Civil Liability Bill House of Commons, Second Reading 4 September 2018 The Law Society of England and Wales is the independent professional body that works to support and represent over 180,000 members, promoting the highest professional standards and the rule of law. 1. Introduction This briefing outlines the view of the Law Society ahead of the Second Reading of the Civil Liability Bill in the House of Commons on 4 September 2018. The Bill, which has completed its passage through the House of Lords, consists of two main parts: Reforming the claims process for whiplash injuries (resulting from road traffic accidents) that last for up to two years; Changing the way in which the personal injury discount rate, applied to lump sum awards of damages for future loss, is set. The Law Society's key positions and priorities for the Civil Liability Bill: We believe that this Bill will mean drivers and passengers injured through no fault of their own will struggle to access justice. When combined with the Ministry of Justice s proposals to increase the small claims limit, the amount of legal advice and guidance that can be obtained from a solicitor in personal injury cases will be severely restricted. The Law Society strongly opposes provisions in the Bill to establish a tariff for compensation for whiplash injuries. We do not believe the same injury should be compensated less just because it was sustained in a road traffic accident and argue that tariffs would limit access to justice. We believe that judges should be given the discretion to award appropriate uplift in exceptional circumstances, without being fettered by the restrictions in the Bill. We are concerned that much of the legislation will come through regulations without full Parliamentary scrutiny, and we will continue to seek to clarify the Government s intention for the regulations during the progress of the Bill through Parliament. Before making these reforms, we would urge the Government to review Part 2 of the Legal Aid Sentencing and Punishment of Offenders Act 2012 (LASPO) and to reassess how best to tackle fraud.
2. Part 1 - Whiplash injuries Part 1 of the Bill makes reforms to the claims process for those suffering from whiplash injuries (resulting from road traffic accidents) that last up to two years. Clause 1 and 2 Whiplash injury a) Definition of whiplash Clause 1 establishes a definition for whiplash injuries, and Clause 2 provides for regulations in which the Lord Chancellor can amend that definition. The definition of whiplash injury on the face of the Bill is: (2) An injury falls within this subsection if it is (a) a sprain, strain, tear, rupture or lesser damage of a muscle, tendon or ligament in the neck, back or shoulder, or (b) an injury of soft tissue associated with a muscle, tendon or ligament in the neck, back or shoulder. (3) An injury is excepted by this subsection if (a) it is an injury of soft tissue which is a part of or connected to another injury, and (b) the other injury is not an injury of soft tissue in the neck, back or shoulder of a description falling within subsection (2). (Part 1, Clause 1, lines 8-17) We are pleased that the Government has accepted the arguments from the Law Society, the House of Lords Delegated Powers and Regulatory Reform Committee, and others, that they must define whiplash injuries on the face of the Bill, rather than in regulations. However, we do not consider the proposed definition in the Bill to be appropriate as: Very serious injuries could be classified as whiplash - Significant injuries such as tears to muscles and tendons in the shoulder could fall under the definition of whiplash as outlined in the Government s definition. These injuries could be debilitating, require serious medical treatment, or involve a lengthy and complex recovery, going far beyond the general understanding of a whiplash injury. The current definition could see very serious injuries sustained in a road traffic accident misclassified as a whiplash injury, denying the victim appropriate compensation. It is not a medically accurate term - The NHS defines whiplash as a whiplash injury is a type of neck injury caused by sudden movement of the head forwards, backwards or sideways. 1 It remains unclear what input from medical professionals the Government sought when drafting this definition, which goes beyond a standard definition of whiplash. We would urge the Government to develop a definition with input from medical professionals, as they have committed to doing should there be any alteration to the definition in future regulations. Getting the definition of whiplash injuries right is incredibly important. Failure to set an appropriate definition could unnecessarily restrict people with genuine whiplash injuries from making a claim, or indeed a poor definition could capture those with worse injuries and prevent them from making a more appropriate claim for compensation. 1 NHS, Definition of Whiplash, Accessed August 2018 [https://www.nhs.uk/conditions/whiplash/] 2
If it is appropriate for medical professionals to have input when revising the definition, surely it must be appropriate for them to have input when establishing the definition in the first instance. Clauses 3 and 4 Damages for whiplash injuries a) Tariff levels Clause 3 introduces a tariff for compensation in whiplash claims. It enables the Lord Chancellor to specify in regulations a tariff to determine the damages the court may award for whiplash injuries sustained in road traffic accidents. These tariffs were laid out in a draft order of the Civil Liability Bill, published in May. The proposed tariffs were helpfully presented alongside the current average damages by injury duration in an article on Legal Futures, 2 and reproduced below: Injury duration in months Proposed fixed tariff damages post reform Current average damages Insurer saving per claim 0-3 235 1,800 1,600 3-6 470 2,250 1,750 6-9 805 2,700 1,900 9-12 1,250 3,250 2,000 12-15 1,910 3,650 1,750 15-18 2,790 4,150 1,350 18-24 3,910 4,750 850 Over 24 No revision N/A N/A The Law Society fundamentally disagrees with the proposal to introduce a tariff. We believe that: Those with the same injuries sustained through different circumstances should be compensated the same We are concerned that under these proposals the same injury would be compensated less just because it was sustained in a road traffic accident, rather than in another way. The tariffs allocated are far too low to compensate whiplash injuries appropriately Under these proposals, a person who sustains a whiplash injury lasting three months in a road traffic accident would only receive up to 235 in compensation. They may have suffered this injury through no fault of their own and could suffer with terrible pain in their back and neck throughout that time, affecting their day to day life. However, that same individual could receive significantly more if they experienced a flight delay. They could receive 400 if they had a flight delayed by 3 hours. 3 A flight delay is inconvenient and should be compensated, but it does not compare to living in pain for months, so it is only right that those who suffer from whiplash injuries receive appropriate compensation. A similar example of compensation for a train delay is detailed by the Association of Personal Injury Lawyers (APIL) in their parliamentary briefing for second reading of the Bill in the House of Commons. 4 The tariffs will be politically decided and not judicially independent - The Lord Chancellor will determine compensation amounts under the current proposals, without input from or the experience of the judiciary. The rates of compensation have been established through 2 Legal futures, A guide to the Civil Liability Bill, June 2018 (last accessed 13 August 2018) [https://www.legalfutures.co.uk/features/a-guide-to-the-civil-liability-bill] 3 Under EU Regulation 261/2004, passengers on flight between 1,500km and 3,500km, or more than 1,500km and within the EU, delayed by 3 hours or more are entitled to 400 in compensation. 4 APIL, Parliamentary briefing for Civil Liability Bill, Commons Second Reading, July 2018 [https://www.apil.org.uk/files/online-files/85-842621/civil-liability-bill-house-of-commons.pdf] 3
common law over a number of years and are enshrined in the Judicial College Guidelines. If tariffs are introduced, judges will be constrained by them and unable to determine compensation based on their own experience and training, and on legal precedent. We are therefore concerned that these reforms could impact on access to the expertise and experience of the courts as currently available, adversely affecting individuals trying to access justice. Tariffs will impact on access to justice Those who are injured through no fault of their own in a road traffic accident are entitled to compensation and justice. We are concerned that by establishing a tariff for whiplash injuries sustained in RTAs, the Government risks discouraging those with injuries making a claim for compensation and denying them justice. We were disappointed that the amendment in the name of Lord Woolf to remove tariffs from the Bill was narrowly defeated at Report Stage in the House of Lords. We agree with his assertion that tariffs will reduce the damages that will be received by an honest litigant, because of the activities of dishonest litigants. 5 While the Law Society does not support the proposed introduction of a tariff, if a tariff were to be pursued we believe it should be set through consultation with the Judiciary and with regard to the existing Judicial College Guidelines. In Part 2 of the Bill, the Government commits to establishing the personal injury discount rate only after consultation with a panel of experts. The Law Society believes that this would be a more appropriate approach to setting tariffs for compensation in whiplash claims in the first instance, should a tariff-based system be pursued. b) Mitigation Clause 2 also sets out how a court would determine damages for pain, suffering and loss of amenity in whiplash cases resulting from a road traffic accident. It details that the reforms apply where the duration of the pain, suffering and loss of amenity does not exceed two years, or where it would not have exceeded two years but for where the claimant has failed to take reasonable steps to mitigate the effect of the injury. The Law Society would like the Government to further clarify what will constitute a claimant s failure to take reasonable steps to mitigate. We are concerned that claimants may be punished through no fault of their own, for example for declining physical therapy because they could not take time off work. Unless the legislation clarifies further what steps to mitigate the effects of an injury would be deemed reasonable, the Law Society believes that clauses relating to mitigation should be removed from the Bill. c) Minor psychological injury We are concerned that the definition of minor psychological injury in Clause 2 has not been adequately defined on the face of the Bill. We believe that the Government should consult with medical professionals to appropriately define minor psychological injury on the face of the Bill. Clause 5 Uplift in exceptional circumstances Clause 5 of the Bill enables the Lord Chancellor to provide in regulations for the courts to use discretion in exceptional circumstances to increase the sum determined through the tariff. The Law Society is broadly supportive of uplift in exceptional circumstances, where the legislation allows the courts to exercise their discretion. However, we are concerned that judicial discretion will still be restrained by this clause. We believe that the test on exceptionality in Clause 5 of the Bill is a high barrier for what will be a modest uplift on low levels of compensation, and where the definition of exceptional has not been made clear. 5 Lord Woolf, Civil Liability Bill; Report Stage, House of Lords 4
Judges should be given the discretion to set appropriate levels of uplift in exceptional cases, without limitations set through regulations. Clauses 6 and 7 Rules against settlement before medical report and the effect of rules against settlement before medical report Clause 6 bans regulated persons from making or offering a settlement on a road traffic accident related whiplash claim without appropriate medical evidence. The Law Society is supportive of a ban on pre-medical settlements without medical reports which we regard as a welcome step to reduce the number of fraudulent claims. We would welcome the extension of this principle to all personal injury claims. 3. Part 2 - Personal injury discount rate Part 2 makes provision regarding the personal injury discount rate, which is a rate applied to lump sum awards of damages for future loss. Specifically, this part makes changes to the way in which the personal injury discount rate is set. The personal injury discount rate is a figure used to calculate how much defendants should pay claimants in cases of life-changing injury. Compensation in personal injury claims is intended to put the claimant in the position they would have been had they not suffered injury. The Bill introduces a requirement for regular reviews of the rate and specifies whom the Lord Chancellor, who sets the rate, must consult in conducting a review. We are supportive of the measures in the Bill which provide for regular reviews of the rate and the requirement that the Lord Chancellor must consult with an expert panel when setting the rate. The Law Society urges the Government to strengthen this measure and ensure that the Lord Chancellor must give due regard or appropriate weight to the recommendations of the expert panel. Furthermore, we call for the recommendations of the expert panel to be published, and that the Lord Chancellor should provide reasons for accepting or rejecting any recommendations made by the panel. For the purpose of setting the rate, the Bill also changes the level of risk that an investor of damages is assumed to be willing to take in investing his or her lump sum award of damages for future financial loss from "very low" to "low". We believe that more evidence is required to justify changes to the personal injury discount rate, and we would urge the Government to further consider the Justice Select Committee s recommendations following its pre-legislative scrutiny of the draft personal injury discount rate clause. 6 In particular, we call on the Government to undertake further research on the way claimants invest their damages and why, and to include an expert panel in the initial review of the discount rate. 4. The small claims limit The Government has announced its intention to increase the small claims limit for all road traffic accident (RTA) claims up to 5,000 and for all other types of personal injury claims up to 2,000. These measures do not require primary legislation and the Government has indicated that regulations will be introduced alongside regulations from the Civil Liability Bill once it has received Royal Assent. The Law Society is concerned about the implications of reforms to the small claims limit on access to justice. 6 Justice Select Committee, Pre-legislative scrutiny: draft personal injury discount rate clause, November 2017 [https://publications.parliament.uk/pa/cm201719/cmselect/cmjust/374/374.pdf] 5
The measures would mean that all victims of RTAs with an injury worth less than 5,000 would not be entitled to recover legal costs, limiting access to legal representation. We believe that the proposals would create a greater inequality of arms between accident victims and insurance companies, leaving individuals to represent themselves against resource-laden insurance companies. The changes will impinge on the right to receive redress of all victims of road traffic accidents, not only victims of whiplash, including pedestrians, cyclists, motorcyclists and other road users, many of whom will be forced to go it alone, forgoing legal representation and acting for themselves throughout a complex process. An infographic detailing the complex process for a litigant in person to bring an RTA personal injury small claim can be found at the back of this briefing in Annex A. These concerns were echoed by the Justice Select Committee in their report on the small claims limit in May 2018. 7 In response to this report, the Government delayed plans to implement the changes to April 2020. 8 The Law Society have welcomed this delay and urge the Government to reconsider the proposals. 5. Cold calling The Law Society remains committed to rooting out fraudulent claims from our system. While the Law Society welcomed measures in the Financial Guidance and Claims Act 2018 to limit claims management companies ability to cold call, we believe that the Government can go further to tackle cold-calling and claims management companies, in order to combat fraudulent personal injury claims. The Law Society opposes CMCs being able to cold call. Under the Solicitors Regulation Authority (SRA) rules, solicitors are already prohibited from doing so. We urge the Government to improve the regulation of CMCs source and use data, including better regulation of opt-ins, the way in which information is used and more intensive enforcement of data regulations. 6. Suggested questions to pose during the Second Reading debate Does the Minister agree that a tariff could see certain types of injury classed as worth less than others? Why should the same injury be compensated for less just because it was sustained in a road traffic accident? Would it not improve transparency and fairness if a panel of experts gave advice on setting the tariff for damages for whiplash injuries resulting from road traffic accidents, as has been proposed later in the Bill for the personal injury discount rate? Will the Government give further clarity on what steps it expects individuals suffering from a whiplash injury to take to mitigate the effect of the injury? Which medical experts were consulted in making the definition of whiplash as seen on the face of the Bill, and will the Lord Chancellor take advice from medical experts when making the regulations which could further define what a whiplash injury is? 7 Justice Select Committee, Small claims limit for personal injury, May 2018 [https://publications.parliament.uk/pa/cm201719/cmselect/cmjust/659/659.pdf] 8 Ministry of Justice, Government Response to the Justice Committee s Seventh Report of Session 2017-19: Small Claims Limit for Personal Injury, July 2018 [https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/725155/govt_resp_to _Justice_Committee_s_Report_on_Small_Claims_Limit_for_Personal_Injury_web_.pdf] 6
Will the Government provide further clarity on what it deems a minor psychological injury to be? Will the Government consider extending the scope of the ban on pre-medical settlements beyond just whiplash injuries resulting from road traffic accidents? Does the Minister agree that the test on exceptionality in Clause 5 of the Bill is a high barrier for what will be a modest uplift on low levels of compensation? Will the Government ensure that the Lord Chancellor gives appropriate weight to the recommendations of the expert panel on setting the discount rate, and will they publish the recommendations of the panel when provided? What steps are the Government taking to combat cold-calling? For further information please contact: Joe Ferreira (Public Affairs Adviser) T: 020 7320 5817 / M: 07814 557 881 E: joe.ferreira@lawsociety.org.uk 7
Annex A To download this infographic as a PDF, please click here or visit: http://www.lawsociety.org.uk/news/documents/litigant-in-person-infographic/