UK p/i lawyers oppose increase in small claims limits
The UK’s 5,000-member Association of Personal Injury Lawyers [“APIL“] has been waging a campaign to prevent an increase in the personal injury limits in the UK’s small claims courts (“small claims track”). See, e.g., “Support Grows for Retention of Small Claims Limit for Injury Victims” (APIL Press Release, Dec. 11, 2006); and Response to the Better Regulation Task Force (APIL/DCA, May 2004; 18 pp. pdf.). (via PIBLJ, Jan. 27, 2007)
The dollar limit for most small claims matters in UK courts is £5,000, up from £3,000 in 1999, and £1,000 in 1996. However, the limit on personal injury and housing repair matters is still £1,000. Because of that lower limit, almost all p/i matters are heard in the upper tracks of the judicial system. In 2004, the Better Regulation Task Force produced a report titled “Better Routes to Redress” (48 pp. pdf.), which recommended (in Sec. 4.2, at p. 25), that:
[T]he Government carry out research into the potential impact of raising the limit under which personal injury can be taken through the small claims track. The research should establish a limit which best balances the benefits to the claimant and society against the costs.”
The Task Force noted that keeping the lower limit is supported by lawyers, who argue that p/i matters were too complex to be handled without a lawyer, and that the small claims track offered only limited recovery of costs, which was unfair to claimants in p/i cases, which can be very expensive. The Task Force suggested that rules be changed to allowed recovery of reasonable medical expenses, and concludes that “allowing more personal injury claimants to go through the small claims track process will increase access to justice for many as it will be less expensive, less adversarial and less stressful.” Its reasoning can be found in an excerpt provided at the foot of this posting, below the fold.
You may recall from our posting last week on personal injury self-help, that both the legal reform group HALT (in its p/i Consumer Alert) and self-help pioneer Nolo.com have stated that small claims court here in the United States can be an excellent place to bring p/i claims for relatively small amounts of money. In addition, HALT’s small claims reform project has been advocating long and hard for increases in the small claims jurisdictional limits (hoping to someday reach $20,000).
It its campaign against raising the small claims limit, APIL makes the arguments noted by the Task Force (complexity, inability to recover costs), and stresses surveys showing that the public is reluctant to go to court in a p/i case without a lawyer. In addition, it frets that “In the small claims court, a claimant either has to pay for legal representation out of his own pocket, which many people can ill-afford, or stand up in court against the defendant without the benefit of a lawyer’s representation.” This suggests that p/i lawyers won’t use contingent fees (which APIL calls “CFAs” — Conditional Fee Agreements) in small claims court, but I do not understand that position (and would welcome an explanation; update (Feb. 20, 2007): in this Comment I again ask for help understanding the differences in the UK from the American system, listing more questions).
APIL also asserts that the small claims court will not assist the claimant to effectively bring his or her own case. They make the self-serving claim that the claimant without a lawyer will face a rich defendant with legal representation and not receive justice — or, simply not bother to bring the case.
Moreover, APIL strongly cautions that
“By raising the small claims limit firms will be deprived of a huge source of funds, which personal injury claims between £2,000 and £5,000 provide, so making it unlikely that larger risky cases could be pursued. APIL members have estimated that between a third and a half of personal injury cases they deal with are for damages around £5,000. By removing the ability to regain costs firms will struggle to support personal injury practices, and in particular, will refrain from taking on cases which have any chance of being lost – i.e. only take on cases which have a 90 per cent plus chance of success. APIL believes this will further restrict injured claimants access to justice.”
This seems to be the discredited notion that p/i lawyers subsidize riskier cases with lower risk cases. Not only is there no credible evidence that such cross-subsidization exists, but a lawyer owes a professional and fiduciary duty to charge a reasonable fee to each client individually, so that the client has his or her own case treated on its merits by the lawyer — paying fees based on the risk presented by the particular case. No client should be asked to subsidize other clients with riskier cases.
- See “Effective Hourly Rates of Contingency-Fee Lawyers: Competing Data and Non-Competitive Fees,” 81 Wash.U.L.Q. 653 (2003; 84 pp pdf.), by Prof. Lester Brickman, where the author argues that “Contingent-fee lawyers carefully screen potential claimants and reject approximately two-thirds of those seeking representation,” prevailing in 70 to 90% of the cases they do accept. He adds, in fn. 332, that ‘Experience in England with “conditional fee agreements,’ a highly modified form of contingency fee, indicates similar success rates. See Michael Zander, Will the Revolution in the Funding of Civil Litigation in England Eventually Lead to Contingency Fees?, 52 DEPAUL L. REV. 259, 278–79 (indicating that . . . in the vast majority of English “conditional fee agreement” cases . . . [93%] were successful in the sense either of achieving a settlement or a judgment wholly or partly in favor of the client”).” In addition, see Prof. Brickman’s “The Continuing Assault on the Citadel of Fiduciary Protection: Ethics 2000’s Revision of Model Rule 1.5″ (2003 U.Ill.L.Rev. 1181 [Number 5]; 34 pp pdf.).
Because I am not familiar with the working of the UK legal system, I would very much like to hear from those who might be able to explain whether there are differences that would make low-dollar p/i claims inappropriate for small claims courts in England and Wales. Does “loser-pay” change the dynamics and make the upper track courts fairer to the claimant? Would allowing recovery of costs in p/i cases solve the problem of expensive medical reports? Is self-help information available from the small claims courts for “in person” litigants, so that they will understand procedures, as well as issues such as fault and causation?
So, does APIL have a good case against the increase of small claims limits, or was ethicalEsq correct to suspect that the lawyer guild has been working to prevent reform and revitalization of small claims courts?
- Our thanks to EL Eversman, at AutoMuse, for including our posting last week on personal injury self help law in Blawg Review #95, which was posted today. Mary Whisner’s posting on buying wheels is also listed in BR#95. As always, you will find listings to many fine, recent law-related postings in this week’s Blawg Review. Each Monday, you can find another “best of the blogs” round-up at Tim Kevan’s The Barrister Blog, which also pointed to our p/i self-help post this morning.
****************************************
Excerpt from “Better Routes to Redress” (Better Regulation Task Force, Sec. 4.2, at p. 25 to 26, pdf):
“The small claims regime in England and Wales has been designed specifically with claimants in mind. It provides a cheap and simple mechanism by which people who are unfamiliar with legal procedures can bring their disputes to the courts. They can dispense with the services of lawyers if they wish to do so.
“Even though a dispute may involve only a small sum of money, the small claims procedure gives litigants in person a fighting chance of success against a represented and wealthier opponent, without having to run the risk of financial ruin in the process (since they do not have to pay their opponent’s costs if they lose). The whole process is designed to be more informal and less adversarial. In the small claims track the judge plays a proactive role at hearings. This role involves, in particular, helping litigants in person to present their own evidence and assisting them in putting questions to the other side.
“. . . . Given the work being carried out in the area of fixed fees (dealt with later in this report), the Task Force believes that the time is now right to examine again whether the limit for personal injury claims should be raised above £1,00012. The issue has not been examined since 1999. The research should concentrate on the implications of raising the limit for personal injury claimants, and should include changes to allow the claimant to claim reasonable medical expenses from the defendant. We believe that allowing more personal injury claimants to go through the small claims track process will increase access to justice for many as it will be less expensive, less adversarial and less stressful.”
david giacalone
February 16, 2007 @ 3:44 pm
Check out this post on Costs and Small Claims in the UK, at the BabyBarista weblog – http://babybarista.blogspot.com/2007/02/day-96-week-20-harlow-county-court.html
Richard
February 20, 2007 @ 6:56 am
Your comments that “This suggests that p/i lawyers won’t use contingent fees (which APIL calls “CFAs” — Conditional Fee Agreements) in small claims court, but I do not understand that position (and would welcome an explanation)” are a nonsense. The ONLY point to a small claim is that each side bears its own costs (CPR 27). Consequently, if a lawyer took a small claim to trial (and therefore there would be a 100% uplift) the fees would be in the region of £10,000. The client would have to be quite seriously injured to make it worthwhile. Why should the tortfeasor be given carte blance to injury someone up to a value of £10,000 knowing that the fees would outweigh the damages and therefore be unlikely to proceed to court. Could a litigant do it themselves? Almost certainly not, how do they know the questions to ask experts, Who is to blame for eg. a tripping , the Highway Authority, the utlity company, the occupier of the land, get this wrong and you may have to pay the wrong parties’ costs (acting unreasonably under CPR 27.17)
Small claims should be abolished, not increased.
Donald Campbell
February 20, 2007 @ 7:02 am
I am involved in this and the position is even more murky than would appear. A small group of agencies who allege they put solicitors (attorneys) in touch with appropriate experts to prepare medical reports came to an agreement with large insurance companies in England & Wales taht if their experts only were instructed, they could drive down the cost of preparing a medical report and fix it so teh insurers would then have a known cost for every case. THe fee level proposed was approximately £300 for everything ie the cost of the report, the obtainign of records and the provision of the report. This was roughly what experts were charging for the report itself. The agencies were charging approximately 100% markup on all these cases and tried to sell it to the Government under th guise of restricting the budget which the state had hitherto funded. This was to be done by suggesting that no medical records be obtained in small cases. I attended Government sponsored “consultations” when this little wheeze became known and the fact that between 20 and 40% of cases where the records are obtained show that the claimant has deliberately or accidently hidden previous I claims or medical matters of relevance was shown to the Government and insurance Company rtepresentatives. Over 95% of the approximately 175 persons who attended these “consultations” made the same pointt and asked why the Insurers were happy to pay out more than 40% claims when there was no need. The insurers said they’d no problem with this as the benefit for them wass that they would know exactly how much it would cost for every case to get a report even if it didn’t pick up fraud. The Government said they didn’t care about the fact that 95% of those involved said thiss proposal was a bad idea and said it was to go ahead anyway, which it did.
It also said that whilst Medical Experts and Other Expertss and SOlicitors had to make their costs a matter of public record at the end of a case, the Agency costs should be kept secret for commercial reasons and should not be open to Public Scrutiny unlike every other party in the case.
Insurance companies started trying to refuse to allow to fund any medical reports which didn’t come through their approved agencies. A test case was taken to the highest Court in ENgland and Wales because a claimant solicitor objected to paying the agency fees and this is currently awaiting a judgement, which should have come in Mid Jnauary, but has been delayed for three months to try to allow the parties in the case to agree an out of COurt settlement which would avoid a definitive opinion to be given on this matter (Woollard – v – Fowler)
Some conspiracy theorists have suggested taht all this is a quid pro quo for the Insurance Companies to get the Government out of their present difficulties with Pension Funds especially for the Sttate Sector – the Insureres will take over the adminsitration and issuing of STate Pensions (for a fee!) from the |Government enabling them to avoid the fact taht UK state pensions are paid for directly out of taxation and there is no real fund as such to pay for the pensions – I simply report what others are ssaying and I of course do not believe thsi to be the case.
One final point -Scotland has its own Legal SYstem of |Jurisprudence much more like the US so these latters simply do not arise there.
david giacalone
February 20, 2007 @ 10:27 am
Richard, As I specifically stated, I was sincerely hoping for an explanation that would help an American lawyer or consumer, who does not know how the UK system operates, understand the issues raised by increasing the p/i limits. How do the two systems differ and why would it make small claims less attractive to the consumer in the UK. Your “nonsense” response is not particularly helpful, nor is citing UK law but not quoting or explaining it.
A good faith explanation would truly be appreciated. Some questions are: (1) With the “contingent fee” in the USA, the client literally pays no legal fee unless he or she wins an award, with the lawyer taking a percentage of the dollars won for the client. How does the CFA used in UK differ? An explanation of a typical CFA fee arrangement would be helpful. Do any UK “lawyers” use the American-style contingency fees?
(2) The 10,000 pound number seems rather high, how many hours of work does a typical “tripping” case entail for an experienced lawyer? A system that consistently costs more in lawyer fees than the amount of injury seems very inefficient and could possibly use a reform that allows the injured individual to bring his or her own case — with, of course, information being provided that would help the nonlawyer understand the basic issues that must be addressed.
(3) A very large percentage of American p/i victims are turned away by p/i lawyers, who do not want to work for the small fee that would be generated by their damages, or who fear risk of losing is too high. Does the CFA system help to solve this problem in the UK? Rejected victims in the USA need a good small claims, consumer-friendly system so that they can bring their own cases. Are there large numbers of injured in the UK who cannot find legal assistance and should have the opportunity to bring their own lawsuit on the small claims track?
(4) In my earlier post on personal injury self-help, I point to available online information that a consumer could use to prepare to handle a small claims p/i himself. Do such materials exist for the UK public to use? If not, wouldn’t it be a good idea to create such resources and to make sure that small claims courts are user-friendly? Does the judiciary exist to help bring about fair and efficient justice, or merely as an employment structure ensuring income for lawyers?
(5) Why doesn’t the Task Force suggestion that some costs be allowed in small claims solve the biggest problem raised by APIL? Also, could the system be set up so that unrepresented p/i plaintiffs would have the option to use small claims, but others could use the upper track?
More light and less heat on theses issues would be much appreciated.
Ian Tysh
February 20, 2007 @ 11:10 am
I’m a UK litigation solicitor but not a PI one so can mainly help with the points about costs and small claims. Contingency fees are illegal in all court proceedings in England & Wales (I don’t know about Scotland or N Ireland); and conditional fee agreements (‘no win, no fee’) don’t work in small claims because the loser does not have to pay the winner’s costs and the relevant rules require costs under such agreements to come from the loser. CFAs are fine from a claimant’s point of view (although there has been a lot of satellite litigation about their details in the last few years) for cases worth more than £5,000 if you judge the case well, because the damages and costs almost always come from insurers so if you settle well or win at trial you can make a living. Clients like CFAs because they like the risk-sharing aspect and because they get to keep all or virtually all of their damages.
david giacalone
February 20, 2007 @ 12:13 pm
Thank you, Ian. Readers who want to better understand Conditional Fee Agreements might want to read the UK Law Society’s Model CFA and its brochure for clients, CFAs: What You Need to Know. Suggestions for further reading would be appreciated.
I would also like to receive responses to the Citizen Advice essay on Simplying CFAs, with its claims that consumers need far more information for CFAs to work fairly, as well as other complaints about the way CFAs work in practice.
Nearly Legal
February 20, 2007 @ 6:44 pm
As you mention, it is also housing disrepair cases (breach of landlord’s contractual and statutory repairing obligations) that currently have a £1000 rather than a £5000 limit for damages below which the claim is heard in the small claims court. Proposals have also been made by landlord’s organisations, or landlord’s lawyers organisations to make the limit £5000. I’ve had a go at the arguments here:
http://nearlylegal.co.uk/blog/archives/126
As disrepair is also a counterclaim to rent arrears claims, which are not smal claims matters, this proposal is particularly incoherent.
Michael Pritchett
February 23, 2007 @ 3:09 pm
There have been times I have considered a claim (larger than the small claims limit) but have not proceeded as whereas I would have been prepared to pay my own costs had it not succeeded I was not prepared to pay the other side’s as they could have run up quite a bill. For a small claim there is no disincentive.
However I would have a reservation about increasing the normal small claims limit beyond £5000 as it would allow people to make claims against me which I might consider weak but would not be able to recover costs in defending.
Solicitors in Wakefield
May 26, 2009 @ 6:59 am
Very interesting post. Some great comments here with well explained points and counter points. Very fascinating to read!