The defendant costs specialists

Why did APIL’s campaign fail?

By on Feb 27, 2017 | 1 comment

At the end of any unsuccessful campaign it is instructive to try to analysis why it went wrong.

Why did Labour lose the 2015 general election? Because people voted Tory as Labour was not left wing enough. Solution: elect a hard left leader with genuinely left wing policies and watch the voters come flooding back.

Why did Clinton lose the presidential election? Because most Americans are racists and were therefore naturally attracted to Trump’s bigoted anti-Muslim, anti-Mexican views. That’s why America will never have a black President.

Why did Remain lose the Brexit referendum? Even I struggle to advance a convincing explanation for that one. Nevertheless, there is a very interesting, if lengthy, blog from Dominic Cummings, previously Campaign Director of Vote Leave (the official Leave campaign group), exploring some possible reasons. I do not know whether any of his analysis is correct but he does highlight the very real danger of retrospectively trying to explain the cause of events:

“There are strong psychological pressures that lead people to create post facto stories that seem to add up to ‘I always said X and X happened.’ Even if people do not think this at the start they rapidly construct psychologically appealing stories that overwrite memories.”

One of the examples he gives from the referendum is:

“Month after month they [Remain campaigners] argued (including to us in private discussions) that they would win largely because they had the advantage of the status quo – an advantage proved in votes around the world over many years. They were right. That was a big advantage. It is much simpler to argue for the status quo than for a very complex change – that is exactly why most ‘change’ referendums lose, just as they briefed the media. Now they say ‘The EU is very complex, it requires a lot of information to explain it’ (Craig Oliver). Their claim that actually they had the ‘complex’ argument to make against our ‘simple lies’ is laughable for exactly the reasons they gave themselves before they came unstuck.”

I therefore wonder what post-campaign analysis is being undertaken, and what conclusions reached, by those who campaigned most strongly against any radical changes to the whiplash claims process.

The recent government announcement represents a devastating loss (although it could have been even worse) to the status quo campaigners.

A combination of increasing the small claims limit for RTA claims and introducing a very low tariff system for “whiplash” injuries will have a catastrophic impact on the RTA industry.

The damages figures are, depending on the injury duration:

0–3 months  – £225
4–6 months – £450
7–9 months  – £765
10–12 months – £1,190
13–15 months – £1,820
16–18 months – £2,660
19–24 months – £3,725

(For claims with an injury duration of 12 months or less, these represent reductions of between 62% and 87% on the amounts currently awarded for similar injuries.)

Commenting on these figures, Kerry Underwood writes:

“The effect of the tariff system, set out above, means that the general damages figure in soft tissue claims will never cross the £5,000.00 general damages threshold unless the injuries are very serious.

That being the case the overall claim needs to be above £10,000.00 – the general small claims limit – to escape the small claims limit and to be cost bearing.

For all intents and purposes all road traffic whiplash claims will be small claims.

Overall, as a percentage of the personal injury market, road traffic whiplash claims are thought to account for around 50%.

However the effect of the changes will still be to remove around half of all cases from being cost bearing.

That of itself would not, in my view, cause a significant problem as if there was still a reasonable amount of damages, but with a quicker and cheaper procedure, lawyers doing whiplash work could still make a decent living by charging the clients say 40%.

The real killer for personal injury lawyers is the tariff system in whiplash injuries.”

There has been some scaremongering to suggest that if solicitors withdraw from low-value RTA claims the gap will be filed by unscrupulous claim management companies. However, I am struggling to envisage any business model which would allow for a reasonable profit to be made (even by CMCs) where damages for whiplash claims with symptoms of under 12 months are £1,190 or less and the claims are not costs bearing. What % of damages could be taken that would enable a profit to be made but leave enough damages for the claimant to bother with a claim? (The one exception to this is if an AI system could be put together that would fully automate the claims process for claimants, without the need for any human intervention, in exchange for a small cut of the damages.)

Either way, massive jobs cuts will follow.

Now, I start from the self-evident truth that it is always a misfortune if someone losses their job, but it is a crying catastrophe if that job is mine.

Nevertheless, a campaign by me relying on how terrible it would be if I lost my own job is one that would be likely to receive only limited sympathy. The Association of Costs Lawyers has wisely always been very careful, when responding to consultations that clearly threaten Costs Lawyer jobs, to avoid raising job losses amongst its own member as a reason to oppose change.

With or without the benefit of hindsight, it therefore seems a mistake by campaigners to have put the risk of job losses (amongst those very same campaigners) into the mix when fighting against RTA claim reform. For example, Access to Justice tweeting:

“We prove that #PIReforms are putting 35,000 jobs at risk. MoJ must consider the DISASTROUS impact on jobs & rights”

It obviously does not help that lawyers are not universally popular. Most people want a buoyant housing market, but a concern for preserving the jobs of estate agents is not usually a driving factor behind that desire. Most people want a strong and stable financial sector, but a concern for preserving the jobs of City bankers is not usually a driving factor behind that desire.

Potential reductions in work volumes will not just impact lawyers but will also massively reduce the demand for medical reports. Perhaps the government thought that GPs and orthopeadic surgeons might be able to find something else to do, of some equal value to society, if they were freed from the 100,000s of hours each year writing medical reports for low-value RTA claims. I cannot think of anything off the top of my head, but the possibility perhaps exists.

The issue of potential job losses as a result of changes to the RTA claims process is something on a non-issue in any event. As Kerry Underwood has previously observed, the introduction of driverless cars will see much of the personal injury claims sector disappear regardless of any changes to the RTA claims process. The whiplash reforms will simply accelerate this process by a few years. Those working in RTA claims should already have an exit strategy in place.

The other rather obvious mistake made by campaigners has been the relentless drive, led by the Association of Personal Injury Lawyers, to argue that whiplash claims have been in rapid decline in recent years and this is evidence there is no problem that needs fixing. Regular readers may have become rather tired of my repeated suggestions that this was complete twaddle. The apparent falls in “whiplash” claims were almost certainly no more than relabelling identical types of injury. Having looked at the issue, big surprise, the government concludes:

“Many respondents from the claimant lawyer community have indicated their belief that the numbers of whiplash claims registered with the CRU are decreasing. However, further study of the CRU statistics suggests this is not the case and that differences in claims labelling may be behind this belief. When soft tissue injury claims labelled as ‘neck’ and ‘back’ are considered together with those labelled as ‘whiplash’ the figure increases significantly. The number of such claims has remained steady over the last three years at around 680,000 claims, which is around 90% of all RTA related personal injury claims made.”

Again, without trying to use the benefit of hindsight, it seems a fundamental flaw to a campaign to use figures that are plainly wrong, you know are wrong and everyone else knows are wrong.

“£350 million a week extra for the NHS if we leave the EU”. Nobody would believe that.

As Dominic Cummings observes, sometimes the outcome is certain from the start, such as Reagan’s re-election campaign in 1984 or Blair’s re-election campaign in 2001, and the campaign itself does not make any difference to the eventual outcome. I suspect that the anti-whiplash reform campaign broadly fell into this category. The point had been reached when the government was happy to kill off large parts of the claims industry. A popular theory for this is that the wicked Tory government is happy to remove the rights of injured people to claim compensation and to destroy thousands of jobs just so as to line the pockets of greedy insurance companies. Possibly. I would suggest there are two other possible causes.

Firstly, this may be a case of the chickens coming home to roost. The worst excesses of the claims industry over the years has led to the situation where a government can kill a large part of the industry and know no tears will be shed by the larger public. Examples include, and feel free to add you own:

• Dishonest and inflated claims for legal costs.
• The scandals that were Claims Direct, The Accident Group, etc, etc.
• Solicitors happily paying unlawful referral fees (that everyone knew were unlawful) to those same unscrupulous claims management companies.
• Dishonest and inflated claims for legal costs.
• Solicitors setting up their own medical agencies to provide “independent” medical reports and taking a slice of the pie of the medical fee.
• Too clever by half ATE insurance providers introducing deferred, self-insuring, ring-fenced policies, meaning the client had no interest whatsoever in the price. (A classic example of killing the goose that laid the golden egg).
• Solicitors taking undeclared commission for selling the same ingenious ATE policies.
• Endless cold-calling by claims management firms for claims that then made their way into the hands of solicitors who were less than scrupulous as to how these claims had been generated.
• Dodgy claims against the military over Iraq abuse allegations.
• Dishonest and inflated claims for legal costs. (Have I done that one already?)

(The real tragedy is that personal injury claims were traditionally undertaken by largely descent, hard-working lawyers able to make a reasonable living. The spivs were then allowed to take control and have brought everyone else down with them.)

Secondly, even with the greater costs control introduced in recent years by fixed fees, the overall cost of the system (once medical fees, court fees, defendant costs, etc are added) is still enormous to provide a relatively modest level of damages per claim. “General damages” for whiplash is, in any event, an odd concept of trying to compensate in monetary terms for an entirely non-monetary “loss” (ie pain).

Although it no doubt appears to lawyers working in the industry to be a self-evident good to society (to compensate the injured for the wrong-doing of others), it is difficult to imagine that, starting from scratch (and knowing what it would turn into), a society would ever consider creating such a claims system afresh. Having, inherited a broken system, it now looks more attractive to kill it off rather than attempt further reform.

This was, perhaps, a campaign that was always going to be lost.

    1 Comment

  1. It seems that you are having a good winge about campaigners who did what they could to actually make a difference simon. What did you do?
    I was brought up with my mother telling me that unless i “actually do something or get involved in something, then i shouldn’t really have a say in it!”…..just saying.
    It’s ok for someone post reforms to look at the issues and say “well THEY shouldn’t have said this” or “THEY shouldn’t have said that” and point fingers.
    This was always going to be about damage reduction, the MOJ and Government had already made up their mind once the Insurers had planted the seed!
    I heard yesterday on the news that Car Insurance premiums are due to rise by a couple of hundred quid too, what happened to the £40 savings per policy holder, the Insurers promised?
    Anywho have a good day and long live the costs world!

    An annoyed reader

    28th February 2017

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