The UK Government, as part of its ongoing cost-cutting measures, is recommending some significant changes to the legal aid system, including a £350m reduction in funding. In November 2010 Justice Secretary Kenneth Clarke presented a proposal in which legal aid (with some exceptions) will be cut for cases such as divorce, welfare benefits, clinical negligence and personal injury.
Speaking to the BBC about these proposals Clarke described how they planned to “introduce a more targeted civil and family scheme which will discourage people from resorting to lawyers whenever they face a problem, and instead encourage them to consider more suitable methods of dispute resolution." (i)
However, others have concerns that the changes and cuts to legal aid may reduce access to justice and affect those who can least afford it.
In the case of divorce, couples may be required to go through mediation, represent themselves or find the money to fund their own divorce under the new proposals. This will obviously cause additional stress in an already upsetting situation.
One solution, should the proposals go through, would be to introduce insurance that covers the cost of divorce. In an interview on the BBC Radio 4 show Moneybox, Tony Buss, ARAG’s Managing Director describes how in Germany divorce insurance is well-established and taken out by people alongside their other legal protection insurances. A married couple will pay a premium of approximately €100 a year which if they decide to divorce (after at least 3 years of marriage) will pay out around €30,000 towards the legal costs involved. (ii)
Another avenue to consider is that of pre- and post-nuptial agreements. These are not yet enforceable by law but with the recent publication of the Law Commission’s consultation on marital property agreements (iii) this may change in the future. Therefore it would surely make sense to introduce an accompanying insurance that would cover the cost of litigation for both spouses in the event of divorce.
So is there a place for this type of cover in the UK? As Buss points out, so far insurance companies have “shied away from providing it because it is not yet socially acceptable.” But with the potential removal of legal aid, prospect of either funding or fighting your own divorce and the possibility of legally-binding pre-nuptial agreements, this cover would certainly provide a good alternative.
You can ‘listen again’ to discussions on this topic and interviews with Tony Buss on Moneybox, Radio 5 Lives’ Breakfast Show (2 hrs 50 mins) and Ted Robbin’s show on BBC Radio Lancashire (52 mins 33 secs).
(i) 15/11/2010 BBC, Legal aid reforms are unveiled by Kenneth Clarke: http://www.bbc.co.uk/news/uk-11741289
(ii) 15/01/2010 BBC Radio 4, Moneybox: http://www.bbc.co.uk/iplayer/console/b00xgr11/Money_Box_15_01_2011
(iii) Law Commission, Marital Property Agreements: A Consultation Paper (2011) http://www.lawcom.gov.uk/marital_property.htm
Friday, 28 January 2011
Tuesday, 25 January 2011
Employment Tribunal System
Following a research paper on Business and the Employment Tribunal System (i) the British Chamber of Commerce issued a press release calling for reforms to the employment tribunal system. According to the press release “the average cost for an employer to defend themselves at tribunal is £8,500”, as compared to an average payout of £5,400 if the employer settles. The problem that this highlights is that employers will be persuaded to settle “even if faced with a spurious claim” because it keeps costs down and is “more convenient to do so”.(ii)
As Dr Adam Marshall, Director of Policy and External Affairs at the BCC, points out in the press release:
“The employment tribunal system is in dire need of reform. Currently, tribunals are too slow and overwhelmingly weighted in favour of the employee - whereas they should be fair for employers and employees alike.”
ARAG’s range of commercial legal expenses insurances provides vital protection which will help to level the playing field so that the employer feels confident fighting unfounded claims at employment tribunals. For instance, Absolute Business Legal responds to a generous range of legal disputes that can arise from your day-to-day business activities, including:
(i) British Chamber of Commerce (2011) Business and the Employment Tribunal System, Abigail Morris
(ii) British Chamber of Commerce (05/01/2011) Press release: BCC calls for reform to employment tribunal system
As Dr Adam Marshall, Director of Policy and External Affairs at the BCC, points out in the press release:
“The employment tribunal system is in dire need of reform. Currently, tribunals are too slow and overwhelmingly weighted in favour of the employee - whereas they should be fair for employers and employees alike.”
ARAG’s range of commercial legal expenses insurances provides vital protection which will help to level the playing field so that the employer feels confident fighting unfounded claims at employment tribunals. For instance, Absolute Business Legal responds to a generous range of legal disputes that can arise from your day-to-day business activities, including:
- employment disputes and compensation awards
- defence of prosecutions
- representation for compliance and regulatory matters
- pursuing claims for property damage nuisance and trespass
- license appeals
- representation for full and aspect tax enquiries
- VAT appeals
(i) British Chamber of Commerce (2011) Business and the Employment Tribunal System, Abigail Morris
(ii) British Chamber of Commerce (05/01/2011) Press release: BCC calls for reform to employment tribunal system
Tuesday, 18 January 2011
Personal Injury Advertising
Lord Young’s recent report Common Sense, Common Safety explored the perceived ‘compensation culture’ in Britain, which encourages a ‘if there’s a blame, there’s a claim’ mentality in which people are led to believe that they can get financial compensation for even the most minor accident. The report suggests that this places unnecessary burdens on businesses and the voluntary sector, making them take ‘an overzealous approach to applying the health and safety regulations’.
The report identifies the advertising conducted by the claims management companies as one of the major contributing factors to this problem. These advertising campaigns often promote the reward of non-refundable inducements, for example:
“We'll pay you £200 immediately after our solicitors approve your claim”
“As soon as we accept your claim, we promise to give you a £150 cash advance”
Under the current regulations of Client Specific Rule 6(b) of the Conduct of Authorised Persons Rules 2007 these inducements are allowed as they are not offered as an ‘immediate cash payment'. Following recommendations in Lord Young’s report, the Ministry of Justice (MoJ) is proposing to change this rule so that inducements of any kind are banned from all stages of the process. The MoJ has issued the Claims Management Regulation Consultation Paper outlining its plans to all claims management companies with all responses due by 10 February 2011.
So do the problems in the current system as laid out in the Common Sense, Common Safety report exist? As with anything they will to an extent but as the Consultation Paper points out “the majority of claims management businesses are not likely to be particularly affected.” Therefore is it right to limit the competitive edge that advertising and incentive strategies bring to the industry? In addition, as the money for inducements is not added to the claims cost but instead paid by the solicitors is there really that much of a problem to be solved?
You can read more in Lord Young’s Report and the MoJ’s Consultation Paper. To find out about legal insurance, visit ARAG’s website.
The report identifies the advertising conducted by the claims management companies as one of the major contributing factors to this problem. These advertising campaigns often promote the reward of non-refundable inducements, for example:
“We'll pay you £200 immediately after our solicitors approve your claim”
“As soon as we accept your claim, we promise to give you a £150 cash advance”
Under the current regulations of Client Specific Rule 6(b) of the Conduct of Authorised Persons Rules 2007 these inducements are allowed as they are not offered as an ‘immediate cash payment'. Following recommendations in Lord Young’s report, the Ministry of Justice (MoJ) is proposing to change this rule so that inducements of any kind are banned from all stages of the process. The MoJ has issued the Claims Management Regulation Consultation Paper outlining its plans to all claims management companies with all responses due by 10 February 2011.
So do the problems in the current system as laid out in the Common Sense, Common Safety report exist? As with anything they will to an extent but as the Consultation Paper points out “the majority of claims management businesses are not likely to be particularly affected.” Therefore is it right to limit the competitive edge that advertising and incentive strategies bring to the industry? In addition, as the money for inducements is not added to the claims cost but instead paid by the solicitors is there really that much of a problem to be solved?
You can read more in Lord Young’s Report and the MoJ’s Consultation Paper. To find out about legal insurance, visit ARAG’s website.
Subscribe to:
Posts (Atom)