As the Ministry of Justice wades through stakeholders' views on proposed reforms to civil litigation, there is an imperative to investigate the critical, yet largely undocumented issue, of defendant behaviour in the personal injury claims process. So far, the debate about rising costs and delays has focused solely on claimant factors. It is time to correct this imbalance.
National Accident Helpline commissioned Professor Peysner, widely considered to be the leading legal costs academic, to undertake the first study of its kind into the link between defendant behaviour and civil litigation costs. His conclusion is that defendant delay is too important to be ignored and must become part of the debate for regulators and policy makers.
Peysner’s findings strongly suggest that defendant delays are a significant factor driving excessive costs and delays. In one in four cases that are delayed, the delay is caused by defendant action. Furthermore, the study finds that defendant delay is six times more expensive than any other form of delay.
A full investigation into the contribution defendants and their insurers make in increasing costs in personal injury litigation is long overdue. Most claimant lawyers will have a long list of examples and anecdotes about obstructive behaviour by insurers. However, no one has looked beyond these and undertaken a critical analysis of defendant actions and behaviours and their inevitable relationship with excessive costs. Why do defendants systematically ignore protocols, delay investigations, defend the indefensible and make woefully low settlement offers? Are these deliberate tactics designed to deter claimants from pursuing claims or are they as a result of under-resourcing in claims departments? Insurers have the ability to retain control of litigation costs by admitting liability where appropriate and making proper use of part 36 offers, so why don’t they?
For too long, claimants and their legal advisers have been blamed for the rise in costs in personal injury claims. Attacks on claimants for front-loading costs and issuing proceedings prematurely are common and are sometimes made with justification. However, the role of defendants and their insurers in increasing costs has been overlooked and has never been the subject of close scrutiny. For this reason, the research represents a hugely important step into a territory previously unexplored. If delay is indeed the main cause of excessive cost in civil litigation cases, then the role defendants play must be unravelled.
The proposals to reform civil litigation in England and Wales have stirred up a good deal of controversy. But perhaps the most contentious of Lord Justice Jackson’s wide-ranging recommendations is that full recoverability of success fees and after-the-event (ATE) premiums from the losing defendants should be scrapped on the grounds that it is driving 'excessive costs'. In its place, a system of 'one way costs shifting' would be introduced.
Conditional fee agreements (CFAs) were introduced to provide access to justice for those who cannot afford to pursue litigation and who are not eligible for public funding. The aim should always be to put successful claimants back into the position that they would have been in had they not sustained the injury in question. Jackson's proposals pose a direct threat to that principle. Changes to the recoverability regime will actively discourage victims from seeking redress for injuries while making whole categories of perfectly legitimate claims uneconomic.
Peysner’s report sheds light on the fact that the causes of excessive costs in civil litigation cases are complex and far from being fully understood. While various potential causes of excessive costs, including ATE premiums and defendant behaviour, have been identified by Jackson and Peysner, their relative contributions have not been properly assessed. Without a clear understanding of these issues, radical changes to the civil justice system should not be contemplated.
As Peysner’s research highlights, defendant delay is a factor in adding unnecessary court costs to cases where there is a failure to reach settlement and the claimant is forced to litigate. This is demonstrated by evidence that personal injury claimants win 90% of cases where they issue proceedings. The need for exploration into defendant insurer behaviour, and its impact on the legislative process, could not be more apparent.
An independent assessment of the insurance industry's tactics when dealing with personal injury claims must be the first step in a wider review of civil litigation in the UK. This should be followed by an in-depth piece of research designed to ascertain the effects of defendant behaviour on the claims process. This will enable a rigorous assessment of arguments that delay is used as a tactic by the insurance industry to frustrate settlement and, in many cases, to discourage claimants from pursuing cases to a resolution.
Jackson's recommendations are arguably redundant in a personal injury context because of the development of fixed costs in RTA claims and the probable evolution of fixed costs into all areas of personal injury litigation. Proposals to replace CFAs with qualified one way costs shifting lack clarity and will lead to a growing fear among potential claimants that they would be lumbered with a large legal bill. Indeed, research by National Accident Helpline suggests that around 88% of legitimate claimants would be deterred from making a claim if they were uncertain about what the eventual costs of a case might be.
Professor Peysner's research was the first in its field and therefore by its own admissions cannot be conclusive. The priority for policymakers must therefore be a full investigation into the real causes of excessive costs in civil litigation cases.
A growing wave of objections against Jackson's proposals has been articulated by academics, law firms and third parties alike. Jackson's recommendations will have an adverse impact on access to justice. The human cost of these proposals should not be underestimated or undervalued any longer.
Janet Tilley is non-executive legal director at National Accident Helpline