Archive for the ‘Chapter 9’ Category
For some time the Government (under pressure from the Insurance industry) has been concerned about the numbers of claims and the aggregate amount of those claims for minor injuries arising from Road Traffic Accidents.
Between November 2016 and January 2017 the Government consulted on a package of measures to tackle the continuing high number and cost of whiplash claims and their impact on motor insurance premiums.
The Government’s concern was that the volume of road traffic accident related personal injury claims has remained static over the last three years and is over fifty per cent higher than 10 years ago (460,000 claims registered in 2005/06 28 compared with 770,000 in 2015/16) despite a reduction in the number of road traffic accidents reported to the police and improvements in vehicle safety, for example better head restraints.
It was noted that similar improvements in vehicle safety in other jurisdictions have led to a reduction in both the number of claims and motor insurance premiums.
The Government’s view is that the continuing high number of low value claims increases the cost of motor insurance premiums, paid by motorists in England and Wales. The Government has set out its view that the level of compensation paid to claimants for these claims is also out of proportion to the level of injury suffered. It has therefore decided to introduce measures to disincentivise minor, exaggerated and fraudulent claims.
Part 5 addresses this matter.
Clause 62 enables the Lord Chancellor to specify in regulations, in the form of a tariff, the damages that a court may award for pain, suffering and loss of amenity (“PSLA”) for relevant whiplash injuries sustained in road traffic accidents, in those cases where the duration of the injury does not exceed or is not expected to exceed two years. The tariff will provide for an ascending scale of fixed sum payments with the relevant tariff for a particular case identified by reference to the severity of the injury. Regulations may specify different sums for different descriptions of injury.
There will be power to deviate from the tariff in exceptional circumstances.
Clause 64 bans regulated persons (basically solicitors and barristers, legal executives and alternative business structures) from making or accepting a payment in settlement, or inviting, or offering to settle an RTA related whiplash claim without appropriate medical evidence.
Whether these changes will actually lead to any reduction in insurance costs is currently hard to determine, particularly given other recently announced changes that may result in a general increase in awards of damages for personal injury.
Enromous changes to the ways in which courts – both criminal and civil – and tribunals operate have already been foreshadowed in a number of policy documents published during 2016. Parts 2 to 4 of the Prisons and Courts Bill contain provisions that will give statutory authority to the changes that have been proposed.
The headline provisions may be set out as follows:
Part 2 creates new procedures in civil, family, tribunal and criminal matters.
It makes changes to court procedures in the Crown Court and magistrates’ courts to make processes and case management more efficient.
It allows some offenders charged with summary-only, non-imprisonable offences to be convicted and given standard penalties using a new online procedure.
It extends the use of live audio and video links, and ‘virtual’ hearings where no parties are present in the court room but attend by telephone or video conferencing facilities.
It makes provision which will apply across the civil, criminal and tribunal jurisdictions to ensure public participation in proceedings which are heard virtually (by the streaming of hearings), including the creation of new criminal offences to guard against abuse, for example by recording such stramed hearings.
It creates a new online procedure rules committee that will be able to create new online procedure rules in relation to the civil, tribunal and family jurisdictions.
It bans cross-examination of vulnerable witnesses – in particular those who have been the subject of domestic abuse – in certain family cases.
It confers the power to make procedure rules for employment tribunals and the Employment Appeal Tribunal on the Tribunal Procedure Committee and extends the membership of the Committee to include an employment law practitioner and judge or non-legal member.
Part 3 contains measures relating to the organisation and functions of courts and tribunals.
It extends the role of court and tribunal staff authorised to exercise judicial functions giving the relevant procedure rules committees the power to authorise functions in their respective jurisdictions.
It abolishes local justice areas, enabling magistrates to be appointed on a national basis, not just to a specific local justice area.
It replaces statutory declarations with statements of truth in certain traffic and air quality enforcement proceedings.
It makes reforms to the arrangements for the composition of employment tribunals and the Employment Appeal Tribunal.
It enables the High Court to make attachment of earnings orders for the recovery of money due under a judgment debt, as far as practicable, on the same basis as in the County Court.
Part 4 contains measures relating to the judiciary and the Judicial Appointments Commission.
It enables more flexible deployment of judges by enabling them to sit in different jurisdictions.
It brings the arrangements for the remuneration of judges and members of employment tribunals – currently undertaken by the Secretary of State for Employment – under the remit of the Lord Chancellor.
It rationlises the roles of judges in leadership positions who will support a reformed courts and tribunals system. (This includes provision to abolish the statutory post of Justice Clerk; this role will continue, but those qualified to be Clerks will also be able to undertake analogous work in other court/tribunal contexts.)
It gives the Judicial Appointments Commission the power to carry out more work (not directly related to judicials appointments) on a cost-recovery basis.
Source, Explanatory Notes to the Prisons and Courts Bill 2017, available at https://www.publications.parliament.uk/pa/bills/cbill/2016-2017/0145/en/17145en02.htm
The Competition and Market Authority Final Report on legal services was published in December. Its interim report was noted in this blog in July 2016.
The CMA found that competition in legal services for individual and small business consumers is not working as well as it might. In particular, there was a lack of digital comparison tools to make comparisons easier for consumers. Lack of competition meant some providers can charge higher prices when substantially cheaper prices are available for comparable services.
In response to these findings, the CMA set out a package of measures which challenges providers and regulators to help customers better navigate the market and get value for money. These changes were drawn up after discussions with key stakeholders, including the 8 frontline legal regulators, and will be overseen by the Legal Services Board, which will report on progress.
A requirement on providers to display information on price, service, redress and regulatory status to help potential customers. This would include publishing pricing information for particular services online (only 17% of firms do so at present).
Revamping and promoting the existing Legal Choices website to be a starting point for customers needing help, information and guidance on how to navigate the market and purchase services.
Facilitating the development of comparison sites and other intermediaries to allow customers to compare providers in one place by making data already collected by regulators available. At present only 22% of people compare the services on offer before appointing a lawyer.
Encouraging legal service providers to engage with feedback and review platforms to ensure that customers can benefit from the experience of others before making their choice.
Recommending that the Ministry of Justice looks at whether to extend protection from existing redress schemes to customers using ‘unauthorised’ providers.
In addition, the CMA considered the impact of legal services regulation on competition. The CMA found that whilst the current system is not a major barrier, it may not be sustainable in the long term. In particular, the framework is not sufficiently flexible to apply proportionate risk-based regulation which reflects differences across legal services which could harm competition. The CMA therefore also recommends that the Ministry of Justice reviews the current framework to make it more flexible and targeted at protecting consumers in areas where it is most needed.
The Legal Services Board has welcomed the report and announced that it will publish its response in due course. The Ministry of Justice response is also awaited.
In this blog, I noted (Feb 2016) the appointment of the MP for Tottenham, David Lammy, to lead a review of racial bias in the criminal justice system. He has now published his ’emerging findings’ in a letter he has sent to the Prime Minister. His final report is expected in 2017. The Press Release states:
The review commissioned an analysis paper looking at disproportionality in the criminal justice system. One finding was that for every 100 white women handed custodial sentences at Crown Courts for drug offences, 227 black women were sentenced to custody. For black men, this figure is 141 for every 100 white men.
Among all those found guilty at Crown Court in 2014, 112 black men were sentenced to custody for every 100 white men .
The disproportionality analysis also found that, among those found guilty, a greater proportion of black women were sentenced to custody at Crown Court than white women.
Other notable findings highlighted today from the disproportionality analysis and the wider Lammy review include:
Of those convicted at Magistrates’ Court for sexual offences, 208 black men and 193 Asian men received custodial sentences for every 100 white men.
BAME defendants are more likely than their white counterparts to be tried at Crown Court – with young black men around 56% more likely than their white counterparts;
BAME men were more than 16% more likely than white men to be remanded in custody;
BAME men were 52% percent more likely than white men to plead ‘not guilty’ at crown court;
In prisons, BAME males are almost five times more likely to be housed in high security for public order offences than white men, and
Mixed ethnic men and women were more likely than white men and women to have adjudications for breaching prison discipline brought against them – but less likely to have those adjudications proven when reviewed.
51% of the UK-born BAME population agree that ‘the criminal justice system discriminates against particular groups’, compared to 35% of the UK-born white population;
41% of youth prisoners are from minorities backgrounds, compared with 25% ten years ago, despite prisoner numbers falling by some 66% in that time;
The number of Muslim prisoners has almost doubled in the last decade.
The next stage for the review will be to examine the reasons for these figures and to explore whether they reveal bias in the system against those from BAME groups.
It has also been announced that Lammy will – as part of this exercise – take a closer look at diversity in the judiciary and the numbers of judges from BAME groups.
The details of the emerging findings are at https://www.gov.uk/government/news/lammy-review-emerging-findings-published
For a number of years, it has been accepted that there should be greater diversity among the judiciary. The gender and ethnicity of the judiciary should broadly reflect the gender and ethnicity of the population as a whole. There has been considerable effort to more the judiciary away from their ‘white, male, upper middle class’ image.
The present Lord Chief Justice is determined that progress towards a more balanced judiciary should be advanced. The latest Judicial Diversity Statistics, published in July 2016, indicate that some progress has been made.
The headline findings are that in April 2016:
- The number of woman Court of Appeal Judges remains the same as last year at eight out of 39 (21 per cent).
- Twenty two out of 106 High Court Judges are women (21 per cent). In April 2015 the number was 21 (20 per cent).
- In the courts the percentage of female judges has increased from April 2015 to April 2016 from 25% to 28%. In tribunals it remained stable at 45%.
- The number of female Circuit Judges increased from 146 in April 2015 to 160 in April 2016 (from 23 per cent to 26 per cent)
- More than half (51 per cent) of the 85 court judges who are under 40 years of age are women (53% last year). In tribunals, 64 per cent of the 56 judges under 40 are women (56% last year)
- The percentage of judges who identify as Black, Asian and Minority Ethnic (BAME)is 5% in courts (6% last year), and in tribunals 9% (stable since 2015). This is higher for judges under 40 – 8% (6% last year) for courts and 14% (15% last year) for tribunals.
- A third (34%, compared with 36% in 2015) of court judges and two thirds (65%, compared with 67% in 2015) of tribunal judges are from non-barrister backgrounds. Judges in lower courts more likely to come from a non-barrister background.
The conclusions that may be drawn from these findings is that some progress has been made in the appointment of women as judges; but the numbers of BAME judges remain low.
In order to encourage applications, particularly from women and BAME candidates, the Judges Council has established a Judicial Diversity Committee, which undertakes different events and initiatives to encourage a wider range of candidates to apply for judicial appointment. They have recently published their first report.
Their work includes:
- sponsoring networking events;
- running a judicial shadowing programme;
- appointing judicial role models from the existing bench to provide advice and guidance to potential applicants.
One pilot initiative relates to developing ways to encouraging applications for appointment to the High Court bench from those who have not had practice experience as a barrister, including leading academics.
To see the Judicial Diversity Statistics, go to https://www.judiciary.gov.uk/wp-content/uploads/2016/07/judicial-diversity-statistics-2016-2.pdf.
The report of the Judicial Diversity Committee is at https://www.judiciary.gov.uk/wp-content/uploads/2016/07/judicial-diversity-committee-progress-report-13-16.pdf
Not all legal services are provided by lawyers or legal executives who are regulated by their professional bodies. There is a group of legal service providers who are not authorised and regulated under any legal sector specific legislation, but who are providing legal services for profit and as a significant focus of their work.
The Legal Services Board has recently (June 2016) published research on the work of this sector of the legal service market. The research looked in detail at will-writing, online divorce and intellectual property.
The Key Findings of the research were:
- For profit unregulated providers make up a small proportion of the legal services market. In the individual legal needs survey, they represented 4.5-5.5% of cases in which consumers paid for advice or representation.
- In contrast, not for profit providers, most of whom will be unregulated, accounted for approximately 37% of all legal problems where advice was sought.
- Benefits for consumers include lower prices and greater price transparency compared to regulated providers, innovation and service differentiation, and competitive impact on regulated providers.
- The main risks to consumers relate to consumers not making informed choices and misleading advertising claims. The research did not assess the technical quality of work.
- Consumer satisfaction with customer service is broadly comparable across regulated and unregulated providers – 84% versus 81% respectively.
- More than half of consumers who instruct for profit unregulated providers are aware of their regulatory status. Of those who don’t check, a significant proportion do not do so because they assume that they are regulated.
- There is a limited potential market for voluntary regulation beyond existing trade associations given the size of the market and low appetite for such initiatives among providers.
For the time being, at least, the policy conclusions for the Legal Services Board are that
- The for profit unregulated sector is smaller than expected, although in some segments these providers have gained a significant market share.
- Based on the evidence of benefits and risks to consumers and limited potential market for voluntary regulation beyond existing trade associations, the LSB will monitor developments but will not pursue a voluntary arrangement under the Legal Services Act.
- Consumers should be encouraged to check whether or not providers are regulated.
In other words no active intervention for the moment.
Notwithstanding these broad conclusions, the research did look more closely at the work of for profit unregulated providers in three areas: will-writing; divorce; and intellectual property, where not insignificant amounts of legal services work was being undertaken by unregulated providers – around 10% of the work. The dominance in the area of divorce by 5 on-line companies offering very cheap services can be particularly noted.
My guess is that, so long as the unregulated sector provides cost-effective services, with which consumers are satisfied, the lack of regulation will continue. But if there is a highly publicised scandal, then the regulatory context will change.
One of the last Ministerial actions taken by Lord Faulks, before he decided to leave the Government, was to publish a very important consultation on how Alternative Business Structures (ABS) should be regulated.
On 30 November 2015, the Government published, ‘A Better Deal: boosting competition to bring down bills for families and firms’ which set out the Government’s approach to encouraging open and competitive markets, for the benefit of the UK economy and UK consumers. A key part of the Government’s approach is to ensure that the statutory frameworks underpinning regulatory regimes allow regulators to regulate in a way that is proportionate and promotes competition and innovation.
As the legal services market is not only an important contributor to the UK economy, but also to ensuring individuals’ and companies’ access to justice, the Government seeks to develop a strong, independent and competitive legal services market, which will promote consumer choice and quality services at lower prices, ensuring greater access to justice for all.
The Better Deal document included a pledge to consult on two particular matters:
- making changes to the regulatory framework for legal services to remove barriers to market entry, and regulatory burdens on, Alternative Business Structures in legal services, and
- making legal services regulators independent from professional representative bodies.
The second of these is delayed, pending the final report from the Competition and Markets Authority – about which I have written separately.
However on 7 July 2016, the Government published a Consultation Paper on what changes might be needed to the regulation of ABSs.
Since 2010, when Alternative Business Structures were first licensed to provide legal services, over 600 ABS firms have entered the market. According to the Government:
The introduction of ABS businesses, particularly those that have access to external investment and business and commercial expertise, has benefited the market more widely. Recent research has indicated that ABS firms are more likely to be innovative than other regulated legal services firms. These new, innovative providers have increased competition in the market, which [the Government believes] encourages a wider variety of legal services in the market that are more accessible and affordable to consumers.
As a result of concerns raised at the time about the potential risks of new and unknown business models, the legislative framework for the regulation of ABS businesses, set out in the Legal Services Act 2007, is more onerous and prescriptive than that for traditional law firms.
Six years on, experience suggests that ABS businesses have not been shown to attract any greater regulatory risk than traditional law firms. In consequence, the Legal Services Board and front-line regulators suggest that the current statutory requirements act as a deterrent and an unnecessary barrier to firms wanting to change their current business model to a more innovative one, as well as to new businesses considering entering the market.
The proposals set out in the consultation aim to enable legal services regulators to reduce regulatory burdens on ABS, while taking a more effective risk-based approach to regulation. The proposals are very technical in nature. The following summary is set out in Legal Futures.
- ABSs should not have to provide reserved legal activities from a practising address in England and Wales. The consultation said this restriction can prevent online businesses being licensed as ABSs, while traditional firms are not required to do reserved work.
- ABS licensing authorities should be able to make their own rules around ABS ownership, in line with guidance to be provided by the LSB. The consultation said the current “inflexible” rules on which non-lawyers need to be investigated before assuming ownership of an ABS leads to unnecessary checks on some people who have no real control or influence over an ABS, but others who should be checked fall outside the definitions set out in the Act.
- Abolishing the requirement to consider whether an ABS applicant explicitly meets the regulatory objective of improving access to justice. There is no equivalent on non-ABS firms or individuals, while all the regulators and licensing authorities are separately under an obligation to improve access to justice anyway. “We consider that this would save cost and time for applicants who wish to become an ABS as well as for regulators.”
- Amend the Act so that heads of legal practice and of finance and administration (COLPs and COFAs in traditional firms) only have to report ‘material’ failures to comply with licensing rules, rather than ‘all’ failures as now. This would bring ABSs into line with non-ABS firms.
The Consultation runs until 3 August 2016.
For Lord Faulks Ministerial statement, see https://www.gov.uk/government/speeches/legal-services-regulation.
For the Consultation paper, go to https://consult.justice.gov.uk/digital-communications/legal-services-removing-barriers-to-competition
For the summary in Legal Futures go to http://www.legalfutures.co.uk/latest-news/government-lays-plans-encourage-abss-enter-market#