Legal blog: Avoiding a litigation free-for-all

This feels like the calm before the storm. We’ve all had our say on Lord Justice Jackson’s proposals to reform the civil litigation system, including Jackson himself.

Now we must wait until mid-May for the Ministry of Justice to tell us how they wish to take things forward. What we know already from the considerable debate among key stakeholders on the most effective solution to a difficult and complex issue is that there is little agreement on what would be universally acceptable.

What is clear, however, is that significant changes will be driven through the litigation process and, in all probability, in very short timescales.

Equally apparent is that it won’t be a done deal. There will almost certainly be further opportunities to challenge what the MOJ decides to implement.

That cannot be helpful. It must be in everybody’s interest to ensure that the opportunity for satellite litigation is removed or severely curtailed.

This requires all parties to take a pragmatic approach. Let’s hope, for the sake of all those using the litigation process with the aim of achieving a simple and speedy resolution to their issues, that the room for disagreement is not exploited.

There also continues to be upward pressure on recoverable levels of damages, quite apart from Jackson’s proposals on the general damages uplift.

The Lord Chancellor is being pressed to review the discount rate, currently 2.5%, on the basis that he has a statutory requirement to do so. It isn’t clear whether or not he does in fact intend to review it and, if so, what the outcome might be. But there is a risk that this will add further to the costs of claims.

Similarly, the Ogden Working Group is about to be reformed and is to produce some revised tables in the summer. Ever-increasing life expectancy will be reflected in the new tables, which again will increase the lifetime multiplier and the level of damages awarded.

Finally, we have the recent European Court of Justice ruling on what can and cannot be taken into account when rating risk. As things stand, that decision will drive up the cost of premiums – perhaps perfectly acceptable to some.

But this is yet another factor bringing uncertainty to both underwriters and lawyers around the cost of premiums and a predictable outcome on damages.

It is hoped that some of these uncertainties will disappear as we start to work through the MOJ proposals over the summer. All in all, though, the landscape does not look great for those in search of certainty, or even for those looking to pay fair compensation.

All too frequently we have seen examples of those prepared to exploit the system, both as a consumer and as an adviser. If we get nothing else from all of these initiatives, let’s hope we get clarity at least.

Tim Oliver is president of Forum of Insurance Lawyers (Foil).