A very civil mediator

Oh, to have been a fly on the wall during the meeting between the Civil Justice Council (CJC), insurers and claimant lawyers held at 1am in Bob Musgrove’s bedroom.

The unconventional gathering, hastily called after an industry conference about six years ago when tensions over the costs war in personal injury claims had reached well beyond boiling point, was perhaps Musgrove’s finest hour. The government advisory body boss was somehow able to find common ground with the strangest of bedfellows.

“We had representatives from the ABI, the insurance industry and claimant lawyers,” the CJC chief executive recalls, sitting in his office at the Royal Courts of Justice. “They all came and said, ‘look, this war has got to go’. The relationship between them was not very good. And thus was born our mediation approach to try to stop the cost war. It just took a couple of brave people to say, ‘this can’t go on’.”

He adds with a laugh: “Everybody had one foot on the floor at all times.”

The costs war was fought over the spiralling cost of personal injury claims – a problem that obviously has not gone away.

The problems started in 1999 when the government changed the rules on conditional fee agreements, which are the success fees payable to a lawyer. Under the new rules, personal injury claimants could no longer use legal aid.

Additionally, lawyers’ success fees and after-the-event (ATE) insurance premiums became recoverable. Therefore, claimant solicitors could not only recover their costs but also additional success fees of up to 100% of their costs, plus the ATE premium, which could itself reach many hundreds of pounds. That pushed up the money spent by liability insurers significantly.

Musgrove says: “Over 85% of all personal injury claims succeed, so insurers felt they were paying far too high success fees for the amount of risk lawyers were taking in bringing cases, because lawyers were not losing that many cases.

“So the amount of money they had to pay not only increased, but they felt the success fees were not actually reflecting the risk profile of the lawyers. That’s when we stepped in and started mediating.”

Insurers had begun wreaking havoc by challenging every case in court. But after the CJC’s early-morning meeting, considerable progress was made. A number of fixed cost agreements were brought into the rules of court for road traffic claims, and employers’ accident and disease claims.

This sparked government interest and over two years ago, it was decided there should be a wider review of personal injury reform. As a result, the CJC’s programme was suspended.

Like everyone else, Musgrove had been eagerly awaiting the government’s reform proposals, which were finally unveiled last month. They have been widely met with disappointment as many insurers do not feel they go far enough to limit spiralling costs.

Musgrove has declined to comment on the proposals, while the CJC works with the government to establish what its role might be going forward.

But he admits that he has concerns about how the relationships that he worked so hard to build between insurers and claimant lawyers might have deteriorated in the time it has taken the government to produce its report.

“I am possibly a non conformist in some ways. I work for the establishment, but I do not think I am an archetypal establishment man.

“Considerable trust had developed because we had mediated these solutions between the two industries, overseen by government observers. So we established a good relationship of trust,” he says. “When the claims process was taken over by government, some bodies then elected a more direct form of lobbying with government.

“So about two and a half years ago we kind of lost the momentum and have been sitting around, as have the insurance and legal industries, awaiting the government’s consideration.”

The fixed costs originally agreed through the CJC still stand. But Musgrove says symptoms of the costs war have resurfaced as insurers grow increasingly impatient, and adds there have been a rising number of technical challenges by insurers in court over personal injury claims during the past six months.

Musgrove remains confident that the CJC will once again have considerable influence

and input on personal injury reform. The CJC has been invited by the Ministry of Justice (MoJ) to run some events aimed at considering the detail of the new claims process, but the terms of engagement have not yet been agreed.

Surely, any man willing to host the industry’s biggest names in his bedroom has got to be a dedicated mediator.

Musgrove, a gentle sort with a white beard, shares a passion for photography with his Canadian wife. The 44-year-old Kent resident is a vegetarian and enjoys growing vegetables, cooking, and dinner parties. He is also writing a cookbook.

“I’m possibly a non-conformist in some ways,” he says. “I work for the establishment, but I don’t think I’m an archetypal establishment man. I think that of the problems that we face, most of them can be addressed in a better way by communication and mutual understanding about the people’s positions. I prefer the innovative to the mundane.”

The CJC uses a model of applied mediation, which basically means a two-tiered approach.

High-level representatives are chosen from each of the opposing parties. In the first tier, accredited mediators run between rooms and deliver messages between the groups. If no agreement is reached, then in come the heavies – including Musgrove himself. Basically, this second tier applies a little more pressure.

Musgrove says: “The incentive for them is if they don’t make the deal, it gets taken away from them. Then we make recommendations to government about what we think reform should look like. Then ministers decide whether they accept that or want to do something else. Or, it can be fought in the courts and you’re in the hands of judges. But you will lose control if you’re not able to make an agreement, so there’s considerable incentive.”

According to Musgrove, the beauty of the CJC mediated process is that “everybody is unhappy with it but everybody can live with it”. He believes the government’s approach is more process-driven and structured, while the CJC’s is more of a market-led solution. But he says there is no wrong approach, and the CJC merely offers an alternative.

Those who participate in CJC mediation can rest assured that most mediation sessions do not take place in Musgrove’s sleeping quarters.