‘Jackson panic’ coming to the fore

The last couple of weeks have shed greater light on the ‘Jackson panic’ prevalent in the run-up to 01/04/13.

The legal press, and certainly my Twitter feed (you can find me at @walcd, by the way), in March of this year was riddled with stories and soundbites along the lines of ‘100,000 CFAs signed this month alone!‘ and ‘we’ve written more business this month than in the whole of the last year!‘. Articles such as this, referring to a “hump of CFA cases“, were frequently seen.

Fair enough, I suppose; with the sun about to set on the haymakers it was time to cram in a few more bales. But in recent weeks I have seen some very frustrating cases and one or two that have left a very bitter taste in my mouth.

One public liability case in particular sticks in my mind (I’ve changed a few, unimportant details to protect the guilty – though I must add that the case has now settled):

01/02/13: Accident.
07/02/13: Solicitors instructed and CFA signed.
12/03/13: Letter of claim.
19/03/13: Letter of claim acknowledged; investigations underway.
26/03/13: Defendant’s insurers offer rehabilitation services (not always, but invariably a good sign).
29/03/13: ATE LEI application submitted.
31/03/13: ATE LEI policy issued.
11/04/13: Liability admitted.
18/04/13: Pre-medical offer of £20,000.
22/04/13: Claim settled without medical evidence (not even GP records) at £22,000.

Those of you with a good memory will appreciate that 31/03/13 was Easter Sunday.

The ATE LEI premium, for bog standard cover/indemnity, was a shade over £6,000! Granted, the policy offered certain discounted premiums in certain events – the greatest of which being a 60% discount in the event that the claim settled within 60 days of service of the claim form.

So, no discount for admitting liability within the relevant Protocol period and settling quantum without even a need to issue proceedings and certainly (this will make you smile) no discount to reflect what was, on any reading, utterly exemplary conduct by the defendant’s insurers in settling the claim exceedingly quickly and amicably and at a level at which the claimant and his solicitors were very happy (and were certainly not “mugged“).

The premium in the claimant’s bill of costs was claimed at 40% of the full premium and thus at or around £2,400; that’s £2,400, approximately 10% of the value of the claim, for 22 days of cover in a case where liability was (to my weary eyes at least and doing my best to remove my rose/hindsight-tinted spectacles – which I confess I am looking through occasionally while thumping this into my iPad) a veritable shoo-in.

If the case truly warranted the purchase of ATE LEI, why was it not purchased, off the peg and at circa 25% of even the ‘40% premium’ aforementioned, at or around the date of the CFA (i.e. before the ‘Jackson panic’ set in and what I can only describe as Underwriting Bingo was played over the Easter weekend)? Off the peg policies such as those offered by Allianz Legal Protection (£577 after discount), Temple (£450 in the above circumstances) and DAS 80e (£630) immediately spring to mind.

Why was seemingly nothing done between the date of instruction/CFA and the date of the letter of claim? That period of 33 days is a period longer than that between the letter of claim and the defendant’s admission of liability, such that any perceived need to insure might just have subsided had it been considered after an admission of liability following a prompt letter of claim.

Why was ATE LEI purchased in any event? Of course, disclosure of the demands and needs statement was refused as was a proportionate (I thought) request for details of enquiries made in respect of pre-existing methods of funding.

Was a market appraisal conducted? Yeah right, over the Easter weekend?!

What were the perceived prospects of success set out in the ATE LEI proposal form? What other information was provided to the ATE LEI providers and how was this policy rated (given that it was clearly not off the peg)? Silence.

The claimant’s solicitors’ base profit costs were largely reasonable I must say, leaving only the 90% success fee (and that was the second stage!) and the premium in real issue. Anyway, as aforementioned the claim has since settled (for a global sum of approximately 60% of the total claimed) without costs proceedings and without an appeal or two given that neither party was going to be happy with an adverse judgment.

Both parties are sort of happy, I suppose, the case having settled “with a good deal more pragmatism than science“, and one very much suspects that the ATE LEI providers accepted, behind the scenes, a sum considerably lower than that claimed.

That case, and one or two others still ongoing, reminded me of a recent (21/06/13) Law Society Gazette article under the headline of “Time limits mooted for pre-Jackson ATE. In short, Sir Rupert Jackson himself was rumoured to be dismayed at the number of policies taken out before 01/04/13 and The Law Society’s Civil Justice Section co-chairman stated that there was a possibility of there being imposed a time limit by which proceedings must be commenced if a claimant is to benefit from the ‘pre-Jackson’ rules on recoverability of such an additional liability.

Sadly however, the omniscient Professor Dominic Regan has since dispelled such a possibility as “utter tosh“. More’s the pity.

I am sure that claims for such last-minute ATE LEI premiums will become a very hot topic in the coming weeks and months. Indeed, I already have a good number of such cases on my desk at present and many of them include claims for premiums incurred in March 2013 and some weeks/months after admissions of liability. Whether or not we will see another Costs War, there will certainly be a substantial number of battles ahead and things are bound to be a little hairy in the costs world for some time to come.

Which reminds me – I have a £540 per hour, plus 100% success fee no less, bill of costs, arising out of a non-litigated, £4,500 and provincial hairdressing-gone-wrong claim, to deal with. Something for the weekend, I suppose.