Two years after implementation of the civil justice reforms, what has the impact been on claims within the public sector and the claims industry overall, and what is likely to happen next? Sarah Swan reviews the emerging picture.
Time to take stock
Even in these relatively early days in the life of the reforms, an initial picture is starting to emerge, particularly in respect of lower value claims. It is possible to analyse the impact of the reforms on those claims. However, it will take longer to assess any changes in the higher value (damages over £25,000) arena as these more complex, longer lifecycle claims will require more time to mature.
Some initial observations
We have compared lower value claims across our client base during the periods of 16 months before, and 16 months after, the introduction of the employers’ liability and public liability portal. Our headlines are as follows:
- General damages awards have increased by approximately 10%, as expected;
- Claimant costs and disbursements have decreased by just over 50%;
- We have recorded reduced ‘notification times’ (incident date to us receiving the claim) of around 10 days as claims are received via the portal;
- Many clients have improved their processes so that authoritative, early decisions on liability can be made to ensure the right claims are retained within the portal;
- Claims lifecycles are showing signs of reducing.
In respect of the higher value claims, more time is needed in order to forecast the overall impact on public sector organisations. For higher value claims, cost budgeting has been introduced with the aim of reducing legal costs. However, we are still seeing mixed judicial responses to the new process. While costs certainty may be more likely to be guaranteed, lower costs may not as new elements such as the claimant’s percentage fee for preparing the budget are added in. What is clear from our experience is that, in spite of qualified one way costs shifting, our clients within the public sector have not been deterred from fighting appropriate cases.
Areas to watch
The impact of the reforms on claims costs overall can only be measured once further time has been allowed in order for claims to mature. The public sector is exposed to a wide spectrum of claims, for example historic abuse/failure to protect claims, where claim lifecycles tend to be longer. For the public sector, therefore, the true picture of the impact of the reforms will take longer to emerge.
The coverage of the Savile revelations, and subsequent much-publicised investigations such as Operation Yewtree, has brought claims for historic abuse to the forefront of the public consciousness. We are regularly defending historic claims where claimants are stating that extensive media coverage has triggered memories of their own experiences; emboldened them to make a claim on the basis that they feel that they are more likely to be believed now; and also that they are now aware that claims can be brought for historic abuse and/or failure to remove or protect.
With the increase in justified claims for historic abuse, it is somewhat inevitable that there has been an increase in claims which may be considered to be suspect. Claimants’ solicitors are actively pursuing clients in respect of claims for historic sexual abuse, particularly with regard to group actions against large organisations such as local authorities. In circumstances where abuse against one or more individuals has been proven, particularly in a criminal court, when other claimants come forward it is then very difficult to prove to a sufficient standard that other abuse has not occurred. With the introduction of qualified one-way costs shifting, and the complexity associated with defending such claims, commercial settlements have to be considered at an early stage in such circumstances.
There is much speculation in the industry regarding fraudsters switching or extending their focus from whiplash to EL and PL claims. Local authorities have reportedly seen increased injury fraud and those dealing with public sector claims must therefore be vigilant in identifying possible fraudulent claims. If it is correct that would be fraudsters are diverting their attention from whiplash to slip and trip claims, then it is not difficult to foresee that those defending claims in the public sector are more likely to be affected than those in other areas.
Evidence of the claims industry’s adaptability is demonstrated by the impact of noise induced hearing loss claims, which have reportedly increased by 400% over the last four years. It is therefore vitally important to nip any adverse trends in the bud at the earliest possible opportunity, particularly given that fraudulent motor claims are now being firmly targeted.
A further area that we are mindful of is the possibility of claimants seeking to portray diagnoses that are subjective, such as chronic regional pain syndromes or psychological injuries triggered by an injury. Such conditions, which may not be obvious from the outset of a claim when liability is being considered, have the potential to significantly increase the value of a claim and, hand in hand, the value to the claimant’s solicitor.
It is still early days in comprehensively assessing the impact of the reforms on the public sector and the full picture will develop as time goes go by. As we assess the data now across our client base, savings on lower value claims are to be welcomed, but we must be mindful that at 16 months maturity the majority of claims settled are of low value and low complexity and the costs reduction may erode as more mid to high-range value claims are concluded.
As the new regime beds in, our clients are managing the new systems far more efficiently, and streamlining procedures for investigating claims and are thereafter able to take quick, fully informed, liability decisions. As processes continue to improve, the benefits of the new regime will continue to increase and our clients’ reserves will continue to decrease.