Technology will drive down case costs

One of the measures contemplated by Lord Justice Jackson in his review of civil litigation costs is that compensation should be fixed at judicially approved levels for all personal injury cases of pain, suffering and loss of amenity up to £10,000. This would lead to far greater certainty and consistency with personal injury claims, but there would be broader consequences for how personal injury cases are processed, both by lawyers and insurers.

In terms of processing the claims, the relevant technology already exists: systems can receive electronic medical and rehabilitation data directly into damage-assessment applications. The further step of matching financial assessment outputs to a judicially derived result feels highly achievable. In that scenario, the role of lawyers and insurers would change profoundly.

Delivery of such a solution for road traffic cases is the obvious first step. Most motor injury incidents arise in circumstances where liability can be quickly defined. As can be seen from the distribution of costs in the new MoJ claims process, in such cases the weighting of transactional cost is skewed heavily towards the activity associated with determination, assessment and resolution of quantum. This is work that, within an environment of damages calibrated at judicially approved levels, would for the most part no longer be necessary. The need for a lawyer in straightforward cases of modest value would be challenged by a move to damages calibrated at judicially approved levels.

The present disproportionate level of legal costs could surely not survive such a step.

Judicial calibration would herald speedier, more consistent and fairer compensation, although benefits would also accrue to compensators through reduced costs.

Jackson has mooted that compensation levels for pain, suffering and loss of amenity should rise by 10% to compensate claimants for a changed conditional fee agreement model. While few would quarrel with the principle of rebalancing overall compensator spend in favour of damages rather than legal costs, the effect on cost – and insurance premiums – must remain in focus.

At RSA we have been developing our claims capability in this area, and a trial has been a success. We took a step towards the objectivity that a calibrated system of judicially approved damages would deliver by constructing a calibration that includes settlement data provided by a major claimant law firm. The output has enabled us to settle claims, directly with claimants and via their legal representatives, at compensation levels that are consistent, objectively derived and free from input by claims staff. This has also proved to be a powerful proposition within our RSA Care third-party assistance programme, ensuring that all unrepresented claimants are fairly and consistently compensated in a manner that goes beyond even the principles in the recent ABI Code of Practice for insurers.

If Lord Justice Jackson’s package of changes, with judicial calibration of damages among them, goes ahead, this concept could prove to be a watershed for the administration of personal injury compensation.

The way could be open for further electronic streamlining in areas such as anti-fraud filtering and automatic settlement. The prospect of fewer but more expert practitioners managing personal injury cases only by exception in both law firms and insurers could be just around the corner.

David Frost is the UK head of injury claims at RSA. IT