The trend of non-specialist firms moving into clinical negligence work in a bid to shore up revenues following LASPO could have damaging consequences for the profession.
Huge changes to the personal injury market post-LASPO are resulting in a worrying trend in clinical negligence work that could have damaging consequences for the legal profession and drive up insurance premiums in the long term.
New fixed-costs regulations were introduced in April last year but for many law firms it is only now that the real impact is beginning to bite. Personal injury cases brought prior to April 2013 are being settled and firms are finding themselves with a new caseload of claims covered by fixed-cost rules. With these new cases failing to bring in the necessary fee income, many of the traditional ‘trip and slip’ personal injury firms are looking to diversify to shore up revenues.
They see running complex clinical negligence claims as a good option given this work is not covered by the same fixed-costs rules.
The problem is that many of these firms simply don’t have the expertise required. These cases can be very different to standard PI cases and can include complex medical conditions such as birth injury, spinal cord damage and brain injury. They require specialist medical knowledge and generally work on much longer timescales.
Audits of numerous firms’ caseloads by consulting law firm Citadel Law have shown that and many are putting themselves and their clients at risk. Non-specialists can risk losing or under-settling complex clinical negligence cases. This means letting down vulnerable clients who may require significant financial support and will be unaware they are not instructing experts in the field.
Proper governance and risk management are vital to the success of today’s solicitors but by taking on cases outside their expertise, firms are opening themselves up to the risk of regulatory breaches, professional negligence claims, bad press and ultimately business failure.
This is not just a concern for the firms themselves. There are potential consequences for the profession as a whole. Poor-quality service to clients and any consequent rise in professional negligence claims casts the profession in a bad light and leads to a lack of trust. We are already seeing negative headlines associated with solicitors overcharging and the cost of the NHS clinical negligence bill.
Poor management of clinical negligence cases will only exacerbate this.
We also risk rising after-the-event insurance premiums. These firms are looking to their insurers to provide ATE insurance to cover clinical negligence cases. They are all looking for immediate, easily accessed insurance under delegated authority from day one. Not all insurance firms will insure non-specialists on this basis but there will always be others that will.
As they take on extra risk they will find themselves paying out more often for lost cases and recouping less due to under-settlement. In the end we are likely to see the fallout in terms of rising premiums, potentially damaging to those insurers’ existing panel of firms who find themselves being asked to pay more because of other firms’ poor records.
Traditional PI firms need to think carefully about diversifying into clinical negligence and if they decide to go ahead, consider how they manage this process to mitigate the considerable risks. If they decide this is the route for them, they will need to look at staffing and whether they need to bring in solicitors and other personnel with the necessary technical skills.
Risk management and good governance are key and firms new to clinical negligence work will need to ensure they have the right professional indemnity cover and potentially work with ATE providers to conduct more in-depth assessments of cases before they will be insured. They will need to supervise both their staff and client files effectively to ensure cases are valued correctly, that service levels are adhered to and the level of technical advice given is appropriate.
That such firms take these steps is critical to the success of their businesses, their clients and the profession as a whole.
Richard Whale is ATE sales manager at DAS LawAssist and Lesley Graves is managing director, Citadel Law