Is access to justice really out of reach for most employees?

The Guardian’s article “Access to justice is no longer a worker’s right but a luxury” provides an illustration of the difficulties faced by one individual who faced discrimination at work.

https://www.theguardian.com/commentisfree/2017/mar/28/employment-tribunals-workers-rights

On the face of it the lady concerned did not appear to be very well off but she was unable to obtain help with employment tribunal fees and in the event relied on her trade union together with crowd-funding to cover her legal costs and the tribunal fees.  Her case was settled and she was spared attending a hearing. 

We have blogged about the introduction of employment tribunal fees from time to time and this story serves as a reminder of the need for legal protection for individuals. BTE is more valuable than ever since the introduction of fees.

Following its review of employment tribunal fees the Government has confirmed that they have no intention of reducing the level of fees payable (£1200 for most claims that result in a hearing).

The story, however, does not paint the full picture.  It gives the impression that employment tribunal cases are scarce as fees deter individuals from pursuing their rights. While it’s true that claims against businesses have dropped since the introduction of fees the latest quarterly statistics – Q4 2016, show a 3% increase in the number of single tribunal applications received over the same quarter in 2015.

More importantly around 92,000 notifications of disputes were received by ACAS’s early resolution service in the year to March 2016.  The early conciliation service is free to both employers and employees and ARAG provides legal representation throughout the process for our commercial and family policyholders.  Parties are successful in arriving at an agreement through ACAS Early Conciliation in around one-third of cases and can avoid their claim escalating to tribunal.

ARAG ATE policy safeguards claimant

On the 18th January 2013, the High Court overturned an earlier judgment that an ARAG ATE policy was not good enough security for costs.

The bespoke wording expressly stated that the policy would only be void should there be fraudulent non-disclosure (and not for innocent or negligent non-disclosure), and even if there was, the cancellation provisions expressly stated that ARAG would be liable for costs up to the date of cancellation, so minimising any risk to the defendants costs.

The case was not the type to have an adverse verdict at trial, as it centred on technical issues rather than contentious facts, and so there was no commercial reason why the claimant would wish to jeopardise the policy by not complying with its terms. Quite simply, the policy was for the claimant’s own protection.

This case clearly shows that defendants will use the ATE policy as a way of making life difficult for the claimant, but fortunately in this case, the claimant had an ARAG policy that provided the safeguard for the claimant should they lose, and likewise for the defendant.

Permission to appeal has not been granted as yet, and the claimant was awarded the costs of the application.

Big news for small businesses

The banking world has been in the dog house for a while now but a new initiative from the Financial Services Authority (FSA) looks to keep them there for a bit longer. Another mis-selling scandal has emerged in relation to the sale of interest rate swap products to small businesses.

According to an article in the Independent interest rate swaps are “complicated derivatives that have been sold as protection - or to act as a hedge - against a rise in interest rates”. The FSA have identified that more than 90% of the products were mis-sold to the small business sector accumulating to an estimated “total [of] as much as £1.5 billion across the sector”.

As a result of the mis-sold product many small businesses are left with hefty bills, however the FSA has set out a framework for the banks to provide compensation. As quoted in the Telegraph, Vince Cable sets out that “the immediate priority is to ensure small businesses are not driven out of business by banks pursuing liabilities for swaps that they mis-sold”.

With this in mind, ARAG can provide your small business customers with the means to pursue the compensation that they are entitled to with the support of Recourse After-the-Event insurance.

For and most importantly against the LASPO Bill

Various government proposals and bills seem to be having a tough time in the House of Lords, not least the rocky ride being shown to the Legal Aid, Sentencing and Punishment of Offenders Bill (LASPO) which proposes cuts to legal aid and sweeping changes to civil litigation.

Currently in committee stage there have already been a few concessions made but with many peers opposed to the Bill the next report stage should be very interesting.

The last couple of weeks have seen a number of articles in the news with varying opinions on the LASPO Bill.

In the Telegraph over the weekend, the Justice Minister Ken Clarke was defending the Bill by highlighting the costs that the NHS pays in success fees to lawyers in clinical negligence cases. According to their figures:

• the number of claims rose from 5,426 in 2006/07 to 8,655 in 2010/11
• legal costs of claimants suing the NHS rose over the same period from £83 million to £195 million
• the cost of defending the actions rose from £49 million to £62 million.

Blaming the compensation culture, Clarke explained that "Taxpayers expect that the system should compensate claimants properly and reward their lawyers appropriately, not liberally.”

On the other side of the fence, the Telegraph article mentions phone-hacking victims like the Dowler family who have lobbied the government with a letter saying that “the changes will make it difficult for any but wealthy people to launch legal actions.”

Similarly, a range of charities, organisations and campaign groups are fighting back against the Bill, including AJAG and the CJA both of which ARAG is a member of.

The latest press release from the Law Society explains: “Peers in the House of Lords will discuss altering the legislation in a bid to eradicate "compensation culture" but the move would instead penalise victims of accidents, fraud, negligence and wrong-doing as well as businesses and even the Government.”

In an article in the Guardian, charities Oxfam and Amnesty International have joined the campaign on behalf of those suffering human rights abuses, warning that, “Victims of oil spills, pollution or land grabs in developing countries will no longer be able to pursue claims in British courts against multinational corporations under [these] legal reforms.”

Another hole identified in the Bill is that of the money saving aspect. Concerns have been raised by many that the calculations haven’t been done and that the cuts in legal aid and amends in civil litigation will cost more than they save. A report by King’s College London identifies that “these changes will incur new costs for the taxpayer by simply shifting the burden onto other parts of the public purse.”

In another academic report, Dr McIvor, Senior Lecturer at Birmingham Law School, accused the reforms of being “excessive and over-zealous”. She advised that “the evidence does not necessarily demonstrate that the primary source of the current high level of costs is the recoverability of success fees and after-the-event insurance premiums.”

What is also surprising about the Bill is the lack of joined up thinking in the government. With Clarke, together with his counterpart, Eric Pickles, continually following the party line about saving money (Guardian article: Eric Pickles: council tax rise a 'kick in the teeth' for cash-strapped residents), if the Bill is passed and legislation implemented then Council Tax will increase. The reason for this is quite simple. Unlike the present system where Local Authorities can recover their legal costs when they successfully defend a claim, under the new proposed system, they will not unless the case is deemed to be fraudulent or frivolous, which is extremely difficult to prove. This Bill is leaving Local Authorities will their hands tied behind their back. One the one hand they will want to defend cases, but on the other they know that if they do they won’t recover costs. Claims won’t reduce, so compensation payments by local authorities will increase, meaning only one thing, a cut in services or an increase in the Council Tax.

With the report stage to come and many amendments expected to be tabled by the Lords to all sections of the Bill, the fight is not yet over for those battling for and most importantly against the LASPO Bill.

ARAG shortlisted at the 2011 Personal Injury Awards

ARAG is pleased to announce that we have been shortlisted at this year’s Personal Injury Awards in the ‘Insurance Provider of the Year’ category. Having previously won this award in 2009 we are keeping our fingers crossed for 24 November when the awards will be held at The Riverbank Park Plaza in London.

ARAG’s existing After-the-Event (ATE) product is known for offering flexibility and quality to ensure that customers’ needs are met and hopefully exceeded. In addition to this, ARAG also look for and implement innovative ideas and in 2011 we created and launched a new product – Recourse Options.

Our original product Recourse provides a standard limit of indemnity covering third party costs and disbursements, whereas Recourse Options is tailored to the specific indemnity required to cover third party costs, disbursements and own sides costs in non-injury cases. Some of the key features include:

• Limits of indemnity to meet the specific risk


• Cover by an A-rated insurer


• Contingent premium – the premium is deferred until conclusion and only payable upon a successful conclusion


• Top-up cover to a Before-the-Event policy


• Cover for cases conducted under a partial or full CFA


• Premium shortfall cover


• Bespoke staged premiums

These are backed by a passionate team and a bespoke approach which allows them to be set up as scheme arrangements or one-off cases.

There is also an easy-to-use online policy application and administration system designed to make life easier for our solicitor partners. This is currently in the process of being developed to enable solicitors to update cases from their own system rather than having to log in to gATEway as well as increasing its scope to offer post-issue schedules for RTA cases.

If you would like more information on ARAG’s ATE products please visit: http://www.arag.co.uk/index.asp?m=93&s=159&t=After%2Dthe%2DEvent+Legal+Insurance

A boost for the campaign against the Jackson reforms?

The campaign against the civil litigation reforms proposed by LJ Jackson received a boost recently after the response by three cost judges to the Green Paper was revealed by the Access to Justice Action Group (AJAG).

According to the Law Society Gazette the judges, “have broken ranks to object to radical reform of civil litigation” and were “unable to agree with the majority view of the costs judges”.

Backed by the Ministry of Justice (MoJ), the reforms include proposals to end the recoverability of success fees and After-the-Event (ATE) premiums, cap success fees at 25% of compensation awarded and increase general damages by just 10%. ARAG, AJAG, the Consumer Justice Alliance (CJA) and many others believe that such changes will significantly reduce access to justice and it seems the cost judges agree.

Describing many of the proposals as “inappropriate”, the judges have said in their response, “claimants who have suffered serious medical injuries could lose thousands of pounds intended to pay for their care”. They go onto say that it is often the conduct of the defendant that increases costs, so shifting the payment of success fees and ATE premiums to the claimant will cause “injustice”.

For ARAG and other legal expenses insurers who believe that ATE insurance helps access to justice as well as reduce costs by rooting out unmeritorious claims, a further comment describing the reforms on ATE as having “gone much too far” is a welcome one.

As pointed out in a Legal Futures article “the fact that important voices in the judiciary have such serious doubts about the reforms will give campaigners heart.” The fight continues!

The importance of Before-the-Event Legal Expenses Insurance

The publication of the In Case of Emergency Report by Consumer Focus caused a few ripples in the ARAG office when it was released last month, due primarily to its negative and often inaccurate account of Before-the-Event Legal Expenses Insurance (BTE LEI). Now, a couple of weeks later, we have had time to read through it and digest the findings only to discover that our initial concerns were confirmed.

As you may know ARAG is fighting the proposed civil litigation reforms as we believe that removing the recoverability of After-the-Event (ATE) insurance premiums will significantly reduce access to justice. The Consumer Focus Report also mentions the reforms but points to BTE LEI as a contender to fill the gap left behind. Yet, the Report itself is likely to cause more damage to access to justice by focusing on the negative aspects of their findings into the BTE LEI market and describing it as an “unnecessarily complex and shadowy market”.

These are the kind of statements that create the headlines, not the fact that 64% of respondents were able to give an explanation of BTE LEI (showing relatively high product knowledge) and 48% and 16% respectively were either satisfied or very satisfied.

Below are just a few examples where we have spotted some inaccuracies in the Report:

• Accepting that knowledge of any product or service is likely to be low amongst those that do not purchase it, the fact that overall 64% of respondents were able to give an explanation of LEI is testimony that it is well understood.


• Some favourable findings concerning BTE LEI policy information were excluded from the Report. The Report states that just 4% of respondents claim they received nothing when purchasing LEI. This along with an impressive response of 70% finding their policy information reasonably clear or very clear illustrates that considerable effort is made to treating customers fairly.


• It confirms that just 15% of respondents would not know what to do to make a claim. We would contest that this compares favourably to any other form of insurance product. Furthermore, excluded from the Research are details of those groups who have a greater than average 64% response on knowing what to do to claim.


• The Research comments that most people find the process of claiming straightforward, yet the Report fails to mention this preferring to highlight the fact that it is concerning that less than half of those surveyed (who had a successful claim) were satisfied with the process for making a claim.

ARAG is not afraid to accept criticism where it is due but the findings in this report seem to have been unnecessarily skewed in order to paint an unbalanced picture.

In principle we are not against such a Report and in fact commend the objectives set out. Some of the findings as they stand are very useful and will inform some of our decision making in the future, for instance improving product information and understanding. However, the Report as it stands does more damage than good.

A round-up of responses to the Jackson Review Consultation

Valentine’s Day 2011, normally a day of romance but for ARAG and many other organisations and companies it signalled the end of the consultation period for the Ministry of Justice’s Proposals for reform of civil litigation funding and costs in England and Wales.

The proposals are based on recommendations from Lord Justice Jackson’s Review of Civil Litigation Costs (December 2009), in which he puts forward “a coherent package of interlocking reforms, designed to control costs and promote access to justice”. Some of the recommendations contained in the consultation paper include:

• Introduction of qualified one way cost shifting
• Abolishing the recoverability of after-the-event insurance (ATE) premiums and success fees
• Increasing general damages by 10%

The responses from across the industry have been submitted and it is now a waiting game to see how the government proceeds. In the meantime, this blog summarises a selection of the responses.

• Consumer Justice Alliance (CJA): The CJA describe the proposals as “misguided and ill-considered”, as they feel that they will “ultimately hinder the ability of injured victims to seek fair and reasonable access to justice”. More specifically, the CJA believe that it would be unfair to shift costs onto the injured victim and worry that capping success fees will mean it is not “commercially viable” for law firms to take cases with lower prospects of success. They also add that “there is no alternative that provides the certainty for claimants or defendants that a robustly regulated ATE market does”. Read more...


• Legal Expenses Insurance Group (LEIG): As laid out by Tony Baker, LEIG’s director, "the LEIG response will to preserve access to justice by putting forward practical alternatives to Government proposals while delivering significant and proportionate cost savings." Reiterating that there is only a ‘perceived’ compensation culture; the group propose a revised ATE system that will “control claimants’ and defendants' costs, maintaining access to justice, reducing unmeritorious claims, solving the disbursement conundrum, and preserving the ATE market”. Read more...
  
• Independent panel of law academics: Reported on the Law Society Gazette website, an independent panel of law academics described the proposals as ‘”misleading and inconsistent with a fundamental principle of civil justice.” They point out that they “would reduce the availability of legal services to injured persons, and benefit defendants at the expense of the injured.” Ultimately, the panel recommend that the “government should reject Jackson’s key proposal to allow lawyers to recover success fees from an injured person’s damages.” Read more...


• Medical Defence Union (MDU): According to Post Online the MDU are backing the Ministry of Justice proposals to reform civil litigation costs, claiming that they will “make the civil justice system fairer but will not impact a patient's access to justice.” Representing medical professionals, the MDU state that they “wholeheartedly” support the proposals that tackle “excessive and disproportionate costs, without affecting the ability of patients to seek compensation when they have been negligently harmed.” Read more...
  
• Association of British Insurers (ABI): The ABI is backing Jackson’s proposals stating that it is “time to put the brakes on the legal costs gravy train that is costing UK consumers £2.7 million every day.” They describe how, in their opinion, “high legal costs are at the heart of a compensation system that is too slow, too complex and fails too many genuine claimants.” The ABI believe that Jackson’s proposals will “deliver faster, fairer, more cost-effective compensation and care to those who need it.” Read more...
  
• Access to Justice Action Group (AJAG): “Access to justice for ordinary people will be severely curtailed by the proposals” reports AJAG’s press release which outlines its response. Citing their consumer survey, the AJAG Co-ordinator notes that “the biggest fear people have when enforcing their rights is the risk of legal costs.” Therefore they present a “comprehensive package that both maintains access to justice and helps keep costs down.” Read more...

As a member of the LEIG and CJA, ARAG of course support their responses to the consultation. However, with the view that the proposals will negatively impact access to justice ARAG also submitted their own response.

• ARAG maintain abolishing success fee recoverability would “have a catastrophic effect on injured victims” as “any deduction of damages would result in a victim receiving an unfair settlement”.


• As an ATE insurer ARAG know first-hand how valuable this cover is to claimants and have serious doubts that qualified one way cost shifting will “be sufficient to remove the other side’s costs risk.” They point out that insurance will still be needed to plug the gap but that few insurers could “respond to providing such limited forms of cover.” Additionally, the premium may have to increase and it will still be taken from the claimant’s damages producing “a significant barrier to taking legal action.”


• On unmeritorious claims, ARAG note that “ATE insurance acts as a significant filter on unmeritorious claims”, with ARAG declining “approximately 2/3rds of all individual quotes”.


• In response to the proposal to increase general damages by 10% to balance out the costs deducted, ARAG cite the 1999 Law Commission report that describes general damages as “already too low”. They therefore back plans for an increase but not at the expense of abolishing recoverability of success fees and ATE premiums.


• Regarding qualified one way cost shifting, ARAG state that it “would create a significant element of uncertainty and the likely prospect of satellite litigation.” Furthermore, ATE insurance would not be “available to protect those risks that would remain by virtue of the qualified rules” and will therefore deter genuine claimants from bringing valid claims and encourage more unmeritorious claims.