Jackson reform resource goes on line

During a recent Airmic Live event, the panel discussed the proposed Ministry of Justice (MoJ) extension to the RTA Portal.  The proposal is twofold: to encompass RTA claims to the value of £25,000 within the Portal, and secondly, a ‘horizontal’ extension to process Employer’s (EL) and Public Liability (PL) claims.  Joseph Noel of Cunningham Lindsey discusses the implications.

In 2008 Lord Jackson recommended an extension of the fixed recoverable costs regime for low value Personal Injury claims; in a consultation called ‘Solving disputes in the County Courts; creating a simpler, quicker and more proportionate system’.

Whilst access to justice and freeing the Courts from burdensome litigation were cited as the principal drivers behind the recommended extension, the main purpose has been widely interpreted as an attempt to save the Treasury money.  The Government, with exposure to NHS and former nationalised industry claims, would be a top three compensator.

We discuss how the existing RTA Portal works later, but the reforms recommended include:-

• The vertical extension of the Portal, to include RTA claims up to the value of £25,000
• The horizontal extension, to include Employer’s and Public Liability claims
• A tiered system of fixed costs for cases which ‘stay in’ and ‘fall out’ of the Portal

The existing Portal:-

• Encompasses RTA injury claims of up to £10,000
• Allows 15 days for a liability decision
• Retains claims where there is an admission or standard contributory negligence for failure to wear a seatbelt
• Releases claims where, if there are other contributory negligence arguments, there is a failure to respond within 15 days or a denial
• Dictates that there are 35 days allowed to negotiate settlement if the case remains
• Means that currently, claimant’s solicitor’s costs are £1,200 for both stages

To be prepared for the changes, we need to consider how the extended Portal is likely to look.  So what are the proposals?

• For EL and PL claims, there will be no allowance for contributory negligence
• Disease claims are allowed, apart from those for mesothelioma, but only where there is a single defendant.  It’s difficult to envisage how the Portal will cope with multiple compensators
• Claimant solicitors should need to consult the Employers’ Liability Tracing Office, to ascertain who the EL insurer is before feeding in the notification
• There is no database to deal with PL policies
• The response time for liability decisions will be 30 business days for EL claims and 40 for PL claims
• Time will be measured 24 hours from when the form is fed in

‘In portal’ EL and PL cases where claims are valued between £10,000 - £25,000 will attract £1,600 in costs for both stages, with lower costs for cases under £10,000.  A reference guide to the proposed costs will be available on the AIRMIC website.  Additionally, there will be a system of Fixed Recoverable Costs, pre-litigation, for those cases which fall out of the portal; higher than costs in-portal.  For example, a claim valued at £20,000 dealt with ‘in portal’ would attract £1600 in costs, whereas the same claim, if it falls out but settles pre-litigation, will attract £2,750.

It is fair to presume there may be some behavioural change on the part of claimant firms.

• They will want cases to drop out of the portal and litigate, where possible
• It will be advantageous to inflate the value of damages, to increase the fixed costs.  A claim valued at £11,000 will be worth more in costs than one worth £9,000

Obviously there may be some behavioural change on the part of insurers also.  One consideration will be the true financial value of arguing lower levels of contributory negligence.   Insurers will need to make certain the value saved in damages by accepted contributory negligence arguments outweighs the additional costs from portal drop-out.  A separate guidance note on the break-even value (in costs terms) of raising contributory negligence arguments is available on the AIRMIC website.

Some in the defendant community have raised concern that the new regime may result in a no-fault compensation scheme, for low value injury claims.  Certainly brokers, captives and insurers will not want such a culture to develop.  After all, the merits of each claim will need to be assessed and as ever, the insurer who gains competitive advantage and the captive who is least exposed will be those who settle claims which ought to be settled and litigate cases where appropriate.

Joseph Noel is Head of Personal Injury at Cunningham Lindsey

Joseph Noel
Head of Personal Injury at Cunningham Lindsey