil litigation disputes to take this opportunity to provide evidence to this Inquiry for the Government. This first opportunity which has been provided for over 13 years.
During the Commons Scrutiny Committee debate on 13 September 2011 Andy Slaughter at that time Shadow Minister for Justice proposed the following amendments to LASPO relating to professional negligence claims:
Amendment 204, in clause 41, page 29, line 21, at end insert—
‘(2A) The amendments made by subsections (2) and (4) do not apply in relation to proceedings which include a claim for damages for loss resulting from breach of any duty to exercise professional care or skill.’.
Amendment 205, in clause 43, page 31, line 37, at end insert—
‘(4) The amendments made by this section do not apply in relation to a costs order made in favour of a party to proceedings which include a claim for damages for loss resulting from breach of any duty to exercise professional care or skill.’.
Mr Slaughter went on: “Clinical negligence is a type of professional negligence. In many cases, this would exclude most professional negligence cases, including, for example against lawyers, surveyors, accountants or banks, for negligent advice or conduct. Retaining the ATE and CFAs would allow such cases to be brought.
In the case of professional negligence, we also have the issue of QOWCS. This will be a huge double whammy costs risk barrier to anyone attempting to litigate a non-personal injury case without the protection of ATE or the shield of QOWCS, such as it is…..
The [PNLA] states:
“Under section 41 onwards of the proposed Legal Aid Sentencing and Punishment of Offenders Bill no claimant in any civil litigation will recover any damages under the proposed system if their claim is equal to the success fees plus ATE premium. Worse the claimant could win the case and go into debt to their own solicitor and ATE insurer if their claim is less than the success fees plus the ATE premium. This formula is impossible to calculate at the outset of the case.
A risk averse claimant would never bring a claim if the Bill is passed…Recovery of success fees and ATE premiums has filled the gap in Civil Legal Aid so that claimant solicitors and ATE insurers have carried the cost and risk of access to justice unless and until the case succeeds, when most of the costs can be recovered from a wrongdoing/losing defendant.”
Lest we thought that this involved a privileged class of people, the association gives some examples in answer to the question about who brings professional negligence and liability claims:
- “A surveyor negligently fails to spot subsidence in his report for first time home buyers––the property is a ‘home from hell’ and subsides––they lose all their money, as it is worth only site value, and still have to repay the mortgage…
- A solicitor negligently helps a dishonest nephew to get his elderly aunt to sign away her home to him––he then throws her out leaving her homeless…
- A barrister only reads the papers the night before the trial and forgets half the evidence so the case is lost.
- A financial adviser negligently invests in a high risk investment that fails so the claimant with a spinal injury loses all the damages award they received for their care…
- An insurance broker negligently forgets to send the form for buildings insurance and the home burns down in a fire––the claimants lose their home and all their possessions…
- An accountant negligently fails to prepare proper accounts for a business––HMRC then claim a large payment for tax which the business cannot pay and it goes into liquidation…
- A solicitor negligently tells a client that litigation has a good chance of success but then changes his advice just before the trial forcing a settlement involving payment of the opponents’ costs––the solicitor keeps his fees while bankrupting his clients…
- A probate solicitor takes 3 years to deal with a mother’s estate after her death––then charges huge fees, some of which were used dishonestly for his own lifestyle…
- A negligent insolvency practitioner does an administration pre-pack––leaving dishonest directors and shareholders of the company with all the assets and the company creditors without any payment.”
Those are snapshots, but they are credible actual cases. Of course, the vast majority of professional people in this country do a good job, and when things go wrong it is often no one’s fault. However, when things do go wrong, they often leave individuals and small businesses that have suffered significant loss—as in many of the examples I have just given—and cannot then fund litigation.
The fundamental problem is that large success fees are directly caused by the defendant’s conduct in defending the claim, and they cannot be calculated or predicted with any certainty at the outset.
The Government’s proposals do not recognise that wrongdoing defendants choose to fight strong claims, and only if they do that do they have to pay the high claimant CFA/ATE cost award. The existing system places the risk on the wrongdoing defendants; if they choose to defend a claim, then the costs, including success fees and ATE premiums, are the defendants’ risk and they pay those costs if they lose the case.
The Government’s proposed new system places the risk on the claimant so, if the defendant chooses to defend the claim, the success fee and the ATE premium cannot be recovered and come out of any damages that the claimant receives. Even if liability is admitted in such cases, technical legal defences commonly raised include: causation, which is that, even if there were negligence, it did not cause the lost claim; contributory negligence, which is that the claimant should share the blame; and failure to mitigate, which is that the claimant has not done enough to reduce the loss, and the defendant should not pay because the claimant did not act soon enough.
Such cases are always complicated. They often take two to three years to resolve, and the parties might well incur costs of about 100 hours each. The PNLA ATE scheme premium is set at a level increasing in four stages, starting at about £2,000 pre-action and ending up at about £50,000 for trial. The proposed reforms offer no realistic alternative funding for claimants. Claimants will run the risk of paying the defendant’s costs if they lose without ATE cover an amount that cannot be predicted at the outset.
I quote another professional negligence solicitor:
“Although I have been in practice now for nearly 40 years, my practice for the last 12 years has been concerned exclusively with litigation in the fields of pensions, financial services, savings and investments. My clients are typically successful entrepreneurs, professional men and women and the retired. I have some pension fund and charity trustees as clients as well.
I lead a team of 8, and we have recovered about £30m over the last 10 years, mostly from life assurance companies and banks, which are my typical opponents. My biggest single case so far was for over 400 Equitable Life annuitants, whose claim was funded with a series of CFAs, a mutual costs sharing agreement and limited BTE and ATE cover…
As a firm we use CFAs and ATE insurance extensively, mainly for claimant work but also for defence work.
The costs of litigation are so high that even wealthy people and small businesses find it imprudent not to hedge against disastrous results. For example, my property litigation colleagues used a CFA to defend an unfounded dilapidations claim for a well known health charity.”
Such people are at the coal face, not legislating in a vacuum as the Government are, but helping individuals—our constituents—every day with tricky and costly legal situations. He goes on to say:
“Already big business, by threatening high costs, can defeat meritorious claims by deserving people. I have seen recently costs estimates from banks of over £500,000 for a single case. This is really scary for the average client, and even for the rich. The proposed reforms will heighten that risk enormously, and will deter even more deserving people.”
I have just one more quote, which states that “Adding the proposed amendments”—the amendments we tabled—
“would not affect the tax payer nor ordinary people as to their insurance premiums––professionals pay their indemnity insurance premiums normally as a professional conduct requirement of their professional bodies.
Underwriters currently can base the level of premium on the risk of claims using the current legal system and judicial process.
Civil claims arise in this area of practice in highly unpredictable and unpredicted situations and, in all cases, a trusted professional has let down their client. Cases are only brought if lawyers for the claimant assess the chance of success at 60% or more, which is the normal minimum requirement for ATE cover to be obtained.
Professionals and their indemnity insurers frequently and vigorously defend claims, even if their defence is weak perhaps for reputational or other reasons.
It is only if they are found liable that the claimant’s success fees and ATE premiums are payable by the wrongdoing defendant…
Professionals and their indemnity insurers are highly skilled at defending claims and for claimants to be unable to fund a claim––even with a 60% or more chance of success––it is likely to cause considerable injustice with predictable consequences in local communities––whether geographic or niche business communities…
It is an area of practice which generally is a long way from the type of volume low value claims which interest claims management companies in the personal injury sector. Ordinary people and small businesses can have high value claims, eg a first time buyer purchasing a ‘home from hell’ based on negligent advice from a surveyor or conveyancing solicitor.”
I hope that I have said enough about the matter to persuade the Minister that we are dealing with chalk and cheese.”
Too see the full debate in Hansard
https://www.theyworkforyou.com/pbc/2010-11/Legal_Aid%2C_Sentencing_and_Punishment_of_Offenders_bill/12-0_2011-09-13a.2.0
In 2011 the proposed amendments were narrowly defeated by 11 votes to 9 in the Commons albeit at a time when the Conservatives held a majority, which is no longer the case now. Change may well be possible and this Inquiry is an opportunity for all of us to bring this about.
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