The Business of Law
ISSUE 36 SUPPLEMENT
Access to justice: Building a sustainable PI sector
"The reforms risk civil justice reverting to a bygone era when the law was only available to the rich and powerful"
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Modern Law welcomes you to the Access to Justice: Building a sustainable PI sector supplement 2018. The Access to Justice Campaign was created in order to coordinate action for personal injury claimants who were injured through no fault of their own. The current campaign focuses on persuading the Government to rethink its plans for the reforms and either withdraw or change them. This supplement gathers a wide range of perspectives from across the PI market and even from across the Indian and Pacific Oceans in Australia. Charles Layfield introduces the supplement and tells Modern Law why A2J are campaigning against the reforms and how they will continue to do so in the lead up to their implementation, as well as how the public still needs to be properly educated on the many aspects of the claims market. We also spoke to Scott Whyte, Watermans, to gain Scotland’s view of the current challenges the personal injury market is facing and how he suggests England and Wales prepares for a post-reforms world. Gerry Lee, PR Hanna, gave us a similar story but explained how the reforms may have an indirect effect on the Northern Ireland personal injury market.
From Blumers Personal Injury Lawyers, Noor Blumer identifies some interesting parallels between the Australian PI market and England and Wales’s sector. Although Australia’s legal system is complex to navigate, its structure is based on that of the UK. Noor suggests that the UK could utilise and adapt from Australia’s business models and perhaps we can use their PI market as an example going forward. Professor Hugh Koch, hailing from our panel of experts on the editorial board, discusses how communication is changing the game between stakeholders in a claim and therefore creating more positive and effective legal services for all those involved. We also
heard from Greg Cox at Simpson Millar who told us how his firm are adapting to become ready for a post-reforms world. Clerksroom and Barrister-Direct Limited hosted their annual PI Conference this year and Andrew McKie gave us a roundup of the day’s events and a summary of what the conference explored in terms of the upcoming changes to the industry and the challenges that are set to face the industry in 2019 and beyond. We then cross over to our features where Mark Holt from Frenkel Topping outlines the Ogden Discount Rate and what effect this has had on personal injury solicitors and their injured clients. Laird Assessors’s Nik Ellis, tackles the effect of the reforms on the expert witness process and explores the alternative realities. Edna Hammami, Legit Claims, questions what will happen to the personal injury lawyer, while James Reilly, Ralli, looks into the future and discusses the positions of future claimants following the proposed reforms. Joe Pendle, ISO, finishes our supplement nicely with a focus on technology and how it could enable collaboration between the parties involved in the claim. I hope you enjoy reading this supplement, and if you have any feedback or comments, please do get in touch via the details below.
Poppy Green Editorial Assistant, Modern Law Magazine 01765600909 | @Modern_Poppy | email@example.com
Since George Osborne announced planned reforms to the personal injury sector in 2015, the A2J campaign group has been fighting against changes that they predict will be harmful to claimants. Charles Layfield spoke to Modern Law about why A2J is campaigning against the reforms and how they will continue to do so in the lead up to their implementation.
4 Charles Layfield
18 PI Conference 2018: views from industry leaders 20 Unravelling the Ogden Discount Rate
8 Scott Whyte
Scott Whyte, Managing Director of Watermans, told Modern Law about the current challenges facing the personal injury market in Scotland and what his prediction is for the Scottish market.
10 Gerry Lee
While reforms to personal injury are currently proposed only for England and Wales, Gerry Lee from Northern Irish PI firm PR Hanna Solicitors predicts an indirect effect on the NI market, as he explained when he spoke to Modern Law about this changing sector.
12 Noor Blumer
Noor Blumer, Blumers Personal Injury Lawyers, spoke to Modern Law about the state of the Australian PI market, identifying some interesting parallels between the challenges currently facing the two nations’ sectors.
14 Professor Hugh Koch
Editorial Board stalwart Professor Hugh Koch explained to Modern Law how communication between stakeholders in a claim is changing to become more positive and effective to improve legal services for all involved.
16 Greg Cox
Jason Tripp, Operations Director, Coplus
Mark Holt, Frenkel Topping, outlines the tumultuous recent history of the Ogden Discount Rate for calculating compensation payments and the effect this has had on personal injury solicitors and their injured clients.
23 The effect of the legal reforms on the expert witness process
Nik Ellis, Laird Assessors, explores the alternative realities of the expert witness process following the implementation of the reforms.
25 What happens to the Personal Injury Lawyer?
Edna Hammami, Legit Claims, discusses the effect of the reforms on personal injury lawyers and how insurers and the PI sector are starting to clash.
27 A lot to lose
James Reilly, Ralli Injury Lawyers, discusses the position of future claimants following the proposed reforms.
29 Interview with Joe Pendle
Joe Pendle, Verisk Analytics, told Modern Law about the scope that exists for collaboration between the parties involved in a claim and how technology can enable this.
Greg Cox, Simpson Millar, talks about how his firm is adapting ready for a post-reforms world and what challenges he predicts will surface.
Editor Brendan Gurrie
Editorial Assistant Poppy Green
Project Manager Martin Smith
Event Sales Kate McKittrick
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Since George Osborne announced planned reforms to the personal injury sector in 2015, the A2J campaign group has been fighting against changes that they predict will be harmful to claimants. Charles Layfield spoke to Modern Law about why A2J is campaigning against the reforms and how they will continue to do so in the lead up to their implementation.
What impact do you expect the predicted reforms to have on personal injury in regards to both the profession and to claimants?
For claimants, which is what this should be all about, it is clear that the government will have to remodel civil justice in its entirety to give claimants any chance of navigating their way through a complex system. Typically without legal advice, claimants seeking compensation will be up against an array of defendant lawyers, so there is no equality of arms, and they will be involved in complicated litigation for those who wish to take on the resources and technical know-how of an insurance company and their lawyers, as was amply proven to be the case in the recent case of Barton v Wright Hassall where a litigant in person had their claim struck out (at first instance and ultimately by the Supreme court) for failing to correctly serve the claim. There will be no expert check or balance on would-be claimants, so many more frivolous cases are likely to proceed to litigation, encouraged by McKenzie friends whose interests may not match those of the claimant. A2J estimated that as many as 600,000 injured people each year will be denied access to legal advice as a result of these reforms. The reforms risk civil justice reverting to a bygone era when the law was only available to the rich and powerful. In relation to the profession, Capital Economics has calculated that as many as 35,000 legal professionals could lose their livelihoods as a result of these reforms. The sector supports a further 40,000 jobs and contributes £2.1bn to the exchequer annually. The impact will be felt across the UK, but especially in cities such as Manchester, Liverpool, Sheffield and London. In its impact assessment, the Ministry of Justice did not attach a cost to job losses among legal professionals, merely assuming that ‘they would find alternative employment.’ Of course, some
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law firms, predominantly the national volume firms, may be able to drastically change their business models in order to survive, but the majority will go to the wall. RTA claims are no longer a significant profit generator for law firms, with a long list of high-profile failures and exits in very recent history, but with the changes proposed, the impact on the sector is going to be seismic.
Which, if any, of the reforms do you feel could bring positive benefits to the personal injury sector?
The personal injury sector will be hollowed out by the reforms, so it is hard to ‘take any positives’ from these reforms. I cannot see any real material benefits for the claimants, albeit if the good work of the Insurance Fraud Taskforce and the Brady Report recommendations (under the guise of much more robust regulation of CMCs by the FCA) come to fruition as one hopes they will, then this will be a material step forward and address some of the persisting dysfunctions in the market. Equally, the government’s intentions of digitising the civil judicial process are eminently sensible and should generally, in time, deliver greater access to justice for the consumer, but not without considerable investment in redefining the process with the necessary supporting technology. But the need for access to legal support will remain and should be a key feature of the build design methodology. Regarding the market itself, my sense is that the vast majority of small to mediumsized firms predominantly reliant on RTA PI claims will struggle to find ways of replacing their lost income, while the larger firms may have the capabilities to make the necessary investments required in process and technology to continue to support a post-reform world. Diversification into broader areas (of law or other service lines) will allow some firms to
There is a role to be had to remove the emotional rhetoric from the equation and getting the industry to produce solutions to problems right across the sector
deliver a variety of claims services. Notwithstanding the governmentâ€™s mission to introduce online courts, technology will almost certainly make the claims journey more efficient.
Where do you believe the government should have directed their attention and efforts in order to improve the personal injury process?
There are few people in our sector who believe the current system is unimprovable, and ironically, if you remove the ideologues from the equation, all parties broadly want the same thing: remove fraudulent or frivolous clams, make sure injured people have adequate redress, get rid of obnoxious cold calling and claims touts and avoid the courts being clogged up with LiPs who have no idea what theyâ€™re doing. A2Jâ€™s long-standing Alternative Claims Framework (ACF), which in its principles has support from the vast majority of major claimant law firms, strikes the right balance and ensures that access to justice for the majority of the genuinely injured people is upheld, while at the same time addresses the persisting dysfunctions in the market. Laws are invariably blunt instruments, especially when they are a product of ministers who are not the subject matter experts and are not making policy after a cool appraisal of the evidence. It seems patently obvious that the onus on solutions for the persisting market dysfunctions should come from robust and constructive dialogue between the key stakeholders in the market.
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As these reforms have played out, it has become clearer than ever that ministers are trying to fix a problem that is already being fixed, thanks largely to the effect of earlier and significant improvements to the regulatory framework, and improved corporate practice as a result.
What steps can personal injury firms take to prepare for the post-reforms world?
I understand the intent is to implement the reforms from April 2019, so I think the coverage has been misleading in that regard. There remains slow progress across the MoJsponsored steering groups and the fundamental changes to the Portal, which convinces me that April 2019 is far too bold.
Navigating one’s way through a personal injury claim is complex, and the Barton judgment highlights it is vital that the government makes the process claimantfriendly. It can’t be done on the back of a cigarette packet. Further reform is required, but a sensible compromise is readily available, which allows the government to meet its stated objectives of reducing fraud, claims volumes and claims costs. But it is essential that the government delivers a comprehensive package of reform through a managed process and avoids piecemeal reform. A good example of this is the need to have a BTE LEI market which has had time to adapt and make the necessary changes to support a post-reform environment. To achieve this given the twelve-month renewal cycle, this market will need to be fully engaged in the reform agenda and provided a minimum of eighteen months to adapt.
In which areas do you think the personal injury sector needs to improve its public perception, and how should it go about this?
The public do not differentiate between the different elements of the ‘claimant sector.’ A tout looking for holiday sickness claimants on a Magaluf beach is no different to them than a claims management company, a personal injury lawyer or a credit hire operator. It’s all just ‘claims.’ Often, there’s little distinction made between insurers and the claimant sector, because insurers hand responsibility for claims management to third party suppliers. Customers make a motor claim on average once every six or seven years, so there is little opportunity for ongoing dialogue between the public at large and the claims industry that could help improve its reputation. I feel there is a need to educate the public on the many beneficial aspects of the claims market, as well as what is being done collaboratively to eradicate the unscrupulous elements of the sector. The instant changes I feel would be beneficial are set out in the ACF, but include items such as: • Establish a cross-industry working party (including the numerous regulators) with an enduring remit of continuously identifying and addressing areas for improvement in the broad claims market • Collaboratively work together to eradicate from the market the dozen or so solicitors who are – according to insurers - responsible for presenting most of the fraudulent cases • Empower the FCA to address each of the Brady recommendations and provide stringent and effective regulation of CMCs and ban cold calling • Ensure the small claims limit is increased on an indexation basis, and once rebased, as is only surely fair given there have been no changes to the limit since 1999, adopt a simple methodology which allows for the limit,
There is a need to educate the public on the many beneficial aspects of the claims market, as well as what is being done collaboratively to eradicate the unscrupulous elements 6 Modern Law Supplement
costs and damages to be increased on an inflationary basis periodically • Ban intervention from insurers, and premed offers • Remove vulnerable road users such as pedestrians, cyclists, bikers and equestrians (who are accepted by all parties as being caught in the cross fire) from the reforms • Test the viability of a tariff for the lowest value RTA PI claims, set and overseen independently by the judiciary – let’s not have another discount rate situation where the setting of a figure becomes highly political and opens the government to lobbying (by both parties) and challenges their independence and integrity • Deal with ‘aged claims,’ where there is a greater propensity for fraud and when often these claims are generated through cold calling activity
What would you say have been the most positive changes made to personal injury in the past decade, and are there themes or lessons that can taken from these and applied to future changes?
The claimant sector has learned many lessons after the early years of the Woolf reforms, when opening the Pandora’s Box of access to justice created behaviour among claimant firms that sometimes bordered on the unethical. In hindsight, it is no surprise that these reforms resulted in a material increase to claims volumes; after all, that was the intention of the government’s reforms. I believe our sector has matured considerably in the last few years, especially since LASPO, and we are only now seeing the true impact of the number of sensible measures adopted in 2013 and thereafter. But the sector remains fragmented and seemingly incapable of speaking with one voice. Insurers have benefited from our inability to compromise. The claims sector said: “Over my dead body,” at the time LASPO was mooted, and the government ignored us and legislated anyway. We have learned that relationships with legislators and regulators need to be predicated on compromise and consensusbuilding, where give and take is practiced. Proactive continuous engagement in seeking industry solutions through dialogue is essential. There can be no objective argument to maintain a position that the small claims limit, which hasn’t increased since 1999, should remain as it is; and yet no claimant group took this
As these reforms have played out, it has become clearer than ever that ministers are trying to fix a problem that is already being fixed forward as a sensible proposal and rather focused on defending the existing position. This is no different to the position that the insurance community took in wanting to maintain a discount rate set 2001 and in a pre-financial crisis world. The inability of the sector as a whole to achieve sensible outcomes which place the customer and injured party at their heart is a lamentable position to watch unfold and has created the need for government to feel it needs to intervene. A2J has made inroads in bringing forward objective insights to support evidential based policy making and together under one umbrella group a wide variety of different claimant businesses, which means we represent a wide number of claimant specialists, from credit hire companies, to medical reporting agencies, to insurers, to law firms, barristers and others. The sector is a complex one with much more in common between the claimant and insurance communities than either party dare admit. We are also going through a period of unprecedented change, driven by technology, media scrutiny and ever-increasing customer expectations. We need to equip ourselves properly to navigate our way through these seismic changes to create a stronger, better, dynamic sector that can represent the consumer's interests in the 2020s.
Looking back at A2J’s campaign against the proposed personal injury reforms to date, where did the group effect the most change, and is there anything you would have approached differently?
It is tempting to say ‘je ne regrette rien,’ but all campaigns of this nature carry lessons with them, and we are continuously reviewing our strategy and activity to make sure we improve what we do on behalf of the consumers and our supporters. At a macro level, I would like to have campaigned with the support of the court of public opinion. Although the insurance industry has a massive trust problem, so do the claimant fraternity, principally
due to the activities of a rogue element at the margins, which haven’t yet been stamped out. As such it has been hard to convince sceptical journalists that the campaigning is on the side of the public. For all its faults, I think the government would have found it far harder to accede to lobbying by insurers if the public had a better understanding of what was being proposed in their name. No right-thinking individual would sign up to lose historic rights for the sake of a £16-£18 saving, which in reality they’ll never receive. As is so often the case, the public won’t know what they’ve lost until it’s gone. Politicians have a crucial role, to consider in a pragmatic way the merits or otherwise of proposed legislation, on behalf of the public they represent. As we look towards the future, there is no doubt that the organisation has to evolve into something else if the efforts to date are to be sustained. There needs to be a greater focus on challenging but constructive dialogue, which I am convinced is the only way to produce longterm sustainable solutions and certainty to the market.
There is a role to be had to remove the emotional rhetoric from the equation and getting the industry to produce solutions to problems right across the sector.
How will A2J’s role change in the lead up to and following the implementation of personal injury reforms?
Our primary aim is to force a government re-think on the PI reforms, both the Civil Liability Bill itself and the other elements of the package, such as the Small Claims Limit. As the reforms have been delayed, so the rationale for them has fallen away too, as the significantly reducing claims volumes support. We remain hopeful that ministers will see sense and bring all sides together to agree a compromise. We are already involved in working to provide industry solutions in a wider remit of areas, including working with those who represent vulnerable road users, addressing the dysfunctions caused by the displacement of activity into the holiday sickness sector, the discount rate, and the impact of the reforms on the BTE LEI market. n
Charles remains a qualified lawyer but has worked purely in a full-time leadership role since 2006. He has held various Executive and Board roles with the likes of Pannone LLP, BGL Group and Minster Law before establishing his own company providing advisory services to a range of companies, including acting as a Chairman, Non-Executive Director, consultant and mentor to numerous Boards, Executive teams and investors. He has a specialism within the legal and claims sectors, with a particular focus on leadership; strategy; strategic execution; corporate governance; human capital management; political lobbying and public affairs; organisational design; audit, risk and compliance; stakeholder management and regulatory management, having occupied regulatory approved persons roles. He has held leadership roles in companies which have successfully executed varying strategies, including: growth within the same market segment; diversification into new markets; turnarounds, as well as being involved in a number of acquisitions/disposals.
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Scott Whyte Scott Whyte, Managing Director of Watermans, told Modern Law about the current challenges facing the personal injury market in Scotland and what his prediction is for the Scottish market.
What are the current challenges in the personal injury market?
Uncertainty is probably the greatest challenge in the market overall. The market as a whole has faced numerous changes both north and south of the border in recent years (although more so in England and Wales than anywhere else). The uncertain market has the biggest impact on injured people and the proposed erosion in their rights to fair representation and compensation is of particular concern to me.
What do you predict will be the impact of the personal injury reforms on the Scottish market?
It has been interesting running a Scottish PI firm and watching the attack on injured people and the firms that represent them by successive justice ministers. On the one hand, I am extremely thankful that we have a separate legal system and that the proposed reforms wonâ€™t come into force in Scotland. On the other, I have no doubt that the insurance industry will do all they can to push for similar reforms in Scotland. Whilst the implementation of the reforms as they currently stand wonâ€™t impact Scottish claims, there are a number of organisations we work with within the sector who will be undoubtedly be affected by them and this will have a knock on the sector in Scotland.
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Surviving in a post-reform world will really depend on a firm’s business model and its ability to operate on a lean structure
What effect have CMCs had on Scotland’s personal injury market?
have already made the move out of lower value personal injury work but the majority still have some exposure to these changes.
Again, we are fortunate that our separate legal system has taken a much more sensible view of the role of CMCs than the English system has. In 2013, Sheriff Principal Taylor produced a report on civil litigation in Scotland. Within that report, he stated that CMCs have a “legitimate role” in the claims industry by informing the public of their legal rights to pursue a claim and providing law firms with work streams from the enquiries they receive. He recommended regulation of the industry as opposed to trying to drive them out by banning referral fees.
Making efficiencies in better work systems and adding additional revenue streams to work will be key.
I am in full agreement with those recommendations and my business enjoys many positive relationships with CMCs who have the interests of injured people at their core.
How can the industry collaborate to bring in measures to disrupt the activities of CMCs in Scotland where they are having a negative effect?
Within the pursuer (claimant) sector of the Scottish market, a number of firms will exchange information informally where a less reputable operator is working within the market and where possible that operator would effectively be starved out of the market. The proposal to introduce a regulator in Scotland would hopefully allow for further powers to deal with such operators as and when they appear.
How do personal injury firms in England and Wales need to prepare for a post-reforms world?
Surviving in a post-reform world will really depend on a firm’s business model and its ability to operate on a lean structure. Many firms
What are the issues in the personal injury system and how should these be improved?
Insurer behaviour is and has for a long time been the biggest issue facing the personal injury sector.
Insurers and politicians need to stop treating every injured person as a fraudster and start treating them with respect. These are innocent people who have been injured by the negligence of someone else. It may not have been deliberate but it is painful and it is inconvenient. Fraud is an issue on both sides, but it is only ever reported on the side of someone exaggerating or staging a claim. The decades old practice of insurers trying to force clients into low-ball settlement to then end up having to pay ten or twenty times that sum when faced with a good personal injury solicitor is equally as deplorable but never reported.
How do you suggest that the public perception of personal injury solicitors be improved; could the reforms have a positive or negative influence on this image?
Sadly I think it will be a case of “you don’t know what you’ve got until it's gone”; when many people are forced to take on an insurer, their highly paid solicitors and the court system all by themselves in order to try and receive a fraction of the compensation they may once have been entitled to. Then people will realise the work that personal injury solicitors did for them and how they have been misled by the insurance industry and the present government.
What can firms in England and Wales utilise and adapt from Scottish business models?
I think the same principles for success apply wherever your firm is based. You need to market your business well and make the most of every bit of work that you have. The English market is fiercely competitive with thousands of firms operating in a very crowded marketplace. The Scottish market is much less crowded with maybe only 20-30 firms having a dedicated personal injury department. That doesn’t mean that we don’t compete for work but I do think we will see a further “thinning out” of the number of firms in the future.
In the reformed system for the personal injury sector, what opportunities do you predict, and how can firms make the most of these opportunities?
It is really hard to look at the proposed reforms with any sort of positivity. They are a complete affront to justice for anyone unfortunate enough to be injured in an accident in England and Wales. They show complete contempt for the rights of individuals. For many firms it means a switch in focus to other claim types and that has already happened with many firms. Businesses with a pro-active approach and a good structure will always adapt to change. Some of that change may be painful, but that will be nothing compared to the sea change injured people will face in trying to achieve justice for the injuries they suffer. Whatever opportunities that may arise sadly won’t assist in re-balancing the scales of justice for injured people, but I don’t suspect the fat-cat insurer CEOs will lose any sleep over that. n Scott Whyte, Managing Director, Watermans.
For many firms it means a switch in focus to other claim types and that has already happened with many firms Modern Law Supplement 9
Gerry Lee While reforms to personal injury are currently proposed only for England and Wales, Gerry Lee from Northern Irish PI firm PR Hanna Solicitors predicts an indirect effect on the NI market, as he explained when he spoke to Modern Law about this changing sector.
Hopefully the negative impact of the reforms in NI will be minimal and should be more gradual, allowing stakeholders the time to adapt and adjust to the changes 10 Modern Law Supplement
What are the key differences between the UK and Ireland guides for personal injury?
Damages in Northern Ireland (NI) are considerably higher in personal injury claims. This is probably due to historical reasons and in particular the late ending of the Jury trial System NI in contrast to England and Wales (E&W). We have a green book for guidance regarding levels of compensation and this is the equivalent of the JBS guidelines. The High Court has a jurisdiction for claims exceeding £30,000, with the County and District Courts dealing with claims below that level. Barristers are widely used throughout these lower courts. There is no portal in NI and RTA claims are excluded from the Small Claims Court with a limit of £3,000, and there are currently no plans to increase the limit as there are in E&W.
What impact do you predict the expected personal injury reforms will have on the Irish market?
Thankfully, none of the planned reforms are likely to be visited in NI and indeed recent legalisation in E&W has not been replicated in NI. The reforms will hopefully have no impact in this jurisdiction, unlike in E&W where it is inevitable the reforms, if implemented, will have a devastating impact on access to justice for claimants. If the small claims limit is increased to £5,000 and a tariff system for soft tissue injuries introduced, the vast majority of claimants will be left without any representation by solicitors. This prospect is even more worrying when you consider the recently announced proposal by the government to, in principle, accept the offer by the insurance industry to fund the initial build for a new personal injury portal.
What steps need to be taken by personal injury firms in order to prepare for the post-reforms world?
There will undoubtedly be an overarching effect and therefore the reforms will have indirect
consequences. The insurers are now few in number but much bigger in size and the industry continues to contract and consolidate for mainly commercial reasons. This process itself will have a gradual and progressive impact throughout the UK and therefore NI as well. As an example of this, one can see the presence of the national defence solicitors in NI such as BLM and DWF. This process, coupled with the opportunities technology is presenting to what is already a receptive industry, means that on a practical day to day basis, the PI sector in the UK is truly a very small place. Despite this, hopefully the negative impact of the reforms in NI will be minimal and should be more gradual, allowing stakeholders the time to adapt and adjust to the changes.
How do you believe the personal injury system should be improved?
In NI, the alternatives to legal aid, such as ATE and BTE insurance, are not as well developed as in E&W, and the government’s focus needs to be on dealing effectively with this issue. Joined up thinking by the government and the Northern Ireland Law Society (NILS) is needed to ensure that replacing a very generous legal aid scheme (by comparison to what is available in E&W) to an overly reliant population is properly managed. Measures taken must not only benefit those that currently qualify for legal aid but also the working population, who at the moment, in the absence of widely available BTE/ATE cover, have limited access to justice in the true meaning of that principle.
What effect could the personal injury reforms have on access to justice for the claimant?
Somewhat ironically, lawyers in NI need to do what their English counterparts have always done, i.e. be innovative in response to change. In effect, embrace change. I say ironically as it is very likely that this otherwise welcome and established characteristic has probably
In NI, the alternatives to legal aid, such as ATE and BTE insurance, are not as well developed as in E&W, and the government’s focus needs to be on dealing effectively with this issue not gone unnoticed by other stakeholders within the sector. In particular, one might venture to suggest, it contributed to the MoJ feeling that unwelcome reforms would ultimately be successfully implemented.
How can the public perception of personal injury solicitors be improved, and what impact could the reforms have on this image?
A more balanced and measured approach by the MoJ could still lead to the personal injury legal system doing what it has always done in the past and being responsive to the ever changing needs of clients/customers that the modern world now presents. The ABI should be more open and transparent to the government and all stakeholders as to the crucial role the claimant sector has had in consistently delivering access to justice to the many and not the few. Taking this for granted will not only damage access to justice but ultimately undermine the rule of law itself. The idea that litigants supported by CMCs can replace the established legal representation is misguided and misplaced and will result in widespread injustice.
How do the processes and procedures surrounding fraud differ between the UK and Ireland?
That’s an old chestnut and there isn’t an easy answer. It’s part of an overall image problem for lawyers. The planned reforms offer opportunities to perhaps profile ourselves in a more obvious and less humble way, which has always been a hang up for us due, for example, to the old constraints of regulation and a reluctance to say how good or better we are than our peers/ competitors. The reforms will place a large portion of the population at the mercy of the insurance industry, and surely the marketing departments can easily see the claimant solicitors as the white knights coming to the rescue and promote us accordingly.
Will it be possible for firms to maintain their current business models following the reforms;
how might personal injury firms need to adapt their current business models in response?
In NI we don’t have the proposed or actual recent legislation such as the Social Action Responsibility and Heroism Act 2015, nor the 2008 Compensation Act and the Criminal Justice and Courts Act 2015. That said, historically and culturally the extent of fraud in Northern Ireland has always been very limited and probably even the ABI would agree it plays a minor role in the PI sector.
What opportunities do you foresee in the reformed system for the personal injury sector, and how can firms make the most of these?
The impact of the planned reforms in E&W is likely to have a very limited, direct impact which of course is a good thing. The old adage of ‘if it isn’t broken then don’t fix it’ is apt. That said, there will be a gradual and indirect impact and that should allow for the stakeholders in NI to properly strategise and plan for the future. You can only put off change for a limited period and it is probably better to embrace it and those that do are likely to be the winners. The regulatory body (Northern Ireland Law Society – NILS) can of course be of assistance and needs to play its part along with the government. The traditional ‘doctors surgery’ approach of a small firm being able to handle most matters and where they can’t seek the advice of Counsel is no longer fit for purpose; how to replace it is the real issue. Has the ABS structure, for instance, been a proven success? The Jury is surely still out on that one.
In order to improve the industry for both the insurers and the customers, where does the government’s focus need to be in regards to insurance?
A modern and properly resourced legal firm, appropriately supported by its stakeholders that benefit greatly from its efficient workings, can
look forward to the future, even one that includes the planned reforms. However, such reforms are not set in stone and can still be defeated. Organisations like A2J, APIL and MASS continue to represent the profession admirably, and although a few battles have been lost, the war is far from over. Closer to home, the recent publication of the Review of Civil Justice by L.J Gillen presents the legal sector with a blank canvas, and if the key recommendations are implemented progressively then that should offer opportunities for the PI sector. Contained within the review is a commitment to the digitalisation and modernisation of the courts, online dispute resolution, the creation of a Civil Justice Council and, most interestingly, legislation to reconstitute the Northern Ireland Courts and Tribunals Service as a Non-Ministerial Department. This latter measure could help underpin the independence of the profession and ultimately the Rule of Law, which is essential for proper access to justice. n
Gerry Lee Gerry Lee is Senior Partner in PR Hanna Solicitors in Belfast with over 30 years’ experience in Personal Injury Claims. He is a member of APIL and his practice is the only firm in Northern Ireland who are Members of Headway – the brain injury association personal injury solicitors List. Gerry is the volunteer representative of the road safety charity Brake in Northern Ireland and his firm also works in partnership with Aspire – supporting people with spinal injuries and Headway. He was a member of the Executive Committee of MASS for over 10 years and currently sits on the Road Safety Forum in Northern Ireland that advises the Stormont Assembly on Road Traffic legislation.
Modern Law Supplement 11
Noor Blumer, Blumers Personal Injury Lawyers, spoke to Modern Law about the state of the Australian PI market, identifying some interesting parallels between the challenges currently facing the two nations’ sectors.
Maintaining relationships inside the government combined with publicly standing up to attacks on the common law have had the best results in the Australian context Modern Law Supplement
What are some of the key differences in the Australian and UK
legal sectors, particularly in terms of structures and scale?
Although Australia’s legal system is based on and similar to that of the UK, it is probably more complex to navigate as each of the eight states and territories have their own laws and court systems, with additional Commonwealth laws and courts. Like the UK, the Australian market ranges from large national and international firms servicing government and big business to sole practitioners, who represent a significant percentage of law firms. The Australian personal injury system is based on the UK common law system. All of the eight jurisdictions have introduced statutory limitations to the common law to varying degrees for most types of personal injury claims.
What are the current challenges and opportunities facing the Australian PI market?
The legal profession is constantly attempting to halt the further erosion of common law rights. For some reason, governments seem determined to reduce entitlements by the introduction of high thresholds, caps on damages and legal costs and various other measures. In some jurisdictions, a change of government within the state has seen a restoration of some common law rights. The assault on common law rights by governments often arises from pressure from insurance companies or from a desire to reduce premiums for compulsory insurance, but it also sometimes arises for no apparent reason.
According to the Australian Lawyers Alliance, ‘governments have sought to slash compensation available for individuals’. How is the ALA fighting to protect the rights of the claimant?
The Australian Lawyers Alliance has been actively involved in campaigning against proposed ‘reforms’ by whatever means necessary, including lobbying, advertising campaigns and working closely with governments. Recently, this has particularly been the case in New South Wales, Queensland and the Australian Capital Territory.
Fighting to preserve justice and the entitlement to fair compensation for those wrongfully injured is vital, particularly as there is a trend towards undermining the rights of those wronged in order to increase the financial benefits for those at fault and insurance companies.
Maintaining a proper tort system encourages safe practices and discourages negligent behaviour – an important tenet of our justice system.
How do you think the personal injury system could be improved in Australia, and how can these improvements be driven forward?
A coordinated effort is difficult given the number of jurisdictions and the constantly changing governments within them. Recently, there have been some steps forward, such as removing the statute of limitations in several jurisdictions for victims of institutional abuse. Attempts are being made to put in place a reasonable compensation scheme for those victims. It really takes work on a local level. There is a scheme for Commonwealth government workers and some other large organisations, but otherwise the compensation laws are state and territory based. It has been crucial for lawyers to be consulted by government when changes to the tort system are proposed. Maintaining those relationships inside the government combined with publicly standing up to attacks on the common law have had the best results in the Australian context.
The nature of the UK’s personal injury market has offered new opportunities for some Australian law firms. Do you think this will be a continuing trend and what are the reasons for the move?
Australia has a population of only 23 million compared with 65 million in the UK, within a much smaller geographical area. In the UK, hourly rates are generally higher and damages have been more generous. Up until now, I understand that the common law has mostly been preserved and the market is relatively unregulated. Having said that, the entry of Australian firms into the UK plaintiff market seems to have arisen with the public listing of a couple of major plaintiff firms. Their example has not been an inducement to others to follow in that path so far, and I would be surprised if others were keen to try again in a hurry.
The assault on common law rights by governments often arises from pressure from insurance companies or from a desire to reduce premiums for compulsory insurance
As the UK prepares for a post-reforms PI sector, what can firms in England and Wales utilise and adapt from Australia’s business models?
Using the New South Wales (NSW) example, where the erosion of the common law has been particularly evident over the last twenty years, the plaintiff legal scene has changed dramatically. With the changes to the workers’ compensation laws in the 1990’s and early 2000’s, the most dramatic effect was the loss of work to the Sydney bar. Previously busy counsel had to either find other areas of work or leave the bar. Some have survived for the work that remained and have continued to prosper, but there are far fewer. The work also became much more difficult and complex to perform, and it became less common for generalist, suburban and country practices to continue to run personal injury claims for their clients. The available work is now mostly done by large specialist plaintiff firms, who can afford to advertise and to undertake the work on a ‘no-win, no-fee’ basis. Increasingly, those firms are either paying disbursements or providing funding arrangements for clients. Some of the work, such as NSW workers compensation and motor vehicle accident work greatly restricts what party/party and, to a degree, solicitor/costs can be paid. This has resulted in some areas of practice being undertaken by only a few firms. The rates that can be charged are way below the cost base of providing the work.
What positives changes have been made to the personal injury market in the past; are there any lessons that can be taken from these and applied to any future changes and/or that you would suggest to the UK following the predicted implementation?
Generally there has been an increased use of compulsory mediation before matters can proceed to hearing. This has had the beneficial effect of reducing the numbers of claims going to hearing. There has also been a loosening on restrictions on advertising previously in place in some jurisdictions. In some instances, serious restrictions on common law rights have been wound back to some extent.
What are the differences between the volumes, methods and defensive procedures surrounding fraud in Australia and the UK?
In the past few years the incursion of claims harvesters, many of them from the UK, who are no doubt fleeing since the payment of referral fees was outlawed in the UK, has contributed to an increase in claims. This has been particularly the case in NSW, where persons who would not normally claim have been encouraged to bring very minor and/or unmeritorious claims combined with an increase in plainly fraudulent claims. The resulting significant increase in claims resulted in the NSW government introducing even more restrictive benefits for motor accident victims that went into effect in December 2017. Legislation has been passed in some jurisdictions similar to that in the UK, outlawing the payment of referral fees, but the damage has already been done, particularly in NSW. We have been dealing with an onslaught of claims harvesters in the Australian Capital Territory and are working on getting similar legislation in place as soon as possible.
What is next for the Australian PI market; is there anything that the UK market should have on their radar or vice versa?
There are some new areas of compensation, particularly arising out of the Royal Commission into Institutional Responses to Sexual Abuse, with limitation periods being extended in some jurisdictions and a National Redress Scheme in the process of being put in place. The fight to retain and/or restore common law rights and improve access to compensation continues on all fronts in all eight states and territories. Class actions, a relatively recent innovation in the Australian legal landscape, continue to be commenced with varying degrees of success. There is a concern that litigation funders are reaping a greater benefit than lawyers. As non-lawyers, they are entitled to charge based on a percentage of the result, unlike lawyers who are still bound by regulations prohibiting charging in that manner.
There is some push to allow lawyers to charge contingency fees based as a percentage of the amount of damages – much as has been done in the UK and Canada in the last few years. The appetite is not yet there for such a change from the more conservative forces in the legal profession. One benefit the UK market has, that for reasons unknown has never been a factor in the Australian market, is the availability of litigation insurance. There is no such facility as far as I am aware in Australia; indeed I spoke to Allianz at the AvMA conference in Leeds last year and indicated our interest in having such insurance available in Australia, but have heard nothing further. Of real concern is the effect of the implementation of the National Disability Insurance Scheme (NDIS), which purports to provide tailored care to enable people with serious disabilities to live a normal life and achieve their goals. It is already greatly affecting the ability to resolve claims for those seriously injured, as it is providing expensive care that then needs to be taken into account and repaid in any settlement. Part of the push to reform motor accident claims, is towards ‘no fault’ restricted/fixed benefit schemes. While this makes sense from the point of view of social welfare, it is more controversial when economic loss benefits are slashed to pay the drivers who caused the accidents. Also proliferating are hybrid schemes, such as those that allow limited compensation for treatment for a period of time for drivers at fault and those that allow for common law damages in cases where the seriousness of injury exceeds certain thresholds. The attack on common law rights for plaintiffs has been fought with varying success. Australian lawyers who have banded together, provided money and time and cooperated well, despite otherwise being competitors, have obtained the best results in protecting the system that provides compensation to those who have been wronged. n Noor Blumer, Director, Blumers Personal Injury Lawyers, President Elect, Australian Lawyers Alliance, Past President, Law Society of the Australian Capital Territory, Past President, Australian Women Lawyers.
We have been dealing with an onslaught of claims harvesters in the Australian Capital Territory Modern Law Supplement 13
Professor Hugh Koch Editorial Board stalwart Professor Hugh Koch explained to Modern Law how communication between stakeholders in a claim is changing to become more positive and effective to improve legal services for all involved.
The joint statement process is unique to English civil law and is something to be proud of, and positive and effective debate between experts on an impartial basis is crucial 14 Modern Law Supplement
What are the challenges for collaboration between psychologists and lawyers in the current marketplace?
Understanding the psychology of the many activities lawyers are involved with is essential – examples include lawyer wellbeing, effective communication, both verbal and digital, persuasion techniques for settlement debates and ADR and robust and impartial decision-making. These are all sources of stress and can be significantly helped by an understanding of psychology. Digital technology is improving communication between professionals, mainly because of its speed, and that is largely a good thing for all of us.
What steps can legal professionals take to improve these activities, and what role does management and culture have in this?
Communication can be helped and encouraged by in-house discussions, seminars, education and mentoring by senior partners. If a lawyer sees the senior partners positively communicating, both internally and externally, that could be one of the biggest things that has an effect on their own style of communication. All of these issues can and should be addressed at an undergraduate and postgraduate level, so that in years to come the system is producing qualified professionals who have a different approach to communication and quality management.
What effect could the forthcoming PI reforms have on claimants’ rights to compensation for the psychological effects of an accident?
Changing the small claims limit could make the obtaining of necessary medical reports more difficult for legal teams. If a claimant is left to obtain and fund such a report themselves, this could be hampered by experts feeling unable to accept a claimant’s instructions without a lawyer. It is important to safeguard access to justice; any reforms should not discriminate against the man in the street who can’t afford legal representation. Historically, dealing with litigants in person is a different circumstance to when there is an intermediary lawyer. It is difficult to see how one gets around the difficulties or replaces the buffer that the lawyer offers between the
expert and the claimant, which is so essential. It is difficult to see how that can be replaced by changes in claimant approach or in expert approach. Most of us will have had experience of the difficulties of a claimant understanding an expert report or how to deal with changes in expert evidence or the complexity of expert evidence; that is why the intervening lawyer is so useful, not only to the claimant, but also the expert and the court process. It is difficult to see how that could be altered if the claimant no longer has or can afford a solicitor. Yet at the time, one wants to try and assure that claimants get proper legal advice and representation.
Eighteen months since publishing your last book ‘Legal Mind’, has awareness of fraud detection and evidential reliability improved?
Yes, I think we see a greater level of discussions in the media and legal circles, both claimant and insurer, about the pitfalls of single-source evidence. The need for back up evidence from medical records, occupational records, surveillance data and in recent years, digital/social media all helps. Deception detection still remains the ‘holy grail’ of legal and forensic professionals – greater innovation and research in this area is better than a blanket belief in a culture of ‘spurious whiplash claims’. I am liaising with colleagues at Portsmouth University over multi-source detection techniques. The research shows that it is extremely difficult to detect, in a reliable way, when someone is not telling the truth. At the moment, one of the key elements is the behavioural characteristics you can pick up in interviews. The second issue is multi-source information; in other words, the medico legal trail allows for a number of different sources and time occasions for getting information, for example, the first interview, the second interview, the defendant interview, the GP records, the hospital records, the occupational records and then finally surveillance data, if it exists. Trying to sensibly and logically marry up the consistency of those different sources over a period of a year, or however long the claim takes to get to fruition, is difficult. Therefore, one is trying to understand more and more about whether inconsistencies that occur are meaningful, predictive of unreliability or untruthfulness, or are just random.
A typical difficult variable to pick up on is the reliability of what the claimant is saying. If the claimant says, “I’ve not been able to sleep for three months”, clearly that is an unlikely circumstance. But the claimant is trying to explain how bad or how emotionally distressed they feel, rather than trying to mislead.
Can psychology affect dispute resolution, and especially joint statement and alternative dispute resolution?
The joint statement process is unique to English civil law and is something to be proud of, and positive and effective debate between experts on an impartial basis is crucial. Adopting ‘win-win’ techniques and conflict resolution psychology is important as and when ADR gets used more often. Both the joint statement and ADR processes rest on legal professionals using effective communication skills, including the ability to understand what the other person means and what the conflict is. The original enthusiasm about ADR hasn’t yet been borne out in practice. The number of experts that say they would be involved in ADR is still fairly small; hopefully it is something that will over time be looked at as an alternative to the current process. The joint statement process has taken time to get bedded down and is now a very valuable, innovative and unique part of UK law and practice. It’s something that is not seen in other jurisdictions around the world. If that can be integrated into an ADR approach, then I think there are going to be more and more case studies showing that this has been very helpful.
Can claims ‘product’ and claims ‘service’ co-exist on an equal footing?
They are inextricable, aren’t they? Excellent customer service is crucial for both law firms and insurers to ensure their customers have appropriate information, understand the issues and feel we are responsive to them. The new UK Customer Service Excellence Awards and recent editorials on Total Quality successfully highlight this. There is more interest in the culture of customer-supplier chains within legal services; a lawyer supplies their services to the claimant but also requires certain things back from the claimant. The customersupplier chain is really important to all the people involved in civil litigation. That is gradually getting greater understanding so that when an expert speaks to an instructing lawyer, both parties have to understand the push and the pull on them in terms of providing their high quality service. It is a reasonably complex situation, but it is something that lawyers and experts are becoming more aware and conscious of.
Can digital innovation give claimants a better service?
As in other areas of our lives, well thought out and focused digital innovation leads to better service and outcomes, whether it is in prompt access to information, access to treatment timetabling or transmission of key communications. All of these digital innovations are helping to make services more robust and customer-focused.
How will your collaboration as a visiting Professor with the Birmingham City University improve professional liaison between judiciary, lawyers and experts?
BCU leads the way in inspirational research activity, excellent law teaching and placing quality and multidisciplinary collaboration at the forefront of their links with academics and students in the School of Law, and in addition, with the community. My role will encourage greater collaboration with the judiciary, will create greater awareness of their decisionmaking processes, a greater understanding by lawyers and academics about how psychological processes impinge on their everyday processes and relationships, and how experts of all disciplines adopt excellent customer service. I am grateful for this opportunity to help professionals become more ‘outward looking’. n
How can collaboration with psychologists be better embraced by legal professionals in order to generate better outcomes for firms and for claimants?
Involvement of psychologists, not only in their expert reporting role, but in an advisory law firm/insurer context is under discussion and should allow for a greater understanding of communication, dispute resolution and expert-lawyerclaimant/defendant issues. For example, the attachment of an advisory psychologist to a law firm helps to raise understanding of complex communications and motivations and how best to resolve differences, as well as increasing a lawyer’s own understanding of psychological principles. I have been involved in personal injury cases for 45 years and certainly there has been a change. There is a greater understanding of psychological principles, however, the continuing professional development training can be enhanced to not necessarily look at complex psychological principles, but fairly straightforward psychological principles that lawyers already know a little bit about.
Is locality and accessibility of expert skills important to modern clients?
Yes, crucial I think. If you needed to be seen for a medico legal report, you would want to see a good expert as near to home or work as possible with minimal disruption. This would be equally true if you were very disabled and unable to travel or were managing to hold your job down and concerned about taking time off.
Professor Hugh Koch
Professor Hugh Koch is a clinical psychologist based in Cheltenham. He runs a firm of 60 psychologists providing reports for civil compensation cases throughout the UK. He has recently been appointed a visiting professor in Psychology and Law to the School of Law, Birmingham City University (BCU). His role is to collaborate with academics and students in the School of Law to generate discussion and research about the intersection of law and psychology. This is the first interdisciplinary visiting professor appointment of this kind for the School of Law.
Modern Law Supplement 15
Greg Cox Greg Cox, Simpson Millar, talks about how his firm is adapting ready for a post-reforms world and what challenges he predicts will surface.
We see the reforms as accelerating the inevitable consolidation of the personal injury market into a handful of larger firms plus small niche practices
What effect do you predict personal injury reforms will have on your firm?
There are a few parts to this answer. First, Simpson Millar is already a diverse firm and offers a wide range of different â€˜consumerâ€™ legal services. As such, its portfolio of work is mixed and has a blend of different consumer services in addition to PI, including employment, family, private client services and residential conveyancing. Secondly, much of the personal injury work we do is unaffected by the reforms now signalled in the bill. Finally, and most importantly, we see the reforms as accelerating the inevitable consolidation of the personal injury
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market into a handful of larger firms plus small niche practices. We have recently taken tough action to reshape Simpson Millar. This has ensured that we are ready for the changes and, with new ownership, we are one of the few law firms in the sector with strong capital backing. We see Simpson Millar as a driving force behind that consolidation through acquisition and we welcome approaches from firms.
How is the firm adapting for a post-reforms world in the lead up to their implementation?
Simpson Millarâ€™s current management team has a depth and breadth of experience in responding to reform and change in the legal sector. For the categories of work most affected, we will respond through a combination of adapting our offering to
clients, tailoring our processes to improve efficiency and investing in technology to provide new services for our clients that will include the way in which they can access legal services.
How could the reforms affect your clients?
We should make no mistake about it – the stated effect of the reforms is to significantly reduce the ability of clients who have suffered a relatively modest whiplash claim to access justice. The suggested rationale for this is on public policy grounds. Although we will have to wait for the statutory instrument to be published, the previously discussed levels of damages for this cohort of claims will significantly reduce the damages available to these clients. It will also reduce the ability of clients who have suffered a modest soft tissue injury in a road traffic accident to secure representation. At the other end of the spectrum, the changes to the discount rate, which have been well heralded, will significantly affect those clients with life changing injuries. The rate only changed after years of delay and a legal challenge. There is a real risk that the changes to the rate may reduce full compensation for these claims and/or force claimants to speculate on how their damages are invested with the associated risks.
How will firms need to adapt in order to attract new clients following the implementation of the reforms?
Each firm will have to take its own approach but it is inevitable that firms will have to reduce cost per acquisition, which is currently a feature in the market, firms will have to reduce and reduce significantly. Owning routes to market is vital and Simpson Millar is building on our direct to market capability and online presence. In addition, and, as mentioned in an earlier answer, we will be providing a technology solution which enables clients to access legal services in a variety of ways, most suited to their own specific needs.
What effect could the reforms have on the public’s perception of personal injury solicitors?
There are lots of myths peddled (usually by the insurance sector) about compensation culture and personal injury lawyers. Anyone who has first-hand experience of being injured and helped by a good personal injury solicitor
will have a favourable perception of a personal injury lawyer. The real question for the public here is whether the insurers and government will deliver the promised reductions in insurance premiums at a level which justifies the removal of compensation from a cohort of injured people.
What points/topics within the reforms are receiving the most focus?
At the present time, the reforms to the low value RTA cases by reducing compensation and increasing the small claims limit are receiving most focus. The changes to the discount rate should, perhaps, be in sharper focus as the principle of full compensation for seriously life changing injuries is being eroded.
What lessons can be learnt from the processes other sectors and/ or countries use and can these be applied to the UK personal injury market?
The main lesson is that these reforms always have unintended consequences. It may be, in this instance that we see a rise in unrepresented or claimants represented by Mackenzie friends or CMCs, bringing with it, in some instances, enhanced risks to the claimants and pressures on the legal system.
Are there any other ways that firms could streamline their processes and workflows in order to increase productivity?
The reforms at the lower damages bracket drive a need to reduce the costs of production whilst maintaining quality at the key stages. Firms will look to streamline processes in different ways or may look to assist claimants to bring their own claims or run parts.
Are there any new technologies that could be utilised to increase profitability of the firm during this time of change? And what advantages does modern technology bring to PI firms?
Effective use of technology has a key part to play in personal injury firms and indeed in all law firms, but it is important not to lose focus on the central role played by the people in law firms. We see technology merely as an enhancement to the very valuable attributes that good people bring to the delivery of legal services; not as a replacement for those people. When talking technology, it is tempting to reference whatever terms are currently vogue – AI and chatbots, for example. However, while these concepts do have relevance to the legal sector, we believe we can get far more from the technology that has been available for some time. The current focus of our attention might then be divided into two parts: firstly, anything that improves the communication and general experience for our clients, and secondly, technology that facilitates not only improved productivity but also collaboration between people involved in cases. This approach is key to improving the ability of our people to meet our clients’ requirements for legal services, generally in a way which is valued and is cost effective.
What opportunities do you predict in the reformed system for the personal injury sector, and how will your firm make the most of these opportunities?
I have referred to the opportunities brought by consolidation and scale above. We will certainly be seeking to add scale by acquiring or taking over books of work from firms who might not have the resources or scale to continue in the sector. History also shows us that the ‘devil in the detail’ of the regulations and rules of court gives rise to opportunities and will shape the response by firms and innovation. As with the previous reforms, there will also be litigation to clarify and define the precise interpretation, scope and boundaries of the reforms. Simpson Millar lawyers have always been at the forefront of advising on and acting in this litigation, particularly in the Higher Courts. n Greg Cox, Managing Partner, Simpson Millar.
The main lesson is that these reforms always have unintended consequences Modern Law Supplement 17
PI Conference 2018: views from industry leaders Clerksroom and Barrister-Direct Limited jointly hosted their annual conference on 2nd March 2018 in Manchester. The event that was headline sponsored by BMS funding attracted a number of eminent QC speakers and seminars from some of the leaders in the industry. Despite the heavy snow, we were delighted so many delegates could make the journey up to Manchester and help us to make the event a great success. The conference explored some of the upcoming changes to the industry including more fixed costs changes, the small claim track and the 2017 Jackson report and explored the challenges faced by the industry in 2019 and beyond. Simon Dawson from headline sponsor, BMS Funding, gave a great insight into a new funding model that allows law firms access to case acquisition funding including an interest free period. Simon discussed some of the challenges to the solicitor using a traditional funding model and how BMS can help fund cases in a difficult marketplace.
The conference featured updates from a number of senior silks. PJ Kirby QC from Hardwicke Chambers gave an interesting seminar on costs post Jackson, a general update on costs budgets and, notably for practitioners, an insight into electronic bills of costs to arrive in April 2018. Gerard McDermott QC provided an insightful update from the perspective of a serious injury practitioner and emphasised how vital, even in fixed costs, a specialist barrister is on high value personal injury cases for independent advice at the highest level. Perhaps one of the most informative talks came from Steve Din of Doorway Capital, who gave the conference an insight into their acquisition of firms with the PI sector and opined that the market will sink to just a dozen firms. Steve talked about Doorway's ambition to acquire more firms in the sector and a great curve of opportunity created by LASPO and the fixed costs changes. One certainly awaits the outcome of these new models with great interest. Andrew Ritchie QC provided a very interesting seminar on behalf of PIcArbs and invited solicitors to dump the courts and, instead, arbitrate. Andrew talked with great clarity and conviction about the benefits of arbitration in the PI sector and suggested that arbitration was more effective and efficient. This talk struck a chord with many delegates and really sparked some debate as to whether this model could succeed in the PI sector. Andrew Twambley updated the conference on the work Access to Justice has been diligently undertaking to push the Government
Andrew Twambley strongly suggested that the outcome of LASPO should be awaited before a final decision by the Government is taken on the increases in the small claims track
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We were delighted so many delegates could make the journey up to Manchester and help us to make the event a great success on the PI reforms. Andrew opined that the main beneficiaries will be the insurers and their shareholders. Andrew strongly suggested that the outcome of LASPO should be awaited before a final decision by the Government is taken on the increases in the small claims track. Donna Scully provided an update on the Fraud Task force and emphasised that fraud was a real issue not to be ignored and that, in her view, CMCs were a threat to solicitors under the Financial and Claims bill. Ian Skeate of Barrister-Direct (a Bar Standards Board regulated entity) provided a great update of how a BSB ABS can have benefits for clients in this new marketplace and the benefits of a BSB ABS allowing for innovation. Ian emphasised the benefits of low PII premiums and the Bar being able to work with external investors could be a recipe for success. Paul Bennett of Aaron and Partners gave the conference an insight into upcoming FCA regulation for CMCs, how they will be impacted by CMC regulation in 2019 and what delegates can do to prepare. Martin Davies, Chambers Director at Clerksroom, talked about the importance of counsel, clerks and clients building strong relationships and how that culture of collaboration has been cultivated within Clerksroom. Kain Knight included a written presentation as to one of the most controversial issues in the industry at present: clients suing solicitors under the Solicitors Act 1974 and how this could have an impact on the PI sector.
Finally, Dez Derry of MMA Digital provided an insight into the CMC marketplace and how the cost of Pay Per Click in PI and clinical negligence has increased due to competition in the sector. He explained what the digital marketing agencies are doing to tackle this. As the Conference Chair, I was delighted to host the event. The delegates I spoke to reported that they took away an overview of the challenges to the marketplace in 2018 onwards and how the LASPO changes and Jackson changes are really affecting all sides of the industry. I learned that thereâ€™s some great innovation in our industry surrounding potential arbitration in PI and the development of new models such as BSB ABSs, that thereâ€™s a strong appetite by litigation funders to acquire law firms and how the traditional role of the CMC supplying work to the solicitor is really going to change with the Financial and Claims Bill. Clerksroom and Barrister-Direct intend to run a London event in October 2018 to follow up on the success of the Manchester conference. We hope you see you there! n Andrew Mckie, is Head of Personal Injury at Clerksroom Barristers and a Director at Barrister-Direct Limited.
Modern Law Supplement 19
Unravelling the Ogden Discount Rate
Mark Holt, Frenkel Topping, outlines the tumultuous recent history of the Ogden Discount Rate for calculating compensation payments and the effect this has had on personal injury solicitors and their injured clients. Last year the Government altered the Ogden Discount Rate for the first time in sixteen years, which has had a dramatic and confusing effect on the legal market, surrounding compensation payments for personal injury. The Ogden Discount Rate is used to calculate the size of the lump sum damages payments in a personal injury claim. It is an assumption on the amount of interest or investment return that can be expected on money that is invested. Essentially, the higher the discount rate, the lower the lump sum and vice versa. When someone suffers a catastrophic injury, whether in a road accident, through medical negligence or at work, they are entitled to damages to help them adapt to their new life. Often, they are left wheelchair bound or with a severe brain injury and require ongoing care and support to ensure they are able to continue to rebuild their life. These damages can be used to pay for specialist accommodation, ongoing rehabilitation or medical care and any additional support required to ensure the injured person is able to live as comfortable a life as possible. Such compensation can be issued either as a lump sum or as periodical payments â€“ an annual amount paid to the claimant for the rest of their lives. Everyone agrees that the injured person should be fairly compensated, but by which means continues to cause much debate. What is
In some cases, compensation payouts have been blown through poor judgement or bad financial planning
clear though is that the Ogden rate can make a huge difference to the amount of compensation that an injured person receives, and to the way that money is used. In my experience, defendants and their insurers have previously fought vigorously to settle larger multi-million pound claims with a lump sum rather than have to give periodical payments. They know this payment treatment pushes all the financial risk onto the claimant to invest for their own future, ending their liability and making it entirely the claimantâ€™s responsibility to ensure they have enough money in the pot to pay for their ongoing needs, such as regular care or changes to accommodation until they die.
Features However, this can put extreme pressure, stress or result in bad financial decisions by the injured person or their family. In some cases, compensation payouts have been blown through poor judgement or bad financial planning. In contrast, specialist financial advisers, like myself at Frenkel Topping, recognise that periodical payments are often the best option for our very vulnerable clients. Having a fixed annual payment, linked to an appropriate index, free of taxation, completely negates any risk and allays client fears that the ‘pot’ could run dry, leaving them dependent on the state or relatives. Legal practitioners representing clients who’ve suffered serious negligence or personal injury naturally feel an enormous responsibility to secure the maximum damages and optimum investment for them at a time when they are extremely vulnerable. For years, however, it was recognised that the discount rate was too high because of the declining returns of ILGs (Index Linked Government Stock) and the unrealistic assumption that claimants would invest in them alone. Although the industry anticipated a reduction in the discount rate, when Liz Truss, then Lord Chancellor, slashed it from 2.5% to -0.75% last February. This caused an earthquake in the sector, which is still being felt over a year on. Impact of the change The change drove up compensation payments overnight. For example, whereas a 25-year-old male left with permanent disability and requiring £50,000 annual care costs would expect a £1.5m lump sum under the 2.5% discount, that figure would soar to just under £4m under the new -0.75% discount rate.
Insurers and their lawyers have been dragging their feet when it comes to settling claims in the hope that the discount rate will go up and they will be liable for a much smaller amount of damages is settled, or that less generous settlements are proposed than is currently required. The Government has suggested the discount rate could be set against a basket of relatively low risk investments, instead of ILGs. But the idea that one investment basket would be suitable for all claimants is likely to provide ongoing debate.
While many believe clients had been undercompensated for too long and this change was overdue, the insurance industry was appalled. It has since put pressure on the Government, who have undertaken a review, which has left the industry in limbo.
After all, a 75-year-old man with a 10-year life expectancy naturally won’t take the same risks with his money as a professional deputy looking after the future of a 10-year-old likely to live for 60 years or more.
Aside from making lump sums more attractive and periodical payments less attractive for claimants, the uncertainty around another possible rate change is causing chaos. In my opinion it could be more than twelve months before a definitive framework is finalised, although indications are that the rate could be set somewhere between 0 and 1%.
Civil Liability Bill However, steps have now been taken to resolve the debate surrounding the discount rate with the Civil Liability Bill having reached the report stage within the House of Lords.
In the meantime, insurers and their lawyers have been dragging their feet when it comes to settling claims in the hope that the discount rate will go up and they will be liable for a much smaller amount of damages before agreement is reached or cases get to court. This hiatus is leaving many injured people in limbo and unable to get on with rebuilding their lives, as many insurers are slowing down cases, awaiting the outcome of the Ogden rate discussion. It could be argued, this is because there is a hope that a new system will be in place by the time the case
Civil Liability Bill Hansard publishes the full debate within the House of Lords on the Civil Liability Bill (CLB) at report stage dated 12/06/2018. Once the Civil Liability Bill has progressed through the House of Lords, a third reading is due on 26/06/2018, it will progress through the various stages of the House of Commons before gaining Royal Assent. Frenkel Topping At Frenkel Topping we offer expert advice to personal injury lawyers. I’m immensely proud that we are renowned not only for our knowledge of the sector, but more importantly for demonstrating a great deal of empathy and compassion to our clients who are often experiencing the worst time of their lives. Whatever happens, it is in the interest of everyone, but most importantly our clients who are trying to rebuild their lives after trauma, that the Government acts fast to find the right solution. n MARK HOLT, commercial director of Frenkel Topping, consults on the discount rate for APIL’s Ogden Working Party.
Modern Law Supplement 21
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The effect of the legal reforms on the expert witness process
Nik Ellis, Laird Assessors, explores the alternative realities of the expert witness process following the implementation of the reforms. Expert witnesses have been used by the personal injury industry for many years to provide independent justification of quantum, and in some cases to assist with liability or other arguments. In the case of road traffic accident reports, the expert is there to control the repair costs and repair process of the vehicle, or in the case of a total loss, the pre-accident value. They will also record salient details of the accident, which often assist with liability such as impact direction, magnitude, positioning, dimensional measurements, paint transfer, etc. If there is no solicitor controlling the case and it is up to a litigant in person (LIP) to bring his claim, one option they often take is simply to ask a bodyshop to provide an estimate. A motor engineer would normally audit such an estimate and negotiate with the garage to police the cost and methodology of the repairs. Without such intervention, the bodyshop is uncontrolled. Worse still, if aware that their estimates are unlikely to be challenged, then the bodyshop’s quotes may become indulgent and average repair costs can rocket. Alternatively, some insurers will attempt to steer the LIP into one of their ‘approved’ bodyshops. We would not want to tarnish all insurers and repairs with the same brush, but typically approval is garnered by offering cheap repair rates in return for volume; not a direction synonymous with quality. Being forced to work to average repair costs or exceptionally cheaply can often result in corners being cut. Sub-standard repairs can lead to diminution in value, refusal by the dealership to take in a subsequent part exchange and in the worst case scenarios, dangerous repairs. We have seen some terrible repairs, which would not protect the occupants during a further impact to anywhere near where the manufacturer’s intended standard; a real threat to human life simply to ensure increased profits for the insurer. Experts are likely to see instructions swapping from legal entities to management companies. The expert’s legal responsibilities are different here, plus the focus tends to be on quantum rather than liability issues together with a rapid turnaround in order to mitigate hire car, storage or loss of use charges. Being less regulated than solicitors, AMCs vary widely in quality. Most that we deal with are outstanding, as they tend to operate as a business with a keen eye on customer service, an efficient supply chain and an evolutionary attitude towards technology.
The sector (both legal and AMCs) has benefited hugely from the technology available as we race into the fourth industrial revolution. So many processes have become automated, and with APIs becoming mainstream our systems are able to talk to each other with immediate and complete precision, 24/7. In our case, we use API to collect vehicle data (DVLA, MotorCheck), estimating and valuation data (Audatex, Glass’s), accountancy (Sage, Xero, RBS, Barclays) and talk effectively with our clients (via Proclaim and most other case management systems). We can teach our systems what we do and how we want it done, so it ‘learns’, augmenting our speed and accuracy; machine learning being a good step towards AI. With autonomous and connected cars now amongst us, our focus is understanding how this affects us from a technological view point. We are keeping a close eye on how legislation surrounding these vehicles will operate; we’re delighted and proud that the UK’s government are so keen to be at the forefront of this new vehicular era and hope that they manage to devise some fair and unrestrictive regulation. Insurance will be redefined by the autonomy. We have already seen some vehicle manufacturers trialling self-insurance in much the same way that servicing plans and finance are predominantly dealer controlled. This double edged sword also tackles the clash between manufacturers wanting to repair vehicles with their approved methods and genuine parts and insurers whose priorities tend to revolve around shareholder profits. One thing is for certain: our children’s transport, insurance and legal system will look very different to the one we have grown up with. Let’s hope it is for the better. n Nik Ellis is Managing Direct of Laird Assessors
If aware that their estimates are unlikely to be challenged, then the bodyshop’s quotes may become indulgent and average repair costs can rocket Modern Law Supplement 23
What happens to the Personal Injury Lawyer?
Edna Hammami, Legit Claims, discusses the effect of the reforms on personal injury lawyers and how insurers and the PI sector are starting to clash.
An estimated 1.3 Million British workers have suffered a personal injury between 2016/2017. With a focus on motorists, insurance companies have pointed out that PI claims for whiplash alone have increased by as much as 780,000 claims in the same period. Combined with the Government’s acceptance earlier this year of the ABI’s proposal to fund and build a new litigation portal, it appears the insurers have taken the personal injury sector by the collar. And this is not the first time that the solicitors and the insurance industry have clashed. Reports by the Insurance Times1 stated that many solicitors and law firms in the UK are not impressed with this decision as they do not consider insurers' involvement as impartial. Access to Justice’s Andrew Twambley exclaimed that “The whole idea behind the so-called reforms is to prevent/discourage claims, in order to save the insurers money so that they can pay dividends.” The effect on personal injury lawyers and the risk of job cuts The main motivator behind personal injury claims reforms introduced with the Civil Liability Bill in March this year centralises around whiplash-related proposals. Objectives are set out to address the high number of whiplash claims, coupled with the need to reduce the alarming high volume of fraudulent claims in the UK. But it does not appear that this issue is so cut and dry. The Law Society, MASS, and other law firms have cited concerns about its implementation. MASS chair Simon Stanfield said to Legalfutures2: “MASS shall continue to fight the proposed changes to RTA whiplash claims at every opportunity”. Big questions need to be answered about how the state proposes to implement, operate and mitigate the reforms' possible ruinous consequences. The reforms are expected to affect 96% of all whiplash claims. Goals are aimed at simplifying personal injury claims procedures, whilst simultaneously adjusting the settlement rates. Two small claims thresholds have been proposed, thus raising the small claims limit for RTA to £5,000, and all other personal injury to £2,000. According to The Law Society’s Gazette3, The Law Society president Joe Egan stated that “These changes will mean people injured through no fault of their own will struggle to get justice. The Law Society does not accept that these limits are reasonable and we continue to oppose these reforms.” It is evident that many solicitors are scrambling to get a foothold after an impact assessment4 was published by the MoJ revealing potential losses of up to £81m per annum. It is estimated that PI practitioners stand to lose around £32m per year from claims that will no longer proceed, with a further reduction in income totalling £49m from claims where legal representation will no longer be allowed.
Is the Government doing the right thing? These reforms do not affect solicitors and law firms alone. The overall goal of the new framework is to deliver a system that is fair to customers, claimants as well as taxpayers. A solution is to be found that will ensure the people of England and Wales receive fair compensation without excess costs to the system. It is estimated that motorists can look forward to a saving of up to as much as £35 per year on their insurance premiums, while claimants can receive compensation in full. Furthermore, the hope is that the small claims court would be relieved of its burden as more claims will proceed without lawyers. In conclusion, these reforms have certainly come under mass scrutiny form every angle, and clearly it is going to take time to see how these new implementations materialise. It is believed that 85% of the obvious benefit to the insurance industry will be passed on to the customer. In fact, 26 insurance companies have signed a letter to the Lord Chancellor, David Gauke, promising to pass on full savings in lower motor premiums5. n Edna Hammami is Director and Co-founder of Legit Claims. 1 Source: https://www.insurancetimes.co.uk/lawyers-outraged-as-abi-givengo-ahead-to-fund-pi-gateway/1426399.article?adredir=1 2 Source: https://www.legalfutures.co.uk/latest-news/countdown-beginswhiplash-reforms-introduced-april-2019 3 Source: https://www.lawgazette.co.uk/news/officials-confirm-april-2019for-rta-claim-reforms-/5064777.article 4 Source: https://www.gov.uk/government/publications/civil-liability-bill 5 Source: https://www.insurancetimes.co.uk/insurers-pledge-to-pass-onwhiplash-savings/1426668.article
It appears the insurers have taken the personal injury sector by the collar. And this is not the first time that the solicitors and the insurance industry have clashed Modern Law Supplement 25
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A lot to lose
James Reilly, Ralli Injury Lawyers, discusses the position of future claimants following the proposed reforms.
Access to legal services, once considered the “4th Pillar” of the Welfare Estate when the Legal Aid & Advice Act was enacted in 1949, has steadily been eroded over the last decade. Until 2013, for claimants within personal injury claims, there was an expectation of receiving full compensation. This was partially eroded in 2013 with the injured individual now being expected to pay a percentage from their damages towards legal costs. The present reforms are even more draconian but should be seen against that back drop to highlight that instead of society shouldering the responsibility of funding representation for most personal injury claims, the burden will be transferred to the injured individual. This is a departure from the aims of the 1949 Act to provide legal aid and access to legal redress for all. The proposed reforms would introduce a damages tariff for road traffic accident claims and raise the small claims limit to £5000, a 500% increase on the present limit of £1,000 for personal injury claims. The tariff will compensate soft tissue injuries (however that is defined) at a significantly reduced rate. Under the scheme, a six month neck injury would receive up to £450, 25% of the compensation for the same injury. These would be small claims and there would be no right to recover anything towards legal advice. The government accepts that not all claimants understand the litigation process but ignored this on the basis of the vast support available. Whatever anyone’s view on the reforms, it is nonsensical and disingenuous to suggest that there is free professional help and support available. Litigants in person may be loosely assisted once within the court process, but it is a requirement of the Civil Procedure Rules to try and resolve litigation before proceedings. There is currently no available help and support to users of the portal. Rather bizarrely, the Government indicated that McKenzie Friends could be considered, which seemed to entirely ignore the misgivings that have been raised against unregulated and unscrupulous individuals representing and advising the general public.
The reality is that in the vast majority of road traffic claims that claimants will either not bother, represent themselves or pay. Many claimants will be extremely susceptible to being induced to under settlement of significant claims without appreciating the implications of full and final settlement. The very modest level of damages proposed is such that it is inconceivable that lawyers will be undertaking this type of work and it will be done by unregulated claims management companies with claimants paying a significant percentage of damages towards costs. The public will not enjoy the same quality and, ultimately, protection of legal representation. Individuals and companies who flagrantly ignore GDPR regulation and participate in cold calling will be only too happy to fill the void. The only touted benefit to the general public is the reduction in premiums and that it will reduce fraud. It is now readily accepted by all, including the insurers, that there will be virtually no reductions in premiums and it is disingenuous of the Government, which has doubled tax levied on all insurance within four years, to suggest that these measures would have any effect on premiums. The Government consultation papers suggested that it is commonplace for victims to exaggerate their injury or to be financially induced into making a claim for what they deem a trivial injury. It is hard to see that removing regulated representation will prevent committed fraudsters from persisting and if anything these measures will make it easier. The reality for future claimants is that they will be unaware that their rights are being removed as the general public are ignorant of the reforms or at best apathetic. Unfortunately legal services are a distress purchase and the reality will only materialise once they seek and expect what has been lost. n James Reilly is a Partner, Personal Injury at Ralli Injury Lawyers
The reality is that in the vast majority of road traffic claims that claimants will either not bother, represent themselves or pay Modern Law Supplement 27
Joe Pendle Joe Pendle, Verisk Analytics, told Modern Law about the scope that exists for collaboration between the parties involved in a claim and how technology can enable this.
Where are the biggest inefficiencies within law firms that you have identified, and what steps can be taken to address these?
It is more in the process rather than law firms themselves. In third party claims against the insurers, we have the MoJ Portal, which is like a big document exchange, and that works well when cases stay inside the portal. However, when they fall out of it we’re back to paper, or at best e-mail, because there is no real platform for conducting non-MoJ claims. The reforms that are coming in are going to put some claims out of the small claims limit, so there may be changes to the portal, or there might be more claims outside of the portal. Both insurance companies and lawyers need to look for a platform together to transact a nonMoJ claim. We call the MoJ’s platform a portal, but it never really was, it was just document exchange. We need a system for non-MoJ claims that will work like that and helps both ends of the claims, not just the lawyers or just the insurers.
Do similar inefficiencies exist within insurance businesses, and what do you identify as the main driver of any parallels?
They are certainly there in the non-MoJ cases. One thing that the MoJ does for the insurers is provide a countdown; they have to respond on liability within fifteen days from motor or 30 days from liability or 40 days if it is MIB. These timelines don’t exist for insurers if it is a non-MoJ claim, so these claims are still forming a backlog. So you might develop a new platform, but it would be good for it to have similar standards. That could work for solicitors too; you’re transacting a claim to get a response within fourteen days, and if both sides sign up for that it would save a lot of time and effort when you are transacting electronically. I would look for a set of industry agreed SLAs that would get insurers to respond quickly to non-MoJ claims.
You could automate claims settlements, and the technology would bring huge savings to both lawyers and insurers. Not everyone subscribes to that view though Modern Law Supplement 29
Whether you’re a lawyer or an insurer, after the reforms businesses are going to look to automate settlements in personal injury claims
What is the role of technology in improving efficiency and accuracy within the claims sector, and what technologies are currently available that can assist claims professionals with this?
There are a few things available; there is obviously the portal that is available already, and for nonMoJ claims they need to improve that transaction, but there are things that can take friction out of the system, like liability assessments. There is a company who we work with and know very well called Validus, and they have a system that transacts business for insurers for the recovery of damages, but something like that in the PI world would be good because it allows all parties in a claim to agree. Instead of having to go to court to resolve disputes or for arbitration, perhaps there is technology out there that can help lawyers and insurers resolve disputes. There’s PIcARBS, but it tends to only be used in the higher value cases. Something like that for lower value cases would speed up the claim.
How can businesses weigh up the costs against the benefits of new technology, particularly amid market challenges? It depends who you talk to. For us, technology will be the answer to everything.
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You could automate claims settlements, and the technology would bring huge savings to both lawyers and insurers. Not everyone subscribes to that view though, and many would argue that there has to be a sense of human intellect at the end of the process and that you can’t automate everything. If fraudsters thought that the insurers were automating the settlement of all of their claims coming in then they would target those insurers, so there would need to be a human element in there. You can get automation into your claims, and that is where we are heading. Whether you’re a lawyer or an insurer, after the reforms businesses are going to look to automate settlements in personal injury claims. If you automate 80%, then everybody saves money. That saves money for the solicitors who are going to get very low fees post reforms, insurers will be able to save on headcount in terms of the number of people handling the claims, but most importantly, it saves money for the people who have to insure their cars and have to pay premiums.
In what other ways can businesses across the claims sector achieve greater efficiency in the years to come? It is about collaboration. There is a little bit of this already between claimant lawyers and insurers through askCUE PI, but we could do better.
We could share intelligence so that the claims that can’t be automated and all of the claims that fall out of the portal systems get put into set forms, and that would be beneficial to everyone. It has been an adversarial system for a long time, and there are good reasons for that, but the adversarial aspects only need to be there in cases where there are real disputes and real issues – most of the time there aren’t any. We need to collaborate to settle those by using technology. n Joe Pendle is Managing Director of Verisk Analytics UK & EU.
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