Outcomes from the MOJ Reforms 17 May 2016 David Williams Partner, DAC Beachcroft Claims Limited

Agenda Recap on the Low Value Protocol Impact on claim volumes Claimant behaviours The future?

Recent Reforms 1 April 2013 Reform to the Civil Procedure Rules, including introduction of QOCS, costs budgeting and tougher rules in relation to relief from sanction Legal Aid Sentencing and Punishment of Offenders Act 2012 implemented – success fees and ATE not recoverable on post-31-3-13 CFAs 31 July 2013 Horizontal and Vertical Extension of the Low Value Protocols – claims up to £25,000 for motor, EL and PL (excludes multi-party disease) Introduction of Fixed Costs for claims commencing within and falling out of the Low Value Protocols (excludes disease claims)  

1 October 2013 Implementation of s.69 Enterprise and Regulatory Reform Act 2013, breach of statutory duty no longer founding claim for personal injuries   1 October 2014 Introduction of fixed costs for RTA soft tissue medical reports 1 April 2015 Implementation of s.57 Criminal Justice and Courts Act, courts must strike out fundamentally dishonest claims unless substantial injustice 6 April 2015 Introduction of randomised allocation of experts through MedCo in RTA soft tissue claims, CUE PI search required before claim presented

The Pre-Action Protocol for Low Value Personal Injury (Employers Liability and Public Liability) Claims Claims expected to have a value of £1,000 - £25,000 Accidents on or after 31 July 2013 Single-Employer Disease claims where no letter of claim before 31 July 2013 Requires admission of liability without contributory negligence Stage 1 Liability Stage 2 evidence on quantum and causation Stage 3 (if required) assessment of damages

It will not apply to … Claims which should fall within the Small Claims Track Claims with a value of over £25,000 (assessed by the Claimant) Where the Claimant or Defendant is deceased or a protected party Where the Claimant is bankrupt Public Liability claims against individuals Claims arising from incidents / breach of duty outside England and Wales Multi-Defendant / PL disease claims Claims for neglect, abuse, harm by or to children / vulnerable adults

Stage 1 The Claimant must complete the Claims Notification Form (CNF) and serve it on the Defendant’s insurer via the Portal (or Defendant where the insurer is not known / no insurer on risk) The Defendant must send the CNF to its insurer on the day after receipt, and insurer / Defendant must acknowledge the CNF, electronically, on the business day after receiving the CNF The Defendant must apply for CRU certificate and complete the response section of the CNF and send it to the Claimant: in EL claims within 30 business days of deemed service of the CNF (PL claims 40 business days) if liability is denied, the CNF response must contain brief reasons for the denial

If a claim falls out of the Protocol It will proceed under the Pre-Action Protocol for Personal Injury or Industrial Disease Claims The date of service of the CNF will be treated the date of service of the letter of claim Fixed Costs apply to claims presented within the Portal which fall out of it Fixed Costs apply to applications for Pre-Action Disclosure

Stage 2 The Claimant should obtain a medical report, and must check its factual accuracy before sending it to the Defendant Stage 2 Settlement Pack should be sent to the Defendant within 15 days of the Claimant’s approving the final medical report Reports may be obtained in more than one discipline Stay where addendum reports required, interim payments Non-medical reports / witness statements if required to value claim In Employers Liability claims the Defendant must supply earnings details within 20 days of the admission of liability Defendant has 15 days to respond to Stage 2 Settlement Pack 35 day negotiation period Stage 3, Part 8 proceedings, paper or oral hearing

Motor Costs: Claim value of £1k to £10k £200 Stage 1 Stage 2 £300 £500 Total

Motor Costs: Claim value of £10k to £25k £200 Stage 1 Stage 2 £600 £800 Total

EL / PL Costs: Claim value of £1k to £10k £300 Stage 1 Stage 2 £600 £900 Total

EL / PL Costs: Claim value of £10k to £25k £300 Stage 1 Stage 2 £1,300 £1,600 Total

Stage 3 – Still within the process £250 Paper Hearing £500 Oral Hearing

Fixed Recoverable Costs: EL Pre-Issue   Post-Issue £1,000 - £5,000 £5,001-£10,000 £10,001-£25,000 Pre-Allocation Post-Allocation Post-listing Trial Pre-Listing Pre-Trial Advocacy Fee £950 £1,855 £2,500 £2,630 £3,350 £4,280 £500 (to £3,000 +17.5% of damages + 12.5% of damages + 10% of damages + 20% of damages + 25% of damages +30% of damages £710 (£3,001-£10,000) over £5k over £10k £1,070 (£10,001-£15,000) £1,705 (£15,000+

Fixed Recoverable Costs: PL Pre-Issue   Post-Issue £1,000 - £5,000 £5,001-£10,000 £10,001-£25,000 Pre-Allocation Post-Allocation Post-listing Trial Pre-Listing Pre-Trial Advocacy Fee £950 £1,855 £2,370 £2,450 £3,065 £3,790 £500 (to £3,000 +17.5% of damages + 10% of damages + 17.5% of damages + 22.5% of damages 27.5% of damages £710 (£3,001-£10,000) over £5k over £10k £1,070 (£10,001-£15,000) £1,705 (£15,000+

Management Information on claims volumes from the Compensation Recovery Unit

Number of EL and PL claims reaching settlement within the Portal Process

Average General Damages paid on EL and PL claims proceeding to settlement within the Portal process

Impact of the implementation of the Low Value Protocol on Claimants' solicitors' costs

Behaviours of Claimants’ solicitors Extract from a CNF: 3.2 Where did the accident happen? Please provide sufficient detail to identify the precise accident location (e.g. road name, house number, permanent location feature, grid reference etc. ) Cannon Hill Park, Birmingham, on the ride – Twister

3.3 Please give a description of the accident and provide a sketch or photograph, if appropriate The claimant was exposed to a hazard (a defective fair ground ride) and/or exposed to the negligent or improper use of the fairground ride controls by the Defendant (its servant agent or employee).

4.1 Why does the claimant believe that the defendant was to blame for the accident. Due to breach of statutory duty and /or negligence Claimants willing to resubmit claims through the Portal when insufficient information / missing mandatory information?

What have we seen so far? Psychiatric injuries – NO – but will this change on whiplash reform? Physio - NO – but Brown v Haven Insurance Company Ltd Inadequate information – YES Allegations of breach of statutory duty – YES – was ERRA a figment of our imagination? Claims for success fees and ATE – YES Pre-action Disclosure applications where claims fall from the Portal – YES Ignoring of the Portal process – YES Non-Portal claims submitted through the portal – YES Move into non-Portal areas – YES – NIHL, clinical negligence, financial misselling

Market Effects Colemans-CTTS figures volunteered at FOIL–MASS seminar 19/11/13 Pre-LASPO average income from EL claims £4,076 Post-LASPO – no success fee (no MOJ) £3,615 Post-LASPO 20% settling within Portal Process £2,527 Post-LASPO 40% settling within Portal Process £2,371

Mergers and Acquisition

Incentives 40% reduction in number of Claims Management Companies April 2013-April 2014

Move into new areas of work - Noise Induced Hearing Loss Specifically targeted by Claims Management Companies and open to abuse and potentially fraudulent behaviour Repudiation rate over 70% Target the Claimants’ firms and experts with the arguments known to work Robust fraud criteria NIHL specific software - where medical evidence is received to assess causation, limitation and quantum, limiting our clients’ indemnity spend and identify fraudulent behaviours

Fraud in Casualty Claims EL 38% Slips, Trips or falls on same level 22% Handling, lifting or carrying 13% Struck by moving object PL 62% Slips, Trips of falls on same level 10% Struck by moving object 7% Falls from height Increase in proportion of fraud v non fraud claims More fraud or better detection?

Switch from EL to PL

Impact of LASPO Abolition of recovery of additional liabilities - Success fee and ATE premiums Fixed Cost Regime QOCS limits recovery of costs on repudiated claims reduces risk for Claimants in continuing with fraudulent claims reduces the effectiveness of drop hands offers

Fundamental Dishonesty What did we think it would mean? Gosling v Screwfix (29 March 2014) – our first definition Criminal Justice and Court Act 2015

Extension of the Portal Reduced time limits for liability decisions – spotting your red flags in 30/40 days Portal retention policies – costs benefits driving need to keep claims in the portal Easiest fraudulent claims to make via the portal – increase in organised PL fraud

Enterprise and Regulatory Reform Act 2013 Removal of Strict Liability in certain situations – employers able to defend on negligence grounds Decrease in EL fraud - too difficult? Move into NIHL claims

What will the future bring?