Ruling puts ATE at risk

After-the-event (ATE) insurance and success fees could be obliterated following an appeal finding in Chester County Court last week, according to the claimant's solicitor.Andrew Twambley, of Manchester firm Amelans - who also acts for the claimant in the test case of Callery v Gray, which is currently before the Court of Appeal - said that the judgment in Imran Sarwar v Muhammed Alam will mean that where any before-the-event legal expenses insurance exists, claimants may not take out an ATE policy.'Liability insurers en masse will now issue free pre-event cover to block solicitors' success fees and the ATE insurance market,' he said.The claimant - a passenger injured in a car accident - took out an ATE policy, but it later emerged that the driver was insured for third- party legal expenses.Although Amelans asked the claimant if he was insured (he was not), the judge on appeal found that the firm should also have checked the driver's policy.Mr Twambley said the finding would enable liability insurers to control both ends of the market, operate a restricted panel of their own solicitors dependent upon them for work, freeze out pro-claimant solicitors, and deny freedom of choice to the public.Tim Wallis, senior partner of north-east firm Crutes and vice-president of the Forum of Insurance Lawyers, said it was 'simply not true' to say that all cases would be covered be pre-event insurance.The case comes as the ruling in Callery v Gray - which should resolve the extent to which success fees and ATE are recoverable - was hit by a delay.At a hearing last week, costs master John O'Hare allowed parties extra time to make submissions on a draft report on the recovery of premiums, and he is now expected to report officially to the Court of Appeal in late July.

It is now doubtful whether judgment - originally expected before the summer recess - will come before autumn.Meanwhile, Health Secretary Alan Milburn said this week that a new consultation committee for clinical negligence is to investigate overhauling the way compensation claims are handled, paving the way for a radical white paper early next year.Proposals for consultation include introducing no-fault compensation, structured settlements to replace lump sum awards, fixed tariffs for specific injuries, and more use of mediation.Mr Milburn said fundamental reform of clinical negligence 'is long overdue'.

The current system 'very often' ends up paying out more in legal fees than damages for patients, he said.The Association of Personal Injury Lawyers welcomed the consultation, saying 'any reforms which encourage the early admission of negligence are to be encouraged'.Jeremy Fleming