WOOLF 10 YEARS ON: HAS IT WORKED?

• Pre Woolf situation

• Aims

• Vision

• Success to date?

• DCA Proposals

• Feedback

• Potential Impact

PRE WOOLF: PERCEIVED INJUSTICES

• Too expensive

• Too slow

• Too uncertain

• Too adversarial

AIMS OF WOOLF REFORMS

• Fairness

• Tighter Timeframes

• To be understandable to those who use them

• Effective, adequately resourced and organised court service

WOOLF’S VISION

• Litigation as a last resort

• Reduced time scales

• Costs more affordable and predictable

HAS WOOLF’S VISION BEEN ACHIEVED?

Avoiding Litigation

County Court Claims Issued:

2,245,324 in 1998

1,870,374 in 2005

High Court (QBD) Claims Issued:

142,505 in 1996

15,317 in 2005

HOWEVER…the number of bodily injury claims reported to UK motor insurers rose by 3% a year between 1996 and 2006

HAS WOOLF’S VISION BEEN ACHIEVED?

Issue Fees

Have largely increased in line with RPI

HOWEVER…

With effect from 1 October 2007, allocation fees have increased and hearing fees have been introduced.

HAS WOOLF’S VISION BEEN ACHIEVED?

Legal Fees

Bodily injury claims paid out by UK motor insurers:• Costs – up by 840% in 20 years• Total cost of claims - up by

9.5% per year• Costs for claims over £5 million –

up by 30% a year

HAS WOOLF’S VISION BEEN ACHIEVED?

Solicitors’ Hourly RatesCentral London rates for Grade 1 fee

earners:£260 per hour in 1999£380 per hour in 2007

RPI for 2007 - £393.97

Time from Issue to Trial79 weeks in 199958 weeks in 2005

HAVE THE WOOLF REFORMS FULFILLED THEIR AIMS?

Fairness?• Simplified litigation• Costs regime – disadvantaged

defendants?

Reasonable Speed?• Disparity and quality of court listings

and staff• Waiting times for interim hearings

HAVE THE WOOLF REFORMS FULFILLED THEIR AIMS?

More understandable?

• 45th Edition of CPR

• 30 statutory instruments

Adequately resourced and organised?

• No specialist judges or trial centres

• Court service budget is

limited

HAVE THE WOOLF REFORMS FULFILLED THEIR AIMS?

Other Factors

• Woolf reforms in isolation?

• New costs regime

• Lower discount rates

• Revised Ogden Tables

• JSB Guidelines

WINNERS AND LOSERS

Claimants as winners:

• Quicker settlement

• Increased damages

• Funding

• More judicial control

Claimants as losers:

• Fewer “have a go”claims

• No legal aid

• Media/press

• Compensation culture

• Insurance premiums

WINNERS AND LOSERS

Defendants as winners:

• Judgements based on merit

• Faster disposal of claims

• Predictive costs

Defendants as losers:

• Cost of claims

• Disproportionate costs

WINNERS AND LOSERS

WINNERS

Claimants and their

solicitors

LOSERS

Court staff

Judges

Defendants and their solicitors

Insurers: Winners or Losers?

NEW DCA CONSULTATION

Proposals:

1. Raising the Small Claims Limit

2. Raising the Fast Track Limited to £25,000

3. Streamlining the personal injury claims process

STREAMLINING THE CLAIMS PROCESS

The Proposals• Early notification

• Standardised claim forms

• Moratorium on claimant solicitors investigations

• Settlement packs

• Standard damages / contributory negligence scenarios

• Set timeframes throughout the process

STREAMLINING THE CLAIMS PROCESS

Where quantum negotiations breakdown

• Cases under £2,500 referred to a District Judge to be resolved by paper hearing

• Cases over £2,500 to go through a simplified review process

STREAMLINING THE CLAIMS PROCESS

Responses

• Law Society – supports proposals for claims under £5,000

• APIL – proposals only suitable for RTA cases where liability is obvious and should only be used in cases less than £2,500

• ABI – welcomes streamlined process and believes paper review for quantum should apply regardless of value

STREAMLINING THE CLAIMS PROCESS

Cost Proposals

• Fixed costs for each stage

• Fixed success fees

• No recovery of ATE premiums taken out at the commencement of the claim

• Claimants only to recover costs where they beat their own offer on claims up to £2,500

STREAMLINING THE CLAIMS PROCESS

Law Society Response

• Reject the notion of the claimant having to beat their own offer to recover costs

• Supports fixed costs

• Concerned by the possible impact on ATE insurance

STREAMLINING THE CLAIMS PROCESS

ABI’s Response

• Supports staged fixed fees and success fees

• Supports removal of ATE where there is no risk

APIL’s Response

• Rejects lack of funding and low fixed fees

• Concerned by impact on ATE market

STREAMLINING THE CLAIMS PROCESS - CONCLUSION

• Should value alone determine track allocation?

Streamline process

• Are timescales realistic?

• How will claims departments react?

• Settling claims regardless of merit?

• Will fixed costs reflex cost of claims acquisition?

• Opportunities for TPA’s?

• New claim forms – “have a go” litigation?

STREAMLINING THE CLAIMS PROCESS - CONCLUSION

Costs and funding

• At what level will costs be set?

• Effect on ATE market – final blow?