In part two of our two-part blog, Sian Stanton, Business Developer, continues her discussion around the latest Civil Justice Council (CJC) working group report and implications of Fixed Recoverable Costs (FRC) for clinical negligence claimants.
The introduction of FRC is certainly not going to improve the situation. Although careful management of costs and disbursements is certainly possible, there needs to be scope to enable responsible ATE insurers to continue providing first class coverage in a sustainable manner. It feels like 2013 all over again whereby the entire landscape of ATE insurance needed to evolve and adapt to ensure that future policyholders can be supported.
There seems to be a lack of understanding regarding the ATE market and insurance in general; with some sweeping statements about ATE picking up extra costs of the early neutral evaluation – without any corresponding price increase. Nowhere is this more perfectly demonstrated than by the suggestion that there is ’a formula based on the actual or anticipated fees for experts on liability or causation‘.1 This is in fact already a fundamental factor in calculating ATE premiums which, contrary to some beliefs, aren’t plucked out of thin air. This poor grasp of insurance does perhaps go some way in explaining why the statutory framework often ends up producing such perverse outcomes which don’t provide access to justice.
Alternatively, asking an insurer to work to a cap means that the product is being designed backwards – starting with price and seeing what cover can be shoehorned into that level of premium. Not only does that seem to be an unethical proposition but it’s likely to be in breach of FCA rules for insurers. Reverse engineering an ATE product will leave policyholders inadequately insured and the product not fit for purpose.
Although expert reports and witness statements won’t need to be reformatted to ‘trial ready’, those documents for cases where proceedings need to be issued will be, resulting in an increase in costs. The report is largely unfinished in terms of being able to solve the expert fees issue – it would seem that experts would view this reformatting to be trial ready as either addendum type work or as a brand new report.
Other burdens on law firms could come in the form of increasing costs and difficulties in obtaining PII in an already challenging market, if the proposals to make early quantum offers without obtaining evidence a part of the standard track. It’s not difficult to see this leading to under settlements or the risk of same for which law firms would have to provision for.
Despite the concerns around the cost of recoverable ATE and the CJC demanding that more of the burden falls on policyholders and insurers, the market will adapt in whatever way necessary.