17 January, 2011
Filed UnderLegal Costs
Take any controversial subject: the death penalty, abortion, legalising drugs, immigration, Marmite. Most people will have a view, one way or the other, on these topics. When presented with new arguments or studies supporting or opposing these pre-held beliefs, do we objectively weigh the strengths or weaknesses of them? Of course not. Those that support our own views are considered “more convincing” or “better conducted”. Those that oppose our own views are considered “weak”, “ill-conceived” or have “obvious flaws”.
Arguments or studies in support of our beliefs simply strengthen our convictions. Those that are against our beliefs are simply ignored. (See chapter 11 of Irrationality.)
Lord Justice Jackson consulted extensively when writing his Review of Civil Litigation Costs. I don’t know what preconceptions he secretly brought to the process, but the response from the legal and insurance industries was entirely predictable. Defendants and insurers (with the exception of ATE insurers) are broadly behind the proposals and claimant representatives (solicitors, trade unions, claimant management firms, etc) are opposed. What a surprise.
We are now into a further period of consultation on implementation. Any guess as to what each side is going to say? I really can’t believe that the Ministry of Justice is going to take any notice of responses unless some hugely convincing statistical evidence is produced. There are some interesting alternatives/amendments contained within the consultation and it is obvious the MoJ has been advised by some individuals with a real understanding of the issues. However, I just can’t see that the consultation will sway the MoJ one way or the other. The arguments that will be presented in response to the consultation will not come from objective analysis of the merits but will be inspired by existing beliefs generated by self-interest.
As Lord Justice Jackson was reported as saying by Litigation Funding:
“the competing arguments, which I heard over the past ten months, are the same as the competing arguments which I heard last year”
And they are going to be trotted out again by the usual suspects.
The usual arguments have been too well rehearsed to be worth commenting on again, but over the next day or two I will mention some of the more novel ones.
Last year a letter was published in the Law Society Gazette from Rhonwen Barraclough. Among the various reasons put forward as to why the Jackson proposals were a bad thing was:
“There is also the prospect of losing even more high street practices, given the constant onslaught from professional indemnity insurance and farcical legal aid rates. Like it or not, personal injury is big business, with the majority of fee income going back into the economy in the form of taxes, VAT, wages and to other associated businesses. Has the practical impact of the reforms been considered in that context at all? Can the government really afford to lose the revenues generated by PI?”
A similar point was made by specialist costs counsel Christopher Perry on a LinkedIn discussion forum:
“I think there is little political currency especially in the present climate in abolishing the ATE market and costs shifting arrangements, collaterally putting many costs draftsman, claims handlers, intermediaries, etc, out of business. Joe public are likely to be more worried by news of jobs cuts rather that being concerned about the cost of their car insurance. Don't forget the IPT income received on ATE premiums.”
Now, it’s a fascinating question as to whether the income generated for the government by the claims industry (through taxes) outweighs the cost to government (through NHSLA expenditure, etc) and one that will no doubt be the one that ultimately decides whether Jackson is implemented. However, I can’t be the only one who feels a bit queasy about the idea that personal injury law should be influenced by how many lawyers’, and other hangers’ on, jobs it provides.