Justice: Personal Injury Cases

Tuesday 20th December 2011 Lords Chamber

Question

14:43

Asked By

[Lord Hoyle]

To ask Her Majesty’s Government why they are proposing that personal injury claimants pay part of their legal costs.

[The Advocate-General for Scotland (Lord Wallace of Tankerness)]

My Lords, the Government are reforming no-win no-fee conditional fee arrangements to return them to the basis on which they were first introduced in the 1990s. CFAs worked well then, and personal injury claimants were liable to contribute to their lawyer’s success fee if the lawyer charged one. However, CFA claimants no longer have an interest in the costs run up on their behalf. Our reforms will bring proportion to civil litigation costs while preserving access to justice.

[Lord Hoyle]

Does the Minister not understand that many people who have suffered serious and maybe life-threatening injuries will be deterred from seeking compensation? Far from saving £50 million, as has been suggested, recent Parliamentary Answers have shown that this measure will cost the Government over £100 million, which comprises legal fees, additional compensation and loss of income from recovered treatment fees from insurers? This is a folly. It will deter ordinary people from going forward to seek the compensation that is due to them.

[Lord Wallace of Tankerness]

My Lords, the Government do not accept that the measure will deter people from coming forward. As I indicated, the reforms brought in by my noble and learned friend Lord Mackay of Clashfern in the 1990s, which introduced the no-win no-fee conditional fee agreements, allowed people suffering from personal injuries to come forward and pursue their claims. We are not satisfied that at present there is a proper proportion with regard to the amount of fees charged, particularly where the claimant has no interest in ensuring that they are kept within modest means. The system has got out of proportion; our reforms seek to bring it back into proportion.

[Baroness O'Loan]

Is the Minister satisfied that there will be equality of access to justice for the very poorest victims of clinical negligence in circumstances in which they must bring their action against public authorities, whose defence will be funded by the state?

[Lord Wallace of Tankerness]

My Lords, I perfectly recognise that the issue of clinical negligence is one that many Members of your Lordships’ House raised during Second Reading, and I am sure that it will be fully debated when we reach the relevant stage in Committee. We say that “after the event” insurance premiums should be allowable in cases of clinical negligence. Indeed, we are seeking through the NHS and those who represent claimants to try to ensure that, where there can be joint reports and better agreements between the two sides, that should be done. I hope that we can make progress on that but no doubt it will be fully debated in the weeks to come.

[Baroness Turner of Camden]

Does not the Minister think it very unfair that somebody who has been injured through somebody else’s fault, and is suing on the basis that someone else is at fault, should lose some of their compensation even though it is not their fault?

[Lord Wallace of Tankerness]

My Lords, success fees are intended to cover the risk of not winning and the lawyers not being paid. In many cases where there is personal injury there is a very low risk of that happening. Indeed, it begs the question whether it is necessary for solicitors to charge success fees at all in these situations. However, as my noble friend Lord Gold pointed out at Second Reading, claimants who fund themselves often do not receive the full amount of their compensation. It seems rather odd, to put it mildly, that those who are funded by the taxpayer should get the full amount back but those who fund themselves do not recover the full amount of their compensation.

[Lord Faulks]

My Lords, I understand that there is an intention to bring in damages-based agreements whereby a claimant will have to pay some of their costs out of the damages they receive. The compensation factor is that there will be a 10 per cent increase in general damages for pain and suffering and loss of amenity, which is currently assessed by judges on an ad hoc basis and according to the Judicial Studies Board guidelines. However, bereavement damages have long troubled people as being far too low. They are £11,800, which can be split between all those who are bereaved as a result of an accident. Do the Government have any plans to increase the size of bereavement awards, particularly in view of the fact that other awards may be increased by 10 per cent under the new regime?

[Lord Wallace of Tankerness]

My Lords, my noble friend raises the important point about damages in respect of bereavement. As he noted in his question, conventionally these matters have been dealt with by the judiciary. Certainly, the proposed 10 per cent increase will be taken forward by the senior judiciary. I will ensure that the important point my noble friend makes regarding damages for bereavement is drawn to its attention.

[Lord Thomas of Gresford]

My Lords, the Minister will know that the NHSLA—that is, the legal arm of the NHS—opposes these changes and desired that legal aid should continue in clinical negligence cases. That was its answer to the consultation process. What is its current position?

[Lord Wallace of Tankerness]

My Lords, I am not aware that it has made any further pronouncements on the matter. However, the Government believe that a conditional fee arrangement backed by ATE insurance will ensure that the vast majority of clinical negligence claims will be able to be investigated and that the ATE insurance market will adapt to the new arrangements. It is also important to point out that in Clause 9 of the Bill there is an exceptional funding scheme, which may well be relevant in profoundly serious cases where clinical negligence arises. However, I am sure that my noble friend will make a contribution on these matters when this is debated, I hope next month.

[Baroness Seccombe]

My Lords, does my noble friend agree that people in minor accidents are sometimes encouraged to find that they have whiplash, which encourages a lawyer to say that they must be legally represented?

[Lord Wallace of Tankerness]

My Lords, I made the point earlier that there is little or no risk involved in many cases, but I also think—and this relates to my noble friend’s point—that some cases in which a claimant is funding their own legal costs may well never come to court, whereas if all their fees are paid for them it may be easier to pursue the claim.