Personal Injury Brief market insights – March 2019
A summary of key developments, including an update on the Civil Liability Act (whiplash claims and discount rate review), the small claims track, post-implementation review of LASPO, Scottish civil justice reforms, online court modernisation, regulation of claims management companies, the McKenzie Friends consultation and the review of ADR within the civil justice system in England and Wales.
The Civil Liability Act 2018
On 20 December 2018, the Civil Liability Bill received Royal Assent, starting the first review of the personal injury discount rate. The review must be completed by 5 August 2019 but the government is being pressed to set a new rate as quickly as possible.
Measures relating to whiplash are expected to be implemented ahead of April 2020, to allow large-scale testing of the online systems. Regulations are to be made on a number of areas including the levels of tariff applied to injuries, court powers to award an uplift on the tariff, medical reporting and FCA regulation and reporting.
Contact: Mark Burton
Related item: Civil justice reforms – a game of two halves
Small claims track
Alongside the whiplash measures within the Civil Liability Act 2018, the process to increase the track limit to £5,000 for motor-related claims is expected to progress in 2019 to allow the framework to be in place for April 2020. The Civil Procedure Rules Committee will oversee these changes. Secondary legislation will be necessary to progress the IT portal – expected to move into its next developmental phase shortly.
The proposed increase of the track limit to £2,000 for employer and public liability claims is expected to follow the increase of the motor track.
Contact: Mark Walsh
Related item: The Claims Portal – looking back and thinking forwards
Civil justice reform in Scotland
Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018
On 8 November 2018, the Scottish Government opened its consultation into Part 1 of the Act, which deals with the regulation of success fee agreements (no win no fee). The main purpose of the consultation is to determine the correct level of cap for personal injury claims. Proposed caps include up to 20% for the first £100,000 of damages. Kennedys provided a response to the consultation, which closed on 31 January 2019 and the Scottish Government proposes to implement the new provisions at the same time as the FCA regulation of claims management companies commences on 1 April 2019.
Damages (Investment Returns and Periodical Payments) (Scotland) Bill
Stage 2 of the Bill was completed on 22 January at committee level, following the Stage 2 debate. The Bill was amended to extend the review cycle for the discount rate in Scotland from three years to five in line with England and Wales, to require Scottish Ministers to consult on the make-up of the notional investment portfolio when the discount rate is reviewed and to the continuity of PPOs. An amendment to increase the standard adjustment for investment charges and taxation to 1.5% was withdrawn but could be revisited at Stage 3 – as could the withdrawn amendment to reduce the further margin adjustment to 0.25%. Stage 3, which the final opportunity for debate, will take place on 19 March.
- One stage closer to accurate compensation? Update on the Scottish Damages Bill
- Kennedys warns of rising cost of injury claims following Scottish reforms
Post-implementation review of LASPO
The Ministry of Justice completed their post-implementation review of Part 2 (litigation funding and costs) of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) on 7 February 2019.
The government considered that, on balance, the evidence suggests that the Part 2 reforms have been successful against their objectives. They believe that costs have been reduced, that fewer unmeritorious cases are being taken forward and that access to justice at proportionate cost is generally being achieved. The government is not therefore proposing to make any changes to the legislation.
Contact: Tracy Head
New era of regulation for claims management companies
On 1 April 2019, the Financial Conduct Authority (FCA) will become the regulator of case management companies (CMCs) in England, Wales and Scotland. Following a consultation, the FCA published its Policy Statement on 17 December 2018, which sets out the rules and fees it will apply to CMCs.
CMCs now have until 31 March 2019 to apply for ‘temporary permission’ if they want to continue trading after 1 April 2019. This will allow them to continue to operate until they are fully FCA-authorised during one of two waves running from April until the end of July.
Contact: Ian Davies
HMCTS delays court reforms and inquiry is held into the implications of the reforms on access to justice
On 6 March 2019, the government announced that the revised finish date for the £1 billion court modernisation project will be delayed until 2023 to allow for more time to develop some of the shared systems that will form the basis of the next set of online services.
This delay is hot on the heels of the House of Commons Justice Committee launching an inquiry into the project at the start of the year. The inquiry will focus on the progress made with the reforms so far and the implications of planned changes, particularly in relation to access to justice and the increasing use of digital and video technology. The inquiry will run until 11 March 2019.
Contact: Richard West
Reforming the courts’ approach to McKenzie Friends
In February 2019, the response of the Lord Chief Justice to the McKenzie Friends consultation was published. The consultation examined the growth in McKenzie Friends following the enactment of LASPO.
The Judicial Executive Board (JEB) remain concerned about the proliferation of McKenzie Friends who are unqualified, unregulated and uninsured. It has identified support for a number of reforms, including the introduction of a Code of Conduct, replacing the practical guidance for McKenzie Friends with rules of the court and prohibiting McKenzie Friends from recovering fees. The consultation response has been referred to the Lord Chancellor.
Contact: Paul Bedford
Encouraging ADR – Civil Justice Council published final report
The Civil Justice Council (CJC) has published a report making recommendations for alternative dispute resolution (ADR). The final report makes 24 recommendations, which include the use of a judicial-ADR liaison committee, increased public awareness of ADR, peer mediation in schools, increased law faculty and professional training and a new website to act as a single umbrella source for information about ADR.
The Working Group (set up in 2016) specifically consider the question of timing, and recognise that the optimum timing for mediation may vary. The report specifically confirms that the Working Group does not support wholesale obligation. It waits to be seen if and how many of the recommendations are adopted.
Meanwhile, industry groups including APIL, FOIL and MASS are in the process of setting up a register of mediators qualified by experience to mediate claims in personal injury. The ADR elements of the new Small Claims Personal Injury Jurisdiction are also under development.
Contact: Rachel Moore