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Delivering Dispute Resolution: A Holistic Review of Models in England and Wales
9781509916894, 9781509916924, 9781509916900

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Christopher Hodges

Table of contents :
Executive Summary
Foreword by Lord Thomas of Cwmgiedd
Thanks
Brief Contents
Detailed Contents
Abbreviations
List of Figures
1 Introduction
I. Types of Disputes Covered
II. The Basic Models of Dispute Resolution
III. The Incidence of Major Types of Claims
IV. Themes
V. The Need for a Redesign
VI. Evaluating the System
Part A: Setting the Scene
2. Affecting Behaviour
I. Understanding How to Affect Behaviour
II. A Systemic Approach
3 People's Problems: Incidence, Types, Pathways and Objectives
I. People's Legal Problems
II. Incidence and Types of Consumer Problems
III. What Pathways do People Choose?
IV. What are People Seeking?
V. Conclusions
4 Courts
I. Introduction
II. Court Users Research
III. County Courts and Small Claims
IV. High Court
V. Business and Property Courts
VI. Duration
VII. Alternative Strategies for Business Disputes
VIII. Conclusions
5 The Courts: a Story of Costs and Funding Problems
I. Overview
II. The History of Continuous Reform
III. Conclusions
6 ADR
I. ADR and the Courts
7 Digitisation of the Courts
I. Courts and IT
II. The HMCTS Reform Programme
III. Conclusions
8 Helping People with Problems
I. The Information and Advice Landscape
II. Problem-Solving Pathways: Delivering Coordinated Expertise
III. Conclusions
Part B: Types of Disputes
9 Consumer-Trader Disputes
I. Overview
II. Pathways
III. Consumer Redress Facilitated by Regulatory Authorities
IV. Core Functions
V. Conclusions
10 Personal Injuries
I. Overview
II. Pathways
III. Workplace Injuries
IV. Clinical Injuries
V. The Health Service Ombudsman
VI. Discussion
VII. Recommendations
11 Family Disputes
I. Introduction
II. Divorce
III. Public Law
IV. Private Law
V. Financial Remedies
VI. Scholarly Thoughts on Transformations
VII. Conclusions
12 Property
I. Introduction
II. Pathways
III. Conclusions
IV. Recommendations
13 Complaints Against the State
I. Overview
II. Internal Complaints Procedures and Appeals
III. Tribunals
IV. Suing the State
V. Judicial Review
VI. Public Ombudsmen
VII. Public Inquiries
VIII. Coroners
IX. Discussion
X. Recommendations
Appendix: Complaint Mechanisms for Government Departments
14 Small Business Disputes
I. Overview
II. Pathways
III. Process Improvements
IV. Core Functions
V. Conclusions
15 Employment Disputes
I. Overview
II. Pathways
III. Courts, Employment Tribunals and ACAS
IV. New Regulatory Mechanisms
V. HMRC National Minimum Wage/National Living Wage
VI. Process Improvements
VII. Recommendations
Part C: Conclusions
16 Reviewing the Pathways
I. The Objectives
II. Criteria for Dispute Resolution Pathways
III. Models of Pathways
IV. Pathways
17 Recommendations
A Focus on Solving Problems
Need for a New Dispute Resolution Model
Individual Problem Types and Pathways
18 A New Design for Dispute Resolution Architecture
I. Criteria for Pathways
II. Design Parameters
III. Stages in Dispute Resolution
IV. Further Design Issues
V. Final Challenges
Index

Citation preview

DELIVERING DISPUTE RESOLUTION This book reviews the techniques, mechanisms and architectures of the way disputes are processed in England and Wales. Adopting a comparative approach, it evaluates the current state of the main different types of dispute resolution systems, including business, consumer, personal injury, family, property, employment and claims against the state. It provides a holistic overview of the whole system and suggests both systemic and detailed reforms. Examining dispute resolution pathways from users’ perspectives, the book highlights options such as ombudsmen, regulators, tribunals and courts as well as mediation and other ADR and ODR approaches. It maps numerous sectoral developments to see if learning might be spread to other sectors. Several recurrent themes arise, including the diversification in the use of techniques; adoption of digital, online and artificial technology; cost and funding constraints; the emergence of new intermediaries; the need to focus accessibility arrangements for people and businesses that need help with their problems; and identifying effective ways for achieving behavioural change. This timely study analyses the shift from adversarial legalism to softer means of resolving social problems, and points to a major opportunity to devise an imaginative and holistic strategic vision for the jurisdiction. Volume 9 in the series Civil Justice Systems

Civil Justice Systems Series General Editor: Christopher Hodges, Head, Swiss Re Research Programme, Centre for Socio-Legal Studies, University of Oxford This series covers new theoretical and empirical research on the mechanisms for resolution of civil disputes, including courts, tribunals, arbitration, compensation schemes, ombudsmen, codes of practice, complaint mechanisms, mediation and various forms of Alternative Dispute Resolution. It examines frameworks for dispute resolution that comprise combinations of the above mechanisms, and the parameters and conditions for selecting certain types of techniques and procedures rather than others. It also evaluates individual techniques, against parameters such as cost, duration, accessibility, and delivery of desired outcomes, and illuminates how legal rights and obligations are operated in practice. Volume 1: The Costs and Funding of Civil Litigation: A Comparative Perspective edited by Christopher Hodges, Stefan Vogenauer and Magdalena Tulibacka Volume 2: Consumer ADR in Europe Christopher Hodges, Iris Benöhr and Naomi Creutzfeldt-Banda Volume 3: Law and Corporate Behaviour: Integrating Theories of Regulation, Enforcement, Compliance and Ethics Christopher Hodges Volume 4: A Comparative Examination of Multi-Party Actions Joanne Blennerhassett Volume 5: Redress Schemes for Personal Injuries Sonia Macleod and Christopher Hodges Volume 6: Ethical Business Practice and Regulation: A Behavioural and Values-Based Approach to Compliance and Enforcement Christopher Hodges and Ruth Steinholtz Volume 7: Delivering Collective Redress: New Technologies Christopher Hodges and Stefaan Voet Volume 8: Pharmaceutical and Medical Device Safety: A Study in Public and Private Regulation Sonia Macleod and Sweta Chakraborty

Delivering Dispute Resolution A Holistic Review of Models in England and Wales

Christopher Hodges Professor of Justice Systems and Head of the Swiss Research Programme on Civil Justice Systems, Centre for Socio-Legal Studies, University of Oxford Supernumerary Fellow, Wolfson College, Oxford Fellow, European Law Institute

HART PUBLISHING Bloomsbury Publishing Plc Kemp House, Chawley Park, Cumnor Hill, Oxford, OX2 9PH, UK HART PUBLISHING, the Hart/Stag logo, BLOOMSBURY and the Diana logo are trademarks of Bloomsbury Publishing Plc First published in Great Britain 2019 Copyright © Christopher Hodges, 2019 Christopher Hodges has asserted his right under the Copyright, Designs and Patents Act 1988 to be identified as Author of this work. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any information storage or retrieval system, without prior permission in writing from the publishers. While every care has been taken to ensure the accuracy of this work, no responsibility for loss or damage occasioned to any person acting or refraining from action as a result of any statement in it can be accepted by the authors, editors or publishers. All UK Government legislation and other public sector information used in the work is Crown Copyright ©. All House of Lords and House of Commons information used in the work is Parliamentary Copyright ©. This information is reused under the terms of the Open Government Licence v3.0 (http://www. nationalarchives.gov.uk/doc/open-government-licence/version/3) except where otherwise stated. All Eur-lex material used in the work is © European Union, http://eur-lex.europa.eu/, 1998–2019. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication data Names: Hodges, Christopher J. S., author. Title: Delivering dispute resolution : a holistic review of models in England and Wales / Christopher Hodges, Professor of Justice Systems and Head of the Swiss Research Programme on Civil Justice Systems, Centre for Socio-Legal Studies, University of Oxford, Fellow, European Law Institute Description: Oxford ; New York Hart Publishing, an imprint of Bloomsbury Publishing, 2019. | Series: Civil justice systems; volume 9 | Includes bibliographical references and index. Identifiers: LCCN 2019028795 (print) | LCCN 2019028796 (ebook) | ISBN 9781509916894 (hardback) | ISBN 9781509916917 (Epub) Subjects: LCSH: Dispute resolution (Law)—England. Classification: LCC KD7644 .H63 2019 (print) | LCC KD7644 (ebook) | DDC 347.42/09—dc23 LC record available at https://lccn.loc.gov/2019028795 LC ebook record available at https://lccn.loc.gov/2019028796 ISBN: HB: HB: HB: ePDF: ePub:

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EXECUTIVE SUMMARY Time for Change The national dispute resolution system needs fixing. The adversarial model is unaffordable for most types of claims. It is no longer fit for purpose. We do not have a coherent system. We have too many possible dispute resolution pathways. Some of them are not easy for people to identify. Some of them do not work well. Many are too complicated for people to use easily. The system does not deliver our objectives. Justice is too often not delivered. We do not solve the root causes of problems. The system does not support learning or prevent problems from arising. The landscape of advice for citizens, tenants, consumers, families, workers and small businesses is disorganised and confusing. The right assistance is not being delivered in an effective and timely fashion. The idea that upholding the law in resolving disputes has much effect on future behaviour and culture is a mirage. Changing behaviour needs intervention by parties other than judges and lawyers. Above all, it needs those responsible for the culture of their organisation to ensure that the culture throughout the organisation is ethical and that all decisions and behaviour conform to ethical values. But the dispute resolution system can play an important part in collecting and communicating aggregated data and illuminating issues. Some parts of the current system do this well, and make a real difference to the prevention of future problems. We are paying for all this so the whole system should be both effective and efficient. It is time for change.

An Integrated System We need a system that delivers three elements for people and organisations: assistance in problem solving, dispute resolution and learning and improving. DISPUTE RESOLUTION. The system should provide integrated dispute resolution pathways. All the relevant stages should be integrated into a simple, single pathway: assistance and triage, mediation, online, decision, enforcement. This means integrating courts, tribunals, arbitration, mediation, ADR, Ombudsmen, ODR and anything else. Pathways for assistance in solving problems and for dispute resolution should be easy to identify, simple to use, quick, usually have no cost to applicants, be cheap overall, and effective in delivering outputs that are fair and just. The current adoption of Online Justice should be continued. It provides numerous advantages in simplifying processes and reducing cost. But it should also be designed to provide effective data that can be used to address underlying problems in behaviour and culture. ASSISTANCE IN PROBLEM SOLVING. The system should focus on solving people’s and organisations’ problems. It should have an accessible face, that provides information and

vi Executive Summary support. The network for delivering personal and expert assistance should be coordinated. It should be based on providing online information to people – and collecting anonymised data on their problems. Person-to-person assistance should also be available. Expert assistance should be focused at an early stage to solve root causes of problems. Experiments in problem-solving courts and family and addiction courts have demonstrated their value, but these do not necessarily have to be configured around courts and judges. A wider vision is needed. LEARNING AND IMPROVING. The dispute resolution and assistance systems must provide effective input into the prevention of future disputes. Data should be captured and fed back to relevant intervention and regulatory systems to support delivery of improvement in behaviour and culture. The system should aim at identifying new problems and solving the root causes of problems, not just resolving individual disputes. Hence expert assistance and systems should be configured to deliver and achieve this.

Redesign in Individual Pathways 1.

2. 3. 4.

5.

6.

7.

Injuries: Shift clinical injury and product liability claims out of courts into an administrative redress scheme, overseen by an Injury Ombudsman. Only this shift from an adversarial system would support the open culture that is a goal for the NHS. The proposed Online Injury Portal is a good development, but should be integrated with the Injury Ombudsman. Complaints against the State: Combine Tribunals and PHSO/LGSCO into a single integrated pathway. Refocus a high level Ombudsman function on overseeing behaviour and culture in public bodies, with power to intervene and work with bodies. Property: Create a new unified architecture that integrates both the envisaged new Ombudsman scheme(s) together with the current County Court and First-tier Tribunal (Property Chamber). Consumers: Continue to develop the integrated consumer Ombudsman landscape, integrating the Small Claims mechanism. Create a single national information and dispute resolution portal: Resolver already exists as the model on which to build. Continue good existing links between most of the consumer Ombudsmen and sectoral regulatory authorities. Shift all ADR schemes into the Ombudsman system. Employment: Combine ACAS with the Employment Tribunal as a single pathway. The information should be fed to a new regulatory system that integrates multiple current bodies (on late payment, minimum wage etc) and employer functions, and supports best practice in workplace behaviour and culture. SMEs: Create a new mechanism for delivering business support and assistance to SMEs, that includes both an efficient dispute resolution pathway and assistance in preventing similar problems. It would be built on current best practice from some Local Authorities, Better Business for All, the Resolver/Ombudsman Services pilot, and the Small B usiness Commissioner etc. A possible alternative model is for the Small Claims track to become the Small Claims Ombudsman and shift its administration from HMCTS into a National Ombudsman Service. Families: Create a better system of coordinated front line expert assistance to families through local authorities and the social care system.

FOREWORD An accessible, fair and cost-effective system of dispute resolution is essential to the Rule of Law. This simple principle seems to have been forgotten by many in England and in Wales. Access to legal advice is also essential to the Rule of Law for without it many, particularly those who need it the most, find most types of dispute resolution impossible to use. For them there is no properly accessible system of dispute resolution and so there is a denial of one of the fundamental principles of the rule of law. Any proper examination of the current dispute resolution system would show that the present system of dispute resolution is also no longer fit for purpose. It is too expensive. It is too complicated; an egregious example is that the rules of civil procedure used in court have to be set out in a book over 2000 pages long. The system cannot be readily or properly used by those who need it the most without legal advice and representation. The legal aid “reforms” effected in 2012 have progressively reduced the provision of legal advice made available by the state. The effect of the “reforms” has been devastating for the disadvantaged in our society as nothing effective was put in its place by the Government. The system in any event lacks cohesion. The courts operate under one structure and the tribunals under another, though these are more closely related now than they have been. There is some linkage between the courts and some providers of methods of alternative dispute resolution such as mediation, but there is no real coordination. The same is true in respect of an ombudsman services. Each by and large lives in its own world rather than providing a system of joined up advice and dispute resolution. What is plainly needed is a system that is cohesive and coordinated. Such a system must cover all forms of dispute resolution, including informal resolution at the outset by advice and discussion. Members of the public can then have a clear understanding of where to go to get their disputes resolved. The system should also take into account in its design dispute resolution that can be used through the provision of on line advice and without the need for legal advice. The provision of legal advice, however, should, where it is necessary for the vulnerable or disadvantaged in society, be seen as an integral part of a dispute resolution system. We have at present the opportunity in England and in Wales to look again at how such a system should be provided and aligned with legal aid. That opportunity is provided by the need to reform the current systems, given the state into which they have been allowed to fall. This should not be done by tinkering, but by a rebuild of the present system of advice and dispute resolution to form an integrated and comprehensive system. The current reform to the court and tribunal system particularly through the use of digital technology and the plans under discussion to use ombudsman services more widely provide further impetus for reform. The ongoing transformation of the way in which we work through use of digital technology is another factor. This may not help the most vulnerable or disadvantaged without assistance; any new system must take this into account as a basic building block of providing a more equal society.

viii Foreword Piecemeal reform will fail. It will result in replicating a disjointed, expensive and difficult to use set of alternative methods of dispute resolution with legal aid being seen as something separate. What is need is a strategy based on analysis of the existing system which will provide a new system that can make a real difference to delivering a fairer and more equal society and to safeguarding the rule of law. This book provides that clear analysis of the present system in England and in Wales. It correctly concludes that now is a time for change. What is needed is a modern system that integrates the provision of advice and disputes resolution and in addition uses data collected by such a system for the benefit of society so that behaviour which has resulted in disputes can be addressed for the future. The strategy and plans for change provide a clear way forward. They integrate advice, resolution where possible by agreement and, where this is not possible, a system for dispute resolution combining the various methods of dispute resolution, including the emerging online court into a single coherent system. Each main class of dispute is identified and the suggested way in which that class of dispute should be resolved is clearly outlined. Although there may be some useful discussion about the detail of the way in which this is to be done, there can be no room for argument that a radical and far-reaching redesign of our dispute resolution and legal advice system is needed. I therefore cannot commend too highly the compelling analysis which shows this is necessary. It sets out what needs to be done to produce as soon as possible a new and integrated system and provides a clear set of proposals for discussion. In pressing for reform, it will be essential to remind everyone that without an accessible dispute resolution system and without the provision of legal advice and assistance where they are needed, the Rule of Law is indeed under a real threat in England and in Wales. Lord Thomas of Cwmgiedd, Kt PC Lord Chief Justice of England of Wales 2013–2017

THANKS This book could not have been written without the assistance and input of many people. There are far too many to name. All deserve warm thanks. From my former career in practice, stretching back over 40 years now, I learnt the art of litigation from many colleagues, including Richard Ireland, Peter Robson, Chris Hickson, Mark Hapgood QC, Tim Hardy, Mark Tyler, Ian Dodds-Smith and Sir Gary Hickinbottom. A very large number of legal colleagues and clients across the world have contributed over 25 years in practice and 15 years in the academy to my knowledge and thinking about how disputes are resolved. In recent years, I have had the pleasure of researching and assisting many O mbudsmen, both in UK and across Europe, and I would thank in particular Lewis Shand Smith, Matthew Vickers, Caroline Wayman, Annette Morris, Donal Galligan and Rob Behrens, plus my academic colleagues Naomi Creutzfeldt, Stefaan Voet, Eline Verhage and Alexandre Biard. My colleague Sonia Macleod and I spent some years researching and thinking about personal injury redress schemes. A major transformation in thinking occurred when I began to unravel ideas on affecting behaviour. That led by way of my book Law and Corporate Behaviour to the model set out in the book by Ruth Steinholtz and myself, Ethical Business Practice and Regulation. Many people contributed to that transformation in understanding, especially Ruth and Graham Russell and colleagues at the Office for Product Standards and Safety. In researching this book in the past couple of years Harriet Harper and then Charmaine Cole have provided terrific research support, Katie Hayward and Adina Henson administrative support. I have been most fortunate in working with Anthony Inglese CB, formerly Legal Adviser at a number of Departments of HM Government, latterly HMRC. He has been generous with his time in making arrangements and detailed discussions of issues. He also kindly introduced me to many people, not least David Pearson CB, formerly head of government litigation, who kindly provided comments on a draft. A great number of people kindly agreed to talk to Anthony and I, and provided invaluable assistance or comments. Thanks are due to them all. The list includes the following: Sir James Munby, formerly President of the Family Division Lord Justice Ryder, Senior President of Tribunals Sir Geoffrey Vos, Chancellor of the High Court Lord Justice Underhill HHJ Mary Stacey HHJ Edward Hess HHJ Margaret DeHaas QC Judge Brian Doyle, President of Employment Tribunals

x Thanks Judge John Aitken, President of the Social Entitlement Chamber Judge Michael Clements, President of the Immigration and Asylum Chamber Judge Siobhan McGrath, President of the Property Chamber Robert Behrens CBE, Parliamentary and Health Service Ombudsman Michael King, Local Government and Social Care Ombudsman Caroline Wayman, Chief Ombudsman, Financial Ombudsman Service Annette Lovell, Director of Engagement, Financial Ombudsman Service Lewis Shand Smith, Ombudsman Emeritus, Ombudsman Services Matthew Vickers, Chief Ombudsman, Ombudsman Services Dr John Sorabji, Senior Legal Adviser to the Lord Chief Justice and the Master of the Rolls; Senior Teaching Fellow, University College London Andrea Dowsett, Private Secretary to the Chancellor of the High Court Tazeen Said, Legal Secretary to the President of the Family Division James Walker, CEO, Resolver Rohan Grove, HMCTS Luc Altmann, HMCTS Cris Coxon, HMCTS Adam Lennon, HMCTS Gill Dix, Nicole Clarke, John Woods, all of ACAS Sir Alan Ward, Chair, Civil Mediation Council Paul Randolph, Civil Mediation Council Juliette Dalrymple, Family Matters Mediation Dr Karl Mackie CBE, Centre for Effective Dispute Resolution Steve Brooker, Legal Services Board Crispin Passmore, formerly Solicitors Regulatory Authority, now Passmore Consulting Adam Sampson, formerly Legal Ombudsman James Plunkett, Executive Director of Policy and Advocacy, Citizens Advice Lindsey Poole, Advice Services Alliance Simon Davis, Vice-President, The Law Society Sophia Adams Bhatti, Director of Legal & Regulatory Policy, The Law Society Gary Luff, Ageas Insurance Limited Antony Greensweig, Ageas Insurance Limited Ivor Adair, Fox & Partners and for the Employment Law Association Anthony Fincham, CMS Cameron McKenna Nabarro Olswang LLP Valerie Dougan, CMS Cameron McKenna Nabarro Olswang LLP Amanda Gourlay, Barrister

Thanks xi Subo Shanmuganatha, Chartered Institute of Arbitrators Caroline Sheppard, Chief Parking Adjudicator Christine Tacon, Groceries Code Adjudicator The opinions expressed here are, of course, mine and should not necessarily be attributed to any of the above who have kindly contributed information and their thoughts. I am fortunate in having a close and highly productive relationship with Hart Publishing, stretching back over a couple of decades to the days of Richard Hart, and now continuing with Sinead Moloney, Dr Roberta Bassi, Tom Adams, Emma Platt, Rose Wood and Claire Banyard. I am extremely grateful to the team – yet again – for their great professionalism and understanding. This project has not received direct funding, it is essentially a personally driven interest of mine, even amounting to a campaign, to see things more objectively and try to improve them. Funding for some research that I have undertaken, some of which is related in subject matter to this project, has been received from HM Government, the Swiss Reinsurance Company Limited, the European Justice Forum and UK Finance. No funder has had input into what I have researched or concluded in this book. A considerable quantity of data is given in Figures in the book. In order to more easily identify trends, I have usually put in bold the largest number appearing in a sequence over a number of years.

xii

BRIEF CONTENTS Executive Summary�� v Foreword by Lord Thomas of Cwmgiedd�� vii Thanks�� ix Detailed Contents�� xv Abbreviations�� xxv List of Figures�� xxix 1. Introduction��1 PART A SETTING THE SCENE 2. Affecting Behaviour��33 3. People’s Problems: Incidence, Types, Pathways and Objectives��68 4. Courts��105 5. The Courts: A Story of Costs and Funding Problems��134 6. ADR��180 7. Digitisation of the Courts��187 8. Helping People with Problems��201 PART B TYPES OF DISPUTES 9. Consumer-Trader Disputes��217 10. Personal Injuries��251 11. Family Disputes��310 12. Property��340 13. Complaints Against the State��364 14. Small Business Disputes��445 15. Employment Disputes��463

xiv Brief Contents PART C CONCLUSIONS 16. Reviewing the Pathways��521 17. Recommendations��546 18. A New Design for Dispute Resolution Architecture��550 Index�� 571

DETAILED CONTENTS Executive Summary�� v Foreword by Lord Thomas of Cwmgiedd�� vii Thanks�� ix Brief Contents��xiii Abbreviations�� xxv List of Figures�� xxix 1. Introduction��1 I. Types of Disputes Covered��1 II. The Basic Models of Dispute Resolution��2 A. Modes��2 B. Structures��4 C. Techniques��5 D. Evolution and Diversification��5 III. The Incidence of Major Types of Claims��6 IV. Themes��11 A. Techniques��11 B. Technology��12 C. Cost��13 D. Comparisons and Options��13 E. Intermediaries��14 F. Shift in Funding��15 G. User-Friendliness��16 H. The Widening of Objectives��16 I. Affecting Behaviour��17 J. Evolution in the Legal Theories and the Basis of Triggering Compensation��20 K. Fairness��20 V. The Need for a Redesign��22 A. The Need to Accept the Failure of the Adversarial Model��22 B. Compiling the Parts��23 C. We’re Paying for All this��25 VI. Evaluating the System��26 A. Best Practice in Evaluating Reform��26 B. Adopting Users’ Viewpoints��26 C. Objectives and Functions��27 D. Evaluation Criteria��28 E. Durations��29

xvi Detailed Contents PART A SETTING THE SCENE 2. Affecting Behaviour��33 I. Understanding How to Affect Behaviour��34 A. Traditional Theory: Deterrence��34 B. Compliance and Resistance within Organisations��38 C. The Science of Human Behaviour��40 D. Blaming Prevents Learning: Aviation Safety and the NHS��42 E. Developments in Government Policy on Regulation and Enforcement��45 F. Revisiting Organisations and Culture��48 G. Ethical Business Practice and Ethical Business Regulation��49 H. Public Sector Organisations��50 I. Building an Open and Ethical Culture��51 J. Redefining Accountability��53 K. Switching Paradigms of Affecting Behaviour��54 L. Implications for Dispute Resolution Systems��55 II. A Systemic Approach��56 A. The Problem-Solving Paradigm��56 B. The Core Functions��58 C. Delivery of the Core Functions��59 D. Delivering the Functions��63 E. The Consumer Markets Example��65 3. People’s Problems: Incidence, Types, Pathways and Objectives��68 I. People’s Legal Problems��68 II. Incidence and Types of Consumer Problems��74 III. What Pathways do People Choose?��76 A. Survey Evidence on Pathways��76 B. General Reasons to Seek Legal Advice��91 C. Responses to Consumer Complaints��92 IV. What are People Seeking?��95 A. Public Sector Complaints��95 B. Consumer Complaints��96 C. Personal Injury Claims��98 V. Conclusions��104 4. Courts��105 I. Introduction��105 A. The Court System��105 II. Court Users Research��106 III. County Courts and Small Claims��113 A. Mediation and Small Claims��114 B. Statistics��116 IV. High Court��119

Detailed Contents xvii V. Business and Property Courts��121 A. The Chancery Division��122 B. Reforms of Procedure��125 C. Disclosure��126 D. Environmental Cases��127 VI. Duration��128 VII. Alternative Strategies for Business Disputes��131 VIII. Conclusions��132 5. The Courts: A Story of Costs and Funding Problems��134 I. Overview��134 A. Funding Options��134 B. The Historical Context and Funding Conundrum��135 II. The History of Continuous Reform��137 A. The Woolf Reforms of Civil Procedure��137 B. From Legal Aid to Conditional Fees��138 C. Recoverability of Success Fees and ATE Premiums��141 D. Costs and Funding��143 E. Referral Fees��145 F. Claims Management Companies��146 G. Compensation Culture��150 H. Austerity and the 2013 Demise of Legal Aid��151 I. 2013 Implementation of the Jackson and Other Reforms��158 J. Whiplash Claims��162 K. Court Fees��164 L. The Flood of Litigants in Person��165 M. Fixed Costs��166 N. The Costs Problem that Would Not Go Away��168 O. Shifting Sands: Liberalisation of Legal Services��170 P. Further Developments��171 Q. Post-Legislative Review of LASPO��172 R. A New Policy��175 III. Conclusions��176 6. ADR��180 I. ADR and the Courts��180 A. Policy on Introducing ADR into Civil Procedure��181 B. Issues with Mediation and ADR��184 7. Digitisation of the Courts��187 I. Courts and IT��187 A. ODR��188 B. The Concept of the Online Court��189 C. Issues Arising��194 D. Money Claim Online��195

xviii Detailed Contents II. The HMCTS Reform Programme��196 A. Outline of the Reform Project��196 B. Unification��200 III. Conclusions��200 8. Helping People with Problems��201 I. The Information and Advice Landscape��201 A. Advice Landscape��201 B. Pro Bono Arrangements��202 C. Diversity and Coordination��205 II. Problem-Solving Pathways: Delivering Coordinated Expertise��206 A. Problem-Solving Courts��207 B. Social Welfare Cases: Problem Clusters and Root Causes��208 III. Conclusions��214 PART B TYPES OF DISPUTES 9. Consumer-Trader Disputes��217 I. Overview��217 II. Pathways��218 A. Citizens Advice��218 B. Courts��220 C. Business Complaint Functions��220 D. Resolver��221 E. Statistics��224 F. Alternative Dispute Resolution and Consumer Ombudsmen��225 G. Ombudsmen Processes��227 H. Statistics on Some Leading Consumer Ombudsmen��228 I. The EU Consumer ADR Regulatory Scheme��232 J. Online Dispute Resolution��233 K. EU Cross-Border Disputes: ECC-NET and the ODR Platform��234 III. Consumer Redress Facilitated by Regulatory Authorities��235 A. Regulatory Redress Powers��235 B. Overseeing Delivery of Redress��237 C. Examples of Regulatory Redress Paid��238 D. The Behavioural Context of Regulatory Enforcement��239 IV. Core Functions��240 A. Information��240 B. Advice and Assistance��241 C. Dispute Resolution Pathways��242 D. Collecting, Aggregating and Feeding Back Data��244 E. Affecting Behaviour��248 V. Conclusions��249

Detailed Contents xix 10. Personal Injuries��251 I. Overview��251 A. Switching by Solicitors��252 B. Statistics��255 II. Pathways��259 A. Road Traffic, Employers Liability and Public Liability: The Portal��259 B. Portal Statistics��261 C. Proposed New Portal��264 III. Workplace Injuries��265 A. Affecting the Incidence of Workplace Injuries��266 IV. Clinical Injuries��268 A. Private Healthcare��268 B. Public Healthcare��270 C. Types of Claims: Obstetrics Dominate Cost��274 D. High Claim Failure Rates��275 E. Outcomes of Claims��276 F. Disproportionality between Costs and Damages��278 G. Inexorably Rising Cost of Clinical Claims��279 H. Drivers of Costs and Success Rates��281 I. Proposals on Personal Injury Fixed Costs��284 J. The Discount Rate��286 K. Costing Damages at Private Rates��287 L. Differential Use of Mediation��288 M. Duration��289 N. Summary��290 O. Attempts to Introduce an Administrative Redress Scheme��291 V. The Health Service Ombudsman��295 VI. Discussion��302 A. Workplace, Public and Road Traffic Injuries��302 B. NHS Clinical Claims��303 C. The Perennial Problem of Culture in the NHS��304 D. A No Blame Culture is Essential��307 E. Affecting Behaviour��309 VII. Recommendations��309 11. Family Disputes��310 I. Introduction��310 II. Divorce��312 A. Digitising the Process��313 III. Public Law��315 A. The Care Crisis��316 B. Problem-Solving Courts, Settlement Conferences and FDACs��318 C. Digitisation��323

xx Detailed Contents IV. Private Law��323 A. Legal Aid, Court Fees and Litigants in Person��325 B. MIAMs��327 C. Conclusions on Private Law Cases��331 D. Duration��332 V. Financial Remedies��332 VI. Scholarly Thoughts on Transformations��334 VII. Conclusions��336 A. Core Functions��338 12. Property��340 I. Introduction��340 A. Sector Statistics��342 II. Pathways��343 A. Historical Dispute Pathways��343 B. Courts and Tribunals��344 C. Letting and Managing Agents��346 D. New Homes��353 E. Social Housing��356 F. Rationalisation of the Advice and Ombudsman Landscape��360 III. Conclusions��362 IV. Recommendations��363 13. Complaints Against the State��364 I. Overview��364 II. Internal Complaints Procedures and Appeals��366 A. Description��366 B. Reforms��366 C. Concerns with Initial Decision-Making��368 III. Tribunals��371 A. Outline of the Tribunals System��371 B. Usage Statistics��374 C. Fees��378 D. Duration��378 E. Digitisation, Reform and Problem Solving��379 F. Examples of Innovations in Process��382 G. Social Entitlement��385 H. Online SSCS Project: A Continuous Online Hearing��387 I. Immigration and Asylum��389 J. Process Innovations in the IAC��392 K. Some Policy Considerations in Innovations��394 IV. Suing the State��394 A. The ADR Pledge��395 V. Judicial Review��395 A. Description��395 B. Usage��396 C. Duration��400

Detailed Contents xxi VI. Public Ombudsmen��400 A. Function and Origins��400 B. The Ombudsman Process��401 C. PHSO Statistics��403 D. Duration��410 E. Health Service Ombudsman��411 F. Operational Reform of PHSO��412 G. Local Government and Social Care Ombudsman��413 H. Proposals for Structural Reform of the Two Ombudsmen��418 VII. Public Inquiries��421 VIII. Coroners��425 IX. Discussion��426 A. Modernising Processes��426 B. Summary of the Systems��426 C. The Multiple Pathway Issue��427 D. Simple Potential Rationalisations��428 E. Outcomes and Mediation��428 F. Improving Decision-Making by Officials��429 G. Obtaining Data to Identify Problems and Drive Change��431 H. Affecting Behaviour and Culture��432 I. Major Public Issues��434 J. A Model of a Fused System��436 X. Recommendations��438 Appendix: Complaint Mechanisms for Government Departments��438 HMRC��438 Government Legal Department��439 HM Land Registry��439 Crown Prosecution Service��440 National Crime Agency��440 Home Office��441 Department for Work and Pensions��441 Department for Environment Food & Rural Affairs��442 Food Standards Agency��442 Department for Transport��442 Driver and Vehicle Licensing Authority��443 Competition & Markets Authority��443 Charity Commission for England and Wales��443 Serious Fraud Office��444 Local Government��444 14. Small Business Disputes��445 I. Overview��445 A. Small and Medium Sized Businesses in UK��445 B. The Legal Needs of SMEs��445 II. Pathways��449 A. Arbitration��449 B. Small Claims Track��450

xxii Detailed Contents C. The Public Procurement Review Service��450 D. The Importance of Identifying Underlying Problems��450 E. The Groceries Code Adjudicator��450 F. The Pubs Code Adjudicator��454 G. The Small Business Commissioner��456 H. Intellectual Property Mediation Service��458 I. SMEs and Banks��458 III. Process Improvements��460 IV. Core Functions��461 V. Conclusions��462 15. Employment Disputes��463 I. Overview��463 II. Pathways��465 A. Typologies��465 B. Advice��466 C. Workplace Resolution��468 D. Funding Constraints and Effects��469 III. Courts, Employment Tribunals and ACAS��472 A. Duplication between ETs and Courts��472 B. The ET and ACAS Processes��473 C. ET Panels��474 D. The Shift to Mediation��475 E. ACAS Conciliation��475 F. The ACAS Process��479 G. Mediation in ETs��480 H. Theoretical Arbitration Options��481 I. Representation��482 J. ET Fees: A Diversion from Modernisation��483 K. Current Caseload��485 L. Types of Case��487 M. Outcomes��490 N. Statistics��491 O. Performance Data��494 P. Introduction of IT��496 Q. Proposals for an Integrated Court and ET Jurisdiction��496 R. Enforcement Problems��499 IV. New Regulatory Mechanisms��500 A. The Gangmasters and Labour Abuse Authority (GLAA)��501 V. HMRC National Minimum Wage/National Living Wage��502 A. Employment Agency Standards (EAS)��503 B. The Director of Labour Market Enforcement��503 VI. Process Improvements��505 A. Assisting Early Resolution��505 B. A Simplified Pathway��506 C. Case Types��507

Detailed Contents xxiii D. Affecting Behaviour��508 E. Limitations of the Private Enforcement Model and a Wider Need��510 F. Issues with the Regulatory Approach and Landscape��514 G. Delivering Information and Intervention��515 H. A Potential Labour Market Model��515 I. Costs��517 II. Recommendations��518 V PART C CONCLUSIONS 16. Reviewing the Pathways��521 I. The Objectives��521 II. Criteria for Dispute Resolution Pathways��522 III. Models of Pathways��523 IV. Pathways��525 A. Courts��525 B. Consumers��527 C. Families and Children��530 D. Property��533 E. Citizens and the State��533 F. Personal Injuries��537 G. The NHS��538 H. What is Missing? Neighbours and Education��539 I. Businesses��540 J. SMEs��540 K. Conclusions on Existing Pathways��544 17. Recommendations��546 A Focus on Solving Problems��546 Need for a New Dispute Resolution Model��546 Individual Problem Types and Pathways��546 Consumers��546 Personal Injuries��547 Family��547 Property��547 Complaints against the State��548 Assistance and Neighbourhood Issues��548 SMEs��548 Employment��548 18. A New Design for Dispute Resolution Architecture��550 I. Criteria for Pathways��550 II. Design Parameters��550 A. Integrated End-to-End Design��550

xxiv Detailed Contents B. Problem-Solving Focus��551 C. The Role of Courts in a Pluralist Architecture��551 III. Stages in Dispute Resolution��555 A. Information��555 B. Integrating Delivery of Initial Information, Assistance and Triage��555 C. Pathway Selection��557 D. Making a Complaint or Claim��559 E. Case Management��559 F. Technology��559 G. Decision-Making��560 IV. Further Design Issues��561 A. What Human Assistance is Needed?��561 B. Funding��561 C. Cost of Access��564 D. Structures��565 V. Final Challenges��566 A. Coordinating the System��566 B. Lessons on Policy-Making��567 C. The Ultimate Question: Reflecting the Values of our Society��569 Index�� 571

ABBREVIATIONS ABI

Association of British Insurers

ABS

alternative business structures

ACAS

The Advisory Conciliation and Arbitration Service

ADR

Alternative dispute resolution

AI

Artificial intelligence

ASA

Advice Services Alliance

ATE

After the event

BEIS

Department for Business, Energy and Industrial Strategy

BPBU

The Bar Pro Bono Unit

BTE

Before the event

B&PCs

Business and Property Courts

CA

Citizens’ Advice

CABx

Citizens Advice Bureaux

C2B Consumer-to-business CAFCASS

Children and Family Court Advisory and Support Service

CEDR

The Centre for Effective Dispute Resolution

CFA

Conditional fee agreement

CIArb

Chartered Institute of Arbitrators

CIWM

Certificate in Internal Workplace Mediation

CJC

Civil Justice Council

CMA

The Competition and Markets Authority

CMC

Claims Management Company

CNF

Claim Notification Form

CNST

Clinical Negligence Scheme for Trusts

CPI

Consumer Prices Index

CRU

Compensation Recovery Unit

xxvi Abbreviations DBA

Damages-based agreement

DJ

District Judge

DLMA

The Director of Labour Market Enforcement

DWP

Department for Work and Pensions

EC

Early conciliation

ECHR

European Convention on Human Rights

EEC-NET

European Consumer Centres Network

EEJ-NET

European Extra-Judicial Network

EHRC

The Equality and Human Rights Commission

ET

Employment Tribunal

EU

European Union

FCA

Financial Conduct Authority

FDAC

Family Drug and Alcohol Court

FOS

Financial Ombudsman Service

FRC

Fixed recoverable costs

FRU

Free Representation Unit

FSB

Federation of Small Businesses

GCA

Groceries Code Adjudicator

GLAA

Gangmasters and Labour Abuse Authority

GP

General practitioner

HepC

Hepatitis C

HMCTS

Her Majesty’s Courts and Tribunals Service

HMRC

Her Majesty’s Revenue and Customs

ICR

NHS Injury Costs Recovery

ICSAS

Independent Healthcare Sector Claims Adjudication Service

IPSEA

Independent Parental Special Education Advice

LASPO

The Legal Aid, Sentencing and Punishment of Offenders Act 2012

LEI

Legal expenses insurance

LeO

Legal Ombudsman

LGSCO

The Local Government and Social Care Ombudsman

Abbreviations xxvii LiP

Litigant in Person

MCOL

Money Claim Online

MDU

Medical Defence Union

MedCo

Medco Registration Solutions

MHCLG

Ministry for Housing, Communities and Local Government

MIAM

Mediation Information & Assessment Meeting

MINELA

Middle Income Not Eligible for Legal Aid

MRO

medical reporting organisation or Market Rent Only

NAO

National Audit Office

NED

non-executive director

NGO

Non-Governmental Organisation

NHSLA

NHS Litigation Authority

NHS-R

NHS Resolution

NIHL

noise-induced hearing loss

NML/NLW National Minimum Wage/National Living Wage OC

Online Court

ODR

Online dispute resolution

Ofcom

The Office of Communications Regulation

Ofwat

The Office of Water Regulation

OSC

Online Solutions Court

PAC

House of Commons Public Accounts Committee

PASC

House of Commons Public Administration Select Committee

PCA

Pubs Code Adjudicator

PHSO

Parliamentary and Health Service Ombudsman

PI

personal injury

POB

Pub Owning Business

PPI

Payment protection insurance

QOCS

Qualified One-Way Cost Shift

RAPEX

European Rapid Alert System

RCOG

Royal College of Obstetricians and Gynaecologists

xxviii Abbreviations RRR

Rapid Resolution and Redress

RTA

Road Traffic Act

SBC

Small Business Commissioner

SEND

special educational needs and disabilities

SME

Small and/or Medium-Sized Entity

SRA

Solicitors Regulatory Authority

TCEP

Transforming Compliance and Enforcement Programme

TPT

Traffic Penalty Tribunal or Tied Pub Tenant

TUC

Trades Union Congress

vCJD

Creutzfeld Jacob Disease

LIST OF FIGURES Chapter One – Introduction Figure 1.1 Incidence of major claims in 2017/18��7 Figure 1.2 Volume of major court proceedings 2006/7 to 2010/11��8 Chapter Two – Affecting Behaviour Figure 2.1 The Private Law Legal Paradigm��35 Figure 2.2 The Regulatory Enforcement Paradigm��35 Figure 2.3 The New Regulatory Paradigm��38 Figure 2.4 A Values-based Ethics and Compliance Framework��52 Figure 2.5 The Problem-Solving Paradigm��57 Figure 2.6 The Core Functions��59 Chapter Three – People’s Problems: Incidence, Types, Pathways and Objectives Figure 3.1 Summary of Issue Types and Responses in 1999 Paths to Justice Study��70 Figure 3.2 Percentage of adults who experienced a legal problem in the last 18 months by problem type, 1 LPRS 2014–15 (Table 2.1 in the original)��71 Figure 3.3 Duration of problems, LPRS 2014–15 (Table 3.2 in original)��72 Figure 3.4 Perceived seriousness of problems by problem type, LPRS 2014–15 (Table 3.5 in original)��73 Figure 3.5 Services people have had a poor experience with in the two years to mid-2016��74 Figure 3.6 Amount of consumer detriment and compensation paid in Oxford Economics study��75 Figure 3.7 Amount of consumer detriment and compensation paid by sector in Oxford Economics study��75 Figure 3.8 Resolution strategies used to try to resolve legal problems, LPRS 2014–15��77 Figure 3.9 Most formal resolution strategy used by problem type, 1 LPRS 2014–15 (Table 4.2)��78 Figure 3.10 Use of formal resolution processes by problem type, 1 LPRS 2014–15 (Table 5.1)��79 Figure 3.11 Types of help obtained by problem type, 1 LPRS 2014–15 (Table 6.1)��81 Figure 3.12 Advice providers by problem type, 1 LPRS 2014–15 (Table 7.2)��81 Figure 3.13 Type of help received from last adviser contacted, LPRS 2014/15 (Table 7.4)��83 Figure 3.14 Quality of service, 1 LPRS 2014–15 (Table 7.7)��84 Figure 3.15 Amount paid for help obtained, 1 LPRS 2014–15 (Table 7.10)��85

xxx List of Figures Figure 3.16 Outcomes of legal problems, by problem type, 1 LPRS 2014–15 (Table 9.1)��86 Figure 3.17 How problems were resolved by problem type for all resolved problems, LPRS 2014–15 (Table 9.3)��87 Figure 3.18 In whose favour was the problem perceived to have resolved, LPRS 2014–15 (Table 9.8)��88 Figure 3.19 Reasons and per cent of problems where consumer had failed to seek redress��93 Figure 3.20 Reasons for not complaining after experiencing poor public service��96 Figure 3.21 Consumer Objectives in Complaining: Consumer Focus 2012 Study��97 Figure 3.22 What Happened When Consumers Made an Initial Complaint: Consumer Focus 2012 Study��98 Chapter Four – Courts Figure 4.1 Civil Court User Survey 2015; Nature of the claim (Table 4.1)��106 Figure 4.2 Civil Court User Survey 2015; Type of Claim (Table 3.2)��107 Figure 4.3 Civil Court User Survey 2015; Claim value (specified money claims only) (Table 3.3)��108 Figure 4.4 Civil Court User Survey 2015; Whether at the point of sampling the claim had been defended, whether judgment had been entered and whether the claimant had legal representation, by claim type (business claims only) (Table 3.5)��108 Figure 4.5 Civil Court User Survey 2015; Track allocation by claim type (defended business claims only) (Table 3.8)��109 Figure 4.6 Civil Court User Survey 2015; Whether at the point of sampling the claim had been defended, whether judgment had been entered and whether the claimant had legal representation, by claim type (individual claims only) (Table 3.6)��109 Figure 4.7 Civil Court User Survey 2015; Claim value (all individual claims which involved a claim for money) (Table 4.2)��110 Figure 4.8 Civil Court User Survey 2015; Case outcome (all individual claims – completed claims only) (Table 4.5)��110 Figure 4.9 Civil Court User Survey 2015; Action before starting a claim (all individual claims) (Table 6.2)��111 Figure 4.10 Civil Court User Survey 2015; Preference for court action (all individual claims) (Table 6.3)��112 Figure 4.11 Civil Court User Survey 2015; Legal costs (individual claimants who had used a solicitor/other lawyer) (Table 7.3)��113 Figure 4.12 Civil Court User Survey 2015; Total legal costs (all who paid or expected to pay legal fees) (Table 7.4)��113 Figure 4.13 England & Wales County Court civil cases 2000–2018��116 Figure 4.14 England & Wales County Court civil cases 2000–2016: Track allocations��117 Figure 4.15 England & Wales County Court civil cases 2000–2016��118 Figure 4.16 All unspecified money claims 2013/14 to 2015/16 quoted by Briggs LJ��118 Figure 4.17 England & Wales High Court Queen’s Bench Division Statistics 2002–2017��120

List of Figures xxxi Figure 4.18 Graph of England & Wales High Court Queen’s Bench Division Statistics 2002–2016��120 Figure 4.19 Estimated claim values for All Ch D claims through the triage process (whether issued or transferred to Chancery) for the period 21.12.15 to 27.5.16��122 Figure 4.20 England & Wales High Court Chancery statistics 2000–2018��123 Figure 4.21 Chancery statistics 2000–2016��124 Figure 4.22 Proportion of cases issued that were listed for trial and tried between 2008 and 2012��124 Figure 4.23 Time target for Small Claims Track cases, per Briggs 2016��128 Figure 4.24 Time target for Multi-Track cases, per Briggs 2016��129 Figure 4.25 Time target for Fast Track cases, per Briggs 2016��130 Chapter Five – The Courts: A Story of Costs and Funding Problems Figure 5.1 Spending on civil legal aid between 1979/80 and 2013/14��151 Figure 5.2 Disposable income contributory rates in civil/family legal aid, before and after LASPO��153 Figure 5.3 Civil legal aid workload summary, legal help and civil representation 2009–12 to 2016–17��155 Figure 5.4 Number of Solicitor firm provider offices by category of civil legal aid work, Apr–Jun 2013 to Jan–Mar 2017��157 Figure 5.5 Number of Not-for-Profit provider offices by category of civil legal aid work, Apr–Jun 2013 to Jan–Mar 2017��157 Figure 5.6 The TUC’s 2014 Compensation Myths��160 Figure 5.7 Agreed or approved budgets and total costs for different claim types for claims under £25,000, 2017��169 Chapter Nine – Consumer-Trader Disputes Figure 9.1 Citizens Advice Bureau statistics on consumer trends��219 Figure 9.2 Main areas complained about to Citizens Advice in 2017/18��220 Figure 9.3 Resolver case file numbers 2014–2018��225 Figure 9.4 A consumer Ombudsman’s escalating pyramid technique��227 Figure 9.5 Contacts and case numbers for leading consumer Ombudsmen 2010/11 to 2017/18.��229 Figure 9.6 Enquiries and case numbers for consumer ADR bodies administered by CEDR 2010/11 to 2017/18��230 Chapter Ten – Personal Injuries Figure 10.1 Personal injury claims notified to the Compensation Recovery Unit��256 Figure 10.2 Settlements recorded by Compensation Recovery Unit 2006/07 to 2017/18��257 Figure 10.3 Recoveries made by Compensation Recovery Unit 2006/07 to 2017/18 in £��258 Figure 10.4 Statistics on use and average damages under the RTA Portal 2010–2018��262 Figure 10.5 Statistics on use and average damages under the RTA Portal 2010–2018 for EL (Accident only) claims��262

xxxii List of Figures Figure 10.6 Statistics on use and average damages under the RTA Portal 2010–2018 for EL Disease claims��263 Figure 10.7 Statistics on use and average damages under the RTA Portal 2010–2018 for PL claims��263 Figure 10.8 Rate of fatal injury per 100,000 workers��267 Figure 10.9 Claims against ISCAS 2015–2018��270 Figure 10.10 The process for resolving clinical negligence claims against the NHS��271 Figure 10.11 NHS Claims and Costs 2012/13 to 2017/18�� 273 Figure 10.12 Number of new clinical and non-clinical claims reported from 2010/11 to 2017/18��274 Figure 10.13 Claims received by specialty in 2014/15 and 2017/18��275 Figure 10.14 A comparison of the number and total value of claims for maternal cerebral palsy/brain damage across all clinical negligence schemes 2004/5 to 2017/18��276 Figure 10.15 Number of NHS-R cases resolved without payment of damages from 2004/5 to 2017/18��276 Figure 10.16 Resolution of NHS-R claims in 2017/18��277 Figure 10.17 Levels of success and damages paid under CNST by NHS-R in 2017/18��278 Figure 10.18 Disproportion between Damages and Claimant Legal Costs��278 Figure 10.19 Payments on clinical claims for CNST, ELS and Ex-RHA, and DHSC clinical schemes from 2012/13 to 2017/18��281 Figure 10.20 Claimants’ legal funding arrangements for successful clinical negligence claims, 2006/07 to 2016/17��283 Figure 10.21 Average legal costs and damages awarded, 2006/07 to 2016/17��284 Figure 10.22 Claimants’ legal costs as a proportion of damages awarded by funding arrangements 2006/07 to 2016/17��285 Figure 10.23 Swedish Patient Compensation Scheme (LÖF) data on settled claims involving serious birth injuries 2000–2015, per 100,000 babies born per quarter and per date of birth��293 Figure 10.24 NHS Claims and Costs 2007/8 to 2017/18��296 Figure 10.25 Types of health complaints received and accepted by the NHS Ombudsman��297 Figure 10.26 Investigation into NHS providers Q1–3 2018/19��299 Chapter Eleven – Family Disputes Figure 11.1 Cases starting in Family courts in England and Wales 2006–2018��310 Figure 11.2 Cases reaching a final disposition in England and Wales 2011–2017��311 Figure 11.3 Summary statistics on the timelines of cases in the Family courts of England and Wales 2011–2018��311 Figure 11.4 Number of disposals and average time to first definitive disposal in the Family Courts of England and Wales by case type and legal representation of parties 2011–2018��311 Figure 11.5 Number of children involved in Public law applications, receipts, disposals and outstanding cases in England and Wales, 2015 and 2017��315

List of Figures xxxiii Figure 11.6 Completed workload and expenditure in civil representation Oct–Dec 2014 to Oct–Dec 2017��318 Figure 11.7 Number of children involved in Private law applications, receipts, disposals and outstanding cases in England and Wales, 2015 and 2017��324 Figure 11.8 Representation status of parties in private family law proceedings with at least one hearing in the Family Courts in England and Wales 2012/13 to 2016/17��327 Figure 11.9 Volume of publicly funded MIAMs and mediation starts in family law 2011/12 to 2016/17��330 Figure 11.10 Public and Private Law summary statistics on the timeliness in the Family Court of England and Wales, 2015 to 2017��332 Chapter Twelve – Property Figure 12.1 Diagram of the main regulatory, professional and dispute resolution organisations in the property market��341 Figure 12.2 Summary of property cases in the County Court and Tribunals in 2018��345 Figure 12.3 The Property Ombudsman statistics 2017��351 Figure 12.4 The Property Redress Scheme statistics 2017��351 Figure 12.5 Comparative costs of property sector Ombudsmen 2016/17 and 2017/18��352 Figure 12.6 The Regulator for Social Housing’s four consumer standards��357 Figure 12.7 Housing Ombudsman’s dispute resolution process��359 Figure 12.8 Users of housing redress schemes��362 Chapter Thirteen – Complaints against the States Figure 13.1 Summary of Tribunals��371 Figure 13.2 Tribunal statistics 2007/08 to 2017/18��375 Figure 13.3 Volume of cases received in major Tribunals and complaints assessed by the Public Ombudsmen 2017/18��377 Figure 13.4 Receipts for all Tribunals, 2007/08 to 2016/17��378 Figure 13.5 All DLA Panel Final decisions��384 Figure 13.6 Social Security and Child Support receipts, disposals and caseload outstanding, 2015 to 2017��388 Figure 13.7 Continuous Online Resolution (COR) in SSCS process map: HMCTS��389 Figure 13.8 First-tier Tribunal, Immigration and Asylum Chamber receipts, disposals and caseload outstanding, 2015 to 2017��390 Figure 13.9 Number of appeals and applications made (other than by judicial review), number granted and number of appeals allowed in the Administrative Court 2006–2016��397 Figure 13.10 Number of applications for permission to apply for Judicial Review 2000–2018��397 Figure 13.11 New complaints to PHSO 2011/12 to 2017/18��404 Figure 13.12 PHSO cases, assessments and investigations 2017/18��404 Figure 13.13 Decisions made at assessment, year on year 2011/12 to 2017/18��405 Figure 13.14 Decisions made at investigation, 2011/12 to 2017/18��406

xxxiv List of Figures Figure 13.15 Total complaints to PHSO��406 Figure 13.16 Top five government departments by number of complaints received.��407 Figure 13.17 Top five government departments by number of complaints received (excluding 2012/13 and 2013/14)��407 Figure 13.18 Top five government departments by number of complaints accepted for investigation��408 Figure 13.19 Number of completed investigations 2012/2017��408 Figure 13.20 Outcome of PHSO investigations 2016/17 for Departments of central government��409 Figure 13.21 Durations per stage (days)��411 Figure 13.22 Complaint and outcome data for the Local Government & Social Care Ombudsman 2017/18��414 Figure 13.23 Principles proposed by PHSO for a new Public Ombudsman Service��419 Figure 13.24 Lord Howe’s functions of a public inquiry��422 Chapter Fourteen – Small Business Disputes Figure 14.1 Civil Court User Survey 2015; Number of employees by type of claim issued by IDBR matched business (Table 9.1)��446 Figure 14.2 SMEs’ problems in 2016 FSB survey��447 Figure 14.3 Answers by FSBs to the survey question ‘Did any of the following happen as part of the problem or sorting the problem?’��449 Chapter Fifteen – Employment Disputes Figure 15.1 ACAS Early Conciliation notifications received and ET1 conciliation cases received – individual disputes 2012/13 to 2017/18��476 Figure 15.2 ACAS grounds of complaints received 2017/18��476 Figure 15.3 ACAS Collective disputes received 2012/13 to 2017/18��476 Figure 15.4 ACAS Helpline contacts 2012/13 to 2017/18��476 Figure 15.5 ACAS statistics��477 Figure 15.6 Employment Tribunals Caseload 200/08 to 2016/17 (Highest figures in bold)��487 Figure 15.7 Employment Tribunals Caseload 2007/08 to 2016/17 by Types of Cases (Highest figures in bold)��488 Figure 15.8 Flow of conciliation cases 2017/18��492 Figure 15.9 Extract of Figures 15.6 and 15.7 – types of cases brought to ETs in 2017/18��493 Figure 15.10 Employment Tribunals’ single claim receipts, disposals and claims outstanding, 2015 to 2017��494 Figure 15.11 Index of Employment Tribunals single and multiple claim receipts, disposals & claims outstanding, Q1 2009/10–Q4 2017/18, baseline 2009/10��495 Chapter Sixteen – Reviewing the Pathways Figure 16.1 Classic court model��523 Figure 16.2 Modified court model��524

List of Figures xxxv Figure 16.3 Figure 16.4 Figure 16.5 Figure 16.6

Online court model��524 Consumer Ombudsman model��524 Continuous cycle of communication��525 Feedback mechanism to public sector bodies��525

Chapter Eighteen – A New Design for Dispute Resolution Architecture Figure 18.1 The Low Commission’s summary of using technology to redesign information and advice services��557 Figure 18.2 Total HMCTS business (ie, courts and tribunals)��562 Figure 18.3 Total civil courts business (ie, family and civil)��562 Figure 18.4 Total tribunal business (ie, asylum and immigration, employment and other)��562 Figure 18.5 PHS Ombudsman��562 Figure 18.6 Ombudsman Services��563 Figure 18.7 Financial Ombudsman Service��563

xxxvi

1 Introduction This book reviews the techniques, mechanisms and architectures of the way we resolve disputes in England and Wales. This is both long overdue and timely. There has been significant development in how particular types of disputes are resolved but there has not hitherto been a holistic review of the whole landscape. The approach adopted here is a comparative evaluation of the current state of the main different types of dispute resolution systems, and ways of resolving different types of disputes, set in some recent historical context. Indeed, the first finding of this analysis is how many different types of dispute resolution exist. Anyone who thinks that a court is the only option will be in for either a shock or a pleasant surprise at the availability of other options, even more so because some of them are highly effective. The second finding is that these various silos have evolved piecemeal and with no systematic attempt to learn from experiments or developments in other silos and no overarching plan for joining things up in a coordinated fashion. This book is an attempt to do those things. There is a need, first, to map and evaluate the various sectoral developments so as to see if learning might be spread to other sectors and, secondly, to carry out a holistic overview of the whole system to see if all the individual parts fit well together and how they might collectively be developed as part of a coherent whole. The analysis is of the major dispute resolution pathways that exist in the jurisdiction of England and Wales. Three self-imposed limitations should be mentioned at the start, as this book is large enough as it is without including wider material. First, this book does not focus on criminal or regulatory disputes or pathways. Secondly, although the jurisdiction is that of England and Wales, the focus of this book is primarily on England. This is because some variations in architecture exist in Wales (the Welsh Ombudsman and now a separate tribunal bureaucracy) that call for their own analysis. Indeed, a number of interesting developments are occurring in Wales that deserve separate treatment. Thirdly, a range of interesting m aterials and experience exist in other jurisdictions, from Scotland to Australia. Considerations of space have regrettably led almost all of these to be excluded from this work for reasons of space. Hopefully the approach adopted here can lead on to similar inquiries covering an even wider approach and other jurisdictions.

I. Types of Disputes Covered This book is organised around major types of dispute resolution as a means of examining the dispute resolution mechanisms that operate in each type. The main types are the following: • General disputes handled in courts, and associated alternative dispute resolution (ADR) techniques – see chapters four and five.

2 Introduction • Consumer-trader disputes, especially ‘consumer ADR’ and consumer Ombudsmen – see chapter nine. • Personal injury claims, arising primarily from road traffic, workplace and healthcare accidents – see chapter ten. • Family disputes, involving family courts and some mediation – see chapter eleven. • Property disputes, involving landlords and tenants in the residential and social housing markets – see chapter twelve. • Disputes between citizens and the State, involving public authorities’ complaints mechanisms, judicial review, tribunals, and the public Ombudsmen – see chapter thirteen. • Disputes between businesses, handled in specialist courts large and small. We do not devote particular attention to arbitration mechanisms since they are privately organised and this book focuses primarily on publicly organised mechanisms. Large business disputes are covered in chapter four. For disputes involving small and medium-sized businesses (SMEs) with their business customers, especially over late payment or market abuse, noting the Groceries Code Adjudicator, the Pubs Code Adjudicator and the Small Business Commissioner – see chapter fourteen. • Employment disputes, especially involving ACAS and Employment Tribunals – see chapter fifteen. This selection of dispute types and fora is very generalised and not intended to be comprehensive – nor could it be without a far larger study. But it should be sufficiently diverse to give a reasonable and broadly representative range of types, mechanisms and structures to enable some sensible comparisons to be made. It is clear that there exists a dispute resolution landscape with significant diversity in intermediaries, mechanisms, techniques and pathways. These have arisen piecemeal, as particular approaches have been thought to be useful for different situations. There has hitherto been no strategic plan or evaluative review. So the need for this holistic review is timely. We need to ask what processes, techniques, structures and landscapes, alone or in combination, are effective and efficient. What lessons can be learned from the comparisons that are available? What should be changed, either in simple elements such as revising individual processes or in major landscape reform? Further, various systems are undergoing a digital modernisation. Lessons can be learned from comparing changes and their effects in different contexts. We will proceed in this introductory chapter by noting the basic modes, structures and techniques of dispute resolution that will recur in different guises as we proceed to examine the landscapes, pathways and issues of different types of disputes. In chapter three we will look at the types of problems that people have, the incidence of such problems and the evidence on how people respond to them.

II. The Basic Models of Dispute Resolution A. Modes The examination of different types of disputes in succeeding chapters reveals a range of modes of dispute resolution. Each mode has evolved away from – if it ever existed on its

The Basic Models of Dispute Resolution 3 own – the sole paradigm of determination of a dispute by a court, or even under the shadow of the court. We might summarise the current main types of dispute resolution processes in the following three types. Direct communication and negotiation. There are many policy statements that this is the preferred paradigm in almost all case types. However, it is also clear that some types of disputes involve complexity of law and/or fact-finding, or some people intrinsically need help in analysing, evidencing, arguing or resolving their disputes, such that some external assistance is required. Communication and negotiation facilitated by a third party. Following on from the previous point, we see a range of third party intermediaries who perform these functions, and also an evolution and shift in their identities. Traditional intermediaries might be private lawyers hired by each party, who can provide a full service involving information, advice, evidencegathering, arguing a case, advocacy representation in a court, tribunal or other forum, and negotiation of a settlement. A major shift occurred around 2000 when the Woolf reforms of civil procedure redefined dispute resolution policy as being to use ADR as a means of resolving cases and only using the courts as a last resort. Whilst various forms of ADR exist, the mediation technique is the most widely used, and involves a neutral third party facilitating communication between the parties and/or their lawyers, so as to help the parties reach a consensual agreement. Practice varies as between types of disputes as to whether the intermediary acts only as a channel of communication or may actively propose possible solutions. The use of nomenclature can also vary. Those variations are not germane to this inquiry: the important point is the presence of an intermediary who assists but does not decide a dispute. For present purposes, we will use the generic term ‘mediation’. Major examples of this technique are as follows. ADR services may be purchased from a mediator before or during a case that is proceedings in a court or tribunal. In employment cases, ACAS can provide what it calls conciliation services between employee and employer, and separate mediation services in other circumstances. In family cases, parties are now required to attend a MIAM information session and can use (in most cases at their expense) mediation services from family mediators. The leading consumer Ombudsmen include mediation as one technique in their process, although it may tend to be more of a facilitation of communication between the parties than the type of mediation that a civil or family mediator might provide. A civil, family, and perhaps employment mediator would typically attempt to identify and resolve emotional tensions between the parties rather than facilitating an agreement that resolves just around money. A public Ombudsman may also use a mediation-style technique in their investigative processes. The Ombudsmen have some inherent authority, arising from their ultimate ability to make a formal recommendation to resolve a case or for the public Ombudsman to make significant findings on systemic practice of the organisation being complained about, that may inherently assist in achieving resolution of individual cases by agreement, and perhaps to a greater extent than a private mediator, who has no such extended authority. Decision by a third party. The paradigm here is a decision that is backed by the power of the State that the result imposed is binding under the law and can be enforced through the State’s mechanisms. That is a decision by a court or tribunal. State-backed enforcement also applies in arbitration (as a breach of contract claim), where the parties agree in advance that they will submit their dispute to an arbitrator or arbitration-based ADR body.

4 Introduction A variation on this technique is where a body makes a recommendation to resolve the case. This is the position with most consumer Ombudsmen, and various mechanisms exist under which the recommendation can be made to have legal force or be highly persuasive for the parties’ adherence to it. For example, decisions by the Financial Ombudsman Service are not binding on the consumer unless the consumer accepts them, whereupon they are binding on the financial entity. Recommendations by other consumer Ombudsmen and the public Ombudsmen are not binding per se but trade associations, firms or public entities may either undertake in advance to apply them or there will be significant public and reputational pressure to adhere to them, and the evidence is that adherence is high in many cases.

B. Structures This cohort of types certainly reveals variety in approaches, not least in the structures and techniques that are used. These are concepts that will recur throughout this study, and the following is a simple summary. The structures used include: • A court: a forum provided by the State, backed by coercive powers. • A tribunal: here meaning a forum provided by the State that has somewhat less formality than courts, and where the decision-makers have specific expertise in relation to certain types of disputes, such as ones involving claims between citizens and the State and employment disputes. • A website platform: for example, provided by individual or groups of traders, or another intermediary such as Resolver or the European Commission, providing online dispute resolution (ODR). • A neutral space, without any particular structure, providing for discussions between parties, either in direct negotiation or assisted by a third party. Alternative Dispute Resolution (ADR) exists in numerous structures, ranging from independent mediators to arbitration organisations to specific ADR schemes to Ombudsmen. • An Ombudsman: an independent intermediary who may either assist in the resolution of individual disputes, and/or undertake systemic reviews of particular issues and provide reports to State bodies or traders. • Other intermediaries: including public regulatory authorities or other public bodies such as the Small Business Commissioner. Fifty years ago, courts, tribunals and Ombudsmen (limited to public bodies) were regarded as separate regimes, performing different functions and essentially not comparable. However, the technique of an Ombudsman has colonised the area of market regulation to provide consumer-trader dispute resolution of individual cases (which is a function that public sector Ombudsmen do not always offer) as well as assisting with systemic issues (which has been the core role of public sector Ombudsmen) to ensure fair markets. The focus on markets, driven by two forces (the privatisation of numerous services, and harmonisation of EU internal market rules), has also created a large number of public regulatory authorities. That development has produced a shift in the centre of gravity on making

The Basic Models of Dispute Resolution 5 market rules, and hence right supporting consumer protection, away from Parliament and judges to regulatory authorities and Ombudsmen. We do not debate the advantages and disadvantages of such a shift in this study, but note that this shift is of fundamental importance to the development of new means of dispute resolution and of controlling market behaviour.

C. Techniques Broadly, the techniques of dispute resolution are well known, and comprise: • Adjudication: a binding decision by an independent third party who is (usually) a judge. • Arbitration: a binding decision by one independent third party arbitrator, or a panel of usually three arbitrators in which there would typically be one appointed by each side plus a neutral independent chair. • Negotiation: communications directly between parties involved in a dispute, or their representatives. • Conciliation or mediation: communication between parties to a dispute facilitated by an independent third party, either trying to clarify issues, narrow the issues in dispute, assisting in negotiations, or sometime proposing solutions or even issuing semi-binding opinions. In this book, we will use the term ‘mediation’ as the generic term for this technique, save where a particular context requires otherwise.

D. Evolution and Diversification The dispute resolution modes have evolved over time. Two paradigms might be thought of as forming modes at opposite ends of the spectrum: at one extreme, agreement between the parties and, at the other, imposition of a solution by the State (or another third party agreed to in advance). Those two extremes represent poles of social organisation. One is based on individual freedom and the other on the State imposing order on how people interact in its society. Between those extremes is a range of mechanisms or options between freedom and coercion. A wide range of structures and techniques in dispute resolution has existed throughout history – there is nothing new about ADR, even if it has been rediscovered in the past 30 years.1 In recent years, the evolution in architectures has perhaps occurred mainly away from the coercive paradigm towards the self-determination paradigm. It has extended first from courts to tribunals, small claims courts or other specialist courts. Private arbitration still adopts the court-influenced adversarial procedural model. However, public Ombudsmen have also emerged in the twentieth century, primarily to try to address systemic cultural issues in public administration, rather than to resolve

1 S Roberts and M Palmer, Dispute Processes: ADR and the Primary Forms of Decision-Making (Cambridge University Press, 2005).

6 Introduction multiple individual cases, but they are now extending to try to resolve more individual cases. In contrast, private sector Ombudsmen were created from the fourth quarter of the twentieth century primarily to resolve small individual cases in a manner that would be simpler, cheaper, more attractive and effective than any type of court or tribunal, but they quickly extended into feeding back the aggregated data that they were amassing so as to effect systemic market behaviour. At present, the leading consumer Ombudsmen are highly effective in delivering both functions of individual dispute resolution and affecting systemic behaviour. One advantage of consumer Ombudsmen is that they work in cooperation with sectoral regulatory authorities, and this gives considerable authority to their activities, in both resolving cases and intervening with businesses over their behaviour. The procedures of courts have undergone fundamental reform since 1999 (the history of Woolf, Jackson and funding challenges is summarised in chapter five). The reformed model tried to encourage ADR before and during court procedure as a preferred mode of settlement of disputes. The landscape of tribunals was structurally reformed under the Tribunals, Courts and Enforcement Act 2007, which brought almost all tribunals into a unified structure consisting of two tiers. Courts and tribunals are currently undergoing transformation through major public investment in digitisation of files and procedures. This will be a rolling programme that will continue until at least 2022. The design of the Online Court was significantly influenced by the successful model of the Financial Ombudsman Service and innovations in Canada. Tribunals are somewhat freer to experiment and innovate than courts, and a series of innovations are being tried across the tribunal system, influenced by Canada but without extensive knowledge of what already exists in the Ombudsman system. Thus, there is interesting cross-fertilisation, but its scope is subject to curious gaps in knowledge. In personal injuries, the major innovation was driven by the insurance industry with the creation of the Portal, initially for RTA cases and swiftly extended to public and employers’ liability cases. The reform is partial, in that the Portal facilitates a first stage of direct communication between claimant layers and insurers, but does not apply to cases that cannot be consensually included or resolved at that stage. A series of proposals have been made to reform the system for clinical negligence cases, which have essentially so far come to nothing. This inertia is curious, since the NHS wishes to adopt an ‘open culture’ that learns from its mistakes, and to succeed such an approach would need to remove blame and adversarialism from the culture. But the NHS seems unable to make this highly important transformation. That failure to modernise is doubly unfortunate, since the continued problem of personal injury cases in the court system was one of the major drivers behind the reforms of both Lord Woolf and Jackson LJ, which are now said to have failed. The situation could be transformed if personal injury cases could be transferred to a different process.

III. The Incidence of Major Types of Claims What are the major types of disputes? We need to know that for three reasons: first, to deliver the right response to each type of dispute, whether it is a generic response or pathway

The Incidence of Major Types of Claims 7 or something more tailored; secondly, to focus the right level of resource on particular disputes, such as on the more important; and thirdly, to analyse how to reduce the incidence of particular types of disputes. Figure 1.1 summarises the number of claims for the major types in 2017/18 that are noted in detail throughout the book. On these figures, the major problems of society relate to (in descending incidence): debt, trading, road safety, social security, issues with public bodies, employment and family issues. A general indication of the main claim categories by incidence is summarised below, with more detail in following chapters. One issue to which we will return is how behaviour can be influenced so as to reduce the incidence of these problems. Figure 1.1 Incidence of major claims in 2017/18 Types

Approximate Annual Numbers Inquiries

Consumer Ombudsmen PHSO

2,000,000+ 115,000

Residential Ombudsmen

24,400

LGSCO

19,000 Cases processed

Civil Claims in County & Magistrates Court, mainly money

2,000,000

Personal Injury: Total

850,000

Consumer Ombudsmen

400,000

Family Courts

250,000

Social Security and Care Tribunal

230,000

Employment Tribunals

110,000

Property possession cases

114,000

Immigration and Asylum Tribunal

60,000

Other Tribunal Chambers

53,000

SMEs

potentially 2–3 million

PHSO: NHS

24,000

LGSCO: Decisions

19,000

Property and Social Housing Ombudsmen

6,000

PHSO: General cases investigated

2,500

We do not have adequate data on how many people make inquiries about starting a court or tribunal claim (see chapter three), but there is at least a suspicion that the number of cases of any category that have some merit but are not brought is, for many types of case, larger than the number of formal cases that are commenced. It may be anticipated that the number of people making an inquiry of a public or consumer Ombudsman will be (as it is) much greater than the number of cases subsequently investigated. In the case of the

8 Introduction two public Ombudsmen there are process reasons for this. But for all of the Ombudsmen, they resolve a number of cases at the start by providing information to people who contact them and prevent cases going further. Lawyers no doubt also perform those information, investigation and filtering functions in relation to claims brought in courts or tribunals, but the presence of cost incentives (discussed in chapter five) can have an influence on this process. We can already see in the headline statistics the importance that Ombudsmen play in the justice eco-system in addition to courts and tribunals. These three types of bodies are now the major pillars of delivering justice in the country. But they are not integrated. As appears below, moves to integrate courts and tribunals are underway, which is possible because they both contain judges, but the public and private Ombudsmen exist in their own separate worlds. These three types are also not the only bodies involved. Various public bodies now exist, who deliver redress in the regulatory contexts for consumer-trader and employment contexts. A range of ADR bodies and individuals also deliver justice in the broad sense – ACAS, CEDR and many mediators across the country. The most numerous type of proceedings in the courts is to recover unpaid debts. This was illustrated by the Legal Services Board on data in the five years to 2012 (Figure 1.2), when money claims exceeded criminal and family cases by some way.2 At that stage, debt claims had decreased over the previous five years. Figure 1.2 Volume of major court proceedings 2006/7 to 2010/11 2,000,000 1,800,000 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000

County Courts - Moneyclaims - proceedings started County Courts - Non - Moneyclaims - proceedings started Criminal Trials (Magistrates’ courts, Crown Court - Received for trial, committed for sentance, & appeals) County Courts - Dissolution/Nullity of marriage/judicial separation-petitions field, private Law Children applications, Domestic violence proceedings

400,000 200,000 0

2006/07

2007/08

2008/9

2009/10

2010/11

2 Evaluation: How can we measure access to justice for individual consumers? A discussion paper (Legal Services Board, 2012) Fig 1.

The Incidence of Major Types of Claims 9 Some more details are given below on some major claim types. Of the 2 million plus cases initiated by the courts, some specific breakdown figures are: Chancery

25,000

High Court

9,000

High Court Commercial

830

Personal Injuries. In 2017/18 almost one million claims were notified to the Compensation Recovery Unit under the following main types: Published data Motor

CRU data

780,000

Personal Injury: NHS

10,673

17,400

700,000

650,000

Personal Injury: Employers Liability

54,000

73,000

Personal Injury: Public Liability

58,000

Personal Injury: RTA Portal

96,000

Personal Injury: Total

850,000

In addition, 24,664 complaints were made about the NHS to the PHS Ombudsman in 2017/18. Employment. In 2017/18 1.3 million people contacted ACAS, and in 2017 165,000 people contacted Citizens Advice for employment advice. In 2017/18 there were 105,000 ET notifications to ACAS and 725 collective disputes notified. ETs received 171,622 cases. The main ET case types arose under the Working Time Directive (30,281), unfair dismissal (11,988), equal pay (10,567) and unauthorised deductions (9,074). The 2017 Taylor Review confirmed that the top three issues are unauthorised deduction of wages (26% of enquiries), unfair dismissal (19%) and terms and conditions, many in relation to bogus self-employment (13%).3 Family. The number of family cases in England and Wales in 2018 was 214,209. Matrimonial cases Children Act – private law

42,006

Financial remedies

33,372

Domestic violence remedy orders

16,807

Children Act – public law

16,403

Adoption Act

11,603

Forced marriage protection Female Genital Mutilation protection

3 Good

108,786

170 45

Work. The Taylor Review of Modern Working Practices (HM Government, 2017).

10 Introduction Claims against the State. The number of complaints made to public bodies is unknown. In 2017/18 around 343,000 appeals were made to tribunals (230,000 for social entitlement, 60,000 for immigration and asylum and 53,000 across a wide range of other subjects), and 110,000 claims were made to Employment Tribunals. Around 115,000 inquiries were directed to the Parliamentary and NHS Ombudsman (PHSO) and 19,000 to the Local Government and Social Care Ombudsman. The complaints to PHSO in the two years to mid-2016 were most numerous for GP services (37%), local authorities (29%), hospital (28%), HMTC (20%) and another government department (14%).4 Consumer-trader. Over 2 million consumers contact one of the private sector O mbudsmen or a private ADR scheme every year, resulting in around 400,000 cases resolved by that route. A major part of those numbers relates to one or two particular types of claims against banks (notably over payment protection insurance) but numbers handled by Ombudsmen in other sectors are generally rising. Property. The statistics were: Possession by landlords Residential Property Tribunal Inquiries to residential

Ombudsmen5

114,000 9,000 24,401

Cases processed by residential Ombudsmen6

4,218

(Social housing) Housing Ombudsman

1,763

The figures above have to be considered in the context of a series of research studies into the incidence and types of problems that people have, which are summarised in chapter three. These do not cover business disputes. The latest national figures show that the highest incidence of problems that most individuals experience relate to, in descending order, are: purchasing goods and services, neighbours’ anti-social behaviour, money, employment and debt (see Figure 3.1, reproduced below). These data are interesting since various categories do not typically feature notably in dispute resolution debates and raise the question of whether the State provides effective responses to them. For example, anti-social behaviour arises, if at all, as a police or local authority issue rather than a community mediation issue. This is a reminder that a fresh look might be taken at what responses should be provided to personal and business problems. Percentages Civil legal problems

27

Purchasing goods and services

8

Neighbours’ anti-social behaviour

8

Money excluding personal debt

7 (continued)

4 Learning

from mistakes. An investigation report by the Parliamentary and Health Service Ombudsman into how the NHS failed to properly investigate the death of a three-year old child (PHSO, 2016). 5 The Property Ombudsman 23,841, the Property Redress Scheme unclear but processed 560 cases. 6 The Property Ombudsman 3,658, the Property Redress Scheme 560 cases.

Themes 11 (Continued) Percentages Personal debt

5

Rented accommodation

5

Accidents or medical negligence

4

Owning or buying residential property Administrative legal problems

2 10

Employment

6

State benefits

3

Education

2

Family legal problems

1

Unweighted base

10,058

IV. Themes This study has a number of findings that are set out in chapter seventeen. At this stage, let us identify ten broad themes that emerge from the detailed consideration of the different dispute types and pathways that follow in individual chapters. They arise particularly from the ability to make comparisons between different dispute resolution types and mechanisms. The points will be expanded upon in later chapters, but it should assist to identify them at the start, so that particular ideas can be considered and expanded below.

A. Techniques The first theme is that diversification has taken place in the use of techniques. Only a few decades ago, adjudication by courts or arbitrators was almost the only option for resolving disputes. The most obvious diversification is the well-known introduction of mediation in a wide range of situations. Mediation was encouraged before or alongside court process around 1999 under Lord Woolf ’s reforms. The current spread of ADR is noted in chapter six. The institutionalisation of some form of involvement of ACAS (referred to as conciliation) in employment disputes emerged from the 1960s and crystallised in 2014. A further example is the use of mediation as an integral component in the pathway of dispute investigation and resolution by consumer Ombudsmen. Cappelletti famously postulated that ADR would be an ultimate ‘third wave’ in consumer protection,7 but his paradigm has now been transcended into a different vision. In some areas, mediation has not yet found a firm position in the architecture or pathways. For example, the involvement of ACAS is voluntary in

7 M Cappelletti and BG Garth, ‘Access to Justice: The Newest Wave in the Worldwide Movement to Make Rights Effective’ (1978) 27 Buffalo Law Review 181.

12 Introduction employment disputes, and in family law there remains an unresolved debate on whether to make mediation compulsory or not, as mediators exist outside the main court pathway. These points will be expanded on below.

B. Technology The second theme is that the use of technology is transforming various areas and architectures. Communications, evidence collation and even decisions are profoundly affected by digital and internet technologies. This is not a new point. However, IT has been adopted by various dispute resolution systems in different ways and at different speeds. The revolutionary programme on digitisation of the courts and tribunals is summarised in chapter seven. It is possible to see how different architectures and techniques are being affected by the assimilation of new technologies. This study does not attempt to give a comprehensive analysis of this issue, which is a large one, and involves transformations that are still continuing and whose effects are not yet realised or possibly predictable. But, without necessarily evidencing the end of lawyers,8 some insights can already be gained into what the new world will look like. The use of IT can clearly save costs and time, in providing information or digitised assistance or transmitting information. All of the public and private systems noted above that have adopted IT appear to have operated more effectively and efficiently. But adoption of IT by itself does not necessarily constitute enough to realise maximal benefits if the system still operates on an architecture that could itself be improved. Certain types of claims might be able to work almost exclusively without human contact, but not all. A State online portal to recover debts, by declaration and subsequent enforcement, can clearly function well through an online facility. This exists with Money Claims Online (MCOL), which has reached a steady state of around 180,000 claims annually.9 Bulk claims, for example debt claims by utilities against customers, are processed by Secure Data Transfer (SDT) at a Bulk Centre based at Northampton County Court. The typical value of SDT and MCOL claims averages £1,665 and median £644.10 Many consumer-trader, small business, and injury compensation systems also rely heavily on IT, but all are designed to use online efficiencies within a framework of human contact that is verbal or written. IT is essential but cannot replace human speech and interaction in many situations. Some of the ideas noted here have been included in the developing Online Solutions Court model: an online facility with triage and case management. But will it still be insufficiently user-friendly to attract consumers, patients or small businesses away from the other systems? Will it deliver the extra advice and regulatory functions that the other systems do? Will an ‘assisted digital’ support function be adequate to deliver what people want? Does it assume that every problem is a legal problem? Is it a good idea but just too late?

8 R Susskind, The End of Lawyers? Rethinking the nature of legal services (Oxford University Press, 2008). 9 Lord Justice Briggs, Civil Courts Structure Review: Final Report (Judiciary of England and Wales, 2016) para 2.28. 10 ibid, para 2.29.

Themes 13

C. Cost The third theme is the perennial one of cost and funding constraints. Every dispute resolution process carries cost and will be subject to budgetary constraints. Further, the sources of finance and the rules on funding and costs vary between different pathways, as between different States.11 Again, without undertaking here a comprehensive inquiry into actual or comparative costs, it will be seen that cost issues have had a significant impact on the design of mechanisms and choice between them, and continue to do so. There are numerous examples. One was the gradual removal of legal aid from civil cases, notably the 40% reduction in 2013. That restricted the use of traditional pathways: many people could no longer consult lawyers or bring court cases. A second example was major rises in court fees around 2014–16. A third dramatic constriction was the introduction of fees for accessing the Employment Tribunal in 2013, resulting in a major fall in cases, which was reversed when the Supreme Court held the fees to have been unlawful in 2017. Many legal disputes involve small amounts in value, and the curse of cost-proportionality mitigates against a dispute resolution process that observes an adversarial paradigm in which due process rights are fully observed. Vast numbers of legal disputes are just not worth spending much money on, and people increasingly want them resolved quickly, and more quickly than any adversarial process can deliver. So, whilst various steps might attempt to reduce cost in the court process (fixed fees, IT, initial mediation, case management and so on), the inherent nature of an adversarial process itself may contain too much cost to be able to respond to a huge number of legal problems in a way that people want. In other words, courts may be too slow and expensive, and suffer a dinosaur’s fate. In simple economic terms, shifting from an adversarial system to an inquisitorial system can clearly save cost, since it might reduce the number of intermediaries from three (two representatives and one judge) to one (an Ombudsman or similar neutral intermediary).

D. Comparisons and Options The fourth theme is that the availability of alternative dispute resolution (ADR) and online pathways enables choices to be made between them. Such choices can be a powerful driver of change. Some choices have been made, such as by consumers switching tracks: first from courts to Small Claims court/track, then to ADR schemes, then to consumer Ombudsmen and now adding in Resolver mechanisms. As appears from chapter nine, the architecture and pathways for consumer-trader disputes are not only transformed from what they were 30 years ago, they are now much more effective, and the pathways typically involve a sophisticated integration of techniques (information, assistance, triage, investigation, mediation and resolution).

11 C Hodges, S Vogenauer and M Tulibacka (eds), The Costs and Funding of Civil Litigation: A Comparative Approach (Hart Publishing, 2010).

14 Introduction Further examples arise in various fields – and it is significant that these new intermediaries do not extend private enforcement but employ public enforcement models. New structures have been created for claims by SMEs, through the Groceries Code Adjudicator, the Pubs Code Adjudicator and the Small Business Commissioner. In the employment area, new regulatory bodies have been created under the Director of Labour Market Enforcement: the Gangmasters and Labour Abuse Authority (GLAA), the Employment Agency Standards (EAS) Inspectorate and an enforcement section in HMRC for the National Minimum Wage and National Living Wage legislation. However, in some cases, there is resistance to facilitating change, not least by intermediaries who perceive that their rent would diminish – that is, lawyers. A dramatic example comes from outside this study: a war has been waged for some years between Italian lawyers and successive Italian Governments over whether lawyers must be involved in mediation: the same is true in Greece. Another obvious barrier to change is an absence of resources. For example, introducing digitalisation into the court and tribunals systems has been held back for some decades by a lack of public funds. The same problem has held back changes by the public Ombudsmen. The impact of national austerity since 2008 has led to profound changes, including withdrawal of legal aid and attempts to raise access fees, which had major impact on family disputes and employment disputes, to name but two of many examples.

E. Intermediaries The fifth theme is that new intermediaries have emerged, and are continuing to be contemplated, that are replacing courts. In the past half century, the two public Ombudsmen and various new tribunals have been created. In recent years, the use of Public Inquiries has expanded. In the consumer trading field, the number of arbitration ADR entities and particularly of sectoral Ombudsmen has expanded considerably in the past few years, now covering financial services, pensions, energy, communications, lawyers, furniture, motor vehicles, transport and property and has been proposed in water. Delivering redress to individuals and groups of consumers has been transformed by the development not only of sophisticated sectoral Ombudsmen but also by empowering public regulatory authorities with redress powers. Those mechanisms have proved to be outstandingly successful, swift, cheap and efficient.12 They have recently been approved by UNCTAD.13 For SME disputes, completely new intermediaries have been created: The Groceries Code Adjudicator, the Pubs Code Adjudicator and the Small Business Commissioner. Consideration is being given to a new form of intermediary for disputes between SMEs and banks. The existence of new intermediaries shows both demand for them by users and dissatis faction with traditional pathways. The ‘unique selling proposition’ of the new intermediaries 12 Directive 2013/11/EU on consumer ADR. See C Hodges, I Benöhr and N Creutzfeldt-Banda, Consumer ADR in Europe (Hart Publishing, 2012); J Zekoll, M Bälz and I Amelung (eds), Dispute Resolution: Alternatives to Formalization – Formalization of Alternatives? (Brill, 2014); P Cortes, The New Regulatory Framework for Consumer Dispute Resolution (Oxford University Press, 2016). 13 Manual of Consumer Protection (UNCTAD, 2017) ch XI.

Themes 15 is that they provide services that people want in ways that are preferable to courts. Key aspects are cost and speed, but especially user-friendliness and the ability to deliver a package of functions that is wider than just a declaration of the legal result in the particular circumstances of a dispute. A significant attractiveness of Ombudsmen is that they can be accessed directly at any time, online or by phone. But, as we will expand on below, the package of functions that they provide includes not just dispute resolution but also advice and regulatory feedback. The initial advice or triage function is of fundamental importance. Looked at from the perspective of a judge, every incoming case involves a dispute over legal rights, or it has been transformed to do so. But looked at from the perspective of citizens, the facts that they present to any adviser might raise multiple issues, some or all of which might not be ones of legal rights, or call for resolution as if they involve legal rights.14 The real problem might often not be essentially about legal rights. As the PHSO recently said: ‘People bring their unresolved complaints to us because they want an explanation, an apology and for the service to improve for others.’15 Thus, the first service provided by many consumer Ombudsmen is that of advice and triage, for example explaining terms and conditions or tariffs or consumer law, after which a significant percentage of inquiries are resolved by being dropped or a consumer is able to resolve an issue quickly with the trader, with simple mediation-like involvement of the Ombudsman. The ratio of initial inquiries to formal complaints experienced by the Financial Ombudsman Service has for some years been as high as roughly four or five to one (at its high point in 2014, 2.5 million contacts and 500,000 disputes processed). Similarly, small businesses have declined to use legal systems to complain about late payment and other problems, whereas the Groceries Code Adjudicator has been able to respond to them by combining an anonymous communication channel with larger businesses, backed by mediation and regulatory powers. The traditional legal process is not what such traders seek: they seek extra-court means of solving their problems, whether advice or intermediation.

F. Shift in Funding The sixth theme is that there has been a dramatic shift in who pays for the dispute resolution system. Historic debates have been over whether the State (all taxpayers) or users, especially ultimately losing parties, should foot the bill. The model of justice introduced in 1949 was that the State would pay for representation for the masses in an adversarial system. But it is that model that has proved to be unsustainable. Since at least the 1970s the State has been trying to restrict its expenditure on legal aid. The latest onslaught on removing legal aid was in 2014. The QOCS and premium-added recoverability mechanisms are variations on this theme, loading cost onto defendants and especially insurers. 14 The Law Society President Jonathan Smithers made exactly this point in response to Briggs: ‘… we have grave concerns that the proposed online court may exclude people’s ability to access legal advice for cases up to £25,000 in value. This is a very large sum of money. People seeking to recover monies due and owing to them will still need legal advice on their claim as well as, in many cases, assistance with navigating through the process, whether online or otherwise. While the online court may not require advocacy, there will still be a need for legal advice to ensure that everyone, including the vulnerable, can access justice.’ J Hyde, ‘Briggs review: online court needed to cut out lawyers’ Gazette, 11 January 2016. 15 RESOLVE News from the Ombudsman Service (PHSO, 2015).

16 Introduction In contrast, the dramatic shift that has occurred almost unseen has been for the business community to fund the system for C2B claims entirely, making access free to consumers. Why should business do this? Because those businesses who have made this commitment obtain wider benefits from their money. Traders who wish to maintain their market reputation for fairness towards customers pay to support that valuable asset, to keep customers happy and therefore loyal. A further reason is that reputation-sensitive businesses wish to gain access to the intelligence and feedback that comes from the aggregation of market data that Ombudsmen and Resolver can provide.

G. User-Friendliness The seventh theme is one of a slow evolution away from judicial contexts to other pathways. The numbers of claims summarised above show a very significant shift away from courts in relation to small claims such as consumer-trader claims. Most of the nation’s legal disputes are about small amounts in financial terms, whether involving consumers or SMEs. People have been voting with their feet where effective alternatives exist. The availability of a simple online platform for consumer claims, such as Resolver, has proved to be very popular: traffic on Resolver reached over 3 million disputes in 2018, exceeding the number handled by the Citizens Advice network. At the same time, the number of small claims has been falling for some years. The reasons for this shift lie primarily in the user-friendliness of the online process offered by Resolver and the private sector Ombudsmen, plus the fact that they are free and thought to be quicker than courts. The court small claims track is informal and cheap, yet has been eclipsed by a better offer. As the Legal Services Board has said, ‘litigation is not a normal state of affairs in which to find oneself ’.16 An online Portal has been developed by the insurance industry initially for uncontested road traffic claims, now extended to other types of workplace and public liability injuries. The Portal preceded the development of the Online Solutions Court and ongoing shifts online by tribunals.

H. The Widening of Objectives The eighth theme is about a diversification in the objectives and hence functions that are expected to be performed by the systems. A major feature of the shift to online and digital systems is that they can satisfy the rise in demand for data about the type and incidence of legal disputes and what issues concern people. Dispute resolution models that focus only on resolution of individual claims have historically not collected such underlying data. Digital systems, especially if they are designed to attract high volumes of traffic, can aggregate such data. They can also then feed it back in useful ways so as to give important information on underlying behaviour, such as in a market or about individual actors. This sort of data can be invaluable in improving safety systems. 16 Evaluation: How can we measure access to justice for individual consumers? A discussion paper (Legal Services Board, 2012) para 4.4.

Themes 17 In other words, some dispute resolution systems provide other functions in addition to ‘just’ dispute resolution. This makes them more attractive. It also facilitates the achievement of, and the demand for achievement of, wider goals. Systems that support identification of problems and their pre-emption provide particular value. Thus, there is demand now for integrated systems that deliver identification of problems, the ability to intervene and solve such existing problems as well as pre-empt future recurrence and risk, and generally learn and improve performance. There is increasing demand for systems to perform all of these functions, in more effective, coordinated and efficient ways. The focus has therefore shifted to a wider range of functions and outcomes. A great deal of this is about giving advice and supporting fair behaviour. An important factual finding is the observation that several of the mechanisms discussed in this study deliver a wider range of functions and outputs than just dispute resolution. Indeed, some mechanisms are now designed to provide multiple functions and outputs, or there are calls for them to do that. The leading example is that consumer Ombudsmen deliver information to consumers, resolve disputes with traders, aggregate data on what concerns consumers, and feed it back to traders and regulators so as to assist in driving change in market behaviour. Some Ombudsmen are now expanding with others into providing information and consultancy assistance to traders so as to engage directly to address the causes of concerns and be even more effective in delivering changed behaviour and cultures. Given that diversity of outputs and functions is in more than one area, this study poses the same questions in relation to each area. What are the objectives that society needs for its systems, and how can they best be delivered? Can particular intermediaries and systems deliver more objectives more effectively and efficiently than if the intermediaries were separate? What essential outputs are desirable but are perhaps less often delivered? What combinations of intermediaries might give greater effectiveness and efficiency? The wider goals are all essentially about behaviour. There is nothing particularly new about this. It has traditionally been held that determinations by courts provide deterrence and so affect behaviour. However, that view has come under increasingly strong attack, as noted in chapter two. Developments in practice by regulatory authorities, underpinned by scientific and empirical legal research, have illuminated how the behaviour of humans, individually and in groups and organisations, is in fact best affected. Those advances have swept ideas of deterrence and of the impact of decisions by judges or others in individual cases largely off the table. There are two large consequences of those ideas. First, different approaches and systems are required to affect behaviour. Secondly, if mechanisms are needed to deliver dispute resolution, they can be simpler than traditional ones, as the supposed need to deliver deterrence is no longer required. A major example of where that point could be applied is if compensation for medical injuries were to be shifted from litigation to administrative schemes.

I. Affecting Behaviour The ninth theme is the rise in significance of specific focus on the need for systems not just to resolve disputes but also to affect future behaviour. It is understandable that those who focus on dispute resolution should be highly influenced by the idea that disputes should be resolved in accordance with the law, and that achieving that end upholds the rule of law and

18 Introduction justice within society. Developing that idea leads to focusing on accessing the justice system and the delivery of forensically legally accurate judgments at the end of the process. Thus, at the beginning of the process is the idea of providing access to justice, leading to delivery of legally correct results at the end, facilitated by due process (equality of arms, access to all relevant evidence). But resolving a dispute justly does not mean that every dispute needs to be resolved by delivery of a judgment by a judge. The overwhelming majority of civil disputes are settled between the parties, perhaps with assistance from third parties, such as through the techniques of diplomatic communication and mediation or in the shadow of the possibility of ultimate resolution by imposition of a solution by the State. The more fundamental point is that people should act fairly in dealings with others, and acting fairly in disputes means encouraging and supporting them to understand others’ position, respond to it fairly, and reach a fair compromise. Providing access to justice is not, of course, the same as delivering justice. If a state wishes to ensure the delivery of justice it has to provide the means of delivery, namely institutional structures and availability of techniques, such as a judge and an effective fair process, or the availability of mediation. It also means removing barriers to justice (excessive cost of access fees or transactional costs, whilst balancing the prevention and removal from the system of unmeritorious cases that waste resources or are fraudulent) and providing facilitation (the availability of information and assistance, for some through state-funded legal aid). Focusing on civil process (or any other subject) can bring tunnel vision. We like to argue that the delivery of justice (often just referred to as providing access to justice, which is not the same thing) has a systemic effect on the behaviour of society. The fact that the law is upheld in individual cases, individual rights are vindicated, and the law may be clarified, are all claimed to provide systemic effects on the behaviour of everyone in society. Yet there is little empirical evidence for how much such effects might occur in practice. The assertion that there is some systemic effect from private enforcement of law omits consideration of other causes of good or bad behaviour in society, such as public enforcement, and sociological and voluntary effects (people following rules because they think it is the right thing to do or because their social group acts in that way). Chapter two looks at the strong development in understanding of those other causes (public regulation and enforcement, corporate compliance mechanisms, and behavioural and ethical mechanisms). Those other mechanisms have undergone huge transformations in recent decades that provide a far wider frame for understanding the rather limited effects on behaviour of private enforcement and dispute resolution. At the same time, the development of some dispute resolution mechanisms, especially private sector Ombudsmen, has also transformed the ability of dispute resolution mechanisms to contribute to affecting behaviour. They have done this by developing the aspects of providing increased information on law and dispute resolution options, by collecting data on individual cases and then aggregating a mass of like data to provide analysis on the root causes of problems, and by engaging with businesses and regulators to change the underlying behaviour and culture that gave rise to the initial problem. Hence, these new structures have been able to deliver far more effective changes in behaviour than traditional dispute resolution mechanisms. Delivery of the increase in effect has occurred because of two things: first, a better understanding of what affects the behaviour of humans

Themes 19 (and hence humans in groups, such as private or public organisations) and, secondly, the ability to design a better system. We have the knowledge, we now need to redesign our systems. Look at the example of how efforts are made to affect the behaviour of commercial companies. The simple drive to make profits has now been replaced for many by the drive to perform an effective social purpose that delivers value in a wide sense to all stakeholders involved – staff, suppliers, customers, communities, regulators, society and hence investors – and to be seen to do this in a demonstrably ethical fashion, so as to be sustainable in reputational and economic terms. Performing this feat requires the coordination of all relevant actors.17 Those who are most closely involved in affecting behaviour are the corporate leadership, various internal leaders (management, human resources, risk, legal, compliance, marketing and so on), external consultants and auditors, regulators, Ombudsmen and others. Company activities are subject to regulation by multiple external actors, such as in relation to tax, employment, commercial, product design, manufacture, distribution, advertising and selling activities. The heading ‘employment’ alone might include labour terms and conditions, working practices, the national minimum wage, equality and human rights, health and safety and so on, all of which involve universes of laws and different enforcement officials and regimes. All of those regulators seek to intervene in affecting an organisation’s internal behaviour. Viewed in this light, the influence of the legal system, and particularly of court decisions or the outcome of individual disputes, can provide little in terms of direct influence on behaviour and culture. They can, however, provide data-based input to internal systems that are receptive to receiving and acting on such stimuli. When we widen the focus from commercial organisations to that of public bodies, we see fewer external regulators or other bodies that can intervene directly in behaviour, so we should expect larger problems in terms of affecting change. That is exactly what we see below in terms of the frustration of tribunals in seeking to affect decisions on immigration or social entitlement payments, and the efforts of the public Ombudsmen in trying to affect the culture of public bodies generally. The conclusion of this is that the systems that provide dispute resolution can and should be viewed not just as a means of providing justice or resolving individual or collective disputes but as part of a larger system of supporting ethical behaviour and culture in the relationships of people in society. That viewpoint has important implications. First, it is clear that dispute resolution systems as such provide little effect on their own on behaviour and culture. So we need to recognise that fact and focus on approaches that do deliver that goal. Secondly, the design of dispute resolution systems is highly important in the wider context of achieving the basic objectives of supporting ethical behaviour in society. This is because the design should ideally deliver not just fair and speedy resolution of disputes but also important outputs (especially clarification of the rules and data on behaviour) that other parts of the system need as inputs so as to be able to function effectively as a whole in supporting ethical behaviour. This is a holistic conception of a socio-legal system. 17 See the changes in purpose, values and culture introduced by The UK Corporate Governance Code (Financial Reporting Council, 2018) and The Wates Corporate Governance Principles for Large Private Companies (Financial Reporting Council, 2018). See also the emphasis on the purpose of organisations in C Mayer, Firm Commitment: Why the corporation is failing us and how to restore trust in it (Oxford University Press, 2013) and C Mayer, Prosperity (Oxford University Press, 2019).

20 Introduction

J. Evolution in the Legal Theories and the Basis of Triggering Compensation The focus of policy on promoting future compliance with law through ex post enforcement by private or public law mechanisms has been transformed in much of the regulatory space by switching from the idea of deterrence. The upholding of rights in individual or collective legal claims fails per se to address generic issues of conduct or culture. Instead, there is greater ex ante emphasis on conduct, being based on ethical values, and the support of a constant ethical culture. The lines of research and thinking are summarised in chapter two below. There is a clear need to remove from the healthcare system liability law based on finding fault and adversarial dispute resolution systems. The realisation that b laming prevents sharing of information and hence learning and improvement is critical for the NHS but also all public and private organisations and societies. It is no accident that the socially cohesive Nordic States have made such strides by moving away from blame culture (striking results in patient safety) and that their dispute resolution relies so strongly on Consumer Complaint Boards (ADR) and administrative schemes for personal injuries. That shift in legal theory has huge implications for redesign of the dispute resolution system, which now need to be implemented. The key here is to see how a system can deliver all of the functions, and the answers lie with intermediaries that have particular designs, and that operate together. It will involve the use of new intermediaries, such as Ombudsmen and regulators. Legal, mediation and judicial skills will still be needed but may be deployed within different organisational structures.

K. Fairness The tenth theme revolves around a shift from just talking about legal justice to society increasingly basing its decisions on a broad concept of fairness. This trend is also apparent in the references below to people having problems, as opposed to legal problems. The categorisation of problems just as legal problems masks the fact that both the root cause and the possible solution to a problem might not lie in categorisation as a legal issue or remedy. There is a strong trend to widening of the rules of society from legal rules to social norms and values of fairness and ethical culture. One established example of this is that consumer Ombudsmen typically make decisions based on what seems to them to be fair and reasonable in the circumstances, taking the law and other considerations into account. Interestingly, that shift to fairness in relation to resolving banking cases came about almost by accident. For centuries, it had been the law that insurance contracts were all subject to the duty of uberrimae fidei (utmost good faith). That approach was central to the resolution of insurance disputes, and was formalised when a private Banking Ombudsman was created in the 1960s. When various private Ombudsmen schemes were merged in 2000 to create the Financial Ombudsman Service, that approach could not be removed from the insurance sector and became adopted for all consumer financial services disputes under the new jurisdiction. In 2018, there was a strong call for fairness to be extended to disputes involving small firms and banks.18

18 K

Hollinrake MP, Fair Business Banking for All (Centre for Policy Studies, 2018).

Themes 21 Regulatory authorities have also strongly moved into the space of requiring fair behaviour by those they regulate. Regulators have moved beyond mere compliance with rules (typically on safety or pricing) and well into the sphere of how customers are treated.19 This trend is especially clear now with economic regulators.20 In this context, Ombudsmen are acting as supporting quasi-regulators and guardians of fairness because they are empowered (even if this has come about accidentally) to make decisions in individual cases that take the law into account but on the basis of what seems to them to be ‘fair and reasonable’. There has been an undeniable spread in the last 20 years or more of popular reliance on the concept of fairness, irrespective of legal rules. A requirement for fair trading has been embedded throughout European consumer protection law.21 Public disgust at issues from MPs’ expenses, exploitation of workers in third world countries, payment by multinationals of low amounts of national corporate tax, dieselgate and many other examples all arises out of a basic sense that the conduct is unfair even if it is strictly legal. The centrality of the idea of fairness has implications for political discourses and structures. It is frequently asked, as the media and politicians do, ‘Who is to blame?’ and, as discussed above, this usually does not assist learning and improvement. But the centrality of fairness also has implications for the legal system and its operatives and structures. Judges apply law. Ombudsmen make decisions on fairness. Both those groups can be accountable to the public – or not – in different ways. But should either group be allocated the function of the other? If Ombudsmen are guardians of decisions that are ‘fair and reasonable’, and those concepts change in any society over time, how do Ombudsmen make sure that they accurately reflect the views of society? Leading Ombudsmen put some effort now into linking into public feeling on fairness and monitoring how it shifts. One example is what the decision should be on whether it is fair that a consumer should or should not have to pay on a loan contract that she signed, or whether the customer of a bank should suffer the loss of a fraud committed by a third party. The same shift to fairness has now been demanded by SMEs in response to how some of them have been treated by banks during the economic slough that occurred in the decade after the global financial crash of 2008.22 That is a highly significant development, that some may consider to drive a coach and horses through centuries of contract law’s caveat emptor rule. The development is motivated by strong feelings that people just will not put up with previous rules and conduct as they are simply unfair. 19 A major initiative in financial services was the ‘Treating Customers fairly’ initiative: Treating Customers Fairly After the Point of Sale (Financial Standards Authority, 2001); Policy Statement 7/11, The Responsibilities of Providers and Distributors for the Fair Treatment of Customers (Financial Standards Authority, 2007). See S Gilad, ‘Institutionalizing Fairness in Financial Markets: Mission Impossible?’ (2011) 5 Regulation and Governance 309. 20 C Hodges, Law and Corporate Behaviour: Integrating Theories of Regulation and Enforcement (Hart Publishing, 2015). 21 Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council (‘Unfair Commercial Practices Directive’); in UK The Consumer Protection from Unfair Trading Regulations 2008, SI 2008 No 1277. 22 K Hollinrake MP, Fair Business Banking for All. How to improve access to justice for businesses in financial services disputes (Centre for Policy Studies, 2018); Consultation on SME access to the Financial Ombudsman Service and Feedback to DP15/17: SMEs as Users of Financial Services (FCA, January 2018), CP18/3; Statement on the Financial Conduct Authority’s further investigative steps in relation to RBS GRG (RCA, 2018).

22 Introduction

V. The Need for a Redesign A. The Need to Accept the Failure of the Adversarial Model Why is a holistic review such as this needed and timely? A basic problem is that we have to invent a new dispute resolution system for disputes involving real people that works, as the one we have inherited does not now work. The opening up of the courts as a dispute resolution system for consumers and citizens after World War II was designed to operate with State funding for lawyers (legal aid). Adversarial procedures are designed to be operated by lawyers representing laypersons rather than laypersons themselves.23 Yet the adversarial system involving legal aid started to become unsustainable almost immediately after it was introduced in 1957 as this and other countries became unable to afford State aid. The system in which each side obtains legal advice from their own lawyer, and is then represented by a (maybe different and further) lawyer if the dispute continues, in an adversarial system, is too slow and expensive. We have known that for some decades. But we have been trying to fix the problem through tinkering with funding, capping and fixing costs and so on, which have not only failed to fix the system but have created unintended consequences, such as Case Management Companies (CMCs), cold calling, referral fees, and fraudulent claims (the sad tale is recounted in chapter five). There has been considerable consumer detriment and the need to try to regulate poor behaviour by unnecessary intermediaries. The crisis on funding of lawyers produced a significant rise in Litigants in Person (LiPs) that placed great strain on the judiciary in an adversarial system. It also threatened the means of access to justice for many people. Underlying this funding issue remains a need to redesign the procedural system, since it is the adversarial model that remains the problem. A principal finding of this book is that successive governmental constrictions on litigation funding struck a fatal blow to the adversarial model that applied universally to the dispute resolution system, and that the heroic Woolf and Jackson attempts to patch things up were unable to address the fundamental nature of the shift away from an adversarial model that was an inevitable consequence. In reality, what was required was a fundamental reform of the system. The adversarial model may continue to function, and to be appropriate, for some types of claims, especially if they involve large sums of money. The adversarial model is an admirable model but does not deliver justice – or access to justice – for the vast majority of disputes that arise for most of the population and the majority of businesses in the country, either because it is too expensive a model, or too slow, or too adversarial when people need reconciliation. It is time to fix the system. This means going back to the underlying issue that the adversarial model is no longer fit for purpose. A new model that is affordable must be designed. It should provide effective pathways for all types of claims and be contained within a rational single justice framework. 23 D Luban, Lawyers and Justice: An Ethical Study (Princeton University Press, 1988). Quoted in H Genn, ‘Do-it-yourself law: access to justice and the challenge of self-representation’ (2013) 32 Civil Justice Quarterly 411, 434.

The Need for a Redesign 23

B. Compiling the Parts The second reason for a major review of the system is that there is no longer any c oherent coordinated system. Instead, we have a splintering of many individual structures and dispute resolution pathways that do not function, and are not viewed, as a coherent integrated dispute resolution system. One consequence of this is that potential users remain unaware of the options that may be available to them. There have been innovations in techniques (mediation, other types of ADR), in structures (courts, tribunals, Ombudsmen, ADR, Coroners, Public Inquiries, the Groceries Code Adjudicator, the Pubs Code Adjudicator, the Small Business Commissioner, administrative redress schemes and no doubt others that are not included in the study) and now in technology (the RTA Portal and its subsequent development, online access to Ombudsmen, Resolver, the EU ODR platform, the Online Solutions Court and various other applications). Almost all of these developments and innovations have occurred within particular contexts and are not applied generically. Developments and conversations about them occur within silos. Many of them are simply unknown outside those who work in the relevant silo. Debates on dispute resolution tend to occur within groups who are focused only on particular mechanisms, such as courts, arbitration, Ombudsmen, or individual sectors, such as construction, family, financial services, and many others. As a result, discussions can fail to be enlightened by developments in other areas, and can assume that ‘what you see is all there is’.24 This siloism is reflected – and strengthened – at the level of policy discussions, since the institutional arrangements reflect traditional categories. Thus, there is a Civil Justice Council for the courts, a (newly revived) Administrative Justice Council and a Civil Mediation Council. Essential as these structures are, there remains a need for a complete, holistic overview. Major institutional barriers to joined-up reform also arise from current governmental organisational structures and from the short-term and linear policy-making inherent in the political system. Responsibility for courts and tribunals may lie with the Ministry of Justice and HM Courts and Tribunals Service but the innovative developments in consumerbusiness (C2B) and small business issues have been driven by business and consumer policy under the auspices of what is now the Department for Business, Energy and Industrial Strategy (although lack of a coherent consumer ADR approach has been hampered by the fact that power for many regulated sectors in financial services, communications, transport and so on lies with other Departments). Similarly, responses to clinical injury issues are led by the Department of Health and Social Care. The short duration of ministerial appointments means that ministers have almost no ability to or incentive to take a long-term view of developments. The constant political imperative of trying to address urgent issues leads to short-term linear fixes that may not contribute to long-term cohesion of the system as a whole. It is notable that many of the major reform initiatives for courts and tribunals have been led by the judiciary. One thinks of names like Woolf, Jackson, Briggs, Ryder, Munby and numerous others. There are two potential problems here. First, reforming one part of a

24 D

Kahneman, Thinking, Fast and Slow (Allen Lane, 2011), 85–88.

24 Introduction larger system without considering wider implications may lead to problems. Secondly, do judges have the skills to undertake policy analysis and decisions, and to manage systems, despite their undoubted high intellectual gifts? Speaking personally, I would argue that the Woolf and Jackson reforms were significantly flawed because they did not take a view of the dispute resolution system that was wide enough. On the other hand, sensible judiciallyinspired reforms can be defeated by political restrictions on making resources available (the family area and MIAMS is one case in point). An example of where limited horizons prevented the identification of a better solution to a problem (and would have prevented a succession of unintended consequences) is the reform of court procedures undertaken by the judiciary since the mid-1990s. As examined in chapter five, although the problems were identified in generic language (costs are too high and must be controlled), there was a particular type of litigation that was causing problems, namely personal injury claims. It is suggested by this study that the solution to personal injury claims is to shift them out of the courts silo into a different, tailor-made silo, namely administrative injury compensation schemes.25 As explained in chapter ten, that solution has proven to be extremely effective, for various reasons. The advantages of the administrative scheme model are, first, that it is quicker and cheaper than the adversarial bipartisan model of courts; secondly, that the non-adversarial model avoids finding that individual healthcare professionals or other actors were to blame, and hence that ‘no blame’ culture encourages them to volunteer information that may be embarrassing or potentially attract criticism to them or their colleagues or team, but which is vital if root causes of mistakes and accidents are to be identified and steps taken to reduce future risk of reoccurrence. This ‘open culture’ model has been proven to be essential in underpinning the extremely good safety record in aviation and nuclear systems. Various other regulatory systems are now adopting the same approach, and it is underpinning increased good outcomes. The point, therefore, is that reform of the courts system failed to solve how to process personal injuries by not ‘looking outside the (courts) box’ and then moving them into a different ‘box’, such as an administrative compensation scheme. It exemplified what we might call the Wrong Box Syndrome. The idea that the courts are the ultimate option where others are appearing was illustrated by the concept of a ‘multi-door court-house’, which was proposed by Harvard Professor Frank Sander in 1976 in the context of the United States’ legal system,26 which was then and remains dominated by private litigation.27 However, that concept is now out of date in this country and a number of European jurisdictions, where sectoral pathways have replaced courts.28

25 S Macleod and C Hodges, Redress Schemes for Personal Injuries (Hart, 2017). 26 Address by Frank EA Sander at the National Conference on the Causes of Dissatisfaction with the Administration of Justice (April 7–9 1976), reprinted in Sander, Varieties of Dispute Processing, 70 FRD 111 (1976). 27 RA Kagan, Adversarial Legalism: The American Way of Law (Cambridge/Mass, Harvard University Press, 2001). S Farhang, The Litigation State: Public Regulation and Private Lawsuits in the United States (Princeton, Princeton University Press, 2010). 28 C Hodges and S Voet, The Relationship between Courts and New DRs: A New Paradigm, Paper in response consultation by the ENCJ-ELI consultation, 2018 (on file with the author).

The Need for a Redesign 25 A great deal of helpful innovation is revealed by this study. But a consequence of this s iloism is that application of the learning is not maximised because developments tend to stay known only within the silo in which they occurred. It is time to spread the knowledge widely so that all parts of the dispute resolution system can benefit and consider improvements. We have the Civil Justice Council, the Family Justice Council, the Administrative Justice Council and the Civil Mediation Council – but we have no National Dispute Resolution and Justice Council. As a result, we have no integrated national justice policy or integrated justice system. There is widespread ignorance of options and that some options work better than others in delivering justice. We have talked about access to justice for too long – the phrase is usually used as a political slogan for giving more funding for lawyers – and not talked enough about the delivery of justice.29

C. We’re Paying for All this As already said, this study reveals considerable diversity and many options for dispute resolution. Innovation is good, but it produces diversity. At some stage, we need to stand back and rationalise the system if it has become too complex as to fail to be intelligible to users, to confuse them about what options they might have, and to generate concerns that some pathways are less trustworthy than others. The point was made in one of the few holistic reviews of national justice systems, namely that undertaken in Australia in 2009. The Australian Government’s motivation can be simply put: ‘We’re all paying for all this diversity, so we’d better make sure that we are paying for things that work and for the right options.’ The Australian approach looked at all available dispute resolution pathways. It was founded on the basis that a whole system approach was needed to improve access to justice: Improving access to justice requires a broad examination of how the system and its various institutions influence each other and work together to support or limit people’s capacity to address legal problems and resolve disputes. Reforming one or more of the individual institutions or programs might assist current clients or users but will not provide sustainable access to justice benefits or increase the number or profile of beneficiaries. A whole of system examination is needed.30

Hence, we should assess all options, and undertake robust and comparative assessments of cost, effectiveness and outcomes for all possible options. That will involve analysis at both micro and macro levels: what is or are the best options for particular dispute pathways, and how does the system work as an integrated whole? This would produce a joined up assessment and imaginative vision.

29 Note G Russell and C Hodges (eds), Regulatory Delivery (Hart, forthcoming). 30 A Strategic Framework for Access to Justice in the Federal Civil Justice System (Australian Government, 2009). The holistic Australian approach was noted in Scotland: Ensuring effective access to appropriate and affordable dispute resolution. The final report of the Civil Justice Advisory Group (Consumer Focus Scotland, 2011).

26 Introduction

VI. Evaluating the System A. Best Practice in Evaluating Reform Best practice in public administration lays down that policy development should consist of two stages: identifying the rationale for government intervention; and appraisal of the options to deliver the government’s policy intention.31 All the options in approaches that will achieve the desired objectives should be identified and evaluated on the extent to which they do so in the most effective, efficient and proportionate way.32 One should seek to avoid unintended consequences.33 Applying this approach necessarily involves the assumption that no mechanism or technique (eg, courts, arbitration, adjudication, ADR, mediation, Ombudsman or anything else) is the only or ultimate option or paradigm. Only in this way can we take an objective dispassionate view of the best ways that are now available to achieve the objectives of supporting a fair and law-abiding society in which problems are identified and solved, and the risk of future problems is reduced. Only thus can we achieve effectiveness in allocating disputes to appropriate pathways and effective delivery of justice.

B. Adopting Users’ Viewpoints This study evaluates the structures and techniques from the point of view of users. Many evaluations have been conducted by judges or administrators of processes and are evaluated by academics whose expertise may only be in civil procedure. The risk with that approach is that it may involve an inherent bias of looking at a system from the perspective of one of its ultimate points, namely that of courts and judges. Instead, we build on the viewpoint of those who have problems. That perspective builds on the ‘paths to justice’ studies noted in chapter three, which found that people have problems and that they need to find solutions to those problems. Chapter eight expands on the idea that some people need help with multiple problems (clusters) and that a system that identifies and addresses a root cause can prevent the need to focus ineffectively on too many symptoms. It is an inherently limiting approach even to adopt the viewpoint of ‘disputes’ or disputes resolution pathways or systems. The idea of ‘problems’ is a more fruitful concept. As the Lord Chief Justice said in 2018, ‘the citizen, the users of our courts, must be at the heart of the design process’.34 As noted above, and as the Scottish Consumer Focus review said, adopting the perspective of users involves an assessment of the ‘whole system’ to improve access to justice.35

31 Better Regulation Framework. Guidance (Department for Business, Energy & Industrial Strategy, 2018). 32 The Green Book. Central Government Guidance on Appraisal and Evaluation (HM Treasury, 2018). This is longstanding policy: see Principles of Good Regulation (Better Regulation Task Force, 2003). 33 Principles of Good Regulation (Better Regulation Task Force, 2003) 8. 34 Speech by Lord Burnett of Maldon at the First International Forum on Online Courts, London, 3 December 2018. 35 Ensuring effective access to appropriate and affordable dispute resolution. The final report of the Civil Justice Advisory Group (Consumer Focus Scotland, 2011).

Evaluating the System 27 This will not assume that any particular pathway, structure, technique or technology is necessarily the paradigm or is superior to any other. We should not assume any particular architecture, such as court or tribunal or Ombudsman or anything else, in advance. The policy-making approach will rest on evaluation of what people want and on empirical evidence. HMCTS carried out interesting research in 2017 into the experience of court and tribunal users. The key finding related to the visibility, predictability and expectations of the pathway:36 The qualitative research found that the key user need was increasing the visibility of the processes and stages in the user journey which can be achieved by providing the right information in a timely manner. Having sight of the whole journey and having information on progress, as well as information on what to expect was an important factor in perceptions of experience across all jurisdictions and at all stages of the user journey.

Unsurprisingly, users expected the process to be emotionally difficult, formal but fair. Three clusters of factors were found to have an impact on users’ overall rating of their experience, of which the most important factor was being listened to, which was found to be more than twice as influential on the overall rating of experience than the other factors. The second group was (in descending order of importance): good information, can do what they need to, system open and accessible, experience of staff and able to take part with confidence; and the third group: understanding what is happening, physical environment and time taken. User expectations were formed from a range of sources, including previous direct experience of family and friends, TV and internet searches. The conclusion seems to be that people expect the experience of legal process to be strange and difficult but are more able to cope the more they know about what to expect. Thus, making the process simpler would increase confidence.

C. Objectives and Functions We should, therefore, ask some basic questions. What do we want the legal system to do? What functions should it have? What approach should be taken by Government to the design and reform of dispute resolution systems? Those questions lead on to the following ones: • • • • •

What do people want/need from the process? What are the objectives and outputs that are needed? What functions does a system need to have to deliver those objectives and outputs? What impediments prevent achieving those outcomes? Hence, what features should the system have?

Chapter three therefore summarises the evidence on what people seek and need. We will need to seek answers to questions like these. Do people seek voice (to be listened to, to be heard, to have an opportunity to speak or be recognised)? Do they seek verification of

36 HM

Courts & Tribunals Service. Citizen User Experience Research (Ministry of Justice, 2018).

28 Introduction what happened? Do they seek an apology for the harm they have suffered? Do they seek being believed by an independent authority figure? Do they seek accountability, retribution, punishment, vilification or scapegoating of others whom they hold responsible? Do they want a similar thing not to happen to anyone else? Do they seek a change in practice or behaviour by an institution or person? Do they simply seek money, or some other redress? Or do they seek something else? The issue of what people want has to be answered for everyone involved, not just the claimants. What do the defendants want? What do all stakeholders want, including the State and civil society? A further set of questions arises when we ask what functions a system needs to have to be able to deliver the desired outcomes. How are the desired outcomes going to be delivered? Is it possible to deliver them, or are they conflicting or unrealistic? If people seek that the same misfortune will not happen to anyone else in future, by what mechanism can this be achieved? And how can its achievement be demonstrated to the people who seek it, and the public at large? (this is often difficult, viz the NHS; plus blaming organisations and people in them does not help bring about actual change, so one has to think creatively about reconciling the two sides – achieving changes in behaviour is a completely different subject from adopting a ‘victims’ rights’ perspective, and not many people see that), money etc). In asking what the impediments might be to achieving the desired outcomes, we need to consider issues like lack of resource, lack of pressure, lack of access to evidence, slow response (lawyers and courts), wrong sort of response, fear that leads one to stay anonymous (that was solved by the Groceries Code Adjudicator), and so on.

D. Evaluation Criteria How should we evaluate the various mechanisms? A traditional approach would evaluate civil procedure against constitutionally-based criteria such as due process (fair treatment, equality of arms, audi alteram partem), judicial independence and so on. It is tempting to evaluate all pathways as if they were courts. However, that ignores the fundamental point that some new pathways are different, and it is precisely those differences that are attractive to users. Discussion about ADR has for some decades highlighted that ADR is valued because of qualities such as speed, cost and achieving fair outcomes in a trusted manner. In response, it is said that ADR is in various ways unconstitutional because it does not satisfy values that are applied to courts. The reality is that every option will have advantages and disadvantages. Those attributes need to be evaluated against objective criteria without preconceptions. Not every ADR scheme, for example, may be acceptable or preferable. We may need to find other ways of addressing some issues that flow from less use of courts, such as means of clarifying and developing the law. From the perspective of users, the criteria relate essentially to the comparative performance of different optional pathways in delivering the desired criteria. In this study, we will evaluate the competing pathways against the following users’ criteria: • Ease of identification. • Ease of accessibility.

Evaluating the System 29 • • • • •

Ease of use of the pathway. Cost of accessing and using the pathway. Duration. How long does the pathway take to reach a conclusion? Degree of trust that may be placed in the pathway. Extent to which the pathway delivers a type of outcome that is useful and desired by the user. This is not whether the user ‘wins or loses’ but whether the pathway is able to deliver a solution of a type that is useful. For example, if the user wants an apology or some other response from the other party, is the pathway capable of delivering that? • Extent to which the pathway is capable of contributing to a change in the behaviour and culture of the other party. This is essentially a regulatory function, involving identification of issues, behaviour and cultures that need attention and then contributing to effective means of intervention to achieve those outcomes. Further criteria arise from the perspective of society we add also: • • • •

The transactional cost of the pathway, by itself and in comparison with other pathways. Delivery of outcomes that are fair and just. Where injustice arises, maximising the delivery of such fair and just outcomes. The extent to which the system as a whole is efficient and effective, and provides acceptable pathways that deliver fair and just outcomes, contributing to a balanced and stable society.

Overall, the two objectives that we now expect from systems that include dispute resolution are: • To identify problems and resolve them. • To learn from the problems that people encounter and hence reduce risk by changing future behaviour or systems. We will return in chapters seventeen to nineteen to the findings of this book in relation to evaluation of these outcomes by currently available pathways, and to recommendations for reform.

E. Durations An important ‘key performance indicator’ of a dispute resolution system is how long it takes to reach a satisfactory result. Obtaining reliable data on this aspect is difficult for two reasons. First, not all systems measure or publish reliable data on how long they take and, secondly, cases resolve (or not) at different stages of the process so it is difficult to say that a particular process takes x weeks as some cases may resolve before it starts, at any stage during it, or (hopefully) at its end. Even processes that supposedly terminate in a binding decision may be followed by failure of a party to implement the decision. We note below some statistics on various mechanisms. However, comparison between them is dangerous, as is criticism that some take too long, even if it is true. Producing reliable proof that processes are swift and efficient remains a challenge that those responsible for different processes should take up.

30

part a Setting the Scene

32

2 Affecting Behaviour The central question is: How do dispute resolution systems contribute to affecting the behaviour of their users and others? This chapter summarises some fundamental changes that have taken place in our understanding of what affects human behaviour and why we decide or act, and the implications for a reassessment of the role of dispute resolution systems. The answers that emerge from this reassessment have a profound impact on the future design of our dispute resolution systems. A major change has occurred in the way that we understand how and why humans make decisions and act. The new understanding arises from scientific research into behavioural science since the mid-twentieth century. The findings of behavioural psychology, sometimes referred to as ‘behavioural insights’, have been applied by governments in ‘nudging’ citizens (such as to make healthier choices in eating, or to pay tax on time)1 and by public authorities in supporting compliance by businesses with regulatory regimes.2 A crucial question is how people and organisations change behaviour or culture so as to comply with law. What effect will be produced by: • A judgment given by a court, either in which the organisation or someone else is a defendant? • An agreement to settle an individual case, or a group of similar cases? • Inspection or enforcement action taken by a public official? • Internal compliance mechanisms? • Internal culture? The answer to these questions can be reached by empirical evidence rather than by assertion. It is somewhat surprising that there is little direct empirical evidence on these specific issues, although there is now quite a lot of evidence on related issues about the drivers of human behaviour and on enforcement of law in regulatory and criminal contexts. The available evidence suggests that the mechanisms that are more effective will tend to be at the bottom of the list above rather than at the top. We now investigate these issues.

1 RH Thaler and CR Sunstein, Nudge (Yale University Press, 2008); D Halpern, Inside the Nudge Unit. How small changes can make a big difference (WH Allen, 2015); Behavioural Insights and Public Policy. Lessons from Around the World (OECD, 2017). 2 C Hodges, Law and Corporate Behaviour: Integrating Theories of Regulation and Enforcement (Hart Publishing, 2015); C Hodges and R Steinholtz, Ethical Business Practice and Regulation. A Behavioural and Values Based Approach to Compliance and Enforcement (Hart Publishing, 2017).

34 Affecting Behaviour It is interesting here to bear in mind two paradigms of how behaviour is affected and changed: A. A legal paradigm, in which rules are set and enforcement action is taken against those who break the rules, which deters future breaches by the perpetrator and others, providing ongoing compliance. B. A cultural paradigm, in which the behaviour of those in a group is directed by personal and group understanding and practice of what the right thing to do is. These may be extreme paradigms, and reality may lie somewhere between them. But the main point is that paradigm A is giving way to the newer paradigm B. That shift has important implications for legal systems. This chapter is in two parts. We first summarise developments in theory and practice on how to affect behaviour of people, singly and in organisations. We note particularly major developments that have occurred in the commercial context, where theories of enforcement based on deterrence have given way to approaches based on behavioural psychology. Those insights indicate that individual decisions emanating from civil disputes over rights can be expected to have at best limited impact on future behaviour and the culture of originations. We then propose a new approach to problem-solving, in the form of a model involving a sequence of core functions that can be represented in circular form as a means of constantly monitoring and improving performance. In that context, the data on the incidence and nature of disputes as an aggregated whole is highly important for an effective system to capture, analyse and apply. This suggests a place for dispute resolution mechanisms in a wider model of monitoring and supporting desirable social behaviour.

I. Understanding How to Affect Behaviour A. Traditional Theory: Deterrence The traditional theory is that the application of the law in an individual case, such as by a crim inal conviction and sanction and by a private law judgment, will affect the future behaviour of the particular defendant and everyone else. The law and individual rights will be declared, enforced and ‘vindicated’, and these facts will provide deterrence in relation to individual defendants (specific deterrence) and everyone else (general deterrence). The p aradigms for private and public regulatory enforcement are illustrated in Figures 2.1 and 2.2. In the past 100 years, the most influential theory has been the economic theory that all people who injure others are rational cost-avoiders, make decisions by calculating costs and benefits, and will be influenced in all future decisions (especially in choosing to avoid causing harm to others) by knowledge of the ex post imposition of financial or other sanctions on them or others.3 The theory assumes that the deterrent effect increases with: (a) increasing the penalty, and (b) increasing the likelihood of a penalty being applied. 3 Leading texts are AC Pigou, The Economics of Welfare (London, MacMillan, 1920); M Allingham, Rational Choice (New York, NY, St Martin’s Press Inc, 1999); MS Archer and JQ Tritter, Rational Choice Theory: Resisting Colonization. (New York, NY, Routledge, 2001); G Becker, ‘Crime and Punishment: An Economic Approach’ (1968) 76 Journal of Political Economy 169–217; GJ Stigler, ‘The Theory of Economic Regulation’ (1971) 2 Bell Journal of Economics and Management Science 3–21.

Understanding How to Affect Behaviour 35 Figure 2.1 The Private Law Legal Paradigm

Law

Deterrence

Breach of Rights

Remedy or Sanction

Access to Justice

Determination of Rights

Figure 2.2 The Regulatory Enforcement Paradigm

Rules

Deterrence

Sanction

Inspection

Identify noncompliance

36 Affecting Behaviour The deterrence theory supports the imposition of either fines or damages as a primary means of affecting behaviour, especially of commercial organisations and individuals. The concept of deterrence carries an assumption that imposition of a sanction (such as the cost of remedying the harm caused, or a fine, or imprisonment) will either completely prevent similar behaviour or harm in future, or will be the sole or major means of affecting behaviour. Various practical issues also arise. How are breaches identified? Does deterrence eradicate all non-compliance, or only some? How much change is enough, and how do we know how much behaviour is affected? Many objections have been tabled to the theory of deterrence. The idea that you get people to obey laws by making them afraid is inconsistent with modern democracy. The findings of behavioural psychology on the reasons why humans act or fail to act, discussed below, significantly undermine the idea that all ideas are made by rational cost-calculating or fully responsible individual actors. Behavioural studies suggest that the key tenet that increasing a penalty will exert greater deterrent effect is incorrect.4 The empirical evidence that deterrence affects future behaviour is strikingly slim.5 Rather, there is plenty of evidence that deterrence is not only ineffective but also can adversely affect compliance.6 Decisions are taken for many reasons, and the supposed fear of legal penalties may have very limited or no effect on behaviour.7 Deterrence theory struggles to explain how harm can be avoided where it is caused by complex interactions between multiple people, systems and cultures. For example, medical practice was for some time subjected to the assumption that training and punishment would eliminate all medical error (the ‘perfectibility’ model).8 Emphasis on the incompetent doctor shifts the emphasis away from the more fundamental questions about systemic approaches to mishaps.9 Leape noted that reliance on inspection as a mechanism of quality control was discredited long ago in industry,10 because the technique is reactive. In contrast, product regulatory systems typically rely on continuous

4 LS Beres and TD Griffith, ‘Habitual Offender Statutes and Criminal Deterrence’ (2001) 34 Connecticut Law Review 55, 59; see I Ehrlich, ‘Crime, Punishment, and the Market for Offenses’ (1996) 10 Journal of Economic Perspectives 43, 55–63; PW Greenwood et al, Three Strikes and You’re Out: Estimated Benefit and Cost of California’s Mandatory New Sentencing Laws (RAND Corporation, 1994) 16. But see D Kessler and SD Levitt, ‘Using Sentence Enhancements to Distinguish Between Deterrence and Incapacitation’ (1999) 42 Journal of Law & Economics 343. 5 A recent review of empirical literature is C Hodges, Law and Corporate Behaviour: Integrating Theories of Regulation and Enforcement (Hart Publishing, 2015). 6 Accessible books are D Ariely, Predictably Irrational: The Hidden Forces That Shape Our Decisions (HarperCollins, 2008); MH Banaji and AG Greenwald, Blindspot: Hidden Biases of Good People (Bantam Books, 2016); Richard Barrett, The Values-Driven Organization: Cultural Health and Employee Well-Being as a Pathway to Sustainable Performance, 2nd edn (Routledge, 2017); MH Bazerman and AE Tenbrunsel, Blind Spots: Why We Fail to Do What’s Right and What to Do about It (Princeton University Press, 2011); J Haidt, The Righteous Mind. Why Good People are Divided by Politics and Religion (Penguin Books, 2012); M Heffernan, Wilful Blindness. Why we ignore the obvious at our peril (Simon & Schuster, 2011); D Kahneman, Thinking, Fast and Slow (Allen Lane, 2011). 7 For a review see C Hodges, Law and Corporate Behaviour: Integrating Theories of Regulation, Enforcement, Culture and Ethics (Hart Publishing, 2015). 8 LL Leape, ‘Error in medicine’ (1994) 272(23) Journal of the American Medical Association 851. 9 L Mulcahy and MM Rosenthal, ‘Beyond blaming and perfection: a multi-dimensional approach to medical mishaps’ in MM Rosenthal, L Mulcahy and S Lloyd-Bostock (eds), Medical Mishaps. Pieces of the Puzzle (Buckingham, Open University Press, 1999) 8. 10 LL Leape, ‘Error in medicine’ (1994) 272(23) Journal of the American Medical Association 851; citing DM Berwick, ‘EM Codman and the rhetoric of battle: A commentary’ (1989) 320 Milbank Quarterly 262; WE Deming, Quality, Productivity and Competitive Position (Cambridge MA, MIT Press, 1982).

Understanding How to Affect Behaviour 37 control and monitoring of design, manufacture, distribution and marketing functions by means of a permanent quality system. The typical pattern of medical mishaps is not caused by a sole individual, as a 2016 report made clear:11 Safety issues and related incidents are often the result of complex local, organizational and systemwide processes, with similar events recurring repeatedly in different places across the healthcare system. The purpose of safety investigation is to understand the patterns of causality that produce harm, and to make recommendations that can address those causes across the healthcare system in order to improve the safety of all patients. … The vast majority of safety incidents are associated with inadvertent or unintentional errors on the part of caring and committed staff. These errors are typically provoked by poorly designed systems, equipment, or work contexts.12

We can contrast two opposing approaches to enforcement. One approach is to impose a large fine or seek imprisonment of someone who breaks the law. That has been done in the past decade by, for example, the Financial Conduct Authority in relation to banks and bankers, and the Competition and Markets Authority and other regulators in relation to breach of competition law. However, despite massive fines, the approach has not been notably successful in preventing future breaches.13 Another approach is that where a business asks for assistance in relation to complying with the law and clarifying what it should be doing, where it may well have been breaking the law, the regulator’s primary response is to assist the business to get into compliance and to make good any damage caused, rather than impose a penalty. That is the typical response under, for example, the Primary Authority scheme, which emphasises assistance, support and giving ‘assured advice’. It should be no surprise that the second approach appears to have achieved better results. The engagement is inherently more likely to be successful with genuine businesses. The CMA’s approach based on deterrence alone leads to it applying a hard enforcement approach to every business, rather than just to criminals. There is clear behavioural evidence that a punitive approach on people who are trying to obey the law produces resentment and reduces compliance rather than increases it: deterrence does not work on them. A differentiated (responsive) approach is needed. In looking beyond a theory that a judicial declaration, perhaps accompanied by a fine or award of damages, has some effect on future behaviour we turn to a mechanical explanation of how such an effect occurs.14 An inherent difficulty is that enforcement occurs after a breach of law has been identified and officially enforced. By definition, that ex post event will not have prevented the particular breach itself. That could only, on this theory, have been prevented by previous acts of enforcement. The point is that proving how and why people obey the law, or break it, involves empirical evidence and a convincing explanation that satisfies scientific criteria. But the empirical evidence and behavioural science point to different mechanisms than deterrence, and to little evidence that deterrence works, as discussed below. 11 Report of the Expert Advisory Group; Healthcare Safety Investigation Branch (Department of Health, May 2016) 21. 12 ibid, 25, 26, quoting National Advisory Group on the Safety of Patients in England, A promise to learn – a commitment to act (Department of Health, 2013). 13 Transforming Culture in Financial Services (Financial Conduct Authority, 2018). 14 C Hodges and S Voet, Delivering Collective Redress: New Technologies (Hart Publishing, 2018) ch 7.

38 Affecting Behaviour Ideas about regulation, compliance, enforcement and deterrence have all moved on. Many UK regulatory authorities seek to work with businesses, rather than to blame and shame them, still less to punish them. Serious sanctions will, of course, continue to be imposed on criminals – those who intend to break the rules, especially if for their own benefit, as opposed to people who make honest mistakes. The idea that imposing sanctions affects future behaviour has been significantly undermined by empirical evidence and in theorising.15 The new regulatory paradigm is illustrated in Figure 2.3. These changes are of major significance but have gone largely unnoticed by many. Figure 2.3 The New Regulatory Paradigm

Rules Inspection and Support

Monitor

Identify noncompliance

Consider sanction

Require remedial actions

Support compliance

B. Compliance and Resistance within Organisations What effect does law have within organisations, and how? Organisations exist in all shapes and sizes,16 with a variety of structures, modes of operation and cultures. In the 1920s, Weber’s description of large bureaucratic organisations suggested that they would encounter challenges in external adaptation and internal integration.17 Crozier’s research found that

15 C Hodges and S Voet, Delivering Collective Redress: New Technologies (Hart Publishing, 2018) ch 7. 16 H Mintzberg, The Structuring of Organisations (Prentice-Hall, 1979). 17 M Weber, Wirtschaft und Gesellschaft: Grundriss der verstahende Soziologie, (1920, 5th edn 1980), 551–6; E Schein, ‘The Role of the Founder in Creating Organizational Culture’ (1983) Organizational Dynamics 13, 14.

Understanding How to Affect Behaviour 39 those organisations that are organised vertically tend to demonstrate hierarchical strata insulated from each other and exerting great pressure for conformity on their members, and the ‘creation of parallel informal power relations around the groups or individuals capable of coping with residual and unanticipated contingencies and uncertainties affecting the organization’s capacity to function in a satisfactory way’.18 Together, these characteristics created ‘vicious circles’ of self-reinforcing behavioural patterns, with the consequence, Crozier argued, that that bureaucracy is a mode of organisation that is incapable of correcting its behaviour in the face of its results. It created self-reinforcing behavioural patterns that reinforced impersonality and centralisation. Change would not be piecemeal or incremental but occurs after crises. In contrast, flatter structures, especially those that disperse power and discretion to individuals, could possibly disseminate information quickly and take swifter and more flexible decisions. It is well recognised that the more individuals in an organisation, the more multiple localised cultures exist.19 Penetrating and changing ‘the way things are done around here’ can present quite a challenge to directors and managers, let alone to external authorities.20 Theorising about how public declarations and enforcement of law (externally) are applied within commercial organisations led to the incentivisation of corporations having internal compliance systems. Most prevailing corporate governance regimes require extensive risk management and control systems.21 However, a formal compliance system does not stand alone sending unambiguous messages and instructions.22 Indeed, corporate compliance programmes have been criticised on the basis that they do not have any actual effect in improving compliance (ie, in changing the behaviour of staff).23 The creation of compliance systems can be traced to a response to the ideas of external prosecuting authorities that their presence will improve compliance. Acting on that belief, the US Department of Justice24

18 M Crozier, The Bureaucratic Phenomenon (The University of Chicago Press, 1964, revised Transaction Press, 2010). 19 M Parker, Organizational Culture and Identity (SAGE Publications, 2000) 231. 20 C Hodges and R Steinholtz, Ethical Business Practice and Regulation: A Behavioural and Values-Based Approach to Compliance and Enforcement (Hart Publishing, 2017) 217. 21 BJ Schoordijk, ‘Risk management alshoeksteen van corporate governance’ in SHA Dumoulinea (ed), Tussen Themis en Mercurius, BedrijfsjuridischebijdragenaaneenEuropesebeleidsconcurrentie, LustrumuitgaveNederlandsGenootschap van Bedrijfsjuristen (Kluwer, 2005) 309–29; DAMHW Strik, Deel II – Aansprakelijkheidvoorfalendrisicomanagement, in Ondernemingsbestuur en risicobeheersing op de drempel van eennieuw decennium: eenondernemingsrechtelijkeanalyse, Preadvies van de Vereeniging ‘Handelsrecht’ 2009 (Kluwer, 2009); J Eijsbouts, Corporate responsibility, beyond voluntarism. Regulatory options to reinforce the licence to operate (Inaugural lecture, Maastricht University, 2011). 22 C Parker and S Gilad, ‘Internal corporate compliance management systems: structure, culture and agency’ in C Parker and V Lehmann Nielsen (eds), Explaining Compliance. Business Responses to Regulation (Edward Elgar, 2012). 23 KD Krawiec, ‘Cosmetic Compliance and the Failure of Negotiated Governance’ (2003) 81 Washington University Law Quarterly 487, 491; C Parker and S Gilad, ‘Internal corporate compliance management systems: structure, culture and agency’ in C Parker and V Lehmann Nielsen (eds), Explaining Compliance: Business Responses to Regulation (Edward Elgar. 2011). 24 US Sentencing Commission, Federal Sentencing Guidelines Manual: Chapter Eight – Sentencing of O rganizations (2009) 495; The US Federal Sentencing Guidelines, Compliance Program Requirements www.ussc.gov/ Guidelines/2010_guidelines/Manual_HTML/8b2_1.htm.

40 Affecting Behaviour and others such as competition25 and environmental protection authorities,26 incentivised compliance systems by offering corporations that had them a reduction in enforcement fines, so such systems have spread widely.27 A recent British example is the Bribery Act 2010, under which s 7(2) provides a defence for a commercial organisation to prove that it had in place adequate procedures designed to prevent persons associated with it from undertaking such conduct. Research has found that the imposition of ever more and detailed legal rules produces an internal response within organisations of creating new offices and developing written rules, procedures and policies in an attempt to achieve legal legitimacy, while simultaneously limiting law’s impact on managerial power and unfettered discretion over employment decisions.28 Law becomes ‘managerialised’, misunderstood and diluted.29 In some organisations, employees have been shown to develop a ‘culture of regulatory resistance’, with managers and staff refraining from doing anything more than minimally complying with existing regulations (rather than seeking to go beyond compliance) and frequently resisting agency enforcement efforts.30 Some organisations can exhibit ‘creative compliance’, involving finding ways of behaving that can be claimed to comply with the letter of rules but not their spirit.31

C. The Science of Human Behaviour The enforcement of legal rules in the context of commercial regulation has moved away from a theory that imposition of sanctions will effectively deter future behaviour. There is 25 For USA, see ABA Section of Antitrust Law, Antitrust Compliance: Perspectives and Resources for Corporate Counselors (ABA Publishing, 2005). In UK see How your business can achieve compliance with competition law: Guidance (Office of Fair Trading, 2011). Discussions at A Stephan, ‘See no evil: cartels and the limits of antitrust compliance programmes’ [2010] 31.8 The Company Lawyer 3; K Voss, ‘Preventing the Cure: Corporate Compliance Programmes in EU Competition Law Enforcement’ (2013) 16(1) EuroparättsligTidskrift 28. For UK: CMA’s guidance as to the appropriate amount of a penalty (Competition and Markets Authority, 2018), CMA73. Previously Leniency and no-action. OFT’s guidance note on the handling of applications, (Office of Fair Trading, 2008) OFT803. For EU: Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003 (European Commission, 2006) 2006/C 210/02; Revised Leniency Policy (European Competition Network, 2012). 26 For USA: Environmental Protection Agency, ‘Incentives for Self-Policing: Discovery, Disclosure, Correction, and Prevention of Violations’ Fed. Reg. 60 (1995), 66706; revised Environmental Protection Agency, ‘Incentives for Self-Policing: Discovery, Disclosure, Correction, and Prevention of Violations’ Fed. Reg. 65 (2000) 19618. 27 See generally GP Miller, ‘An Economic Analysis of Effective Compliance Programs’ (2014) New York University School of Law, Law & Economics Research Paper Series, Working Paper No 14-39. 28 PJ DiMaggio and W Powell, ‘The Iron Cage revisited: institutional isomorphism and collective rationality in organizational fields’ (1983) 48 American Sociological Review 147–60; LB Edelman, ‘Legal environments and organizational governance: the expansion of due process in the American workplace’ (1990) 95 American Journal of Sociology 1401–40; LB Edelman, ‘Legal ambiguity and symbolic structures: organizational mediation of civil rights law’ (1992) 97 American Journal of Sociology 1531–76. 29 LB Edelman and SA Talesh, ‘To comply or not to comply – that isn’t the question: how organizations construct the meaning of compliance’ in C Parker and V Lehmann Nielsen (eds), Explaining Compliance. Business Responses to Regulation (Edward Elgar, 2012) ch 5. 30 E Bardach and R Kagan, Going by the Book: The Problem of Regulatory Unreasonableness (Temple University Press, 1982). 31 D McBarnet, ‘Law, Policy, and Legal Avoidance: Can Law Effectively Implement Egalitarian Policies?’ (1988) 15 Journal of Law and Society 113–21; D McBarnet and C Whelan, ‘Challenging the Regulators; Strategies for Resisting Control’ in C McCrudden (ed), Regulation and Deregulation (Clarendon Press, 1999); D McBarnet and C Whelan, ‘The elusive spirit of the law: Formalism and the struggle for legal control’ (1991) 54 Modern LR 848; and other essays collected in D McBarnet, Crime, Compliance and Control (Ashgate, 2004).

Understanding How to Affect Behaviour 41 now extensive empirical evidence that significantly undermines the theory that deterrence affects future behaviour.32 The scientific findings reveal that humans rely on various inherent mechanisms.33 First, our brains try to use shortcuts (heuristics) in making decisions in situations that we think we are familiar with. Another way of saying that is that we tend to make decisions very quickly by instinct (or ‘gut feel’).34 We then persuade ourselves that we comply, even when we obviously do not (cognitive dissonance),35 discarding evidence or reasoning that does not support the decision taken.36 Secondly, in assessing evidence and risk, we may underestimate objective risk, and think that ‘what we see is all there is’.37 Thirdly, we are particularly influenced by the behaviour of others around us.38 However, fourthly, some people do not have the emotional ability to respond to others or ethical ideas (sociopaths and psychopaths) and may make poor and risky decisions and are incapable of ethical social working.39 Fifthly, we make poor decisions when we are under stress, focus just on certain targets, or feel threatened.40 All those factors need to affect our working culture. However, we can equally draw on our inherent ability to distinguish between right and wrong,41 and the sense of social fairness that supports ethical behaviour42 through sensing that fair rules are made and applied fairly.43 All these aspects can support a fair and just system of behaviour in social groups, built on evidence of mutual trust. It will be important to have time to reflect, to ask ourselves 32 For a review see C Hodges, Law and Corporate Behaviour: Integrating Theories of Regulation, Enforcement, Culture and Ethics (Hart Publishing, 2015). 33 Accessible books are D Ariely, Predictably Irrational: The Hidden Forces That Shape Our Decisions (HarperCollins, 2008); MH Banaji and AG Greenwald, Blindspot: Hidden Biases of Good People (Bantam Books, 2016); Richard Barrett, The Values-Driven Organization: Cultural Health and Employee Well-Being as a Pathway to Sustainable Performance, 2nd edn (Routledge, 2017); MH Bazerman and AE Tenbrunsel, Blind Spots: Why We Fail to Do What’s Right and What to Do about It (Princeton University Press, 2011); J Haidt, The Righteous Mind. Why Good People are Divided by Politics and Religion (Penguin Books, 2012); M Heffernan, Wilful Blindness. Why we ignore the obvious at our peril (Simon & Schuster, 2011); D Kahneman, Thinking, Fast and Slow (Allen Lane, 2011). 34 D Kahneman, Thinking, Fast and Slow (Allen Lane, 2011); MH Banaji and AG Greenwald, Blindspot: Hidden Biases of Good People (Bantam Books, 2016). 35 R Fairman and C Yapp, Making an impact on SME compliance behaviour: An evaluation of the effect of interventions upon compliance with health and safety legislation in small and medium sized enterprises (Health and Safety Executive, 2005), Research Report 366; M Syed, Black Box Thinking. Marginal Gains and the Secrets of High Performance (John Murray, 2015) 80. 36 J Haidt, The Righteous Mind. Why Good People are Divided by Politics and Religion (Penguin Books, 2012). 37 C Chabris and D Simons, The Invisible Gorilla (Crown Books, 2010) (‘they can’t find what they’re not looking for but they won’t find what they’re not looking for, no matter how dangerous it is.’). 38 MH Banaji and AG Greenwald, Blindspot: Hidden Biases of Good People (Bantam Books, 2016) 130. 39 P Babiak and RD Hare, Snakes in Suits: When Psychopaths Go to Work (HarperCollins, 2006). 40 D Gentilin, The Origins of Ethical Failures. Lessons for Leaders (Routledge, 2016); Report of a senior practitioners’ workshop on identifying indicators of corporate culture (International Corporate Governance Network, IBE, Institute of Chartered Secretaries and Administrators, held on 17 December 2015). 41 EO Wilson, The Social Conquest of Earth (Liveright Publishing, 2012); Jonathan Haidt, The Righteous Mind. Why Good People are Divided by Politics and Religion (Penguin Books, 2012). 42 LM Friedman, The Legal System: A Social Science Perspective (Russell Sage Foundation, 1975), 105–13; RA Kagan, N Gunningham and D Thornton, ‘Fear, duty, and regulatory compliance: lessons from three research projects’ in C Parker and V Lehmann Nielsen (eds), Explaining Compliance: Business Responses to Regulation (Edward Elgar, 2012). 43 J Darley, TR Tyler and K Bilz, ‘Enacting justice: the interplay of individual and institutional perspectives,’ in M Hogg and J Cooper (eds), The SAGE Handbook of Social Psychology (Sage, 2003); TR Tyler, Why People Obey the Law (Yale University Press, 2006); TR Tyler and SL Blader, Cooperation in Groups: Procedural Justice, Social Identity, and Behavioral Engagement (Psychology Press, 2000).

42 Affecting Behaviour and others if our fact-base, analysis and judgment is correct, to check and be open to challenge,44 and to make sure that we work with our emotions engaged. We can make better decisions by calling on our sense of ethical values.45 We are likely to follow fair rules that are made and applied fairly.46 We are more likely to do the right thing if we work in a group and organisation that has a clear sense of purpose that is aligned with ethical values and produces an ethical culture as the sum of all behaviours. These concepts are forming the basis of successful approaches to regulatory and compliance systems. They are used to build adult-adult relationships between those in authority and regulatees, rather than authoritarian adult-child (command and control) relationships. Sophisticated enforcement policies distinguish between the motivations of regulates and then deploy different tools in response. Those who honestly intend to do the right thing and not harm others are supported to improve, whereas those whose actions are deliberately anti-social and self-benefitting (criminal) are liable to hard enforcement (removal of liberty or licence to operate, disqualification, large fine).47 Use of the latter tools on the former people contrary to deterrence theory tends to reduce compliance rather than increase it, since it will be viewed as unfair.48

D. Blaming Prevents Learning: Aviation Safety and the NHS The shift in the approaches to the origins of human behaviour has been accompanied by a shift in the techniques on how to affect it. An outstanding example of where the new thinking has been applied is in aviation safety. Evaluation of data is undertaken constantly, so the flow of information is critical. Research showed that an authoritarian approach (prosecuting failure by air traffic controllers and pilots for failing to report near misses) significantly reduced the number of reports, whereas a ‘no blame’ regime maximised such reports.49 It is universally accepted in relation to civil aviation that individuals will not share information if they fear potential adverse consequences, whether personal criticism, official investigations, criminal action, employment disciplinary action, social censure, embarrassment, or simply

44 A Gawande, The Checklist Manifesto. How to Get Things Right (Profile Books, 2010). 45 LM Friedman, The Legal System: A Social Science Perspective (Russell Sage Foundation, 1975), 105–13; RA Kagan, N Gunningham and D Thornton, ‘Fear, duty, and regulatory compliance: lessons from three research projects’ in C Parker and V Lehmann Nielsen (eds), Explaining Compliance: Business Responses to Regulation (Edward Elgar, 2012). 46 J Darley, TR Tyler and K Bilz, ‘Enacting justice: the interplay of individual and institutional perspectives,’ in Michael Hogg and Joel Cooper (eds), The SAGE Handbook of Social Psychology (Sage, 2003); TR Tyler, Why People Obey the Law (Yale University Press, 2006); TR Tyler and SL Blader, Cooperation in Groups: Procedural Justice, Social Identity, and Behavioral Engagement (Psychology Press, 2000). 47 It is highly relevant that it is very rare that individuals working in the NHS act criminally to harm others (such as Dr Shipman). 48 S Shapiro and R Rabinowitz, ‘Punishment versus Cooperation in Regulatory Enforcement: A Case Study of OSHA’ (1997) 14 Administrative Law Review 713–62, 718. 49 M Tamuz, ‘The Impact of Computer Surveillance on Air Safety Reporting’ (1987) Columbia Journal of World Business 69; M Tamuz, ‘Learning Disabilities for regulators. The Perils of organizational learning in the Air Transportation Industry’ (2001) 33(3) Administration & Society 276.

Understanding How to Affect Behaviour 43 uncertainty over what will happen.50 ‘The sheer threat of judicial involvement is enough to make people think twice about coming forward with information about an incident that they were involved in.’51 A culture of openly reporting any and all events or information that might affect safety, however embarrassing they might be,52 is now established throughout the civil aviation industry, underpinned by legislation, called an ‘open, just culture’.53 It is regarded as the cornerstone of the outstandingly successful safety record in that industry, as in similar industries such as nuclear generation.54 The legislation defines ‘just culture’ as meaning:55 a culture in which front line operators or others are not punished for actions, omissions or decisions taken by them that are commensurate with their experience and training, but where gross negligence, wilful violations and destructive acts are not tolerated.

In the aviation ‘open, just culture’, all individuals constantly share all relevant information, however embarrassing it might be, in the knowledge that they do so in a ‘safe space’ environment. The concept of ‘compliance’ has been replaced by focus on performance: the approach is constantly to improve how people and the system are performing in a risk-based world. The issue is not to identify an individual and blame them, but to seek to learn and improve by asking ‘Why would any human in that situation act in that way, so that we can reduce the risk of recurrence?’ There is extensive evidence that a culture of fear of being blamed in the NHS prevents staff from sharing information about things that are not right, or things that have gone wrong. Successive studies involving healthcare professionals have identified fear of litigation, damage to reputation and embarrassment as the main barriers to the practice of open disclosure.56 A 2017 report into how the Royal College of Nursing responded to complaints from a hospital that years later turned out to have been evidence of a major disaster showed

50 Report on legal and cultural issues in relation to ATM safety occurrence reporting in Europe: Outcome of a survey conducted by the Performance Review Unit in 2005–2006 (Eurocontrol Performance Review Commission, 2006). 51 S Dekker, Just Culture. Balancing Safety and Accountability (Ashgate Publishing, 2007) 103. 52 S Dekker, Just Culture. Balancing Safety and Accountability (Ashgate Publishing, 2007) 103; Robert L Helmreich, ‘Building safety on the three cultures of aviation’ in Proceedings if the IATA Human Factors Seminar (Bankkok, 1999) 39–43; D McCune, C Lewis and D Arendt, ‘Safety Culture in Your Safety Management System’ in AJ Stolzer, CD Halford and JJ Goglia (eds), Implementing Safety Management Systems in Aviation (Ashgate, 2011). 53 Regulation (EU) No 996/2010, recital 4. Even in 1994, it was provided that a safety recommendation shall in no case create a presumption of blame or liability for an accident or incident: Directive 94/56/EC, art 10 (‘The sole objective of safety investigations should be the prevention of future accidents and incidents without apportioning blame or liability’). 54 Ensuring Robust National Nuclear Safety Systems – Institutional Strength in Depth INSAG-27. A Report by the International Nuclear Safety Group (Intenational Atomic Energy Agency, 2017). 55 Commission Regulation (EU) No 691/2010 of 29 July 2010 laying down a performance scheme for air navigation services and network functions and amending Regulation (EC) No 2096/2005 laying down common requirements for the provision of air navigation services, art 2(k). 56 TH Gallagher, AD Waterman, AG Ebers, et al, ‘Patients’ and physicians’ attitudes regarding the disclosure of medical errors’ (2003) 289 JAMA 1001. D Studdert, D Piper and R Iedema, ‘Legal aspects of open disclosure II: attitudes of health professionals-findings from a national survey’ (2010) 193 Med J Australia 351.

44 Affecting Behaviour defensiveness and a failure to engage with patients, ensure that they are informed of the process and progress, and analyse and take their evidence seriously.57 The 2015 Francis Report into whistle-blowers in the NHS, arising after the Mid-Staffordshire Hospitals scandal, said that58 we have seen cases where a culture of blame leads to entrenched positions, breakdown of professional relationships and considerable suffering, utterly disproportionate to the nature of the problem from which this process originated. … The overarching principle is that every organisation needs to foster a culture of safety and learning in which all staff feel safe to raise a concern.

The 2016 National Maternity Review was particularly clear about the adverse effects of litigation on creating a blame culture leading to the practice of ‘defensive medicine’.59 As soon as the Secretary of State announced that NHS staff would be subject to a ‘duty of candour’ enforced by criminal law60 the rate of reporting of moderate incidents (which is the vast majority, as opposed to minor or major) fell in England, but not in Wales where the duty was not then introduced. Government policy has firmly adopted the goal of an ‘open culture’ for the NHS, avoiding blame in investigations, based on the aviation model.61 There have been initiatives to apply the new policy in the healthcare regulatory system62 and proposals for a new ‘no fault’ compensation approach to brain-damaged babies instead of litigation.63 Acceptance that seeking to blame individuals discourages the flow of vital information has been widely accepted in healthcare. Studies involving doctors have identified fear of litigation, damage to reputation and embarrassment as the main barriers to the practice of open disclosure.64

57 Lessons Learned Review. The Nursing and Midwifery Council’s handling of concerns about midwives’ fitness to practise at the Furness General Hospital (Professional Standards Authority, 2018). 58 Sir R Francis QC, Freedom to Speak Up: An independent review into creating an open and honest reporting culture in the NHS (Department of Health, 2015). 59 Better Births: Improving outcomes of maternity services in England: A Five Year Forward View for maternity care (National Maternity Review, 2016). ‘A prevailing attitude of defensiveness’ by NHS Trusts was identified by the Public Accounts Committee: Managing the costs of clinical negligence in hospital trusts (Public Accounts Committee, 2017). 60 A contractual duty of candour was included in the standard NHS commissioning contract under NHS Standard Contract 2014/15, Updated Technical Guidance (NHS England), para 27.31, Appendix 5. 61 Rt Hon Jeremy Hunt MP, Speech ‘From a blame culture to a learning culture’ at Global Patient Safety Summit, Lancaster House, 10 March 2016 www.gov.uk/government/speeches/from-a-blame-culture-to-a-learning-culture. 62 Annual Report 2013/14 (Care Quality Commission, 2014) (aiming to create a ‘just and open culture in CQC, one that is open about what people think and believe, where we learn from mistakes to get better, and are encouraged to raise concerns that will be listened to’); Report of the Expert Advisory Group; Healthcare Safety Investigation Branch (Department of Health, 2016). 63 Safer Maternity Care. Next steps towards the national maternity ambition (Department of Health, 2016); A Rapid Resolution and Redress Scheme for Severe Avoidable Birth Injury: a Consultation (Department of Health, 2017); Department of Health birth injury compensation policy research (Ipsos Mori, 2017); No-Fault Compensation Schemes. A rapid realist review to develop a context, mechanism, outcomes framework (Department of Health, 2017); A Rapid Resolution and Redress Scheme for Severe Avoidable Birth Injury: Government Summary Consultation Response (Department of Health, 2017). 64 TH Gallagher, AD Waterman, AG Ebers, et al, ‘Patients’ and physicians’ attitudes regarding the disclosure of medical errors’ (2003) 289 JAMA 1001. D Studdert, D Piper and R Iedema, ‘Legal aspects of open disclosure II: attitudes of health professionals-findings from a national survey’ (2010) 193 Med J Australia 351; Sir R Francis QC, Freedom to Speak Up: An independent review into creating an open and honest reporting culture in the NHS (Department of Health, 2015); Better Births: Improving outcomes of maternity services in England: A Five Year Forward View for maternity care (National Maternity Review, 2016) para 3.32.

Understanding How to Affect Behaviour 45 It has been realised that the focus needs to be on identifying systemic approaches to mishaps, rather than blaming individuals:65 Safety issues and related incidents are often the result of complex local, organizational and systemwide processes, with similar events recurring repeatedly in different places across the healthcare system.66 The vast majority of safety incidents are associated with inadvertent or unintentional errors on the part of caring and committed staff. These errors are typically provoked by poorly designed systems, equipment, or work contexts.67

E. Developments in Government Policy on Regulation and Enforcement The UK is a leader in the transformation of the approach to regulation and enforcement by segmenting the motivations of those who break the law so as to react to them appropriately, and due to most people and businesses adopting supportive interventions rather than applying the authoritarian (deterrence-like) approach that is appropriate for those with criminal intent to everyone. The predominant current practice amongst UK regulatory authorities in relation to enforcement in response to identification of breaches of law has two components. First, public authorities differentiate infringers based on their motivations. Was their intent essentially deliberately anti-social and self-benefitting (criminal) or was it a mistake by someone or some organisation that essentially honestly intends to do the right thing and not harm others? Secondly, the tools to respond to people at those two extremes, and on a spectrum between them, need to be differentiated. You keep a hard enforcement tool (removal of liberty or licence to operate, disqualification, large fine) for criminals,68 and you support the well-intentioned to assist them to comply in future. If you use the wrong tool on the wrong person, not only will it be ineffective in achieving the desired outcomes, you may do more harm than good. For example, imposing a significant penalty on someone who was trying to do the right thing may lead to a reduction in compliance by them and others, since the action will be viewed as unfair. Although criminal law and hard penalties exist as a long-stop, it is unnecessary to remind people of their existence, and it is unhelpful in supporting a positive working culture for the vast majority to work in the context that they will be sanctioned. This approach has developed through the concept of ‘responsive regulation’69 and restorative justice in criminal law. Government policy has moved in parallel with the concept 65 L Mulcahy and MM Rosenthal, ‘Beyond blaming and perfection: a multi-dimensional approach to medical mishaps’ in MM Rosenthal, L Mulcahy and S Lloyd-Bostock (eds), Medical Mishaps. Pieces of the Puzzle (Buckingham, Open University Press, 1999) 8. 66 Report of the Expert Advisory Group; Healthcare Safety Investigation Branch (Department of Health, May 2016) 21. 67 ibid, 25, 26, quoting National Advisory Group on the Safety of Patients in England, A promise to learn – a commitment to act (Department of Health, 2013). 68 It is highly relevant that it is very rare that individuals working in the NHS act criminally to harm others (such as Dr Shipman). 69 Leading texts are I Ayres and J Braithwaite, Responsive Regulation: Transcending the Deregulation Debate (Oxford University Press 1992); K Hawkins, Environment and Enforcement: Regulation and the Social Definition

46 Affecting Behaviour of Better Regulation70 that now includes a risk-based approach towards securing compliance by business using advice and persuasion as the first step,71 associated with Macrory’s specification that the first aim of regulatory enforcement is to change the behaviour of the offender.72 Sophisticated regulators now focus not on compliance but on outcomes.73 In 2017, the UK Cabinet Office identified that the direction of travel of regulation is to recognise that responsibility of risk lies with those who create and can directly control it:74 the primary role of regulators is to not to help run things or mandate how they are run as long as the social and economic outcomes are achieved. Under the Better Regulation approach of achieving better outcomes whilst saving resources for both public and private actors, a duty was imposed on many UK regulatory bodies75 to observe statutory principles of good regulation in that regulatory activities should be carried out in a way which is transparent, accountable, proportionate, c onsistent,

of Pollution (Clarendon Press 1984); K Hawkins, Law as Last Resort (Oxford University Press, 2002); H Genn, ‘Business responses to the regulation of health and safety in England’ (1993) 15 Law and Policy 219; B Hutter, Compliance: Regulation and Environment (Clarendon Press, 1997); B Hutter, Regulation and Risk: Occupational Health and Safety on the Railways (Oxford University Press, 2001); P Grabosky, ‘Beyond the Regulatory State’ (1994) 27(2) Australian and New Zealand J of Criminology 192; N Gunningham and P Grabosky, Smart Regulation. Designing Environmental Policy (Oxford University Press, 1998); F Haines, Corporate Regulation: Beyond ‘Punish or Persuade’ (Clarendon Press, 1997); F Haines, ‘Regulatory Reform in Light of Regulatory Character: Assessing Industrial Safety Change in the Aftermath of the Kader Toy Factory Fire in Bangkok, Thailand’ (2003) 12 Social and Legal Studies 461; B Hutter and C Jones, ‘From government to governance: external influences on business risk management’ (2007) 1 Regulation & Governance 27; J Braithwaite and P Grabosky, Of Manners Gentle: Enforcement Strategies of Australian Business Regulatory Agencies (Oxford University Press, 1987); PJ May and S Winter, ‘Regulatory Enforcement and Compliance: Examining Danish Agro-Environmental Policy’ (1999) 18(4) Journal of Policy Analysis and Management 625; J Black and R Baldwin, ‘Really Responsive Regulation’ (2008) 71(1) Modern Law Review 59. 70 See OECD texts: Risk and Regulatory Policy: Improving the Governance of Risk (OECD, 2010); OECD Guidelines for Multinational Enterprises (OECD, 2011); Peter Lunn, Regulatory Policy and Behavioural Economics (OECD, 2014); OECD Best Practice Principles for Regulatory Policy: Regulatory Enforcement and Inspections (OECD, 2014); Corporate Governance and Business Integrity. A Stocktaking of Corporate Practices (OECD, 2015); G20/OECD Principles of Corporate Governance. OECD Report to G20 Finance Ministers and Central Bank Governors (OECD, 2015); Behavioural Insights and Public Policy. Lessons from Around the World (OECD, 2017); Improving Regulatory Governance. Trends, Practices and The Way Forward (OECD and KDI, 2017). 71 P Hampton, Reducing Administrative Burdens: Effective Inspection and Enforcement (HM Treasury, 2005). The Regulators’ Code 2014. Introduced as the Regulators’ Compliance Code: Statutory Code of Practice for Regulators (Department for Business Enterprise and Regulatory Reform, 2007), made under s 22(1) of the Legislative and Regulatory Reform Act 2006. 72 R Macrory, Regulatory Justice: Making Sanctions Effective (HM Treasury, 2006); reprinted in R Macrory, Regulation, Enforcement and Governance in Environmental Law (Hart Publishing, 2010). Implementation was in the Regulatory Enforcement and Sanctions Act 2008. Subsequent codification occurred in the Consumer Rights Act 2015. 73 The goal of achieving outcomes is specified in Regulatory Futures Review (Cabinet Office, 2017); Sir Michael Butler, Delivering better outcomes for citizens: practical steps for unlocking public value (HM Government, 2017); Primary Authority: Statutory Guidance (Department for Business Energy and Industrial Strategy, 2017) para 1.27. 74 Regulatory Futures Review (Cabinet Office, 2017). 75 See the Legislative and Regulatory Reform (Regulatory Functions) Order 2007, SI 2007 No 3544, which specified various bodies, including 27 national regulatory agencies such as the Civil Aviation Authority, the Environment Agency, the Financial Services Authority, the Food Standards Agency, the Health and Safety Commission, the Health and Safety Executive, the Office of Fair Trading (other than any regulatory function under competition or merger law) and the Pensions Regulator. See various subsequent amendments. Various regulators are specified in the Legislative and Regulatory Reform Act 2006, s 24(5): the Gas and Markets Authority, the Office of Communications, the Office of Rail Regulation, the Postal Services Commission and the Water Services Regulatory Authority.

Understanding How to Affect Behaviour 47 and that regulatory activities should be targeted only at cases in which action is needed.76 Specified bodies are also under a duty not to impose or maintain unnecessary burdens in the exercise of regulatory functions.77 The 2014 UK Regulators’ Code78 stresses the need for regulators to adopt a positive and proactive approach towards ensuring compliance, requiring that: • Regulators should carry out their activities in a way that supports those they regulate to comply and grow;79 and • Regulators should ensure clear information, guidance and advice is available to help those they regulate meet their responsibilities to comply.80 Regulatory authorities have issued enforcement policies in response to the Regulators’ Code.81 A 2018 statement of the approach to selection of appropriate responses to noncompliance was that of the various national and local authorities responsible for market surveillance of the safety and compliance of non-food products:82 [Market Surveillance Authorities (MSAs)] will usually first seek voluntary compliance from an economic operator when a product is found to contravene legislation, often providing support, guidance or advice to businesses to help them become compliant. Where appropriate remedial action is not delivered voluntarily, MSAs will issue formal notices to require economic operators to bring about compliance. Where it is considered proportionate to take punitive action, MSAs have a range of penalties available, as set out in the various legislation. This might involve imposing a monetary penalty determined by the MSA, or potentially prosecution in court. Prosecutions can result in financial penalties being imposed by the Courts or, in the most extreme cases, imprisonment.

The approach essentially differentiates between businesses that behave ethically and those who do not. Sophisticated regulators now focus not on compliance but on outcomes.83 In 2017, the UK Cabinet Office identified that the direction of travel of regulation is to recognise that the centre of gravity for responsibility of risk lies with those who create and can directly control it:84 the primary role of regulators is to help not run things or mandate how they are run as long as the social and economic outcomes are achieved.

76 Legislative and Regulatory Reform Act 2006, s 21. The government later claimed that the principles of good regulation were ‘a widely accepted definition of best practice’: S Vadera, Government Response to the House of Lords Select Committee on Regulators: Report on UK Economic Regulators (Department for Business Enterprise & Regulatory Reform, 2008) para 1.2. 77 Regulatory Enforcement and Sanctions Act 2008, ss 72, 73(3)–(6). 78 The Regulators’ Code 2014. Introduced as the Regulators’ Compliance Code: Statutory Code of Practice for Regulators (Department for Business Enterprise and Regulatory Reform, 2007), made under s 22(1) of the Legislative and Regulatory Reform Act 2006. 79 From 2017, UK regulators must ‘have regard to the desirability of promoting economic growth’: Deregulation Act 2015, s 108. 80 Regulators’ Code, provisions 1 and 5. 81 eg, Enforcement Policy (Office for Product Safety & Standards, 2018). 82 UK National Market Surveillance Programme. January 2018–January 2019 Small Business Commissioner. Framework Document (Department for Business, Innovation & Skills, 2018). 83 The goal of achieving outcomes is specified in Regulatory Futures Review (Cabinet Office, 2017); Sir Michael Butler, Delivering better outcomes for citizens: practical steps for unlocking public value (HM Government, 2017); Primary Authority: Statutory Guidance (Department for Business Energy and Industrial Strategy, 2017) para 1.27. 84 Regulatory Futures Review (Cabinet Office, 2017).

48 Affecting Behaviour Some public authorities make strong efforts to assist businesses in knowing what to do in applying rules to their particular situations. A review of the enforcement policies of UK regulatory authorities85 revealed, first, how few of them adopt deterrence as a headline enforcement policy, and secondly, how many authorities adopt a supportive, responsive approach to improving business compliance and practice. Many statements have been made by government and different regulators that most people want to do the right thing most of the time. We believe that most businesses aim to treat their customers fairly and comply with consumer protection law and that OFT aims to enable and encourage them to do so, and to take enforcement action only where there is no better route to securing compliance.86

A clear example of the helpful approach is the ‘assured advice’ mechanism that exists for those businesses that are members of a Primary Authority partnership. The Primary Authority model is based on a shared approach between Local Authorities and participating businesses, in which responsibilities are defined in agreed protocols.87 A major consequence of the scheme is that the formal structure has created relationships between regulators and businesses, and between authorities themselves. The scheme supports development of consistent good practice. A critical component is the ability of businesses to seek clarification from regulators of what they should do to comply with the rules, in the knowledge that by doing so they are unlikely to attract a punitive response. The resultant ‘assured advice’ brings the consequence that compliance with it would not trigger enforcement action. The system that operates in the Netherlands is notably effective there: every three to five years, the standard terms applied in a trade sector are reviewed and updated in a formal discussion sponsored by the State involving consumer and trade bodies. Any issues that subsequently arise in practice under the terms and conditions are then supported by self-regulatory mechanisms and any disputes are directed to the consumer dispute resolution body (geschillencommissie).88 The system is based on an inclusive partnership of all stakeholders.

F. Revisiting Organisations and Culture How do the findings of behavioural science apply to the behaviour of individuals who operate in groups, such as businesses or the civil service? There is a growing – and urgent – realisation in the corporate and financial worlds that enforcement action by public authorities is markedly ineffective in affecting corporate behaviour, and that the critical mechanism is the internal culture of organisations and whether it is consistently ethical or not. There is clear evidence that both mistakes and decisions that cause harmful consequences can be prevented if organisations have a sound internal culture, namely one that 85 C Hodges, Law and Corporate Behaviour: Integrating Theories of Regulation, Enforcement, Culture and Ethics (Hart Publishing, 2015). 86 Statement of consumer protection enforcement principles (Office of Fair Trading, 2010) OFT1221. 87 See Regulation and growth (BRDO, 2016); Primary Authority Handbook (Regulatory Delivery, 2016); Primary Authority Changes 2017: Unlocking the Potential (Regulatory Delivery, 2017). 88 F Weber and C Hodges, ‘The Netherlands’ in C Hodges, I Benöhr and N Creutzfeldt-Banda, Consumer ADR in Europe (Hart Publishing, 2012).

Understanding How to Affect Behaviour 49 accords with the ethical values of society generally.89 This point was emphasised in 2017 in relation to public-private enterprise partnerships.90 Requirements have recently been set that organisations should have a clear social purpose and that boards should set and monitor the culture that is desired and should exist throughout their organisations. This approach is at the heart of a series of developments in 2018. First, revisions to the Financial Reporting Council’s Corporate Governance Code require Directors to set a company’s (social) purpose and ensure that its culture is aligned with that.91 Secondly, global financial regulators are currently confronting the realisation that since the 2008 financial crisis they have spent 10 years fining and increasing strong regulation on bankers, but it has almost no effect (the FCA said: ‘What have we not learned?’). They are engaging with the idea that the answer is the culture of banks (and of regulators), as can be seen in statements about the supervision regimes of the Financial Conduct Authority92 and the Central Bank of Ireland.93 The water regulator Ofwat has amended the licensing regime for water companies to include a requirement for having an appropriate culture as a licence condition.94 The essential lessons from behavioural psychology and empirical evidence of organisations and regulatory enforcement here are: • An organisation must own its own culture, it cannot be imposed from outside. • Those who try to affect culture and behaviour from outside will fail if they are authoritarian; they need to recognise their limitations and adopt an approach of helping not lecturing or forcing. • A collaborative and supportive approach works where it involves mutual adult-adult engaged relationships of trust. • Trust is based on a body of reliable evidence.

G. Ethical Business Practice and Ethical Business Regulation The findings from scientific research and from empirical research into regulatory practice outlined above have been used to support new understandings in business compliance, 89 C Hodges and R Steinholtz, Ethical Business Practice and Regulation. A Behavioural and Values Based Approach to Compliance and Enforcement (Hart 2017); A Filabi and C Bulgarella, ‘Organizational Culture Drives Ethical Behaviour: Evidence From Pilot Studies’ conference paper 2018, at https://www.oecd.org/corruption/integrityforum/academic-papers/Filabi.pdf. 90 Review of Local Enterprise Partnership. Governance and Transparency. Led by Mary Ney (Department for Communities and Local Government, 2017) (‘As with any organisation, the establishment of an embedded culture across the [Local Enterprise Partnership] is a prerequisite to assurance that governance arrangements are fit for purpose and are being adhered to.’), para 4.1. 91 The UK Corporate Governance Code (Financial Reporting Council, 2018). See commentary in Guidance on Board Effectiveness (Financial Reporting Council, 2018). 92 FCA Mission: Our Approach to Supervision (Financial Conduct Authority, 2018) (‘We also know that firms’ culture shapes the conduct outcomes for consumers and market. So we aim to assess and address the drivers of culture including firms’ leadership, purpose, governance and approach to managing and rewarding its employees’). See also Transforming culture in financial services. Discussion paper (Financial Conduct Authority, 2018) DP18/2. 93 Behaviour and Culture of the Irish Retail Banks (Central Bank of Ireland, 2018). 94 Board leadership, transparency and governance – principles (Ofwat, 2019). See earlier Consultation on revised Board Leadership, Transparency and Governance principles (Ofwat, 2018).

50 Affecting Behaviour regulation and ‘enforcement’. The concepts of Ethical Business Practice (EBP) and Ethical Business Regulation (EBR)95 have recently been applied in supporting the new approaches. They require organisations to ensure that they have an ethical culture, consistently aiming to do the right thing and providing transparent evidence of this, thereby deserving trust and lower regulatory intervention since they are effectively self-regulating. Organisational culture should be based on a single, simple social purpose and on adoption of ethical values in all behaviour by all staff. This approach principally acts ex ante, and constantly, so is preventative of breaches, but then aims to identify problems swiftly and rectify them, including making amends and rectification. These approaches are spreading in other regulatory situations, such as food safety, construction safety and water pricing.96 The model is for operators to assume full responsibility for their activities, and to prove that they are consistently striving to ‘do the right thing’ throughout their daily work, including in controlling risk. This is contrasted with a model in which operators are treated like naughty children who cannot be trusted, or like criminals, and inspected, graded, told off, told to improve and sanctioned.

H. Public Sector Organisations The discussion above has been largely focused on learning relating to private commercial organisations. Do different considerations apply to public organisations? How is the behaviour of people working in them to be affected? The first point is that the purpose of a public organisation ought to be closely aligned with achieving the public good and with ethical social goals, at least in a Western democracy. However, if that is so (and it may be difficult to detect in the operation and culture of some public organisations) their internal cultures may still be significantly affected by adverse influences such as the imposition of conflicting political objectives, outcome targets, multiple sources of stress, and poor people-management. All of these factors will reduce the ability of people to produce good outcomes, or to learn from evidence on performance and culture so as to improve. We have noted above, for example, the desire of the NHS to achieve an open culture, and its equivalence to EBP, but the apparent inability to achieve that goal. We will note in chapters below numerous frustrations by public Ombudsmen and by tribunal judges over the inability of certain public bodies to learn from cases where things have gone wrong, decisions are overturned on a systemic basis, cultures are criticised, or that desirable changes are not implemented or achieved. A recent academic analysis suggested that both the theoretical97 and empirical literature indicated a great deal of scepticism that external redress mechanisms were effective in 95 C Hodges and R Steinholtz, Ethical Business Practice and Regulation. A Behavioural and Values Based Approach to Compliance and Enforcement (Hart Publishing, 2017). 96 See C Hodges and R Steinholtz, Ethical Business Practice and Regulation. A Behavioural and Values Based Approach to Compliance and Enforcement (Hart Publishing, 2017). 97 Leading texts include J Mashaw, ‘Conflict and Compromise Among Ideals of Administrative Justice’ (1981) 2 Duke Law Journal 181; J Mashaw Bureaucratic Justice (Yale University Press, 1983); D Galligan, Due Process and Fair Procedures: A Study of Administrative Procedures (Oxford, Clarendon Press, 1996); M Adler, ‘A Socio-Legal Approach to Administrative Justice’ (2003) 25(4) Law and Policy 323; S Halliday, Judicial Review and Compliance with Administrative Law (Hart Publishing, 2004); M Adler, ‘Tribunal Reform: Proportionate Dispute Resolution

Understanding How to Affect Behaviour 51 controlling bureaucratic decision-making.98 That conclusion might not be surprising given the wide range of social and organisational contexts and street-level bureaucratic discretion given99 to large administrative organisations. The limited empirical literature indicated a slightly more positive view of the potential for the Ombudsman mechanism100 to affect public organisations than judicial review101 or tribunals.102 There has been little development of ideas or practice in relation to public sector organisations on the application of behavioural psychology and organisational learning akin to the developments noted in the regulation of commercial organisations. But such learning could be applied. One conundrum is whether a body akin to an external regulatory authority is needed so as to scrutinise and achieve desired change and culture, or whether a combination of internal work and external intervention by a body such as an Ombudsman would be effective.

I. Building an Open and Ethical Culture Recent research into compliance in business organisations, and into regulation and enforcement, both in a wide range of business sectors, has identified the fundamental design and the Pursuit of Administrative Justice’ (2006) 69(6) The Modern Law Review 958; M Adler, ‘From Tribunal Reform to Administrative Justice in Tribunals’ in R Creyke (ed), The Common Law World (The Federation Press, 2008); M Adler, ‘Understanding and Analysing Administrative Justice’ in M Adler (ed), Administrative Justice in Context (Hart Publishing, 2010); S Halliday and C Scott, ‘A Cultural Analysis of Administrative Justice’ in M Adler (ed), Administrative Justice in Context (Hart Publishing, 2010); M Adler, ‘The Rise and Fall of Administrative Justice – A Cautionary Tale’ (2012) 8(2) SocioLegal Review 28. 98 C Gill, Administrative Justice and the Control of Bureaucratic Decision-Making. A study investigating how decision-makers in local authority education departments respond to the work of redress mechanisms PhD thesis (University of Glasgow, 2016). 99 M Lipsky, Street Level Bureaucracy: Dilemmas of the Individual in Public Services (New York, Russel Sage Foundation, 1980). 100 L Hill, ‘Affect and Interaction in an Ambiguous Authority Relationship: New Zealand’s Bureaucrats and the Ombudsman’ (1972) 4(1) Administration and Society 35; R Gregory and P Hutchinson, The Parliamentary Ombudsman: A Study in the Control of Administrative Action (Allen and Unwin, 1975); L Hill, Ombudsmen, Bureaucracy, and Democracy (Oxford University Press, 1976); R Gregory and P Hutchinson, The Parliamentary Ombudsman: A Study in the Control of Administrative Action (Allen and Unwin, 1975); K Friedmann, ‘Controlling Bureaucracy: Attitudes in the Alberta Public Service Towards the Ombudsman’ (1976) 19(1) Canadian Public Administration 5; J Pajuoja, ‘The Impact of the Parliamentary Ombudsman Institution in Finland’ in R Passemiers, H Reynaert and K Steyvers (eds), The Impact of Ombudsmen (Vanden Broele Publishers, 2009); W van Acker, G Bouckaert, W Frees, J Nemec, C Lawson, A Matei, C Savulescu, E Monthubert, J Nederhand and S Fleming, Mapping and Analysing the Recommendations of Ombudsmen, Audit Offices and Emerging Accountability Mechanisms (online, 2015). 101 S Halliday, Judicial Review and Compliance with Administrative Law (Hart Publishing, 2004); J King, Judging Social Rights (Cambridge University Press, 2012); M Kerry, ‘Administrative Law and Judicial Review – The Practical Effects of Developments Over the Last 25 Years on Administration in Central Government’ (1986) 64(2) Public Administration 163; I Loveland, Administrative Law and the Administrative Process (Clarendon Press, 1995); T Mullen, ‘Access to Justice in Administrative Law and Administrative Justice’ in E Palmer, T Cornford, A Guinchard and Y Marique (eds), Access to Justice: Beyond the Politics of Austerity (Hart Publishing, 1996); D Obadina, ‘The Impact of Judicial Review on Homelessness Decisions’ (1998) Judicial Review 244; G Richardson and D Machin, ‘Clash of Values – Mental Health Review Tribunals and Judicial Review’ (1999) 1(1) Journal of Mental Health Law 3; G Richardson and D Machin, ‘Judicial Review and Tribunal Decision-making: A Study of the Mental Health Review Tribunal’ (2000) Public Law Autumn, 494; S Halliday, ‘The Influence of Judicial Review on Bureaucratic Decision-Making’ (2000) Public Law, Spring 110; S Halliday, Judicial Review and Compliance with Administrative Law (Hart Publishing, 2004). 102 R Young and N Wikeley, ‘The Administration of Benefits in Britain: Adjudication Officers and the Influence of Social Security Appeal Tribunals’ (1992) Public Law 238; J Evans, ‘The Impact of the SEN Tribunal on Local Authorities’ Policy and Planning for SEN’ (1999) 14(2) Support for Learning 74.

52 Affecting Behaviour parameters and criteria for the development of an ethical, open culture.103 An organisation should have both a Cultural and Leadership Framework supporting ethical practice, and a Vales-based Ethics and Compliance Framework. Some of the requirements of the latter are in Figure 2.4. The latter recognises that focusing mainly on compliance (or enforcement or blame) is not the answer, and that the entire staff of an organisation need to adopt and be seen to act in accordance with a principle of ‘doing the right thing’. A useful tool for diagnosing an organisation’s ethical health or extent of culture risk is to undertake a periodic Cultural Values Assessment.104 In this way leaders can measure progress in embedding ethical values as well as determine where potentially limiting behaviours may be creating the risk of disengagement and misconduct. Imposing duties that people should do the right thing, such as a duty of candour, sends a message to all staff that they are not trusted: it will undermine rather than support the right culture. Proclaiming ethical codes without involving the workforce in their development and in agreeing what they mean in relation to their daily practice and dilemmas will also not achieve much. It is the demonstration through an organisation of what consideration of ‘doing the right thing’ means that will build trust and enthusiastic compliance and improvement. Figure 2.4 A Values-based Ethics and Compliance Framework105 The Foundation, People and Ethos, Systems and Processes The Foundation ––

A belief that ethics is everyone’s responsibility.

––

An articulated and inspirational social purpose.

––

Thoughtfully identified core ethical values, whose meanings are clear to all employees, and continuous communication and training for all (including the board) to reinforce the values.

––

A public commitment by leaders and managers to EBP, including some form of a public statement.

––

Conscious commitment to continuous improvement, curiosity about the organisational culture and demonstration of the basis for placing trust in the organisation, involving listening and feedback from a wide range of internal and external stakeholders.

––

Dedication to fairness in all aspects of the business and relationships.

People and Ethos ––

Leaders who are fully committed to ethical values and understand their role in creating an ethical culture, and who set a strong, positive example.

––

Employee involvement and engagement in fostering ethical business practice, such as using ethics ambassadors.

––

Management with the personalities and skills required to promote open communication, ethical decision-making, deep listening and to hold others to account.

––

Tolerance and encouragement of constructive conflict with no fear of reprisals for raising difficult issues.

––

A collaborative atmosphere – work across functions, business units and cultures with curiosity and respect, and the ability to learn lessons and continuously improve.

103 C Hodges and R Steinholtz, Ethical Business Practice and Regulation. A Behavioural and Values Based Approach to Compliance and Enforcement (Hart Publishing, 2017). 104 Such as the Barrett Cultural Values Assessment tool, www.valuescentre.com/. 105 C Hodges and R Steinholtz, Ethical Business Practice and Regulation. A Behavioural and Values Based Approach to Compliance and Enforcement (Hart Publishing, 2017) ch 14.

Understanding How to Affect Behaviour 53 Aligned Systems and Processes ––

Processes and systems in alignment with ethical values and supporting ethical business practice, embedded in the business, not separate from it.

––

Performance management systems and incentive schemes that reward good leadership and ethical behaviours, not just results, and that do not foster unethical behaviour.

––

Provision of clear and adequate information and professional assistance to support all aspects of EBP.

––

Honest auditing, measurement and monitoring to enable the organisation to demonstrate the existence of a strong ethical culture and the basis for trust.

J. Redefining Accountability Accountability is the giving of an account by someone of what they have done and usually why.106 It usually arises in the context of reviewing performance against objectives or outcomes, and the context can vary enormously, such as involving operational performance against targets, compliance with legal, professional or regulatory requirements, or political and governance issues.107 However, use of the word ‘accountability’ often arises after something has gone seriously wrong, and it brings connotations going beyond fact-finding that stretch into desires to blame or punish someone, including finding a scapegoat. It is important to bear in mind the example of aviation safety noted above. The concept of ‘open and just culture’ draws a line between acceptable and unacceptable behaviour based on motivation. ‘A wilful violation is not acceptable. An honest mistake is.’108 The concept of individual responsibility has been retained but redefined in personal and social terms. Standards of behaviour require professional competence, openness, sharing, and taking responsibility for one’s mistakes by identifying them, correcting them and improving.109 In other words, the motivation of individuals is important. Equally important is to be able to investigate whether the root cause of a problem lies with systemic or behavioural factors, as a result of which particular individuals should not be blamed. In aviation safety, the question is not ‘Which individual was to blame for doing this?’ but ‘Why would any human in that situation act in that way?’ so that the conditions that produced the action can be avoided in future. The critical issue is that it will probably not be possible to answer that second question accurately unless the context has no connotation of blame, otherwise people will just not share vital or complete information openly. However, in the absence of a blame culture, that is, in an open culture, every individual provides an account of what they did and why. They will not be trusted if they fail to do that.

106 M Bovens, ‘Public Accountability’ in E Ferlie, L Lynne and C Pollitt (eds), The Oxford Handbook of Public Management (Oxford University Press, 2007). 107 B Romzek and M Dubnick, ‘Accountability in the Public Sector: Lessons from the Challenger Tragedy’ (1987) 47 Public Administration Review 227. 108 S Dekker, Just Culture (Ashgate Publishing, 2007) 15. 109 D McCune, C Lewis and D Arendt, ‘Safety Culture in Your Safety Management System’ in AJ Stolzer, CD Halford and JJ Goglia (eds), Implementing Safety Management Systems in Aviation (Ashgate, 2011) 195.

54 Affecting Behaviour

K. Switching Paradigms of Affecting Behaviour In summary, there has been an evolution in thinking about how to affect the behaviour of individuals, whether alone or in groups. The traditional approach in legal thinking is reactive. It requires a determination of breach of rights or of infringement of rules, followed by imposition of a remedy or sanction. Thus, it is only at that ex post facto stage that the legal system comes into play and its remedies and responses to wrongdoing are triggered. In real life, however, it makes more sense to maximise compliance with rules ex ante, on the basis that maximal compliance achieves maximal desired outcomes from the underlying activity, and that prevention of non-compliance is better than cure. Hence, many regulatory systems specify that actors should operate systems that promote standard desired outcomes and identification of risks. For example, many manufacturing sectors must operate quality systems that cover the design, production, marketing, distribution and post-marketing feedback of the products produced by the system so that quality and safety are consistently achieved and risks are identified and reduced. Accurate and consistent operation of the system and of outputs can be monitored by auditing and inspection, sometimes internal and sometimes by official or third parties. But the system is essentially designed to support constant spontaneous action by operators in preventing and reducing risk and supporting compliance. Further, we noted above that the traditional enforcement/deterrence paradigm has been shown to be not particularly effective in achieving compliance. It is always ex post and it can adversely affect the willingness to comply of many people on whom sanctions are imposed when they believe they are trying to do the right thing. Hence, using the wrong enforcement approach on many people may in fact simply be counter-productive. For this reason, both managers and compliance and risk officers in commercial organisations, and public regulatory officials in external authorities have increasingly adopted policies of supporting compliance for most businesses which might not be in full compliance rather than adopting traditional ‘enforcement’ sanctions. The objective is to achieve not just optimal compliance with society’s rules but also to support the outputs and growth of the private sector organisation. Accordingly, ‘smart responsive regulation’ policy holds that responses to those who break the law should be different, based on their motivations. Effective enforcement policy therefore segments people into those who think they are trying to do the right thing (most) and some who act out of criminal intent (only a few). In the context of this book, we are basically not concerned with those who are criminals, and can focus especially on civil servants, normal citizens and business organisations whom, it can be generally assumed, are trying to do the right thing. The basic objective is to affect how people behave. The key issue is to find the right balance between people and situations where correcting behaviour is done spontaneously and where some external intervention is needed. Some people and organisations will react automatically to receipt of information on where things are not right, such as from feedback from auditing or complaints, and others may benefit from intervention by a third party, such as consultancy advice or regulatory intervention backed by a toolbox of State powers. One then needs to identify exactly what sort of intervention may be necessary. That last question is outside the scope of this book. We are concerned here with what role the various dispute resolution systems might play in contributing to other systems that affect behaviour to a greater extent than the dispute resolution system ever could. We can than try to design an integrated unified system in which we identify problems and solve them.

Understanding How to Affect Behaviour 55 Before continuing, we should note that the latest thinking on how to affect behaviour goes further than just responding to errors or individual actions that cause them, and instead focuses at the higher level of affecting organisational culture. The idea is that it is the culture of how people behave in groups that is fundamental in affecting whether they seek to do the right thing, or don’t pay attention to risk, breaches of rules, listening to feedback, or making improvements. Applying the science of behavioural psychology has shown that supporting ethical engaged relationships (within teams, amongst the members of different groups in an organisation, in external relations with suppliers, customers, regulators, shareholders and all other stakeholders) is highly effective in most situations. The concept of Ethical Business Practice (EBP) can be drawn on, which engages everyone in a common enterprise of ‘doing the right thing’ all the time and demonstrating that this is happening. This needs constant awareness by all involved of what they are doing, openly questioning it, discussing what the right thing is in particular circumstances, and then acting. Many UK regulatory authorities have switched, or are in a process of switching, from the deterrence paradigm to the engaged supportive paradigm, and are now moving into the Ethical Business Regulation (EBR) model. These findings have important consequences for considering what impact may be achieved by the outputs of dispute resolution systems. Those who are familiar with dispute resolution systems or enforcement systems may believe (and wish to believe) that what they do affects behaviour. But the empirical evidence is that the outcome of individual disputes, whether settlement agreements or judgments stating the law, has little effect on general behaviour. Accordingly, we need to look elsewhere to see how law is applied and how behaviour is actually affected and changed.

L. Implications for Dispute Resolution Systems The conclusion of this analysis is that dispute resolution processes and decisions (whether by courts, tribunals, arbitrators, Ombudsmen, mediators or parties) can only have a limited if any effect on the ongoing or future behaviour of the people and organisations that they involve as defendants, and that other mechanisms are needed to produce more systemic effects. This is why not just regulatory authorities but also the Public Ombudsmen and private sector Ombudsmen have been focusing on affecting the culture of the organisations against whom they receive complaints (see chapters thirteen and nine respectively). Similarly, consumer Ombudsmen and Resolver have been focusing on providing new services for businesses to assist the businesses to make changes, especially changes in culture, so as to reduce the risk and incidence of complaints and lack of compliance with rules. Hence, this approach of direct focused engagement in changing organisational culture is an issue that needs to be adopted in all fields. It is an issue that is central in the context of the consequences of resolving disputes in employment, public bodies, the NHS and families. Those lawyers who argue that the effect of the passing of a law or of giving a judgment in an individual case will directly lead to widespread compliance may be demonstrating the WYSIATI (what you see is all there is) phenomenon.110 110 What you see is all there is: A Tverksy and D Kahneman, ‘Judgment Under Uncertainty: Heuristics and Biases’ (1974) 185 Science 1124–31.

56 Affecting Behaviour In 2015 Hodges concluded an extensive review of the empirical evidence on regulation, enforcement and behaviour with the comment:111 The law focuses to a considerable extent not on creating a positive code but on things one should not do, and on the problems that arise when things go wrong. So it limits its ability to have a positive influence on behaviour, and can lose sight even of the existence of positive behaviour, and the means of promoting the normal position that the considerable silent majority of people in an ethical democracy observe most of the rules most of the time on a daily basis. Law is always trying to catch up. By focusing on problems – criminal behaviour or regulatory non-compliance – legal and economic thought have gone down blind alleys. … Compliance with the norms of a social system is produced by ethical values and systems. It is not produced directly by rules (laws) and their enforcement. Systems can be risk-based, but behaviour is value-based.

If deterrence does not work with most people, it should logically be neither an objective nor a justification of liability law. The social goal that remains valid is to provide compensatory or corrective justice – a responsibility to make good harm caused – which has been asserted throughout modern history,112 recently by contrasting theorists of private law113 and rightsbased analysis, based on basic values of inter-personal morality, fairness and justice.114 If providing compensation remains a valid objective and justification for those harmed, the issue that remains is how it is best achieved.

II. A Systemic Approach A. The Problem-Solving Paradigm One way of looking at contemporary legal systems as a whole is to regard them as mechanisms for contributing to the solving of the problems of society, that is problems that arise when humans and their organisations interact. From this perspective, two basic objectives can be stated: 1. To identify problems and resolve them. 2. To learn from the problems we encounter and hence reduce risk by changing future behaviour or systems. 111 C Hodges, Law and Corporate Behaviour: Integrating Theories of Regulation, Enforcement, Culture and Ethics (Hart Publishing, 2015). 112 Aristotle, Nichomachean Ethics, Book V (T Irwin tr, Indianapolis, Hackett Publishing, 1999) paras 1131b–1134a; T Aquinas, Summa Theologica (Fathers of English Dominican Province trs, Benziger Bros, 1947) part 2(2) question 62 arts 1–3; H Grotius, De Jure Belli ac Pacis Libri tres (FW Kelsey tr, Clarendon Press, 1925) book 2 ch 17 para I; S Pufendorf, Of the Law of Nature and Nations (HC Oldfather and WA Oldfather trs, Clarendon Press, 1934) book 3 ch 1 § 2; EJ Weinrib (ed), Tort Law (1991); EJ Weinrib, The Idea of Private Law (1995); EJ Weinrib, Corrective Justice (Oxford University Press, 2012); A Beever, Rediscovering the Law of Negligence (Hart Publishing, 2007); A Beever, Rediscovering the Law of Negligence (Hart Publishing, 2007); A Beever, ‘Our Most Fundamental Rights’ in D Nolan and A Robertson (eds), Rights and Private Law (Hart Publishing, 2012) ch 3. 113 EJ Weinrib (ed), Tort Law (1991); EJ Weinrib, The Idea of Private Law (1995); EJ Weinrib, Corrective Justice (Oxford University Press, 2012). 114 R Stevens, Torts and Rights (Oxford University Press, 2007); R Stevens, ‘Rights and Other Things’ Law’ in D Nolan and A Robertson (eds), Rights and Private Law (Hart Publishing, 2012).

A Systemic Approach 57 The language of ‘problems’ is deliberate. It is wider than concepts like breaches of rights or law, and encompasses deeper and root causes of what may manifest as symptoms. Citizens Advice calls for ‘solving the underlying causes’.115 It similarly defines ‘redress’ as ‘If things go wrong, they’re put right quickly, with compensation if appropriate.’116 From the problem-solving paradigm, the legal system should have the following functions, illustrated in Figure 2.5: 1. 2. 3. 4. 5. 6.

To establish clear rules. To support the achievement of compliance and ethical behaviour and culture. To identify problems. To identify the root cause of problems, recognising that what we see may only be a symptom and not the cause that needs to be addressed to prevent recurrence. To support action to prevent recurrence and reduce future risk. Monitoring to see if the action has succeeded and if further action is necessary.

An important consideration is to take into account the point made above about how blaming inhibits the sharing of information and cooperation between people, and hence learning, performance and innovation are all chilled. Figure 2.5 The Problem-Solving Paradigm

Establish clear rules

Monitor to decide if further change is needed

Support systems & culture

Take action to prevent recurrence

Identify problems

Identify the root cause of each problem

115 The difference we make. Our impact in 2016/17 (Citizens Advice, 2017) 6. 116 Citizens Advice: Protecting consumers in a changing world. The Citizens Advice consumer work plan 2018/19 (Citizens Advice, 2017) 6.

58 Affecting Behaviour

B. The Core Functions If we integrate the paradigms for clarification of the rules, achieving desired behaviour, and resolving disputes, we can see that the functions that are needed across a legal system (‘the core functions’), are:117 1. Establishing clear rules and their interpretation. 2. Supporting compliance. 3. Identification of individual and systemic problems, such as non-compliance or new problems that have not been catered for in the rules. 4. Decision on whether behaviour is illegal, unfair, or acceptable. 5. Cessation of illegality. 6. Resolving disputes. 7. Identification of the root cause of the problem and why it occurs. 8. Identification of what actions are needed to prevent the reoccurrence of the problematic behaviour, or reduction of the risk. 9. Dissemination of information to all who might benefit. 10. Application of the actions: (a) by identified actors, or (b) by other actors, either voluntarily or with assistance in changing behaviour, systems or culture so as to reduce risk of reoccurrence. 11. Putting things right where harm has been caused, for example by making redress. 12. Imposition of sanctions. 13. Ongoing oversight to verify that the intended actions have been taken, and any consequential action to ensure this or sanction non-compliance. 14. Ongoing monitoring of actions taken and any necessary corrective amendment of the strategy. These core functions can be illustrated (Figure 2.6) as a continuous cycle of activities, akin to a quality system. It will be seen that this list of functions is more specific and practical than simply declaring or enforcing the application of law and hoping that things change. It seeks to engage mechanisms that are effective in achieving change. The principal purpose of the system is to prevent future problems (or infringements or harm) by using information from constant monitoring of activities so as to reduce future risk of the occurrence of the same or similar damage. Earlier versions of the list have been quoted with approval by the Irish Law Reform Commission118 and the Australian Law Reform Commission.119

117 C Hodges, ‘Mass Collective Redress: Consumer ADR and Regulatory Techniques’ (2015) 23 European Review of Private Law 829–74; C Hodges, ‘Consumer ombudsmen: better regulation and dispute resolution’ (2015) 15(4) ERA Forum 593. 118 Report on Regulatory Powers and Corporate Offences. Volume 1: Regulatory Powers (Law Reform Commission, 2018) 51. 119 Integrity, Fairness and Efficiency – An Inquiry into Class Action Proceedings and Third-Party Litigation Funders. Final Report (Australian Law Reform Commission, 2018) para 8.30.

A Systemic Approach 59 Figure 2.6 The Core Functions

Monitoring

Establish clear rules Support compliance

Oversight

Identify problems

Consider sanctions

Decision on legality/ fairness

Rectification/ redress

Cease illegality

Apply actions

Communicate Identify actions

Identify root causes

Resolve disputes

C. Delivery of the Core Functions The individual chapters below will examine how and to what extent the core functions are delivered for different types of problems or disputes. But it may be helpful at this stage to give some general explanation, so that we can be alert to identifying the issues as they arise amidst the complexity of what can be detailed discussion. The general default position is as follows: Function 1: Establishing the rules. Establishing rules is done initially by Parliament and in regulated areas by public authorities. Revised rules can also be done by either of those actors. Interpreting the application of rules is done by courts, and sometimes by regulatory authorities, for example through guidance documents. Interpretation of rules can be done by arbitrators or Ombudsmen, but the outcome may be less publicly available in some systems. Function 2: Supporting compliance. This may be a strange objective or function for a legal system, but the behavioural evidence cited above indicates that it is an essential one. First,

60 Affecting Behaviour if people are unable to comply with rules because the rule is complex, unclear, or requires excessive actions to comply, then it is not a sensible rule. The concept of r egulatory delivery arises here: the analysis of whether a system of rules is likely to have high c ompliance.120 Secondly, the system needs to support most people to observe the rule, such as by information, explanation, assistance and support. An approach based on maximising compliance through punitive or deterrent actions will, as discussed above, not be successful in affecting the behaviour of most people. Function 3: Identifying problems. In order to be able to address problems, we need to be able to identify them. We then need to be able to undertake root cause analysis on the problem, rather than just addressing symptoms. It may be that some rules are being broken. It may be that the rule is unclear and needs to be clarified, perhaps by a court or a regulator or an amendment to a code of conduct. How do we identify problems? Historically, the data that triggers the cycle of response has been the identification of an individual breach of a rule of law. In the digital age, we now have a very effective tool in the monitoring of mass data on diverse facts and systemic behaviours. Artificial intelligent analysis of large data sets can not only identify legal infringements that might not otherwise be identified but also identify areas and cultures that give rise to risk. It may also involve giving people information and assistance in identifying where rules have been broken, what their rights are, and how to raise a complaint. These are areas that have attracted extensive attention under slogans like providing ‘access to justice’. But in the overall scheme of the system, it may nowadays be important to devote effort elsewhere on some of the other stages listed here. Function 4: Decisions need to be made on what is fair and legal. Decisions by courts, tribunals and arbitrators are inherently based on whether or not there has been a breach of law, such as the claimant’s legal rights. Decisions by Ombudsmen typically do not decide formally whether there has been a breach of law; but this may well be implied in their decisions. Settlements agreed between parties (mediated or otherwise) similarly do not usually formally decide whether there has been a breach of law, they agree certain consequences between the parties (such as payment of money), but are made ‘in the shadow of the law’.121 Decisions by some Ombudsmen can be made on the basis of what seems ‘fair and reasonable’ to the Ombudsman, and so be on a wider basis than might be reached by strict application of the law, and lead to more amplified remedies and consequences. Similarly, there is no restriction on the consequences that can be agreed in settlements. Function 5: Cessation. Powers requiring cessation of wrongdoing can be exercised by courts (an injunction order) and often by regulatory authorities themselves. In the case of courts, a person who has been harmed by an action has to initiate an application to a court for an injunction, which involves incurring personal cost and carries the risk of having to pay opponents’ costs if unsuccessful. In some cases, an injunction application can be made instead by a State official or regulatory authority. That mechanism is particularly useful in responding

120 G Russell and C Hodges (eds), Regulatory Delivery (Hart Publishing, 2019). 121 RH Mnookin and L Kornhauser, ‘Bargaining in the Shadow of the Law: The Case of Divorce’ (1978) 88 Yale Law Journal 950; R Cooter, S Marks, and R Mnookin, ‘Bargaining in the Shadow of the Law: A Testable Model of Strategic Behavior’ (1982) 11 Journal of Legal Studies 225.

A Systemic Approach 61 to systemic or widespread issues. Individuals or entities can bring ongoing infringements of law to the attention of a public authority at no cost, and the authority will then bear the cost of investigation and the process of application for an injunction and its enforcement. Some regulators, namely those where the regulatory system involves the award of a licence to operate, can achieve cessation (and some of the other functions, such as agreements to make redress) by means of activating or threatening to activate a power to withdraw a licence or amend licence conditions.122 Intervention by an authority (backed by availability of an injunction power) or trusted external party, or even simply being confronted with data on performance, can result in spontaneous action by an actor or infringer. Function 6: Resolving disputes. Disputes need to be resolved. What are the most effective and appropriate techniques and structures for achieving this? That is the central question raised in this book. The answer depends to some extent on the context in which the problem arises. We will see a wide range of different approaches in this book. Sometimes, people also seek particular outcomes. One outcome will be accurate application of law to the objective and complete facts of a case. But some people may seek an apology, or a swift resolution of an underlying problem which may be a different problem than that raised in a legal claim, or want to know that changes will occur so that other people do not suffer the same problem in the future. Different techniques are better at delivering different outcomes here. For example, claimed benefits of mediation are to bring people together, to enable an apology to be given, to provide a trustworthy explanation of what happened, to provide assurance that events will not occur again (see chapter six). Achieving changes to reduce the risk of future occurrence of a problem usually involves more of a regulatory-style intervention than simply resolving a historical dispute. Function 7: Root cause analysis. As noted above, it is often important to ask why behaviour occurs, and what factors make it likely to recur, rather than to address a person who has broken a rule. It is necessary to address the disease not its symptoms. In order to be able to achieve accurate root cause analysis, it is necessary to have a system that identifies all relevant facts and factors. Function 8: Identifying actions. This activity is closely linked to its immediate predecessor, root cause analysis, but it is functionally separate and may require different skills: the first is investigation and analysis and the second is a different analysis of what actually needs to be done to avoid or reduce future risk. What needs to change and be done differently? Answering these questions may need considerable expertise and knowledge, including an understanding of human factors on why some people behave in certain ways. It may also involve addressing organisational culture. Function 9: Communication. Having decided what the problem is and what should be done to reduce the incidence and risk of recurrence of the problem or similar problems, and what action needs to be taken or avoided, people then need to be told this information if they are to act appropriately. Legal systems are not good at this. Details of legal decisions may only be communicated to those parties who are directly involved, and maybe amongst the legal community. But the determination is about the law, such as that acting in such a way

122 eg,

in energy, water and railways regimes.

62 Affecting Behaviour will constitute a breach of law, and does not address how to avoid committing all but simple breaches in future and what action to take in practical circumstances. This may arise even in a simple example, such as a rule like ‘Do not kill’. People responsible for operating a complex system may need to apply very specific and detailed changes to the way the system works in order to reduce future risk. It may be important to disseminate information to the people and organisations involved in the historical event, but also to publicise the information to many others who may be at risk of behaving in such a way that the same hazard occurs for them. Function 10: Taking action: intervention. This step involves applying the actions identified as necessary to improve performance and reduce the risk of future reoccurrence of the original problem. The action may need to be taken internally by front-line actors or organisations, but it may need to be prompted and overseen by external public or other intervenors. It may be necessary for State bodies to issue orders, or to agree undertakings, that specified actions will be taken by specified people or bodies. Function 11: Putting things right and making redress. All of the dispute resolution mechanisms should be able to provide (an order or agreement for) redress for the harmed claimant(s) or others, such as payment of money, repair of damage to property or to the environment. The traditional mechanisms are formal systems such as courts, arbitration and certain tribunals. But the mechanisms are changing and diversifying. Criminal courts must now consider making a Compensation Order in every case where a conviction is entered.123 Many regulatory authorities now possess powers to order, or seek a court order for, a defendant to make redress.124 In situations involving mass harm, mechanisms exist for ordering or agreeing collective redress:125 such as the court Group Litigation Order,126 regulators’ redress powers, and aggregation mechanisms for some Ombudsmen.127 However, increasing regulatory practice is that businesses will apply corrective action spontaneously, or as agreed in discussion with a regulatory authority, rather than some time later after a formal enforcement action has concluded in an order that certain activity is unlawful and certain actions should be taken.128 We therefore see increasing flexibility in the means of agreeing and delivering redress and rectification. This is evidenced by the spread of ADR and Ombudsmen in the areas of consumer, property and SMEs disputes. Function 12: Sanctions. Civil courts issue injunctions or award damages, but the power to issue penalties is generally a matter for criminal courts, save that civil courts can impose penalties for breach of injunctions or contempt of court. However, many regulatory authorities are able to achieve both redress and sanctions, either under a power to order 123 The Legal Aid, Sentencing and Punishment of Offenders Act 2012, s 63; Crime and Courts Act 2013, s 45 and Sch 17. 124 See C Hodges and S Voet, Delivering Collective Redress: New Technologies (Hart Publishing, 2018). 125 Any consumer enforcer has powers under the Consumer Rights Act 2015, Sch 5, art 14. Several sectoral regulators have specific powers, such as Financial Services and Markets Act 2000, ss 382–383 (restitution order), s 404 (consumer redress scheme and single firm scheme), Electricity Act 1989, s 27G, and the Gas Act 1986, s 30G. 126 Civil Procedure Rules, 19.III. 127 C Hodges and S Voet, Delivering Collective Redress: New Technologies (Hart Publishing, 2018) ch 6. 128 C Hodges, Law and Corporate Behaviour: Integrating Theories of Regulation, Enforcement, Culture and Ethics (Hart Publishing, 2015).

A Systemic Approach 63 this themselves or to apply to a court, or under an agreement reached in the shadow of such a power. The principal point of including imposition of sanctions at this stage in the list – rather than keeping sanctioning as a separate activity that is unrelated to the other stages – is so that a clear incentive can be seen for ethical organisations to ‘do the right thing’ in responding at the earlier stages, by spontaneously identifying problems, discussing them with officials and others, implementing necessary changes and making redress. All those actions can be taken into account in setting the level of a sanction, if any is required. Such actions should be mitigating factors that are included in a regulatory authority’s published enforcement policy. Equally, failure to act in those ethical ways would be aggravating factors. In sophisticated regulatory enforcement, the critical question these days is to identify the motivation of the infringer so as to select the right enforcement tool, from a toolbox that can encompass a range of possible responses soft supportive intervention and/or hard sanctions and protection of society. Function 13: Oversight. This stage provides verification that agreed actions at stages 8, 9 and 11 have been taken, and taken correctly. There should be a means of ensuring, for example, that technically non-binding awards by an Ombudsman have been implemented by a business so that a claimant is paid what they are owed. It may involve a simple confirmation mechanism by a business. Equally, a public authority will want to be assured that a business that has undertaken to implement actions has in fact done this. Function 14: Monitoring. This stage involves active monitoring of a situation where action has been taken (or not) to ensure that the outcome is as intended (a reduction in future risk) and the unintended consequences are acceptable or can be avoided. It may be concluded that the action taken was ineffective and different action needs to be taken or adjustments made. This function takes us back to stage 1 as part of the continuous cycle. It may be that it will be necessary to clarify the rules or change them because they are too complex or not capable of widespread compliance. It may be that changes or fresh action may be necessary in the responses that have earlier been implemented to respond to the underlying problem.

D. Delivering the Functions Surely we want a system that delivers all of these functions? Do we have such a system? Currently, we do not, although elements are present in some sectors or types of problems. Many of the functions might appear to be more about regulation and behaviour than about disputes. But the point is that we need an integrated system that performs all of these functions, and the traditional approach of keeping some of them in a regulatory context and some in a dispute resolution context, without those separate systems being integrated, is no longer acceptable, as we will not succeed in delivering the desired outcomes of improving performance and reducing future risk. The core functions described above are relatively straightforward to describe in general terms. It will already be seen that some are traditionally the domain of courts, arbitrators and tribunals and others more the domain of regulatory authorities or others. On the dispute resolution side, the traditional functions are interpreting rules (1), making decisions on law (4), ordering cessation through injunctions (5), making decisions to resolve disputes (6),

64 Affecting Behaviour providing some level of communication on such decisions (9) and ordering redress to be paid (11). Criminal courts impose sanctions (12). Courts are essentially designed to decide issues of law and fact, and to issue orders that someone should stop doing something (injunctions) and that someone should pay money to another (awards of damages). The idea that a decision by a court affects much future behaviour inside organisations across the land is not supported by empirical evidence. On the regulatory side, primary functions are providing guidance on regulatory rules (1), supporting compliance (2), to some extent identifying problems through inspections, market surveillance and responding to information (3), ordering cessation or applying for court orders on cessation (5), root cause analysis ((7), identifying actions (8), ordering or publicising communication (9), intervening to produce action (10), imposing sanctions or initiating proceedings for courts to impose sanctions (12), oversight (13) and monitoring (14). Some regulatory authorities have also moved into resolving disputes (6) and ordering redress (11) through using redress powers or particular enforcement policies. The core activity of bodies such as consumer and property Ombudsmen are making decisions (4), resolving disputes (6) and achieving redress (11), but they have extended their activities through use of the data that they collect into supporting compliance (2), identifying problems (3), identifying that actions need to be stopped (5), root cause analysis in some situations (7), identifying actions (8), publicising the incidence of problems (9), intervening (11), oversight (13) and monitoring (14). Public Ombudsmen were created to try to address systemic behavioural issues. Overall, it can be seen from just these three groups that there are both differences and overlaps in the functions that they perform. Different mechanisms, techniques and bodies are better at delivering some functions, but some can be flexible and overlap. They can sometimes work very well together – a good example being regulators and Ombudsmen working together. It also appears that these and other bodies have opportunities to develop further functions. The key issue, therefore, is how to ensure that all relevant intermediary bodies are integrated so as to deliver all of the functions in the most efficient, swift and effective way. In short, we need a new system. The focus of this book is primarily on dispute resolution mechanisms, rather than on regulatory or other systems, so the key question is how dispute resolution systems can be integrated with others so as to deliver the complete set of functions. Three points can be noted here. First, we will note the strong diversification of courts and tribunals in their techniques of resolving disputes by integrating ADR techniques into their pathways. Some do this better than others – ADR may be encouraged but not all pathways are as integrated and easy to use as others in their access to mediation and related techniques. Secondly, there is a major opportunity for courts and tribunals to follow the lead of consumer Ombudsmen in their collection of data and its feedback to drive change, even if judges might not go so far as to intervene in businesses or public bodies so as to change behaviour or culture. It was suggested above that the key to affecting behaviour on a systemic and consistent basis is through addressing the culture of the organisations in which the human beings produce the relevant behaviour. This approach involves identifying behaviour and cultures that need to be addressed through monitoring data and then intervening in effective ways. The importance of data is widely recognised, for example in improving case management systems in third world States, where it is believed that ‘better data

A Systemic Approach 65 can help them reach their organisational goals’.129 The United Nations has recognised the importance of feeding back information so as to change future behaviour in its promotion of the need for businesses to have internal grievance procedures for human rights issues of all kinds.130 Thirdly, courts and tribunals are the classic locus for debating and deciding points of law. But they no longer have a monopoly on this function, and might not be the most appropriate or effective pathway for doing this, for example in the vast majority of disputes of small value. How these three points might be developed will be discussed below. However, change cannot be avoided. Performance and outputs may be improved if we redesign their current structures for dispute resolution, so that they can operate better as part of a larger whole. None of this undermines the truth that the fact of upholding the law can have a symbolic value in establishing the base-line rules for a society, and supporting the underlying ethical values.131 But other options for supporting a fair and ethical society based on the rule of law are also available, and effective. Chapter three shows that too many people decide not to raise their problems in courts or tribunals but can do so using other pathways. The fact has to be faced that justice is not delivered by some pathways, in which case it is important to find others that do this. A principal object of this study is to assess four aspects relating to these core functions. First, to what extent do existing dispute resolution mechanisms contribute to achieving the core functions? Secondly, to what extent are the core functions delivered by a combination of any mechanisms, including dispute resolution systems and, say, regulatory systems? Thirdly, therefore, where are the gaps in achieving the core functions and, fourthly, how could the core functions be better achieved by, for example, changes in system architecture or operation?

E. The Consumer Markets Example This description may become clearer if illustrated by a concrete example: let us look at what should typically occur now if a trader were to sell a product or service in breach of the consumer protection rules. The system for market regulation is possibly the best illustration of how mechanisms and actors can be combined to make a coherent system. The example can be generic, as the situation described now occurs in several sectors, such as financial services, energy, water, communications and general consumer trading.132 It is what should

129 Technology in case management for legal empowerment work (The Engine Room, 2018). This covers initiatives in Indonesia, Moldova, Mongolia, Sierra Leone and South Africa. 130 UN Guiding Principles on Business and Human Rights (United Nations, 2011), Commentary (g) on Guiding Principle 31: ‘Regular analysis of the frequency, patterns and causes of grievances can enable the institution administering the mechanism to identify and influence policies, procedures or practices that should be altered to prevent future harm’. 131 R Cooter, ‘Expressive Law and Economics’ (1998) 27 Journal of Legal Studies 585. 132 C Hodges, ‘Mass Collective Redress: Consumer ADR and Regulatory Techniques’ (2015) 23 European Review of Private Law 829–74; C Hodges and S Voet, Delivering Collective Redress: New Technologies (Hart Publishing, 2018).

66 Affecting Behaviour have happened with the systemic mis-selling by banks a decade ago of Payment Protection Insurance (PPI) products to millions of consumers – but did not quite happen because at that time various parts of the system had not quite been fitted together. The fact that one or more traders are selling in breach of rules on fair treatment should be identified from data from banks’ internal records or data from customers. Resolver and some Ombudsmen can now identify that there is a problem by aggregating their data, and are starting to add to the data pool by including some traders’ internal data. The data might not arise from formal claims made to the Financial Ombudsman Service (FOS) or Ombudsman Services (OS) but from the far larger volume of customers who ask the FOS or OS or Citizens’ Advice for advice on whether the situation is right or not. The ratio of contacts to cases for the FOS has been roughly 5 to 1 in recent years, so it is the content of general inquiries that can give an early indication that there might be a problem. The key question is not ‘What legal claims are being made?’ but ‘What are consumers worried about?’ In the traditional context, courts are only capable of having data on the former question: in theory, all lawyers might be able to answer the latter question, but problems of data protection and aggregation arise. The systems developed by Resolver and the leading Ombudsmen have solved the data aggregation issue and are taking data collection to the earlier stage of capturing complaints and requests for information. Application of artificial intelligence assists analysis of the databank. The idea is to amend the system further so as to capture more data at the right stage through system design (see chapter nine). The generic data will be fed back to banks and published by Resolver and the FOS. Once the issue has been identified, banks can take corrective action, under the scrutiny of the regulator. Action may be taken as a result of regular meetings between the OS and individual banks, during which the FOS will ask ‘Here is the data on your complaints and issues. How do you propose to reduce the incidence on these problems? What actions do you intend to take? What actions have you taken since our last meeting?’ The Financial Conduct Authority (FCA) may, of course, ask the same questions. It is possible that the relationship between a trader and the sectoral Ombudsman is more open than the relationship between trader and regulator, although there is no harm in messages being reinforced. The regulator has a formal oversight role and powers. There are indications that the absence of such powers in an Ombudsman can facilitate useful conversations. In any event, Resolver and OS are developing the ability to offer detailed assistance to traders on internal behaviour and culture, so as to address the root causes of problems in a very practical way. Such assistance may be provided under separate consultancy arrangements. Claims taken to the FOS should have already been resolved by payment of redress to harmed consumers. Multiple cases should have been processed internally by the FOS so as to achieve consistent results. Points of law can be referred for clarification by a court. The trader may agree to pay redress in unsolved or future cases, by agreement with the regulator under the threat that the regulator will order this. All this will happen fairly quickly, within a few months, rather than years as would happen if lawyers tried to assemble a GLO through the courts. The regulator will incentivise the agreement by traders of open discussions on problem identification, root cause, appropriate action, cessation, redress and implementation by means of its powers and its published Enforcement Policy, which states that traders who do the right things will expect that fact to be a significant mitigating factor in setting any sanction. An example from 2018 was Ofwat’s approach to consistent failure by Thames Water to tackle leakage. Ofwat concluded that the starting point for a ‘standard’ fine was

A Systemic Approach 67 £24.6 million but accepted from the company proposed actions on leaks and various forms of restitution/price reduction (amounting to £65 million) so a fine was imposed of £1.133 Thus, all issues can be resolved through informed, responsible, adult discussions, and outcomes can occur swiftly. The regulator will undertake ongoing oversight and monitoring to ensure that the trader correctly implements what has been agreed or ordered, and take appropriate action if this does not occur.134 Some aspects of this model should be emphasised in the wider context: the importance of a feedback mechanism, the importance of data, the need to intervene to address behaviour and culture of organisations so as to achieve real change. Succeeding chapters include consistent references to the frustration that judges or public Ombudsmen have in their inability to effect changes in the behaviour of public or private organisations. They may issue reports that highlight an issue but they do not have the ability to intervene, and certainly not the ability to affect organisational culture. The traditional approach of individually enforcing breaches of rights fails to address wider behavioural and cultural issues. All modern effective regulatory authorities and corporate human resources personnel know this. The legal system is rights-based. Having a right is associated with a particular mode of ‘vindicating’ that right, through enforcement. But the tools of the legal system relate primarily to injunctions and ordering money to be paid, neither of which are interventions that are effective in affecting organisational culture to anything like the same extent as direct interventions by managers or regulatory officials. A complaint to an Ombudsman is typically based not on a right as such but on what seems unfair to citizens, consumers or tenants. It is typically decided by Ombudsmen on the basis of what seems fair to them in the circumstances of the case, taking the law and all relevant circumstances into account. Thus, while legal rules still form the basis of inter-relation between actors in society, a deeper basic value of fairness is what people are falling back on (as the law becomes ever more complicated), since it has meaning and value to people.135 A national model of engagement between citizens, patients, consumers, tenants and others in feeding into a system that is able to demonstrate that it can and does produce real changes in behaviour would be transformative.

133 See official documents at www.ofwat.gov.uk/pn-22-18-thames-waters-failure-tackle-leakage-results-65m- package-customers/ and www.ofwat.gov.uk/publication/notice-ofwats-proposal-impose-penalty-thames-waterutilities-limited/. 134 See Assessing the Quality of Investment Advice in the Retail Banking Sector. A Mystery Shopping Review (FSA, 2013); Payment Protection Insurance Complaints: Report on the Fairness of Medium-Sized Firms’ Decisions and Redress (Financial Conduct Authority 2013), TR13/7. The FSA imposed a financial penalty of approximately £4.3 million on Lloyds TSB Bank, Lloyds TSB Scotland, and Bank of Scotland for failure to pay redress promptly to PPI complainants between 5 May 2011 and 9 March 2012. The FCA fined Clydesdale Bank £20,678,300 (after a 30% discount for early settlement) on 15 April 2015 for failures in processes for handling 126,000 PPI complaints between May 2011 and July 2013, in which 42,200 may have been rejected unfairly and 50,900 resulted in inadequate redress. It fined Lloyds Banking Group £117 million for mishandling thousands of PPI complaints between March 2012 and May 2013 and extracted an agreement by the bank to review 1.2 million complaints, for which a further GBP 710 million was added to the GBP 12 billion already set aside to cover repayments. 135 N Wolterstorff, Justice. Rights and Wrongs (Princeton University Press, 2008); N Spencer, The Evolution of the West. How Christianity has shaped our Values (SPCK, 2016).

3 People’s Problems: Incidence, Types, Pathways and Objectives This chapter summarises the research on three issues. First, what is the incidence and types of problems that individuals have? Secondly, which means or pathways do people then use to resolve their problems – if they attempt to do so. Thirdly, what is it that they are seeking when they experience a problem and in relation to their use of dispute resolution processes? The focus here is on individual human beings – as citizens, patients and so on – rather than on businesses (which are dealt with in other chapters). Some further data on specific aspects such as consumer-trader complaints and personal injuries of various kinds is given in chapters nine and ten.

I. People’s Legal Problems The classic research that has been done on the type and occurrence of humans’ personal justiciable issues is the ‘legal needs’ studies instigated in the 1990s by Dame Hazel Genn.1 The first, published in 1999 with data from 1997, comprised a screening study of 4,125 individuals followed by interviews with 1,134 respondents. Part of the objective was to identify what services lawyers could provide. The study was conceptually based around the classic categorisation of actions in ‘naming, blaming, and claiming’ of legal problems.2 The study noted a failure to recognise the dissimilarity of problems. The initial 1997 study estimated that 41,496,000 problems were experienced in England and Wales by 15,785,800 adults aged 18 and over (thus 40% of a population of 40,237,000 people belonging to this age group). It also noted that people who experienced a problem often had more than one problem type (problem clustering),3 of which the types most commonly experienced together were: Divorce and family matters

0.53

Family matters and children

0.26

Employment problems and money problems

0.19

1 H Genn, Paths to Justice: What People Do and Think About Going to Law (Hart Publishing, 1999). 2 WLF Felstiner, RL Abel and A Sarat, ‘The Emergence and Transformation of Disputes: Naming, Blaming, Claiming’ (1989–81) 15 Law and Society Review 634. See also HM Kritzer, ‘The antecedents of disputes: complaining and claiming’ (Oňati Socio-Legal Series, 2011). 3 This observation was confirmed in P Pleasance, NJ Balmer, A Buck, A O’Grady and H Genn, ‘Multiple justiciable problems: Common clusters and their social and demographic indicators’ (2004) 1(2) J of Emp Legal Studies 301–29.

People’s Legal Problems 69 Problems with owning residential property and consumer problems

0.17

Problems with rented accommodation and money problems

0.17

Employment problems and owning residential property

0.14

Genn found that certain types of situations have a cascade effect. ‘For example, threatened repossession of the family home can lead to marital strain and breakdown, mental health problems, leading to difficulties at work and problems in caring for children.’4 The 1997 screening survey of 4,125 individuals ranked the main problem types:5 Faulty goods and services

11%

Money problems

9%

Injuries/health problems resulting from accidents or poor working conditions

8%

Owning residential property

8%

Living in rented accommodation

7%

Employment problems

6%

Relationships and family matters

6%

Negligent medical or dental treatment

2%

Discrimination as a result of race, sex or disability

1%

Unfair treatment by the police

1%

Immigration or nationality issues

0.2%

Put another way, the most numerous problems experienced by the sample were those relating to: Faulty goods and services

153 problems per 1,000 adults

Money

138 problems per 1,000 adults

Living in rented accommodation

124 problems per 1,000 adults

Owning residential accommodation

119 problems per 1,000 adults

People had a range of responses to problems, which varied across problem types, as summarised in Figure 3.1. Communicating with ‘the other side’ was the primary reaction in most areas, but in family matters people sought advice from a third party, and often did nothing in response to injuries. Genn concluded that the solution strategy applied is more closely related to the type of problem than with general background characteristics: purchase of products and services are often dealt with personally, as are tenancy issues, whereas people relied on legal aid for relationships and family. Several specific characteristics of the problem and the respondent are much more important: the seriousness and complexity of the problem and the expected benefits that are at stake, the nature of the other party, and the possession of a family insurance policy for legal expenses.

4 H

Genn, Paths to Justice: What People Do and Think About Going to Law (Hart Publishing, 1999) 35.

5 ibid.

70 People’s Problems Figure 3.1 Summary of Issue Types and Responses in 1999 Paths to Justice Study Faulty goods and services

Money problems

Relationships/ family matters

Children

Injuries and health problems

Talked/wrote to other side

76%

71%

49%

68%

42%

Sought advice

30%

35%

57%

55%

27%

Threatened legal action

18%

10%

18%

21%

5%

Did nothing

13%

10%

14%

5%

35%

Started a case

3%

6%

25%

26%

11%

Ombudsman

2%

3%

0%

1%

2%

Mediation/conciliation

0%

1%

5%

8%

1%

Other action

9%

10%

11%

25%

12%

The ‘paths to justice’ methodology was repeated in the UK6 and replicated in Scotland7 the Netherlands8 and elsewhere. A review of 28 international ‘paths to justice’ studies was published in 2016.9 The most recent survey of legal problems in England and Wales, published in 2017, was conducted in 2014/15, against the background that legal aid had removed many problem types from legal aid in April 2014, that fees for Employment Tribunals had been introduced in July 2013, and that a number of reforms had been introduced in family justice.10 The major findings in relation to the 18 months before interview of subjects are summarised over the following pages. • Almost a third of adults (32%) reported that they had experienced one or more of the civil, administrative or family legal problems asked about. • Adults were more likely to experience certain types of problems than other types of problem. Just over a quarter (27%) of adults had experienced a civil legal problem, compared with a tenth (10%) of adults who had experienced an administrative legal problem and 1% who had experienced a family legal problem. 6 P Pleasence, A Buck, N Balmer, A O’Grady, H Genn and M Smith, Causes of Action: Civil Law and Social Justice. The Final Report of the First LSRC Survey of Justiciable Problems (The Stationery Office, 2004); P Pleasence, N Balmer, A Buck, M Smith and A Patel, ‘Mounting Problems: Further Evidence of the Social, Economic and Health Consequences of Civil Justice Problems’ in P Pleasance, A Buck and N Balmer (eds), Transforming Lives: Law and Social Process (The Stationery Office, 2007); N Balmer, A Buck, A Patel, C Denvir and P Pleasence, K nowledge, Capability and the Experience of Rights Problems (Plenet, 2010); P Pleasence, NJ Balmer and RL Sandefur, Paths to Justice: A Past, Present and Future Roadmap (UCL Centre for Empirical Legal Studies, 2013); I Pereira, C Perry, H Greevy and H Shrimpton, Ipsos Mori Social Research Institute, The Varying Paths to Justice Mapping problem resolution routes for users and non-users of the civil, administrative and family justice systems (Ministry of Justice, 2015); Online survey of individuals’ handling of legal issues in England and Wales 2015 (Ipsos MORI, 2016). 7 H Genn and A Paterson, Paths to Justice Scotland: What People in Scotland Do and Think About Going to Law (Hart Publishing, 2001). 8 Recently MJ ter Voert and CM Klein Haarhuis, Paths to Justice in the Netherlands (Ministry of Justice, 2014). 9 P Pleasence, NJ Balmer and RL Sandefur, ‘Apples and Oranges: An International Comparison of the Public’s Experience of Justiciable Problems and the Methodological Issues Affecting Comparative Study’ (2016) 13(1) Journal of Empirical Legal Studies 50–93. 10 R Franklyn, T Budd, R Verrill and M Willoughby, Findings from the Legal Problem and Resolution Survey, 2014–15 (Ministry of Justice, 2017).

People’s Legal Problems 71 • The problem types most likely to be reported were those related to purchasing goods or services (8%), neighbours’ anti-social behaviour (8%) and money problems (excluding personal debt) (7%). Adults were least likely to have experienced problems relating to the provision of education (2%), owning or buying residential property (2%), or a relationship breakdown (1%). See Figure 3.2. Figure 3.2 Percentage of adults who experienced a legal problem in the last 18 months by problem type, 1 LPRS 2014–15 (Table 2.1 in the original)11 Percentages Civil legal problems

27

Purchasing goods and services

8

Neighbours’ anti-social behaviour

8

Money excluding personal debt

7

Personal debt

5

Rented accommodation

5

Accidents or medical negligence

4

Owning or buying residential property

2

Administrative legal problems

10

Employment

6

State benefits

3

Education

2

Family legal problems

1

Unweighted base

10,058

People may have experienced more than one problem, and be counted more than once.

• There was no difference in the proportion of men and women experiencing at least one legal problem (both at 32%). There were differences by age group: Those aged 25–44 were most likely to experience a problem (42%), followed by those aged 18–24 (37%). Those aged 65 and over were least likely to experience a problem (18% of those aged 65–74 and 11% of those aged 75 and over). Black and minority ethnic (BME) adults were more likely to experience at least one legal problem than white adults (38% compared with 31%). Adults with higher levels of educational qualifications (degree equivalent or above – 39%, A-level or equivalent – 37%) were more likely to experience a problem than those with only lower-level qualifications (28%) or no educational qualifications (20%). • Adults with a long-standing illness or disability that limited their activities were more likely to experience problems than adults without any long-standing illness or disability or whose illness or disability were not limiting (40% compared with 31% and 27% respectively).

11 People

may have experienced more than one problem, and be counted more than once.

72 People’s Problems • Half of adults (50%) who had experienced at least one legal problem covered by the survey in the last 18 months had experienced more than one problem in the period: 20% reported experiencing two problems, 9% reported three problems, and 22% four or more problems. • Six out of ten adults (61%) reported that their legal problem had concluded12 by the time of the interview. Problems relating to a relationship breakup or personal debt were significantly less likely to have concluded (38% and 43% respectively) than most other problem types, except for problems with neighbours’ anti-social behaviour or education. Almost three-quarters of problems with purchasing goods and services (74%) had concluded by the time of interview, more than all other problem types. • For concluded problems where it was possible to calculate the duration, 60% of adults reported that their problem concluded within three months of starting, with 12% reporting that their problem had lasted more than a year; see Figure 3.3. • The duration of ongoing problems differed greatly from concluded problems. Almost three in ten (29%) adults with an ongoing problem reported that this had lasted more than two years, compared with 4% for concluded problems. Conversely, those with concluded problems were more likely to say they had lasted three months or less (60%) than those with ongoing problems (22%). Figure 3.3 Duration of problems, LPRS 2014–15 (Table 3.2 in original)

0–3 months 4–6 months 7–12 months 13–24 months More than 2 years Unweighted base2

Percentages Concluded problems3 Ongoing problems (duration to date1) Civil Administrative All Civil Administrative Family All 61 60 60 20 33 4 22 16 16 15 15 12 6 14 12 12 12 18 17 8 17 7 10 8 19 14 32 18 4 3 4 28 25 50 29 1,102 352 1,494 787 226 70 1,083

1

Duration of ongoing problems is time from the start date of the problem to the date of the LPRS interview. Problem with known start dates. 3 Concluded family problems are not shown as too few family problems had concluded by the time of the interview to provide reliable percentages. 2

• Overall almost a quarter (23%) rated their problem as very serious: see Figure 3.4. Family legal problems and administrative legal problems were more likely to be considered very serious (38% and 31% respectively) than civil legal problems (20%). The percentage considering their administrative problem to be very serious was similar for issues associated with employment disputes (30%), provision of State benefits (32%) and provision of education (32%). There was more variation in relation to civil p roblems, with accidents and negligence problems, issues with rented accommodation and neighbours’

12 Concluded problems are those which the respondent described as ‘now over’ or ‘most likely now over’ and ongoing problems are those which were ‘still ongoing’ or ‘too early to say’.

People’s Legal Problems 73 anti-social behaviour being particularly likely to be considered very serious (28%, 25% and 23% respectively). Those with personal debt problems and with issues with purchasing goods and services were less likely to consider the issue to be very serious (both at 14%). Figure 3.4 Perceived seriousness of problems by problem type, LPRS 2014–15 (Table 3.5 in original) Percentages Problem Not very serious

seriousness1

Mean Unweighted Fairly Very seriousness base serious serious score (=100%)

Civil legal problems

38

42

20

9

2,176

Purchasing goods and services

45

41

14

8

420

Neighbours’ anti-social behaviour

28

49

23

9

404

Money excluding personal debt

47

36

17

8

431

Personal debt

43

43

14

8

185

Rented accommodation

31

44

25

10

311

Accidents or medical negligence

29

43

28

10

207

Owning or buying residential property

43

37

20

9

218

Administrative legal problems

25

44

31

11

630

Employment

22

48

30

11

316

State benefits

31

37

32

10

200

Education

22

46

32

11

114

Family legal problems

25

38

38

11

119

All legal problems

34

42

23

9

2,925

1

Respondents rated the seriousness of their problem on a scale of 1 to 20. Ratings of 1–5 have been classified as not very serious, 6–14 as fairly serious, and 15–20 as very serious. Don’t knows and refusals have been excluded from this table.

• Just under half of adults (45%) with a problem reported experiencing one or more adverse consequence as a result of the problem, with 12% experiencing two consequences, 7% experiencing three consequences and 6% four or more; see Table 3.7. Stress or another mental health problem, loss of confidence and loss of income or financial strain were the most common consequences, with around a fifth of adults citing each of them. Just over a tenth (11%) reported experiencing physical illness, with all other consequences cited by less than a tenth. • Those who experienced a family legal problem were more likely to say they had experienced at least one adverse consequence (79%) than those who experienced an administrative (56%) or civil (40%) legal problem. • For administrative problems, adverse consequences were more common for issues associated with employment (63%) and State benefits (59%) than for educational issues (33%). For civil problems, those whose problems concerned an injury or ill-health

74 People’s Problems a rising from accidents or negligence were most likely to experience an adverse consequence (66%). Those who had problems with purchasing goods and service (29%), problems concerning money except personal debt (33%) or problems with neighbours’ anti-social behaviour (37%) were least likely to report an adverse consequence. In the two years to mid-2016 complaints to the PHSO were most numerous for GP services (37%), local authorities (29%), hospitals (28%), HMRC (20%), another government department (14%): see Figure 3.5.13 Figure 3.5 Services people have had a poor experience with in the two years to mid-2016 40%

37%

35% 29%

30%

28%

25% 20%

20%

14%

15% 10%

12%

11%

8% 7%

5% 0%

GP Services

Local authority (council)

Hospital

HMRC (Includes Child Benefit Office and Tax Credits Office)

Other JobCentre Primary or government Plus secondary departments school or or agencies FE (e.g. DWP, college UK Visas and immigration)

DVLA

6%

Higher Social Education care (e.g. provider University)

5%

Other

II. Incidence and Types of Consumer Problems A major study by Oxford Economics for Citizens Advice in 2015 found that UK consumers experienced an average of 2.4 problems a year (123 million incidents), costing £446 per adult, leading to 1.2 billion hours spent dealing with issues, at a total consumer detriment costing UK consumers £22.9 billion a year.14 The most important source of consumer detriment (45%, amounting to £10.3 billion) was substandard service. By 2017, a study for Ombudsman Services reported consumers experiencing 173 million issues with products and services, affecting 57% of people in the UK, yet only a quarter (27%) of these were raised with the provider.15 13 Learning from mistakes: How complaints can drive improvements to public services (Citizens Advice, 2016) Figure 2. 14 Oxford Economics, Consumer detriment. Counting the cost of consumer problems September 2016 (Citizens’ Advice, 2016). The cost per person figure is inflated by high cost problems in areas like construction that affect a relatively small number of people. For EU figures see Civil Consulting, Study on measuring consumer detriment in the European Union Final report Part 1 – Main report (European Commission, 2017). 15 Consumer Action Monitor (Ombudsman Services, 2018).

Incidence and Types of Consumer Problems 75 The top categories listed in the 2015 study that were associated with consumer detriment, and the areas in which most compensation was paid, can be compared by type of problem in Figure 3.6 and the business sector in Figure 3.7. Those two categorisations of areas do not correlate for two reasons. First, the top categories in each are not the same, so there are gaps in the Table. Secondly, it appears that there are differences between detriment suffered and compensation paid. Where that occurs, it would indicate that detriment is uncompensated in some areas, perhaps because of the unavailability of effective dispute resolution pathways. Figure 3.6 Amount of consumer detriment and compensation paid in Oxford Economics study Poor quality service

Consumer detriment

Compensation payments

£10,308 m

£2,037 m

Failure to provide item or service

£3,235 m

£439 m

Problem with prices charged

£2,652 m

£623 m

Poor quality goods

£1,308 m

£622 m

Problem pursuing an insurance claim

£1,096 m

£1,011 m

Sold unsuitable product or service

£1,938 m

Other types

£4,276 m

£2,346 m

Total

£22.9 bn

£22.9 bn

Figure 3.7 Amount of consumer detriment and compensation paid by sector in Oxford Economics study. Construction

Consumer detriment

Compensation payments

£3.5 bn

£3,907 m

Vehicle purchase

£1,347 m

Insurance

£1,028 m

Banking

£677 m

Energy

£548 m

TV, phone and internet services

£4.2 bn

Professional services

£4.1 bn*

£333 m

Home maintenance

£2.6 bn

Property services

£2.6 bn

Pension and investment

£1.2 bn*

Holidays

£0.9 bn

Other

£3.7 bn

£1,175 m

Total

£22.9 bn

£22.9 bn

* Result heavily influenced by one large and unusual response.

These tables indicate that more effective dispute resolution mechanisms are needed in various sectors, such as TV, phone and internet services (the Communications O mbudsman only covers some aspects), professional services, home maintenance and property services

76 People’s Problems (where an Ombudsman mechanism was proposed in late 2017), pensions and investments (there is a Pensions Ombudsman and the FOS, but the jurisdiction of the FOS does not cover professional investments), holidays and, of course ‘other’ (there are difficulties in making the coverage of residual ADR or Ombudsman schemes effective).16 In the sectors where compensation is paid, it is notable that Ombudsmen exist in almost all (motor,17 insurance, banking,18 energy19 and communications). The study found that around £9.0 billion in compensation was awarded to consumers in 2015, which was less than 30% of total detriment costs incurred on average, partly reflecting the fact that compensation was sought in only 35% of cases. By comparison, in 2017/18 the FOS resolved 400,658 complaints but did not publish the total amount of compensation involved.20 The FOS resolved 32,780 cases by an Ombudsman’s decision, and awarded financial compensation for non-financial loss (eg, inconvenience or upset) in 9% of awards.

III. What Pathways do People Choose? A. Survey Evidence on Pathways This section looks at the evidence on how people resolve their legal problems. The question is framed in terms of asking which pathways people choose. Findings from the 1997 study have been noted above. The Legal Problem and Resolution Survey (LPRS) published in 2017 based on 2014/15 data reached the following general conclusion (emphasis added):21 Experiencing a legal problem is a relatively common experience, with a third of adults having experienced at least one problem in the preceding 18 months, although many people who do have such a problem do not classify it as a legal issue themselves and most problems are dealt with without the use of any legal or formal resolution processes or legal advice. Thus the problems

16 In postal services, Citizens Advice later said although Royal Mail customers have access to a clearly defined complaints process and an ADR service, those that use it often report being dissatisfied with the process. For example, two in five report concerns with how their complaint was handled (42%), how their complaint was resolved (42%) or how long it took (38%): Citizens Advice: Protecting consumers in a changing world. The Citizens Advice consumer work plan 2018/19 (Citizens Advice, 2017), citing Residential Postal Tracker. January–December 2016 (Ofcom, 2017). 17 The vehicles & transport services sector paid £1.6 billion in compensation and refunds in 2015 which represented 71% of the total cost of consumer detriment. 18 The banking sector paid £677 million in compensation in 2015, compared to known detriment costs of £104 million. This is affected by long-tail claims in relation to payment protection insurance. 19 In energy, the £548 million in compensation represented 95% of total costs. Citizens Advice later asserted that £2.2million of compensation did not reach energy consumers in 2015/16 when they had not received guaranteed levels of service: Citizens Advice: Protecting consumers in a changing world. The Citizens Advice consumer work plan 2018/19 (Citizens Advice, 2017). 20 Annual review 2017/2018 (Financial Ombudsman Service, 2018). 21 R Franklyn, T Budd, R Verrill and M Willoughby, Findings from the Legal Problem and Resolution Survey, 2014–15 (Ministry of Justice, 2017). See earlier Evaluation: How can we measure access to justice for individual consumers? A discussion paper (Legal Services Board, 2012).

What Pathways do People Choose? 77 that result in formal legal action are a very small part of a much larger pool of problems that people experience and, for the most part, deal with alone or without legal or professional help. These findings are in line with those from previous surveys. Understanding the overall picture and the extent to which individuals are able to deal with their problems through less formal means is important in considering what access to justice represents for different groups, and how people can best be supported in resolving issues effectively and quickly. …

The findings from the survey show that the types of legal problem people commonly encounter present a complex and variable set of circumstances and issues and they cannot be easily categorised based on a single dimension, such as the type of legal dispute. The provision of help, advice and services to support people with such problems therefore needs to be sufficiently broad and flexible to meet a diverse range of needs. The LPRS reported an extensive volume of findings, of which the following are selected extracts: Not everyone who experiences a legal problem will take action to resolve it, and those that do take action vary in the action that they take, with some trying to resolve the problem on their own or using informal information or advice, some trying to resolve the problem with professional help, and some using formal legal processes such as courts and tribunals or resolution services such as mediation. Many people use a combination of different strategies when trying to resolve a problem. Almost all adults with a legal problem (90%) had taken some action on their own to try to resolve their legal problem, with almost two-fifths of adults (39%) using some form of legal or professional help and almost one fifth (17%) using a formal legal process or resolution service. Very few adults (4%) did not try to resolve their problem; see Figure 3.8. Figure 3.8 Resolution strategies used to try to resolve legal problems, LPRS 2014–15

All resolution strategies used2 Most formal resolution strategy used3

Percentages A formal Legal/ resolution professional Did not try Unweighted process help Self-help1 to resolve base 17 39 90 4 2,959 17 27 52 4 2,959

1 Includes

sourcing own information advice or help from internet/leaflets, family or friends, or the other side of the problem. 2 Adults who used more than one strategy are included under each strategy used, and percentages will therefore not sum to 100. 3 Adults who used more than one strategy are included once only for the most formal strategy used.

Looking at the most formal resolution strategy used, just over half of adults (52%) tried to resolve their legal problem without legal or professional help or use of a formal process. Over a quarter of adults (27%) said they tried to resolve their problem with legal or professional help (but without using a formal resolution process) and 17% said that formal resolution processes were used; see Figure 3.9.

78 People’s Problems Figure 3.9 Most formal resolution strategy used by problem type, 1 LPRS 2014–15 (Table 4.2) Percentages A formal Legal/ Did not resolution professional try to Unweighted process help Self-help resolve base(=100%) Civil problems

16

26

55

4

2,199

9

25

75

1

424

Neighbours’ anti-social behaviour

11

36

39

14

405

Money excluding personal debt

23

20

56

1

434

Personal debt

24

15

59

2

187

Rented accommodation

13

17

68

2

318

Accidents or medical negligence

22

47

28

4

212

Owning or buying residential property

15

44

39

2

219

Administrative problems

18

30

49

3

636

Employment

21

37

40

3

317

State benefits

15

22

61

2

202

Purchasing goods and services

Education

16

27

57

1

117

Family problems

35

40

25

1

124

All legal problems

17

27

52

4

2,959

This table shows the most formal resolution strategy used. Adults who used more than one strategy are counted once in this table.

Figure 3.9 shows that the most formal resolution strategy used varied by the type of legal problem experienced. Those who experienced a problem relating to a relationship breakdown were more likely to say a formal resolution process was used (35%) than those who experienced a civil (16%) or administrative (18%) problem. Those experiencing civil or administrative problems were more likely (55% and 49%) to try to resolve the problem without using legal or professional help or a formal legal process than those experiencing a problem relating to relationship breakdown (25%). There was some variation in resolution strategy used depending on the type of civil or administrative legal problem experienced (Figure 3.10). • The use of formal resolution processes was more common for problems associated with personal debt, other money-related issues, employment, and injury or ill-health arising from accidents or negligence, with around a fifth of adults with these problems saying a formal resolution process had been used. • Those who had experienced a legal problem relating to an injury or ill-health arising from an accident or negligence were least likely to only resolve alone (28% did so), followed by those with issues associated with owning or buying residential property, neighbours’ anti-social behaviour or employment (39%–40%).22 Adults with these p roblems were 22 Differences between problems relating to accidents and negligence and problems relating to owning and buying residential property, neighbours’ anti-social behaviour and employment were not significant at the 5% level.

What Pathways do People Choose? 79 more likely to obtain legal or professional help but not engage with formal resolution processes than adults with other civil and administrative problems. • Those who experienced a legal problem relating to a relationship breakdown were most likely to report using a court or tribunal process (16%), or independent conciliation, mediation or arbitration (28%). • Independent conciliation, mediation or arbitration was also relatively common among those who had an employment problem (16%), with use of an Ombudsman or regulator most common in those with money problems, excluding personal debt (12%).23 • Among civil and administrative legal problems, the use of a court or tribunal process was most common for problems relating to personal debt (12%), injury or ill-health arising from accidents or negligence (11%) and the provision of State benefits (11%).24 Figure 3.10 Use of formal resolution processes by problem type, 1 LPRS 2014–15 (Table 5.1) Percentages

Civil legal problems Purchasing goods and services Neighbours’ anti-social behaviour Money excluding personal debt Personal debt Rented accommodation Accidents or medical negligence Owning or buying residential property

Respondent Other Used made side made independent court/ court/ conciliation, Used tribunal tribunal mediation or regulator/ claim1 claim1 arbitration Ombudsman 3 2 8 6

Did not use formal legal process 84

Unweighted base 2,199

2

0

3

4

91

424

–

0

9

2

89

405

7

2

8

12

77

434

4 –

9 1

10 9

7 5

76 87

187 318

9

4

8

4

78

212

3

4

7

6

85

219

(continued)

23 Significantly more than all legal problems other than those relating to personal debt (7%), owning or buying property (6%) or the provision of education (5%). 24 Significantly more than problems relating to purchasing goods and services, neighbours’ anti-social behaviour, rented accommodation and employment (all 3% or less).

80 People’s Problems Figure 3.10 (Continued) Percentages Respondent Other Used made side made independent court/ court/ conciliation, Used tribunal tribunal mediation or regulator/ claim1 claim1 arbitration Ombudsman Administrative 4 2 11 5 legal problems Employment 3 – 16 5 State benefits 9 4 3 5 Education 3 1 11 5 Family legal 9 13 28 0 problems All legal 4 2 9 5 problems

Did not use formal legal process 82

Unweighted base 636

79 85 84 65

317 202 117 124

83

2,959

Respondents could select more than one formal process, so percentages will not add up to 100. 1 Includes court processes such as Money Claim Online. 25 respondents reported that both they and the other party had made a court or tribunal claim. They are included in both columns in this table.

Of those who had used a formal resolution process but not obtained any legal or professional help, most (84%) had sourced their own information or advice, for example from the internet, leaflets, family or friends, or the other side of the dispute. Only 4% of adults with a problem who had used a legal process or resolution service did so without obtaining any information, advice or help at all. Overall, 5% of adults with legal problems had used a court or tribunal process, 14% considered using a court or tribunal but ultimately decided not to, and 80% did not consider using a court or tribunal process at all. Of those who had considered using a court or tribunal to resolve their legal problem but ultimately did not do so, the most common reason given for not using a court or tribunal was that the problem had resolved without needing to use a court or tribunal (43%). Overall, 9% of adults with legal problems had used independent conciliation, mediation or arbitration, 11% considered using it but ultimately decided not to, and 79% did not consider using it at all. Among adults who had considered using mediation but ultimately did not do so, the most common reason given for not using it was that there was no need for it or the problem had resolved (37%). Overall, around one in ten adults (12%) with a legal problem said that they had obtained formal legal help to try to resolve their problem, while around a third (32%) obtained professional help from someone other than a legal professional. Almost three-quarters of adults (73%) said they had sourced their own information in trying to resolve their problem, for example from the internet or leaflets or family or friends. Many of those who had sourced their own information had also obtained legal or professional help. Just under half of adults with legal problems (45%) had only sourced their own information, without recourse to legal or professional help. Less than a fifth of adults (16%) said they did not obtain any help at all to try to resolve their problem; see Figure 3.11.

What Pathways do People Choose? 81 Figure 3.11 Types of help obtained by problem type, 1 LPRS 2014–15 (Table 6.1) Percentages Formal Professional Obtained own No help Unweighted legal help help information obtained base Civil legal problems 11 29 70 18 2,199 Purchasing goods and services 4 18 81 15 424 Neighbours’ anti-social 2 43 49 30 405 behaviour Money excluding personal 12 28 76 14 434 debt Personal debt 4 26 70 19 187 Rented accommodation 4 22 74 21 318 Accidents or medical 45 30 66 11 212 negligence Owning or buying residential 25 39 77 11 219 property Administrative legal 8 38 79 12 636 problems Employment 15 44 77 12 317 State benefits 2 30 76 13 202 Education 1 35 85 9 117 Family legal problems 45 46 80 5 124 All legal problems 12 32 73 16 2,959 Respondents may have used more than one type of help and are included in the table for each type used. Percentages will therefore not add up to 100.

Figure 3.11 shows particularly high percentages for people who obtained their own information. They did so significantly in relation to administrative problems with education (85%), purchasing goods and services (81%), family legal problems (80%), owning or buying r esidential property (77%), employment (77%), money excluding personal debt (76%), State benefits (76%), personal debt (70%), accidents or medical negligence (66%), and neighbours’ anti-social behaviour (49%). There is a wide range of sources who can provide legal/professional assistance to help resolve legal problems: Figure 3.12. Figure 3.12 Advice providers by problem type, 1 LPRS 2014–15 (Table 7.2) Percentages Insurance Local company’s council legal Child Solicitors’ Citizens advice Trade advice Debt advice Mediation support Other Unweighted firm Advice service unions service Police organisation Service Agency provider base Civil legal problem

26

16

16

2

12

9

4

–

–

39

841

Purchasing goods and services

12

23

3

3

13

3

0

1

0

70

79

(continued)

82 People’s Problems Figure 3.12 (Continued) Percentages Insurance Local company’s council legal Child Solicitors’ Citizens advice Trade advice Debt advice Mediation support Other Unweighted firm Advice service unions service Police organisation Service Agency provider base Neighbours’ anti–social behaviour

5

5

46

–

3

35

0

0

0

29

198

Money excluding personal debt

32

18

3

2

6

3

4

0

1

51

167

9

45

3

0

2

0

40

1

0

17

62

Rented accommodation

11

26

21

5

2

–

0

2

0

51

80

Accidents or medical negligence

63

8

0

3

42

3

0

–

0

21

133

Owning or buying residential property

39

9

24

0

8

4

2

0

0

45

122

Administrative legal problems

14

20

9

30

2

1

–

1

0

40

291

Employment

21

11

2

47

1

1

0

–

0

31

177

State benefits

5

49

10

0

3

0

1

2

0

41

69

Education

–

–

–

–

–

–

–

–

–

–

45

Family legal problems

62

24

8

–

0

2

0

16

17

23

95

All legal problems

26

18

14

9

8

7

3

2

1

38

1,227

Personal debt

Includes adults who obtained legal advice or professional help for their problem. Respondents may have used more than one type of advice provider and are included in the table for each type used. Percentages will therefore not add up to 100.

That shows that variations occur in the source of advice by problem type.25 The most commonly used sources of help were: Accidents and medical negligence Family State benefits Employment Neighbours’ anti-social behaviour Personal debt Money excluding personal debt Rented accommodation Purchasing goods and services

Solicitors 63%, insurance company 42% Solicitors 62%, Citizens Advice 24% Citizens Advice 49% Trade unions 47%, other 31%, solicitors 21%, Citizens Advice 11% Local Council 46%, police 35% Citizens Advice 45% Solicitors 32%, Citizens Advice 18% Citizens Advice 26%, Local Council 21% Citizens Advice 23%

25 This was also found in Evaluation: How can we measure access to justice for individual consumers? A discussion paper (Legal Services Board, 2012).

What Pathways do People Choose? 83 The large survey of legal needs in England and Wales in 2014/15 referred to above involving 8,000 people similarly found that people tackled their problems in a variety of ways: 35% obtained legal advice; 34% tried to tackle them alone, 15% got help from family or friends, while 13% did nothing.26 Almost one in 10 were handled alone for ‘fear that doing otherwise would cost too much – either the cost of an adviser’s service or the cost of court fees’. The LPRS found that around a quarter (26%) of adults who obtained legal/professional help from an adviser for a civil legal problem contacted a solicitor. Among adults who obtained some form of legal or professional help, around three-quarters (76%) reported getting it from one type of provider. Almost a fifth (18%) said they obtained help from two types of advice provider, and 6% said they used three or more sources. Figure 3.13 shows what people felt about the help provided by their last adviser. The assistance given in understanding the problem was notably significant, followed by suggesting what should be done. Figure 3.13 Type of help received from last adviser contacted, LPRS 2014/15 (Table 7.4) Percentages Help you understand Support the what Help you Give Act situation you understand you on or your should your legal moral your options do rights support behalf

Support where you could get further help

Help you prepare documents (eg letters or forms)

Represent you in a court or Unweighted tribunal base

Civil legal problem

80

75

66

58

54

41

36

2

820

Purchasing goods and services

79

70

60

46

31

33

20

0

75

Neighbours’ anti-social behaviour

68

71

44

63

54

34

19

0

197

Money excluding personal debt

85

79

76

56

49

43

41

3

161

Personal debt

92

90

80

76

55

64

62

2

62

Rented accommodation

79

76

69

62

42

44

24

3

78

Accidents or medical negligence

83

73

77

58

79

41

49

5

128

Owning or buying residential property

81

72

66

51

54

42

45

2

119

(continued) 26 Online survey of individuals’ handling of legal issues in England and Wales 2015 (Ipsos MORI, 2016). 54% of all those who responded had experienced at least one legal issue in the previous three years.

84 People’s Problems Figure 3.13 (Continued) Percentages Help you understand Support the what Help you Give Act situation you understand you on or your should your legal moral your options do rights support behalf

Support where you could get further help

Help you prepare documents (eg letters or forms)

Represent you in a court or Unweighted tribunal base

Administrative legal problems

87

77

77

74

47

55

45

2

280

Employment

90

76

87

73

50

54

44

2

171

State benefits

76

74

67

73

48

44

45

4

66

Education

–

–

–

–

–

–

–

–

43

Family legal problems

92

82

89

57

57

60

44

13

92

All legal problems

82

76

70

52

52

46

39

1

1,192

Includes adults who obtained legal or professional help for their problems. Respondents could receive more than one type of help, therefore percentages will not add up to 100. Results for education problems are not shown separately due to small base sizes.

Almost all adults who had contacted a legal or professional adviser felt that the (last) adviser had treated them with respect (97%) and 64% felt that the (last) adviser had helped resolve or reduce the problem (around 35% said that they had made no difference and less than 1% that they made the problem worse). There was no statistically significant variation by the type of adviser. Satisfaction levels with the information, advice or help obtained from the (last) adviser were generally high at over 80% for all types of adviser with the exception of a local council advice service (73%); see Table 7.7 (Figure 3.14). Figure 3.14 Quality of service, 1 LPRS 2014–15 (Table 7.7) Percentages

A solicitors’ Citizens firm or barrister Advice

A local council advice service

Another advice or service or Somebody organisation else

All

Whether felt treated with respect by last advice provider 99

99

92

97

96

97

Not treated with respect

1

1

8

3

4

3

Unweighted base (=100%)

274

130

121

348

292

1,165

Treated with respect

(continued)

What Pathways do People Choose? 85 Figure 3.14 (Continued) Percentages

A solicitors’ Citizens firm or barrister Advice

A local council advice service

Another advice or service or Somebody organisation else

All

Whether the last adviser contacted helped to resolve the problem Helped resolve or reduce the problem

69

60

58

64

64

64

Made the problem worse

1

0

1

1

1

1

Made no difference

30

40

41

35

35

35

269

128

120

345

1,145

1,145

Unweighted base (=100%)

Satisfaction with service provided Very/quite satisfied

91

88

73

86

84

85

Not very/not at all satisfied

9

12

27

314

16

15

275

130

122

348

289

1,165

Unweighted base (=100%)

Includes adults who obtained legal or professional help for their problem and answered the question.

Overall, 40% of adults who paid for legal/professional help paid £500 or less for this, with 29% paying over £1,000. When looking at those who received help from a solicitors’ firm however, a quarter (26%) paid £500 or less and 39% over £1,000; see Figure 3.15 (Table 7.10). Around a fifth of adults who had paid for all or some of the help they received did not say how much they had paid. Figure 3.15 Amount paid for help obtained, 1 LPRS 2014–15 (Table 7.10) Percentages Total paid to solicitors1

Total paid to all advisers

£100 or less

7

19

£101–£500

19

21

£501–£1,000

16

11

£1,001–£5,000

23

17

£5,001–£10,000

10

5

7

8

£10,001 or higher Don’t know/refusals Unweighted base (=100%) 1

19

20

120

192

Includes adult who paid for all or some of the legal or professional help they obtained.

86 People’s Problems Figure 3.16 shows the overall outcomes of all legal problems. Overall, over half of adults with problems (55%) reported that their problem was resolved by the time of the interview. The data was then separated into resolved and unresolved problems. Figure 3.16 Outcomes of legal problems, by problem type, 1 LPRS 2014–15 (Table 9.1) Percentages Civil

Administrative

Family

All problems

Resolved problems: As a result of action

43

38

32

41

Sorted itself out

10

17

3

11

3

2

3

3

Plan to resolve in future

27

25

38

27

Do not plan to resolve in future

18

19

24

18

2,137

622

117

2,876

Other Unresolved problems:

Unweighted base (=100%)

Don’t know responses have been excluded from this table. Problems resolved through decisions made by a court, tribunal or other independent part, through conciliation, mediation or arbitration, through direct agreement with the other party or by the respondent or other party taking independent action to resolve the problem. Do not plan to resolve in future includes problems that respondent States had ‘concluded but that they were “putting up with it”’.

The majority of adults with resolved problems (54%) had used self-help only, a quarter (25%) had used legal or professional help and around a fifth (18%) had used a formal process, such as a court or tribunal hearing or mediation, to resolve their problem. Similarly, when examining the most formal type of information, advice or help obtained to resolve a problem, almost half of adults with resolved problems (47%) did not obtain formal legal or professional help and obtained their own information only to resolve the problem. Almost one-fifth of adults with resolved problems (16%) did not obtain any help at all in resolving their problem. Respondents with resolved problems were asked how their problem had ended. Overall, almost three-quarters (73%) of resolved problems were resolved through some form of action: 7% were resolved due to a decision made by a court, tribunal or other independent party such as a regulator or the police, 41% resolved through agreement with the other party, either involving independent conciliation, mediation or arbitration (7%) or direct with the other party (34%), and 26% said that they or the other side of the problem acted independently of each other to sort it out. A fifth (21%) said the problem just sorted itself out or that they moved on. Overall, the picture for resolved civil problems and administrative problems was similar, although those with a resolved administrative legal problem were more likely to say that the problem just sorted itself out or that they moved on (29% compared with 18% for civil problems). The number of family legal problems which had resolved is too small to present figures on. (See Figure 3.17.)

What Pathways do People Choose? 87 Figure 3.17 How problems were resolved by problem type for all resolved problems, LPRS 2014–15 (Table 9.3) Percentages

Civil legal problems Purchasing goods and services Neighbours’ anti-social behaviour Money excluding personal debt Personal debt Rented accommodation Accidents or medical negligence Owning or buying residential property Administrative legal problems Employment State benefits Education All resolved legal problems1 1

The problem just sorted itself out, or you You or moved the other on such Directly side acted as leaving with the independently a job or Unweighted other of each other moving base party to sort it out home Other (=100%) 35 26 18 6 1,167

Of a decision made by a court, tribunal or other independent party, such as a regulator or the police 8

Through conciliation, mediation or arbitration run by an independent person or organisation 7

2

3

42

34

12

6

274

21

3

18

14

33

10

198

6

10

35

30

14

5

215

1 2

8 9

53 41

24 26

12 19

3 3

82 168

15

11

23

22

19

10

114

11

4

35

25

17

8

116

3

6

31

26

29

5

348

0 8 1 7

8 3 7 7

29 32 38 34

25 30 19 26

35 24 22 21

3 3 13 6

186 106 56 1,559

Results for family problems are not shown separately due to small base sizes.

88 People’s Problems In whose favour did the problem resolve? Among adults who said their problem was resolved, 47% said that the problem was resolved all or mostly in their favour and an additional 11% felt that it was somewhat in their favour; see Table 9.8. Around a quarter (24%) felt that it was evenly split between each side and 9% felt that it was all or mostly in the favour of the other side. Those who had experienced a civil legal problem were more likely to say the problem was resolved all or mostly in their favour (51%) than those who had an administrative problem (38%) and less likely to say the problem resolved all or mostly in favour of the other side (6%) compared with those who had an administrative problem (17%). (See Figure 3.18.) Figure 3.18 In whose favour was the problem perceived to have resolved, LPRS 2014–15 (Table 9.8) Percentages Civil

Administrative

All resolved legal problems1

All or mostly in the respondent’s favour

51

38

47

Somewhat in the respondent’s favour

10

14

11

Evenly split ie party in respondent’s favour, party in favour of the other side

24

23

24

Somewhat in favour of the other side

4

5

4

All or mostly in favour of the other side

6

17

9

It just ended – in no-one’s favour

4

2

4

Don’t know

2

1

1

1,167

348

1,559

Unweighted base (=100%) 1

Results for family problems are not shown separately, due to small base size.

The LPRS concluded that experiencing legal problems varied for different groups of the population, with lone parents, unemployed adults, those in receipt of means-tested State benefits and adults with a long-standing limiting disability particularly likely to experience legal problems. These groups were also more likely to experience multiple problems, again in line with previous survey findings. Having a low household income was not related to experiencing a legal problem overall, but was related to experiencing multiple legal problems. These findings suggest that groups who are less likely to have access to financial resources and who may be more vulnerable to disadvantage are more susceptible to problems. A further study carried out in 2014/15 found that people’s knowledge of the existence of a pathway, and of how it might help and how it works, is critical.27 This highlights the importance of having easily accessible advice and support. Across all civil problems, procedural knowledge was central in influencing participants’ resolution pathways. Participants who were not aware of available advice and support services or those who were unable to access relevant information to understand their options struggled to find a resolution to their civil justice problem, and tended to let the matter drop. Friends and family members played a role in signposting to relevant information. 27 I Pereira, C Perry, H Greevy and H Shrimpton, The Varying Paths to Justice. Mapping problem resolution routes for users and non-users of the civil, administrative and family justice systems (Ministry of Justice, 2015).

What Pathways do People Choose? 89 Individual capability and skills were important in handling civil problems. Comprehension skills helped participants to understand the processes involved; communication and literacy skills enabled them to deal with formal procedures; and being able to research their problems allowed participants to obtain relevant procedural information independently. Participants with low levels of these skills faced challenges in handling their problem alone and relied on support from external agencies to help them seek resolution. Some of the examples quoted in that study relating to particular types of disputes and situations are illuminating: In employment problems, for those who decided to pursue a case, obtaining detailed information about tribunal processes and active support by professional advocates at tribunals was valued. The quality of support and advocacy was important. Participants who let the matter drop tended to do so because of potential consequences, for example for their future employment prospects. In welfare problems, concerns around loss of income combined with the stress and anxiety generated by the situation influenced participants to initially respond to their problem. Physical health issues, as well as difficulties such as low levels of literacy or limited resources, hindered participants in dealing effectively with their problem – for example, in understanding correspondence from government departments. Participants tended to let matters drop once all known options had been exhausted. Participants with welfare problems in particular required support to resolve their problem. Early information and advice, especially face-to-face advice, was well received. Many participants facing debt problems were unable to accept that they faced a justice problem until an external party intervened. Anxiety and shame prevented participants from responding to their debt problem. Signposts to debt management agencies or charities and accessibility to the Citizens Advice Bureau (CAB) enabled participants to resolve their debt problem, as did information to help participants negotiate repayment plans. Family finance problems, such as the division of assets post-separation, were perceived to be particularly complex to understand and participants therefore paid solicitors to help them resolve their issues. Participants were keen to obtain a ‘fair’ settlement and sometimes used solicitors to increase their perceived leverage. They did not tend to take a systematic approach to searching for a solicitor and nor did they have any clear benchmarks to judge the quality of the professional engaged. In problems involving child arrangements, participants expressed a strong preference for avoiding court. This was shaped largely by concerns about the wellbeing of their children. The perceived power dynamic between parents was important; participants strongly believed that the parent with whom the children lived had greater leverage in negotiations around contact and residence arrangements. This could influence how the other parent decided to pursue their pathway. Participants were receptive to both informal and professional mediation. Sensitive informal mediation conducted by family members could play an important part in minimising the precariousness of an arrangement made between parents alone. There were some concerns about the timeliness and quality of professional mediation in helping participants reach sustainable arrangements. However, participants who used the courts for family justice problems suggested that in retrospect they would have preferred to make an informal agreement with their ex-partner.

90 People’s Problems Although going to court tended to be a last resort, once it was apparent that a private agreement could not be made, financial resources became an important factor. Inability to afford legal representation could present a barrier to obtaining legal advice and satisfactory problem resolution. Those who were unable to afford representation litigated in person. This was reported to be a stressful experience. Support and advice were critical here; participants who were most comfortable litigating in person reported that they had been assisted by staff at their local court. The fact that issues can mount up if not dealt with (a ‘cascade’ effect) and lead to consequential adverse health consequences was noted by Consumer Focus Scotland in their 2011 review of the area. They also highlighted the need for provision of information that would enable people to address their problems themselves where possible:28 4. Experiencing a Problem and Taking Initial Steps to Resolve it There is also evidence that unresolved problems can cause the ‘cascade’ effect, whereby the experience of one problem is found to lead on to another, for example, an employment problem, leading to debt, leading to marital breakdown, leading to mental health problems.29 The cascade effect is not limited to civil justice problems, and indeed civil justice problems can both cause, and be caused by, wider social problems. Some connections between justiciable events and wider social problems are obvious, for example domestic violence leading to health problems, while other, less obvious, connections have been found.30 For example, analysis of research from England and Wales has found that half of respondents suffered an adverse consequence, such as physical or mental ill-health, loss of income, loss of employment, experience of violence, relationship breakdown or loss of confidence, as a result of their experience of a justiciable event.31 In England and Wales, however, the annual Civil and Social Justice Surveys, which explore people’s experience of justiciable events, have since 2006 expressly considered people’s knowledge of their rights, and of legal processes, at the time they experienced their problem. Research commissioned by the Public Legal Education Network (Plenet) sought to analyse the impact that knowledge of rights and processes had on problem-solving behaviour and outcomes. An example of general self-help material from England and Wales would be AdviceNow’s publication ‘Seven Steps to Solve an Everyday Legal Problem’.32 This outlines seven key steps to try to resolve a problem as quickly and efficiently as possible and could be applied to a number of different situations. The seven steps are: • • • •

What’s your problem? Know your rights (and responsibilities) Understand your options (and know what you want) Know who to speak to

28 Ensuring effective access to appropriate and affordable dispute resolution. The final report of the Civil Justice Advisory Group (Consumer Focus Scotland, 2011). 29 H Genn and A Paterson, Paths to Justice Scotland: What People in Scotland Do and Think About Going to Law (Hart Publishing, 2001). 30 P Pleasence, N Balmer, A Buck, M Smith and A Patel, ‘Mounting Problems: Further Evidence of the Social, Economic and Health Consequences of Civil Justice Problems’ in P Pleasance, A Buck and N Balmer (eds), Transforming Lives: Law and Social Process (The Stationery Office, 2007). 31 N Balmer, A Buck, A Patel, C Denvir and P Pleasence, Knowledge, Capability and the Experience of Rights Problems (Plenet, 2010). 32 Seven Steps to Solve an Everyday Legal Problem available at www.advicenow.org.uk/know-hows/ seven-steps-how-solve-everyday-legal-problem.

What Pathways do People Choose? 91 • Communicate clearly • Get organised! • Know when to get help There is well documented evidence of the problem of ‘referral fatigue’, whereby the more times a person is referred on to another agency or source of help the less likely they are to act on that referral.33

Clients using Community Legal Advice Centre reception areas of Portsmouth, Leicester, Hull, Gateshead and Derby, and their outreach locations, during a one-week period in March 2009 had certain characteristics: they were more likely to be non-white British compared to their respective local population; overall, 17.5% of respondents could be classified as lone parents; more than a third of survey respondents said that they had a long-standing illness, disability or infirmity; and almost a third of respondents had no academic qualification.34

B. General Reasons to Seek Legal Advice Notwithstanding the possibilities of supporting self-help, a number of sources have identified the need for assistance to help people analyse their problems, identify possible options (triage) and take some form of action. Some studies have looked at why people use or need lawyers, for example in making a personal injury claim, but the type of intermediary that is in fact needed (ie, a private lawyer, a person at Citizens Advice, an Ombudsman, or some form of artificial intelligence) is an issue that could be analysed further. A 2006 study of 199 responses to a questionnaire distributed to 1,200 claimants of four solicitors firms found:35 • 83.2% of respondents deemed it to have been ‘very important’ to receive a solicitor’s advice on the value of their claim. A further 12.6% felt it was ‘fairly important’. [95.8%] • More than half of respondents (51.3%) thought the level of compensation they had received was higher because they had received the help of a solicitor. Just over one quarter (27.7%) did not feel able to assess this factor and responded ‘don’t know’. • Two thirds of respondents (66.4%) believed that they had been treated more fairly because they had a solicitor representing them. Respondents who felt they had been treated the same or less fairly accounted for 9.5% and 2.6% respectively. • Over three quarters of respondents (79.3%) said they were ‘not very confident’ or ‘not at all confident’ (35.3% and 44.0% respectively) at the thought of bringing the case themselves. A 2012 survey of 1,675 people into why they seek legal advice found that primary motivations were: to obtain or preserve money or property (35.4%), to put right something that

33 P Pleasence, A Buck, N Balmer, A O’Grady, H Genn and M Smith, Causes of Action: Civil Law and Social Justice. The Final Report of the First LSRC Survey of Justiciable Problems (The Stationery Office, 2004). 34 Community Legal Advice Centres: A Survey of Clients in Reception Areas (Legal Services Research Centre, June 2010). 35 Strategic Research Unit, Injury victims’ experiences of bringing a lower value personal injury claim with the benefit of legal advice and representation. Interim report (The Law Society, 2006).

92 People’s Problems had gone wrong (11.3%), to get compensation (10.6%), to understand what had happened (9.6%), to ‘prove that I was right’ (7.8%), a sense of injustice (7.3%), to prevent something that had gone wrong from going wrong again (7.0%), to change the behaviour of a person (5.4%) and ‘to clear my name’ (3.4%).36 It is interesting to consider the comments of a distinguished American scholar, Herbert Kritzer, who framed civil litigation in terms of ‘naming, blaming and claiming’. Noting cultural and other differences (such as in personality types), he observed that where people are unsure who to blame, Americans were much more likely to claim than English.37 He has also said: Perhaps the best way to think about [the variation across problem types and the nature of different problem areas] is to recognise that a dispute is fundamentally a social relationship, and social relationships take on different characteristics depending on the context in which the relationship is formed, what value is placed on the relationship, whether the relationship is pre-existing, and whether one or more parties to the relationship desire to continue it.38

In reviewing in 2014 whether the legal services reforms had been a success, the Legal Services Consumer Panel concluded that the evidence was all too clear that consumer experiences of legal services differ far too much across different sections of the population, and that, given that access to redress and the ability to complain are key indicators of the effectiveness of regulation and of the success of the reforms, a figure of 44% of dissatisfied consumers doing nothing was not impressive.39

C. Responses to Consumer Complaints The 2015 Oxford Economics study found that in the majority of cases (55%), survey respondents who had suffered some form of detriment indicated that they had not sought, and had no intention to seek, any form of redress.40 In 35% of cases respondents had sought some form of refund or compensation, with a further 4% planning to seek it, and 6% unsure. Of those respondents who did not seek redress, 22% failed to do so because they believed that the process was too long or complicated. The complexity of the process of redress was proportionately less likely to deter those with a higher level of educational attainment. Those aged 75 and over were twice as likely as those in younger cohorts to fail to seek redress simply because they felt that they would not succeed. Of those who did seek redress, just over half (51%) were satisfied that the issue had been resolved in a reasonable manner. Figure 3.19 summarises consumers’ motivations for not seeking redress. The study authors commented: Consumers’ motivations for not seeking redress were varied, but in only a quarter of cases was this because they did not regard the issue as sufficiently serious. Cases where a consumer judged

36 Evaluation: How can we measure access to justice for individual consumers? A discussion paper (Legal Services Board, 2012). 37 H Kritzer, Let’s Make A Deal: Negotiation and Settlement in Ordinary Litigation (University of Wisconsin Press, 1991). 38 HM Kritzer, ‘The antecedents of disputes: complaining and claiming’ (Oňati Socio-Legal Series, 2011). 39 Consumer Impact Report 2014 (Legal Services Consumer Panel, 2014). 40 Oxford Economics, Consumer detriment. Counting the cost of consumer problems September 2016 (Citizens’ Advice, 2016).

What Pathways do People Choose? 93 that the issue did not warrant further action may be of less concern from a policy perspective – however, they are clearly not the norm. Rather, in a significant minority of cases consumers who had opted not to seek redress had done so because of underlying features of the complaints process – eg that it took too long or was too complicated (22%) or that it was not clear how to complain (4%). Figure 3.19 Reasons and per cent of problems where consumer had failed to seek redress Not serious enough

5% 26% 26%

Process too long/complicated Did not think would succeed Not clear about how to complain

4%

22% 17%

Other reason Don’t know Base sample: 645 problems where the consumer did not seek redress

Source: Oxford Economics

The action taken by consumers was primarily to complain to the seller (65%). The most frequent requests were for a refund (52%), compensation for extra costs (25%) or to ask for a replacement (21%). Other actions cited were to complain to an organisation (11%), claim under an insurance policy (10%), withhold payment (8%) or take legal action (3%). Half of respondents (51%) who had sought redress regarded their problem as having been resolved to their satisfaction in a reasonable manner. A further fifth (20%) reported a satisfactory resolution but only after a struggle or long delay. The remaining 30% of respondents were split fairly evenly between those regarding the issue as yet to be resolved and those accepting that the issue was at an end even though they remained unsatisfied. The study noted that some sectors were more responsive than others:41 The personal goods and services and leisure sectoral groups were marked by strikingly high satisfaction rates with the process of resolution. In both sectoral groups, over three-quarters of consumers declared that the issue had been resolved reasonably. This was considerably higher than in the four other broad sectoral groups, with financial and professional services bringing up the rear with a satisfactory resolution rate of just 36%. It may well be the case that consumer problems in the former two sectoral groups are typically much simpler to resolve. This thesis is corroborated by the fact that problems in these two sectoral groups took the least amount of time to resolve on average. A 2018 survey of 5,000 people for Citizens Advice suggested that 3.2 million people had to take time off work to resolve a problem with goods or services, and that 14 million people suffered the knock-on effects of consumer problems in the last year, with poor

41 Oxford

Economics, para 6.3.1.

94 People’s Problems services or faulty goods affecting their lives, finances or health.42 From the respondents to the survey, it found that over half (59%) paid additional costs, more than a third (37%) felt worried or anxious, more than one in ten (12%) suffered damage to their home or property, one in six (17%) had to take time out of work, a fifth (21%) had to send emails or take calls during working hours, and a quarter spent over a month trying to sort out their problem. As noted in chapter nine below, new mechanisms of delivering redress are becoming available for consumers, especially the involvement of sectoral regulatory authorities or general consumer protection officers, which may mean that consumers do not have to initiate any claiming action. For example, between April 2014 and November 2015, the Financial Conduct Authority established 21 informal redress schemes, which it estimates have provided £131 million in compensation to consumers.43 The European Commission’s 2017 scoreboard of consumer issues44 reported that more consumers are buying online and their trust in online purchases has dramatically increased especially in buying from other EU countries: compared to the previous scoreboard edition, levels of trust increased by 12.4 percentage points for purchases from retailers located in the same country and for purchases from other EU Member States, by 21.1 percentage points. However, retailers remained reluctant to sell online to consumers in other EU countries, mainly because of the higher risks of fraud and differences in tax regulations. In the area of criminal enforcement, the National Trading Standards (NTS) Regional Investigations Teams’ activities in 2016/1745 led to the conviction of 67 criminals and confiscation of £1.6 million. Consumer protection cases saved more than £15 million in consumer detriment and over £450,000 in compensation was awarded to victims. The NTS eCrime Team, focusing on criminal activity online removed over 180 fraudulent websites, identified 500 fraudulent Twitter accounts that were taken down, and uncovered potential fraud of over £1 million. The NTS Scams Team identified scams worth more than £34 million, uncovered intelligence relating to more than 120,000 potential scam victims, supported 3,300 victims and saved consumers more than £23 million. NTS Safety at Ports and Borders Teams protect consumers by intercepting thousands of dangerous items. In 2016/17 the teams prevented nearly 550,000 unsafe items (which could have caused explosions, fires, burns and other injuries) from entering the supply chain, identified, held or reworked 1,980,927 non-compliant items, and helped avoid an estimated 1,772 serious injuries to consumers. The NTS Estate Agency team, which aims to protect small businesses, received 246 complaints about individuals and businesses trading as property agents (a rise of 44%) and issued 12 prohibition orders, which ban individuals from operating as estate agents. 42 G Hardy, K O’Malley and B Brindle, The Domino Effect. Exposing the knock-on effects of consumer problems (Citizens Advice, 2018). See also D Harris et al, Compensation and Support for Illness and Injury (Clarendon Press, 1984). 43 Financial services mis-selling: regulation and redress (National Audit Office, 2016), HC Paper No.851. The figure excludes an interest rate hedging products scheme and other schemes which were established in 2013. See C Hodges and S Voet, Delivering Collective Redress: New Technologies (Hart Publishing, 2018) ch 5. 44 Consumer Conditions Scoreboard 2017 edition (European Commission, 2017). 45 Consumer Harm Report 2016-17 (National Trading Standards, 2017).

What are People Seeking? 95

IV. What are People Seeking? A fundamental question in designing both complaint systems and compensation systems is to consider what people want the system to achieve. This chapter first summarises some of the more important research on what users of different systems have said that they are seeking. We summarise here findings in relation to complaints by citizens against the State, by consumers against traders, and by patients against the NHS. Further information on business and SME complaints is covered in other chapters.

A. Public Sector Complaints The PHSO said in late 2015: ‘People bring their unresolved complaints to us because they want an explanation, an apology and for the service to improve for others.’46 Over half (52%) of respondents to a Complaints Survey carried out for Citizens Advice in 2015 said they did not complain because they ‘didn’t think it would change anything’.47 An associated survey of 4,263 members of the public carried out in April 2015 on all public services under the jurisdiction of the PHSO found that although most people believe you should complain if you are unhappy about a service (90%), just one third of people (34%) who were unhappy after using a public service in the Ombudsman’s remit had actually made a complaint, leaving 64% who did not complain despite being unhappy.48 The reasons why people who felt unhappy with a public service did not complain were: • • • • •

29% thought that complaining does not make a difference. 14% thought it would be more hassle than it was worth. 9% felt it would be too time consuming. 7% did not know where to go to make a complaint. 6% did not think it would be taken seriously.

A 2016 Citizens Advice survey found that as many as 15 million people who had a poor experience with a public service had not registered the problem as a complaint and that people generally do not make formal complaints after poor public service.49 It reported a 63% increase in requests for help to complain about public services over the last four years; 45% of people having experienced poor public service recently, but only 22% of them went on to make a formal complaint; 52% of people said they didn’t complain about a poor experience with a public service because they felt ‘it wouldn’t change anything’ (see Figure 3.20). However, 73% used informal channels to share their frustrations, with one in five younger people turning to social media. Citizens Advice said that feedback and insight of specific groups is being missed.

46 RESOLVE

News from the Ombudsman Service (PHSO, December 2015). from mistakes: How complaints can drive improvements to public services (Citizens Advice, 2016) 15. do people think about complaining? (Parliamentary and Health Service Ombudsman, 2015). 49 Learning from mistakes: How complaints can drive improvements to public services (Citizens Advice, 2016). 47 Learning 48 What

96 People’s Problems Figure 3.20 Reasons for not complaining after experiencing poor public service50 I didn’t think it would change anything

0.52

I was able to resolve my complaint …

0.19

I was worried about how the public …

0.19

I thought it would be too complicated …

0.18

I thought it would take too long to …

0.15

I did not know how to make a formal…

0.14

I’ve formally complained before and… 0.08 Other 0.06 0%

10%

20%

30%

40%

50%

60%

Citizens Advice recommended in 2016 that it should be recognised that ‘mistakes happen, but we are wasting opportunities to improve public services if people are put off complaining and if the value of complaints data is not realised’.51 They identified six key opportunities: • There should be no ‘wrong door’ when people want to make a complaint. • Public bodies should develop better insight and intelligence capabilities on emerging service issues through big data aggregation and other means, to make services more effective and responsive to public needs. • Public service providers need to modernise their complaints culture and empower frontline staff. • People should have access to an independent, impartial organisation for help with their complaint. • People should be able to complain to a single point of contact. • The power to raise ‘super complaints’ on behalf of public service users should be introduced.

B. Consumer Complaints There is a large volume of research on consumer complaints, and it will suffice to be selective since the conclusions are well-established. Data from 2011 by Consumer Focus explored

50 ibid,

Figure 7. from mistakes: How complaints can drive improvements to public services (Citizens Advice, 2016).

51 Learning

What are People Seeking? 97 consumer experiences of making a complaint to companies in six important markets: legal services, gas and electricity, mail, telecoms, water and financial services.52 The findings were (see Figures 3.21 and 3.22) as follows. Overall, people most wanted a change in how the service was provided (25%) or a refund (23%). The primary objective varied between sectors. In legal services and financial services it was a desire for compensation or a refund. In telecoms and Royal Mail it was a change in how service was provided. Customers were generally much more satisfied with the service provided by the Ombudsman than the company on every criteria we surveyed. In order to improve the complaints process a number of themes came out. Companies should provide: • • • • • • • •

clear information on who to approach for what; better listening skills and an apology from the company if it is at fault; quicker resolution times (particularly for legal and ﬁnancial services); either better continuity with a named member of staff responsible for seeing a complaint through to the end or good record keeping to allow different staff to pick up the thread; trained staff with knowledge and skills to deal with the range of complaints; clear English spoken (particularly in telecoms and energy); a clear communication of timelines and an attempt to meet these where possible; reference numbers and case ﬁle at the initial enquiry so that consumers know that there is ownership of a complaint and it can be properly tracked. This would also ensure that there are accurate records of discussions so customers can avoid repeated explanations.

Figure 3.21 Consumer Objectives in Complaining: Consumer Focus 2012 Study53 Legal Financial Telecoms Water Energy Royal Mail Total A change in how the service is provided

15%

17%

36%

21%

21%

27%

25%

A refund

30%

35%

20%

19%

17%

21%

23%

Compensation

35%

15%

9%

8%

12%

22%

15%

An apology

8%

13%

4%

13%

22%

19%

13%

A change to a decision made by the service provider

8%

11%

14%

13%

16%

1%

11%

Other

5%

9%

17%

26%

12%

10%

14%

52 P Vaze, J Hinde and G Higginson, Dealing with dissatisfaction. Complaint handling in energy, water, telecoms, Royal Mail and financial and legal services (Consumer Focus, 2012). The data was from an online survey of 825 people, plus three group sessions and 18 in-depth interviews. 53 ibid, Table 1. The question asked was: Which of the following describes what you were hoping to gain when you made your complaint? It is based on 497 people that gave one response to this question. The top choice in each sector is emboldened.

98 People’s Problems Figure 3.22 What Happened When Consumers Made an Initial Complaint: Consumer Focus 2012 Study54 All

35

33

Royal Mail

25

43

Energy Water Telecoms

27

23 0%

20%

40%

The complaint was resolved by the company I pursued the complaint further

21 28 8

16 60%

I was referred to the ombudsman

16

I chose to drop the complaint

20

13

30

37

Legal

24

49

27

Financial

8

11

29

32

22

10

34

35

10

34 80%

100%

Ombudsman Services’ 2018 report reported the following percentages of responses for the minimum consumers would expect to happen if they received poor service or bought a defective product:55 Put the problem right

64%

An apology

42%

Financial compensation

36%

An improved service

29%

Ombudsman Services noted that consumers’ expectations of businesses are rising and also that consumer activism is rising.

C. Personal Injury Claims There is extensive and consistent evidence that what is sought by patients who have been harmed by the system comprises a package of responses: • A reliable explanation of what happened and why; this requires a full, unbiased and expert inquiry, carried out swiftly. • An apology. • The provision of ongoing care. • Reassurance that the same thing will not happen to others.

54 ibid, Table 1. The question asked was: Which of the following best describes what happened after you made your initial complaint? Based on 825 responses. 55 Consumer Action Monitor (Ombudsman Services, 2018).

What are People Seeking? 99 All of these responses are important in supporting the fundamentally important need for patients to be able to trust healthcare providers and the healthcare system. They are also aspects of the human sympathy and caring support those who provide healthcare are expected to demonstrate by those for whom they care and by the public generally. When things go wrong, people who have been hurt can demonstrate remarkable resilience in accepting their own fate, and often only want money in so far as it provides care, whilst not wanting the same thing to happen to others. Complaining about the NHS service has been found to be an atypical reaction to dissatisfaction and is rarely considered as an option by aggrieved patients.56 Hence, it is important for there to be demonstrable feedback, learning and improvement in practice and performance. The Public Accounts Committee summarised their understanding in December 2017: There is a growing body of evidence that when things go wrong many people simply want an apology, or want to know that the issue is being dealt with and it won’t happen again.57

The following summarises some of the principal research that establishes the four responses suggested above, generally in chronological order. A classic 1984 study of 1,700 accidents with physical impairment lasting over two weeks found that 14% made a claim, 12% obtained damages, and a mere five were decided in a contested hearing by a court.58 A 1994 study identified that a system should alleviate the stress felt by patients who need to express dissatisfaction, and they should receive an explanation and apology at a relatively early stage, together with an action plan aimed at avoiding similar mistakes in future.59 Vincent, Young and Philips’ survey of 227 seriously injured patients and relatives who were taking legal action through five firms of plaintiff medical negligence solicitors published in 1994 found that the decision to take legal action was determined not only by the original injury, but also by insensitive handling and poor communication after the original incident.60 Where explanations were given, less than 15% were considered satisfactory. Four main themes emerged from the analysis of reasons for litigation: concern with standards of care – both patients and relatives wanted to prevent similar incidents in the future; the need for an explanation – to know how the injury happened and why; compensation – for actual losses, pain and suffering or to provide care in the future for an injured person; and accountability – a belief that the staff or organisation should have to account for their actions.61

56 L Mulcahy and JQ Tritter, ‘Pathways, pyramids and icebergs? Mapping the links between dissatisfaction and complaints’ (1998) 20(6) Sociology of Health and Illness 825–47. 57 House of Commons, Committee of Public Accounts, Managing the costs of clinical negligence in hospital trusts Fifth Report of Session 2017–19, HC 397, 1 December 2017, para 5. 58 D Harris et al, Compensation and Support for Illness and Injury (Clarendon Press, 1984). 59 S Lloyd-Bostock and L Mulcahy, ‘The Social Psychology of Making and Responding to Hospital Complaints: An Account Model of Complaint Processes’ (1994) 16 Law and Policy 123. 60 C Vincent, M Young and A Phillips, ‘Who Do People Sue Doctors? A Study of Patients and Relatives Taking Legal Action’ (1994) 343 The Lancet 1609. 61 C Vincent, M Young and A Phillips, ‘Why do people sue doctors? A study of patients and relatives taking legal action’ (1994) 343(8913) Lancet 1609.

100 People’s Problems The experience of the charity Action for Victims of Medical Accidents (AVMA) as at 1999 was that: … more than anything else, what concerned patients was the issue of information and accountability. They wanted to know what had happened and why it had happened; they wanted an assurance that a similar accident would not happen to other patients; and they wanted to know that whoever was responsible would be appropriately held to account. Many … were also clearly in need of compensation to restore some quality to a life which had been shattered, and that obviously was not an aspect that could be ignored, but it was rarely the thought that was uppermost in their minds.62

Studies around 2000 found ‘a striking consensus’63 over what patients say they want, namely compensation, an admission of fault, the prevention of future accidents, and an explanation and apology.64 A 2003 survey of 8,206 harmed patients found that the remedy most commonly considered appropriate was an apology or explanation (34%), followed by an inquiry into the causes (23%) or support in coping with the consequences (16%).65 11% of respondents indicated that financial compensation would have been the most appropriate response. In line with this finding, 11.4% of respondents stated that they had in fact pursued a legal claim for financial compensation. The main reasons given for not pursuing a claim were that the respondent did not want financial compensation (36.7%) or that it had not occurred to them (19.5%). Some 6.8% were worried about time-consuming complexity and 2.3% were worried about cost. A 2011 study involved 100 semi-structured, in depth interviews with 39 patients and 80 family members who were involved in high severity healthcare incidents (leading to death, permanent disability, or long-term harm) and incident disclosure.66 Most patients and family members felt that the health service incident disclosure rarely met their needs and expectations. They expected better preparation for incident disclosure, more shared dialogue about what went wrong, more follow-up support, input into when the time was ripe for closure, and more information about subsequent improvement in process. Dame Janet Smith’s early 2000s Shipman inquiry identified a lack of fair procedures, failure to investigate complaints properly, failure to give adequate explanations and lack of impartiality in organisations investigating their own conduct.67 Iedema and Piper found:68 The principal gestures that patients expect are: an apology, timely and honest communication and information flow; acknowledgement of the error and for responsibility to be taken; reassurance 62 A Simanowitz, ‘The patient’s perspective’ in MM Rosenthal, L Mulcahy and S Lloyd-Bostock (eds), Medical Mishaps. Pieces of the Puzzle (Buckingham, Open University Press, 1999) 228. 63 L Fleck, ‘NHS redress scheme for severely neurologically impaired babies’ at the No-fault compensation scheme conference, Centre for Socio Legal Studies, University of Oxford, 16 March 2005. 64 National Audit Office, Handling Clinical Negligence Claims in England: Report by the Comptroller and Auditor General, Session 2000–01, HC 403, 3 May 2001; L Mulcahy, Mediating medical negligence claims: an option for the future (The Stationery Office, 2000). 65 P Fenn, A Gray and N Rickman, ‘The economics of clinical negligence reform in England’ (2004) 114 The Economic Journal 272. 66 R Iedema, S Allen, K Britten et al, ‘Patients’ and Family Members’ Views on How Clinicians Enact and How They Should Enact Open Disclosure: The “100 Patient Stories” Qualitative Study’ (2011) 343 British Medical Journal, http://www.bmj.com/content/343/bmj.d4423. 67 Fifth Report of the Shipman Inquiry, 2004. 68 R Iedema and D Piper, ‘Do Patients Want and Expect Compensation following Harm?’ (2013) 116 Precedent 48.

What are People Seeking? 101 that the incident will not happen again and that the service seeks to improve as a result of the incident; and emotional support.

A 2005 Report by the Health Service Ombudsman highlighted the problems faced by people using NHS services in getting a satisfactory response to a complaint and the failure of the NHS to learn lessons from complaints.69 A major causative issue noted was the fragmentation of complaints systems across the NHS, private healthcare, and social care. This, combined with a failure to focus on patient needs, poor leadership and lack of capacity and competence in complaint handling, was said to have led to a system which made it difficult for patients to have things put right where they had gone wrong. A subsequent survey that found that most people using adult care services saw ‘no point’ in making a complaint.70 A National Audit Office Report on health and care services asserted that people found making a complaint too complex and that many complaints took too long to resolve.71 A Healthcare Commission review found that many NHS complaints related to the fundamentals of good healthcare, such as effective communication with patients, the attitude of staff, record-keeping, privacy and dignity, plus in 19% of cases a problem with the way in which a complaint was handled.72 The Health Select Committee recommended in 2011 that there should be a single point of access, by patients in relation to complaints against the NHS, provided by integrated complaints and advice teams.73 The 2013 Clwyd and Hart review of the NHS hospitals complaints system in 201374 recorded the following key points on how the system should operate, based on their findings on ‘what it feels like to complain’: 1.

Information and accessibility – patients want clear and simple information about how to complain and the process should be easy to navigate. 2. Freedom from fear – patients do not want to feel that if they complain their care will be worse in future. 3. Sensitivity – patients want their complaint dealt with sensitively. 4. Responsiveness – patients want a response that is properly tailored to the issue they are complaining about. 5. Prompt and clear process – patients want their complaint handled as quickly as possible. 6. Seamless service – patients do not want to have to complain to multiple organisations in order to get answers. 7. Support – patients want someone on their side to help them through the process of complaining.

69 Report: making things better? A report on reform of the NHS complaints procedure in England (The Health Service Ombudsman for England, 2005). See previously H Wallace and L Mulcahy, Cause for complaint: an evaluation of the effectiveness of the NHS complaints procedure (The Public Law Project, 1999); Being Heard (Department of Health, 1994) (the Wilson Report); Cause for Complaint (Public Law Project, 1999). 70 Department of Health commissioned survey, 2005, referred to in Listening, Responding, Improving: A Guide to Better Customer Care (Department of Health, 26 February 2009). 71 Making Experiences Count: A new approach to responding to complaints (Department of Health, 2007). 72 Feeding back? Learning from complaints handling in health and social care (National Audit Office, 2008). 73 Health Select Committee report Complaints and Litigation, July 2011. 74 A Clwyd and T Hart, A Review of the NHS Hospitals Complaints System. Putting Patients Back in the Picture (Department of Health, 2013).

102 People’s Problems 8. Effectiveness – patients want their complaints to make a difference to help prevent others suffering in the future. 9. Independence – patients want to know the complaints process is independent, particularly when they are complaining about a serious failing in care. Clwyd and Hart concluded that the first step should be to discuss a concern with the practitioners concerned, such as doctors, allied health professionals, nurses, or paramedics, so as to resolve problems quickly. They noted that immediate appropriate action can help avoid an issue escalating into a more serious problem. They said that reported concerns need to be noted in writing by the staff concerned along with any action taken and the outcome.75 What patients want: Patients want to know that their complaints make a difference. The prime desired outcomes are usually the admission of responsibility, an apology, the reassurance that lessons will be learned and – where appropriate and where individuals are clearly at fault – some form of sanction. This is particularly important if staff have attempted to cover up their failings. Patients want openness and to know that where staff have done something wrong they will not be allowed to remain anonymous.

The Francis Report 2010 into Mid-Staffordshire Hospitals found that complaints were poorly investigated, remedial action was often not applied, appraisal and professional development were accorded a low priority, the focus of the Board was on processes not outcomes, and its reaction to criticism was individually and collectively one of denial instead of searching self-criticism.76 Francis said that the key themes included: • The reluctance of patients and those close to them to complain, in part because of fear of the consequences. This and other barriers prevented organisations receiving complaints. • Support for complainants, whether or not they are specifically vulnerable, with advice and advocacy still requires development. • The feedback, learning and warning signals available from complaints have not been given a high enough priority. • There was a case for independent investigation of a wider range of complaints. The 2015 inquiry into Morecambe Bay hospitals found ‘repeated failure to examine adverse events properly, to be open and honest with those who suffered, and to learn so as to prevent recurrence.’77 Nazione and Pace’s 2015 study found that empathy may play a large role in providing positive outcomes after a medical error.78 Winship and Robbenholt have asserted that

75 ibid, 11–12. 76 Independent Inquiry into care provided by Mid Staffordshire NHS Foundation Trust January 2005–March 2009. Vol I. Chaired by Robert Francis QC, HC375-I (2010). 77 Dr B Kirkup CBE, The Report of the Morecambe Bay Investigation (Department of Health, 2015) para 8.3. 78 S Nazione and K Pace, ‘An Experimental Study of Medical Error Explanations: Do Apology, Empathy, Corrective Action, and Compensation Alter Intentions and Attitudes?’ (2015) 20(1) Journal of Health Communications 1422.

What are People Seeking? 103 ‘people want to know that offenders have learned from their mistakes and have taken steps to prevent the recurrence of similar behaviour and similar harm in the future’.79 The 2015 inquiry into Morecambe Bay hospitals found ‘repeated failure to examine adverse events properly, to be open and honest with those who suffered, and to learn so as to prevent recurrence.’80 The 2016 National Maternity Review was clear about the motivations of families whose baby had died in wanting answers and learning from mistakes:81 We also heard overwhelmingly from families whose baby died that litigation was a last resort, and that they only turned to litigation when they had failed to get answers about their baby’s death through any other channels. They repeatedly told us that they were not motivated by the money, but they desperately wanted to make sure the same mistakes were not repeated with future families. The litigation process caused them considerable stress as it inhibited the clinicians from discussing openly what had gone wrong, and by needing to involve legal representatives, the process took longer to resolve, often many years.

In relation to NHS complaints, the PHSO commented in 2015: Often people complain to us because they don’t want someone else to go through what they or their loved one went through. … Complaints provide an opportunity for learning and improvements and should be embraced at all levels of the organisation from the Board to the frontline.82

A former Chief Medical Officer summarised claimants’ motivations, and the inability of current systems to achieve the desired goals, in late 2018:83 Complainants often say that they went into litigation for two reasons, firstly because they believed it was the best way to find out all of the facts of what happened, and secondly, because they wanted to see those responsible confronted in court. Many found that the process of settlement gave them neither, and the financial restitution was no compensation for the dissatisfaction they were left feeling.

Summarising the evidence on responding to patients who are injured unintentionally, the important functions are: • accurate, complete and speedy fact-finding and root cause analysis; • responding to the need for physical care, with necessary financial support;

79 V Winship and JK Robbennolt, ‘Admissions of Guilt in Civil Enforcement’ (2017) 101 Minnesota Law Review, citing T H Gallagher et al, ‘Patients’ and Physicians’ Attitudes Regarding the Disclosure of Medical Errors’ (2003) 289 JAMA 1001; KM Mazor et al, ‘Health Plan Members’ Views About Disclosure of Medical Errors’ (2004) 140 Annals Internal Medicine 409, 415; KM Mazor et al, ‘More Than Words: Patients’ Views on Apology and Disclosure When Things Go Wrong in Cancer Care’ (2013) 90 Patient Education & Counselling 341; T Relis, ‘“It’s Not About the Money!”: A Theory on Misconceptions of Plaintiff ’s Litigation Aims’ (2007) 68 U PITT L REV 701; C Vincent et al, ‘Why Do People Sue Doctors? A Study of Patients and Relatives Taking Legal Action’ (1994) 343 Lancet 1609, 1611. 80 Dr B Kirkup CBE, The Report of the Morecambe Bay Investigation (Department of Health, 2015) para 8.3. 81 Better Births: Improving outcomes of maternity services in England: A Five Year Forward View for maternity care (National Maternity Review, 2016) para 3.32. 82 J Mellor, Report on selected summaries of investigations by the Parliamentary and Health Service Ombudsman. October to November 2014 (Parliamentary and Health Service Ombudsman, 17 June 2015). 83 Sir Liam Donaldson, Report of the Independent Adviser to the Review. Clinical Advice Review Commissioned by the Parliamentary and Health Service Ombudsman (2018).

104 People’s Problems • responding to emotions as well as intellect of those hurt: an explanation and apology that are believed; • availability of ongoing support and someone to talk to and repeat an explanation; • demonstrating that the lessons have been learned and will be applied (and later that they have been applied) in improving performance and reducing risk. It is the emotional and regulatory aspects here that have largely been overlooked hitherto. Systems have traditionally been aimed at providing money whereas people seek emotional support and a credible demonstration that things can and will improve as a result of their suffering.

V. Conclusions Some important general conclusions for this study from the above data are as follows. First, those who are familiar with the legal system may tend to conceptualise and categorise people’s problems as legal problems, but the reality is that many problems experienced by people are just that – problems. People’s problems may have social, relationship, community, work, property or other aspects that are more real to people than their legal content. An important idea, therefore, is to try to identify the real problem, and its root cause(s), rather than trying to identify legal problems. Such an approach may inevitably take us outside legal architectures, processes and solutions. Secondly, that approach appears particularly relevant when one notes the evidence that some people experience multiple problems, that may amount or escalate, and form a cluster of issues. It would appear to be important to identify the root cause and address that rather than to treat the symptoms that manifest themselves on an individual basis. In this context, the concepts of ‘problem-solving courts’ and Family Drug and Alcohol Courts discussed in chapters eight, eleven and thirteen appear to be highly relevant. Thirdly, many people try to access information to help them respond to a problem themselves, and the access to such information – in a form they can understand – can help them to resolve their problem themselves in many cases. The system design should, therefore, take into account how people access information (online, from particular people or sources) and whether they need help to understand both the information, and what to do to resolve their problem. Thus, the core functions of learning, prevention, feedback, change in behaviour are all relevant, and need to be considered in relation to all of the problem types that arise. For the most important problem types (purchasing goods and services, neighbours, money, personal debt, rented accommodation, accidents, injury and owning or buying residential property) some analysis and solutions appears in other chapters. Fourthly, however, some people may need easily accessible help to understand or solve their problems. Points three and four both suggest that such information and help should be as easily-identifiable, accessible, and understandable as possible. The question is: Are our current information or dispute resolution systems easily-identifiable, accessible, simple to use, or understandable?

4 Courts I. Introduction A. The Court System The court system has vertical and horizontal divisions. It is not the purpose of this book to describe these in detail. Extensive reform of civil procedure and funding issues has occurred throughout the past 30 years if not longer. Chapter five analyses the reforms on funding and costs in relation to courts. This chapter will summarise some of the main points about reform of the courts that are most used by people and small businesses (the County Courts and Small Claims Track) and the major procedural reforms in the senior courts that are used predominantly by larger companies for commercial and international disputes. It will be seen that the County Courts are now used predominantly for debt claims by individuals or (predominantly small) businesses, or possession cases by (individual or corporate) landlords, plus personal injury claims that fall out of the negotiation process established under the Injury Portal described in chapter ten. Courts dealing with large commercial cases, which are exempt from the problems of funding that apply to individuals, such as through legal aid, CFAs, ATE premia and so on, are analysed in chapters four and five. Large commercial enterprises and their insurers are generally able to fund bringing and defending their disputes. A 2014 study, reporting a significant increase in the number of large commercial disputes, found that despite the fact that large corporates do not want to resort to litigation, the majority of conflicts were being resolved in court.1 Commercial litigation funding is a well-established phenomenon for larger commercial cases.2 Over 70% of cases heard in the Commercial Court in London have no connection with the UK and no UK party.3 A CJC working party was created to consider reforms to litigation funding, in particular BTE insurance.4 It found that BTE insurance was widely available but that there was a considerable lack of awareness of its existence amongst consumers. However, it was not available to those who are in the lower socioeconomic demographic, for whom there are ‘particular challenges’ in making BTE available. 1 Corporate conflict is on the increase, says new study (Eversheds, 2014). 2 C Hodges, J Peysner and A Nurse, Report: Litigation Funding. Status and Issues (Centre for Socio-Legal Studies, Oxford and Lincoln University, 2012), at www.law.ox.ac.uk/sites/files/oxlaw/litigation_funding_here_1_0.pdf. 3 Sir Geoffrey Vos, Legal Excellence, Internationally renowned, speech at TheCityUK UK Legal Services Conference 2018, 29 November 2018. 4 Civil Justice Council, The Law and Practicalities of BTE Insurance – An Information Study, (November 2017).

106 Courts The CJC noted the importance of Legal Helplines provided by BTE insurers to offer initial and ongoing advice and support for BTE insureds. The CJC was not persuaded that BTE insurance should be made mandatory. ADR is promoted strongly for larger commercial disputes.5 In 2013/14 the UK mediation market grew by an estimated 9%, based on an estimate of 9,500 commercial mediations (at a value of £9 billion).6 However, the primary parties, plus judges and lawyers, are alive to considerations of controlling overall cost,7 partly as a result of wishing to retain the international competitiveness of London as a centre of judicial or arbitration dispute resolution.8

II. Court Users Research Research into 21,334 claims from the HMCTS case management system published in 20159 found that civil court cases in England and Wales predominantly involve claims for money: these may be specified (claims for a specific amount, such as unpaid debt) or unspecified (where the precise value of the claim is yet to be decided, such as compensation in relation to personal injuries). Cases may also include claims for possession by mortgage lenders and landlords; most often based on either mortgage or rent arrears (see the further analysis of property claims in chapter twelve). A minority of civil court cases involve claims for other remedies, for example injunctions or insolvency. In the 2015 survey, around 30% were money claims, around 50% were personal injury claims, 12% were property possession or rent arrears claims, and other types were around 7% (Figure 4.1). Figure 4.1 Civil Court User Survey 2015; Nature of the claim (Table 4.1)

An unpaid bill or unpaid debt

Self-reported (questionnaire data only)

Composite CaseMan and questionnaire data

%

%

10

Faulty goods or services

6

Another breach of contract

3

Other money claim for a fixed or exact amount All specified money claims

9 28

32 (continued)

5 ADR and Civil Justice Reform: Chartered Institute of Arbitrators White Paper (Chartered Institute of Arbitrators, 2016). 6 Mediation Audit 2014 (Centre for Effective Dispute Resolution, 2014). 7 eg Reforming civil litigation: Discussion document (Bar Council, 2013). 8 UK Legal Services on the International Stage: Underpinning Growth and Stability (Ministry of Justice and UK Trade and Investment, 2013). 9 B Hamlyn, E Coleman, S Purdon and M Sefton, Civil Court User Survey. Findings from a postal survey of individual claimants and profiling of business claimants (Ministry of Justice, 2015). The source quoted for all the Figures here was the Ministry’s CaseMan statistics.

Court Users Research 107 Figure 4.1 (Continued) Self-reported (questionnaire data only)

Composite CaseMan and questionnaire data

%

%

Compensation for personal injury relating to a road traffic accident

30

Compensation for personal injury relating to employment

9

Compensation for personal injury (other than road traffic accident or employment)

6

Compensation for clinical or medical negligence

3

Other compensation/damages

5

All unspecified money claims

53

Possession of a property based on rent arrears

50

6

Possession of a property (not involving arrears)

6

All possession claims Other

12

12

8

7

Base: Self-reported data: All individual claimants (excluding missing responses) (n=1, 862) Base: Composite data: All individual claimants (n=2, 212) Source: Civil Court user Survey 2014/15 – individual claimants.

There were different profiles between claims made by businesses and those made by individuals, as shown in Figures 4.2 and 4.3. The overwhelming majority of claims were for less than £5,000 (Figure 4.7): this was for 91% of businesses and 89% of individuals. Figure 4.2 Civil Court User Survey 2015; Type of Claim (Table 3.2) All claims identified as a business

All claims identified as an individual

%

%

Case Type Specified money claims Unspecified money claims Possession claims Other claims* Base: All claims

64

26

1

33

22

10

13

31

12,315

8,882

*Refers to claims issued directly at county court and includes a mix of the other categories, plus other non-money claims.

108 Courts Figure 4.3 Civil Court User Survey 2015; Claim value (specified money claims only) (Table 3.3) All claims identified as a business

All claims identified as an individual

%

%

Claim Value Less than £500

52

25

£500 less than £1,000

13

18

£1,000 less than £5,000

26

46

£5,000 less than £10,000

5

6

£10,000 or over

5

4

10,286

4,965

Base: All specified money claims

Businesses were most likely to make specified money claims, for a relatively low value, and to be unlikely to be defended or to have a judgment entered. The profiling exercise of VAT-registered businesses showed that the characteristics of businesses involved in different types of claims varied, with possession claims being more likely to be issued by larger businesses, businesses with higher turnover and those with more local units. Individuals were most likely to make unspecified money claims. In comparison with business claims, individuals’ claims were of a slightly higher value and more likely to be defended and to have judgment entered (Figures 4.4, 4.5 and 4.6). Figure 4.4 Civil Court User Survey 2015; Whether at the point of sampling the claim had been defended, whether judgment had been entered and whether the claimant had legal representation, by claim type (business claims only) (Table 3.5) Specified Unspecific Possession money claims money claims claims %

%

%

Other claims

All business claims

%

%

Whether case was defended Yes

11

46

8

6

10

No

89

54

92

94

90

Yes

29

95

97

60

48

No

71

5

3

40

52

69

86

43

57

62

Whether judgment was entered

Whether there was legal representation (at the time of sampling) Yes No Base: All claims

31

14

57

43

38

10,286

125

1,206

698

12,315

Court Users Research 109 Figure 4.5 Civil Court User Survey 2015; Track allocation by claim type (defended business claims only) (Table 3.8) Specified Unspecified money claims money claims

Possession claims

Other claims

All defended cases %

%

%

%

%

No allocation

68

66

81

73

71

Small claims track

30

4

0

2

21

1

23

19

14

6

Fast track Multi track Base: All defended business claims

1

8

1

11

2

3,492

53

127

92

3,764

The survey of individual claimants (see Figures 4.6 to 4.10) showed that:10 • The majority of claimants reported that they would ideally have avoided court action, they had taken some form of alternative action to avoid going to court, and had sought advice on whether or not to make a claim before they did so. These findings suggest that the civil courts are seen as a last resort to resolve disputes. • The use of solicitors or other lawyers during the claim process varied widely by claim type. Almost all unspecified money claimants used legal representation compared with less than half of specified money claimants. Legal fees were funded on a ‘no win no fee’ basis for the majority of unspecified money claims. • Experiences of the claim process vary for different claim types. Possession cases were most likely to have the outcome decided at court by a judge, whereas specified and unspecified money claims were more likely to be settled out of court. • The majority of claimants did not have contact with court staff. Where contact had occurred, most claimants had positive perceptions of court staff. • Overall, the majority of claims were concluded in favour of the claimant, suggesting that individual claimants tend to use the system appropriately for meritorious cases. Figure 4.6 Civil Court User Survey 2015; Whether at the point of sampling the claim had been defended, whether judgment had been entered and whether the claimant had legal representation, by claim type (individual claims only) (Table 3.6) Specified Unspecified All claims money money Possession Other identified as claims claims claims claims an individual %

%

%

%

%

Whether case was defended Yes

41

54

15

6

No

59

46

84

94

32 68 (continued)

10 ibid.

110 Courts Figure 4.6 (Continued) Specified Unspecified All claims money money Possession Other identified as claims claims claims claims an individual %

%

%

%

%

Whether judgment was entered Yes

68

99

92

88

87

No

32

1

8

12

13

42

98

45

92

76

Whether there was legal representation (at the time of sampling) Yes No Base: All claims

58

2

55

8

24

4,965

2,159

893

865

8,882

Figure 4.7 Civil Court User Survey 2015; Claim value (all individual claims which involved a claim for money) (Table 4.2) Claim type Specified money

Unspecified money

%

Possession/rent arrears

All claims %

%

%

Up to £1,000

44

7

21

22

Over £1,000 up to £5,000

42

58

61

51

Over £5,0000 up to £10,000

8

16

9

12

Over £10,000 up to £15,000

2

7

5

5

Over £15,000 up to £50,000

3

7

2

6

Over £50,000

1

5

1

3

1,451

333

122

1,934

Base: All claims which involved a claim for money

Source: Civil Court User Survey 2014/15 – Individual claims where claim was for money.

Figure 4.8 Civil Court User Survey 2015; Case outcome (all individual claims – completed claims only) (Table 4.5) Claim type Specified Unspecified Possession/ All money money rent arrears claims %

%

%

%

Outcome decided by judge at court hearing

28

33

71

39

Settled out of court

52

61

11

48

How case finished:

(continued)

Court Users Research 111 Figure 4.8 (Continued) Claim type Specified Unspecified Possession/ All money money rent arrears claims % Case dropped/withdrawn

%

%

6

3

2

4

12

2

16

8

2

1

1

1

977

261

181

1,442

82

92

90

88

Default judgment Other Bases: All completed cases*

%

Direction of case outcome All or mostly in your favour Evenly split

6

6

5

6

12

1

6

6

956

254

179

1,411

All or mostly in favour of other side Bases: All completed cases*

Source: Civil Court user Survey 2014/15 – Individual claims where case completed at time of survey. *Bases differ in this table due to a differing level of valid answers for the two questions.

Figure 4.9 Civil Court User Survey 2015; Action before starting a claim (all individual claims) (Table 6.2) Claim type Specified Unspecified Possession/ All money money rent arrears claimants %

%

%

%

86

55

82

70

Contacted the other side to try to resolve Yes No, but thought about it

3

3

3

3

No, did not consider it

7

24

12

16

Don’t know

5

18

3

12

89

62

88

75

Informed the other side you were considering legal action Yes No, but thought about it

2

4

3

3

No, did not consider it

5

17

6

11

Don’t know

4

17

3

10

Yes

28

20

13

23

No, but thought about it

22

7

15

14

No, did not consider it

40

41

67

43

Don’t know

10

31

6

21

Formal mediation

(continued)

112 Courts Figure 4.9 (Continued) Claim type Specified Unspecified Possession/ All money money rent arrears claimants %

%

%

%

63

30

68

47

6

4

4

5

No, did not consider it

20

31

25

26

Don’t know

11

35

3

22

7

33

9

21

93

67

91

79

Formal mediation

1,380

402

195

2,006

Contact other side

1,436

393

199

2,057

Inform other side

1,451

400

203

2,086

Other action

1,370

384

194

1,976

At least one

1,515

448

214

2,212

Some other form of action Yes No, but thought about it

None At least one action undertaken Bases: All claimants

Source: Civil Court User Survey 2014/15 – Individual claims.

Figure 4.10 Civil Court User Survey 2015; Preference for court action (all individual claims) (Table 6.3) Claim type

Ideally would have avoided court claim Wanted to take court action Didn’t mind either way Bases: All claimants

Specified money

Unspecified money

Possession/ rent arrears

All claimants

%

%

%

%

80

57

81

68

9

18

10

14

12

25

8

19

1,491

437

212

2,174

Source: Civil Court User Survey 2014/15 – Individual claims.

The type of funding varied with claim type. CFAs were used for unspecified money claims (ie, personal injury claims), lawyers were paid normal fees for property claims, and there was a mixture of funding types for debt claims albeit with a majority not paying any fees (Figure 4.11).

County Courts and Small Claims 113 Figure 4.11 Civil Court User Survey 2015; Legal costs (individual claimants who had used a solicitor/other lawyer) (Table 7.3) Claim type Specified money

Unspecified money

Possession/ rent arrears

All claimants

%

%

%

%

Paid (or will pay) legal fees

27

7

88

22

No win no fee

28

78

3

59

No legal fees Base: All using lawyer

45

15

9

20

519

356

124

1,019

Source: civil court User Survey 2014/15 – Individual claims. Excludes a small number of cases which related to a business not owned by the respondent.

Where fees were paid, the majority (43%) of fees were between £500 and £2,000, and 37% were over £2,000 (Figure 5.17). Compared with the value of claims (Figure 4.12) issues of proportionality appear to be raised. Figure 4.12 Civil Court User Survey 2015; Total legal costs (all who paid or expected to pay legal fees) (Table 7.4) All claimants % Up to £250

10

£251–£500

10

£501–£1,000

23

£1,001–£2,000

20

£2,001–£5,000

18

£5,001+

19

Base: All who paid or expected to pay legal fees

268

Source: Civil Court User Survey 2014/15 – individual claims.

III. County Courts and Small Claims The overwhelming number of claims in the courts are small claims.11 As at 2019, the small claims procedure applies to personal injury and housing claims valued under £1,000, and all other claims valued under £10,000.12 It was proposed in 2017 that the upper limits would 11 R Jackson (2009) 1 Review of Civil Litigation Costs: Preliminary Report 47. 12 CPR, r 27.1(2) and r 63.27. The small claims limit has risen from £100 in 1973, to £1,000 in 1991, to £3,000 in 1996, to £5,000 in 1999, and £10,000 in 2013: Civil Procedure (Amendment) Rules 2013/262, art 9. It was proposed in 2011 that an increase from £5,000 to £15000, would mean that 83% of all defended cases then allocated to a case management track would fall within the limit: See Solving disputes in the county courts: creating a simpler, quicker and more proportionate system A consultation on reforming civil justice in England and Wales (Ministry of Justice, 2011).

114 Courts be raised to £5,000 for personal injury whiplash claims and £2,000 for other personal injury claims.13 As noted in chapter five, after some years of discussion, the small claims limit was to be raised in April 2019 from £1,000 to £5,000 for RTA claims, with the consequence that claimant lawyers could not recover costs from the defendant in these claims. The small claims procedure was designed from its introduction in 1973 to be ‘an accessible, quick, cheap and informal means of deciding disputed civil claims which involve comparatively small sums of money’.14 Hence, it is designed to be used by litigants in person, without the involvement of lawyers. Thus, there are several design features that differ significantly from normal adversarial procedure.15 First, litigants may represent themselves (or be represented by anybody of their choosing, whether legally qualified or not). Secondly, hearings are informal and generally take place in an office rather than a courtroom. Thirdly, judges are permitted to ‘adopt any method of proceeding at a hearing that [they consider] to be fair’.16 Fourthly, parties are required only to disclose those documents that they intend to reply on at trial. Fifthly, expert evidence, is generally not permitted. Sixthly, judge usually carries out examination of the parties and witnesses. Seventhly, each party normally bears its own cost, and costs are not shifted to the loser, save where the court determines that one of the parties has conducted the litigation in an unreasonable manner.17 The Low Commission on social welfare claims noted in 2014 that ‘The small value of many claims and the county court small claims limit, make them unsuitable for insurancebacked litigation or conditional fee arrangements.’18

A. Mediation and Small Claims The Woolfian idea was that the system should encourage people to communicate and settle claims at an early stage – but also while spending little extra cost in doing so. However, incurring extra cost in investigation or mediation of a small claim turned out to be the Achilles heel of the Woolf reforms.19 Given the small sums involved in cases in the small claims track, the idea of referring them outside the pathway to mediation immediately raises questions of whether people will think that the duality of process is worth bothering with. Mediation should either be available automatically in the pathway if relevant or should not be a distraction if irrelevant to a claim. Although initially designed as an arbitration process, the small claims procedure had assimilated a strong element of mediation by the time of the first Woolf report,20 building

13 Part 1 of the Government Response to: Reforming the Soft Tissue Injury (“whiplash”) Claims Process: A consultation on arrangements concerning personal injury claims in England and Wales (Ministry of Justice, 2017). 14 Report of the Review Body on Civil Justice 91988) Cm 394. 15 See J Sorabji, ‘Austerity’s Effect on English Civil Justice’ (2015) 8(4) Erasmus Law Review 159, 168–69. 16 CPR, r 27.8, Practice Direction 27, para 4.3. 17 CPR, r 27.14(2)(g). 18 Tackling the Advice Deficit. A strategy for access to advice and legal support on social welfare law in England and Wales (The Low Commission, 2014) para 1.14. 19 On ‘front loading’ of costs see D Dwyer (ed), The Civil Procedure Rules Ten Years On (Oxford University Press, 2009). 20 Woolf, Interim Report (1999) 102.

County Courts and Small Claims 115 on work by the Chartered Institute of Arbitrators and the Office of Fair Trading.21 Woolf converted the process into a ‘small claims track’ alongside his fast and multi-track system for civil procedure. His general espousal of mediation generated a number of court-annexed mediation pilot schemes around 1999, operating somewhat differently in each County Court.22 The general approach involved instructing (and paying) private mediators, and cases not resolved were returned to the small claims court process.23 The local schemes were replaced by a single national scheme in 2005, comprising a National Mediation Helpline (NMH) and a Small Claims Mediation Service (SCMS). The NMH could be accessed by parties using a local telephone number, or referral by the court. Cases were allocated to a mediator on a rota basis from a group of mediators based across the country. The NMH was replaced by the Civil Mediation Online Directory in 2011, still providing referral to a private mediator, but on a self-referral basis only.24 The website quotes fees to be paid by parties to the mediator per hour, which rise for claims worth over £5,000 and £15,000.25 In contrast, mediators available through SCMS (which started in 2007) are civil servants who are available free to parties in defended claims. In 2012, the SCMS had 15,000 referrals, 73% of which settled.26 Before 2014, mediation required the consent of both parties, but from 2014 claims are automatically referred to the SCMS.27 By 2016, the SCMS, based at the Northampton County Court Business Centre, had a small staff (usually working by telephone from home) that book cases for mediation with a team of 14 mediators.28 The mediators (former court back office managers) achieve a success rate in settling 70% of the cases referred to them. However, Briggs LJ noted: ‘Unfortunately, despite conducting up to five of these simple mediations a day, there are only enough mediators to service about 35 to 40% of the national demand. If the case has not been settled within 28 days of referral it is sent as a defended case to the local hearing centre in the usual way.’ He commented that ‘It is yet to become fully effective since it has insufficient mediators to meet even half of the relevant demand, and I am advised that there is no budgeted resource to expand it.’29 21 Redress Procedures under Codes of Practice – A Consultative Document (Office of Fair Trading, 1979); Annual Report (Director General of Fair Trading, 1983) 15. 22 J Sorabji, ‘Austerity’s Effect on English Civil Justice’ (2015) 8(4) Erasmus Law Review 159, 169. 23 S Prince, ‘ADR after the CPR’ in D Dwyer (ed), The Civil |Procedure Rules Ten Years On (Oxford University Press, 2009). 24 http://civilmediation.justice.gov.uk. 25 In 2017 the fees were: Amount you are claiming

Fees per party

Length of session

£5,000 or less

£50 + VAT £100 + VAT

1 hour 2 hours

£5,000 to £15,000

£300 + VAT

3 hours

£15,000 to £50,000

£425 + VAT

4 hours

26 Solving Disputes in the County Courts: Creating a Simpler, Quicker and More Proportionate System. A Consultation on Reforming Civil Justice in England and Wales. The Government Response (Ministry of Justice, 2012), Cm 8274. 27 Civil Procedure (Amendment) Rules 2014, CPR, r 26.4A. 28 This and the following are from Lord Justice Briggs, Civil Court Structure Review: Interim Report (Judiciary, 2016). 29 ibid, para 2.90.

116 Courts The proposed Online Court would replace both the small claims track and small claims mediation. It copies the practice of Ombudsmen by integrating into a single process a stage of facilitation of negotiation between the parties, rather than keeping the stages of commencement, mediation and adjudication as separate and unintegrated functions, with services delivered by different personnel.

B. Statistics Table 4.13 shows the number of civil claims issued in county and magistrates courts from 2000 to 2015.30 The total fell from 2000 to 2003, rose slightly around 2006, but has then fallen consistently to 2012, since when the number has risen to its 2001 level. It is significant that the vast majority of cases issued proceed no further in the system: only 15% in 2016. This is clear from the consistently low number of defences entered, and then the number of cases allocated to a track (see Figures 4.14 and 4.15). Most cases initiated either settle or are dropped. It seems reasonable to assume that the defendant pays or agrees in many cases. The three available case tracks probably contain distinct case types. The small claims track contains debt claims by traders against customers, possession claims by landlords and personal injury claims. One other important observation from the figures is that many claims are settled (or not pursued) in the period immediately after being filed, since there is a fall of roughly 84% from number of claims commenced and number of defences filed (around 260,000), and a further fall of almost half (to 144,000) in the number of claims allocated to a track. Immediate settlement is logical for debt claims, where a defendant knows that it is not worth trying to prevaricate further. Although the Woolfian idea was that the system should encourage people to communicate and settle claims at an early stage, the associated idea that they would spend little extra cost in doing so was an Achilles heel of the Woolf reforms.31 Figure 4.13 England & Wales County Court civil cases 2000–2018

Period 2000 2001 2002

Total civil claims in county and magistrates courts 1,943,513 1,805,637 1,743,339

Number of defences 248,167 252,176 263,384

Allocated to a track 152,641 143,486 140,721

Small Claims track 91,092 90,621 79,374

Fast track 32,700 30,576 37,600

Multitrack 28,849 22,289 23,747

Total number Fast and of Small Multi hearings Claims track or trial hearings hearings 71,233 55,836 15,397 71,763 58,333 13,430 68,901 55,719 13,182 (continued)

30 See successive quarterly Ministry of Justice Civil Justice and Judicial Review Tables, and Civil Justice Statistics Quarterly. See also L Bello, In case of emergency. Consumer analysis of legal expenses insurance (Consumer Focus, 2011). 31 On ‘front loading’ of costs see D Dwyer (ed), The Civil Procedure Rules Ten Years On (Oxford University Press, 2009).

County Courts and Small Claims 117 Figure 4.13 (Continued)

Period 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Total civil claims in county and magistrates courts 1,718,883 1,723,371 1,968,894 2,115,491 1,944,812 1,993,828 1,803,221 1,550,626 1,504,243 1,394,230 1,445,339 1,595,441 1,562,065 1,802,286 2,048,182 2,074,218

Number of defences 264,379 258,096 275,138 292,115 338,616 298,796 315,963 290,889 275,918 259,585 262,872 264,701 264,545 284,328 296,766 300,333

Allocated to a track 154,705 151,527 153,328 155,149 173,751 163,905 179,983 168,693 170,615 151,120 149,637 143,581 151,260 157,140 161,417 175,575

Small Claims track 75,918 72,398 74,527 76,821 96,417 83,928 93,073 79,924 79,114 61,771 62,907 69,324 72,524 74,789 85,537 91,610

Fast track 50,391 50,342 50,704 50,723 52,970 53,255 61,415 65,665 68,542 67,629 66,957 56,679 62,190 68,055 63,034 70,440

Multitrack 28,396 28,787 28,097 27,605 26,364 26,722 25,495 23,104 22,959 21,720 19,773 17,526 16,546 14,296 12,846 13,525

Total number Fast and of Small Multi hearings Claims track or trial hearings hearings 65,026 51,046 13,980 62,201 46,604 15,597 63,367 47,667 15,700 62,968 46,860 16,108 69,248 53,248 16,000 63,981 46,519 17,462 64,078 46,963 17,115 60,303 42,786 17,517 52,660 36,719 15,941 46,993 32,457 14,536 43,093 29,557 13,516 45,062 32,914 12,169 48,192 34,658 13,534 52,926 36,265 16,661 58,464 41,781 16,683 60,165 42,305 17,860

Figure 4.14 England & Wales County Court civil cases 2000–2016: Track allocations 2,500,000

2,000,000 Total civil claims in county and magistrates courts190 Number of defences

1,500,000

Allocated to a track Small Claims track

1,000,000

Fast and Multi track hearings

500,000

16

15

20

20

13

14

20

12

20

11

20

10

20

20

08

09

20

07

20

06

20

05

20

04

20

03

20

20

01

02

20

20

20

00

0

118 Courts Figure 4.15 England & Wales County Court civil cases 2000–2016 2,500,000

2,000,000

Total civil claims in county and magistrates courts

1,500,000

Number of defences 1,000,000

Allocated to a track Total number of hearings or trial

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

0

2000

500,000

The finding that the vast majority of specified money claims involve small amounts was also made in the analysis conducted by Briggs LJ in his 2016 Report.32 He assembled data for all County Court and all Queen’s Bench and Chancery Division work outside the Rolls Building and the Royal Courts of Justice, London for financial years from 2013/14 to 2015/16.33 Figure 4.16 shows that for all specified money claims issued, the percentage under £10,000 was 96.8%, in the £10,000–£25,000 bracket was 2.4%, and those over £25,000 was 0.7%. Half of specified money claims were allocated to the Small Claim Track, meaning that they were straightforward. Figure 4.16 All unspecified money claims 2013/14 to 2015/16 quoted by Briggs LJ

FY Issue Allocation: Small Claim

Specified money Claims Up to 10K over 10K up to 25K over 25K 2013/14 2014/15 2015/16 2013/14 2014/15 2015/16 2013/14 2014/15 2015/16 978834 1066207 1117701 32436 33584 28227 11693 12314 8920 60607 65991 67086 590 874 1010 66 60 59 (continued)

32 Lord Justice Briggs, Civil Court Structure Review: Final Report (Judiciary, 2016). 33 ibid, Annex 4, para 15. The data is partly derived from management information produced by HMCTS for operational purposes. The following points are noted in the paragraphs quoted: 15.2. Allocations are recorded only when an order allocating the claim to a track has been made. Consequently, Part 8 claims, which are allocated by

High Court 119 Figure 4.16 (Continued)

FY Allocation: Fast Track Allocation: Multi Track (total no. allocated) Hearing: Small Claim Hearing: Fast Track Hearing: Multi Track (total no. hearings)

Specified money Claims Up to 10K over 10K up to 25K over 25K 2013/14 2014/15 2015/16 2013/14 2014/15 2015/16 2013/14 2014/15 2015/16 2092 813 862 2820 2541 2638 451 421 476 228

179

167

252

203

185

1500

1286

1240

62927

66983

68115

3662

3618

3833

2017

1767

1775

29792

32477

34180

233

426

482

24

29

26

966

373

308

744

704

725

123

113

135

64

42

35

89

65

46

331

274

211

30822

32892

34523

1066

1195

1253

478

416

372

IV. High Court The number of claims issued in the High Court has fallen by over half steadily since 2007 (18,505 claims) to 7,353 in 2018: Figures 4.17 and 4.18. The fall in numbers of High Court claims issued in London has been nowhere as dramatic as that for the High Court District Registries. This suggest the maintenance of large commercial and international cases that are attracted to London. Falls have also occurred over roughly the same period in numbers in the Commercial Court (from 1,311 in 2011 to 830 in 2016), Technology and Construction Court (from 528 in both 2009 and 2011 to 359 in 2016) and Admiralty Court (230 in 2009 to 159 in 2016). Judicial justice is less sought: is this because there are fewer cases, or because people solve their cases more themselves or in ADR before going to court, or they do not have access to funding? Funding is certainly implicated as the cause of the dramatic fall in Queen’s Bench cases around 2011–12 that is illustrated in Figure 4.18. The history of the funding issues is discussed in chapter five. The caseload bounced back, but then resumed the downward trend that applied to all types of High Court cases.

default to the Multi-track without the need for an order are not counted in the number of allocations. 15.3. The number of hearings recorded relates only to final hearings. 15.4. The All Claims table includes all issues including Part 8 claims and claims for possession. 15.5. The great majority of lower value specified money claims are not defended and few of the claims issued are allocated to track or reach a final hearing.

120 Courts Figure 4.17 England & Wales High Court Queen’s Bench Division Statistics 2002–201734 Number Number of High of High Court Court Number Number of Queen’s Queen’s of High High Court Bench Bench Court Queen’s Number of Total claims claims Queen’s Bench claims High Court claims issued issued by Bench received Queen’s in High by the District claims in the Bench Court Royal Registries issued Technology claims Queen’s Courts of the in the and issued in the Number of Number Bench of High Admiralty Construction Commercial originating of trials Period Division Justice Court Court Court Court receipts35 concluded 2002 18,624 4,394 14,230 133 500 – – – 2003 14,191 3,514 10,677 170 381 – – – 2004 14,830 4,292 10,538 158 341 947 1,963 310 2005 15,317 3,841 11,476 102 340 981 3,841 224 2006 18,364 4,246 14,118 105 390 926 4,246 199 2007 18,505 4,794 13,711 89 409 839 4,794 221 2008 18,253 5,173 13,080 114 366 1,003 5,173 251 2009 18,583 5,694 12,889 230 528 1,256 5,694 196 2010 16,619 4,864 11,755 194 493 1,060 4,864 182 2011 13, 928 4,726 9,202 214 528 1, 331 4,726 193 2012 14, 454 5,549 8,905 224 452 1, 141 5,549 217 2013 13,053 5,186 7,867 181 475 1, 198 5,186 287 2014 13,084 5,359 7,725 200 478 1, 085 5,359 226 2015 12,292 4,869 7,423 158 437 870 4,869 199 2016 9,274 4,123 5,151 163 359 830 4,123 192 2017 8,403 4,319 4,084 165 404 719 4,319 153 2018 7,353 4,439 2,914 157 395 841 4,439 502

Figure 4.18 Graph of England & Wales High Court Queen’s Bench Division Statistics 2002–2016 20,000 18,000 Total claims in the High Court Queen’s Bench Division Number of High Court Queen’s Bench claims issued by the Royal Courts of justice Number of High Court Queen’s Bench claims issued by District Registries of the High Court Number of High Court Queen’s Bench claims issued in the Admiralty Court Number of High Court Queen’s Bench claims received in the Technology and Construction Court Number of High Court Queen’s Bench claims issued in the Commercial Court Number of trials concluded

16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000

34 Royal

35 These

Courts of Justice Annual Tables – 2017. figures are for the Royal Courts of Justice only.

16

15

20

14

20

13

20

12

20

11

20

10

20

09

20

08

20

07

20

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20

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0

Business and Property Courts 121

V. Business and Property Courts The Business and Property Courts (B&PCs) were established in 2017 to bring together the commercial, intellectual, property, insolvency, technology and construction and Chancery expertise. One aim was to allow judges to be deployed across a greater range of cases in their specialisms.36 Based in the Rolls Building in Fetter Lane, London, the B&PCs comprise the following previous courts as at 2019, with their origins in the Queen’s Bench Division (QBD) or Chancery Division (ChD) as shown: • • • • • • • • • • • •

The Commercial Court (eg, shipping, sale of goods, insurance and reinsurance) (QBD). The Business List (ChD). The Admiralty Court (QBD). The Commercial Circuit Court (previously the Mercantile Court). The Technology and Construction Court (QBD). The Financial List (eg, banking and financial markets) (QBD and ChD Commercial Court). The Insolvency List (ChD). The Companies List (ChD). The Competition List (ChD). The Intellectual Property List (Including the Patents Court and Intellectual Property and Enterprise Court) (ChD). The Property, Trusts and Probate List (cases in Chancery) (ChD). The Revenue List (ChD).

The Commercial and Admiralty courts took steps to control costs through reforms to procedure, especially in relation to limiting discovery. They led an opt out from the automatic Jackson costs management regime the basis that it might not always be appropriate, particularly in high value cases.37 In 2013 Briggs LJ published a fundamental reform package, saying that ‘There should be a major culture change: chancery trials should be fixed rather than open-ended. There should be no overruns. Trial time should be rationed by the court rather than chosen by the parties.’38 His recommendations for a ‘fundamental change of approach’ included the adoption of modern IT and modernised case management, re-directed ‘towards dispute resolution of all kinds, rather than just contested trials’.39 Further innovations have included experimenting with ‘hot tubbing’ of experts.40 The judiciary established the Financial List in 2015, aimed at high-value complex financial cases by docketing them to a single expert judge and including a test case procedure, with an online filing and electronic document management system from anywhere in the world.41 36 Sir Geoffrey Voss C and Sir Brian Leveson P, ‘The Business and Property Courts of England & Wales. An Explanatory Statement’ (Judiciary, 18 May 2017). 37 See eg an opt out in relation to cases in various courts for cases over £2 million: Costs Management in the Chancery Division and the Specialist Lists in the Queen’s Bench Division: Amendment to CPR Rule.3.12(1) (Judiciary of England and Wales, 18 February 2013). 38 ibid, para 16.43. 39 Lord Justice Briggs Chancery Modernisation Review: Final report (Judiciary, 2013). 40 H Genn, ‘Getting to the truth: experts and judges in the “hot tub”’ (2013) 32(2) Civil Justice Quarterly 275. 41 The Lord Chief Justice’s Report 2015 (Lord Chief Justice, 2016).

122 Courts

A. The Chancery Division The previous Chancery Division was described, somewhat enthusiastically in view of the overall statistics on claims, as:42 the largest single unit for civil litigation in the UK, undertaking a uniquely varied workload, the only common feature of which may fairly be described as its complexity. Cases include asset recovery; business contract disputes; reconstruction of companies (as well as Limited Liability Partnerships and other investment vehicles); patents and Intellectual Property (including confidential information, copyright, trademarks and passing off); financial services, security, banking (including charges and guarantees); insolvency and restructuring (including administrations, liquidations and bankruptcies); competition law; pensions; professional liability; commercial and domestic property disputes; fraud; succession and the administration of estates (including Wills, Probate and claims under the Inheritance Act); and trusts.

The value of Chancery Division cases is greater than the majority of general civil cases, as shown in the 2015/16 figures at Figure 4.19. Figure 4.19 Estimated claim values for All Ch D claims through the triage process (whether issued or transferred to Chancery) for the period 21.12.15 to 27.5.16 £100k–£200k

23

£200k–£300k

5

£300k–£500k

10

£500k–£1m

12

£1m–£10m

28

£10m–£100m

5

£100m–£1bn

0

Over £1bn

0

Unascertainable

51

Non-monetary

136

No value entered Total

1 271

The case statistics for Chancery cases between 2000 and 2016 are at Figures 14.20 and 14.21. The total number of cases has fallen from 47,475 in 2008 to 25,168 in 2016. A review of the Chancery Division was undertaken by Briggs LJ in 2013, in the light of its main perceived weaknesses: Unsatisfactory waiting times for hearings before Registrars, and for the trial of patent cases; and an almost complete lack of modern or effective IT. It is curious that the number of cases outside London rose so much in 2016, from 2,736 in 2015 to 21,315, and remained high in 2017. It appears from Figure 4.20 that the percentage of cases issued that are listed for trial is quite high, even if the percentage of trials heard is lower (respectively 23% and 5% in 2012 – still greater than QB cases.) This should not be surprising in view of the potential complexity of Chancery cases.

42 Lord

Justice Briggs, Chancery Modernisation Review: Preliminary Report (Judiciary, 2013) para 1.38.

Business and Property Courts 123 As Figure 4.22 shows, many cases settle at a relatively late stage: the proportion of cases issued that were listed for trial and tried between 2008 and 2012 was relatively stable at between 4% and 6% (in 2012, 255 of the 4,999), with a waiting time of 47 weeks.43 However, the total number of trials and cases disposed of after trials has risen in recent years. This appears to indicate that fewer cases are resolved by direct settlement or ADR. Figure 4.20 England & Wales High Court Chancery statistics 2000–201844 Total number of proceedings in High Court Chancery Period Division 2000 37,333 2001 2002 35,919 2003 38,003

Number of High Court Chancery claims that proceeded in Number of High the Companies Court Chancery Court claims that proceeded Outside in the Bankruptcy London London Court 12,041 6,326 10,511

Number of Patent Court Appeals 10

Total number of trials, general dispositions and interim hearings45 2,17946

Total disposals after trial or hearing in High Court Chancery Division 455

12,865 14,884

7,433 5,931

10,15547 10,850

7 3

2553

1077

5,458 3,508 7,941

11,533 13,149 13,559

6 6 2

4,441 3,995 4,342

2,918 2,860 3,784

2004 2005 2006

34,973 34,125 44,663

11,950 11,571 15,274

2007

45,541

9,099

2008 2009 2010 2011 2012 2013 2014 2015

47,475 45,678 33,102 35,238 28,961 28,615 23,906 25,757

11,586 12,371 10,003 11,115 9,085 8,992 7,013 8,502

8,852 8,000 4,360 4,506 3,772 3,069 2,118 2,736

2016 2017 2018

45,406 41,697 13,704*

9,205 10,722 7,824

21,315 20,363 ?

8,403 Petitions

3

3,856

3,996

12,479 12,144 10,770 8,389 8,269 6,327 5,587 5,525 5,432

Other originating applications 8, 261 5,551 7,402 2,674 3,852 1,129 2,923 1,489 1,245

5 6 5 5 0 0 – –

3,918 4,500 4,108 3,916 3,672 3,984 1,491 1,925

3,634 3,184 2,961 3,034 2,886 2,919 758 897

3,228 2,319 1,644

3,148 266 181

– – –

4,139 1,177 2,102

3,172 1,464 1,604

* Omits cases outside London. 43 ibid. 44 Royal Courts of Justice Annual Tables – 2018. 45 The disposal statistics for the Chancery division are only for the London area. 46 For the 2000 data the sub-categories making up the number of disposals were labelled ‘Witness list Part I,’ ‘Witness list Part II’ and ‘Non-Witness list’ rather than the ‘trials, general dispositions and interim hearings’ categorisation used later on (Lord Chancellor’s Department, ‘Judicial Statistics Report 2001,’ http://webarchive.nationalarchives.gov. uk/20030625070505/http://www.lcd.gov.uk:80/judicial/jsar00/contents.htm accessed 31/8/17 8:25, p 24. 47 Data for the Bankruptcy Court for the years 2002–2006 include only Bankruptcy petitions (Ministry of Justice, ‘Judicial and Court Statistics 2009,’ www.gov.uk/government/uploads/system/uploads/attachment_data/

124 Courts Figure 4.21 Chancery statistics 2000–2016 50,000 45,000 Total number of proceedings in High Court Chancery Division

40,000 35,000

Number of High Court Chancery claims that proceeded in the Companies Court (London)

30,000 25,000

Number of High Court Chancery claims that proceeded in the Companies Court (outside London)

20,000 15,000 10,000

Number of Patent Court Appeals

0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

5,000

Figure 4.22 Proportion of cases issued that were listed for trial and tried between 2008 and 2012 30.0% 25.0%

25.2%

24.7%

24.5%

22.9%

20.6%

20.0%

Listed trials - % of issued Trials heard - % of issued

15.0% 10.0% 6.0% 5.0% 0.0%

2008

4.1%

2009

4.5%

2010

5.7%

2011

5.1%

2012

file/243134/7273.pdf, accessed 28/08/17 11:35, p 34. However, from 2007 onwards, the data for the Bankruptcy Court includes ‘Other originating applications’ (Ministry of Justice (2009), ‘Judicial and Court Statistics 2009,’ www.justice.gov.uk/downloads/statistics/mojstats/jcs-stats-2009-211010.pdf accessed 28/08/17 11:40, p 129.

Business and Property Courts 125

B. Reforms of Procedure Since April 2017, online filing of all court documents in the B&PCs has been compulsory for professional court users. Orders are produced electronically, and some hearings employ digital case management systems, without any use of paper. The Chancellor of the High Court has made clear that the major technological change requires a fundamental change in culture by all those working in the system.48 He also envisioned a more iterative style of procedure to take advantage of the opportunities of the technology on ways of working:49 If the judges were more participative online, asking questions, directing evidence and resolving cases stage by stage, they could probably resolve or decide the majority of even lengthy trials by an iterative online process. We are probably too hidebound by our procedural rules and our long-established practices. Greater flexibility and imagination could cut through the most difficult questions and mean that oral evidence at a synchronous hearing could become the exception rather than the rule. When it was needed, such a hearing would be efficient and business-like. It would be conducted by a judge who was already totally au fait with the issues and the stage that her online ‘trial’ had reached and what she truly needed to know to resolve the issues that really divided the parties in the case.

However, the Chancellor noted caveats that the cost of both simultaneous transcription services and case management systems that allow for paperless trials is expensive, and that it is necessary to keep in mind how the core principles of open justice and access to justice are maintained in a new digital judicial process. Pilots on Shorter and Flexible Trial procedures were introduced in 2015 across courts that later became the B&PCs.50 The Shorter Trial procedure was for commercial and business cases that did not require extensive disclosure, witness or expert evidence. Parties could ‘opt in’ and a defendant could apply to transfer out, pre-action protocols would generally not apply, disclosure would usually be standard, pleadings would be short (maximum 20 pages) and attach key documents, cases would be case managed by docketed Judges with the aim of reaching trial within approximately 10 months of the issue of proceedings, and judgment within six weeks thereafter. The Shorter Trial procedure was made permanent, with amendments (including an extension to non-business cases), from October 2018. The Flexible Trial procedure enabled parties to adapt trial procedure by agreement to suit their particular case, whether in relation to pre-trial disclosure, witness evidence, expert evidence or submissions at trial. The objective was to encourage parties to limit disclosure and to confine oral evidence at trial to the minimum necessary, so as to reduce costs, reduce the time required for trial and to enable earlier trial dates to be obtained. The Flexible Trial procedure was also made permanent for B&PC cases from October 2018.

48 Sir Geoffrey Vos C, speech ‘Debate on how the adoption of new technology can be accelerated to improve the efficiency of the justice system’ at the Foundation for Science and Technology, 20 June 2018, at www.judiciary.uk/ wp-content/uploads/2018/06/speech-chc-the-foundation-for-science-and-technology.pdf. 49 ibid, para 22. 50 Shorter and Flexible Trial Procedures. Pilot Schemes, at www.judiciary.uk/wp-content/uploads/2015/09/ Shorter-and-Flexible-Trial-Schemes-Announcement.pdf. Practice Direction 51N – Shorter and Flexible Trials Pilot Schemes. See earlier The Shorter and Earlier Trial Procedures Initiative: Consultation Document (Chancery Bar Association, 2015).

126 Courts The Intellectual Property Enterprise Court (IPEC) has a notably streamlined procedure with capped costs for cases up to £250,000 and robust case management. Unless the parties agree to exceed the limit, a claim for damages or an account of profits in the IPEC shall not exceed £500,000.51 Scale recoverable costs apply and, subject to certain limited exceptions, the court will not order a party to pay total costs of more than £50,000 on the final determination of a claim in relation to liability and no more than £25,000 on an inquiry as to damages or account of profits.52 A small claims track applies where the value of the claim is not more than £10,000.53 A voluntary two year pilot of the IPEC model was commenced from January 2019 in B&PC cases in the London Mercantile Court and the Mercantile, Technology and Construction Court, and Chancery Courts at Manchester and Leeds District Registries.54

C. Disclosure In November 2017 a new rule was unveiled for consultation on disclosure of documents in the B&PCs, in response to two realities. First, most evidence now comprised electronic documents rather than paper and, secondly, the volume of data that might fall to be disclosed had ‘vastly increased, often to unmanageable proportions’.55 This initiative was, therefore, a further response to unacceptably high costs in commercial cases, in order to cut the volume of evidence disclosed by parties emanating from email and other new technology. The pre-existing regime of ‘standard disclosure’ was said to produce ‘large amounts of wholly irrelevant documents, leading to a considerable waste of time and costs’.56 The Master of the Rolls later admitted that the disclosure working party was a response to complaints on cost from the General Counsel of FTSE 100 companies.57 The Working Group that produced the rule concluded that a ‘wholesale cultural change’ was required.58 In 2018, the B&PCs proposed a disclosure pilot to start for two years from January 2019.59 The new regime required the parties to cooperate with each other and the court over disclosure, and to disclose known adverse documents in any event. The parties and their lawyers would be subject to duties on disclosure, including a duty to cooperate so as to promote the reliable, efficient and cost-effective conduct of disclosure; and a duty to disclose known

51 CPR, Pt 63, r 17A. 52 CPR, Pt 45 rr 45.30–45.32 and see also PD 45, Section IV. 53 CPR, Pt 63, r 72. 54 Extending Fixed Recoverable Costs in Civil Cases: Implementing Sir Rupert Jackson’s proposals (Ministry of Justice, 2019) ch 7 para 3. 55 Lady Justice Gloster, Proposals for a Disclosure Pilot for the Business and Property Courts in England and Wales (Judiciary, 2017). 56 Disclosure Working Group Press Announcement, 31 July 2018, at www.judiciary.uk/wp-content/ uploads/2018/07/press-annoucement-disclosure-pilot-approved-by-cprc.pdf. 57 Sir Terence Etherton, MR, speech ‘Civil Justice after Jackson’, Conkerton Memorial Lecture 2018, Liverpool Law Society, 15 March 2018, www.judiciary.uk/wp-content/uploads/2018/03/speech-mor-civil-justice-afterjackson-conkerton-lecture-2018.pdf. 58 Lady Justice Gloster, Proposals for a Disclosure Pilot for the Business and Property Courts in England and Wales (Judiciary, 2017). 59 CPR, Pt 321. Disclosure Working Party, Disclosure Pilot Scheme – Business and Property Courts, Briefing Note (November 2017).

Business and Property Courts 127 adverse documents in all cases, irrespective of whether an order to do so is made (wider than the normal obligation under the Civil Procedure Rules (CPR), Part 31). The normal approach would start at the stage of statements of case with ‘Initial Disclosure’ of key documents which are relied on by the disclosing party and are necessary for other parties to understand the case they have to meet. A search should not be required for Initial Disclosure, although one may be undertaken. After closure of statements of case, and before the case management conference, the parties should be required to meet, discuss and complete a joint Disclosure Review Document to: • List the Issues for Disclosure in the case (those key issues in dispute which the court will need to determine with some reference to contemporaneous documents); • Exchange proposals for ‘Extended Disclosure’ (including which Disclosure Models should apply for which issue(s)); and • Share information about how documents are stored and how they might (if required) be searched and reviewed (including with the assistance of technology). At the case management conference, the court should consider which of five ‘Extended Disclosure’ models (Models A to E) is to apply to which issue. Under this system, the crucial control mechanism is to shift control of disclosure to judges – but only partially, as a second step after initial voluntary disclosure, which remains in the control of parties and their lawyers. It will be interesting to see if the volume of Initial Disclosure is high, as lawyers seek to maximise their costs on this initial stage. The system relies on the expertise of lawyers in identifying what evidence is relevant or irrelevant, both in their own clients’ domain and that of opponents. In complex cases, it may be that many cases require detailed discussion involving the judge, and that the desired fundamental change in culture may not materialise.

D. Environmental Cases A particular issue that arises in relation to the costs of environmental damage cases is the UK’s international obligation under the Aarhus Convention to provide costs protection for claimants.60 After some discussion on this issue,61 the government announced in March 2019 that it did not propose to pursue the extension of the ‘Aarhus’ rules across all judicial review cases but did agree with introducing cost budgeting for ‘heavy’ judicial review cases.62 60 Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters, done at Aarhus, Denmark, on 25 June 1998. 61 Costs Protection in Environmental Claims: Proposals to revise the costs capping scheme for eligible environmental challenges (Ministry of Justice, 2015). Interim Report of the Working Group on Property Disputes in the Courts and Tribunals (Civil Justice Council, 2016). The interim report of the Civil Justice Council Working Group on Property Disputes in the Courts and Tribunals makes a series of recommendations for the use of flexible judicial deployment in certain categories of property case with the aim of being able to hear and make a decision on a set of facts leading to a particular claim together, without different parts of that claim having to be heard separately and at different times by the county court and the First-tier Tribunal. 62 Extending Fixed Recoverable Costs in Civil Cases: Implementing Sir Rupert Jackson’s proposals (Ministry of Justice, 2019).

128 Courts

VI. Duration Data on the duration of cases is difficult to find. In 2013 the average time between issue and hearing in the small claims track was 30 weeks, and between issue and trial in the fast and multi tracks was 59 weeks.63 Briggs LJ stated in 2016 that the target times for cases were:64 70% of Small Claims Track claims to reach final hearing within 30 weeks of issue. 65% of Fast-Track claims to reach final hearing within 50 weeks 65% of Multi-Track claims to reach final hearing within 80 weeks He published lists of the performance against those targets of areas around the country (Figures 4.23 to 4.25) which show significant variation and failures to meet the targets (on a ‘traffic light’ basis) for all except the Fast Track. Figure 4.23 Time target for Small Claims Track cases, per Briggs 201665

Location

Receipt to Allocation Avg wait (weeks)

Allocation to Hearing Avg wait (weeks)

% of claims Receipt to reaching a Hearing Avg hearing within wait (weeks) 30 weeks

National

17.2

14.6

31.8

69.40%

Avon, Som and Glos Group

16.5

12.4

28.9

76.30%

Birmingham CJC

18

16.5

34.5

60.50%

Cheshire and Merseyside

16

12.4

28.4

77.60%

Cleveland and South Durham

17.5

15.1

32.6

69.90%

Devon and Cornwall Group

15.5

14.9

30.4

67.40%

Dorset, Hants, Isle of Wight and Wilts

15.3

17.1

32.4

64.20%

East Anglia

16

12.6

28.6

72.70%

Greater Manchester

16.4

13.8

30.2

73.20%

Hereford and Worcester

16

12.5

28.5

76.50%

Humberside

18.8

9.5

28.3

76.70%

Kent, Surrey and Sussex

19.2

15.8

35

64.10%

Lancashire and Cumbria

16.9

14.4

31.3

68.90%

Central London and Mayors and City

19

13.4

32.4

71.20%

Other London Courts

18.6

15.4

34

69.60%

North and West Yorkshire

15.8

14.1

29.9

71.60% (continued)

63 Civil

Justice Statistics Tables (Ministry of Justice, 2014) Table 1.6. Justice Briggs, Civil Court Structure Review: Final Report (Judiciary, 2016). 65 Briggs, Final Report, Annex 4, Table 17. 64 Lord

Duration 129 Figure 4.23 (Continued) Receipt to Allocation Avg wait (weeks)

Allocation to Hearing Avg wait (weeks)

Northants and Leicester

19.2

14.9

34.1

57.60%

Northumbria and North Durham

15.6

15.9

31.5

69.90%

Notts, Derby and Lincs

16.2

14.7

30.9

71.20%

South Yorkshire

16.7

12.1

28.8

73.20%

Staffordshire and Shropshire

16.7

15.2

31.9

71.10%

Thames Valley, Beds and Herts

18.1

17.1

35.2

59.40%

Wales

16.2

12.7

28.9

80.40%

West Midlands and Warks

16.2

13.4

29.6

71.30%

Location

% of claims Receipt to reaching a Hearing Avg hearing within wait (weeks) 30 weeks

* Business Centre is excluded.

Figure 4.24 Time target for Multi-Track cases, per Briggs 201666

Location

Receipt to Allocation Avg wait (weeks)

Allocation to Hearing Avg wait (weeks)

% of claims Receipt to reaching a Hearing Avg hearing within wait (weeks) 80 weeks

National

36.5

45.7

82.2

62.10%

Avon, Som and Glos Group

31.3

55.3

86.6

54.80%

Birmingham CJC

27.3

44.3

71.6

64.50%

Cheshire and Merseyside

27.5

50.6

78.1

64.90%

Cleveland and South Durham

41.6

43.2

84.8

56.10%

Devon and Cornwall Group

32.2

54.3

86.5

52.50%

Dorset, Hants, Isle of Wight and Wilts

38.2

40

78.2

55.80%

East Anglia

31.8

48.2

80

67.20%

Greater Manchester

38.4

50.1

88.5

57.80%

Hereford and Worcester

21.9

54.7

76.6

66.70%

Humberside

44

40.8

84.8

50.00%

Kent, Surrey and Sussex

48.3

49.6

97.9

44.10%

Lancashire and Cumbria

47

53.2

100.2

33.30% (continued)

66 Briggs,

Final Report, Annex 4, Table 19.

130 Courts Figure 4.24 (Continued) Receipt to Allocation Avg wait (weeks)

Location

Allocation to Hearing Avg wait (weeks)

% of claims Receipt to reaching a Hearing Avg hearing within wait (weeks) 80 weeks

Central London and Mayors and City

28.6

42

70.6

78.00%

Other London Courts

39.1

31.2

70.3

80.40%

North and West Yorkshire

30.6

51.9

82.5

59.90%

Northants and Leicester

49.5

38.6

88.1

56.10%

Northumbria and North Durham

54.5

64.5

Notts, Derby and Lincs

48.2

44.6

92.8

48.80%

South Yorkshire

41.5

52.6

94.1

39.50%

Staffordshire and Shropshire

41.6

45

86.6

44.40%

Thames Valley, Beds and Herts

41.9

42.9

84.8

61.60%

Wales

38.5

41

79.5

61.70%

West Midlands and Warks

33.7

48.4

82.1

66.00%

119

34.00%

Figure 4.25 Time target for Fast Track cases, per Briggs 201667

Location

Receipt to Allocation Avg wait (weeks)

Allocation to Hearing Avg wait (weeks)

% of claims Receipt to reaching a Hearing Avg hearing within wait (weeks) 50 weeks

National

21.7

28.2

49.9

67.90%

Avon, Som and Glos Group

18.9

26.4

45.3

75.30%

Birmingham CJC

22.6

26.9

49.5

68.10%

Cheshire and Merseyside

18.3

25.4

43.7

80.60%

Cleveland and South Durham

19.6

26.8

46.4

72.90%

Devon and Cornwall Group

22.4

31.4

53.8

48.30%

Dorset, Hants, Isle of Wight and Wilts

21.2

30.1

51.3

63.60%

East Anglia

20.5

28.7

49.2

66.20%

Greater Manchester

19.6

23.9

43.5

80.00%

Hereford and Worcester

20.4

26.4

46.8

68.20%

Humberside

20.9

27.5

48.4

69.80%

Kent, Surrey and Sussex

26.7

30.9

57.6

52.90% (continued)

67 Briggs,

Final Report, Annex 4, Table 18.

Alternative Strategies for Business Disputes 131 Figure 4.25 (Continued) Receipt to Allocation Avg wait (weeks)

Allocation to Hearing Avg wait (weeks)

Lancashire and Cumbria

24.4

30.5

54.9

54.20%

Central London and Mayors and City

19.8

26.4

46.2

83.00%

Other London Courts

23.2

29

52.2

68.30%

North and West Yorkshire

20.2

29.4

49.6

65.70%

Northants and Leicester

22.1

32

54.1

48.00%

Northumbria and North Durham

24.7

29.5

54.2

57.10%

Notts, Derby and Lincs

21.3

26.8

48.1

68.40%

South Yorkshire

19.9

28.4

48.3

69.30%

Staffordshire and Shropshire

21.2

28.9

50.1

67.50%

Thames Valley, Beds and Herts

22.7

32.4

55.1

54.80%

Wales

20.1

24.7

44.8

77.70%

West Midlands and Warks

19.5

27.7

47.2

67.50%

Location

% of claims Receipt to reaching a Hearing Avg hearing within wait (weeks) 50 weeks

In the last quarter of 2018, the average time for those cases that went to trial was 34.4 weeks after issue for a small claim and 57.7 weeks for Fast and Multi-Track claims.68

VII. Alternative Strategies for Business Disputes Major business disputes have developed their own dispute resolution pathways, sometimes of a sectoral basis. Arbitration is a leading option for commercial disputes. It has advantages of the ability to choose expert arbitrators, sometimes reduced cost, and usually confidentiality. Major centres of arbitration operate in leading financial centres and are highly attuned to the needs of their business customers. For example, the International Chamber of Commerce (ICC) regularly reviews its dispute resolution services and rules to ensure that they adapt to the latest legislative and technological developments and meet the needs of practitioners across the globe.69 It stresses the particular advantages for complex disputes, such as construction and engineering projects, of being able to call on arbitrators with highly relevant and ‘fluent’ expertise, of being mindful of the need to be expeditious and cost-effective, and of providing effective case management. The oft-repeated mantra that the UK has a world-leading court system is only a claim that can be made in large commercial cases that can support ‘Rolls-Royce’ 68 Civil Justice Statistics Quarterly, England and Wales, October to December 2018 (provisional) (Ministry of Justice, 2019). 69 www.iccwbo.org/dispute-resolution-services.

132 Courts high quality – and highly expensive – professional services.70 In 2016, over 80% of commercial cases handled by London law firms involved an international party.71 The fact that London has long been a major global centre for commercial services arguably rests to a significant extent on the low level of corruption of judges, supporting their reputation for impartiality as well as their expertise.72 There are also the facts that 27% of the world’s 320 legal jurisdictions use English law,73 40% of governing law in all global corporate arbitrations is English law and that London is viewed as the leading preferred centre of arbitration. A survey reported in 2018 that around 35% of businesses were changing contracts to provide that disputes would be heard in other EU States after Brexit, and two-fifths of the remainder intended to review their contracts on this point.74 In the construction sector, a specific form of dispute resolution has been devised, called Adjudication. A party to a construction contract may refer a dispute for a decision by an adjudicator, which must be made within 28 days.75 The contract shall provide that the decision of the adjudicator is binding until the dispute is finally determined by legal proceedings, by arbitration (if the contract provides for arbitration or the parties otherwise agree to arbitration) or by agreement. The parties may agree to accept the decision of the adjudicator as finally determining the dispute. The model is, therefore, similar to arbitration, with timely expert intervention, and enables the parties to move forward with their relationship on a reliable basis. The mechanism is widely used and very few adjudication decisions are challenged at the end of the contract.

VIII. Conclusions The senior judiciary and leading commercial lawyers have ensured that pathways for large commercial disputes remain competitive internationally, and hence reorganisations and improvements in process, case management, cost management, disclosure of evidence and so on have occurred in that area. The picture is different for the junior courts. The vast number of claims are small in value and apply for individual people and SME businesses. We will see in succeeding chapters that alternative pathways have opened up for consumer, property, undefended personal injury,

70 UK Legal Services on the International Stage: Underpinning Growth and Stability (Ministry of Justice and UK Trade and Investment, 2013); Legal Services 2014 (TheCityUK, 2014); Corporate conflict is on the increase, says new study (Eversheds, April 2014); UK Legal Services 2015: Excellence, Internationally Renowned (TheCityUK, 2015); E Lein, R McCorquodale, L McNamara, H Kupelyants and J del Rio, Factors Influencing International Litigants’ Decisions to Bring Commercial Claims to the London Based Courts (Ministry of Justice, 2015) (concern at high fees); UK Legal Services 2016: Legal Excellence, Internationally Renowned (TheCityUK, 2016). 71 The Lord Chancellor, the Lord Chief Justice and the Senior President of Tribunals, Transforming Our Justice System (Ministry of Justice, 2016). 72 ‘Courtly Competition’ The Economist 2 September 2017, 65. See also E Lein, R McCorquodale, L McNamara, H Kupelyants and J del Rio, Factors Influencing International Litigants’ Decisions to Bring Commercial Claims to the London Based Courts (Ministry of Justice, 2015). 73 The Lord Chief Justice’s Report 2017 (Judiciary of England and Wales, 2017). The legal sector’s trade surplus nearly doubled in a decade to £3.4 billion in 2015. 74 J Hyde, ‘Businesses shun UK courts in droves as Brexit looms’ Law Society gazette 23 July 2018. 75 Housing Grants (Construction and Regeneration) Act 1996, s 108.

Conclusions 133 employment and SME debt claims that have been attracting traffic away from courts. The junior courts now only process for debt claims, possession of property and those personal injury claims that fall out of the Injury Portal. Consumer claims have largely shifted to Ombudsmen in sectors where they exist, as discussed in chapter nine. Hence if a residual Ombudsman scheme fails to be established, the Online Court should reconfigure itself to perform that function. But it should also be designed to provide the information and data functions that consumer Ombudsmen provide. Many property claims by landlords are now being moved across to the Property Tribunal, whereas claims by tenants are increasingly brought to Ombudsmen, as discussed in chapter twelve. Personal injury claims must be started in the Portal, but have a confusing number of pathways, as discussed in chapter ten. New intermediaries have been created for claims by SMEs, as discussed in chapter fourteen. With this background, the introduction of fixed costs for small claims would be pointless, as it adds cost and risk to already small sums. It is far better to move small cases into a no cost regime, such as an Ombudsman, tribunal or administrative redress mechanism. It is difficult to see any evidence that the output of the courts is aggregated or fed back to have any effect on the behaviour or culture of defendants – large or small.

5 The Courts: A Story of Costs and Funding Problems I. Overview The critical problem with an adversarial system is one of cost. Two types of cost arise: the cost of parties in accessing the system (costs of lawyers and courts, plus the risk of further costs through the ‘loser pays’ rule) and the transactional costs of the system if they are disproportionate to the issues or financial value of the claims involved. The major problem with the English and Welsh system has been the inability to keep both types of costs of the litigation process proportionate. We look first at the major funding options and then the historical development towards inevitable crisis,1 before looking in detail at how the crisis has developed during the past decade. Chapter nine reveals that a quiet revolution has occurred in consumer-trader complaints in that most of the consumer Ombudsmen systems and Resolver are entirely free to consumers. This is one of the major aspects that has driven the switch to use these pathways. The same is true for use of the two public Ombudsmen discussed in chapter nine but it is far more difficult to access them and other mechanisms have to be used first. A similar switch to cost-free access is occurring in the expansion of the property Ombudsmen discussed in chapter twelve.

A. Funding Options The following are the main options for funding litigation:2 • Personal funds. • Funds or services provided as a benefit of membership of an association, such as a trade union. • Funding or services provided by the State (legal aid). The great advantage of being awarded legal aid for representation in litigation was the suspension of the ‘loser pays’ rule unless the circumstances were very exceptional, so there was in effect no adverse cost risk if the case was lost. 1 For an earlier view, see J Peysner, ‘England and Wales’ in C Hodges, S Vogenauer and M Tulibacka (eds), The Costs and Funding of Civil Litigation: A Comparative Approach (Hart Publishing, 2010). 2 See C Hodges, S Vogenauer and M Tulibacka (eds), The Costs and Funding of Civil Litigation: A Comparative Approach (Hart Publishing, 2010) 20.

Overview 135 • A loan. Individuals may borrow from friends or family, for example top finance initial advice from a solicitor. A loan from a bank or financial services provider may be used to fund companies but is rare for individuals. Litigation funding companies have expanded considerably in the last 20 years, but focus their investment in large claims, for which they carry out in advance detailed professional due diligence. • Legal expenses insurance (LEI) from a policy taken out before-the-event. Many people take out LEI as a tick-box add on to household or motor insurance. Policies typically provide cover of £50,000 or £100,000. But access to legal advice may be filtered by insurers, who may fund only an initial legal opinion on merits and chance of success, rather than make the full fund freely available. • Regulated speculative fee arrangements provided by lawyers, such as a Conditional Fee Agreement (CFA)3 or Damages-Based Agreement (DBA).4 The risk of having to pay adverse costs can be covered by before-the-event (BTE) or (much more expensive) after-the-event (ATE) insurance. • Free advice and assistance, pro bono by a lawyer or free advice or assistance provided by a body such as Citizens Advice or a specialist charity.

B. The Historical Context and Funding Conundrum Legal aid was introduced in 1949.5 In the succeeding 70 years successive governments have limited its availability. The severe restrictions in the past decade, major aspects of which are discussed below, have occurred in parallel with evolutions in litigation process, culminating in the online movement and the crisis in access to justice that is recorded throughout this book. State policy is essentially that legal aid can no longer be afforded, and although it remains for cases that are regarded as involving real hardship and need, the underlying desire is to find a completely different solution to delivering justice. Since so many claims are of low value, the effective withdrawal of civil legal aid6 has not been matched by other ways of making access to courts free, as has developed for consumertrader claims. Experiments in shifting to other forms of private funding of legal claims, such as contingency fees, damages-based agreements (DBAs), and third party funding, have

3 Courts and Legal Services Act 1990, ss 58 and 58A; Conditional Fee Agreements Order 2013, SI 2013 No 689. The percentage specified is 100%. For s 58(4B)(c) the percentage prescribed is 25% in first instance proceedings and 100% in all other proceedings (Thus a cap on the success fee of 25%). 4 Courts and Legal Services Act 1990, s 58AA(4), as amended by s 154 of the Coroners and Justice Act 2009; Damages-Based Agreements Regulations 2013, SI 2013 No 609, providing for limits to be paid by clients on sums recovered of 25% in personal injury claims, 50% in other claims, and 35% in employment matters. 5 Legal Aid and Advice Act 1949. 6 The Civil Legal Aid (Merits Criteria) Regulations 2013, SI 2013 No 104. This shrinkage has been occurring over many years, see recently Consultation paper, Proposals for Reform of Legal Aid in England and Wales (Ministry of Justice, 2010). The Civil Legal Aid (Merits Criteria) Regulations 2013 (‘the Regulations’) make provision for the criteria which the Director of Legal Aid Casework must apply when determining whether an individual or legal person qualifies for civil legal services under Part 1 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012. The Explanatory Memorandum is available at www.legislation.gov.uk/uksi/2013/104/pdfs/ uksiem_20130104_en.pdf.

136 The Courts, Costs and Funding all been of limited success. This is partly out of concern that funding by intermediaries raises conflicts of interest and hence the risk of abuse, so contingency fees and DBAs have been subject to regulatory restrictions. The UK, like all European States, has resisted the policy adopted in the US of unregulated private enforcement and hence allowing significant financial incentives for intermediaries, such as contingency fees and no loser pays or one-way cost shifting rules. Valiant attempts to respond to these problems, and reduce the cost and delay of civil procedure, have included the following: • Reforming civil procedure to make it simpler. • Introducing ADR before and during court procedure, so that more cases settle swiftly and cheaply, with the added theoretical benefits achieved by amicable agreement rather than aggressive combat. • Introducing case management of civil procedure by judges, to control the amount of work done and hence costs incurred. • Successively removing public funding of lawyers (legal aid) and replacing it with various private funding mechanisms: conditional fees and DBAs, each subject to different arrangements and rules on cost-shifting between the parties applied at different times. • Introducing costs management and fixed fees. • Modifying the ‘loser pays’ rule under different funding arrangements. • Expanding the small claims pathway, by raising its ceiling. • Introducing more IT into the system. The analysis that follows summarises this succession of reforms. What emerges is a highly complex picture of interlocking elements, in which reforms are made to particular parts, often in response to a particular problem, which then often produce both desirable and unexpected undesirable consequences. The complexity and the timelines involved present a considerable challenge to giving a coherent account. Whilst this account is essentially chronological, readers will sometimes need to piece together different elements that appear at different places, and also in chapter ten on personal injury claims. Important political features that appear include objections by lawyers, fearing for their income streams, and a polarised debate over a ‘compensation culture’, and whether it has or has not existed. Particular complexities arise from the fact that ‘the system’ comprises many sub-systems, such as large claims, small claims, personal injury claims, family claims and so on. We see a succession of undesirable consequences, such as the Costs Wars between insurers and claimant lawyers; problems raised by the arrival of various new intermediaries, such as claims farmers, ATE insurers, Claims Management Companies (CMCs), third party litigation funders; and road traffic whiplash claims. The following summary aims to indicate what has been tried, to record the evidence on what has succeeded or failed, to draw some conclusions as to why failures occurred, but to resist the temptation to analyse the story in too much detail, fascinating as it may be. Much has been tried, and over a considerable period. Yet we have now reached a point where the march of innovation is overtaking the civil procedure system – both through the adoption of IT internally and the development of other dispute resolution pathways externally.

The History of Continuous Reform 137

II. The History of Continuous Reform A. The Woolf Reforms of Civil Procedure Michael Zander’s review of over 60 official reports on civil process over 100 years concluded that the focus was always on how to reduce the complexity, delay and cost of civil litigation.7 Accounts of civil procedure have to refer to the fundamental shift brought about by the Woolf reforms implemented in 1999. The Woolf reforms are widely known and written about, so it is unnecessary to go into detail on them here. Lord Woolf produced a simplified set of civil procedure rules (CPRs), in which control of litigation was shifted significantly to judges through case management powers, and pushing cases towards alternative dispute resolution (ADR, here meaning mediation) before and during litigation.8 Incentivisation of settlement was through requiring parties to exchange evidence specified in pre-action protocols, and threatened use of costs penalties. John Peysner has summarised the approach: ‘Woolf took the view that case management and rationing of procedure would strangle the cost monster. It didn’t and since then, partly fuelled by conditional fees, costs have continued to be a serious problem for access to justice.’9 Peysner later said:10 Woolf believed that procedural reform simpliciter would solve cost problems in the teeth of the research evidence.11 … Woolf compromised by ditching the full regime of fixed costs in favour of a smooth path for his central proposal of case management by judges on the untested and later refuted theory that case management saved costs.12 In retrospect, this meant that unpredictable and potentially excessive costs, amplified by success fees, continued – one of the major triggers for the Cost War.

John Sorabji has carefully analysed the revolutionary nature of the change introduced by Woolf.13 The underlying shift was to re-balance the perennial tension between, on the one hand, ensuring that accurate and substantive justice is done in each individual case and, on the other hand, ensuring that the State’s limited resources for delivering justice remain available to all at reasonable cost and without unreasonable delay, as a result of individual parties consuming disproportionate resources in individual cases. Interestingly, no empirical evidence was produced on the extent of delay to cases at that stage, although issues of disproportionate cost for small cases were the subject of much anecdotal debate.

7 M Zander, The State of Justice: Fifty-First Hamlyn Lectures (Sweet & Maxwell, 2000). 8 Lord Woolf, Access to Justice: Interim Report to the Lord Chancellor on the Civil Justice System in England and Wales (HMSO, 1995); Lord Woolf, Access to Justice: Final Report to the Lord Chancellor on the Civil Justice System in England and Wales (HMSO, 1996). 9 J Peysner, ‘England and Wales’ in C Hodges, S Vogenauer and M Tulibacka, The Costs and Funding of Civil Litigation. A Comparative Perspective (Hart Publishing, 2010) 291. 10 J Peysner, Access to Justice: A Critical Analysis of Recoverable Conditional Fees and No-Win No-Fee Funding (Palgrave Macmillan, 2014) 24. 11 JS Kakalik, T Dunworth, LA Hill, DF McCaffrey, M Oshiro, NM Pace and ME Vaiana, Implementation of the Civil Justice Reform Act in Pilot and Comparison Districts (RAND Corporation, 1966). 12 J Peysner and M Seneviratne, ‘The Management of Civil Cases: A Snapshot’ (2006) 25 Civil Justice Quarterly 312. 13 J Sorabji, English Civil Justice after the Woolf and Jackson Reforms: A Critical Analysis (Cambridge University Press, 2014).

138 The Courts, Costs and Funding Woolf himself said that the system had, through its complexity, cost and delay, put the courts out of the reach of too many citizens.14 Woolf ’s revolution in the theory of justice was to depose the principle that substantive justice would be done in every case, and to replace it with an overriding objective that comprised three philosophies: a commitment to reaching the right decision on the merits of the claim (substantive justice), a commitment to economy and a commitment to efficiency.15 Control of civil procedure was shifted from party autonomy to the judiciary. Judges would ensure that supply of the State’s resources, and the costs of the parties, were managed and subject to the principle of proportionality. However, as Sorabji has identified, the Woolf principles were vague, open-textured, and not ‘sticky’.16 He records that it has taken well over a decade for judges, lawyers and citizens to understand the nature of the changes in the philosophy of the system, and the practical implications. A critical pressure-point has been that cases may be struck out, or evidence be refused admission, if parties and their lawyers fail to observe rules and especially time limits. Thus, the accuracy of justice delivered may be reduced or denied in such cases. However, case management and pre-action protocols failed to address the reality of the vast number of civil claims, which involve only low sums and cannot withstand unnecessary costs or delay. As Peysner said, ‘… the volume of claims that never reach the court process … [winnowed] away from a litigation process towards resolution by withdrawal or settlement … so that fewer than two per cent of cases reach a substantive trial.’17 Pre-action protocols front-loaded the costs of a case, by requiring detailed investigation at the start sufficient to clarify whether the case was valid: this could often result in unnecessary work and disproportionate costs.18 A 2016 study found that lawyers overspend in 89% of High Court and county court cases where costs management orders are made.19 More than 80% of members of a lawyers association said costs budgeting has driven up litigation costs, with 82% predicting costs will continue to increase.20

B. From Legal Aid to Conditional Fees The post-war welfare state introduced into a litigation system in which each side funded its own lawyers, and the loser reimbursed perhaps 70% of the winner’s costs, a system of 14 Lord Woolf, Access to Justice: Interim Report to the Lord Chancellor on the Civil Justice System in England and Wales (HMSO, 1995) 7ff. 15 J Sorabji, English Civil Justice after the Woolf and Jackson Reforms: A Critical Analysis (Cambridge University Press, 2014) 130. 16 J Sorabji, English Civil Justice after the Woolf and Jackson Reforms: A Critical Analysis (Cambridge University Press, 2014) 103. 17 J Peysner, ‘England and Wales’ in C Hodges, S Vogenauer and M Tulibacka, The Costs and Funding of Civil Litigation. A Comparative Perspective (Hart Publishing, 2010) 292. 18 Emerging Findings: An early evaluation of the Civil Justice Reform (The Lord Chancellor’s Department, 2001); D Dwyer, The Civil Procedure Rules Ten Years On (Oxford University Press, 2010); CS Konstantinou, ‘Pre-Action Protocols 14 Years on: Have they Been Proven to be Conducive to Settlement?’, available at http://ssrn.com/ abstract=2175448; J Peysner, Access to Justice: A Critical Analysis of Recoverable Conditional Fees and No-Win No-Fee Funding (Palgrave Macmillan, 2014). 19 Research reveals overspend in 89% of cases with costs budgets (Litigation Futures, 10/06/2016). 20 Litigation trends – Over disclosure? Why costs aren’t working (New Law Journal and London Solicitors Litigation Association, 2016).

The History of Continuous Reform 139 public funding of costs for those with limited income and assets (legal aid)21 and a rule that a defendant who won against a legally-aided claimant could not recover his costs. That suspension of the normal ‘loser pays’ rule was increasingly criticised as producing ‘legal aid blackmail’ of defendants. Peysner commented that in the average case, legal aid acted as a bank. In a complex case (such as medical negligence or a group action) the cost-benefit analysis was skewed: the cases were ‘very expensive and often unsuccessful.’22 Decisions on legal aid were generally made by local boards based on applications submitted by applicants’ solicitors, who stood to benefit from the award by undertaking largely whatever work they deemed necessary. Inevitably, changes were introduced to try to address an uncontrollable system caused by the amount of supply of paid services being controlled by the individual suppliers themselves, but amendments only created increased bureaucracy, cost and delay. The percentage of the population eligible for civil legal aid was 52% in the late 1990s, 41% in 2001 (after the removal of personal injury claims from scope), and 29% in 2007.23 By the 1970s, only the rich and the poor could afford to litigate their rights. The expanding middle class was priced out of the system (Middle Income Not Eligible for Legal Aid: MINELAs). The solution introduced from 1995 was conditional fees, which were a regulated variant of US-style contingency fees. The US model was viewed with much suspicion, as being a driver of a litigious society that was bad for business and also citizens. In reality, the US has historically placed much emphasis on preferring private enforcement to public enforcement, so litigation is positively encouraged.24 Peysner’s study describes the story of recoverable conditional fees and no-win no-fee funding as an experiment in the funding of money damage claims that was undertaken over 13 years from 1999 to 2013 without any prior wide-ranging research into the policy, and which completely ignored the government’s tenets of good policy-making.25 He concluded that policy development was fragmented, and there was a mismatch between policy and delivery. There were no prospective controlled pilots,26 evaluative studies, isomorphism (copying other jurisdictions), counterfactuals, or simulations.

21 Legal Aid Act 1949. 22 J Peysner, Access to Justice: A Critical Analysis of Recoverable Conditional Fees and No-Win No-Fee Funding (Palgrave Macmillan, 2014) 26–27. 23 S Hynes and J Robins, The Justice Gap (LSAG, 2009) 71; J Sorabji, ‘Austerity’s Effect on English Civil Justice’ (2015) 8(4) Erasmus Law Review 159, 163. 24 RA Kagan, Adversarial Legalism: The American Way of Law (Harvard University Press, 2001); S Farhang, The Litigation State. Public Regulation and Private Lawsuits in the US (Princeton NJ, Princeton University Press, 2010). 25 The Green Book: Appraisal and Evaluation in Central Government (HM Treasury, 2003); H Bochel and S Duncan (eds), Making Policy in Theory and Practice (Policy Press, 2007). This set out the ROAMEF cycle: 1. 2. 3. 4. 5. 6.

Rationale for policy Identification of objectives Appraisal of Options Implementing and Monitoring Evaluation Feedback

See also White Paper Modernising Government (Cabinet Office, 1999); Professional Policy Making for the Twenty-First Century (Cabinet Office Strategic Policy Making Team, 1999). 26 L Haynes, O Service, B Goldacre and D Torgerson, Test, Learn, Adapt: Developing Public Policy with Randomised Controlled Trials (Cabinet Office Behavioural Insights Team, 2012).

140 The Courts, Costs and Funding The Access to Justice Act 1999 removed legal aid for personal injury and business disputes, substituting regulated conditional fees27 to operate alongside legal aid, hence aiming to address the lack of access to justice for MINELAs. Under the conditional fee agreement (CFA) system, a client would pay nothing if he lost, and if he won his lawyer was entitled to be paid for work done on an hourly rate plus a success fee up to 100%.28 Success fees could be deducted from damages. The theory was that lawyers would cross-subsidise losing from winning cases. However, CFAs inherently included unfairness to defendants ‘who could have their costs liability doubled at the stroke of someone else’s pen’.29 In 2011, the European Court of Human Rights held that the system breached a defendant newspaper’s right to freedom of expression and was not proportionate to the goal of increasing access to justice.30 Motor and household insurers had successfully sold before-the-event (BTE) legal expenses insurance (LEI) widely, but very few people realised that they had this cover.31 It appeared that rates of BTE penetration rise with income. Research in 2011 found that those with BTE policies were disproportionately represented in no-win no-fee cases (71%).32 Consumer Focus highlighted that one reason why BTE LEI was not popular with lawyers was the rule that clients should be able to choose their own lawyer, in order to eliminate the risk of a conflict of interest between the insurers and the assured, particularly where the assured’s claim is against a policyholder insured by the same insurers.33 Advertising rules applicable to insurance companies34 appeared not to be adhered to. Policies also sought to require clients to use the lawyer recommended by the insurer during any initial negotiations to settle, and there was concern that the rule that clients who instituted proceedings should have freedom of choice of lawyer35 were effectively being flouted. Consumer Focus expressed concern regarding the common practice of law firms paying insurance companies ‘referral fees’ in order to be a preferred firm for their business. In some cases, law firms were taking referred cases on a conditional fee arrangement, meaning that the insurer had no risk at all of paying out. As alternative means of funding were introduced or encouraged, the availability of legal aid was restricted by successive governments. A major contraction was under the Access to Justice Act 1999, which substantially reduced the types of claims eligible for legal aid, 27 From 1995 the cost of success fees was borne by successful claimants out of their damages. 28 Courts and Legal Services Act 1990, s 58; Conditional Fee Agreements Order 2000. 29 A Higgins, ‘Referral fees – the business of access to justice’ (2012) 32(1) Legal Studies 109, 112. 30 MGN v UK App no 39401/04 ECJ (18 January 2011) [2011] All ER (D) 143. 31 In 2007, 59% of people were covered by BTE LEI, typically costing between £13 and £24 a year, and subject to a maximum claim limit of £50,000 or £100,000: The Market for BTE Legal Expenses Insurance (Ministry of Justice, 2007); L Bello, In case of emergency. Consumer analysis of legal expenses insurance (Consumer Focus, 2011). 32 No Win – No Fee Usage in the United Kingdom (ICD Research, 2011). 33 This point was noted as unsolved and controversial in The Law and Practicalities of Before-the-Event (BTE) Insurance. An Information Study (Civil Justice Council, 2017) para 13. 34 FSA rules under its Insurance Conduct of Business rules (ICOBs) regime, including requirements that all communications to customers being ‘fair, clear and not misleading’ (ICOB 2.2) and that product disclosures be made ‘in good time’ prior to the conclusion of a contract (ICOB 6). 35 The Insurance Companies (Legal Expenses Insurance) Regulations 1990, Reg 6 provided that to defend, represent or serve the interests of the insured in any inquiry or proceedings, the ‘insured shall be free to choose that lawyer (or other person)’ and this shall be expressly recognised in the policy. The Regulations implemented EU Council Directive 87/344, and the freedom of choice provision was upheld in Case C-199/08 Erhard Eschig v UNIQA Sachversicherung. Domestically see Brown-Quinn and Others v Equity Syndicate Management Ltd and Another [2012] EWCA Civ 1633.

The History of Continuous Reform 141 and, seizing on the availability of CFAs, removed all personal injury claims from scope apart from medical negligence claims.36 As Peysner commented, the philosophy of the New Labour government here was to shift the ‘relationship between risk and security involved in the welfare state, to develop the society of “responsible risk takers”’.37 Legal aid would be largely removed for money claims (the major area being personal injury claims), and replaced by making the success fee and the premium for an after-the-event (ATE) insurance claim recoverable from the losing defendant. However, Peysner concluded that the ‘magic bullet’ of ATE, which removed the need for the client to pay the premium in any event created consequences that were worse than the ‘problem’ of legal aid that was solved.38 For example, trade union clients were free of risk without paying, and recoverability created a new income stream for unions, as well as removing risk from lawyers. At the same time, legal and other professions were being modernised, allowing new intermediaries into lawyers’ monopoly. This opened the door to Claims Management Companies (CMCs), which deployed highly effective mass marketing techniques and began to control the acquisition of work by solicitors, demanding referral fees from them.39

C. Recoverability of Success Fees and ATE Premiums After the New Labour government came to power in 1997, a review of pre-existing proposals on recoverability was undertaken by Sir Peter Middleton, who recommended more work on fixed costs, as there was ‘virtually no useable information’.40 The government said that ‘The present civil justice system falls woefully short of the ideal. It is too complex, takes too long to deal with cases and it is too costly.’41 Middleton did not recommend recoverability of the success fee and ATE premium, but this was enacted despite there being a gap in data on what the effect would be.42 Research existed on the size of success fees before recoverability,43 but that applied to the situation where lawyers set success fees to be paid by their clients, rather than by opposing insurers. As Peysner points out, the change of payer changed the economic incentives: claimants were indifferent to costs because they never paid them, and referral fees could be hidden.44 Lawyers would increase work according to the value of the case.45 36 Individual claims could be funded in exceptional circumstances: Access to Justice Act 1999, s 6.8(b) and Sch 2, para 1. 37 A Giddens, The Third Way and Its Critics (Polity Press, 1998) 45. 38 J Peysner, Access to Justice: A Critical Analysis of Recoverable Conditional Fees and No-Win No-Fee Funding (Palgrave Macmillan, 2014) 36. 39 ibid. 40 The Report to the Lord Chancellor by Sir Peter Middleton GCB on the Review of Civil Justice and Legal Aid (HM Government, 1997). 41 Consultation paper: Access to justice with conditional fees (Lord Chancellor’s Department, 1998). 42 J Peysner and M Seneviratne, ‘The Management of Civil cases: the Courts and the Post-Woolf Landscape’ (Research Department, Department of Constitutional Affairs, 2005); J Peysner and M Seneviratne, ‘The Management of Civil Cases: A Snapshot’ (2006) 25 Civil Justice Quarterly 312. 43 S Yarrow, The Price of Success: Lawyers Clients and Conditional Fees (Policy Studies Institute, 1997). This reported success fees of 50% or less, and average uplift of 43%. 44 J Peysner, Access to Justice: A Critical Analysis of Recoverable Conditional Fees and No-Win No-Fee Funding (Palgrave Macmillan, 2014). 45 P Fenn and N Rickman, ‘Fixing Lawyers’ Fees ex ante: A Case Study in Policy and Empirical Legal Studies’ (2011) 8(3) Journal of Empirical Legal Studies 533.

142 The Courts, Costs and Funding Leading economic experts Paul Fenn and colleagues were able to show that the introduction of recoverability of CFA success fees in April 2000 increased base costs (lawyers’ costs net of success fees) by about 25%.46 They compared data from a leading liability insurer on two points. First, it was shown that the cost to insurers of settling claims in respect of ‘motor’ and other ‘liability’ claims had grown inexorably since the late 1990s, to 2010, whereas by contrast the settlement of ‘property’ claims had remained much more flat.47 Secondly, they compared cases before and after the rule change on 1 April 2000, when the government made a losing defendant liable for the success fee together with the claimant’s other costs, resulting in the calculation that base fees had probably increased by 25%. Fenn and colleagues speculated that claims arising from later accidents may have had even higher costs. They attributed the change to weakened incentives by claimants to monitor their agents’ costs. By 2008, doubts about the long term viability of the ATE market led leading experts to argue that contingency fees would not promote high rates of litigation, frivolous claims or a litigation culture.48 However, Richard Moorhead concluded from interviewing 191 employment lawyers that they often did not put their interests before those of their clients, and he thought that contingency fees should be made simpler, inclusive of disbursements and VAT.49 The Ministerial Impact Assessment on introduction of DBAs stated clearly that cases would rise under DBAs, as, therefore, would damages and insurance costs.50 One study highlighted the ‘money for old rope’ element of CFAs.51 Of the 2.1 million civil cases in 2007, 95% were in county courts, of which 90% concluded without any major contest. However, CFA costs were 158–203% of damages, whereas claimant costs in non-CFA cases were 47–55% of damages. In 2011 the watchdog Consumer Focus, concerned that eligibility for legal aid was declining and that ‘the cost of our civil justice system is out of reach even for those on an income considerably above the national average’, made a plea for expansion of BTE LEI policies, pointing out that they were widely available and cheap.52 Consumer Focus noted that BTE LEI was extensively used in Germany,53 offered by 50 insurance companies as opposed to only six in the UK. However, Consumer Focus argued that legal aid could not be substituted in some types of disputes, such as matrimonial or mental health issues. Richard Lewis also supported BTE, arguing that if BTE were made compulsory for motor vehicles, 46 P Fenn, V Grembi and N Rickman, ‘“No Win, No Fee”, Cost-Shifting and the Costs of Civil Litigation: AN atural Experiment’ (2017) 127 The Economic Journal F142. 47 See figure at wileyonlinelibrary for their article. 48 R Moorhead and P Hurst, ‘Improving Access to Justice’ Contingency Fees. A Study of their operation in the United States of America. A Research Paper informing the Review of Costs (Civil Justice Council, 2008); R Moorhead, ‘An American Future? Contingency Fees, Claims Explosions and Evidence from Employment Tribunals’ (2010) 73(5) MLR 752. 49 R Moorhead, ‘Filthy lucre: lawyers’ fees and lawyers’ ethics – what is wrong with informed consent?’ (2011) 31.3 Legal Studies 345. 50 Impact Assessment on Damages Based Agreements, MoJ 037, 15/11/2010 signed by Jonathan Djanogly, para 2.15. 51 C McIvor, ‘The Impact of the Jackson Reforms on Access to Justice in Personal Injury Litigation’ (2011) 30.4 Civil Justice Quarterly 411. 52 L Bello, In case of emergency. Consumer analysis of legal expenses insurance (Consumer Focus, 2011). 53 M Killian, Legal Expenses Insurance: Preconditions, Pitfalls and Challenges, experience from the world’s largest legal expenses insurance market (Legal Services Research Centre, 2010).

The History of Continuous Reform 143 it would enable three-quarters of all tort claims for personal injury to be litigated efficiently, with ready access to legal advice.54 Paul Fenn and colleagues showed in 2016 that the level of claiming for personal injury in 2013 was not very different from the level of claiming in 2001, but that there were significant changes to the composition of both claimants and claims that were attributed to the changes in funding and costs arrangements.55 From 2001, middle income groups, who had diminishing eligibility for legal aid, were relatively less likely to claim and the success rate in clinical negligence grew significantly between 2001 and 2009. As legal aid reduced and CFAs spread from 2009, success rates stopped growing and possibly declined, whilst middle income groups brought more claims but of lower value and with a less cautious approach to risk assessment by claimants’ solicitors. Legal aid was restricted in that period to a small number of high value claims, especially of the cerebral palsy/birth-related brain damage type.

D. Costs and Funding By 2008 the senior judiciary were deeply concerned about the escalating costs of civil justice.56 Lord Justice Jackson was asked to undertake a review. The fact of his appointment indicated that the judiciary thought that the Woolf reforms had failed.57 However, Sorabji argues that perceptions of a crisis in civil justice were both overstated and were caused by the abolition of legal aid for personal injury claimants and the recoverability of CFAs made in the Access to Justice Act 1999.58 Jackson found that ‘90% of all cases were concluded without any prolonged contest and at costs that were proportionate to the issues at stake’59 and he later said that ‘the CFA regime [was] the largest single cause of disproportionate costs.’60 Much of the focus of Jackson LJ’s efforts was on the problems of personal injury cases. His 2010 Report confirmed that small cases involved wholly disproportionate costs, driven by referral fees, and that very large cases ran up massive bills.61 Jackson’s prescriptions were

54 R Lewis, ‘Litigation Costs and Before-the-Event Insurance: The Key to Access to Justice?’ (2011) 74(2) MLR 272. 55 P Fenn, AM Gray, N Rickman and D Vencappa, Funding clinical negligence cases. Access to Justice at reasonable cost? (Nuffield Foundation, 2016). 56 J Peysner, Access to Justice: A Critical Analysis of Recoverable Conditional Fees and No-Win No-Fee Funding (Palgrave Macmillan, 2014) 24. 57 J Sorabji, English Civil Justice after the Woolf and Jackson Reforms: A Critical Analysis (Cambridge University Press, 2014) 201. 58 ibid, 202. 59 R Jackson, Review of Civil Litigation Costs: Preliminary Report Vol I (2009) 532. 60 R Jackson, ‘The Review of Civil Litigation Costs in England and Wales’ in G Meggitt (ed), Civil Justice Reform – What has it achieved? (Sweet & Maxwell, 2010) 137. 61 R Jackson, Review of Civil Costs: Final Report (2010). See Proposals for Reform of Civil Litigation Funding and Costs in England and Wales. Implementation of Lord Justice Jackson’s Recommendations (Ministry of Justice, 2010), Consultation Paper CP 13/10; Reforming Civil Litigation Funding and Costs in England and Wales – Implementation of Lord Justice Jackson’s Recommendations: The Government Response (MoJ, March 2011). General damages in civil personal injury claims were raised by 10% with effect from 1 April 2013 by Simmons v Castle [2012] EWCA Civ 1288.

144 The Courts, Costs and Funding abolition of recoverability,62 introduction of cost management (budgeting),63 increases in damages (to give headroom for introduction of contingency fees),64 qualified one-way cost shifting (QOCS) and effective removal of recovery of additional liabilities.65 Hodges has summarised the approach:66 Data obtained by Lord Justice Jackson from numerous sources showed that the financial impact of shifting CFA success fees and ATE premiums was significant. In a survey of 699 personal injury cases, for every £1 paid as damages by liability insurers, £1.80 was also paid in claimants’ costs. In a survey of 128 cases dealt with by district judges, the total costs paid to claimants were on average 203 per cent of the damages paid in CFA cases, but on average 55 per cent in non-CFA cases. Other surveys produced similar differentials, the evidence overall showing that claimant costs ranged between 158 and 203 per cent in CFA cases and between 47 and 55 per cent in non-CFA cases. The implicit conclusion was clearly that the disparity between the two types was unacceptably large. Lord Justice Jackson considered that the recoverability regime possessed four significant flaws: it was not targeted on persons who merited financial support with their litigation; it did not require an assisted person to make a contribution towards costs if they were able to do so (in both cases, unlike the legal aid regime); it placed a burden on opposing parties that was simply too great; and it presented an opportunity for some lawyers to make excessive profits, through cherry picking and thereby demeaning the profession in the eyes of the public.67 The major structural proposal made by Lord Justice Jackson was that CFA success fees and ATE premiums should no longer be recoverable from defendants. The cost shifting rule would revert to its pre-1999 status.68 ATE insurance would not be banned but the sector would be expected to shrink, and expand into BTE or private funding products. Nevertheless, Lord Justice Jackson recognised that a one way cost shifting regime needs to contain elements that deter against bringing frivolous claims or applications, and incentives for claimants to accept reasonable offers of settlement.69

Jackson was particularly concerned by costs in fast track (ie, low value) cases, where the data showed an average costs to damages ratio for litigated cases of 130%, and non-litigated cases costs of 90% of damages.70 This compared with high value multitrack litigated cases where average costs were 11% of the damages where claims were issued, and 9% for non-litigated cases.71 He proposed that costs for personal injury cases in the fast track should be fixed, and costs in non-personal injury cases should be capped at £12,000. The QOCS innovation was introduced to protect personal injury claimants against the risk of adverse costs if their claim failed, in the light of data that suggested that most personal

62 Legal Aid and Sentencing of Offenders Act 2012. 63 Amendments to the Civil Procedure Rules. 64 Simmons v Castle [2012] EWCA Civ 1039. 65 R Jackson Review of Civil Litigation Costs, Final Report (2010) 88; LASPO 2012, s 44. 66 C Hodges, ‘England and Wales: Summary of the Jackson Costs Review’ in C Hodges, S Vogenauer and M Tulibacka (eds), The Costs and Funding of Civil Litigation. A Comparative Perspective (Hart Publishing, 2010) 309. 67 Final Report, ch 10, paras 4.5 et seq. 68 Final Report, ch 10. 69 Final Report, ch 19, para 4.5. 70 Solving disputes in the county courts: creating a simpler, quicker and more proportionate system A consultation on reforming civil justice in England and Wales (Ministry of Justice, 2011) para 56. 71 ibid.

The History of Continuous Reform 145 injury claims were valid and defendant insurers should be encouraged to settle more quickly.72 However, the Ministerial Impact Assessment for QOCS said unequivocally:73 2.8 Defendants would be worse off as a result of this proposal. … 2.9 Secondly, the proposal may result in an increased volume of cases pursued by claimants. This may increase defendant liabilities significantly. Thirdly, defendants may be more constrained in the amount of legal costs they are willing to incur as they know they will be liable for their own costs, regardless of the outcome of the case under proposal. Knowing they must pay for their own legal spending with certainty may reduce the amount defendants spend overall. This could lead to defendants losing a higher proportion of cases (it is assumed that greater legal spending increases the chance of winning a case) or defendants being willing to settle cases more frequently, earlier, and/or for higher damages.

The introduction of QOCS fundamentally altered the balance between claimants and defendants (and the financial interests of their respective lawyers). Peysner accurately identified that a major problem was likely to emerge from the ethical dimensions of the changed relationship between claimants and lawyers when recoverability was replaced by contingency fees.74 A quarter of all solicitors’ firms in England and Wales conducted personal injury work75 and these bills went up. There was also clear evidence of subsequent abuse by intermediaries, in the ‘costs war’ between lawyers and insurers and in the activities of new CMCs. The Civil Justice Council concluded that ‘the ‘costs war’ broke out because a considerable extra financial burden had been passed to the liability insurance industry when success fees and ATE premiums had been made recoverable, and there was no transparency as to the levels of success fee claimed or ATE premiums charged.76 The insurers fought back, challenging costs in individual cases and, by implication, the system.

E. Referral Fees Referral fees were permitted in 2004, after a change in the Solicitors Conduct Rules. As Jackson LJ said: ‘That opened the floodgates. Solicitors competed for business by paying ever higher referral fees.’77 After a lengthy debate, payment of referral fees in personal injury 72 Final Report, chs 9 and 10. Written Ministerial Statement: Implementation of Part 2 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012: Civil Litigation Funding and Costs (Ministry of Justice, 2012): this prefigured circumstances in which the protection would be lost, including where the claim was found to be fraudulent on the balance of probabilities; the claimant failed to beat a defendant’s ‘Part 36’ offer to settle; or the case was struck out as disclosing no reasonable cause of action or where it is otherwise an abuse of the court’s process (or is otherwise likely to obstruct the just disposal of the proceedings). 73 Impact Assessment on Qualified One Way Costs shifting (Ministry of Justice) 40, 15/11/2010, signed by Jonathan Djanogly. 74 J Peysner, ‘Tail Wags Dog: Contingency fees (and Part 36 and third party funding)’ (2013) 231 Civil Justice Quarterly 1. 75 Discussion document on the proposed ban on referral fees in personal injury cases (SRA, 2012) para 18. This noted that personal injury work was worth approximately £1.8 billion yearly to the solicitors’ profession, 7% of the total estimated market value in 2011. 76 Civil Justice Council, Improved Access to Justice – Future Funding of Litigation (2007). This sentence is from C Hodges, J Peysner and A Nurse, Litigation Funding: Status and Issues. Research Report (Centre for Socio-Legal Studies, University of Oxford and Lincoln University, 2012). 77 Lord Justice Jackson, Review of Civil Litigation Costs: Supplemental Report. Fixed Recoverable Costs (Judiciary of England and Wales, 2017) para 2.21.

146 The Courts, Costs and Funding cases was banned from 1 April 2013.78 One report concluded that there was no evidence of harm in the markets for conveyancing and personal injury, whether in the form of higher prices than would otherwise be the case or through the advance of cases without merit and to the detriment of other cases. In relation to criminal advocacy, the report noted that the presence of referral fees could have undesirable incentive effects, but that these could be mitigated through an effective regulatory mechanism to underpin quality assurance of advocacy.79 However, the Legal Services Consumer Panel, having obtained research on the consumer perspective,80 concluded that referral fees could be retained, provided that they were revealed and properly regulated. Higgins argued that referral fees made it easier for people to access the justice system.81 However, the Legal Services Board recognised in May 2011 that unregulated referral fees undermined consumer confidence in legal services.82 A 2017 study of 40 personal injury firms revealed that 78% of personal injury firms had referral arrangements in place, and 48% had referral arrangements with CMCs.83 This strongly suggested that it was the behaviour of intermediaries rather than claimants that was the driving factor in personal injury claims.

F. Claims Management Companies CMCs were unknown before the mid-1990s liberalisations in funding. Their operations have given rise to significant levels of consumer mis-selling, detriment and fraud since then. The largest two scandals of the CMCs that emerged after 1999 involved Claims Direct84 and The Accident Group (TAG). TAG collapsed in 2003 with reported debts of £100 million. Reasons given for the company’s collapse include: inadequate screening of weak cases, fraudulent reporting of claims and problems with the company’s referral process.85 TAG’s model was that claimants would be signed up on paying an ATE premium only, with no investigation. Some successful consumers ended up in debt as a result of interest on the loans they had taken out in pursuing their claims, excessive insurance premiums and hidden or non-obvious additional fees.86 In October 2004, it was reported that around 78 Legal Aid, Sentencing and Punishment of Offenders Act 2012, ss 56–60. See guidance: The prohibition of referral fees in the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) Sections 56–60 (Solicitors Regulation Authority, 2013). The ban was later extended to qualified practitioners regulated by the Chartered Institute of Legal Executives (CILEx): The Referral Fees (Regulators and Regulated Persons) Regulations 2014, SI 2014 No 3235. 79 Cost benefit analysis of policy options related to referral fees in legal services (Charles River Associates). 80 Vanilla Research, 2010. 81 A Higgins, ‘Referral fees – the business of access to justice’ (2012) 32(1) Legal Studies 109. 82 Referral fees, referral arrangements and fee sharing. Decision Document (Legal Services Board, 2011). 83 Personal injury report: The quality of legal service provided in personal injury (Solicitors Regulatory Authority, 2017) 17. The study was in response to concerns by various groups about compensation culture, and an increase in fraudulent and frivolous claims, although the findings did not find widespread regulatory failures. 84 At its high point, Claims Direct took on 1,500 cases a week, charging an ATE premium reaching £1,315. Insurers argued that insurance was unnecessary until they had had an opportunity to consider merits of a case. See J Peysner, Access to Justice: A Critical Analysis of Recoverable Conditional Fees and No-Win No-Fee Funding (Palgrave Macmillan, 2014) 100–05. 85 C Hodges, J Peysner and A Nurse, Litigation Funding: Status and Issues. Research Report (Centre for Socio-Legal Studies, University of Oxford and Lincoln University, 2012). 86 P Abrams, ‘No win no fee’ catch leaves poor in debt, BBC News Online (22 June 2004), at http://news.bbc. co.uk/1/hi/uk/3827419.stm.

The History of Continuous Reform 147 500 law firms would have to pay back the TAG investigation fee, which was, in reality, a referral fee paid by lawyers to TAG.87 One insurer sued 89 of its panel firms of solicitors for negligence and breach of contract in accepting some 26,000 claims where it had delegated the right to accept cases for such insurance provided the prospects of success were at least 51% and the damages awardable at least £1,000.88 Regulation of CMCs was introduced in April 2007, requiring them to register and pay a not insignificant level of registration fees.89 A review of CMCs in 2010 found the following.90 First, before regulation was introduced, there were around 500 CMC businesses in the market. By 2010, more than 3,000 businesses had been authorised and the number of new businesses seeking authorisation was running at over 1,000 a year. However, the volume of business had not increased commensurately. There was a substantial turnover in the sector, many businesses coming into and out of the market each year.91 This ‘phoenixism’ became a feature of people closing down a business if it attracted official attention, only to pop up under another guise. Secondly, the report claimed that the Claims Management Regulator had, at a very modest cost (£2.3 million in 2009/10), effectively dealt with overt malpractice in the market: Personal injury claims were the principal driving force behind the introduction of regulation. Regulation quickly dealt with most of the overt malpractice, in particular unauthorised marketing in hospitals, cold calling in person and the misuse of the expression ‘no win, no fee’. The Regulator has also played a significant role in dealing with criminal activity in the form of staged accidents. Malpractice has now largely switched to telephone cold calling by marketing companies and misleading information being given in individual contacts.92 … The authorisation process has been used successfully to keep inappropriate businesses out of the market, largely through applications being withdrawn or not pursued. Over 450 businesses that paid the application fee for authorisation chose not to pursue their applications. The renewal process plays a similar but more muted role in this respect and also provides an opportunity for businesses to withdraw formally from the market. Over 650 businesses have voluntarily surrendered their authorisation. Effective action has been taken against businesses operating without authorisation.93

Marc Boleat’s 2010 Report on CMCs for the Ministry of Justice identified the dichotomy between the upside of encouraging ‘access to justice’ and the downside of avoiding a ‘compensation culture’:94 Access to Justice or Compensation Culture? 1.7 Access to justice is generally seen as being a ‘good thing’ while the compensation culture is seen as being a ‘bad thing’. However, the two are if not the same then closely connected. 87 P Aldred, No win, no fee lawyers must repay £50m, The Telegraph online, (14 October 2004) at www.telegraph. co.uk/finance/2897112/No-win-no-fee-lawyers-must-repay-50m.html. 88 Axa Insurance Ltd v Akther & Darby Solicitors [2009] EWHC 635 (Comm). 89 Compensation Act 2006, Part 2. Claims Management Regulation. Fees Determination 2010–2011 (Ministry of Justice, 2009). 90 M Boleat, Claims Management Regulation. Impact of Regulation. Third Year Assessment (Ministry of Justice, 2010). 91 ibid, para 1.10. 92 ibid, Introduction and para 1.14. See also Better Regulation Executive report, Better Regulation, Better Benefits: Getting the Balance Right Case Studies (Department for Business, Innovation & Skills, 2009). 93 ibid, para 1.6. 94 M Boleat, Claims Management Regulation. Impact of Regulation. Third Year Assessment (Ministry of Justice, 2010).

148 The Courts, Costs and Funding In practice, the promotion of ‘good’ access to justice at the margin inevitably is likely to lead to a belief, that can be realised in some cases, that compensation is available when it is not properly due. The more that ‘good’ access to justice is promoted, the greater the scope for a “bad” compensation culture with compensation being sought and paid where it is not properly due. Access to Justice in the Personal Injury Sector 1.8 Personal injury claims have increased markedly in relation to injuries sustained as a result of road traffic accidents. Claims management companies have contributed to this trend by helping people claim compensation who would not otherwise have done so. There is an argument that they are unnecessary and do not add value. This is to ignore the reality of the market place. Advertising and marketing are essential parts of the process, not expendable extras. Regulation has probably played no more than a modest part in promoting access to justice, although it has helped raise the profile and credibility of claims management companies, particularly in their dealings with solicitors. Access to Justice in financial services 1.9 Claims management companies have played a significant role in increasing access to justice in respect of mis-sold endowment policies and more recently payment protection insurance. Without their activities, many people would not have obtained the compensation to which they are properly entitled. Regulation has played a modest role in increasing access to justice, largely by increasing the credibility of companies in the sector and also by limiting the scope for malpractice.

Data from the insurance industry reported a strong correlation between the number of CMCs in a region and the proportion of private car insurance claims that involved injury to third parties.95 The Citizens Advice Bureau complained strongly in 2012 that the CMC industry was ‘out of control’, with a frenzy of cold-calling or cold-texting experienced by three-quarters of adults in Great Britain, based on illegal trading in names and contact details.96 The CAB commented that whilst this service ‘ought, in theory, to be a legitimate offer of service’ the aggressive marketing was unacceptable (and all cold calling should be banned), and CMCs were charging disproportionate fees for making claims that were ‘money for old rope’. The vast majority of CMC claims related to mis-selling of payment protection insurance (PPI) by banks, which had very high success rates, but which could be made for free by consumers contacting the Financial Ombudsman Service – which was exactly how many CMCs pursued the claims they processed. The CAB noted that the Financial Services Authority had also required firms to make voluntary reimbursement to consumers over PPI products.97 Hence, it was difficult to see that CMCs were providing much by way of valuable service. In 2013, the Claims Management Regulator banned inducement advertising and introduced Conduct Rules requiring CMCs to obtain clients’ signatures on written contracts before any fees could be taken.98 CMCs operated in two sectors: the 1,900 licensed businesses in the personal injury sector produced less than 5% (386) of consumer

95 Motor Third Party Working Party 2011 (Motor Third Party Working Party, 2011). 96 CAB evidence briefing: The claims pests – CAB evidence on PPI and claims-management companies (Citizens Advice Bureau, 2012). This reported that complaints about the cold-calling to Ofcom and the Information Commissioner’s Office had risen by 190% and 43% respectively. 97 See C Hodges and S Voet, Delivering Collective Redress: New Technologies (Hart Publishing, 2019). 98 Conduct of Authorised Persons Rules 2013 (2). See New rules for CMCs (Ministry of Justice, 2013).

The History of Continuous Reform 149 complaints, whereas the 1,100 businesses licensed for financial claims produced 93% (8,521) of consumer complaints.99 The ability to impose financial penalties for firms found breaching the r egulator’s rules of conduct was introduced in December 2014. Fines could be up to 20% of a firm’s annual turnover, and the trading licence could be suspended or removed.100 From January 2015, complaints against CMCs could be made to the Legal O mbudsman (LeO).101 In the first six months, the LeO was contacted almost 9,000 times – an average of 1,500 contacts a month – and 94% of complaints were about CMCs dealing with financial product claims.102 These include mis-sold mortgages, investments and interest rate swaps; the majority (88%) were about mis-sold PPI. The Ombudsman accepted 648 complaints for investigation, resolving 478 of these. More than half (53%) of the resolved complaints required a remedy to put things right for the customer. Around a third (34%) of cases required the firm to limit/waive fees or pay compensation; the average total financial remedy ordered was around £650. Around a quarter (23%) of the complaints were about delays in progressing claims or a failure to progress cases properly at all. Cold calling of consumers is banned as doorstep selling, and by other means it is subject to the Direct Marketing Association’s Direct Marketing Code of Practice. However, complaints of unsolicited text messages and cold calling by CMCs have continued for some years.103 Enforcement activity against CMCs continued, with the Regulator taking action on unwanted marketing calls and spam text messages, and the Advertising Standards Authority upholding complaints over sending misleading messages about how much clients could expect to receive.104 In 2015/16, against a CMC industry of 1,610 businesses with a reported total turnover of £751 million, the Claims Management Regulator fined four CMCs a total of £1.7 million, issued 247 warnings, carried out 306 audits, and cancelled 66 licences.105 CMCs were overwhelmingly concentrated in North West England. In 2016/17, the industry had 1,388 businesses with a reported total turnover of £726 million, the regulator fined £1.1 million, carried out 369 audits, issued 196 warnings, and cancelled 69 licences.106 Turnover in the personal injury claims management sector fell by 15% in 2016/17 to £182 million. Further developments and major factors are discussed further below, e specially involving the ban on referral fees and changes to address the huge rise in whiplash claims. However, the regulator noted a significant rise in holiday sickness claims.

99 ibid. 100 Claims management companies: financial penalties guidance (Ministry of Justice, 2014). 101 Legal Services Act 2007, s161. The Legal Ombudsman and complaints about claims management companies: response to consultation. Summary of responses to the consultation on the fee framework (Ministry of Justice, 2014). 102 Complaints in focus: Claims management companies (Legal Ombudsman, 2015). 103 T Edmonds, Claims Management Companies. Briefing Paper No 06075 (House of Commons Library, 23 Sept 2015). 104 J Hyde, ‘Claims companies rapped by ad watchdog over settlement boasts’ Gazette, 20 July 2016. 105 Claims Management Regulation: Annual Report 2015/16 (Ministry of Justice, 2016). Rock Law Ltd, based in Swansea, fined almost £570,000 for coercing clients into signing contracts, without giving them enough time to understand the terms and conditions before taking unauthorised payments: Ministry of Justice press release, 15 October 2015. 106 Claims Management Regulation: Annual Report 2016/17 (Ministry of Justice, 2017).

150 The Courts, Costs and Funding

G. Compensation Culture Debate on whether or not a ‘compensation culture’ existed lasted from at least the early 2000s107 until the present. Lord Dyson MR expressed concern in 2015 about national culture:108 One consequence of this is the view that as a society we have undergone a cultural shift. No longer is British society characterised by a somewhat philosophical and accepting approach to life. On the contrary, the view is taken that we are becoming more American in our approach; more ready to rush into litigation. To borrow from Tony Weir, we have become a ‘wondrously unstoical and whingeing society with (an) endemic neurosis’, and which rather than sees us ‘grin and bear it’ sees us ‘grit (our) teeth and sue’.109 Perhaps even more dangerously, this shift in approach has been accompanied by a growing concern that an unjustified burden is now being placed on employers, businesses, schools, the NHS and local and central government (as regards payment of compensation and, even worse, legal costs which often substantially exceed the amount of compensation). …

Since 2000, the battleground has focused on CFAs, the activities of CMCs and whiplash claims in road traffic accidents (RTAs), discussed below. The debate was inevitably polarised between the traditional partisans of, on the one hand, claimant lawyers and trade unions and, on the other hand, insurers. There was also an ideological element at political level. A Report to the Prime Minister published on 15 October 2010 by Lord Young of Graffham, primarily concerned reducing burdens on business of health and safety law, and contained a strong attack on a perceived ‘compensation culture’.110 Conservative ministers raised a theme of people taking ‘personal responsibility’, explained as ‘wherever possible citizens should take responsibility for resolving their own disputes, with the courts being focused on adjudicating particularly complex or legal issues’.111 They also mentioned ‘the prize [of] a less litigious society’.112 Political commentators called in 2016 for the abolition of all CFA and DBA arrangements, since they

107 Lord Falconer, Compensation Culture (22 March 2005): quoted in Lord Dyson MR, Magna Carta and Compensation Culture, The High Sheriff ’s Law Lecture, 13 October 2015. 108 Lord Dyson MR, Magna Carta and Compensation Culture, The High Sheriff ’s Law Lecture, 13 October 2015, paras 19 and 20. 109 T Weir, Governmental liability P. 1989, Spr, 40 at 76. 110 Common Sense, Common Safety. A report by Lord Young of Graffham to the Prime Minister following a Whitehall‑wide review of the operation of health and safety laws and the growth of the compensation culture, (HM Government, 2010). 111 Solving disputes in the county courts: creating a simpler, quicker and more proportionate system A consultation on reforming civil justice in England and Wales (Ministry of Justice, 2011) para 1.3. It said: ‘A newer burden on the system is the move towards a compensation culture, driven by litigation. Lord Young’s recent review of health and safety has drawn attention to the phenomenon of individuals suing employers and businesses for disproportionately large sums, often for trivial reasons and without regard to personal responsibility. This has been fuelled by [CFAs] that mean cases can be opened with very little risk to claimants and the threat of very substantial costs to defendants. Partly as a consequence, we have seen problems being brought to the Court room that should have no place there.’ 112 Solving disputes in the county courts: creating a simpler, quicker and more proportionate system A consultation on reforming civil justice in England and Wales (Ministry of Justice, 2011), Ministerial Foreword by the Rt Hon Kenneth Clarke QC MP, Lord Chancellor and Secretary of State for Justice, and Jonathan Djanogly MP, Justice Minister.

The History of Continuous Reform 151 had ‘permitted a vast increase in lawyer-driven litigation’ that was ‘encouraging a claims culture based on gaining sectarian advantage’.113

H. Austerity and the 2013 Demise of Legal Aid Expenditure in England and Wales on legal aid per capita was £39 in 2011, among the highest in the world,114 with around a third of the population being eligible for some form of civil legal aid in 2007.115 However, civil legal aid had risen primarily between 1979/80 and 1995/96, rather than subsequently, as shown in Figure 5.1. Figure 5.1 Spending on civil legal aid between 1979/80 and 2013/14116 1.4

Expenditure (£bn)

1.2 1.0 0.8 0.6 0.4

2013–14

2011–12

2009–10

2007–08

2005–06

2003–04

2001–02

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1997–98

1995–96

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1987–88

1985–86

1983–84

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0

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For the spending period April 2010 to March 2015, the Ministry of Justice was expected to reduce its resource budget from £8.3 billion in 2010/11 to £7 billion in 2014/15, involving overall resource savings of 23% in real terms.117 The Coalition government’s plan was for the Ministry of Justice to save £2 billion a year from 2014/15. The method chosen to achieve this saving was ‘by the crudest of strategies’.118 The Legal Aid Transformation package of reforms ‘included a policy designed predominantly to discourage litigation’ but also ‘to target legal aid to those who need it most’.119

113 DG Green, Democratic Civilisation or Judicial Supremacy? (Civitas, 2016). See also A Look into the Perception of Civil Justice & Litigation Funding in England & Wales (Justice not Profit, 2015), which claimed that 56% of people ‘see the civil litigation system as becoming increasingly Americanised’. 114 International Comparisons of Public Expenditure on Legally Aided Services, Ad hoc Statistics Note (Ministry of Justice, 2011). 115 See A Griffith, ‘Dramatic drop in civil legal aid eligibility’ (2008) 10 September LegalAction. 116 Getting it Right in Social Welfare Law. The Low Commission’s follow-up report (The Low Commission, 2015) Figure 10. 117 HM Treasury, Spending review 2010 Cm 7942, October 2010, p 55. 118 E Palmer, T Cornford, A Guinchard and Y Marique, Access to Justice: Beyond the Policies and Politics of Austerity (Hart Publishing, 2016) 5. 119 Legal Aid, Sentencing and Punishment of Offenders Act 2012: Post-Legislative Memorandum. Submitted to the Justice Select Committee on 30 October 2017 (Ministry of Justice, 2017) Cm 9486, para 170 and p 45.

152 The Courts, Costs and Funding From 1 April 2013, ‘whole tracts of law’ were removed from the scope of legal aid.120 Under the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO), from 1 April 2013 legal aid was removed from, amongst other areas:121 • Clinical negligence, except where a child has suffered neurological injury, resulting in being severely disabled during pregnancy, childbirth or the eight-week postnatal period. • Employment, unless involves a breach of the Equality Act 2010, or it arises in relation to the exploitation of an individual who is a victim of human trafficking. • Private family law cases (contact or divorce), unless there is evidence of domestic violence or child abuse or in child abduction cases. • Housing law, unless a serious disrepair or homelessness, possession proceedings or for antisocial behaviour cases in the county court. • Debt cases, unless immediate risk to the debtor’s home. • Most immigration cases. • Education, unless Special Educational Needs. • Welfare benefit cases, except appeals to the Upper Tribunal or higher courts. Civil legal aid was reduced by 40%.122 For social welfare claims, the cut was £89 million pa, plus reductions in funding by local authorities on advice and welfare support estimated to be £40 million by 2015.123 New merits criteria were to be applied by the Director of Legal Aid Casework at the Legal Aid Agency when determining whether an applicant qualifies for civil legal aid.124 Borderline cases were removed from scope in 2014,125 but after a successful challenge, amended regulations in July 2015 provided that legal aid may be provided in some cases with a ‘poor’ or ‘borderline’ prospect of success, if providing legal aid would prevent a breach of the applicant’s rights under the ECHR or EU law.126 An ‘exceptional case’ safety net was provided, to guarantee the funding of cases that would ordinarily be out of scope for funding under LASPO but where either human rights

120 See A Caplen, ‘Access to Justice: The View from the Law Society’ in E Palmer, T Cornford, A Guinchard and Y Marique, Access to Justice: Beyond the Policies and Politics of Austerity (Hart Publishing, 2016). Changes to civil legal aid in England and Wales since 2013: the impact on clients – Briefing Paper (House of Commons Library, 2015) Summary. To be eligible for legal aid in a civil case, an applicant must pass three tests: • • •

the case must be within scope for legal aid; the applicant must have a 50:50 (or thereabouts) prospect of winning the case (this is the merits test); and the applicant must fulfil the financial eligibility criteria, set out in The Civil Legal Aid (Financial Resources and Payment for Services) Regulations 2013.

121 E Palmer, T Cornford, A Guinchard and Y Marique, Access to Justice: Beyond the Policies and Politics of Austerity (Hart Publishing, 2016). 122 J Sorabji, ‘Austerity’s Effect on English Civil Justice’ (2015) 8(4) Erasmus Law Review 159, 163. 123 Tackling the Advice Deficit. A strategy for access to advice and legal support on social welfare law in England and Wales (The Low Commission, 2014), Executive Summary. 124 The Civil Legal Aid (Merits Criteria) Regulations 2013, SI 2013 No 104. 125 The Civil Legal Aid (Merits Criteria) (Amendment) Regulations 2014, SI 2014 No 131. 126 The Court of Appeal held in R v The Director of Legal Aid Casework and Lord Chancellor ex parte Gudanaviciene and others [2014] EWCA Civ 1622 that it is lawful for the prospects of success test to have a 50% threshold. The rules were subsequently changed to allow an exception to the 50|% threshold where the case is of overwhelming importance to the individual or of significant wider public interest: The Civil Legal Aid (Merits criteria) (Amendment) Regulations 2016, SI 2016 No 781.

The History of Continuous Reform 153 or EU law require the provision of legal aid.127 The Legal Services Commission estimated that there would be 5,000 to 7,000 such applications a year. However, in the first three months after implementation of LASPO, there were only 233 applications (compared with an expectation of around 1,500), of which only six were granted (and four of these were inquest cases).128 The number of applications for ‘exceptional case’ funding in April to June 2015 were 29% higher than for the same period of the previous year,129 of which around a third were granted.130 The ‘exceptional case’ mechanism was, therefore, tightly controlled and few people benefited from it. Unless Legal Representation only is required, all clients in the three mandatory categories were required to apply for advice through an online Gateway unless they satisfy one or more of the statutory exemption criteria.131 The Gateway provides specialist legal advice, primarily by telephone, online, and by post, in debt, discrimination, Special Educational Needs, housing and family issues for people who qualify for civil legal aid. The disposable income regime under the financial eligibility test for civil and family cases was changed in relation to the level of contribution required from clients as shown in Figure 5.2.132 Thus, for clients with disposable income of £733 a month, they were required to contribute £146 a month pre-LASPO (20%) and £220 post-LASPO. Figure 5.2 Disposable income contributory rates in civil/family legal aid, before and after LASPO Contribution rate For disposable income between …

Pre-LASPO

Post-LASPO

£316 and £465

25%

35%

£466 and £616

33%

45%

£617 and £713

50%

70%

Critics of the LASPO reforms argued that they would have a disproportionate effect on the poor and the vulnerable, who may have nowhere else to turn.133 It was clear that the 2012 Act removed many areas of law from the scope of civil legal aid. The verdict of the Low Commission on social welfare was that ‘many of the decisions taken in designing the civil legal aid reforms were hasty ones which were insufficiently grounded on evidence’ and simply made

127 Legal Aid, Sentencing and Punishment of Offenders Act 2012, s 10. 128 See Tackling the Advice Deficit. A strategy for access to advice and legal support on social welfare law in England and Wales (The Low Commission, 2014) para 1.31. From 1 April to 1 July 2013 there were 270 applications for exceptional funding in total, but this figure includes applications for an internal review of refusals of funding (37). This means that there were in fact only 233 applications for exceptional funding. 129 Legal Aid Statistics in England and Wales: April to June 2015 (Ministry of Justice, 24 September 2015) 5. 130 Briefing Paper: Changes to civil legal aid in England and Wales since 2013: the impact on clients – Briefing Paper (House of Commons Library, 2015). 131 The Gateway exemption criteria are: (a) they are in detention (including prison, a detention centre, or secure hospital); (b) they are children (defined as being under 18); or (c) the matter for which they need assistance is one where the user has previously been assessed as requiring face-to-face provision, has accessed face-to-face within the last 12 months, and is seeking further help to resolve linked problems from the same face-to-face provider. 132 Legal Aid, Sentencing and Punishment of Offenders Act 2012: Post-Legislative Memorandum. Submitted to the Justice Select Committee on 30 October 2017 (Ministry of Justice, 2017) Cm 9486, Fig 5, p 44. 133 Changes to civil legal aid in England and Wales since 2013: the impact on clients – Briefing Paper (House of Commons Library, 2015) Summary.

154 The Courts, Costs and Funding to deliver target savings in the legal aid budget quickly.134 The National Audit Office (NAO) and Commons Public Accounts and Justice Committees agreed that the changes reduced spending on civil legal aid, but have questioned whether they had increased costs elsewhere in the legal system and drew attention to the increased difficulties that people may face in obtaining help with legal problems.135 The House of Commons Library Report summarised the position as follows:136 Particular issues surrounding the availability of legal aid for victims of domestic abuse, the 2012 Act’s impact on providers of legal aid (and thus on ‘advice deserts’) and the rise in the number of self-represented litigants (litigants in person) observed since the 2012 Act came into force. … The Commons Justice Committee concluded that the Ministry of Justice had failed to meet three out of its four stated objectives for the reforms and, while making significant savings, had damaged access to justice for some litigants. ‘Our overall conclusion was that, while it had made significant savings in the cost of the scheme, the Ministry had harmed access to justice for some litigants and had not achieved the other three out of four of its stated objectives for the reforms.’ … Net expenditure on legal aid in 2014–15 was £1.6 billion. This compares to a net expenditure of £2.2 billion in 2010–11.137 The largest part of the LAA’s net expenditure on legal aid is on criminal legal aid. In 2014–15, spending on criminal legal aid was £919 million, while spending on civil legal aid was £622 million.138

The NAO criticised the Ministry of Justice for its claim that the reforms could reduce spending on civil legal aid by £300 million per year in the long term, because the Ministry had not quantified most of the wider costs of the reforms.139 The NAO estimated that the costs of increases in litigants in person would be lower VAT revenue of £60 million in 2013/14,140 an increased cost in family courts of £3.4 million in 2013/14,141 and further impact in family courts alone (such as in cases taking up to 50% longer) of £3 million.142 A further restriction introduced in 2012 was that persons who apply for legal aid should access it through a Gateway instead of a face-to-face application.143 134 Getting it Right in Social Welfare Law. The Low Commission’s follow-up report (The Low Commission, 2015) 48. 135 The Public Accounts Committee, Implementing reforms to civil legal aid 4 February 2015, HC 808 2014/5; National Audit Office, Implementing Reforms To Civil Legal Aid 20 November 2014, HC 784 2014/15. 136 Changes to civil legal aid in England and Wales since 2013: the impact on clients – Briefing Paper (House of Commons Library, 2015). 137 LAA, Annual Report and Accounts 2014–15 June 2015. 138 National Audit Office, A Short Guide to the Ministry of Justice June 2014, 16. 139 National Audit Office, Implementing Reforms To Civil Legal Aid 20 November 2014, HC 784 2014/15, 6. 140 ibid, 19. 141 ibid, 14. 142 ibid, 17. 143 Legal Aid, Sentencing and Punishment of Offenders Act 2012. The Gateway provides specialist legal advice, primarily by telephone, online and by post, in debt, discrimination, Special Educational Needs, housing and family issues for people who qualify for civil legal aid. It is delivered through Civil Legal Advice (CLA) 910. See Review of the Civil Legal Advice Mandatory Gateway (Ministry of Justice, 2014). Exceptions apply for people who: • • •

are in detention (including prison, a detention centre, or secure hospital); are children (defined as being under 18); or, the matter for which they need assistance is one where the user has previously been assessed as requiring face-to-face provision, has accessed face-to-face within the last 12 months, and is seeking further help to resolve linked problems from the same face-to-face provider.

The History of Continuous Reform 155 The number of firms providing legal aid gradually declined between April 2012 and March 2017, from roughly 2,500 offices to roughly 1,500 offices.144 The government’s assessment in 2017 was:145 Overall, fewer individuals are in receipt of legal aid in civil and family cases following the reforms, as Figure [5.3] shows. In 2012–13, prior to LASPO’s implementation, the government provided funding for 575,000 new legal help matter starts (i.e. providing advice and assistance) and 150,000 new certificates for civil representation (i.e. representing someone at court). By 2016–17 the legal help figures had fallen by 74% to 145,000 and the civil representation figures by 29% to 105,000. Since LASPO, quarterly volume trends have been relatively flat. Figure 5.3 Civil legal aid workload summary, legal help and civil representation 2009–12 to 2016–17146 Volume (’000s) 250 Legal Help and CLR matters started

April 2013: Implementation of LASPO

200 150 100

0

Civil representation certificates granted

Jan–Mar Apr–Jun Jul–Sep Oct–Dec Jan–Mar Apr–Jun Jul–Sep Oct–Dec Jan–Mar Apr–Jun Jul–Sep Oct–Dec Jan–Mar Apr–Jun Jul–Sep Oct–Dec Jan–Mar Apr–Jun Jul–Sep Oct–Dec Jan–Mar Apr–Jun Jul–Sep Oct–Dec Jan–Mar Apr–Jun Jul–Sep Oct–Dec Jan–Mar

50

2009–10 2010–11

2011–12

2012–13

2013–14

2014–15

2015–16

2016–17

The Ministry of Justice estimated that the percentage of population eligible for free or contributory legal aid had dropped from 52% in 1998, to 29% in 2007 and around 25% in 2015.147 By comparison, in Scotland 70% of the population were eligible for civil legal aid in 2018.148

144 Legal Aid Statistics in England and Wales January to March 2017 (Ministry of Justice, 2017) 47. 145 Legal Aid, Sentencing and Punishment of Offenders Act 2012: Post-Legislative Memorandum. Submitted to the Justice Select Committee on 30 October 2017 (Ministry of Justice, 2017) Cm 9486, para 174 and Fig 6. 146 Ministry of Justice, Legal Aid Agency, Legal Aid Statistics in England and Wales, January to March 2017, 29 June 2017, Figure 6. 147 House of Commons, House of Lords, Joint Committee on Human Rights Enforcing human rights Tenth Report of Session 2017–19, HC 669, para 35. 148 M Evans, Rethinking Legal Aid, An Independent Strategic Review (2018), at https://www.gov.scot/ Resource/0053/00532544.pdf.

156 The Courts, Costs and Funding Research for the Law Society found that the legal aid means test was set at a level that ‘requires many people on low incomes to make contributions to legal costs that they could not afford while maintaining a socially acceptable standard of living’. In particular:149 • At the maximum level of disposable income at which legal aid is allowed, households have too little income to reach a minimum standard of living even before footing any legal bills. Typically, they have disposable incomes 10% to 30% too low to afford a minimum budget. • Even those below the disposable income limit, while eligible for legal aid, are required to make a contribution to legal costs, unless their income is extremely low. Some households who can afford less than half of a minimum budget must still contribute to legal expenses. This includes households whose income would only be just enough to pay for food, heating, travel and housing costs, even before meeting other expenses such as clothing, household goods and personal care items.

In July 2018, the Joint Committee on Human Rights of the House of Commons and House of Lords issued a report expressed concern that the LASPO reforms had150 made access to justice more difficult for many, for whom it is simply unaffordable. Moreover, there are large areas of the country which are ‘legal aid deserts’, as practitioners withdraw from providing legal aid services since they can no longer afford to do this work following reductions in legal aid funding by successive governments over the past three decades.

The Joint Committee noted that the Exceptional Case Funding scheme had been expected to support up to 7,000 cases a year, whereas it only funds a few hundreds of cases.151 It noted evidence from the Law Society that judges estimated that the involvement of Litigants in person made cases 50% longer on average.152 It noted that the number of cases handled by the mandatory telephone gateway for initial advice on debt, discrimination and education law had fallen from 53,479 in 2013/14 to 30,370 in 2016/17, and the total number of clients the service had referred for face-to-face advice had fallen from 182 to 56 over the same period.153 Further, the government had cancelled procurement for delivery of gateway services for discrimination and education law from September 2018, due to a lack of tenders.154 In concurring that ‘legal aid deserts’ had been created, the Joint Committee noted the fall in providers of civil legal aid work by solicitors (Figure 5.4) and not-for-profit suppliers (Figure 5.5).

149 D Hirsch, Priced out of Justice? Means testing legal aid and making ends meet (University of Loughborough, 2018). 150 House of Commons, House of Lords, Joint Committee on Human Rights Enforcing human rights Tenth Report of Session 2017–19, HC 669. 151 ibid, para 44. 152 ibid, para 46, citing Written evidence from the Law Society of England and Wales (AET0020)at http://data. parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/human-rights-committee/enforcinghuman-rights/written/78191.html. 153 ibid, para 49 and n 51. 154 ibid, para 50.

The History of Continuous Reform 157 Figure 5.4 Number of Solicitor firm provider offices by category of civil legal aid work, Apr–Jun 2013 to Jan–Mar 2017155 500

Legal Help

400 350 300 250 200

Civil Representation

150 100 50

2013–14

2014–15

2015–16

Jan–Mar

Oct–Dec

Jul–Sep

Apr–Jun

Jan–Mar

Oct–Dec

Jul–Sep

Apr–Jun

Jan–Mar

Oct–Dec

Jul–Sep

Apr–Jun

Jan–Mar

Oct–Dec

Mediation Jul–Sep

0

Apr–Jun

Provider offices completing work in period

450

2016–17

Figure 5.5 Number of Not-for-Profit provider offices by category of civil legal aid work, Apr–Jun 2013 to Jan–Mar 2017156

2,500 Civil Representation 2,000 1,500 Legal Help

1,000 500

Jan–Mar

Jul–Sep

Apr–Jun

Oct–Dec

2015–16

Jan–Mar

Jul–Sep

Apr–Jun

Oct–Dec

2014–15

Jan–Mar

Jul–Sep

Apr–Jun

Oct–Dec

2013–14

Jan–Mar

Oct–Dec

Jul–Sep

0

Mediation Apr–Jun

Provider offices completing work in period

3,000

2016–17

155 Ministry of Justice, Legal Aid Agency, Legal Aid Statistics in England and Wales, January to March 2017, 29 June 2017. 156 ibid.

158 The Courts, Costs and Funding The Joint Committee said that it shared the grave concerns of many for access to justice, the rule of law and enforcement of human rights in the UK.157 It called for a national culture on human rights, and set out this statement of principles:158 For rights to be effective they have to be capable of being enforced. For that enforcement, it is essential to have: • adequate access to legal information, advice and assistance for everyone at all income levels and in all areas of the country; • a robustly independent judiciary; • a robustly independent legal profession; • a strong Equality and Human Rights Commission, held accountable for its work, and strong National Human Rights Institutions in the devolved administrations, similarly held accountable; and • a culture which understands the concept of the rule of law, respects human rights and accepts that they will be enforced and which is supported by the government.

I. 2013 Implementation of the Jackson and Other Reforms In addition to the demise of legal aid noted above, procedural reforms were introduced in and around 2013 based on the analysis of Jackson LJ, including:159 • All small claims were automatically referred to mediation, on the basis that this is not compulsory mediation, but rather a requirement to engage with a small claims mediator. • Expanding the small claims track to £10,000, on the basis that many of the cases that fell into the small claims track in 1999 were by 2013 routinely treated as fast track cases with associated costs. No change was made to limits for personal injury and housing disrepair. • Introducing a fixed-cost simplified claims procedure for more types of personal injury claims, similar to that which was introduced in 2010 for road traffic accidents under £10,000. Fees for processing basic, uncontested claims for compensation for minor injuries suffered in road accidents were reduced by more than half, from £1,200 to £500. • From 31 July 2013 the Claims Portal, used by lawyers and insurers to settle payouts for uncontested road accidents, was extended to include claims for accidents at work and in public places. It also started handling claims up to the value of £25,000 (the previous maximum was £10,000).160 • Claimants may make offers to settle, and if a defendant does not accept the claimant’s offer but the court subsequently gives judgment for the claimant that is at least as

157 House of Commons, House of Lords, Joint Committee on Human Rights, Enforcing human rights Tenth Report of Session 2017–19, HC 669, para 83. 158 ibid, ch 7 and Summary. 159 Solving disputes in the county courts: creating a simpler, quicker and more proportionate system: a consultation on reforming civil justice in England and Wales – The Government Response (The Stationery Office, 2012) Cm. 8274. 160 Press release, Turning the Tide on Compensation Culture (Ministry of Justice), 1 May 2013, at www.gov.uk/ government/news/turning-the-tide-on-compensation-culture.

The History of Continuous Reform 159 a dvantageous to the claimant as under his offer, the court may order the defendant to pay an additional amount in accordance with prescribed percentages.161 • Damages-based agreements (DBAs) were permitted, under which a representative can recover an agreed percentage of a client’s damages if the case is won (the payment) but will receive nothing if the case is lost.162 Caps applied in first instance proceedings. In a claim for personal injuries, the amount to be paid by the client, including VAT, must not be greater than 25% of the combined total of the damages recovered by the client in the proceedings for pain, suffering and loss of amenity and pecuniary loss, net of any sums recoverable by the Compensation Recovery Unit. In any other claim, the amount of the payment, including VAT, must not be greater than 50% of the sums ultimately recovered by the client. • Success fees were capped under CFAs as 25% in first instance proceedings and 100% in all other proceedings.163 • In order to balance the reduction in claimants’ fees to be paid to their lawyers, a blanket increase in general damages of 10% was introduced.164 In support of the Bill, the Association of British Insurers (ABI) attacked ‘Aggressive marketing tactics by CMCs [which] result in members of the public receiving spam text messages and cold calls encouraging them to claim compensation even where there has been no accident. This adds to the “have a go” compensation culture.’165 ABI asserted that fraudulent claims continued to increase, taking advantage of disproportionate costs for defendants to fight them. An ABI survey of 50,000 low value motor accident claims in 2009 and 2010 found that for every pound in compensation, 87p was paid in legal costs. One insurer’s data showed average claim costs represented 142p of the sums received by injured victims. UK consumers paid £2.7m a day to claimant lawyers through motor insurance premiums. ABI noted ‘cash for crash’ scams and phantom passenger claims.166 It said that detected fraudulent insurance claims rose 9% in 2010 compared to 2009 and totalled £919 million. The estimate of undetected claims was £930 million. When most of the changes on the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) were introduced in April 2013, Justice Secretary Chris Grayling 161 The Offers to Settle in Civil Proceedings Order 2013, SI 2013 No 93. Where the claim is only for an amount of money, the prescribed percentage is: Amount awarded by the court

Prescribed percentage

Up to £500,000

10% of the amount awarded

Above £500,000, up to £1,000,000

10% of the first £500,000 and 5% of the amount awarded above that figure. Above £1,000,000

7.5% of the first £1,000,000 and 0.001% of the amount awarded above that figure Where the claim is or includes a non-monetary claim, Rules of Court may make provision, and similar prescribed amounts are applied, up to a maximum to be paid of £75,000. 162 The Damages-Based Agreements Regulations 2013, SI 2013 No 609. 163 The Conditional Fee Agreements Order 2013, SI 2013 No 689. 164 Simmons v Castle [2012] EWCA Civ 1288. 165 Tackling the Compensation Culture: The Legal Aid, Sentencing and Punishment of Offenders Bill. Improving Systems for All (Association of British Insurers, 2011). 166 A ‘cash for crash’ staged collision in 2014, that was captured on video, led to eight claimants being convicted in 2017 of making fraudulent claims, after insurer AIG had notified the City of London Police’s Insurance Fraud Enforcement Department: J Hyde, ‘Eight sentenced over bus ‘crash for cash’ fraud’ Gazette 13 October 2017.

160 The Courts, Costs and Funding claimed: ‘We are turning the tide on the compensation culture. It’s pushing up the cost of insurance, and making it more expensive to drive a car or organise an event. It’s time the whole system was rebalanced.’167 A contrary picture was asserted by the Trades Union Congress (TUC), which described what it considered to be a series of myths about compensation, some of which are summarised in Figure 5.6.168 Figure 5.6 The TUC’s 2014 Compensation Myths Myth 1 Compensation claims are spiralling out of control. The number of civil claims for compensation against employers as a result of accidents have fallen ever year for the last five years.169 In fact, according to a recent report by the Better Regulation Task Force, despite the introduction of ‘no win – no fee’ claims, the total cost of compensation cases in Britain has remain in real terms, static since 1989.170 Britain also pays out much less out on civil compensation, as a proportion of its GDP, than any other major European country apart from Denmark, and a third that of the USA.171 Myth 2 Workers are too ready to claim compensation Each year over 850,000 people are injured or made ill as a result of their job.172 The most common injuries are musculoskeletal disorders such as back injury or RSI, injuries from slips and falls, skin diseases, and deafness. Many people will [get] better, some will not. Over 25,000 people are forced to give up work every year as a result of work-related injuries or illness. However the number who gain compensation from their employer is, according to the Association of British Insurers, around 60,000 a year.173 A further 20,000 will make a successful claim for industrial injuries benefit, which is a government funded ‘no fault’ scheme.174 This means that 9 out of every 10 workers who are injured or made ill through work get no compensation. Myth 3 Compensation payments are too high. Exact figures are difficult to come by because in excess of 95% of cases are settled out of court.175 Figures from the leading solicitors companies give an average settlement of around £7,500.176 However, because there are a small number of large payments, the vast majority of claimants receive less than £5,000. Payments are made based on decided cases and independent medical evidence compensating actual loss and even where there is a debilitating and life destroying disease the compensation is never more than those guidelines. An example is mesothelioma caused by asbestos exposure. This is invariably fatal. The guidelines for pain and suffering are £45,000–£70,000, however if the case is settled after death, the payment is often lower, with a standard tariff for bereavement damages of £10,000.177 (continued) 167 Press release, Turning the Tide on Compensation Culture (Ministry of Justice), 1 May 2013, at www.gov.uk/ government/news/turning-the-tide-on-compensation-culture. 168 The Compensation Myth (TUC, April 2014). 169 Compensation Recovery Unit, 2005. 170 Better Routes to Redress, BRTF 2004. 171 US Tort Costs –2003 (Tillinghurst-Towers Perrin, 2014). 172 Occupational Health Statistics Bulletin, 2003/04 (HSC, 2004). 173 ABI, quoted in Hazards magazine, May 2005. 174 DWP Industrial Injuries Disablement Benefit statistics, September 2004. 175 APIL, July 2005. 176 TUC survey, July 2005. 177 Judicial studies Board Guidelines.

The History of Continuous Reform 161 Figure 5.6 (Continued) Myth 7 Employers Liability Insurance is just another burden on business. Civil compensation claims are usually paid out through Insurance companies. It is a legal requirement for employers who have staff working for them to have insurance cover in case they injure or kill someone through their negligence, or an employee develops an avoidable disease through work. The average cost of EL insurance is 0.25% of total payroll costs178 and is the lowest in Europe. Average damages for an ELCI claim are £7,500.179 Unfortunately, due to the way the insurance market works there is little economic incentive for employers to take action to reduce the number of injuries and illnesses they cause, as premiums within each sector vary only marginally between the good and bad employers. Myth 8 Because of the large number of claims the insurance premiums employers have to pay have gone up by a huge amount. Premiums have gone up considerably in the last few years, but this is nothing to do with the number of claims. The main reason is that insurance companies were using Employers Liability Insurance as a ‘loss leader’. In 1999 the cost of claims and insurance companies costs was 54% higher than the amount that the insurance companies were charging.180 Following the stock market crash and the attack on the World Trade Centre, the companies decided they could no longer afford to subsidise Employers Liability Insurance so premiums have gone up. However this is not because of higher compensation or more claims. Another factor is that legal and medical costs have been rising much faster than inflation. Between 1997 and 2002 medical and legal costs increased by 50%.181 This is simply because insurance companies are failing to follow protocols which oblige them to respond to claims within certain time limits and to admit liability early on, if the employer is liable. All too often liability is not admitted until a claim is about to go to court, and unnecessary costs have been run up. Myth 9 Employers often have trouble getting Employers Liability Insurance. A review by the Department of Work and Pensions into Employers Liability Insurance concluded that there was no general problem with any employer getting Employer Liability Insurance, although in some cases there were problems caused by late notice of renewal from the Insurance Companies. However, even though it is a legal requirement to have such insurance cover, an estimated 22,000 businesses with employees were operating without any Employer Liability Insurance, not because they could not get cover, but because they wanted to save money.182 This means that over 112,000 employees have no insurance coverage if they are injured at work, or develop an occupational illness.

178 Work

place Compensation – Greenspan Bergman report for ABI, 2002. Review of ELCI, First Stage Report. 180 DWP Review of ELCI, First Stage Report. 181 Workplace Compensation, Greenspan Bergman, 2002. 182 DWP review of ELCI, Second Stage Report. 179 DWP

162 The Courts, Costs and Funding

J. Whiplash Claims The level of fraudulent or exaggerated claims became a major political issue, centred around road traffic accident (RTA) claims including whiplash injuries. The ABI said that nearly 1,200 whiplash claims were made a day in the UK, and that £2 billion a year was paid out for them in compensation and costs.183 The Ministry of Justice said in 2012184 that ‘Figures for the number of RTAs fell by 19% between 2006 and 2012, from 189,000 to 151,000,185 whilst the number of recorded insurance claims for RTA personal injuries rose by nearly 60%, from 519,000 in 2006 to 828,000 in 2012’186 and that ‘Data from the Department of Work and Pensions Compensation Recovery Unit (CRU) indicates that around 570,000 claims were made for whiplash injury in 2011/12, around 70% of total RTA PI claims’.187 Insurers committed to passing on savings through lower general motor insurance premiums.188 One of the changes introduced189 was that doctors providing medical reports of soft tissue injuries had to be registered through medical reporting organisations (MROs) with an independent IT hub, Medco Registration Solutions (MedCo). This centrally managed accreditation scheme for the instruction of medical experts in whiplash claims operates with two tiers of MROs: Tier 1 represents larger (high volume, national) MROs and Tier 2 represents smaller MROs. The Ministry of Justice set qualifying criteria for each tier. When a legal provider undertakes a search through MedCo, it provides seven options: one Tier 1 MRO and six Tier 2 MROs from which the legal provider may choose. MROs pay an annual fee of £75,000 (Tier 1, demonstrating capacity to deliver 40,000 reports annually, and contracts with at least 250 medical experts) or £15,000 (Tier 2). The programme was challenged through judicial review but rejected, although Cranston J expressed concern at potential anti-competitive aspects.190 Other related changes discussed below were proposals to ban general damages for minor soft-tissue injuries and increase the small claims limit to £5,000 for personal injury claims.191 The courts were required to dismiss a claim entirely where it is satisfied on the balance of probabilities that the claimant has been fundamentally dishonest in relation to the claim, unless it is satisfied that the claimant would suffer substantial injustice as a result.192

183 Tackling the Compensation Culture: The Legal Aid, Sentencing and Punishment of Offenders Bill. Improving Systems for All (Association of British Insurers, 2011). 184 Consultation, Reducing the number and costs of whiplash claims (Ministry of Justice, 2012) para 17. 185 Source DfT: www.dft.gov.uk/statistics/tables/ras40007; www.dft.gov.uk/statistics/tables/ras45009. 186 Source DWP CRU. 187 ibid, para 18. 188 ibid, para 23. See also House of Commons Transport Committee, Cost of motor insurance: whiplash Fourth Report of Session 2013–14. 189 See Whiplash reform programme: Ministry of Justice Response to consultation on independence in medical reporting and expert accreditation (Ministry of Justice, 2014); J Hyde, ‘Whiplash MedCo doctors given weeks to find £75,000 fee’ The Law Society Gazette, 5 March 2015. 190 Speed Medical Examination Services Limited v Secretary of State for Justice [2015] EWHC 3585 (Admin). 191 Spending Review and Autumn Statement 2015: key announcements (HM Treasury, 25/11/2015). A five-fold increase in the Small Claims jurisdictions was strenuously opposed by the Law Society: Law Society Response to the Chancellor’s Autumn Statement (Law Society, 2015). 192 Criminal Justice and Courts Act 2015, s 57. This strengthened the more liberal Supreme Court decision in Fairclough Homes v Summers [2012] UKSC 26.

The History of Continuous Reform 163 Legal services providers were prohibited from offering benefits to potential clients as inducements to make personal injury claims.193 For whatever reason, the figures recorded by the CRU for claims where the compensator had used the term ‘whiplash’ fell from 488,281 in 2012/13, to 410,215 in 2013/14, 376,513 in 2014/15, and 335,365 claims in 2015/16.194 However, whiplash claims were replaced in popularity by holiday sickness claims. It was reported in August 2017 that holiday sickness claims had risen by 500% since 2013, and that four out of every five compensation claims for holiday sickness came from Merseyside, Greater Manchester and Lancashire, ‘suggesting that the region is particularly bad for fraud’.195 Travel agents were reported as instituting private criminal prosecutions. The personal injury world was, however, turned upside down with the Lord Chancellor’s announcement that the discount rate for damages would be significantly changed in claimants’ favour. That issue is discussed below in relation to personal injury claims. Further changes were mooted in 2016 to ‘to crack down on minor, exaggerated and fraudulent soft tissue injury (whiplash) claims stemming from road traffic accidents (RTAs)’.196 The Ministry said that the average payment for a minor whiplash claim was £1,850, and the cost of dealing with them was out of all proportion to any genuine injury suffered. The package of measures included introducing a tariff of payments for pain, suffering and loss of amenity (PSLA) in more significant claims, raising the small claims limit in personal injury claims from £1,000 to £5,000 and banning the settling of whiplash claims without a medical report from an accredited medical expert. The package was expected to save the industry around £1 billion a year, which would be passed on to consumers through reduced motor insurance premiums, saving an average of £40 on annual car insurance. In February 2017, the proposal was to increase the small claims limit to £5,000 for whiplash claims and £2,000 for other personal injury claims.197 However, these changes were deferred because of the sudden May 2017 general election, but subsequently pursued by the successor government.198 The Civil Liability Act 2018 introduced regulation of damages for whiplash claims with the new mechanism for setting the discount rate (see chapter ten). A new portal was planned to become live in April 2020 (see the discussion of the RTA Portal in chapter ten) under which claimants would be expected themselves to obtain medical reports from MROs listed as having been approved on the MedCo system. The plan to raise 193 Criminal Justice and Courts Act 2015, ss 58–61. 194 J Hyde, ‘Government figures reveal whiplash claims in freefall’ Gazette 22 July 2016. See also J Hyde, ‘Aviva probes 17,000 whiplash claims but admits fraud is falling’ Gazette 1 April 2016. 195 A Ellson, ‘Northwest named as British hotbed of sickness scams’ The Times 26 August 2017. 196 Reforming the Soft Tissue Injury (‘whiplash’) Claims Process. A consultation on arrangements concerning personal injury claims in England and Wales (Ministry of Justice, 2016) per Foreword by Lord Keen of Elie QC. A claims farmer who planned road traffic crashes and made claims based on them was jailed for seven and a half years: J Hyde, ‘CMC owner jailed for staging crashes to profit from claims’ Gazette 2 August 2017. In January 2018, Miles Savory, a director of a CMC based in Bristol was fined £335, and ordered to pay £364.08 costs and a victim surcharge of £33 after admitting a charge of breach of data protection law in to contact a driver with whom he wrongly claimed to have been in a collision: M Walters, ‘Accident claims company director fined for inventing crash’ Gazette 4 January 2018. 197 Part 1 of the Government Response to: Reforming the Soft Tissue Injury (‘whiplash’) Claims Process: A consultation on arrangements concerning personal injury claims in England and Wales (Ministry of Justice, 2017). 198 ‘Queen’s speech confirms whiplash reform and court modernisation’ Gazette, 21 June 2017, reporting the Queen’s Speech announcement of a Civil Liability Bill to address the ‘compensation culture’ around motor insurance claims.

164 The Courts, Costs and Funding the small claims limit to £5,000 for road traffic personal injury claims (thereby making legal costs unrecoverable for claims under that sum) was deferred. It was estimated199 that these changes would lead to defendant insurers incurring £19 million annually in extra costs for medical reports but that reduced claims numbers and smaller damages payments would yield total benefits of £1.3 billion a year. It was assumed that insurers would pass 85% of these benefits on to consumers in lower premiums, giving insurers a net benefit of £190 million a year. Annual losses would also be caused to HMRC of £140 million through the reduction in claims and £6 million to the NHS in lower CRU recoveries.

K. Court Fees In the post-2008 financial crash environment, the Conservative-led Coalition government policy was to reduce public expenditure wherever it was politically expedient. The Ministry of Justice was required by HM Treasury to reduce its budget by a third from 2010 to 2016.200 Significant increases were made in court fees, with the aim of moving to full cost recovery in the civil and family courts.201 In 2014, fee increases included 18% for money claims (£5,000 to £15,000), 81% for judicial review applications, and 576% for some high value cases.202 Further increases were made in 2015 and 2016. The government concluded that there would be no real detriment to litigants, and more money would simply be raised. The published evidence for this conclusion was a research report203 that has been strongly criticised.204 By 2014, the National Audit Office (NAO) found that the Ministry of Justice was on track to meet its main objective of significantly reducing, in a short timeframe, spending on civil legal aid.205 However, the NAO said that it was less clear to what extent it had met its other objectives of reducing unnecessary litigation and targeting legal aid at those who need it most. In 2015, the maximum fee for lodging a personal injury case increased from £1,920 to £10,000.206 199 Civil Liability Bill. Overarching Impact Assessment (Ministry of Justice, 2018). See J Hyde, ‘Claimant lawyers will lose £81m a year as insurers pocket huge windfall’ Law Society Gazette, 22 March 2018. 200 Ministry of Justice, Cm8751, 20130, 6. 201 Explanatory Memorandum to The Civil Proceedings Fees (Amendment No. 2) Order 2013, SI 2013 No 1410 (L.13) in force 01.07.13. at: www.legislation.gov.uk/uksi/2013/1409/pdfs/uksiem_20131409_en.pdf: 7.1 The Ministry of Justice’s long-term aim is to achieve full cost recovery (where total fee income, plus the value of fee remissions, equals cost) in the civil and family courts, while protecting access to justice for the less well off through the system of fee remissions. 7.2 The total cost of running the civil and family courts in 2011/12 was £594m. The gross fee income recovered was £503m. This amounts to 85% of the cost of running the civil and family courts and leaves a shortfall of £91m. The taxpayer funds this shortfall through the department’s spending settlement. The majority of family fees contained in these proposals have not been increased by the rate of inflation since September 2010. 202 Anti-Social Behaviour, Crime and Policing Act 2014, s 180. See J Sorabji, ‘Austerity’s Effect on English Civil Justice’ (2015) 8(4) Erasmus Law Review 159. 203 Potential Impact of Changes to Court Fees on Volumes of Cases Brought to the Civil and Family Courts (Ministry of Justice Analytical Services Insight Paper, 2013); see also I Pereira, P Harvey, W Dawes, and H Greevy (Ipsos MORI Social Research), The role of court fees in affecting users’ decisions to bring cases to the civil and family courts: a qualitative study of claimants and applicants (Ministry of Justice, 2014). 204 J Sorabji, ‘Austerity’s Effect on English Civil Justice’ (2015) 8(4) Erasmus Law Review 159, 161. 205 Implementing reforms to civil legal aid (National Audit Office, 2014). 206 Managing the costs of clinical negligence in trusts. Report by the Comptroller and Auditor General (National Audit Office, 2017) para 2.16.

The History of Continuous Reform 165

L. The Flood of Litigants in Person The government anticipated that 623,000 of the one million people who benefitted annually from Legal Aid would be denied it from 1 April 2013.207 The increased numbers of litigants in person (LiPs) were a major challenge for judges, especially in the higher courts. The Lord Chief Justice reported: ‘Our system of justice has become unaffordable to most. In consequence there has been a considerable increase of [LiPs] for whom our current court system is not really designed.’208 The sudden raft of LiPs flooding the courts presented a fundamental challenge for a civil justice system predicated on adversarial argument between experienced advocates, where the evidence had all been collected by professionals at an earlier stage. Instead, judges were faced with having to function as advisers, investigators, cross-examiners, and decision-makers. The Civil Procedure Rules provided case management powers for a system based on party autonomy, but did not provide investigative or inquisitorial powers.209 LiPs had long been able to be accompanied by a ‘McKenzie friend’ to provide assistance. Unsurprisingly, there was an increase in McKenzie friends, and arguments over whether they could be paid, or be subject to a code of conduct,210 or banned from recovering costs.211 Changes were introduced to assist LiPs. A Judicial Working Group was convened in 2013 led by Hickinbotttom J, which made a number of recommendations.212 It noted that LiPs ‘are not themselves “a problem”’: the problem lay with a system that was designed on the basis that most litigants will be legally represented.213 The Working Group noted that judges’ primary duty is to ensure ‘that the legal process is fair and proportionate, and that the outcome is, consequently, just.’214 They have a ‘fine line to tread in giving legitimate assistance to a [LiP] without eroding the confidence of other parties in their impartiality.215 In responding to a small number of vexatious litigants, who made repeated or even relentless applications, it was recommended that the judge should have power to declare claims or applications ‘totally without merit’.216 Hazel Genn noted that the German legal system, much admired for its efficiency, requires that all litigants must be represented by lawyers.217 However, in the common law context, she thought that the right to self-representation offers access to the courts for litigants that may be illusory, and the right to act in person can generate significant negative effects and costs for opponents and the court.218 She noted studies of adversarial contexts in which 207 The Judicial Working Group on Litigants in Person: Report (Judiciary, 2013) para 2.2. 208 The Lord Chief Justice’s Report 2015 (Lord Chief Justice, 2016). 209 J Sorabji, ‘Austerity’s Effect on English Civil Justice’ (2015) 8(4) Erasmus Law Review 159, 165. See also Al Rawi v The Security Service [2012] 1 AC 531 at 22, per Lord Dyson JSC. 210 C Smith, ‘Professional bodies round on paid McKenzie friends’ Gazette 9 June 2016; Civil Justice Council (CJC) Response – Reforming the Courts’ Approach to McKenzie Friends (Civil Justice Council, 2016). 211 Reforming the courts’ approach to McKenzie Friends. A Consultation (Lord Chief Justice of England & Wales, 2016). 212 The Judicial Working Group on Litigants in Person: Report (Judiciary, 2013). 213 ibid, para 2.5. 214 ibid, para 3.5. 215 ibid, para 3.23. 216 ibid, para 7.4. 217 German Code of Civil Procedure (ZPO), s 78. 218 H Genn, ‘Do-it-yourself law: access to justice and the challenge of self-representation’ (2013) 32 Civil Justice Quarterly 411, 423.

166 The Courts, Costs and Funding unrepresented individuals fared worse than if they had been represented.219 Whilst noting that tribunals were developing a more flexible and interventionist approach, her conclusion was that there were no easy answers. Rules of court were changed to assist LiPs, with an umbrella provision requiring the court ‘to adopt such procedure at the hearing as it considers appropriate to further the overriding objective’.220 This change contrasts with the position in the small claims track, which was originally designed to be used by litigants without lawyers, and where judges have developed flexibilities in approach.221 A number of pro bono legal advice and assistance schemes were established in the High Court.222

M. Fixed Costs The second round of costs reform undertaken by Jackson LJ in 2016/17 pressed forward on extending fixed recoverable costs (FRC), to ‘finish the job’. His investigations in 2009/10 had revealed the effectiveness of the German system of a tariff of fixed costs, backed by the wide availability of BTE LEI insurance.223 Hence, in 2013 FRC were applied for ‘fast track’ cases (claims up to £25,000 that can be tried in one day) and costs budgeting for the larger ‘multi-track’ cases. Jackson said in 2017 that placing all the costs on the losing party at the end ‘is a recipe for runaway costs’.224 Shifting to fixed costs in England and Wales was based on the German system. The German system works because most householders and businesses have LEI, that can be priced effectively because of the existence of two tariffs of fixed costs, one for what the client pays the lawyer (unless a different basis is agreed) and the other for the loser’s shifted costs. Some lawyers will be prepared to accept some small cases on the basis of the (low) tariff rates. Even so, many small claims fall below the threshold of insurance cover or personal deductibility in Germany, and use of Ombudsmen is expanding there. In England and Wales, there was no policy discussion on how to achieve either or both of the wide availability of effective LEI products and the change in behaviour to use such products by consumers and businesses. Not until November 2017 did the Civil Justice Council publish a paper on LEI, but this was merely an ‘information study’ that made no recommendations, not least because there was a lack of unanimity on key policy issues.225 As the CJC noted, ‘there are particular challenges in making BTE insurance available to those who are in the lower socio-economic demographic, who may not have insurance to the usual insurance products through which 219 H Genn and Y Genn, Effectivenenss of Representation in Tribunals (Lord Chancellor’s Department, 1989); R Moorhead and M Sefton, Litigants in Person: Unrepresented Litigants in First Instance Proceedings (Department for Constitutional Affairs, 2005), Research Series 2/05. 220 CPR, r 3.1A. 221 M Kurkchiyan, ‘Comparing Legal Cultures: Three Models of Court for Small Civil Cases’ (2010) 5 Journal of Comparative Law 169. 222 J Sorabji, ‘Austerity’s Effect on English Civil Justice’ (2015) 8(4) Erasmus Law Review 159, 166. 223 That conclusion was based on the research set out in C Hodges, S Vogenauer and M Tulibacka (eds), The Costs and Funding of Civil Litigation: A Comparative Approach (Hart Publishing, 2010). 224 Lord Justice Jackson, Review of Civil Litigation Costs: Supplemental Report. Fixed Recoverable Costs (Judiciary of England and Wales, 2017) Executive summary, para 1. 225 The Law and Practicalities of Before-the-Event (BTE) Insurance. An Information Study (Civil Justice Council, 2017).

The History of Continuous Reform 167 they could acquire BTE insurance’.226 Yet it has always been that group who need workable access to justice, so BEI and fixed costs fail to solve their problem. In 2017, Jackson LJ stuck to his policy of seeking to extend fixed costs, despite difficulties in some types of cases.227 He recommended a grid of FRC for all fast track cases. He accepted that the costs of litigating lower value cases in the multi-track remained disproportionate to the value of such cases, and recommended that a new proposed ‘intermediate’ track would apply above the fast track of £25,000 for certain claims up to £100,000 that can be tried in three days or less, with no more than two expert witnesses giving oral evidence on each side.228 For business and property cases up to £250,000, he recommended piloting a ‘capped costs’ regime, and in judicial review cases he suggested a number of other measures to limit recoverable costs. He accepted that clinical negligence claims are often of low financial value and that the complexity of such cases means that they are usually unsuited to either the fast track or the intermediate track. For them, in view of the complexities, he recommended that a working party should consider a revised process for handling clinical negligence claims up to £25,000, on a grid of FRC. Further consideration of fixed costs in relation to personal injury claims is at chapter ten below, since the impact significantly affected personal injury claims against the NHS. Fixed costs have only applied in some areas, such as RTA claims, where many have been processed since 2010 through the Portal described in chapter ten. Chapter ten also notes the impact of changes in the damages discount rate. Jackson LJ was reported as saying that fixing the level of recoverable costs is not possible without reforms to procedures: ‘You can’t just slap a fixed recoverable costs regime onto existing procedures’.229 Briggs LJ explained the problem with cost recoverability thus:230 A recoverable costs regime is, on its own, by no means a clear promoter of access to justice. On the contrary, it contains two elements which tend to do the exact opposite. The first is that the risk of having to pay the opposing party’s costs is a powerful disincentive to going to court at all, particularly in the pursuit of small to moderate claims. The second is that the prospect of recovering costs from the opposing side is a powerful economic incentive to lawyers driving up the cost of litigation. This can apply to claims of all sizes. 6.30. The fixed recoverable costs regime for personal injuries claims in the Fast Track, coupled with QOCS and the damages uplift, has been a very successful promoter of CFA based legal representation, and the highly efficient conduct of quite small claims (above £1,000 for PI rather than the general lower limit of £10,000) via the RTA Portal, originally designed for road traffic accident claims, but since extended to public and employer liability claims.

The reality in England and Wales was that fixed costs were inconsistent with a CFA or DBA system, let alone an hourly rate charging basis, which was what lawyers used. The financial models of solicitors – and hence their gatekeeping of access to justice by individual

226 ibid, para 8. 227 Lord Justice Jackson, Review of Civil Litigation Costs: Supplemental Report. Fixed Recoverable Costs (Judiciary of England and Wales, 2017). 228 ibid, ch 7. 229 M Cross, ‘Solicitors relieved as Jackson rows back from one-size-fits-all costs’ Gazette 31 July 2017. 230 Lord Justice Briggs, Civil Courts Structure Review: Final Report (Judiciary of England and Wales, 2016) para 6.28 and 6.5.5.

168 The Courts, Costs and Funding claimants – was constantly destabilised by changes in recoverability of ATE premiums, referral fees, competition from CMCs, the successive withdrawal of legal aid, QOCS and rises in the small claims limit. This history is a tale of a complex system in which 20 years of tinkering with individual elements has constantly destabilised the functioning of the system as a whole. In April 2018 the government extended fixed recoverable costs to holiday sickness claims, saying that the increase in claims (reported by the Association of British Travel Agents to be from 5,000 claims in 2013 to around 35,000 claims in 2016, an increase of 500%) was not seen in other countries and involved an unacceptable level of bogus claims.231 Minister Rory Stewart referred to the position as ‘fraud … that damages the travel industry and risks driving up costs for holidaymakers’.232 In July 2018 the Minister asked the Civil Procedure Rule Committee to consider the issue further.

N. The Costs Problem that Would Not Go Away The Legal Services Board asserted in 2012:233 ‘A range of research between 2007 and 2010 has repeatedly reported a general perception that legal services are expensive and unaffordable.’234 In 2016, after decades of reform of procedure, funding, costs rules, cost budgeting and costs management, the blunt conclusion of Briggs LJ was that all this:235 has not produced the result that the legal costs incurred in small and moderate value personal injury litigation (including clinical negligence) are now proportionate, particularly in the small minority of claims that go all the way to trial. On the contrary, wildly disproportionate expenditure still occurs, albeit not at the claimant’s risk. In those cases, the adverse consequences of that disproportionality lie not in impeding access to justice, but rather in increasing motor and employers’ liability insurance premiums, and in an increased litigation burden on the National Health Service in most clinical negligence cases. Thus the disproportionality remains a weakness of the civil justice system, but of a different kind.

The Lord Chief Justice reported in 2016, ‘costs issues continued to be the subject of dispute between parties, and to generate litigation in their own right.’236 Briggs LJ also confirmed that the introduction of costs management had not led to a reduction in the number of posttrial detailed assessments of costs.237 231 If parties reach a settlement of between £1,000 and £5,000, fixed costs are £950 and 17.5% of the damages. For claims worth up to £10,000, this increases to £1,855 and 10% of the damages over £5,000. Where claims exceed £10,000 in value, lawyers can claim £2,370 and 10% of damages over £10,000. 232 Ministry of Justice Press Release, 13 April 2018. 233 Evaluation: How can we measure access to justice for individual consumers? A discussion paper (Legal Services Board, 2012). 234 Evaluation: How can we measure access to justice for individual consumers? A discussion paper (Legal Services Board, 2012), quoting: GfK, Consumer attitudes towards the purchase of legal services (Solicitors Regulation Authority 2010); Study of Defendants in Magistrates’ Courts (Legal Services Research Centre, 2009); Legal Advice for Small Businesses: Qualitative Research (AIA Research Ltd, 2010); IPSOS MORI, Perceptions of barristers – Research study conducted for the Bar Standards Board (Bar Standards Board, 2007). 235 Lord Justice Briggs, Civil Court Structure Review: Interim Report (Judiciary, 2016) para 5.46. 236 The Lord Chief Justice’s Report 2015 (Lord Chief Justice, 2016). 237 Lord Justice Briggs, Civil Court Structure Review: Final Report (Judiciary, 2016) para 5.23.

The History of Continuous Reform 169 Figure 5.7 Agreed or approved budgets and total costs for different claim types for claims under £25,000, 2017238

Clinical negligence – claimant Clinical negligence – defendant

Already Incurred

Claimant agreed or approved

Total

35,988

59,568

95,555

3,771

30,728

34,499

Personal injury – claimant

16,723

34,589

51,312

Personal injury – defendant

3,954

26,542

30,496

0

0

12,710

41,139

53,849

Business disputes and TCC – claimant and defendant Chancery and property – claimant Chancery and property – defendant

0

6,420

40,846

47,266

Police Action Lawyers Group – claimant

33,550

53,049

86,600

Police Action Lawyers Group – defendant

19,950

33,107

52,698

Jackson LJ amassed a considerable volume of data on costs in his 2017 study on different types of cases, including the figures at Figure 5.7. These figures suggest a number of conclusions. First, control of future cost through cost budgeting by judges could only ever have a limited effect since it would not apply to previously incurred costs. Secondly, such control effect is greater on defendants’ costs than claimants’ costs, since the latter tend to be notably higher than the former at the time of judicial control. The third point is that average costs in cases involving under £25,000 still vastly exceed sums in dispute. Total costs for such cases were £130,054 in clinical negligence cases, £81,808 in personal injury cases, £101,115 in Chancery and property cases, and £139,298 in police cases. Some of Jackson LJ’s detailed comments included the following. There was a reasonably clear correlation between the amount of damages claimed and the level of agreed or approved costs for clinical negligence cases.239 There were significant differences in clinical negligence cases between the ‘as claimed’ and ‘as agreed or approved’ budgets, with the difference generally increasing as the value of the case increases.240 The most expensive work phases in clinical negligence cases and personal injury cases were expert reports and trial.241 There was no significant difference in costs between different types of personal injury cases: road traffic, employers’ liability accident, and employers’ liability disease.242 The major complaint from practitioners in business cases was over excessive disclosure, and failure to control it.243 Jackson LJ held many meetings up and down the country during his review: ‘Most claimants stressed that they had brought their claims in order to change behaviour, rather than to make money.’244

238 Jackson, 239 Jackson, 240 ibid. 241 ibid,

2017. 2017, para 2.9.

paras 2.9 and 2.10. para 2.10. para 2.12. 244 ibid, para 3.3. 242 ibid, 243 ibid,

170 The Courts, Costs and Funding

O. Shifting Sands: Liberalisation of Legal Services Throughout the period considered here, the legal services market was subject to a combined assault from more objective regulation (ousting self-regulation) and from liberalisation to open up ancient monopolies and encourage innovation in the delivery of legal services and other professions.245 The first onslaught occurred under the Legal Services Act 2007, and the Lord Chancellor signalled a further stage in 2015.246 The market was opened up to Alternative Business Structures (ABS), of which around 600 existed by 2017, which were regarded as being more innovative than traditional suppliers.247 Nevertheless, the President of the Supreme Court warned that ABS and conditional fees were two ‘concerning’ developments which could pose a threat to lawyers’ ethical duties, and the risk of a conflict of interest within an ABS was ‘obvious’.248 The effect of this was to increase commercial pressures on lawyers – from constant changes to their business models relating to dispute advice and litigation work; from new forms of competition, some of which were unfair or illegal; and from the cost of regulation. The cost of regulation on entities providing legal services was said to average between 15% and 23% of total practice costs in 2015.249 Research found that clients tend to see most legal work as commoditised whereas lawyers consider most of their work bespoke, and questioned whether law firms are suffering from ‘such a degree of commoditisation blindness that they have lost touch with their own market’.250 Research found consumer satisfaction with levels of service by lawyers to be high.251 However, those who were not happy usually did not bother to complain because they thought the process was too time consuming. Only the number of firms undertaking predominantly retail market work (eg, wills, probate, conveyancing, family, personal injury) has fallen since 2010/11.252 Since 2012, there has been an increase in the number of firms that derive more than 30% of their turnover from personal injury or employment work.253 The proposals to raise the small claims ceiling, ban damages for soft tissue injuries, in the context of discussions on raising court fees and introducing more fixed fees and an Online Court, were reported to have ‘left many personal injury firms, which could be excluded from the majority of their claims, fearing for their future’. Slater and Gordon’s share price

245 Competition in Professions, (Office of Fair Trading, 2001); Sir D Clementi, Review of the Regulatory Framework for Legal Services In England and Wales (2004). 246 Legal Services Regulation (Ministry of Justice, 2015). 247 Written Ministerial Statement made by the Minister of State for Civil Justice, Lord Faulks QC, Legal services regulation (Ministry of Justice, 2016). 248 C Smith, ‘Neuberger warns of conflict risks posed by ABSs and conditional fees’ Gazette 16 June 2016. 249 In-depth investigation into the costs of regulation in the market for legal services. Report for the Legal Services Board (ICF International, 2015). 250 The trend is clear, the blow is yet to come: A report on commoditisation in the legal services sector (TGO Consulting, 2016). 251 Market study into the supply of legal services in England and Wales – consumer findings (IFF Research, 2016). 252 The Future of Legal Services (Law Society, 2016) 21. 253 ibid.

The History of Continuous Reform 171 dropped 51% to less than A$1 (48p), down from a peak of A$6 during the summer. All the major insurers quoted in London closed higher.254 The Law Society said in response:255 There are three areas of particular concern: many people who have suffered injuries will not have access to specialist legal advice; plans to close local courts are moving ahead before the technology to replace them has been tested; and the Ministry of Justice will be heavily hit by cuts to both the front line and administrative budgets. The proposal to raise by five times the limit for all personal injury claims to £5,000 and to stop compensation payments for ‘minor’ soft tissue injuries will not only make it harder for people who have been injured to get the legal advice that can help them decide what to do, but will also completely undermine their right to full and proper compensation when they have suffered injuries through someone else’s negligence. People recovering from their injuries will have to represent themselves, bringing claims as litigants in person (without any legal advice) while defendants are likely to be able to afford to pay for professional legal advice. This undermines the commitment to deliver one nation justice.

The combined effect of LASPO-based changes in 2013 and a hike in court fees ‘severely challenged’ the ability of small high street solicitors firms to survive as sustainable businesses.256

P. Further Developments Developments have continued to occur. With the November 2017 Budget, it was announced that the Ministry of Justice budget of £6.4 billion in 2017/18 would have to fall to £5.6 billion by 2019/20, representing a 40% cut in real terms over the fiscal decade ending in 2020.257 The Civil Justice Council noted that use of DBAs remained small and repeated its call from 2015258 that the rules should be changed so that DBAs could be encouraged.259 A 20% cap on fees for mis-sold payment protection insurance cases came into force on 10 July 2018. Regulation of CMCs was transferred from the Ministry of Justice to the Financial Conduct Authority, involving fees payable to the FCA and the Financial Ombudsman Service that were generally higher than the previous regime.260 A cap was also imposed on the fees that CMCs could charge for their services.261 From 8 September 2018, the fine 254 J Hyde, ‘PI firms reeling after Osborne’s shock announcement’ Gazette, 26 November 2015; J Hyde, ‘Treasury’s regulation shake up heralds new era for “Tesco law”’ Gazette, 30 November 2015. 255 Law Society response to the Chancellor’s Autumn Statement (Law Society, 27 November 2015). 256 A Caplen, ‘Access to Justice: The View from the Law Society’ in E Palmer, T Cornford, A Guinchard and Y Marique, Access to Justice: Beyond the Policies and Politics of Austerity (Hart Publishing, 2016) 15. 257 Written Parliamentary Answer by Dominic Raab MP, 13 November 2017, no 112641. The total budget in 2010/11 was £9.3 billion (in 2017/18 terms). 258 The Damages-Based Agreements Reform Project: Drafting and Policy Issues (Civil Justice Council, 2015). 259 CJC response to the survey for the Post‐Implementation Review of Part 2 of the Legal Aid, Sentencing & Punishment of Offenders Act 2012 (Civil Justice Council, 2018). 260 Claims management companies: recovering the costs of FCA regulation and the Financial Ombudsman Service (Financial Conduct Authority, 2018) CP18/23. 261 Financial Guidance and Claims Act 2018, amending the Financial Services and Markets Act 2000 and the Privacy and Electronic Communications (EC Directive) Regulations 2003, SI 2003 No 2426.

172 The Courts, Costs and Funding for directors of companies making unsolicited calls relating to personal injury claims was increased to £500,000. It was thought that there had been 2.7 unsolicited calls, texts and emails in the previous 12 months.262 The business of CMCs appeared to have remained stable, with a leading CMC reporting stable revenue (£24.9 million) and underlying profit (£5.3 million) for the first half of 2018.263 It was, of course, anticipated that the Civil Liability Bill would introduce a fixed tariff for whiplash claims at vastly reduced rates,264 and change the discount rate for personal injury damages. In addition, the government would increase the small claims limit to £5,000 for RTA claims, with the consequence that claimant lawyers could not recover costs from the defendant in these claims. The overall effect was anticipated to lead to an annual loss in income for claimant lawyers of £80 million (£32 million from claims that would not be brought and £49 million from claimants without legal representation.265 It was said that ATE insurance would only be available for a judicial review claim where the merits were clear (over 80%) and the minimum premium would be 35% of the claim payable up front, so £90,000 for a claim of £250,000.266 Although relating to criminal rather than civil legal aid, the Law Society succeeded in a judicial review of cuts for fees for preparatory work, as the consultation was inadequate.267 In September 2018 a retired judge was quoted as saying that the Woolf reforms to simplify the system, cut costs, delay and complexity had simply failed. The rules had become longer and it was now more expensive to go to court because ‘much more has to be done before you get there’.268 Lord Wilson said: ‘Access to justice was under threat in the UK. Our lower courts are now full of litigants who have to represent themselves, often of course very ineptly.’269

Q. Post-Legislative Review of LASPO The Ministry of Justice undertook a review of the LASPO reforms. The Law Society argued that claimants were being undercompensated as they were having to pay unrecovered costs out of damages, and this was driving down claims numbers since 2013.270 It argued that QOCS had been an inadequate replacement for ATE insurance, that those claimants 262 Claims management: how we propose to regulate claims management companies (Financial Conduct Authority, 2018) CP18/15. 263 J Hyde, ‘Profits slide at claims giant – but whiplash reforms an “opportunity”’ Law Society Gazette, 18 S eptember 2018. 264 Lawyers argued that innocent victims who suffered whiplash injuries were being arbitrarily discriminated against: Parliamentary brief. Civil Liability Bill (The Law Society, 2018). 265 Civil Liability Bill. Overarching Impact Assessment (Ministry of Justice, 2018). See J Hyde, ‘Claimant lawyers will lose £81m a year as insurers pocket huge windfall’ Law Society Gazette, 22 March 2018. 266 Public Law Project response to the Post-Implementation review of Part II of Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Public Law Project, 2018). 267 R on the application of the Law Society v The Lord Chancellor [2018] EWHC 2094 (Admin). 268 T Pilston, ‘Woolf civil justice reforms have failed, says former judge’ The Times, 30 September 2018, quoting Judge Charles Harris QC. 269 Lord Wilson, ‘Our Human Rights: A Joint Effort?’, The Howard J Trienens Lecture, The Law School, Northwestern University, Chicago, 28 September 2018. 270 The Law Society’s Response to the Ministry of Justice Post-Implementation review of Part 2 LASPO Act (The Law Society, 2018).

The History of Continuous Reform 173 without Legal Expenses Insurance still had to take out an expensive ATE and pay Insurance Premium Tax out of their damages, that BTE insurance remained underutilised, that QOCS had not induced defendants to settle claims rather than defend them, and that QOCS should be extended to mixed claims that included a personal injury element. The Law Society noted the official statistics that fast and multitrack cases had to wait on average 56 weeks between issue and trial, and small claims 33 weeks. At the same time, the Bar Council also said that LASPO had failed. Respondents to its survey of barristers said that:271 • over 91% reported of an increase (29%) or significant increase (63%) in individuals expressing difficulty in accessing legal advice and representation; • over 91% reported a significant increase in the number of LiPs in family cases and 77% in civil cases; • 77% noted a significant delay in family court cases because of the increase in LiPs; • The number of barristers who undertook 60% or more of their work in legal aid had halved from 40% to 21%, and 25% had stopped undertaking legal aid work since LASPO; • Requests for barristers to undertake work on a DBA had not increased much, and this was attributed to uncertainty over the flexibility and enforcement of a DBA agreement. The Bar’s conclusion was: Part 1 of LASPO has met only one of the four objectives for reform identified by the government when it was introduced: it has delivered significant savings to the cost of the legal aid scheme; but it has done so by • damaging access to justice by removing the ability of many who need advice and representation in civil or family disputes, to receive it; • overwhelming areas of the justice system with litigants in person, particularly the family courts; and • threatening the sustainability of the publicly funded legal profession.

The government’s 2017 post-legislative review of LASPO claimed that the objective of making substantial savings to the cost of the legal aid scheme had been achieved.272 … the government is now providing legal aid funding for fewer cases and paying less for cases that are funded. Between 2010–11 and 2016–17 annual legal aid fund expenditure fell by £950m, or 38%, in real terms at 2016–17 prices. This fall followed a five-year period between 2006–07 and 2010–11 where annual expenditure was broadly flat in real terms at around £2.4bn per year. In 2010–11 the government spent £2.51bn on legal aid, in real terms, of which £1.13bn (45%) was on civil and family legal aid, £1.29bn (52%) was on criminal legal aid and £86m (3%) was on central funds. By 2016–17, total legal aid expenditure had fallen to £1.55bn, of which £650m (42%)

271 LASPO Five Years On. Bar Council submission to the Ministry of Justice LASPO Post-Implementation Review (Bar Council, 2018). 272 Legal Aid, Sentencing and Punishment of Offenders Act 2012: Post-Legislative Memorandum. Submitted to the Justice Select Committee on 30 October 2017 (Ministry of Justice, 2017) Cm 9486, paras 188, 189.

174 The Courts, Costs and Funding was on civil and family legal aid, £860m (56%) was on criminal legal aid and £45m (3%) was on central funds. Therefore, expenditure has fallen in the distinct areas of civil/family legal aid, criminal legal aid and central funds.

However, the percentage of Ministry of Justice expenditure on legal aid only fell slightly (by £1.46 billion (17%) between 2012/13 (£8.87 billion (24%) and 2016/17 (£7.41 billion (23%)).273 The amount of work available to legal aid providers clearly fell.274 Overall, the government ducked a comment on the issue of whether the changes had delivered better value for money for the taxpayer, calling it a ‘difficult task’ that would require a cost-benefit analysis that would be ‘challenging’.275 The Law Society contributed a paper that argued that the main legacy of LASPO was to produce four undesirable consequences: legal aid was no longer available for those who need it, those eligible for legal aid find it hard to access it, wide gaps in provisions are not being addressed, and there has been a wider and detrimental impact on the State and society.276 They highlighted the impact on children, citing Ministry of Justice estimates that 75,000 children and young people would lose entitlement to legal aid each year,277 NAO figures of a 22% rise in the number of private family law cases involving children where neither party was represented and a corresponding fall in those where both were represented,278 and a fall instead of an anticipated rise in mediation in private family law cases after LASPO. The submission to the LASPO review by NHS Resolution said that they believed that the ban on referral fees had simply driven the practice underground, since it continued to see evidence suggesting that referrals were occurring ‘perhaps on a major scale’.279 NHS Resolution criticised QOCS on the basis that claimants and their lawyers ‘are able to push unmeritorious claims as far as they feel able, in the knowledge that there will be no liability to pay the defendant’s costs unless fraud is demonstrated’. They said that Part 36 offers are rare because ‘claimants’ lawyers (as opposed to claimants personally) have no clear incentive to settle early because that will effectively reduce their fees’. An arrangement that offers a higher incentive when cases are settled early was suggested. Briggs LJ thought that QOCS in personal injury cases had been ‘a powerful promoter of access to justice’ by rectifying the asymmetry between an individual claimant and a sophisticated insurance company, and he thought it could be effective in increasing the number of non-clinical professional negligence claims.280 (It could be commented here that an alternative means of rectifying asymmetry can be achieved more cheaply by an Ombudsmen system.) However, Briggs LJ noted that proposals then on foot to raise the small claims limit from £1,000 to £5,000 and to introduce fixed fees would destabilise the cost model of solicitors acting on CFAs. 273 ibid, para 190. 274 ibid, para 197. 275 ibid, para 210. 276 Access Denied? LASPO four years on: a Law Society review (The Law Society, 2017). 277 Figures supplied to JustRights by MOJ on 10/10/11 in response to a Freedom of Information request. 278 National Audit Office, Implementing reforms to civil legal aid HC 784 Session 2014–15 20 November 2014, para 1.27 279 M Fouzder, ‘LASPO ban is ‘driving referral fees underground’ Gazette (Law Society, 1 October 2018). 280 Lord Justice Briggs, Civil Courts Structure Review: Final Report (Judiciary of England and Wales, 2016) para 6.29.

The History of Continuous Reform 175

R. A New Policy Together with its review of Part 1 of LASPO,281 the government published a new policy on ‘legal support’ in January 2019.282 It argued that the reduction in legal aid had reduced the volume of publicly funded cases and expenditure. In 2017/18, legal aid spending fell by approximately £90m in civil cases and £160m in family cases, compared to £105m and £130m estimated in the impact assessments that accompanied the Act. Legal aid volumes had not fallen as significantly as anticipated in actions against the police, and in public law claims the total spend had not fallen as anticipated because legal help volumes had remained broadly similar. Volumes had declined more than anticipated in social welfare law cases. It was accepted that clustering of problems had caused difficulties for people because of differences in what was covered by legal aid and what was not. It was also accepted that the system was not yet sufficiently capable of catering for those without legal representation, and that there were assertions that many solicitors had abandoned legal aid work, leaving advice deserts. However, the government asserted that average income per civil legal aid provider had increased by 11%. Judicial reviews funded by legal aid had fallen by 20%. However, the Action Plan demonstrated that the government was aware that the system had a number of serious problems.283 The actions announced included the following. First, there would be a comprehensive review into the threshold eligibility entitlements for legal aid by Summer 2020. Secondly, there would be a new approach to resolving legal problems earlier. The government was responding to evidence that many advice providers had had to reprioritise their services away from early support toward supporting people once they reach a crisis point, especially in housing and welfare benefits cases,284 where demand remained high. It had heard that reforms to legal aid had led to some people coming to court when alternatives like mediation would have been suitable. Thirdly, it would develop a webbased source of information for parents in making arrangements over children. Fourthly, it would extend telephone advice beyond the Civil Legal Advice service that then assisted around 1,500 new cases each month. Fifthly, it would develop a face-to-face support pilot for social welfare cases (one practitioner’s association argued that around 50% of housing possession cases for which they receive legal aid could be traced back to a housing benefit issue) and examine co-location of support services to provide a holistic approach.285 Sixthly, enhanced support would be provided for litigants in person. Seventhly, in response to a finding that limited access to legal support at early stages of possession proceedings can

281 Post-Implementation Review of Part 1 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) (Ministry of Justice, 2019) CP 37. 282 Legal Support: The Way Ahead. An action plan to deliver better support to people experiencing legal problems (Ministry of Justice, 2019). 283 Legal Support: The Way Ahead. An action plan to deliver better support to people experiencing legal problems (Ministry of Justice, 2019). 284 Law Centres Network (2018), LASPO Act 2012 Post‑Implementation Review Submission from the Law Centres Network. 285 The example was cited of the UCL integrated Legal Advice Clinic that is located at the Sir Ludwig Guttmann Health and Wellbeing Centre in Newham, and receives referrals from GPs in the Liberty Bridge Road General Practice, as well as drop-ins from patients attending other clinics at the health centre, other GP practices and the wider local community: S Beardon and H Genn, The Health Justice Landscape in England & Wales. Social welfare legal services in health settings (UCL Centre for Access to Justice, 2019).

176 The Courts, Costs and Funding contribute to longer timescales to process cases,286 officials in the Ministry of Justice were working with those in the Department for Work and Pensions to improve initial decision making in immigration and asylum cases. Seventhly, the government wanted to foster a culture of innovation and announced various funds to support initiatives. In March 2019, the Ministry of Justice consulted on further aspects of Sir Rupert Jackson’s fixed costs proposals,287 namely: • The extension of FRC across the fast track, including a new process and separate grid of costs for noise induced hearing loss (NIHL) claims valued below £25,000. • The extension of FRC to intermediate cases valued between £25,000 and £100,000. Sir Rupert had in 2016 revised his original proposal that the upper figure should be £250,000, and had substituted a level of £100,000.288 • Costs budgeting in ‘heavy’ judicial review cases. The Impact Assessment that accompanied these proposals was notable for not making a claim that justice would be widened by attracting more claimants under the proposed fixed costs regimes.

III. Conclusions This chapter tells a story of the unintended consequences of reform of the elements of procedure, funding and costs of litigation – without undertaking an objective holistic view of how those three elements are inextricably interrelated. Many attempts have been made to reform one or other element without looking at the whole picture. The story of the past 20 years is one of constant change and unintended consequences. Expert voices have concluded that each major reform has failed to achieve its stated objectives. The verdict of both Briggs LJ and John Sorabji289 is that Lord Woolf failed to control costs. Peysner’s verdict is that CFAs, recoverability and ATEs all failed, and he describes the period from 2000 to 2013 as an extended experiment that was unsupported by prior research, so a poor example of public policy-making. The removal of legal aid has caused a major crisis in access to justice and the failure of replacement funding mechanisms has fuelled the current growth in LiPs that has significantly challenged the duration and timetables of courts and forced an unresolved challenge to how judges operate. Peysner concluded that CFAs, recoverability and ATEs failed, and were an experiment unsupported by prior research until abolished in 2013.290

286 A qualitative research investigation of the factors influencing the progress, timescales and outcomes of housing cases in county courts (Ministry of Housing, Communities and Local Government, 2018). 287 Extending Fixed Recoverable Costs in Civil Cases: Implementing Sir Rupert Jackson’s proposals (Ministry of Justice, 2019). 288 Lord Justice Jackson, Fixed Costs – The Time had Come. IPA Annual Lecture, 28 January 2016, at www.judiciary.uk/wp-content/uploads/2016/01/fixedcostslecture-1.pdf. 289 J Sorabji, English Civil Justice after the Woolf and Jackson Reforms: A Critical Analysis (Cambridge University Press, 2014). 290 J Peysner, Access to Justice: A Critical Analysis of Recoverable Conditional Fees and No-Win No-Fee Funding (Palgrave Macmillan, 2014) 24.

Conclusions 177 Changes in the cost-shifting rules, notably Jackson’s QOCS arrangements, have been introduced to try to ‘treat the symptom rather than the disease’. When QOCS were introduced, they represented an outlier in the loser pays regime of the rest of the civil procedure system. Jackson LJ justified the outlier on the basis that most personal injury claims were genuine and he wanted to incentivise their early settlement. However, both QOCS and various other factors changed the situation, so that the underlying assumption became invalid. This has unbalanced personal injury cases, to the significant detriment of NHS funds. The continuation of QOCS under a new system is now itself a factor in bringing unjustified claims and driving up costs (see chapter ten). All these attempted reforms have attempted, in linear fashion, to address individual symptoms as they reached crisis point, rather than to address the root cause of the disease. The motivation has been to try to protect a failing system, under the mantra of preserving a traditional model of adversarial ‘access to justice’ rather than to recognise the inherent issue and invent a new system. Change after change to the entire court system was introduced to try to address what was a specific problem, namely small value personal injury claims. The solution to that problem, it will be suggested below, should have been to shift such claims out of the general court system and into custom-designed systems. That is to a significant extent what insurers did in designing the RTA Portal, and ought to be the next step for the NHS in shifting clinical negligence claims into an administrative scheme, as discussed in chapter ten below. At the bottom of the ongoing problems is a failure to address the basic issue of system design. The original design of dispute resolution involving the courts was an adversarial system in which all parties were expected to be advised and represented by lawyers. Maintaining an equal balance of power between parties requires not only a procedure that observes the principle of due process, which necessarily leads to some delay and cost, but also professional advice and representation. Yet it was clear decades ago that the adversarial system unavoidably includes a level of cost that is unaffordable.291 Given that fact, the successive attempts to reform the system for funding and costs would be bound to fail. We have seen the removal of State funding (legal aid) and repeated attempts to reduce cost and provide alternative methods of private funding for lawyers, without addressing the underlying issue of the inherent cost of the adversarial system. The German model of personal insurance is thought by many to provide an answer, but it cannot, of course, respond to those with limited assets or income who are unable to afford the premiums. Although the Woolf reforms were intended to make civil procedure accessible to people without legal assistance, they failed to achieve that. The complexity and diversity of pre-action Protocols, for one thing, made the process confusing and not an easily accessible pathway. At the same time, many people expected legal aid to be available but that was removed and a succession of confusing private funding options was introduced that reduced damages won and made many claims too costly or risky to bring. All of the major reform efforts were motivated by attempting to protect ‘access to justice’ of a failing system. The changes introduced a number of unintended consequences: CMCs, 291 Recent references, among many, quoted above are: Evaluation: How can we measure access to justice for individual consumers? A discussion paper (Legal Services Board, 2012); The Lord Chief Justice’s Report 2015 (Lord Chief Justice, 2016); House of Commons, House of Lords, Joint Committee on Human Rights Enforcing human rights Tenth Report of Session 2017–19, HC 669.

178 The Courts, Costs and Funding abusive claims, referral fees, spikes in claim types such as PPI, whiplash and holidays, and judges having to change the way they operate in order to respond to the rise in litigants in person. The removal of legal aid, moves to redress various unintended consequences including referral fees, and the imposition of fixed costs have all threatened solicitors’ coverage. In 2012 the Legal Services Board noted that the majority (56%) of consumers of legal services (including conveyancing, divorce and probate) paid for the service themselves or with the help of family or friends, and only 6% paid through insurance and 5% through legal aid, and in 10% of cases the service was free but not paid through a no win no fee arrangement.292 It is not surprising that the Law Society has recently called for legal aid to be restored. That is possibly the only logical response to maintaining access to justice under the current system. But would it not also be logical to change the system, away from one in which two sets of partisan advisers both need to be paid? The need for radical changes was stated by the Lord Chief Justice in 2014.293 As the State withdrew funding from the system, he said that radical changes were needed, including a move to an inquisitorial civil system and a two-track Crown court. The type of reform needed required ‘fundamental rethinking of our processes and procedures’ and the financial imperative does not afford the ‘luxury of time’ that reformers of the past have had. Traditional court processes, he suggested, are not best suited to resolving disputes in such cases, and there is a need to make the legal process simpler in the civil and family courts. ‘Careful consideration’ should be given to moving towards a more inquisitorial system in the family and civil courts. What are the options for a sustainable system? Three logical alternatives seem to arise, which we will note here but examine further below. The first option has already appeared on the scene: LiPs who act alone rather than with lawyers. That model raises a series of challenges. First, the judge has to change role and attempt to explain or assist an LiP, and that involves a change in role that may threaten the independence of the judge and the perception of impartiality as well as clearly taking more time. In essence, the judge takes on the function of lawyer as well as independent judge to some extent. But what extent is constitutionally acceptable without undermining the rule of law, or being affordable? Different issues in maintaining a fair balance arise depending on whether both parties have no legal representation or only one of them. What happens when friends of a party appear, whether paid or unpaid? Should they be afforded costs if they win? We do not attempt to examine all of these issues here, merely to indicate that they raise complex issues. We can say that the empirical evidence shows that the number of litigants in person is rising, the judiciary are gravely concerned, livelihoods of high street lawyers are threatened,294 and there are concerns about a collapse in access to justice and the rule of law.295 292 Evaluation: How can we measure access to justice for individual consumers? A discussion paper (Legal Services Board, 2012) para 4.47. 293 Lord Thomas of Cwmgiedd CJ, ‘Reshaping Justice’, speech at Justice, 2014. 294 D Gilmore and M Howgate Innovation in the Delivery of Legal Services (LegalVoice, February 2015). This reported on how legal aid firms and advice agencies were responding by embracing new technologies to help them survive in the wake of the legal aid cuts, concluding that it is ‘impossible to see the … cuts as anything but an absolute disaster’. The only area in which there has been a fall in the number of firms since 2010/11 is that undertaking retail market work (wills, probate, conveyancing, family, personal injury): The Future of Legal Services (Law Society, 2016). 295 See generally Lord Justice Briggs, Civil Court Structure Review: Interim Report (Judiciary, 2016).

Conclusions 179 The increase in LiPs has forced judges to rethink procedure. As the Hickinbottom report said, LiPs are not the problem – it is the system that is the problem. Judges in the courts frequented by most of the populace have had to adapt their means of working so as to accommodate LiPs. Providing more assistance for LiPs at court is only a sticking plaster and not a remedy for the underlying problem. We note below interesting changes in procedure and the mode of operation of judges in tribunals (chapter thirteen) and family cases (chapter eleven). These changes are contemporaneous with, and to some extent able to be carried out under the cover of, the adoption of revolutionary change in technology, as courts and tribunals go online. We will also see, however, that consumer Ombudsmen got there earlier by effectively adopting an investigative rather than adversarial model as their mode of operation (chapter nine). A second alternative would be to make changes to the existing court system itself. Here, all current effort of the Ministry of Justice, HMCTS and the Judiciary is focused on going digital with the Online Solutions Court project, discussed in chapter seven. The two questions that arise are: Will that digitisation project succeed, and will it be enough? Will the crisis in access to justice remain unaddressed? The OSC proposals raise issues about whether it will be adequate as a process and, particularly, whether it will be sufficiently attractive to potential users, given the availability of other options, which may appear more user-friendly, accessible, quick, and free.296 We discuss in chapter nine the fact that many potential users have already shifted out of the County Courts and Small Claims track to consumer Ombudsmen and, potentially, a personal injury scheme. Who will use the OSC, and for what types of claims? Is the OSC 20 years too late? A third alternative would be to move certain types of claims out of the court system and into another system. That option arises from taking a wider, holistic view of dispute resolution landscape and options, rather than just focusing, as the learned judges who have led reform of court systems have done, just on trying to solve the problems of courts. A primary candidate for this would be to move all personal injury claims out of courts into an integrated injury system. Many of the reforms and unintended consequences to try to ‘fix’ the court system have related to personal injury and especially clinical negligence claims. Options here are discussed in chapter ten. Other potential candidate areas are also identified later in the book.

296 C Hodges, ‘Proposed Modernisation of Courts in England & Wales: IT and the Online Court’ (2016) 6(1) International Journal of Procedural Law 419.

6 ADR I. ADR and the Courts Attempts have been made to try to rescue the civil justice system for some decades.1 In the previous chapter we summarised the reform of funding of litigation and civil procedure and related attempts to control the cost of litigation, and here we turn to the promotion of alternative dispute resolution (ADR); in the following chapter we note the more recent digitisation project of State justice. Instigation of reform of litigation funding has come from government. The judiciary were left to pick up the pieces of what quickly became a dysfunctional system to try to keep it functioning. The principal judicial reform movements have been: Lord Woolf ’s fundamental reform of the civil procedure system in his 1995/96 reports, culminating in the new system of 1999;2 Lord Justice Jackson’s reform of litigation costs and funding in 2009 and a second attempt in 2017; and Lord Justice Briggs’ 2015–17 project on the Online Court. It is striking that significant reform effort has been led by judges, rather than the Ministry of Justice. The normal situation would be that strategic reform is undertaken by government ministers and officials. Judges decide cases and do not – and constitutionally should not – make policy, for which they have no constitutional accountability. However, judges do have de facto responsibility for ensuring that the system keeps running. It is a primary conclusion of this book that some of the reform efforts of judges have made a classic mistake in making policy, namely that of failure to consider all the policy options, and of suffering from an unavoidable conflict of interest in their decisions of structural reform. But with something of a policy vacuum coming from successive Ministers of Justice, the motivation of frustration that spurred the judiciary to try to save the system through undertaking reform was understandable. Nevertheless, it is important to recognise, as is noted throughout other chapters of this book, that judicially-led innovation has occurred that is remarkable and has either achieved success or drives further reform.

1 Landmarks are The Civil Justice Review 1988; The Small Personal Injury Claims consultation (Lord Chancellor’s Department, 1993); H Hodge and H Heilbron, Civil Justice on Trial – Joint Report of the General Council of the Bar and the Law Society (1993); Lord Woolf, Access to Justice: Interim Report to the Lord Chancellor on the Civil Justice System in England and Wales (HMSO, 1995); Lord Woolf, Access to Justice: Final Report to the Lord Chancellor on the Civil Justice System in England and Wales (HMSO, 1996); by Sir Peter Middleton, Review of Civil Justice and Legal Aid (Department for Constitutional Affairs, 1997); Lord Justice Jackson, Review of Civil Litigation Costs: Interim Report (2009); Lord Justice Jackson, Review of Civil Litigation Costs: Final Report (2010). 2 Lord Neuberger, ‘Keynote Address: A View From On High’, Civil Mediation Conference 2015 (Mediation ‘woke up around 1997’).

ADR and the Courts 181 It is unnecessary here to chart the reform of civil procedure, as that has been done extensively by others.3 This chapter will focus on the implications of the shift to ADR.

A. Policy on Introducing ADR into Civil Procedure The model of dispute resolution adopted by Lord Woolf placed significant emphasis on encouraging parties to settle cases themselves through alternative dispute resolution (ADR) before and during litigation.4 ADR was also encouraged in administrative justice.5 In this context, the discourse about ADR is largely about mediation, assuming that it is provided by private independent mediators, who need to be paid by the parties. The discourse does not contemplate the fact that mediation or other ADR is available in a context outside the court architecture, namely in different worlds of ‘consumer ADR’, especially Ombudsmen, or newer intermediaries such as the Groceries Code Adjudicator or the Small Business Commissioner (see subsequent chapters). The Woolf conception of ADR was that it was essentially a non-compulsory stage before commencement of court proceedings. However, various nudges towards use of ADR firmed up over succeeding years, especially in relation to the use of ex post penalties by judges in not awarding full or some costs to winners. Jackson LJ pushed things further in his reforms implemented in 2013 that all small claims were automatically referred to mediation, on the basis that this is not compulsory mediation, but rather a requirement to engage with a small claims mediator.6 In 2016, Briggs LJ described the position as being that the two functions of judicial and mediation dispute resolution operate with different providers and the relationship between the two functions is ‘semi-detached’.7 He subsequently reported the perception of the Civil Mediation Council that ADR is broadly satisfactory for high value claims, but that there is a substantial proportion of claims of moderate value where mediation is insufficiently used, and a particular shortfall in the potential penetration of mediation in relation to personal injury and clinical negligence claims.8

3 N Andrews, English Civil Procedure. Fundamentals of the New System (Oxford University Press, 2003); N Andrews, Andrews on Civil Processes: Volume 1 Court Proceedings and Principles (Intersentia, 2013); A Zuckerman, Zuckerman on Civil Procedure: Principles of Practice, 3rd edn (Sweet & Maxwell, 2013); D Dwyer (ed), The Civil Procedure Rules Ten Years On (Oxford University Press, 2009). 4 Lord Woolf, Access to Justice: Interim Report to the Lord Chancellor on the Civil Justice System in England and Wales (HMSO, 1995); Lord Woolf, Access to Justice: Final Report to the Lord Chancellor on the Civil Justice System in England and Wales (HMSO, 1996). 5 A Le Sueur, ‘Administrative justice and the resolution of disputes’ ch 10 in J Jowell and D Oliver, The Changing Constitution, 7th edn (OUP, 2011). The courts have tried to push mediation and other forms of ADR in preference to litigation: Re Cowl (Practice Note); Cowl v Plymouth City Council [2001] EWCA Civ 1935; [2002] 1 WLR 803. 6 Solving disputes in the county courts: creating a simpler, quicker and more proportionate system: a consultation on reforming civil justice in England and Wales – The Government Response (The Stationery Office, 2012) Cm. 8274. 7 Lord Justice Briggs, Civil Court Structure Review: Interim Report (Judiciary, 2016) para 2.86. 8 Lord Justice Briggs, Civil Courts Structure Review: Final Report (Judiciary of England and Wales, 2016) para 2.24.

182 ADR Briggs LJ identified that the practice of a small number of County Court judges who invited parties to consider settlement at hearings produced settlement in a much higher proportion of small claims than normal.9 He also noted that a key element in preventing unmeritorious personal injury claims reaching court was the early bespoke advice on the merits given by solicitors who had to contemplate whether to accept a case on a CFA basis (although DBAs were not successful).10 Accordingly, a key part of his design of the Online Court was to attempt to provide early affordable advice on the merits uncoupled from the disproportionate expense of a full retainer, so he proposed that some fixed recoverable cost should apply for initial advice in the Online Court,11 although fixing the right level would present real difficulties, and was tied to the level of ceiling of the court’s jurisdiction.12 In 2017 a Civil Justice Council (CJC) ADR Working Group issued a report that called for wider use of ADR before and during court processes, but offered no striking solutions as to how to achieve this, other than that the court should actively promote mediation, and providing (and this was not a unanimous recommendation by the committee) that attendance at mediation ought to be compulsory for all cases.13 There was also a tacit acceptance that ADR practitioners did not command trust and support.14 It was said that the voluntary take-up of mediation was ‘disappointingly slow and small’. The CJC recognised the ‘enormous success’ of Ombudsman processes, and suggested ‘exploring the wider use of conciliation and Ombudsmen within or alongside the civil justice system’ expressly without making any immediate recommendations for change.15 It is difficult to understand how Ombudsmen could be used within the civil justice system. A mediation pilot was established in 2017 at the Civil Justice Centres at Exeter/Barnstaple, Central London and Manchester aimed at filling the gap between the free telephone mediation service offered by HMCTS offered to those in small money claims and full private mediation used in much larger claims. Eligible cases would involve over £10,000 or those allocated to the fast or multi tracks, or where a remedy other than money was sought. The CJC’s ADR Working Group’s final report in 2018 recounted the widespread view that ADR was under-used and too little known.16 It noted an HMCTS Court users’ survey that no less than 68% of all litigants contacted said that they would have preferred to avoid Court

9 Lord Justice Briggs, Civil Courts Structure Review: Final Report (Judiciary of England and Wales, 2016) paras 2.19–2.28. He referred to ‘a form of small claims conciliation (to use an umbrella term) carried out by District Judges in certain County Courts hearing centres in the Hampshire, Dorset and Wiltshire area, and also in Romford … [in which] the District Judge conducting the list …. Invites each pair of parties to consider settlement, and provides assistance in the form of informal early neutral evaluation. …. Those cases which do not settle there and then are given the benefit of case management directions designed to enable the parties to prepare for a final hearing much more effectively than is customary in the Small Claims Track.’ ‘Statistics …) suggest that 25% of the entire small claims track list is disposed of due to non-attendance, 50% at the conciliation hearing, and a significant proportion of the remaining 25% settles before trial, due (anecdotally) to progress towards settlement achieved at the conciliation hearing.’ 10 Lord Justice Briggs, Civil Courts Structure Review: Final Report (Judiciary of England and Wales, 2016) paras 6.31–6.39. 11 ibid, para 6.38. 12 ibid, para 6.39. 13 ADR and Civil Justice. Interim Report (Civil Justice Council, 2017). 14 ibid, para 2.10. 15 ibid, para 9.56, recommendation 26. 16 ADR and Civil Justice. CJC Working Group Final Report (Civil Justice Council, 2018) para 4.1.

ADR and the Courts 183 proceedings if at all possible.17 The CJC report ADR can encompass mediation, round table meetings, negotiation, judicial neutral evaluation, private neutral evaluation, conciliation and Ombudsman processes, arbitration, and online dispute resolution. It repeated the view that ADR ‘is working relatively well in high value cases where its usefulness is recognised and its cost is proportionate. It is also seen to be working well in those cases that are able to take advantage of the small claims mediation service. But between those two extremes there remains a considerable gulf.’18 The CJC also highlighted the fact that the cost incentives to mediate had become confused as a result of inconsistent Court of Appeal decisions.19 It raised the possibility of recovering some cost in a successful mediation. The CJC noted use of mediation in a number of specific circumstances. First, the Small Claims Mediation Service (SCMS) is available free of charge,20 but there was concern that the SCMS was insufficiently resourced. The SCMS offers one hour mediation appointments with trained HMCTS mediators before any court hearings. SCMS can be contacted direct,21 or after a court request to complete a Directions Questionnaire (N180) or pursuant to a court order. Mediation will only take place if both parties contact the SCMS to confirm that they want an appointment. All negotiations made at mediation will remain confidential and cannot be disclosed to a judge at a hearing. Secondly, the Boundary Disputes Mediation Service is offered by the Royal Institute of Chartered Surveyors (RICS) and the Property Law association, involving a panel of third party legal and surveyor experts. Thirdly, in employment disputes, ACAS offers conciliation services and Employment Tribunal judges and others offer some mediation (discussed in chapter fifteen below). Fourthly, in family disputes private parties are required to attend a Mediation Information and Assessment Meeting (MIAM) before starting proceedings (discussed in chapter eleven below). However, the take-up of MIAMS is not large and the conversion into actual mediations is low. Apart from the SCMS, the use of ADR was considered to be unsatisfactory. The CJC sought to address the challenges of the awareness, availability and encouragement of ADR, making a long list of recommended actions. These included promoting ADR in schools, a new national ADR website, including in all court documents and protocols a presumption that ADR should be attempted at an appropriate stage on the route to trial (but not necessarily always at the start of the journey), more stringent encouragement of ADR in case management, and the idea of a Notice to Mediate that could be issued separately from starting proceedings. The CJC’s document focused only on ADR in the context of courts, and omitted almost entirely consideration of ADR as used by Ombudsmen or other bodies. Perhaps the most important insight by the CJC, however, was the fact that the position of mediation would change significantly once the proposed Online Solutions Court was functioning, since case officers are intended to provide mediation free of charge as an integral part of their function.

17 ibid, para 6.2. The exact source was not cited. 18 ibid, para 4.2. 19 PGF II SA v OMFS Company 1 Limited [2013] EWCA Civ 1288 and Gore v Naheed [2017] EWCA Civ 36. 20 http://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/738234/ ex730-eng.pdf. 21 by phone at 0300 123 4593 or by email at [email protected].

184 ADR

B. Issues with Mediation and ADR Arguments exist over the definition of ‘mediation’ and whether it means shuttle-diplomacy communication, neutral evaluation, or formalised mediation in which an intermediary may be invested with significant personal information by parties and permitted to propose solutions in some way. It is sometimes argued that mediation, conciliation, early neutral evaluation or other techniques differ. For example, as discussed in chapter fifteen, ACAS refer to their main full service as conciliation and refer to mediation as a separate service offered by others. Conciliation is the term used in civil engineering, meaning where an engineer gives an opinion. Adjudication is also used in construction cases.22 For simplicity, this book will use the term ‘mediation’ generically to describe the technique in which an independent third party facilitates communication and resolution between the parties to a dispute. The arguments referred to above mask an underlying issue of turf: should mediation be performed only by people who have particular qualifications, or can it be delivered by case workers in Ombudsmen organisations or others? It is suggested that the practical point is that the broad technique of mediation (however it is defined) is both beneficial and essential in certain dispute resolution processes. However, individuals who perform legal, mediation or other functions as trusted intermediaries, and who may be privy to confidential information and be subject to conflicts of interest, should have suitable professional training. Modules of accreditation are, therefore, necessary for those who perform judicial, legal or mediation functions. The delivery of such training and accreditation can be organised under a Professional Services Commission, that could cover lawyers, Ombudsmen, mediators, accountants and so on. The central issues are pathways and funding. As a leading expert has said ‘There is no shortage of trained mediators, but the key challenge is organising and funding ADR at a proportionate cost’ (emphasis added).23 Mediation works well where it is integrated into a single dispute resolution pathway as one of several techniques, such as information, fact-finding, triage, mediation, and adjudication. Such integration occurs in the pathways operated by the leading consumer Ombudsmen and to some extent in the Small Claims track. In both of those situations, claimants do not pay for using the service. In contrast, the pathways involving MIAMS and ACAS are not integrated with their relevant Family Court or Employment Tribunal systems. From the initiating user’s perspective, you need to go first to a mediation place and then go separately to an adjudication place. Because the mediation function is available separately from the civil procedure pathway, it has to be accessed separately and is insufficiently signposted, and the mediation provider has to be paid. Those who advocate ADR in the context of court or court-like structures tend to use mediation as a primary source of personal income. They will not obtain income from a number of other situations in which mediation is used, namely in Ombudsmen or, 22 Principal nominating bodies for adjudication/adjudicators are RICS and CEDR. It is binding unless a party objects (cf mediation in Japan and Korea). 23 P Frost, ‘ADR for employment lawyers: lessons from the Civil Justice Council?’ in ADR Notes (Herbert Smith Freehills, 5 March 2019) at http://hsfnotes.com/adr/2019/03/05/adr-for-employment-lawyers-lessonsfrom-the-civil-justice-council.

ADR and the Courts 185 otentially, by the Groceries Code Adjudicator and the Small Business Commissioner p (discussed in chapter fourteen), as mediation is performed there by employees of those organisations. Hence, discourse and understanding of what constitutes ‘ADR’ and how its use might be furthered exists within silos and is disjointed. This is a critical observation, since it conforms to the ‘single integrated pathway’ approach that makes consumer Ombudsmen particularly successful, as discussed in chapter nine below. The Online Solutions Court has, adopting the design of bodies such as the Financial Ombudsman Service, included mediation at no extra cost as an integral part of its dispute resolution pathway. One should note the argument that ADR is not about ‘just settlement’ but ‘just about settlement’ and can lead to unjust and unlawful solutions.24 Some empirical studies support this.25 This book is not the place to debate that issue in detail. It can, however, be noted that people settle cases through the SCMS,26 many consumers happily prefer consumer Ombudsmen to courts and settle their cases through an Ombudsman’s ‘mediation’ function, and that the case-managed mediation function is regarded as an integral design feature of the Online Solution Court. It may be that individuals’ preferences for fair dispute resolution are for speed and cost in dispute resolution rather than what may be forensically legally strict. That issue raises further issues in relation to the need for more research on what outcomes are fair and just, and what people regard as such. US Chief Justice Burger said as long ago as 1977:27 The notion that most people want black-robed judges, well-dressed lawyers, and fine panelled courtrooms as the setting to resolve their dispute is not correct. People with problems, like people with pains, want relief, and they want it as quickly and inexpensively as possible.

John Sorabji has noted the fundamental shift in a societal understanding of justice that was inherent in the Woolf reforms.28 Rabeea Assy has similarly argued that in the face of a ‘paradigm crisis’ for courts, a perceived undermining of traditional values of due process 24 H Genn, Judging Civil Justice. The Hamlyn Lectures 2008 (Cambridge, 2010). 25 H Genn, P Fenn, M Mason, A Lane, N Bechai, L Gray and D Vencappa, Twisting Arms: court referred and court linked mediation under judicial pressure (Ministry of Justice, 2007), Ministry of Justice Research Series 1/07. Two pilots of Automatic Referral to Mediation (ARM) in Central London County Court of 100 defended cases per month referred from April 2004 to January 2006, with an option to opt out, involved 1,232 cases, of which 82% were personal injury (PI) cases. There were objections to mediation in 249 cases. By the end of the period, only 22% of ARM cases had a mediation appointment booked and 172 (14%) had been mediated. Case management conferences dealing with objections did not generally result in mediation bookings and tended to delay progress. Defendants were more likely than claimants to object to referral in both personal injury and non-PI. There was no objection to mediation in 45% of non-PI cases. The settlement rate of mediated ARM cases followed a downward trend from the start of the project, from 69% to 38% in March 2005. Mediation in non-PI significantly reduced the likelihood of trial compared with non-mediated cases. While judicial time spent on mediated ARM cases was lower than on non-mediated, administrative time was higher. Unsettled mediation cases increased legal costs by around £1,000 to £2,000. 26 Solving disputes in the county courts: creating a simpler, quicker and more proportionate system A consultation on reforming civil justice in England and Wales (Ministry of Justice, 2011). This study of the national introduction of small claims mediation in 2009/10 found that in each year more than 10,000 small claims mediation appointments were conducted, with a settlement rate of 73%. Users of the service stated very high levels of satisfaction: over 7,500 users that completed the online survey, 98% saying they were satisfied or very satisfied with the professionalism and helpfulness of the mediators, with 95% saying that they would use the service again. 27 WE Burger, ‘Our Vicious Spiral’ (1977) 49 Judges Journal 22. 28 J Sorabji, English Civil Justice after the Woolf and Jackson Reforms: A Critical Analysis (Cambridge University Press, 2014).

186 ADR and legal accuracy of determination (for which there is no empirical evidence) in relation to the Online Court should be accepted as proportionate when valued against the (presumed) increase in access to justice for those who currently have none.29 The European Council of Networks of the Judiciary is amongst those who have called for a new relationship between courts and ADR, which recognises and integrates the role and strengths of ADR.30 It is argued that the law will not be developed if the throughput of cases leads to fewer judicial decisions. There is a strong constitutional element in this function. Interpreting the law is done by judges. But it has also long been done by arbitrators, and nowadays it is also done by regulators, and Ombudsmen. A system that identifies points of law and behaviour that need clarification sooner than through court processes has value. Different means of clarifying the law may then be needed, either through Parliament, regulators, codes, Ombudsmen referring points of law to courts (as noted in chapters nine and eighteen below), or referral to the Law Commission. One should also note the ability of mediation to provide a creative solution that is not available from the perhaps limited remedies available to a court, and the ability to heal relationships. The adversarial process risks polarising participants into opponents and producing division rather than cohesion and collaborative compromise. It is no surprise to find interest in mediation in family law or commercial relationships.31 It is interesting that for many years the outcome of road traffic and workplace injury claims has owed more to negotiating tactics between solicitors and insurers than application of the law, but this situation has not attracted similar concern to the rise of ADR.32

29 R Assy, ‘Briggs’ Online Court and the Need for a Paradigm Shift’ (2017) 36(1) Civil Jusitce Quarterly 70. 30 The Relationship between Formal and Informal Justice: The Courts and Alternative Dispute Resolution (European Council of Networks of the Judiciary and European Law Institute, 2018). 31 S Roberts and M Palmer, Dispute Processes: ADR and the Primary Forms of Decision-Making (Cambridge University Press, 2005). 32 R Lewis, ‘Tort tactics: an empirical study of personal injury litigation strategies’ (2017) 37(1) Legal Studies 162.

7 Digitisation of the Courts I. Courts and IT Professor Richard Susskind asserted from the early 2000s that artificial intelligence would replace lawyers.1 The wide-ranging potential was summarised by the Legal Services Board in 2012 thus:2 The impact of technology on legal services has been the subject of much speculation for the past fifteen years or so. Technology is propounded as the enabler for consumers to help themselves without lawyers, for lawyers to provide cheap online services, and as fundamentally changing the provision of legal services so that lawyers are no longer the keepers of the law.3 It is argued that IT will enable the mass delivery of standardised legal services: ‘Clients will eschew bespoke services, demanding more efficient, less costly points on the continuum to commoditization. Lawyers will pay more attention to recognition (of the need for legal advice), selection (of the source of legal advice) and service (the process of delivering legal advice and assistance), and IT will optimize each of these stages’.4 Susskind suggests that this will lead to five types of lawyers in the future: Expert trusted advisers; enhanced practitioners who support the delivery of the standard and commoditized packages produced; legal knowledge engineers utilising legal expertise; legal risk managers who are counsellors who avoid legal problems; and legal hybrids schooled in complementary disciplines aligned to law, project managers, strategy consultants, etc.

The Netherlands judiciary set up its first platform for discussing IT in the courts in 1994.5 However, Dory Reiling, the Dutch expert, commented in 2009 that judicial organisations and justice authorities struggle with IT in the courts,6 and in 2018 the Judicial Council of the Netherlands decided not to implement a piloted digitisation programme in first instance courts. As noted in chapter four and referred to below, the English Claims Production Centre was set up in the early 1990s at Northampton County Court as a service to return users like energy companies and banks. Money Claims On Line was added in 2002 as the Internet mailbox for the court, and Possession Claim On Line was launched in 2006. 1 R Susskind, Transforming the Law: Essays on Technology, Justice, and the Legal Marketplace (Oxford U niversity Press, 2003); R Susskind, The End of Lawyers? Rethinking the nature of legal services (Oxford University Press, 2008). 2 Evaluation: How can we measure access to justice for individual consumers? A discussion paper (Legal Services Board, 2012) para 4.39. 3 See R Susskind, The End of Lawyers? Rethinking the nature of legal services (Oxford University Press, 2008). 4 A Boon, ‘Armageddon for the Legal Profession?’ (JOTWELL, 2010) at http://legalpro.jotwell.com/ armageddon-for-the-legal-profession. 5 D Reiling, Technology for Justice. How Information technology can support Judicial Reform (Leiden University Press, 2009). 6 ibid, 16.

188 Digitisation of the Courts Experts claimed in 2016 that computer programs could match judges in decisionmaking.7 The Law Society forecast in November 2017 that automation will replace 20% (67,000) legal services jobs within a generation: from 318,000 jobs in 2017 to 312,000 in 2025, although this would be offset by an increase in law firms’ annual productivity from 1.2% to 2.4% within a decade.8 Two radical new attempts were announced around the end of 2015 to try to save courts, involving mass digitalisation: an injection of IT and a shift to online process. First, in December 2015 it was announced that £738 million will be invested in modernising the courts’ IT systems. A significant part of this sum will be raised by closing 86 courts and selling the estate, leading to projected overall savings in Ministry of Justice expenditure of around £200m a year from 2019/20.9 Secondly, in January 2016, Lord Justice Briggs announced10 that all claims in England and Wales under £25,000 should be switched into a new court structure, HM Online Court (OC), following proposals made in 2015 by an advisory body, the Civil Justice Council,11 and by the charity JUSTICE.12 The name was subsequently changed to the Online Solutions Court (OSC). Important statements were made by HMCTS in 2017 in explaining its reform programme: the new system would be customer-driven and deliver justice ‘where it’s most appropriate’ rather necessarily than in courts.13

A. ODR Before analysing the OSC, we should note that some existing dispute resolution systems are designed to operate entirely online, as noted in other chapters. This is the case, for example, with complaint systems embedded into the internet platforms of traders such as eBay, Amazon and Alibaba. The complaint and response or negotiation can be entirely online. Further, an arbitrator (or mediator) can be available and function entirely online, or maybe with skype or perhaps by phone. In some cases, artificial intelligence (AI) can be used in a number of ways, such as to assist negotiations by providing the parties with a possible settlement range so as to narrow the financial difference between them, or to provide a suggested solution based on information on how other similar cases have typically been resolved. Consumers may typically access an Ombudsman either online, or by phone, or by dropping in (the FOS has a duty Ombudsman in reception at its Docklands premises).

7 M Foudzer, ‘Artificial intelligence mimics judicial reasoning’ Gazette 22 June 2016, reporting a conference at which research by Professor Katie Atkinson at the University of Liverpool into a decision-making algorithm had had a 96% success rate looking at 32 cases. 8 Legal services sector forecasts 2017–2025 (The Law Society, 2017). 9 Spending Review and Autumn Statement 2015: key announcements (HM Treasury, 2015); Response to the proposal on the provision of court and tribunal estate in England and Wales (Ministry of Justice and HM Courts & Tribunals Service, 2016). See later Modernisation of justice through technology and innovation (HM Courts and Tribunals Service, 2016). 10 Lord Justice Briggs, Civil Courts Structure Review: Final Report (Judiciary of England and Wales, 2016). 11 Online Dispute Resolution Advisory Group, Online Dispute Resolution for Low Value Civil Claims (London, Civil Justice Council, 2015). 12 Delivering Justice in an Age of Austerity (JUSTICE, 2015). 13 Justice matters. How our change programme will make services better for everyone who uses them (HM Courts & Tribunals service, 2017).

Courts and IT 189 Whatever the initial means of contacting an Ombudsman, case files are nowadays electronic rather than paper-based. Thus, details stated by a telephone caller to a case handler are recorded by the latter into an electronic case form, populating the required fields. The consumer Ombudsman model was highly influential in the design of the OSC. The EU consumer ADR architecture provides an ODR platform to handle cases between a consumer in one Member State and a trader in another (and the ADR entity may be in any Member State).14 The system is extremely simple in design, but has suffered in practice from the fact that the dispute resolution process is voluntary, so few traders agree to it.

B. The Concept of the Online Court The OSC is intended to operate in three stages, all essentially online.15 The model is similar to – but with important differences from – how the leading consumer Ombudsmen operate.16 The first stage, identification of issues, is largely automated, with claimants supported by ‘assisted digital’ simple, commoditised online advice; the second stage is conciliation and case management by case officers who manage the collection of evidence and allocation of the case to an appropriate track; the third stage is resolution by judges. Briggs explained the tiers as follows.17 Stage 1 is a mainly automated process by which litigants are assisted in identifying their case (or defence) online (‘Assisted Digital’ provision) in terms sufficiently well ordered to be suitable to be understood by their opponents and resolved by the court, and required to upload (ie, place online) the documents and other evidence which the court will need for the purpose of resolution. Stage 1 would be designed to18 provide online help at every stage in the process of completing the requisite online documents, as well as to provide simple commoditised online advice as to the bare essentials of the relevant law. By ‘commoditised’ I mean a description of the basic legal principles applicable to the litigant’s dispute, rather than advice tailored to her particular facts.

Briggs commented that the stage I, triage stage, carries the key to ‘understanding why the OC concept may harness modern IT so as to provide a civil court structure uniquely suitable for litigating without lawyers.’19 Briggs noted the need for individualised early assistance and advice for language reasons: There is a significant class of civil court users who are as challenged by the use of speech or paper as they would be by the use of computers, including the many who do not speak English as their first language, for whom the pro bono agencies are likely to continue to be fully stretched in providing vital assistance.20

14 Regulation 524/2013 of 21 May 2013 on online dispute resolution for consumer disputes OJ 2013, L 165. 15 This section draws on C Hodges, ‘Proposed Modernisation of Courts in England & Wales: IT and the Online Court’ (2016) 6(1) International Journal of Procedural Law 149–63. 16 See C Hodges, I Benöhr and N Creutzfeldt-Banda, Consumer ADR in Europe (Hart Publishing, 2012). 17 Briggs, para 6.7. 18 Briggs, para 6.9. 19 Briggs, para 6.8. 20 Briggs, para 6.58.

190 Digitisation of the Courts However, Briggs noted limits to a digital system: ‘Recognising that there is a substantial section of civil court users who would find it difficult or even impossible to conduct civil litigation through computers, it is being designed to ensure that they thereby suffer no impairment in their access to justice by the proposed digitisation of courts, by providing them with the requisite assistance. Forms of assistance currently being considered include online help, telephone help-lines and face to face human help.’21 Stage 2 involves a mix of conciliation and case management, mainly by a Case Officer, conducted partly online, partly by telephone, but probably not face-to-face. Case Officers would be trained in the processes of investigation and conciliation which will be unique to that court.22 They would not make a final determination of substantive rights (however small the value at risk) or approve the settlement of civil claims on behalf of children and other protected parties. These functions are inalienable judicial functions.23 Briggs referred to a spectrum within the general concept of case management between, at one end, sending standard directions to the parties in straightforward cases and, at the other, taking active and robust bespoke control of large complex cases in such a way as to bring them to a timely and just conclusion, by conciliation or trial, without disproportionate cost. The former routine process would be suitable for Case Officers, whereas the latter ‘artistic’ process must be undertaken by judges.24 There is likely to be a right to have the Case Officer’s management decision taken again by the judge.25 It remained undecided whether the conciliatory role of the Case Officer should be primarily that of mediator or evaluator.26 Briggs contrasted what he characterises as an ‘early neutral evaluation’ (ENE) approach of the Financial Ombudsman (which is highly successful in resolving over 80% of incoming complaints without the involvement of an Ombudsman) with the more ‘rough and ready’ telephone mediation carried out in small claims by non-legally-trained officials in the County Court Bulk Centre (with a 70% success rate).27 He preferred the latter simple mediation role for Case Officers.28 Briggs noted ‘the common experience of DJs hearing small claims track cases at present is that the key facts and evidence remain buried in the minds of the litigants and in their ill-assorted bundles of documents even when they arrive at court for a trial.’29 Stage 3 consists of determination by judges, in practice District Judges (DJs) or Deputy District Judges, either on the documents, on the telephone, by video or at face-to-face hearings, but with no default assumption that there must be a traditional trial. There would also be a fourth stage, namely enforcement, which would be undertaken using electronic communications in a system that would be the same for all courts.

21 Briggs, para 4.14. 22 Briggs, para 6.20. He notes the degree of specialism involved in such functions, stating that if these special functions were to be discharged on a part-time basis by County Court Case Officers, it is likely that they will again be less well focused and may be underfunded. 23 Briggs, para 4.22. 24 Briggs, paras 7.28–7.29. 25 Briggs, para 7.38. 26 Briggs, para 7.18. 27 Briggs, paras 7.18–7.24. 28 Briggs, para 7.26. 29 Briggs, para 6.10.

Courts and IT 191 Briggs illustrated the way the procedure would work with the following example.30 Suppose that A has a dispute with her builder B relating to works carried out at her house. After entering the common Court Service Portal and selecting the OC as the appropriate court (if necessary with online guidance), and after providing her name and contact details, A would be asked to identify the object of her grievance by reference to a series of tick boxes which might include her bank, her holiday company, her next door neighbour and her builder. Having ticked ‘Builder’ the software would present new questions designed to elicit the essential nature of the dispute, for example whether it was about the quality of the work, the amount charged or delays in completion. Ticking (or clicking) the appropriate box would reveal further successive pages, including a page requiring A to identify B and provide his (or if a company, its) contact details, to state whether the building works were covered by an agreement and, if in writing, requiring A to attach any electronic copy, or scan or photograph with her smart phone any paper copy, so that the central document required by the court for determination of the dispute would be lodged electronically from the outset. Further automated pages would question A as to the details of the dispute, in much the same way as a high street solicitor might do when taking instructions after A sought his assistance. The result of this process would be for the system to generate a document on screen broadly approximating to particulars of claim, which A would be invited to approve or amend, and certify as true. The system would then deliver that document and any accompanying evidence electronically to B (if an e-mail address had been provided by A), or request B to go online by sending B a letter or a text to his mobile phone. The software would then automatically take B through an investigatory process (if also a litigant in person) in broadly the same way, so as to generate the electronic approximation to a defence. These automated investigatory processes would have bypasses for litigants choosing to use lawyers, and for bulk issuers with departments of staff trained for the purpose.

It is worth stating at some length how Briggs saw the anticipated advantages of the new system: 6.11. This is intended to generate three substantial advantages over the current small claims process. First it enables the parties to communicate to each other the relevant details of and evidence about their case at the earliest possible stage, thereby providing a substitute for the preaction protocols process used by solicitors in the conduct of most civil litigation. Secondly, it opens up opportunities for conciliation of their claims, whether as the simple result of the exchange of the stage 1 materials, or by mediation or early neutral evaluation, again well in advance of trial. In this context, it was a striking feature of the removal of Legal Aid from private law family proceedings, and the consequential dramatic increase in the proportion of litigants in person, that mediation rates fell sharply rather than (as had been hoped) rose, because litigants in person are less (if at all) aware of the advantages of ADR than lawyers. The introduction of the Mediation Information and Advice Meeting (“MIAM”) in this type of litigation is intended to fill that gap, as a compulsory first educative step. 6.12. Thirdly, this stage 1 triage process enables the case, if not resolved by conciliation, to be managed and made ready for trial with all the requisite information available on an electronic file, thereby making more efficient the processes of judicial preparation and determination of those cases which cannot be settled earlier. 6.13. Stage 2 of the OC process is mainly directed to making conciliation a culturally normal part of the civil court process rather than, as it is at present, a purely optional and extraneous process,

30 Briggs,

para 6.8.

192 Digitisation of the Courts encapsulated in the ‘alternative’ part of the acronym ADR. By that I do not mean that it should be made compulsory. Rather it would build upon the current Small Claims Mediation Service by inviting the parties to engage in an appropriate form of conciliation, albeit respecting the refusal of one or more of them to do so. 6.14. A radical departure which stage 3 would make from current practice and procedure is that there would be no default assumption that a live claim would have to be settled at a traditional face to face trial. Rather, the traditional trial would be regarded as the last resort, if the alternatives of resolution on the documents, by telephone or by video conference were deemed to be unsuitable. A face to face hearing could also be confined to the determination of particular issues, where for example live evidence and cross examination was required. 6.15. Finally, the OC will mark a radical departure from the traditional courts (outside the small claims track) by being less adversarial, more investigative, and by making the judge his or her own lawyer. By that I mean that judges will receive no assistance in the law from the parties, and may well need more training, more frequently, in the law relevant to the caseload of the OC that they receive at present. I acknowledge that, even now, the DJs who decide cases on the small claims track already have to be their own lawyers, but the ambition of the OC will extend to a substantially wider caseload.

No cost shifting. In accordance with the objective of facilitating litigation without lawyers, it appeared to Briggs to be inevitable that costs shifting will not extend (save perhaps in cases of misconduct) to recovery of legal costs, but be limited to court fees and some other expenses.31 It has yet to be considered whether recovery of the costs occurred in obtaining private assistance with the use of computers would be permitted as an expense. Scope: types of cases. Although the OC would in theory be capable of handling any type of case, it appeared that it would respond to some but not other types. Briggs said that the OC is intended for ‘the resolution of relatively simple and modest value disputes’.32 In other words, the focus is simply on value: any case involving a sum under £25,000. It is, therefore, to be assumed that it is both designed and intended for every type of case. However, there is a lack of clarity here about what is in fact intended. Briggs stated: 6.1. The development of the [OC] is the single most radical and important structural change with which this report is concerned. It provides the opportunity to use modern IT to create for the first time a court which will enable civil disputes of modest value and complexity to be justly resolved without the incurring of the disproportionate cost of legal representation. In my view it offers the best available prospect of providing access to justice for people and small businesses of ordinary financial resources. 6.5. … First, the OC is intended to be used for the resolution of relatively simple and modest value disputes. Simplicity is a requirement both because it is unlikely that first generation software will prove to be up to the task of accommodating complex issues and secondly because the traditional adversarial system is pre-eminently well-suited to the resolution of complex issues of fact and law. It is designed to accommodate disputes of modest value precisely because it is those disputes which continue to attract disproportionate cost, if litigated with the assistance of lawyers. Furthermore, it is probable that, at least in its early stages, the OC will be confined to the resolution of money claims, for reasons discussed later in this chapter.

31 Briggs, para 6.60. No costs shifting is well established in the Employment Tribunal and the small claims track of the County Court. 32 Briggs, para 6.5.

Courts and IT 193 Briggs stated that the OC would handle ‘relatively straightforward debt and damages claims up to a provisionally chosen value at risk of £25,000’.33 He also saw no reason why personal injury cases should not be included, at least up to £5,000.34 It was unclear whether the Qualified One-Way Cost shift for such cases introduced by Jackson35 would continue, given Briggs’ intention that the OC would essentially not involve cost shifting. However, Briggs provisionally thought that housing disrepair claims by tenants could be given voluntary but not compulsory admittance to the OC, and he noted that there is:36 a wide measure of provisional agreement about classes of case which should, at least initially, be kept out of the OC. They include the following: (a) Claims for possession of dwelling houses, save perhaps for ‘no fault’ claims under s.21 of the Housing Act 1988 and claims where there is a mandatory ground for possession and no dispute that it applies. (b) Claims for injunctions or other non-monetary relief requiring the close attention of the court (such as specific performance or declarations). (c) Class claims (including bankruptcy or winding up). (d) Claims by or against minor children or other protected parties.

The Law Society noted that alternative service models such as ODR represent an area with enormous potential for meeting the needs of the legal system and its users,37 and that the number of firms undertaking predominantly retail market work (eg, wills, probate, conveyancing, family, personal injury) has (uniquely, in relation to other areas) fallen since 2010/11.38 Rationale for the £25,000 jurisdictional cap. Briggs outlined the rationale for setting the jurisdictional cap for the OC at £25,000. The small claims track limit at the time was £10,000, but £1,000 for personal injuries litigation and housing disrepair, although it had been proposed to raise that limit to £5,000 for personal injuries at least. Small claims cases worth up to £10,000 account for almost 70% of hearings in civil courts in England and Wales. However, the number of small claims going to hearing has fallen over recent years, from 51,046 in 2003 to 29,603 in 2013. Experts consulted by Briggs thought that the ‘Value at Risk’ that would make a claim economically viable is somewhere between £25,000 and £100,000.39 He considered that a value limit of £25,000 would be a better steady-state objective than £10,000, even if it were to be approached in two stages, by using £10,000 as a temporary initial limit.40 That limit would already capture a very substantial part of the number of cases in the County Court. It would transfer a recognisable block of existing civil cases, leave the fast track and multi-track untouched.

33 Briggs, para 4.12. 34 Briggs, para 6.48. 35 Under the QOCS, from 1 April 2013, losing claimants would pay their own costs and any success fee, but not pay the winner’s costs, and losing defendants would pay the winner’s base costs: CPR, rr 44.13–44.17. 36 Briggs, para 6.43. 37 The Future of Legal Services (The Law Society, 2016) para 4.2.3. 38 ibid, p 21. 39 Briggs, para 5.38. He cited a recent survey by Citizens Advice that 71% of its clients would think twice before even contemplating litigation, and that only 14% would feel confident enough to represent themselves: para 5.40. 40 Briggs, para 6.39.

194 Digitisation of the Courts

C. Issues Arising There was concern over whether the amount of public funding required to maintain the future system would remain available. Briggs noted that there would be ongoing cost in maintenance and constant updating of an OC,41 and regarding the adequacy and long-term funding of the Assisted Digital Service, which he said must be satisfactorily addressed and tested before there could be any question of making the OC compulsory.42 Lawyers voiced objections that they were being excluded from the process, as indeed was the initial impression. Briggs LJ reiterated that:43 It is not a design objective of the Online Court to exclude lawyers. The underlying rationale is that whereas the traditional courts are only truly accessible by, and intelligible to, lawyers, the new court should as far as possible be equally accessible to both lawyers and LiPs.

The need to ensure accessibility was also stressed in a policy paper issued, unusually, together by The Lord Chancellor, the Lord Chief Justice and the Senior President of Tribunals, in which they said that accessibility required that ‘the procedures and remedies should be available and intelligible to non-lawyers’.44 They said that in spending over £700 million to modernise courts and tribunals, they wanted to build on simpler consumer-focused models. In the civil courts, we will automate and digitise the entire process of civil money claims by 2020. These account for more than four fifths of the 1.6 million claims issued in the county courts and the High Court each year – with the vast majority (83%45) of which are uncontested. We will speed up resolution as we replace paper and post with digital working: currently, a ‘fast track’ claim with a value between £10,000-£25,000 takes 11 months to be resolved.46 Under our new digital model, cases will be handled faster and in a more convenient way, improving the experience for everyone making and defending claims in the civil courts.

The cases in the digitised court and tribunals, assisted by a new and greatly simplified procedural code, would initially be lower value debt and damages claims and appeals to the Social Security and Child Support Tribunal.47 Briggs’ initial ambition to include all cases up to £25,000 would remain an ambition, but the soft launch would have a ceiling of £10.000.48 Richard Susskind urged that the Online Court should be introduced modestly rather than

41 Briggs, para 5.122. 42 Briggs, para 6.58. 43 Lord Justice Briggs, Civil Courts Structure Review: Final Report (Judiciary of England and Wales, 2016) para 6.22. See also J Hyde, ‘Briggs: online courts will not offer second-class legal service’ Gazette 10 June 2016: ‘I am not looking at this as creating a lawyer-free zone, that is not any part of my conception,’ he stressed. Briggs envisaged qualified lawyers being part of the process before the first and third stages, helping clients to decide whether to progress their case, and if conciliation has not worked, help them prepared their argument for the judge. It is also likely that case officers, who will be the first human point of contact for litigants in the online process, will be legally qualified.’ 44 The Lord Chancellor, the Lord Chief Justice and the Senior President of Tribunals, Transforming Our Justice System (Ministry of Justice, 2016). See associated policy paper: Transforming our justice system: summary of reforms and consultation (Ministry of Justice, 2016). 45 Ministry of Justice Civil Justice Statistics Quarterly: January to March 2016. 46 ibid. 47 ibid. 48 Briggs, Final Report, para 6.43.

Courts and IT 195 in a ‘big bang’,49 and a pilot commenced in 2017 after lawyers were told to just get used to the idea.50 Enforcement of County Court judgments was identified by Briggs LJ as a problem,51 and the government’s reforms included giving the High Court powers to issue attachment of earnings orders, commencing a fixed deductions scheme (fixed table) provisions in the County Court and introducing fixed tables in the High Court, providing transparency and certainty of the rate of deductions from debtors’ earnings to pay back their creditors.52

D. Money Claim Online One area in which digitisation was carried out as early as 2001, and has proved to be operated successfully and without the need for tinkering, has been in debt claims for specified amounts. The Money Claim Online (MCOL) service was established in 1992 and operates from the Northampton County Court Business Centre with a staff of 200. Applications, issue, Directions Questionnaires and default judgments are handled electronically.53 The service is provided for the whole of the England and Wales jurisdiction and offers considerable efficiency for collection of commercial and multiple debts. However, 80% of users are LiPs. In 2016 it issued around 750,000 claims, with average and median values of £1,665 and £664 respectively, 95% of which were undefended. MCOL operates without built-in rules or an online triage service, although there is a telephone and email help service. The Northampton Centre also administers the Small Claims Mediation Service noted above. If claims are defended, they revert to the paper-based procedure at the relevant local centre. A similar online money claim facility is run at the County Court Money Claims Centre at Salford, which similarly operates without hearings, and has a turn-around time of five working days for over 90% of incoming claims.54 The service has over 180,000 users annually. A pilot Money Claim Online service was launched in August 2017, and was used to issue 1,035 claims by March 2018, taking seven–eight minutes to complete a claim before being issued immediately through the online system.55 There was up to a 40% reduction in the 49 D Bindman, ‘Susskind urges restraint and piloting over fears that Online Court is “too ambitious”’, at www. legalfutures.co.uk/latest-news/susskind-urges-restraint-piloting-fears-online-court-too-ambitious. 50 J Hyde, ‘Online court pilot in July – better get used to it, says judge’ Gazette 22 May 2017, quoting Mr Justice Birss. 51 Lord Justice Briggs, Civil Court Structure Review: Interim Report (Judiciary, 2016) para 2.46. ‘The main methods of individual enforcement of County Court judgments are Warrants of Possession (of land) and of Control (possession of goods), Charging Orders, Attachment of Earnings and Third Party Debt Orders. Methods of collective enforcement are mainly by Bankruptcy and Winding-up petitions, which give rise to separate proceedings of their own. There is also procedure for the obtaining of information from debtors about their assets, as a precursor to enforcement, by examination before a court officer. Default by judgment debtors in complying with the court’s orders to attend or to provide relevant information in connection with enforcement is, in the last resort, punishable by committal to prison.’ 52 Introduced in the Tribunals, Courts and Enforcement Act 2007, s 92 and Sch 15, amending the Attachment of Earnings Act 1971. See Transforming our justice system: summary of reforms and consultation (Ministry of Justice, 2016). 53 See description in Lord Justice Briggs, Civil Court Structure Review: Interim Report (Judiciary, 2016) paras 2.26–2.29. 54 ibid, paras 2.32–2.35. 55 Sir Terence Etherton, MR, speech ‘Civil Justice after Jackson’, Conkerton Memorial Lecture 2018, Liverpool Law Society, 15 March 2018, www.judiciary.uk/wp-content/uploads/2018/03/speech-mor-civil-justice-after-jackson-conkerton-lecture-2018.pdf.

196 Digitisation of the Courts time taken for claims to move from being submitted to being sent for a first hearing. Public testing of the portal went live in March 2018, with the ability for without prejudice offers to be made and accepted.56 By September 2018, over 25,000 claims had been issued, and 90% of users were satisfied or very satisfied.57 During the following 18 months, the service would be extended to support cases going to hearing and those settling beforehand. The average time to settle the 62,000 claims issued up to the end of the 2018/19 period using the online process was 5.2 weeks, compared with 13.7 weeks using the non-reformed service.58

II. The HMCTS Reform Programme A. Outline of the Reform Project From 2016, HMCTS proceeded to implement a £1.2 billion programme to modernise courts and tribunals. The programme digitised paper-based services, moving some types of cases online, introducing virtual hearings, closing courts and centralising customer services. HMCTS expected that by March 2023, 2.4 million cases per year would be dealt with outside physical courtrooms, it will employ 5,000 fewer staff, and it would save £265 million a year from these changes after 2023. There were three major component programmes:59 • The HMCTS Reform Programme which is modernising processes and systems to reduce demand on courts by moving activity out of courtrooms. For example, it will introduce online services and digital case files and expand the use of video technology in hearings. • The Common Platform Programme which is developing shared processes and a digital criminal justice case management system to share information between HMCTS, the Crown Prosecution Service and the police. It is jointly managed by these organisations. • The Transforming Compliance and Enforcement Programme (TCEP) which is upgrading systems in HMCTS’s National Compliance and Enforcement Service, used to enforce court orders such as penalties and compensation. NAO Report of May 201860 noted that the rationale for the reform programme was: There are significant financial and operational pressures to improve the effective administration of the justice system. Many activities rely on outdated systems and paper-based processes. This creates inefficiency and contributes to delays, unnecessary costs and a poor experience for court users.

In relation to the civil and family courts and tribunals, the NAO said that the aim was:61 to reduce the number of cases requiring a physical hearing from 2.6 million to 1 million a year by introducing the following reforms: (a) Most cases will be dealt with online, from application through to resolution (‘digital by default’). For some services (such as probate or divorce), this can be done by the individual

56 www.moneyclaim.gov.uk/web/mcol/welcome.

See Money Claim Online (MCOL) – User Guide for Claimants. Update. Autumn 2018 (HM Courts & Tribunals Service, 2018) 12. 58 Annual Report and Accounts 2018/19 (HM Courts & Tribunals Service, 2019). 59 Early progress in transforming courts and tribunals (National Audit Office, 2018). 60 ibid. 61 ibid, para 1.10. 57 Reform

The HMCTS Reform Programme 197 applicant themselves, with no need to attend court. Participants will be able to follow the progress of their case online. (b) There will be new online systems for mediation and resolution so that citizens can resolve more disputes themselves outside the courtroom. For cases where a trial or hearing is still needed, this could be a virtual hearing, which is not restricted to a particular courtroom location. (c) Specialist case officers will progress cases and undertake some routine judicial tasks. This will free up time for judges to concentrate on the most contentious issues.

The NAO concluded that the change portfolio ‘presents a very significant challenge’ and, despite (delayed) progress, ‘remains extremely challenging’. Expected costs had increased and planned benefits had decreased, and there were gaps in the funding for reforms in later years. Comments included: 16. Failure to sustain commitment from all delivery organisations will significantly reduce the likelihood of success and the benefits achieved. 17. Delivering change on this scale at pace means that HMCTS risks making decisions before it understands the system-wide consequences. 18. The benefits claimed so far by HMCTS exceed expectations but risk putting pressure on its ability to maintain services.

It also noted that moving services online ‘depends on users changing their behaviour, and HMCTS has little direct control over this’.62 We might note here that the concept of merely achieving a behaviour change by significant number of users may be wide of the mark. Chapter three identifies the nature of the problems that certain people have, which indicates that there are people with clusters of social problems who may be quite unable to engage with an online legal system. The Public Accounts Committee (PAC) reviewed the position in July 2018.63 The PAC described the programme as ‘hugely ambitious’ and on a scale never attempted anywhere in the world before. It criticised the fact that the project was already extended from four to six years, that only 62% of the milestones had been delivered at the end of the first stage, and that the critical Common Platform Programme had been delayed from July 2018 to July 2020. The PAC concluded with a blunt assessment: 1. We have little confidence that HMCTS can successfully deliver this hugely ambitious programme to bring the court system into the modern age. 2. HMCTS has failed to articulate clearly what the transformed justice system would look like, which limits stakeholders’ ability to plan for, and influence the changes. … 4. HMCTS has not adequately considered how the reforms will impact access to, and the fairness of, the justice system for the people using it, many of whom are vulnerable 5. One third of the way through the programme, the Ministry of Justice still does not understand the financial implications of its planned changes on the wider justice system

In response, HMCTS said that it had already delivered:64 • A new fully accessible online Civil Money Claims service giving the public the ability to make a small claim online – with 13,000 claims made online since its launch in late March, and user satisfaction at 90%; 62 ibid, para 1.24. 63 House of Commons Committee of Public Accounts Transforming courts and tribunals Fifty-Sixth Report of Session 2017–19, HC 976, 20 July 2018. 64 HMCTS response to Public Accounts Committee report on court reform programme, 20 July 2018, at www.gov. uk/government/news/hmcts-response-to-public-accounts-committee-report-on-court-reform-programme.

198 Digitisation of the Courts • A new system for applying for divorce online, which has cut errors in application forms from 40% to less than 1%; • A new probate system in testing which has also cut errors, speeds up the process, and a user satisfaction rate of 95%; • A pilot of fully video hearings in the tax tribunal to test the potential for the use of video more broadly across the courts and tribunals system. This is now the subject of an independent, academic evaluation; • The national roll-out of a new in-court system to record the results of cases digitally and instantly; • A national Track Your Appeal service in social security and child support tribunals, allowing thousands of users, many vulnerable, to be kept informed about the progress of their Personal Independent Payment appeal.

Digitisation was taken forward across a wide range of different claim types. The 2018 NAO review identified major developments in digitisation of criminal processes and evidence (that are outside the scope of this book), in design and development of the Common Platform, to provide ‘end-to-end digital case management system, single justice p rocedure and automated case management’,65 and in the broad HMCTS project on ‘Online self-service for civil and family court services’. In relation to tribunals, the following work was specified:66 Department for Work & Pensions (DWP): Automation of administrative functions to enable swifter processes for social security and child support tribunals. Use of digital case files will allow a proportion of cases to be decided online, reducing costs of sending representation for a courtroom hearing HM Revenue & Customs (HMRC): HMCTS is working with HMRC to pilot electronic hearings and the sharing of HMRC evidence electronically. Children and Family Court Advisory and Support Service: Shared processes. Accessing and sharing case data electronically aims to speed up turnaround of cases and reduce duplication of data and effort. Home Office: Future plans for Wi-Fi and screens in courtrooms so evidence can be viewed digitally. Digital transcripts could be made available to parties in the hearing room.

The Master of the Rolls, Sir Terence Etherton, gave more details in March 2018.67 He listed four reasons for the importance of digital reforms: the need for systems to be simpler and less costly in order to make them more accessible, the need to respond to the changes in society that the digital age had created, the ongoing need to address the increasing cost and time of litigation, and to address unmet need. In relation to the Online Court, he said that in a limited trial starting in mid-2017, the time taken between issue and first hearing had reduced by 40%, with 80% of users being satisfied or very satisfied with the system.

65 See n 58, Fig 2. 66 See n 58, Fig 5. 67 Sir Terence Etherton, MR, speech ‘Civil Justice after Jackson’, Conkerton Memorial Lecture 2018, Liverpool Law Society, 15 March 2018, www.judiciary.uk/wp-content/uploads/2018/03/speech-mor-civil-justice-after-jackson-conkerton-lecture-2018.pdf.

The HMCTS Reform Programme 199 Sir Terence noted that consideration was being given to extending facilitation of mediation, for example by a court officer on the telephone or online, or by a software programme that would provide a structured framework to assist the parties to reach a compromise.68 He noted that such developments would complement the County Court Mediation Pilot Scheme, then being run in a few selected locations, by which parties could agree to refer their dispute to mediation, and where the pilot scheme had shown that the time taken from the claim being issued to settlement was reduced on average by a half. However, Sir Terence noted that online services would not be taken up by a significant number of people:69 Recent analysis shows that there are 15.2 million people in the UK who are either non-users or limited users of the internet. 7.8 million non-users do not have access to the internet at home or elsewhere or do not currently use the internet even if they do have access. The expression ‘assisted digital’ support is the expression used by HMCTS to describe the various support mechanisms to be put into place to help end users interact with the new digital services. The support currently envisaged includes assistance over the telephone, webchat and face to face support. … It appears that just under a quarter of users in the pilot have required some form of assisted digital help. This was much lower than anticipated, possibly because those choosing to make an application online are more likely to have good digital skills. The pilot is also showing that the type of assistance called for is predominantly procedural – 75% of queries related to procedure. Only 12% were solely IT related. The remainder were a combination of procedure and IT. Moreover, just of half of all assistance then given took the form of reassurance. In a third of cases light guidance was given. Only in 10% of cases was significant assistance needed.

By May 2018, work on ‘civil, family and tribunals’ was said to be 85% complete:70 Several services (divorce, probate, help with fees and civil money claims) were tested online with real users and early feedback was positive. HMCTS also trialled an option for some users to track their case online and receive real-time text alerts. The online tax appeals service had 2,300 users and 700 appeals were made

Details of various technology reform projects for family law and tribunals are given in chapters eleven and thirteen. These run alongside digitisation of other areas, including criminal cases and applying for probate online.71 Amongst the cross-cutting projects are introduction of Wi-Fi in all courts and tribunals, the ability to hold video hearings (where the judge chooses, in the interests of justice for a particular case), and a tool for scheduling and listing cases (to respond to and manage widely differing needs of parties, judges, witnesses, experts and others). However, two substantial IT problems caused ‘significant and widespread disruption across the entire MoJ network’ in January 2019.72

68 ibid,

para 36. paras 37 and 41. Fig 7. 71 Reform Update. Autumn 2018 (HM Courts & Tribunals Service, 2018) 12. 72 Annual Report and Accounts 2018/19 (HM Courts and Tribunals Service, 2019). 69 ibid, 70 ibid,

200 Digitisation of the Courts

B. Unification In 2017 it was decided that the same single process would operate across all civil, family and tribunal cases, supported by a single set of new rules.73 Various projects building component parts were identified as:74 • Social Security and Child Support Tribunal – parties will be able to resolve their disputes online using a digital end to end service where parties and judges will be able to view evidence online through a Continuous Online Hearing. A digital case file will allow users to track and monitor their case through ‘Track My Appeal’ and access reliable signposting and guidance. Parties will be able to see the grounds of a dispute and further evidence through digital evidence sharing. • Apply for a Divorce – applicants will be able to process an undefended divorce online from their home, with additional features added in time, including payments and uploading documents. • Apply for Probate – an online service for people applying for grants of probate. • Tax Online Project – this project enables appeals to be lodged with the First-Tier Tax Tribunal online. • Civil Money Claims – this online service will enable parties to resolve money claims online using a largely automated system for claims under £25k and streamlined digital pathway for all other civil money claims.

III. Conclusions A major digitisation process is occurring across courts and tribunals. It is being undertaken in multiple bite-size pieces rather than through imposing a massive unified system on every type of case at the same time. This progressive approach enables customisation, the ability to move in smaller stages rather than as a ‘big bang’, and to learn as projects proceed.

73 The

Lord Chief Justice’s Report 2017 (Judiciary of England and Wales, 2017). 8.

74 ibid,

8 Helping People with Problems The Legal Needs surveys summarised in chapter three identify that a key insight is that people have problems, and that problems are ubiquitous and often clustered. Such problems may arise from and involve a range of different aspects, and it may not help to categorise or respond to them as legal problems, since the solution to the problem may not involve a legal process or remedy. That insight is particularly relevant in relation to people who have clusters of multiple problems, which is a not infrequent situation. In short, it is useful to focus on the root causes of problems and then on finding effective solutions, rather than on process or other issues such as providing ‘access to justice’ for individual issues following which underlying problems may not be resolved. How people characterise their problems, if they do, is critical to how they respond. The number of people who characterise problems as legal problems is low, and they use a range of other characterisations. These findings suggest that society should provide advice and assistance services that are as wide in coverage as possible, so people can go there with their problems and be helped to categorise them accurately and hence address them appropriately and adequately. In other words, there should be a simple and single point of assistance with a wide opening that is capable of providing real assistance and signposting people on to relevant pathways if needed. This chapter first picks up the issue of what configuration of service supply is needed to assist people who need general information and assistance, including in dealing with online dispute resolution processes. It then explores ideas for new configurations for the delivery of specialist support.

I. The Information and Advice Landscape A. Advice Landscape The incorporation of digital and online technology offers a number of enormous advantages for providing information and for signposting dispute resolution pathways. But there are references in chapters throughout this book to the fact that, at least at present, users of such systems still need to talk to people in some circumstances. There are various reasons for this. First, some people may be unfamiliar with an online system (such as one-off, not repeat, users) and need someone to help with interacting with an online system, such as in knowing what information to input or attach as evidence. In systems that involve legal terminology and consequences this reticence can affect a surprising number of otherwise computer-literate people, as is shown by the experience of the EU consumer ODR platform

202 Helping People with Problems (chapter nine) and the number of people choosing to telephone rather than input information on websites to Ombudsmen. Hence, technical assistance may be required simply to succeed in functional operation of an online system. The withdrawal of Legal Aid funding from lawyers in several sectors has highlighted the demand for this type of assistance in resulting in a significant rise in LiPs, who then take up considerably more judicial time than before and prompt a change in approach by judges having to assume advisory roles that may be uncomfortable in some situations. Secondly, some people may need legal or other expert assistance in analysing the relevant components of their problems(s), such as whether it needs advice from someone who can signpost relevant expertise, or advice from a lawyer, or from a debt counsellor, and so on. Both the public and consumer Ombudsmen expend significant resource in providing information, advice (in the widest sense), analysis and signposting to customers. Solicitors have traditionally performed the same functions as a first triage stage. These functions are a core function of Citizens Advice and many advice centres and charities. It is clear that this second function of providing information, general assistance, triage and specialist support is one that requires advisers to be available to assist both face-to-face as well as on a phone or online. Indeed, for some people, the availability of personal interaction and support may be vital. The issue that arises, therefore, is what combination of online and local support should be available.

B. Pro Bono Arrangements There are very many sources of information, advice and assistance for people through governmental, local authority, commercial, charity, and pro bono sources. An Ipsos MORI study in 2015 concluded that there were 1,500 legal entities who offered advice,1 and NCVO listed 166,001 voluntary organisations as at 2015/16,2 with a total income of £47.8 billion (£22.3 billion from individuals and £15.3 billion from government) and a fully or partially paid workforce of 880,556 people. The landscape is complex and diverse. Some sources operate on a wide basis (such as Citizens Advice, Law Centres) and some are focused on issues (such as housing, the elderly, debt, addiction). Local Authorities play an important role in social support and coordination. The following descriptions of the leading pro bono referral schemes or organisations in England and Wales are taken from the Law Society’s Pro Bono Manual and relevant websites: Citizens Advice is a national network that provides free face-to-face advice from 2,500 local Citizens Advice locations across England and Wales, as well as by phone, web chat, post, email and their self-help website.3 Further details are given in chapter nine. Citizens Advice has reduced its outlets from 340 to 290 in the past few years through mergers so as to provide concentration of service delivery. The local offices provide generalist, uncoupled advice and involve people who self-organise.

1 Survey

of Not for Profit Legal Advice Providers in England and Wales (Ipsos MORI, 2015). Civil Society Almanac 2018 (NCVO, 2018) at http://data.ncvo.org.uk/a/almanac18/fast-facts-2015-16/. 3 www.citizensadvice.org.uk. 2 UK

The Information and Advice Landscape 203 AdviceUK is a charity supporting over 700 independent community advice organisations across England, Scotland and Wales.4 AdviceUK members are diverse and serve population groups across the spectrum, principally in social welfare law advice. Members include Church groups, groups established by individuals or trade unions, and niche community groups responding to local ethnic, language or cultural issues. Over 250 have a BAMER focus and many other members work with disabled people, refugees and migrants, women, young people, older people or specific groups such as housing association tenants or students. Law Centres are a network of over 40 not-for-profit legal practices.5 Each Law Centre is an independent charity with a defined service area. Law Centres specialise in social welfare law and aim to assist particular local communities where there is high need. Law Centres offer legal advice, casework and representation to individuals and groups. They can undertake case work from start to finish. Spotting local trends and issues in the course of their work, they highlight them to bring about necessary policy changes and to prevent future problems. Law Centres also help build capacity within local communities by training and supporting local groups and educating people about the law and their rights. Age UK provides advice aimed at vulnerable older people on a range of issues including health and care, housing, work and learning, money and benefits, wellbeing, home and community.6 Age UK provides a telephone information and advice service, casework and face-to-face services and publishes guides and factsheets on a wide range of topics. Its headline aims are to provide advice, enable independence, and combat loneliness. LawWorks (the operating name for the Solicitors Pro Bono Group) is a registered national charity which encourages, supports and celebrates the pro bono of solicitors, law schools and law students across England and Wales.7 A focus of the charity’s work is on supporting and developing local pro bono advice clinics and projects and connecting smaller charities and not-for-profit organisations with pro bono volunteers from amongst its membership. LawWorks is supported by the Law Society (financially and in-kind), and by over 100 members, including international and City firms, regional, medium and small firms, and in-house solicitors and organisations. The LawWorks Not-for-Profits Programme connects small not-for-profit organisations in need of legal support with the skills and expertise of solicitors from among LawWorks members. The LawWorks Clinics Programme provides consultancy and advice to establish and support free legal advice sessions carried out by volunteer solicitors and law students. It supports an expanding network of over 200 independent clinics across England and Wales which deliver over 35,000 pieces of pro bono advice every year. It also helps to set up new, sustainable clinic partnerships between law firms, in-house legal teams, law schools and advice agencies to help address unmet legal need in local communities. The Bar Pro Bono Unit (BPBU) provides barristers across England and Wales for people who are not eligible for legal aid and who cannot afford to pay.8 Cases are matched to

4 www.adviceuk.org.uk/.

5 www.lawcentres.org.uk. 6 www.ageuk.org.uk/.

7 www.lawworks.org.uk/.

8 http://weareadvocate.org.uk/.

204 Helping People with Problems ualified barristers from the BPBU’s panel. Support that is available includes specialist legal q advice, drafting and representation and help at mediation across all areas of law, and all courts and tribunals. The BPBU is unable to assist with cases where legal aid is available or a barrister can be paid for. Individuals must be referred from a MP, lawyer, or advice agency using an application form available online. Applications must be submitted at least three weeks before help is needed. The National Pro Bono Centre houses the national clearing houses for the professions’ legal pro bono work delivered in England and Wales: the Bar Pro Bono Unit, LawWorks (the Solicitors’ Pro Bono Group) and the CILEx Pro Bono Trust (CILEx PBT). The Free Representation Unit (FRU) provides volunteers who represent clients in social security and Employment Tribunals and criminal injury compensation cases in the First-tier Tribunal (and Upper Tribunal).9 The volunteers are mostly law students and are overseen by FRU’s staff. FRU is unable to assist with cases without a hearing date and cases are listed at tribunal venues outside London and the South East or Nottingham and the surrounding area. Most cases have to be referred from one of FRU’s partner agencies. Short Employment Tribunal hearings (final hearings lasting no more than two days) may be referred directly by claimants using the self-referral scheme via the FRU website. IPSEA (Independent Parental Special Education Advice) is a charity that offers free and independent legally based information, advice and support to help get the right education for children and young people with all kinds of special educational needs and disabilities (SEND).10 IPSEA provides free downloadable legal guides and resources aimed at parents and carers. The guides are complemented by a free Advice Line which provides legally based information and next step advice on any educational issue that is a result of a child’s SEND. IPSEA’s Tribunal Helpline gives next step advice on appeals and disability discrimination claims to the SEND Tribunal and is also the gateway to its Tribunal Support Service where a referral can be made for more extensive casework support from a volunteer, including representation at the hearing. Advice services are delivered by a national network of around 200 highly-trained volunteers, supervised and supported by IPSEA’s Legal Team members. It also provides training on the SEND legal framework to parents and carers, professionals and other organisations. Shelter helps people struggling with bad housing or homelessness through advice, support and legal services.11 It can help people take action, including if they are: living in run-down or overcrowded housing; homeless, or worried that they soon could be; having problems with their landlord (private or social) facing eviction or repossession; having difficulty paying their rent or mortgage; experiencing problems with neighbours; unsure of their housing rights; unsure of the welfare benefits they are entitled to; and having difficulty with debt or bankruptcy. Shelter’s free national helpline is open all year round and offers expert housing advice. The website offers housing advice and practical tips online. Individual questions are answered through an email form on the website.

9 www.thefru.org.uk/.

10 www.ipsea.org.uk.

11 www.shelter.org.uk/advice.

The Information and Advice Landscape 205 Advice Services Alliance (ASA) was formed in 1979 as a means of coordination of multiple fragmented suppliers of advice services. In late 2018 it had around 700 members. There is a notably strong driving motivation of voluntary support for assisting others that constantly produces changes in issues and bodies and means that it is of questionable relevance to try to impose some top-down permanent structure on the plethora of means of delivering advice to citizens. Principal drivers are high incidence of local need, availability of funding (critically from Local Authorities) and the existence of champions for particular issues. ASA has a quality standard for service bodies. Important issues relate to the availability and consequences of funding advice bodies. Much of the funding comes from Local Authorities, but the policy inherently leads to salami slicing and the risk that bodies can lose their distinctive characteristics. Funding has moved away from grants to commissioned services, which introduce competition between bodies and a focus on awarding funds to the cheapest options, but this results in impeding collaboration between bodies and potential quality issues. The current funding model essentially drives down service delivery. The ASA’s experience of responding to the Grenfell tower crisis highlighted a need to coordinate advice services. The legal professions, led by the Law Society and the Bar Council, have developed pro bono legal support in impressive ways.12 Many local solicitors have provided pro bono advice to local people, but this phenomenon appears to have contracted this decade as restrictions in Legal Aid have constricted the activities and number of local firms. At the other end of the spectrum, a significant number of major national law firms have developed pro bono units that coordinate their lawyers giving assistance at a local level. There is a collaborative approach between the major firms on focusing the provision of relevant expertise to the right local outlets. This mechanism has considerable scope for expansion as a major means of delivery of legal assistance. Various restrictions currently impede its development.

C. Diversity and Coordination It is clear that people need information and assistance at the initial level of problem analysis and triage, and being given basic help and signposting to specialist assistance or to particular pathways where necessary. The answers to where such initial help is located and how (or whether) it is funded are interlinked. All of the charities and public authorities involved depend on the availability of funding. Hazel Genn noted that ‘The original objectives of the legal aid scheme were to provide “legal advice for those of slender means and resources, so that no one will be financially unable to prosecute a just and reasonable claim or defend a legal right”.’13,14 One unlikely source of funding has come from enforcement by regulatory authorities against companies which have been resolved by agreement that companies will pay s ignificant

12 Developing a Pro Bono Programme. Guidance and toolkit (The Law Society, 2015). 13 Legal Aid and Advice Bill 1948: Summary of the Proposed New Service, presented to Parliament by the Lord High Chancellor (Nov. 1948) Cmd. 7563 of 1948, para 4. 14 H Genn, ‘Do-it-yourself law: access to justice and the challenge of self-representation’ (2013) 32 Civil Justice Quarterly 411.

206 Helping People with Problems sums to NGOs for charitable purposes. This practice is notable in the energy sector, i nvolving Ofgem and a number of companies, who have funded work on fuel poverty.15 Ofgem has appointed a firm (ESL) to coordinate selection of charities and projects as recipients. Local Authorities are excluded from bidding and have objected to this. A candidate body for performing the function of funding distributor would be the Access to Justice Foundation, that was created to be the recipient of pro bono costs orders. Should there be a simplified landscape of advice bodies, that are easy for people to identify and access? Would that be too difficult to achieve and organise, in practice or politically? Or should there be greater coordination of the existing bodies, in a ‘hub and spoke’ matrix? It does appear that it is important for the first line to signpost and refer people on ‘behind the curtain’ to a matrix of relevant experts. It is beyond the scope of this book to seek to provide answers to the question of the desirable configuration of bodies to deliver information and advice to citizens, consumers, businesses or others. Indeed, the conclusion may be that it is neither possible nor sensible to attempt to rationalise this rich diversity. But it does seem important to provide for greater connectivity between them all. That issue could be addressed by government with Local Authorities.

II. Problem-Solving Pathways: Delivering Coordinated Expertise Various innovative ways of responding to people with multiple problems have been tried in recent years. They typically revolve around delivering specialist assistance of various types as part of a coherent and coordinated multi-disciplinary service. Rather than require people to access each specialism separately, the supply of specialist support will be available through accessing a single point after a process of triage to determine what help is needed. We now focus on examples of this new coordinated approach. The concept of the Family Drug and Alcohol Court (FDAC) is referred to in chapter eleven below and the concept of ‘problem-solving courts’ is referred to in chapter thirteen and discussed below. Another example has arisen in discussion of responses to welfare cases. New ways of locating and engaging people who might need help are emerging. In the London Borough of Haringey, a successful experiment has co-located welfare advisers in General Practice surgeries and led to improvements in subjects’ stress, income, housing circumstances and confidence.16 A change in police approach to child crime aiming to keep children out of the criminal justice system has led to a fall in the number of arrests of children by 68% from 245,763 in 2010 to 79,012 in 2017.17

15 Research by M Canto-Lopez, forthcoming, reported at a Conference at Leicester University on 21 September 2018. In one settlement in 2015, nPower agreed to pay £19 million compensation to customers and £7.45 million to fund charities to carry out projects. In various projects funded by nPower, outcomes have included Age UK’s ‘Warm and Well Programme’ helping nearly 8,500 people, with £29 million benefits identified or £3,400 per person, and 740 referrals to Citizens Advice’s ‘Debt Management Service’ with £10.5 million debt managed. 16 Presentation by Dr Charlotte Woodhead and colleagues at the Advice Services Alliance conference, 30 November 2018. 17 F Crook, Howard League for Penal Reform, at http://howardleague.org/news/child-arrests-in-england-andwales-reduced-by-more-than-two-thirds-in-seven-years/.

Problem-Solving Pathways 207 Interest in problem-solving has risen across the globe but is at an early stage. A recent European review found that courts are rarely at the forefront of this phenomenon, with courts tending to remain restricted to functioning as a ‘case processing mill’18 while wider responses have tended to be developed in mediation or other extra-court contexts.19 However, there have been some interesting attempts by some judges to adopt and coordinate a wider approach.

A. Problem-Solving Courts The idea of addressing the root cause of a person’s problems, rather than the individual symptoms or consequences, has arisen in relation to reducing crime, drug, alcohol and related social issues, under the generic name of ‘problem-solving courts’. The approach involves coordinating multiple expertise in supporting people who have problems. It is customer-service focused, rather than state-delivery focused. Considerable attention has emanated from the criminology literature,20 which describes the concept thus:21 Problem-solving courts put judges at the centre of rehabilitation. Generally operating out of existing courts, problem-solving courts yoke together the authority of the court and the services necessary to reduce reoffending and improve outcomes. They embrace a wide family of distinct models, all of which seek to improve public safety and the legitimacy of the justice system in the eyes of the public. …. What distinguishes problem-solving courts is how they bring together community treatment and services, with the court, and more specifically the judge, as a principal mechanism for delivering behaviour change. Putting judges at the centre of rehabilitation, problem-solving courts deliver specialised community sentences, tailored to change offenders’ behaviour and hold them accountable through regular monitoring by the judge.

The key features of problem-solving courts have been described as:22 • • • • •

Specialisation of the court model around a specific group of defendants or type of crime. Collaborative multi-agency programmes of treatment and supervision. Holding offenders to account through judicial monitoring. An emphasis on ensuring offenders feel fairly treated. A focus on measuring and improving outcomes.

It was concluded in 2015 that there is strong evidence that adult drug courts reduce substance misuse and reoffending, particularly with offenders who present a higher risk of reoffending; that evidence on family treatment courts and family drug and alcohol courts reducing parental substance misuse and the number of children permanently removed from their families is good; that evidence on the impact of problem-solving domestic violence courts

18 G Berman and J Feinblatt, Good Courts. The Case for Problem-Solving Justice (Quid Pro Books, 2015). 19 M Boone and P Langbroek, ‘Problem-Solving Justice: European Approaches’ (2018) 14(3) Utrecht Law Review: Special Issue. 20 Better Courts: Cutting crime through court innovation (Centre for Justice Innovation, 2013). 21 Problem-solving courts: An evidence review (Centre for Justice Innovation, 2015). 22 Problem-solving courts: An evidence review (Centre for Justice Innovation, 2016).

208 Helping People with Problems on outcomes for victims, such as victim safety and satisfaction, is good; but that evidence on juvenile drug courts was negative.23 The innovative approach has been said to be fundamental to building a fair and effective criminal justice system that focuses on preventing crime and giving respite and reparation to victims and does so by making a material difference to re-offending through understanding and responding to the issues that underpin criminal behaviour such as debt, addiction and mental illness.24 The ‘problem-solving court’ concept was supported by the policy vision issued in 2016 by the Lord Chancellor, the Lord Chief Justice, and the Senior President of Tribunals, and ideas are developing.25

B. Social Welfare Cases: Problem Clusters and Root Causes The landscape for resolving social welfare issues was examined in detail by the Low Commission, established by the Legal Action Group and chaired by Lord Low of Dalston. Reports were produced in 2014 and 2015, which proposed a strategy for the future provision of advice and legal support on social welfare law in England and Wales. They said:26 The problems of everyday life come in many shapes and sizes. Surveys on social welfare law problems – which we take to include welfare benefits issues, community care, debt, e mployment, housing, immigration and asylum, and education (such as special educational needs) – have consistently shown high levels of advice need following findings that around third of the population experience civil legal problems.27 Often several problems come at once, one triggering another, becoming particularly prevalent in a time of economic instability. Support comes from a diverse economy of advice providers, but it is not enough and is suffering from public funding cuts. In the family law area, links between poverty and stresses associated with parenting issues, which may lead to parental vulnerabilities and child care applications, are well established.28

The Low Commission noted with concern that the cuts in Legal Aid and rises in court and tribunal fees had led to significant social problems going unresolved. As noted in other chapters of this book, they noted that, for example, family cases in courts had in fact risen, but the number of unrepresented parties had risen significantly, and the number of mediations had fallen significantly, as solicitors were a critical referrer of cases to mediation. The cuts hit both those who needed help but also the advice and legal support bodies who provide much of that help. It was estimated that local authority funding of such bodies would fall from £220 million in 2010/11 to £180m, or even to £160m, in 2015/16. The Equality and Human Rights Commission (EHRC) has also ended its grant programme, which between 2008 and its end in 2013 totalled £30.9m. Shelter had to close nine of its advice centres as a

23 Problem-solving courts: An evidence review (Centre for Justice Innovation, 2015). 24 Better Courts: A blueprint for innovation (Centre for Justice Innovation, 2015). 25 Problem-solving Courts: A delivery plan (Centre for Justice Innovation, 2016). 26 Getting it Right in Social Welfare Law. The Low Commission’s follow-up report (The Low Commission, 2015). 27 Civil and Social Justice Survey LSRC 2006–2009. 28 J Wilkinson and S Bowyer, The impacts of abuse and neglect on children; and comparison of placement options. Evidence review (Department for Education, 2017).

Problem-Solving Pathways 209 result of a £3m cut in its legal aid funding. Citizens Advice’s overall income was estimated to have fallen from £177m in 2010/11 to £144m in 2013/14.29 The Low Commission disagreed with the government’s claim that removing areas of social welfare law from the scope of state-funded assistance could be justified on the basis that the issues concerned related to the ‘personal choices’ of individuals, and were therefore not suitable for public funding.30 They said that ‘There is no standard profile for the kind of person who experiences social welfare law problems; the particular features of the problems will vary every time, as will the capacity of the individual concerned to resolve them.’31 They asserted that the LASPO reforms forced people to wait until crisis point before seeking advice and support, which meant that problems were not prevented from escalating, and expanded into clusters of problems and ‘revolving door’ situations.32 The Low Commission called strongly for an approach that focuses on the needs of the individual.33 They highlighted the need to reduce preventable demand by supporting the ‘right first time’ approach and early intervention and action,34 including by improving citizen capability, delivering advice differently, and improving feedback and learning processes.35 It stated the following key principles:36 • early intervention and action rather than allowing problems to escalate; • investment for prevention to avoid the wasted costs generated by the failure of public services; • simplifying the legal system; • developing different service offerings to meet different types of need; • investing in a basic level of provision of information and advice; and • embedding advice in settings where people regularly go, such as GP surgeries and community centres. They called for an ‘enabling approach’ based on better links between community organisations and advice agencies to develop the capacity of individuals or groups to recognise when there is a problem with a legal solution and to know whom to turn to for help in solving the problem. Provision of information and advice needed to be coordinated with health providers (GPs surgeries and hospitals), local authorities, major charities and housing associations.37 Advice – both real and virtual – needed to be embedded where people already feel that their needs are met and where they naturally turn when they need help. Existing sources mentioned included websites and helplines such as the Royal National Institute of Blind

29 Tackling the Advice Deficit. A strategy for access to advice and legal support on social welfare law in England and Wales (The Low Commission, 2014) para 1.15. 30 Tackling the Advice Deficit. A strategy for access to advice and legal support on social welfare law in England and Wales (The Low Commission, 2014) para 1.5. 31 ibid, para 1.4. 32 ibid, para 1.29. 33 ibid, para 3.11. 34 Citing: The deciding time: prevent today or pay tomorrow (Early Action Taskforce, 2012). 35 J Randall, Social welfare legal advice and early action (Baring Foundation, 2013). 36 Low Commission, 2014, Introduction and para 2.9. 37 Tackling the Advice Deficit, para 5.2.

210 Helping People with Problems People, Saga, Age UK, Mind, Rethink Mental Illness, Macmillan Cancer Support, and benevolent societies such as Perennial for gardeners, and specialist websites and helplines on particular topics, such as Shelter (for housing) and National Debtline. However, capacity barriers existed, such that Citizens Advice was only able to answer 45% of calls and Shelter 60,000 of its 140,000 calls. Accordingly, a one-stop national helpline providing a comprehensive advice service for the general public was called for.38 The Commission found that providers of advice and legal support on social welfare law issues in England and Wales fall into five main categories and that the delivery of these services ranges from face-to-face to national helplines and websites:39 (1) local not-for-profit advice agencies, comprising 350 CABx (under the umbrella of Citizens Advice) operating out of 3,500 locations, and over 800 other independent advice agencies (under the umbrella of AdviceUK), as well as other local agencies, providing information and advice and some legal support across all or most aspects of social welfare law; (2) over 50 local Law Centres (under the umbrella of the Law Centres Network), set up to use their specialist legal skills to address and alleviate poverty, provide legal help and representation and undertake strategic case-work across all or most aspects of social welfare law; (3) national charities, such as Shelter, Age UK and Youth Access, providing information, advice and some legal support in their areas of specialism; (4) local authorities providing informal and formal information and generalist advice through a wide range of social and community workers, as well as specialist staff providing statutory advice on homelessness and, in some cases, welfare rights advice; (5) private law firms providing paid-for and pro bono legal help and representation. In addition, the Advice Services Alliance (ASA), a third-tier umbrella body, plays an important coordinating role in the advice and legal sector (eg, on issues such as quality), as well as a representative role in legal aid. However, the (then) Legal Services Commission cut its grant to the ASA for performing its representative role in respect of the not-for-profit sector, as part of the overall cuts to legal aid, with effect from 2013/14. The Commission’s proposed model comprised the following elements:40 • a public legal education system, making full use of the internet and embedding information about social welfare law issues in community settings locally; • national helpline and website services, providing information and advice on all aspects of social welfare law, building on and developing current services; • local advice networks of generalist and some specialist advisers for each local authority area, providing face-to-face information, advice and legal support; • access to specialist national support providing information and advice for frontline agencies.

38 Low

Commission, 2014, 5.16. Commission, 2014, 1.7. 40 Low Commission, 2014, 5.8. 39 Low

Problem-Solving Pathways 211 Advice to the Low Commission from the Design Council on the design of services included some pertinent truths:41 • • • • • •

focus on user needs; observe people in context, don’t just ask them their opinions; map needs as customer journeys; create simple prototypes and test them out; improve good ideas, kill bad ideas; iterate until you have an elegant solution.

The Low Commission recommended that courts, ‘which most people are reluctant to use’ should be replaced by processes that are easily accessible and are free to use, such as the free Financial Ombudsman Service, coupled with simplification of the rules.42 The Law Commission also published some excellent reports on the reform of housing law and housing dispute resolution.43 Its recommendations, if they had been implemented, would have made it easier for both landlords and tenants to understand their mutual rights and responsibilities; would have enabled advisers to give advice to landlords and tenants more easily on their rights and responsibilities; and, if litigation in court was unavoidable, would have reduced costs for social and private tenants and landlords by reducing the need for expensive advocates. It regretted that the recommendations have not been implemented in England, but welcome the progress being made in Wales. The Low Commission said that it is necessary ‘to look at each step of the process from the individual’s point of view and assess what help and what changes are needed to make the process navigable by unassisted and unrepresented litigants.’44 Looking at the system from the perspective of a litigant in person, the Low Commission approved of the approach of the Victorian Civil and Administrative Tribunal in Australia, where a review had proposed a ‘self-represented persons strategy’ that would include the following elements:45 • • • • • •

a positive duty on the tribunal to assist all parties; enhanced powers and duties of the principal registrar (including to assist parties); a litigants in person coordinator; expanded pro bono services; the establishment of a self-representation civil law service; a Judicial Direction on how judges can and should deal with unrepresented litigants.

It said that the ideal model of ADR for unassisted individuals is:46 • an assessor or forum which has all the legal expertise required; • an inquisitorial function to ensure that all the necessary facts and evidence are discovered;

41 ibid,

para 5.26. paras 4.3 and 4.4. Commission, Renting homes: the final report, Law Com No 297, May 2006. 44 Tackling the Advice Deficit, para 4.5. 45 ‘One VCAT’ – President’s review of VCAT, Hon Justice Kevin Bell, November 2009, 74–79. 46 Tackling the Advice Deficit, para 4.15. 42 ibid, 43 Law

212 Helping People with Problems • flexible and personal engagement using telephone or email in preference to writing or oral hearings so that the assessor does all the paperwork; • built-in mediation where appropriate for issues where there may be no ‘right’ answer or where an agreed solution is desirable; • a final binding decision on both parties; • no cost or low cost, and, where paid for, predictable pricing with the possibility of costs shifting and/or means weighting. The Low Commission looked more generally at administrative justice in its 2015 report and noted that the trend towards discouraging court-based dispute resolution was well-set and that not enough was being done to feed back tribunal decisions to decision-makers and policymakers in a manner that could have an impact or drive systemic change.47 It noted the ongoing contraction in the supply base for independent advice, with the number of solicitors offices offering publicly funded legal advice through the civil legal aid (green form) scheme across most areas of law declining over 20 years from 10,000 to less than 2,000 firms offering any civil legal aid at all (and far fewer providing social welfare advice), and a network of 721 Citizens Advice Bureau that has shrunk to 338, of which the number offering specialist civil legal aid advice had dropped from 200 to only 21. Against this, it noted evidence from Citizens Advice suggesting that, as a service, CABx are worth at least £750 million to society, plus another £300 million or so in terms of debts written off and rescheduled.48 The Low Commission called for an increased focus on ‘systems thinking’49 to guide redesign of services, in which public authorities, service commissioners and providers would work together. The ‘Systems Thinking Programme’ had saved Nottingham City Council more than £700,000 from February 2009 to 2014 on its benefits service. That approach required • addressing the issues of users in the round and not just tackling problems in silos; • looking not just at the presenting problem but also at the background issues of poverty, unemployment, homelessness or poor health, especially mental health, drug and alcohol addiction, etc; • bearing down on inefficiencies in the system that give rise to delay and bureaucratic mistakes and working with public services providers to improve their delivery. The importance of early intervention was once more stressed, both in securing good outcomes and in achieving value for money.50 The above themes were confirmed by research published in 2018. Sarah Beardon and Dame Hazel Genn recorded clear evidence that social welfare legal problems – housing,

47 Getting it Right in Social Welfare Law. The Low Commission’s follow-up report (The Low Commission, 2015). 48 Making the case: The value to society of the Citizens Advice service, Citizens Advice (2014). 49 Saving money by doing the right thing (Locality, 2014). 50 Early Landscape Review (NAO, 2012); J Randall, Social Welfare Legal Advice and Early Action (Baring Foundation, 2013).

Problem-Solving Pathways 213 benefits, debt, employment and family – have a substantial impact on health.51 They pointed to an absence of an overarching strategy for provision of social welfare legal assistance. An online survey found that the areas in which advice was provided were: Welfare benefits

93%

Housing

64%

Debt

64%

Health and community care

52%

Employment

52%

Family

48%

Consumer/general contract

44%

Elder law

24%

Other

13%

The kind of support provided broke down as: Information

89%

Advice

89%

Form filling

87%

Advice with casework

84%

Advocacy

50%

Tribunal representation

42%

Other

14%

In summary, the ideas collated by the Low Commission have given rise to calls for the delivery of public services to be refocused from service provision to the needs of service users. It is argued that the belief in ‘economies of scale’ and the belief in the standardisation of services together prevent organisations from understanding and meeting people’s needs.52 Providers measure items of access to them and their activities in providing services, which indicates that the artificial demand, created and amplified by organisations themselves, is rising, whereas a focus on users’ needs shows surprisingly that real demand for most public services is not rising. The existence of too many ‘front doors’ also confuses people and leads to an episodic approach that loses knowledge of people’s needs, resulting in duplication of activity and a lack of continuity in relationships. The think tank Locality considers that a shift to a local by default model of service delivery that focuses on the root causes of needs would save as much as £16 billion pa for local authorities across England.53

51 S Beardon and H Genn, The Health Justice Landscape in England & Wales. Social welfare legal services in health settings (UCL Centre for Access to Justice, 2018). 52 Saving money by doing the right thing. Why ‘local by default’ must replace ‘diseconomies of scale’ (Locality, 2014). 53 ibid.

214 Helping People with Problems

III. Conclusions In policy debates, it is easy to overlook the reality on the ground. Many people need access to simple but reliable initial assistance and information. The information and advice landscape across the country is confusing but there is considerable resource and potential for delivery. It needs to be reviewed and reconnected in the current age where a great deal of information and problem solving is going online. A great deal of easy-to-use information is available on rights and the law on the Advicenow website,54 operated by the charity Law for Life, which provides extensive community-based education and training, research and policy with the aim of ‘ensuring that everyone has the knowledge, confidence and practical skills they need to secure access to justice’.55 The website reaches over 1 million people a year in England and Wales, over 50% of whom are disabled and 45% having a household income below £1,100 a month. Over 450,000 users access information on family law. THere is a need to coordinate various existing structures (local authorities, courts, Citizens Advice), organisations (NGOs and Law Centres) and expertise (volunteers and pro bono lawyers and other specialisms). In any event, there should be greater c onnectivity between initial assistance and signposting (first tier) to more specialist assistance (second tier). At the second tier, there is a need to deliver specialist services in a more coordinated way, drawing on problem-solving concepts and with the easy availability of multiple specialists. Some of the experiments with coordination of specialists to deal with particular problems may be too narrow and could benefit from involvement of a wider range of expert support.

54 www.advicenow.org.uk. The resources include a short film on representing yourself in the family court, a longer film on how to fill in the financial statement Form E, a film and guide on applying for a non-molestation order, and advice on housing issues. Signposts are provided on finding practical and emotional support, legal advice and representation. 55 www.lawforlife.org.uk.

part b Types of Disputes

216

9 Consumer-Trader Disputes I. Overview The consumer landscape has undergone the most impressive and successful transformation of any area discussed in this book. Considerable innovation has occurred in the deployment of information technology, made possible because of the absence of constraints on structures. It was estimated that consumers experienced 173 million issues with products and services in 2017, affecting 57% of the UK population, yet only a quarter of these were raised with the provider.1 A book written by a lawyer on consumer-trader disputes might usually start with courts’ small claims procedures and ADR, and then add on various other aspects, such as Citizens’ Advice. Here, however, we will follow the consumer’s real journey as it now exists in practice. That means starting with sources of advice and ways of getting a complaint through to a business. The traditional model of providing advice has relied on local Citizens Advice Bureaux (CABx), and to some extent the Consumers’ Association Which?, to provide advice to consumers, supplemented by lawyers paid either by legal aid or, as legal aid has effectively been removed from consumer issues, by clients. In practice, those traditional models have diminished to CABx around the country trying to help people who have multiple social problems (housing, social security, debt and so on), and advice being sold to more middle class people by Which? If consumers do go so far as to raise a formal claim, the mechanism of the small claims court, established in the 1960s, used to be the primary formal mechanism, although the mechanism has in fact been used predominantly by small traders rather than by consumers.2 Since then, consumer ADR schemes have occupied the field, with improved business customer complaint mechanisms. They were based initially on an arbitration model. Two transformative changes have occurred in recent years: first, the rise of the sectoral consumer Ombudsman model as a more developed form of consumer ADR and, secondly, an online complaint platform facility called Resolver. Those two mechanisms, now working increasingly together, and working with regulatory authorities, provide both

1 Making a difference together. Annual review 2017 (Ombudsman Services, 2018) 7. 2 J Peysner, Access to Justice: A Critical Analysis of Recoverable Conditional Fees and No-Win No-Fee Funding (Palgrave Macmillan, 2014) 15.

218 Consumer-Trader Disputes more efficient dispute resolution mechanisms but also provide more functions than just dispute resolution.

II. Pathways A. Citizens Advice Citizens Advice is a network of around 285 independent local charities across England and Wales. Its funding comes from public, charitable and private sources. It provides free, confidential and independent advice to help people overcome their problems, and provides a voice for clients and consumers on relevant issues, and is the statutory consumer watchdog for the energy and post industries. Local services are provided from 2,600 community locations (including GP surgeries, libraries and courts) by over 22,000 trained volunteers and 7,000 paid staff. The national website has extensive information on a range of consumer issues across different business sectors, and attracted 41 million visits in 2017/18. That year it helped 2.6 million people face to face, over the consumer phone helpline, by email and webchat. It states that 7 in every 10 people who sought their help that year had their problem solved, and in 2016/17 it saved government and public services at least £426 million. Citizens Advice (CA) has two core roles, consumer advocacy3 and providing advice. CA is the first point of contact for many consumers (triage). The CA brand recognition in the population is as high as 90%. CA receives 1.2m face-to-face requests a year, from people walking in (50% with multiple problems, vulnerable, clustering, especially mental health + debt), 1.2m by phone, and 22m contacts on its website. People are often not good at describing problems. CA has put a lot of effort into wording and layout on the website, such as an F shape layout with headings and drop-downs, asking a few questions in logic chains to provide problem solving rather than information (other sites, eg Wikipedia). They pass redress claims on to Ombudsmen. Many CA clients have a different demographic from those who approach/are members of Which? (which is essentially a trading association with a commercial board that owns a charity), the latter being middle class and the former tending to have limited resources, so tending to have different problems. The clients who contact the national CA service for advice in general, and on specific cases, are shown in Figure 9.1. The former category has been falling in the last three years, to under two million, so is roughly equal the number of contacts to consumer Ombudsmen. A curious lack of transparency has appeared as CA ceased to publish this data in mid-2016/17. The long-term trend may reflect a falling, but still significant, number of clients.

3 CA holds the government advocacy mandates for energy, post and aviation. In some other sectors, advocacy is provided differently, such as the Water Consumer Council, and Transport Focus, whereas for telecoms Ofcom has one in-house person.

Pathways 219 Figure 9.1 Citizens Advice Bureau statistics on consumer trends Clients advised

Cases

2014/15

2,030,0004

2015/16

1,982,727

1,048,010

2016/175

979,000

527,646

2017/186

1,452,028

655,800

5,783,490 issues

CA noted in 2017 the use of social media as a channel for complaints and as a rich potential source of data:7 A growing number of consumers are turning their backs on traditional complaints channels, choosing instead to register their dissatisfaction and seek resolution through social media platforms. Using a technology platform called Method52 (developed by The Centre for the Analysis of Social Media) we found8 that each month consumers direct an average of 35,000 tweets at parcel operators mentioning either a specific ‘issue’ (see footnote) with parcel delivery services or general dissatisfaction with the quality of service provided. In the run up to Christmas the volume of these tweets increases substantially, with over 85,000 recorded in December 2017. Taken together, these tweets contain a wealth of insight on the types of problems consumers experience in postal services markets and the additional frustration they can encounter when trying to get these problems put right. At the moment, this insight is largely untapped. In 2016/17 we began to explore how we can use Method 52 software to harvest, and gain insight from, complaints made through social media. This year, we will build on this exploratory work, asking questions of the data to develop a strong picture of the volume and nature of the complaints made through in this way [sic], and how the insights from these complaints can be used to best effect by regulators, policy makers and consumer advocacy bodies. We will also work with industry to understand how, if at all, complaints made through social media currently interact with their formal complaints processes and whether and how they use insights from social media complaints to monitor and improve the service they provide to their customers.

The main areas complained about to CA in 2017/18 are shown in Figure 9.2. Interestingly, the two areas in which most complaints arise – household goods and work and

4 The Consumer Service helped clients with 0.65 million issues by phone, email or letter, the local Citizens Advice service dealt with 1.38 million consumer related issues, and the online service had over 12.6 million consumer content page views. 5 From the end of the second quarter of 2016/17 the CA did not publish how many enquiries it received. Therefore, the numbers for this year are roughly half what might be expected. 6 Advice trends 2017/18 (Citizens Advice) at www.citizensadvice.org.uk/about-us/difference-we-make/ advice-trends/advice-trends/advice-trends-201718. 7 Citizens Advice: Protecting consumers in a changing world. The Citizens Advice consumer work plan 2018/19 (Citizens Advice, 2017). 8 We collect all Tweets written in English that reference Royal Mail, the Post Office, or UK-based postal operators (or in cases where an operator also operates abroad, we record Tweets directed at their UK, or European Twitter page), either by their Twitter handle or specified keywords. Method52 then uses natural language processing to classify the Tweets into ‘issues’. A Tweet is classified as an issue if it is from a consumer about an issue they have experienced, or are experiencing, relating to postal services. This includes information-only queries (if it is clear there is a specific problem), and problems reported in non-compliant language. It also includes general negative comments from consumers about the postal services industry or postal service providers.

220 Consumer-Trader Disputes transport – have not been served by Ombudsmen, whereas Ombudsmen have made some impact in areas where numbers are lower, like financial services, pension, energy, communications and cars. Figure 9.2 Main areas complained about to Citizens Advice in 2017/18 Type

Number

House Fittings and Appliances

97,099

Transport

92,227

Personal goods and services

48,754

Communication and Technology

41,742

Professional and financial services

31,005

Leisure

31,815

Other household requirements

24,681

Commercial goods and services

4,328

Unknown

111,956

Grand Total

481,892

Citizens Advice said that it would work with industry to understand how, if at all, complaints made through social media currently interact with their formal complaints processes and whether and how they use insights from social media complaints to monitor and improve the service they provide to their customers.

B. Courts Formal complaint mechanisms have diversified in recent years. The theoretical route is to bring a claim in the court system. However, for many consumer claims, the sum involved is small and it is irrational to spend money or time in pursuing a claim through the county court process or consulting a lawyer as a first step. Litigation is typically slow, involves disproportionate cost and – this simple practical fact is often overlooked – is not user-friendly for consumers to access or use. The court system responded to these problems during the 1960s by introducing small claims procedures, and has argued for many years over the opposite of trying to aggregate mass claims, both of which mechanisms have failed to overcome their disadvantages. The small claims process is free to claimants and does not require a lawyer, but does involve time and effort. A process that is online and can be accessed and used at a time convenient to the claimant, and is quick and user-friendly, is what is required. The Online Court might provide that process but it has been provided for some years by one or a combination of company complaint mechanisms, Resolver and consumer O mbudsmen, as described below.

C. Business Complaint Functions Since the realisation during the 1960s that consumers are vital actors in markets and econo mic growth, new mechanisms have developed to provide effective channels for resolving

Pathways 221 consumer problems outside courts. Legislators have given support to these developments in order to support the enforcement of the expansion in consumer protection rights since the 1960s. Enlightened businesses have also recognised the need for such mechanisms, in order to keep their customers happy: there is a strong commercial imperative that applies here, demanding maximisation of good outcomes. Retail businesses of any size have internal customer care or complaint mechanisms as essential functions necessary if they recognise the need to maintain their reputations.9 Some regulatory systems impose requirements to have such complaint systems, and sometimes on how they are to function,10 and then enforce how they are operated.11 These requirements can include, typically in regulatory systems based on achieving safety, what data is to be collective and what is to be reported to a regulator. A 2010 Recommendation introduced an EU-wide method for classifying and reporting consumer complaints to be used by complaint bodies on a voluntary basis.12

D. Resolver Resolver.co.uk is, at its core, an online platform that allows consumers to send their complaints to traders. It started as a commercial enterprise but decided in 2019 to convert to being a notfor-profit with a separate company delivering business services. Using a simple form, Resolver is able to direct consumers’ messages free to the customer care or complaint departments of over 25,000 retail businesses across 100 sectors. Introduced by James Walker and colleagues in 2014,13 the Resolver platform monitors cases but does not provide a system of intervention in human dispute resolution. Instead, it supports both sides by nurturing practices and attitudes that make businesses and consumers alike more effective at raising, managing and resolving issues. It has also developed a series of services for consumers and businesses, not least by integrating its mode of operations with the leading Ombudsmen. Resolver provides two distinct support services for businesses – one for larger corporate organisations and one for small businesses – that encourage better decision-making, helping them to consistently deliver better resolutions. Resolver is recommended by a number of key organsations across the financial sector, utilities, government and retail. The platform is integrated with Advice Direct Scotland (consumer phone service of Citizen Advice) and is working to deliver an integrated service with the Consumer Council for Northern Ireland. The main services are as follows.

i. Consumers Resolver offers consumers advice on their rights and on how to complain effectively. Receiptme.com will send consumers an email or Xero list of purchases, together with an 9 C Hodges, ‘Best Practice in Customer Care in UK’ in C Hodges, I Benöhr and N Creutzfeldt-Banda, Consumer ADR in Europe (Hart Publishing, 2012). 10 eg See Policy Statement PS15/19: Improving complaints handling, feedback on CP14/30 and final rules (Financial Conduct Authority, 2015); the OFCOM Approved Code of Practice for Complaints Handling. 11 See Notice of intention to impose a financial penalty pursuant to section 30A(3) of the Gas Act and 27A(3) of the Electricity Act 1989 (Gas and Electricity Markets Authority, 18 December 2015). 12 Recommendation on Consumer Complaints C(2010)0321, 12.5.10. 13 Resolver is the brand of Resolving Limited. Resolver’s ethics include: always free for the consumer, no adverts, no sale of data, no use of personal data and no marketing to consumers. Since 2014 Resolver has had 18 million visits to its website, resolved 3.7 million cases and recovered £2 billion for consumers for free.

222 Consumer-Trader Disputes explanation of the consumer’s rights and the ability to raise a case. It provides a livechat and phone in service, provided by Citizens Advice personnel. Resolver uses AI to predict the outcome of a dispute based on its now extensive database, having learnt that that is what consumers really want rather information on their rights (which has been provided for many years by consumers’ associations and NGOs). In addition to information on rights and options on processes it can predict how businesses will react and reduce the waiting time, as well as identifying cases that need the input of an Ombudsman. The platform can capture images and, where required, provide an auto-summary (of all spam emails received from a business, for example). It stores all correspondence between the consumer and a business (including phone calls) as a complaint file on the platform so that consumers have their complaint organised in one place. The platform also issues a reminder to consumers when it determines that they should be taking the next action needed to progress their complaint. Where a deadlock position has been reached or where a complaint is unresolved after eight weeks, the consumer can opt for the platform to escalate the complaint to the relevant ADR provider. Resolver’s system can identify from the language used by a consumer in phrasing a complaint (rather than from use of particular words) how serious and emotional the consumer is about the case, and whether the complainant is likely to be experiencing various kinds of vulnerability (financial, health, employment, mental health). This information would be relevant to identifying those with clusters of problems who might benefit from particular support.

ii. Ombudsman/ADR – Decider Resolver’s Decider platform assists markets in resolving issues that cannot be resolved by the consumer and business without additional intervention or independent support. The platform is focused on delivering an efficient and effective system of access to justice for unresolved issues. In essence, the platform provides an online court environment with an asynchronous resolution process. The platform allows one party to upload the case, and the other to comment, in a controlled environment and under the management of the ADR Neutral. Once information has been captured from both sides and comments made (as appropriate), the case is then passed over to the adjudicator for a decision. The decision process can take place online, by phone, or face to face. A decision is then created and listed to the parties, they can then login to read the decision. All activity is recorded in an auditable log by the platform that lists each action and by whom it is recorded. The platform was originally developed with the Traffic Penalty Tribunal (TPT), which is the independent appeals process for public sector parking tickets and bus lane contraventions for England and Wales, Mersey Gateway Bridge Crossings (Merseyflow), and the Dartford Crossing. 90% of the traffic appeals made to the TPT are submitted online and the tribunal currently concludes 45% of cases within 14 days (with 87% concluded within 28 days),14 involving people of all ages.

14 PATROL Newsletter Autumn 2017 (www.patrol-uk.info/Newsletters/PATROL_Newsletter_Autumn_2017. PDF).

Pathways 223 The platform has been deployed with Ombudsman Services to support resolution in the energy and telecoms markets in the UK – as well as to support general market resolution in conjunction with the Helper service. It can cut CDR entities’ complaint handling costs by 50%. In addition, Ombudsman Services and Resolver are developing Resolution Plus to assist businesses in using artificial intelligence to predict which cases will escalate to the Ombudsman (with 96% certainty), so that advice and guidance can be delivered to the business by the Ombudsman’s organisation on how to resolve issues before escalation of the case to the Ombudsman. This would support complaints being resolved as soon as possible after they arise, rather than having to wait for extended periods – first for the trader to respond (in some regulated systems, the trader is given up to eight weeks to respond), and then for the duration of the CDR scheme’s process. Such resolution would be supported by an objective view on the merits of an issue. Anonymised data can be made available from individual businesses, Resolver and the participating Ombudsman to give an immediate picture of complaints and issues in the market. This data can be made available to businesses and to regulators.

iii. Corporate Businesses – Corporate Services Receiving complaints from Resolver is free, but Resolver charges where it provides assistance to businesses to improve their effectiveness in managing and resolving customer issues. Resolver aims to help corporate organisations to understand how to deliver better resolution through insight and recommendations. When a consumer raises a case, Resolver can deliver intelligent insights that will identify the severity of the incident, the probability of escalation, the consumer emotion, and an auto-summary of their issue. In 2017, it supplied a prediction of the outcome, to help businesses make better decisions. In addition, Resolver automatically benchmarks an organisation’s services against their market, best in class and key comparable services, performing an automatic root– cause analysis. The information generated by this process helps organisations to understand what they need to do in order to deliver service improvement and change to their business.

iv. Small Businesses – Helper Small businesses may have limited resources, experience and ability to respond to consumer complaints. The SME sector has been underserved in terms of the support offered to businesses in resolving issues. Ombudsman Services and Resolver have developed Helper, a tool to help small businesses to manage and resolve their problems, including customer issues. It is interesting to note the emphasis of this service on businesses having ‘problems’ rather than complaints, mirroring the language of the Legal Needs surveys of individuals referred to in chapter three above. SMEs typically say they don’t have complaints, but they do admit to having troublesome customers. They do not look for resolution or for delivering a better service. The tool will help small businesses understand both their rights and their consumer’s rights, and will offer guidance (including templates and guidance) to direct the business through the process of responding to (and ultimately resolving) the consumer’s

224 Consumer-Trader Disputes issue. If the issue cannot be resolved, it can be escalated for independent, low-cost online issue resolution through integration with Ombudsman Services. This will significantly improve consumer redress by supporting quicker and fairer complaint handling, whilst keeping ownership of the relationship with the business. This has benefits in terms of building trust and confidence in key markets. The platform also allows Ombudsman Services to engage effectively with businesses in providing guidance and advice which builds longer term capability, and which encourages alignment around what constitutes fair behaviour at the first tier. The thinking and mindset of the Ombudsman is made available to all complaints, not just those which are escalated to the Ombudsman. This is a much more effective, efficient and timely way of underpinning the benefits of the Ombudsman in promoting appropriate behaviours in a market, opening up the opportunity for more preventative and systemic work, rather than requiring the cost and delay of working through high volumes of cases at the second tier. Ombudsman resources can then be more valuably focused on more complex cases or on more vulnerable consumers. From a regulatory perspective, the platform also makes all of the data and insights about issues, trends and behaviours visible to the regulator and to consumer advocacy and consumer protection groups on a much broader and earlier basis. Risks can be more accurately assessed and the platform itself then offers a mechanism for advice and guidance to be developed and deployed in response. Businesses can be given feedback on benchmarking against their peers; what they need to do. The service aims to help SMEs run their business better. Changes in the complaints data over time have been used to identify companies that are under financial stress and at risk of insolvency: information can be passed to both the company and the regulatory authority. The business services will be focused initially on sectors that give rise to most consumer complaints, namely trains, second-hand cars, and home improvement. Applications are also being developed with gambling and construction. This arrangement means that consumers should see disputes resolved more quickly by businesses that have access to guidance and advice on fairness, rights and responsibilities in every case without the cost and time of cases having to be escalated to the Ombudsman. The opportunity to escalate is still there and the complaint journey becomes seamless with a much lower risk of consumers failing to achieve redress as they fall into gaps in the system, but the benefit here is of an approach which places an emphasis on helping businesses to get it right first time.

E. Statistics From Resolver’s inception in 2014 to the end of 2016, Resolver handled nearly 600,000 case files (Figure 9.3). By 2018, the annual number had grown to over 3.2 million consumers, who raised and resolved free of charge to them, issues worth £400 million. During 2017, Resolver processed 101,453 cases a month, with 10,579,872 visits to the site. At any time, over 120,000 cases are live in Resolver, observed and assisted by two customer support staff. On Facebook consumers rated Resolver 4.9 out of 5.0 in 2018. In 2018 it engaged with 33,000 companies.

Pathways 225 Figure 9.3 Resolver case file numbers 2014–2018 Year

Case files raised

Site visits

2014

11,795

169,000

2015

177,415

2,586,228

2016

404,912

6,133,652

2017

1,217,443

10,579,872

2018

1,400,000

15,000,000

2019 1st quarter

1,900,000

21,100,000

F. Alternative Dispute Resolution and Consumer Ombudsmen There has been a widespread understanding that courts fail to provide easily accessible, swift, cheap, responsive and effective pathways for consumer complaints or legal claims. The emergence of the concept of ‘alternative dispute resolution’ (ADR) achieved a high profile as a potentially effective alternative to court litigation. Consumer ADR, however, is a separate and distinct phenomenon. ADR schemes for consumer-trader (C2B) disputes have been spreading for several decades. One of the first was the arbitration scheme established by the travel sector trade association in the 1950s.15 By 2012, at least 40 such ADR schemes existed in the UK administered by the Centre for Effective Dispute Resolution (CEDR).16 Further, a number of sectoral ADR schemes operate under sectoral codes of practice, and may be approved as self-regulatory schemes under The Consumer Codes Approval Scheme if they conform to the requirements of the Chartered Trading Standards Institute.17 In some sectors, the ADR body is an independent Ombudsman. The Ombudsman model, inspired by the pre-existing public sector Ombudsmen described in chapter thirteen, has emerged in a relatively short time in relation to private sector disputes and can be observed across the world.18 Consumer Ombudsmen have transformed both the dispute resolution landscape and also the functions that can be delivered by the same (Ombudsman) body, especially as a tool to support regulatory regimes. A major development occurred in the UK in 2000 when the government merged several sectoral private Ombudsmen into a single Financial Ombudsman Service (FOS) and placed the entity firmly within the new architecture of the regulatory system for financial service firms.19 Data from the 15 C Hodges, I Benöhr and N Creutzfeldt-Banda, Consumer ADR in Europe (Hart Publishing, 2012); C Hodges and A Stadler (eds), Resolving Mass Disputes: ADR and Settlement of Mass Claims (Edward Elgar, 2013). 16 see www.cedr.com/consumer. 17 eg, the British Association of Removers, the British Healthcare Trades Association, the Consumer Code for New Homes, the Glass and Glazing Federation, the Institute of Professional Willwriters, RAC Approved Garages, The Carpet Foundation, the ‘Trust My Garage’ scheme of independent garages, the National Body Repair Association. 18 J Beqiraj, S Garahan and K Shuttleworth, Ombudsman schemes and effective access to justice: A study of international trends and practices (International Bar Association, 2018). ‘The ombudsman institution plays a particularly useful role as a tool for guaranteeing effective access to justice in relation to small claims disputes. National courts across the world have become increasingly ineffectual in handling small consumer claims, due to the high cost of proceedings, delays, stretched resources, and the relative inaccessibility of the court system’, p 27. 19 Financial Services and Markets Act 2000. See C Hodges, I Benöhr and N Creutzfeldt-Banda, Consumer ADR in Europe (Hart Publishing, 2012) 272–81.

226 Consumer-Trader Disputes individual cases decided by the FOS could be fed back to the (then) Financial Services Authority, which owned the FOS. Similar Ombudsmen have been created in other regulated sectors, either by UK government or under EU regulatory legislation. Other examples of national Ombudsmen created by statute are the Pensions Ombudsman20 and Legal Ombudsman.21 In addition, various business sectors have created Ombudsmen, and some sectors are now required to have ADR bodies under EU sectoral regulatory requirements such as in energy22 and communications.23 Other sectors include the Furniture Ombudsman (1992), various Ombudsmen in the property sector,24 the Housing Ombudsman,25 and the Motor Ombudsman (2016). Some private investors have created others, such as The Retail Ombudsman.26 The Rail Ombudsman was mandated in 2018.27 Consumer Ombudsmen may be statutory bodies, not-for-profit bodies,28 or other bodies. Ombudsmen covering consumer-trader issues usually have the great advantage that they are funded entirely by the business sector. In 2013 the European Union recognised that CDR provided huge advantages for resolving C2B disputes, many of which involve such small sums that no rational consumer or trader would wish to litigate them29 even in a small claims process, and created an EU-wide system of CDR entities,30 in which recognised ADR bodies are subject to a regulatory regime, and an e-portal for cross-border C2B disputes between Member States.31 20 Established under the Pension Schemes Act 1993, s 145(3). 21 Established as the Office for Legal Complaints under the Legal Services Act 2007, s 114. 22 Ombudsman Services: Energy, established in 2005 with voluntary membership, from 2008 having mandatory membership and exclusive jurisdiction for energy companies under the Consumers, Estate Agents and Redress Act 2007, ss 42–52, and regulated by OFGEM. 23 Ombudsman Services: Communications was established in 2004. CISAS was established in 2003. Both are regulated by OFCOM. 24 See ch 12. The Property Ombudsman was founded in 1990 as the Ombudsman for Corporate Estate Agents, becoming the Ombudsman for Estate Agents on 1 January 1998, and becoming The Property Ombudsman on 1 May 2009. The Property Redress Scheme has operated since 2007. A scheme offered by Ombudsman Services: Property was established in 2005 by about members of the Royal Institution of Chartered Surveyors (RICS) but was discontinued in 2017. 25 See ch 12. The Housing Ombudsman covers complaints about the housing organisations that are registered with it. The Housing Ombudsman Scheme is approved by the Secretary of State under s 51 of and Sch 2 to the Housing Act 1996. The Act requires social landlords, as defined by s 51(2) of the Act, to be members of an approved scheme. Others may join the Scheme on a voluntary basis. The Ombudsman’s jurisdiction was extended to Local Housing Authorities by the Localism Act 2011. 26 Established as Consumer Dispute Resolution Limited in 2015. In 2017 the body resigned from the Ombudsman Association (OA), following which, under the Companies Acts, it is unable to use the title ‘Ombudsman’. 27 The Rail Ombudsman service was launched on 26 November 2018, provided by the Dispute Resolution Ombudsman, which originated in the early 1990s and had been the Furniture Ombudsman since 2007. The Rail Ombudsman service investigates unresolved consumer complaints about train companies and rail service providers who participate in it. 28 eg, Ombudsman Services and the Dispute Resolution Ombudsman are not-for-profit companies. 29 A 2004 EU survey found that only 29% of European citizens would be prepared to bring a claim of less than €500 to court: Special Eurobarometer, European Union citizens and access to justice (European Commission, 2004), 28. See also Special Eurobarometer 342. Consumer empowerment (European Commission, 2011). 30 Directive 2013/11/EU on alternative dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC (Directive on consumer ADR). See P Cortes, ‘A New Regulatory Framework For Extra-Judicial Consumer Redress: Where We Are And How To Move Forward’ (2015) 35(1) Legal Studies 114–41. 31 Regulation (EU) No 524/2013 of the European Parliament and of the Council of 21 May 2013 on online dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC (Regulation on consumer ODR) [2013] OJ L165/1.

Pathways 227 The Netherlands has an integrated ADR structure that covers many sectors under a single administrative body, providing consistency and clarity. It also has two other admirable features: a mechanism for regular agreement on terms and conditions for all major sectors (which leads to high quality of practice, backed by trade self-regulatory pressures) and a trade association guarantee to consumers that the association will pay if any trader member fails to honour an ADR award against it. It also has a new mechanism for referring points of law for determination by a court at an early (pre-judicial process) stage. However, the Netherlands is only just starting to include mediation in its ADR procedures. In summary, a considerable landscape of Ombudsmen or other ADR entities exists, which handles consumer-to-business (C2B) disputes. The bodies differ somewhat in how they operate, although that issue is outside the scope of this book.32

G. Ombudsmen Processes The consumer Ombudsmen are the most advanced form of C2B dispute resolution model. The leading consumer Ombudsmen (such as those for financial services, energy, communications, lawyers, rail, pensions) deliver a user-friendly and easily accessible (phone, email, online) service that provides the functions that consumers want in a single, seamless sequence: advice, triage, mediation/conciliation, and decision (Figure 9.4). This is a simple and effective integrated pathway. The statistics on resolution of claims for almost every market Ombudsman fall into a pyramid structure, with a large number of initial contacts requesting advice, and diminishing numbers as cases pass on through mediation to the decision stage. This structure has the advantage of simplicity, so is simple for consumers to remember and access. It also encourages traders to settle cases. However, statutory CDR bodies also find it difficult to change and evolve. Figure 9.4 A consumer Ombudsman’s escalating pyramid technique

Adjudication binding or nonbinding Mediation/conciliation Refer to third party Triage

32 Having origins in sector codes in the 1970s, Motor Codes Limited, a subsidiary of the Society of Motor Manufacturers and Traders (SMMT), was established to resolve disputes under 4 Codes in 2009, and then established as an independent Ombudsman in 2016.

228 Consumer-Trader Disputes All the Ombudsmen referred to above have adopted an online claims-processing facility as standard some years ago, although they also typically provide the ability for consumers to call in, at which point claim details will be entered into the online system by a case manager. In 2018, Ombudsman Services undertook a major transformation programme, responding to customer trends, before which 70% of traffic was by phone and after which 70% has been by web. A great deal of use is made of text analytics of the language used by consumers, so as to identify the risk areas and if the consumer may be vulnerable.

H. Statistics on Some Leading Consumer Ombudsmen The usage statistics of the leading consumer Ombudsmen are at Figure 9.5, and those statistics published by CEDR in relation to two of the schemes that it administers are at Figure 9.6, together with CEDR’s estimation of the number of civil and commercial cases that it handles (of which consumer cases are just one cohort). The growth and number of these figures are significant when compared with the number of small claims in the County Court Small Claims Track, shown in Figure 4.13. The number of cases allocated to the Small Claims Track stood at roughly 74,000 in 2016, and led to only 36,000 or so hearings. Interestingly, it has increased since then. Claims of small value should represent the vast majority of problems experienced by consumers33 and small businesses, yet the number is counter-intuitively tiny, as appears from Figure 4.1 and elsewhere. Contacts and dispute numbers for the FOS dwarf all other schemes. The FOS became extremely well known from the late 2000s as a result of the scandal over extensive misselling of payment protection insurance (PPI) products by banks and finance companies. The regulator described PPI as a major retail market, with sales of over 5 million policies a year during 2000 to 2005, with premiums in the region of £7 billion a year. It was very profitable for firms. Often the underlying loan served as a loss leader on which to sell PPI. It was targeted at consumers taking on debt, many of whom were financially vulnerable, as their focus was typically on securing the loan with the insurance incidental to the transaction.34

By 2015 the FOS had received more than one and a quarter million complaints about PPI, in the previous year over 4,000 a week.35 Between January 2011 and January 2015 over £22.2 billion redress was paid to over 10 million consumers.36 CDR bodies are designed to deliver swift, cheap and effective redress in individual C2B disputes. In 2017/18, the FOS resolved 40% of general claims and 50% of PPI, packaged bank accounts and short-term lending claims within 45 days. That year Ombudsman Services: Communications resolved domestic disputes in an average of 39 days (41 days for a cross-border dispute). Its rate of compliance data was: 21,338 remedies confirmed, 33 Consumer detriment. Assessing the frequency and impact of consumer problems with goods and services (Office of Fair Trading, 2008), OFT992; Special Eurobarometer 342. Consumer empowerment (European Commission, 2011). 34 The Financial Conduct Authority: Approach to Regulation (Financial Services Authority, 2011) para 5.12. 35 Annual report and accounts for the year ended 31 March 2015 (Financial Ombudsman Service, 2015). 36 Monthly PPI refunds and compensation, at www.fca.org.uk/consumers/financial-services-products/insurance/ payment-protection-insurance/ppi-compensation-refunds. See also The Financial Conduct Authority’s Statement on Payment Protection Insurance (PPI) (Financial Conduct Authority, 2015).

Figure 9.5 Contacts and case numbers for leading consumer Ombudsmen 2010/11 to 2017/18

2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18

Ombudsman Ombudsman Services: Financial Ombudsman Service Services: Energy Communications Legal Ombudsman Ombudsman Ombudsman Contacts37 Cases Decisions Contacts Cases Contacts Cases38 Contacts Cases Decisions 1,012,371 164,899 103,702 13,165 38,155 3,768 1,268,798 222,333 20,540 120,994 25,701 75,420 8,420 2,161,439 223,229 24,332 71,117 10,33139 71,195 8,430 2,357,374 512,167 31,029 80,476 12,909 69,500 8,323 3,059 1,786,973 448,387 43,185 70,139 15,173 59,000 7,635 3,054 1,631,955 438,802 39,872 103,859 56,064 96,453 30,732 59,082 7,033 2,560 1,394,379 336,381 38,619 83,608 45,277 90,423 41,791 64,932 7,223 2,510 1,456,396 400,658 32,780 97,996 52,198 68,567 30,732 * 8,73941 2,306

2011 2012 2013 2014 2015 2016 2017 201843

The Property Ombudsman Contacts Cases 14,066 1,326 15,782 1,651 16,378 2,189 16,021 3,115 16,265 3,304 14,218 3,553 17,536 3,658 15,415 *

Contacts

16,874 28,853 42,552 60,200

Motor Ombudsman Cases Ombudsman decisions – – 647 956 920 1,487 93 2,214 221 3,200 *

Pensions Ombudsman Ombudsman Contacts Cases Decisions 3,066 915 125 3,728 939 157 2,766 1,074 210 3,350 1,058 232 4,236 1,281 180 4,998 1,363 244 6,121 1,333 514 6,319 1,676 384

Retail Ombudsman/ Consumer Dispute Resolution Limited (CDRL)42 Contacts Cases – – – – – – – – 65,285 26,884 3,553 39,459 4,661 * *

Ombudsmen: Property Services Contacts 5,843 7,466 3,940 5,350 5,265 4,14540 5,601 5,078

Cases

1,166 1,191

Furniture Ombudsman Contacts Cases

*

2,492 3,968 5,903 6,610

(* = unpublished at April 2019).

Pathways 229

37 These constitute initial enquiries and complaints. 38 These are measured by the number of complaints forms that are issued by Ombudsmen Services: Communications after initial contact. 39 From 2012/13 the ‘cases’ number no longer refers to cases taken on but rather cases resolved. 40 From 2015/16 the Ombudsmen Services: Property reverts to measuring single calendar years. 41 7,527 cases involving lawyers and 1,212 cases involving claims management companies. In the year, 37% of cases were resolved by informal resolution, 33% of cases were resolved by Ombudsman decision and the remaining 30% were closed by other means. 42 The Retail Ombudsman was approved by the CTSO in May 2015. It was subsequently rebranded as Consumer Dispute Resolution Limited (CDRL), handling disputes in a number of sectors, especially with airlines and travel. Statistics refer to calendar years. 43 Reporting Period: 1 October 2017–30 September 2018. Of the cases received, 8,445 were rejected as outside the scheme’s rules.

230 Consumer-Trader Disputes Figure 9.6 Enquiries and case numbers for consumer ADR bodies administered by CEDR 2010/11 to 2017/18

Year

Total number of civil and commercial mediation cases p.a. (estimated by CEDR)44

Year

2003

1,800–2,000

2004

821

127

2005

2,500–2,700

2005

3,255

185

2006

3,612

497

2007

6,141

1,650

2008

6,464

2,667

2009

5,143

2010 2011

2007

2010 2012 2014

3,400–3,700

6,000 8,000 9,500

Communications & Internet Services Adjudication Scheme (CISAS) Year

Enquiries

Cases

1,651

2009

547

27945

3,953

1,300

2010

365

381

4,967

2,025

2011

393

471

2012

6,387

3,129

2012

493

553

2013

6,467

4,845

2013

421

461

2014

6,520

5,778

2014

340

391

3,31647

2015/1646

Enquiries

Cases

Postal Redress Service (POSTRS)

1,241

2015

307

290

2016

10,000

2016/17

4,130

2,992

2016/17

–48

–

–

–

2017/18

4,167

2,927

2017/18

423

243

2018

12,000

2018/19

2018/19

403

230

of which 19,475 or 91% were implemented within 28 days and 1,534 or 7% implemented outside of 28 days. Of the total confirmed remedies, 329 or 2% remained unimplemented after 28 days. In 2017/18, Ombudsman Services: Energy resolved a domestic dispute in an average of 38 days (40 days for a cross-border dispute). The rate of compliance data was: 39,012 remedies confirmed, of which 36,058 or 92.4% were implemented within 28 days and 2,524 or 6.5% implemented outside of 28 days. Of the total confirmed remedies 430 or 1.1% remained unimplemented after 28 days. Various Ombudsmen have been resolving cohorts of similar individual cases (ie, delivering collective redress) for some years, avoiding the need for consumers to use lawyers 44 These figures were obtained from the CEDR biennial surveys which aim to establish market performance. From these surveys CEDR estimates the size of the civil and commercial mediation market in case numbers. 45 It should be noted that the number of applications accepted by POSTRS exceeds the number of cases dealt with by an adjudicator in each reporting period. This is because some applications will be processed within this reporting period, but the adjudicator’s decision would not be issued until the following year. 46 From 2015 CISAS switched from single year analysis to cross-year analysis, eg 2015/16. 47 From 2015 CISAS gives the total number of disputes it received, not the total number of enquiries. A number of these were found to be out of scope or otherwise not proceeded with. 48 Data on the POSTRS website from 2016/17 relate to airline passenger complaints not to POSTRS.

Pathways 231 and courts. Indeed, the preference of Claims Management Companies (CMCs) for using the FOS instead of courts has created significant issues of misleading consumers and causing them detriment.49 The National Audit Office estimated that CMCs received between £3.8–£5 billion commission for PPI claims between April 2011 and November 2015, up to 23% of total compensation.50 The government has had to regulate CMCs, but could, if a comprehensive national consumer Ombudsman strategy were implemented, presumably make the existence of CMCs redundant, and reduce or remove their economic burden on the economy of the cost of the Claims Management Regulator as well as saving public funds. In 2014/15 there were 1,752 authorised CMCs, with an industry turnover of £772 million, and the regulator received 10,106 new consumer contacts, investigated 93 CMCs, cancelled the authorisation of 105 CMCs and issued warnings to 296 CMCs. Between December 2014 and early 2016, the Claims Management Regulator issued four fines to CMCs totalling £1.6 million and in January 2016 revoked the licence of a company that made 40 million nuisance calls over a three month period.51 It had a modest turnover of £4 million, funded on a self-financed basis from fees from CMCs.52 On 28 January 2015 the Legal Ombudsman took on the role of handling consumer complaints about poor service by CMCs, for which the establishment cost in 2014/15 was £0.85m. In 2017 there were 147 CDR schemes, covering a wide range of sectors, which scholars described as giving a landscape that was too confusing for consumers.53 They called for ADR to be mandatory across all sectors, and for there to be a single entry point, and a single Ombudsman in all regulated sectors and possibly in other sectors. The numbers of complaints attracted by the CDR and consumer Ombudsman system simply dwarf those in the Small Claims court noted in chapter four above. It seems clear that the Ombudsmen are consumers’ pathway of choice for disputes with traders where they are available, and the courts are now used for debt, neighbour disputes or anything of a ‘residual’ nature. In 2017/18 the FOS received 1.45 million consumer enquiries and accepted 339,967 new disputes, of which 55% (186,417) related to PPI, 31% to banking and credit, 12% to insurance and 4% to investments and pensions.54 Annual operating cost was £244 million, with a ‘unit cost’ of resolving a complaint of £736.55 In 2017/18 the Legal Ombudsman handled 8,739 cases, with expenditure of £14.84 million: the unit cost per case was £1,787 for cases involving lawyers and £1,263 for CMCs.56 In 2017/18 Ombudsman Services (primarily relating to energy and communications companies) received 215,969 contacts and resolved 62,806 disputes.57 In 2017/18, the Pensions Ombudsman received 6,319 contacts, and took on 1,676 new investigations and issued 384 decisions.58 49 Rogue PPI Claim Companies Targeted by Fines and Toughened Regulations (Ministry of Justice, 2013); Financial Services (Banking Reform) Act 2013; Insurance Fraud Taskforce: final report (Insurance Fraud Taskforce, 2016). 50 Financial services mis-selling: regulation and redress (National Audit Office, 2016) HC Paper No 851. 51 ibid, para 4.20. 52 Claims Management Regulation Annual Report 2014 to 2015 (Ministry of Justice, 2015). 53 C Gill, N Creutzfeldt, J Williams, S O’Neill and N Vivian, Confusion, gaps, and overlaps. A consumer perspective on alternative dispute resolution between consumers and businesses (Queen Margaret University and University of Westminster, 2017). 54 Annual review 2017/2018 (Financial Ombudsman Service, 2018). 55 Annual report and accounts for the year ended 31 March 2018 (Financial Ombudsman Service, 2018). 56 Legal Ombudsman annual report and accounts (Office for Legal Complaints, 2018). 57 Annual Report 2017/18 (Ombudsman Services, 2018). 58 Annual Report and Accounts 2017/18 (Pensions Ombudsman Service, 2018).

232 Consumer-Trader Disputes The number of cases for consumer Ombudsmen schemes appear currently to be at least 10 times greater than for CEDR’s 26 arbitration ADR schemes. The former schemes are more transparent than the latter. It appears that figures are not published for several sectors covered by CEDR, which is unimpressive. The caseload is diminishing because of FOS’s PPI cases, but numbers in all other Ombudsmen schemes are increasing, presumably as they become better known. The total contacts to consumer Ombudsmen currently appear to be over 2 million, turning into around 400,000 cases. One important difference between consumer Ombudsmen and the CEDR arbitration schemes is in initial ‘contacts’ (for the former) or ‘inquiries’ (for the latter). The Ombudsmen schemes typically provide advice and triage to consumers at the initial contact stage, which might resolve a potential issue swiftly. In contrast, the arbitration schemes do not tend to offer advice on an issue, but only provide information on how their arbitration scheme works if a consumer wishes to use it and to pay the fee to access it.

I. The EU Consumer ADR Regulatory Scheme The EU mandated in 2013 a regulatory framework for consumer ADR and online dispute resolution (ODR). The ADR Directive creates in each Member State a requirement that ADR bodies must exist that are capable of handling any consumer-trader dispute, subject to certain exceptions such as education and healthcare.59 Various features of the regime are important. First, all ADR entities that are registered by Member States with the European Commission are subject to regulatory requirements and oversight by one or more national competent authorities. The requirements fall under the headings of expertise, independence, impartiality, transparency, effectiveness, fairness, liberty and legality.60 Key building blocks in this process have been two European Commission Recommendations on the principles that apply to the more generalised concept of ADR. The 1998 Recommendation on the principles applicable to out-of-court settlement of litigation, specified: (a) minimum criteria guaranteeing the impartiality of the body, the efficiency of the procedure and the publicising and transparency of proceedings, and (b) the principles of independence, transparency, adversarial, effectiveness, legality, liberty and representation.61 The 2001 Recommendation on the principles for out-of-court bodies involved in consensual resolution of consumer disputes included the principles of impartiality, transparency, effectiveness and fairness.62 A Voluntary European Code of Conduct for Mediators was introduced in 2004, covering: • Competence, appointment, fees of mediators. • Independence and impartiality.

59 Directive 2013/11 of 21 May 2013 on alternative dispute resolution for consumer disputes, OJ 2013, L 165. 60 Directive 2013/11, arts 6–11. 61 Commission Recommendation 98/257/EC on the Principles Applicable to the Bodies Responsible for Out-of-Court Settlement of Consumer Disputes, [1998] OJ L 155/31. 62 Commission Recommendation 2001/310/EC on the Principles for Out-of-Court Bodies involved in the Consensual Resolution of Consumer Disputes, [2001] OJ L 109, 56–61.

Pathways 233 • Ensuring the understanding by the parties, fairness, informed consent over any agreement reached, parties’ freedom to withdraw. • Confidentiality.63 Secondly, the EU regime requires ADR entities and consumer regulatory and enforcement authorities to communicate, and ensure ‘mutual exchange of information on practices in specific business sectors about which consumers have repeatedly lodged complaints’.64 ADR bodies are subject to general quality requirements, but it is not specified to what extent they need to provide particular techniques (such as mediation or arbitration) or have certain forms (eg, arbitration or Ombudsmen). A 2017 report for the European and German consumer associations highlighted the numerous serious challenges in protecting consumers in online global markets.65 The study demonstrated that ‘consumers find it extremely difficult to achieve satisfactory redress in disputes with online retailers based outside the EU’. It concluded that the two main areas for improvement are: • Clear pre-purchase information to allow consumers to make informed decisions. • Effective cross-border mechanisms for complaints-handling and dispute resolution to enable consumers to get satisfactory redress. It called for extension of ADR/ODR mechanisms and collective redress mechanisms but was unable to expand on more detailed proposals of how a global system might work in practice.

J. Online Dispute Resolution The most successful online trading platforms include online dispute resolution (ODR) systems that both seek to respond to consumers’ problems quickly and also utilise such feedback as the basis for self-regulatory purposes.66 Consumer Ombudsmen have used information technology case handling for some decades, and a major contributor to the commercial success of online trading platforms, such as Amazon, eBay and Alibaba has been their inclusion of an online complaint transfer, feedback and dispute resolution function. A widely-quoted figure is that eBay resolves about 60 million disputes per year through ODR.67 All consumer Ombudsmen offer ODR platforms, and the concept was copied in the design of the Online Court. The swift innovations of Resolver, integrating with companies’ internal complaint systems and external Ombudsmen systems, are remarkable. The design of the Online Court draws heavily on this experience. 63 See See now http://ec.europa.eu/civiljustice/adr/adr_ec_code_conduct_en.pdf. 64 Directive 2013/11, art 17. 65 The challenge of protecting EU consumers in global online markets (Verbraucherzentrale Bundesverband and BEUC, 2017). 66 Online Dispute Resolution Advisory Group, Online Dispute Resolution for Low Value Civil Claims (Civil Justice Council, 16 February 2015). 67 T Schultz, ‘The Roles of Dispute Settlement and ODR’ in K Arnold Ingen-Housz (ed), ADR in Business: Practice and Issues across Countries and Cultures, Vol. 2 (Kluwer, 2011) 135–55.

234 Consumer-Trader Disputes Online dispute resolution can operate using a number of techniques, and different systems have different designs. The functions might include: transferring information, online negotiation between principal parties, online mediation involving a third party, a recommendation68 or decision69 by a third party. The design of the EU ODR platform has given rise to a number of criticisms in practice. The requirement for every consumer and trader to register to use the platform (an EU-wide database) is unattractive to some consumers and certainly to especially unreliable traders. The number of traders declining to accept ADR appears to be high, so the number of cases being resolved through the platform seems low. The national Contact Point has no role unless the consumer presses the help button. Despite the investment in online technology, it remains the case that many people – whether consumers or businesses – wish to talk to an adviser. Hence, demand for the EU’s cross-border European Consumer Centres Network (EEC-NET) (see next section) steady. If a consumer contacts an office of ECC-NET,70 in relation to a case within the ODR platform, the ECC office has no access to the case file so cannot help. That contrasts with the traditional ability of ECC offices to assist by contacting traders in their country in non-platform cases, which leads to increased case resolution rates. The platform cannot be easily reformed, since its operational requirements are specified in EU legislation.

K. EU Cross-Border Disputes: ECC-NET and the ODR Platform A system to handle consumer-trader disputes involving cross-border elements within the EU was created in 2001 as the Extra-Judicial Network (EEJ-NET), and reformed in 2005 as the European Consumer Centres Network (EEC-NET).71 The ECC-NET provides an admirable expert people-based source of advice and assistance in resolving consumertrader disputes involving cross-border elements within the EU. Each EU Member State has an EEC-NET office, containing experts on dispute resolution, who focus as contact points for consumers who wish to make a claim against a trader in another Member State. The ECC offices are notably well-informed about the national options for dispute resolution in their countries, and highly effective in advising both consumers on outgoing problems and communicating with traders on incoming problems. The network is closely linked to national consumer enforcement offices, and has undertaken a series of in-depth reports focusing on topical problems.72 In UK, the ECC office is located at the headquarters of the Chartered Trading Standards Institute in Essex.

68 Many schemes provide this, and the absence of a binding result can still lead to a high level of adherence by businesses in some countries and sectors. 69 Arbitration. 70 The ECC-NET is the EU network of consumer centres, one in each Member State, that assists consumers on information and settling disputes, including in cross-border situations. 71 https://ec.europa.eu/info/live-work-travel-eu/consumers/resolve-your-consumer-complaint/ european-consumer-centres-network_en. 72 Such as on counterfeit products, cross-border car purchase, time-share, guarantees, chargeback, online fraud, services, trust marks, air passenger ADR, Small Claims procedures, air passenger rights and online shopping.

Consumer Redress Facilitated by Regulatory Authorities 235 Its workload has grown annually, and in the ten years to 2014, the ECC-NET handled over 650,000 direct contacts.73 In 2016 it was contacted by some 110,000 consumers and handled about 45,000 consumer complaints. When the EU created its basic regime for consumer ADR bodies in 2015, it also created a new ODR platform to facilitate cross-border consumer-trader claims.74 The design of the platform envisages almost complete online functions, and this has not turned out not to be ideal and to be difficult to change, as it is mandated by legislation. From since the ODR platform started in 2016 to early 2019 it has had 8 million visits, 108,000 complaints have been submitted, but the number of cross-border cases processed through the platform has been disappointingly low at perhaps only 2%. However, exit surveys show that 41% of parties reach a direct settlement outside the platform. The European Commission is seeking to improve use of the platform.

III. Consumer Redress Facilitated by Regulatory Authorities A. Regulatory Redress Powers Many public regulatory authorities now bring about significant collective redress as part of their enforcement activities, thereby avoiding civil litigation.75 A regulator with redress powers is particularly effective when coordinated with an Ombudsman. Powers to effect consumer redress schemes, initiated by individual firms or covering several firms, have been used increasingly by sectoral regulators: in financial services since 2000,76 copied in energy in 201377 and competition law in 2015,78 environment,79 and also have been

73 The European Consumer Centres Network. 10 years serving Europe’s consumers Anniversary Report 2005–2015 (European Commission, 2015). 74 Regulation 524/2013 of 21 May 2013 on online dispute resolution for consumer disputes OJ 2013, L 165. See P Cortes (ed), The Transformation of Consumer Dispute Resolution in the European Union: A Renewed Approach to Consumer Protection (Oxford University Press, 2016, forthcoming); A Fejős and Ch Willett, ‘Consumer Access to Justice: The Role of the ADR Directive and the Member States’ 24 (2016) ERPL 33; J Hörnle, ‘Encouraging online alternative dispute resolution (ADR) in the EU and beyond’ 38 (2013) ELR 187. 75 For a recent overview and details of mechanisms and cases see C Hodges, ‘Mass Collective Redress: Consumer ADR and Regulatory Techniques’ (2015) 23 European Review of Private Law 829–74 and a pan-EU study see C Hodges and S Voet, Delivering Collective Redress: New Technologies (Hart Publishing, 2018) ch 5. 76 Financial Services and Markets Act 2000 (FSMA), s 383 (restitution order); s 404, significantly extended by the Financial Services Act 2010, ss 14 and 26(3) adding FSMA, s 404(4) –(7) (consumer redress scheme), including referring consumer complaints to the Ombudsman under FSMA, s 404B; FSMA, s 404F(7) (single firm scheme). Redress has been particularly emphasised recently as a regulatory objective: see Our future Mission (FCA, 2016) and Our Approach to Enforcement (FCA, 2018). 77 Energy Act 2013. The power to seek redress arises pursuant to breaches of regulatory requirements as principally set out in the Electricity Act 1989, s 27G and the Gas Act 1986, s 30G. In 2015/16, nearly £43 million was secured in redress. 78 Competition Act 1998, s 49C, as amended by the Consumer Rights Act 2015 (power for the Competition and Markets Authority to approve a consumer redress scheme). See Guidance on the CMA’s approval of voluntary redress schemes (Competition and Markets Authority, 2015). Competition damages is the one field in which a collective action has been introduced: Consumer Rights Act 2015, s 8 and Sch 8. 79 The Environmental Civil Sanctions (England) Order 2010, SI 2010 No 1157 and The Environmental Civil Sanctions (Miscellaneous Amendments) (England) Order 2010, SI 2010 No 1159. From 28 January 2017 to 31 August 2017 civil sanctions totalling around £60 million were paid by 44 companies, of which 21 were reactive

236 Consumer-Trader Disputes used spontaneously in other sectors such as communications,80 railways81 and water.82 This technique has recently been approved by the Australian Law Reform Commission.83 The development of regulatory redress has occurred partly as a result of evolution in the view of the role and functions of regulators. The role now encompasses ensuring that markets remain balanced playing fields.84 Thus, the regulatory response to wrongdoing should include ensuring that illicit gains are removed from infringers or those who should not retain them, and losses are repaid to those who have suffered them, thereby rebalancing the market.85 A related development is the use of compensation orders to victims in criminal proceedings,86 which criminal courts are required to consider in every case since 2013,87 following broadening in the purposes of the criminal justice system.88 The addition of civil sanctions to the criminal powers of enforcers was inspired by Professor Richard Macrory,89 and included imposing discretionary requirements that the offender must take steps specified by the regulator, within a stated period, designed to secure: (a) that the offence does not continue to recur (a ‘compliance requirement’), and (b) that the position is restored, so far as possible, to what it would have been if no offence had been committed (a ‘restoration requirement’).90 If a person refuses to comply with a discretionary requirement or undertaking, the enforcer could decide to bring a prosecution for the original offence.91 An example exists in environmental protection.92 Similarly, extended consumer enforcement powers made under the Consumer Rights Act 2015, known as ‘enhanced consumer measures’, were added to the enforcement cases where the company contacted the agency: Enforcement Undertakings accepted by the Environment Agency (Environment Agency, 2017). 80 eg Communications Act 2003, s 94. 81 Office of Rail Regulation: Empowering stakeholders through enforcement (Office of Rail Regulation, 2010). Enforcement of breaches of licences may involve use of a ‘recovery board’, such as the Freight Recovery Board. Since 2012, the enforcement policy has included incentivisation of restoration in setting penalties: Economic enforcement policy and penalties statement (Office of Rail Regulation, 2012) paras 1.9 and 4.6. 82 Water Industry Act 1991, s 22A(1). 83 Inquiry into Class Action Proceedings and Third-Party Litigation Funders (DP 85). Discussion Paper (Australian Law Reform Commission, May 2018) ch 8; at www.alrc.gov.au/publications/inquiry-class-actionproceedings-and-third-party-litigation-funders. 84 Important milestones were; P Hampton, Reducing administrative burdens: effective inspection and enforcement (HM Treasury, 2005); R Macrory, Regulatory Justice: making sanctions effective (HM Treasury, 2006); Regulators’ Compliance Code: Statutory Code of Practice for Regulators, (Department for Business Enterprise and Regulatory Reform, 2007); Regulators’ Code (Department for Business Innovation & Skills, 2013). 85 Financial services firms, for example, are required to ‘provide prompt and effective redress’ and ‘ensure that firms are not benefiting from exploitation of market failures’; The Dispute Resolution: Complaints (DISP) sourcebook (Financial Conduct Authority) ch 1, para 5.40. 86 Powers of Criminal Courts (Sentencing) Act 2000, s 130. 87 The Legal Aid, Sentencing and Punishment of Offenders Act 2012, s 63, adding s 63(2A) to the Powers of Criminal Courts (Sentencing) Act 2000, s 130. 88 Criminal Justice Act 2003, s 142. 89 R Macrory, Regulatory Justice: making sanctions effective (HM Treasury, 2006). 90 Regulatory Enforcement and Sanctions Act 2008, s 42. See Regulatory Enforcement and Sanctions Act 2008: Guidance to the Act (London, Department for Business Enterprise and Regulatory Reform, July 2008). 91 Regulatory Enforcement and Sanctions Act 2008: Guidance to the Act (Department for Business Enterprise and Regulatory Reform, July 2008) para 50. 92 A restoration requirement under the Regulatory Enforcement and Sanctions Act 2008, s 42(2)(c), or accepting an undertaking under s 50. The Environment Agency’s powers arise under The Environmental Civil Sanctions (England) Order 2010, SI 2010 No 1157 and The Environmental Civil Sanctions (Miscellaneous Amendments) (England) Order 2010, SI 2010 No 1159.

Consumer Redress Facilitated by Regulatory Authorities 237 toolbox specifically to assist in achieving redress, compliance and consumer choice.93 They give enforcement officers considerable flexibility in crafting remedies that are proportionate and appropriate to the circumstances, and increase the swift achievement of redress by official action in the collective interests of consumers.94 Such measures are subject to a cost proportionality requirement95 and certain safeguards.96 It is relevant that the 2010–2015 UK Coalition Government rejected a litigation approach to consumer redress (and a collective action procedure) and favoured voluntary redress schemes and ADR, encouraging and backed by new powers for regulators.97 Although collective litigation was a theoretical option, the government was ‘concerned about the scope for such mechanisms to create incentives for intermediaries, the economic cost of such intermediation and the very heavy burden which a proliferation of such cases may impose on businesses’.98 The government’s preferred approach sought to encourage businesses to put in place schemes aimed at providing redress to consumers collectively when a breach of consumer law arises and causes consumers significant losses.99

B. Overseeing Delivery of Redress Merely because a firm undertakes, or is ordered to deliver, redress does not necessarily mean that appropriate redress is made in practice. This may particularly be the case where one or more traders are ordered, or volunteer, to institute a mass redress scheme. In order to verify that the scheme has been fully and appropriately operated, ongoing oversight or auditing is necessary. In relation to mis-selling of PPI, for example, after the (then) Financial Services Authority set out a proposal for guidance on the fair assessment and redress of complaints related to sales of PPI, and rules requiring firms to re-assess complaints against the proposed new guidance,100 the FCA has audited firms’ performance in the delivery of redress, found

93 Enterprise Act 2008, s 219A, inserted by the Consumer Rights Act 2015, s 79 and Sch 7, art 8. For the policy see Enhancing consumer confidence through effective enforcement: Consultation on consolidating and modernising consumer law enforcement powers (Department for Business, Innovation and Skills, March 2012). 94 Enhanced Consumer Measures. Guidance for enforcers of consumer law (Department for Business Innovation & Skills, 2015). 95 An enforcement order or undertaking in the redress category may only include redress measures in a loss case and if the court or enforcer is satisfied that the cost of such measures to the subject (excluding administrative costs) is unlikely to be more than the sum of the losses suffered by consumers as a result of the underlying conduct: Enterprise Act 2008, s 219B (2), (4) and (5). 96 Enterprise Act 2008, s 219C. 97 Civil enforcement remedies: consultation on extending the range of remedies available to public enforcers of consumer law (Department for Business Innovation and Skills, 2012). 98 ibid, para. 3.10. The exception it made related to competition law, see below. 99 Civil enforcement remedies: consultation on extending the range of remedies available to public enforcers of consumer law (BIS, 5 November 2012), www.bis.gov.uk/assets/biscore/consumer-issues/ docs/c/12-1193-civil-enforcement-remedies-consultation-on-extending. 100 www.fsa.gov.uk/pages/Library/Corporate/Annual/ar09_10.shtml. The banks then challenged the Guidance through judicial review, but lost: R (on the application of the British Bankers’ Association) v Financial Services Authority [2011] EWHC 999 (Admin). See Finalised guidance. Payment protection products. FSA/OFT joint guidance (Office of Fair Trading and FSA, 2013).

238 Consumer-Trader Disputes some wanting, ordered rectification, and instituted sanctions against some.101 Action was also taken against fraudulent intermediaries.102

C. Examples of Regulatory Redress Paid The figures for redress delivered by regulators are impressive.103 The FCA has been using the technique since 2000, and between April 2014 and November 2015, the FCA established 21 informal redress schemes, which it estimates have provided £131 million in compensation to consumers.104 In 2016 and 2017 the FCA’s enforcement cases included £1.3 billion in redress. In one enforcement case, Ofcom imposed a fine of over £3 million but also required refunds and goodwill payments to be paid to some 62,000 customers totalling around £2.5 million.105 In the period 2010 to 2015 Ofgem obtained over £131 million worth of redress for consumers.106 Like various other authorities, Ofgem uses redress as an enforcement tool: redress represented 92.5% of the volume of penalties imposed in 2014/15.107 In the 13 cases concluded in 2015/16,108 £43 million was, or would be, paid out by licensees. Almost all of that money was paid either as compensation to affected consumers, or voluntary redress payments to charitable organisations (along with nominal penalties totalling £15).

101 Assessing the quality of investment advice in the retail banking sector. A mystery shopping review (FSA, F ebruary 2013); Payment protection insurance complaints: Report on the fairness of medium-sized firms’ decisions and redress (Financial Conduct Authority, 2013), TR13/7. The FSA imposed a financial penalty of approximately £4.3 million on Lloyds TSB Bank, Lloyds TSB Scotland and Bank of Scotland for failure to pay redress promptly to PPI complainants between 5 May 2011 and 9 March 2012. The FCA fined Clydesdale Bank £20,678,300 (after a 30% discount for early settlement) on 15 April 2015 for failures in processes for handling 126,000 PPI complaints between May 2011 and July 2013, in which 42,200 may have been rejected unfairly and 50,900 resulted in inadequate redress. It fined Lloyds Banking Group £117 million for mishandling thousands of PPI complaints between March 2012 and May 2013, and extracted an agreement by the bank to review 1.2 million complaints, for which a further £710 million was added to the £12 billion already set aside to cover repayments. 102 A significant number of PPI claims brought by intermediaries were unsubstantiated or fraudulent, necessitating regulatory action. See recently Claims Management Regulation. Proposals for amendment to the Conduct of Authorised Persons Rules (Ministry of Justice, August 2012); CAB evidence briefing: The claims pests – CAB evidence on PPI and claims-management companies (Citizens Advice Bureau, November 2012), available at www. citizensadvice.org.uk/index/policy/policy_publications/er_legal/the_claims_pests.htm; Claims Management Regulation: Approach and Enforcement of the Referral Fee Ban (Ministry of Justice, November 2012); Press release ‘Rogue PPI claim companies targeted by fines and toughened regulations’ (Ministry of Justice, 21 November 2012). Payday Lending Compliance Review. Interim Report (OFT, November 2012), OFT1466; The PPI Claims market: Dealing with malpractice (Ministry of Justice, February 2013), available at www.justice.gov.uk/downloads/ claims-regulation/ppi-claims-market-malpractice.pdf; Rogue PPI Claim Companies Targeted by Fines and Toughened Regulations (Ministry of Justice, 21 November 2013) available at www.gov.uk/government/news/ rogue-ppi-claim-companies-targeted-by-fines-and-toughened-regulations. 103 See C Hodges and S Voet, Delivering Collective Redress: New Technologies (Hart Publishing, 2018). 104 Financial services mis-selling: regulation and redress (National Audit Office, 2016), HC Paper No.851. The figure excludes an interest rate hedging products scheme and other schemes which were established in 2013. 105 Consultation on a proposed new power for Ofgem to compel regulated energy businesses to provide redress to consumers (Department of Energy and Climate Change, 2012) para 13. 106 Strengthening enforcement in gas and electricity markets: A DECC consultation on amending Ofgem’s powers (Department of Energy & Climate Change, 2015) 11. 107 Enforcement Overview 2014/15 (Ofgem, 2015). 108 Enforcement Overview 2015/16 (Ofgem, 2016). See M Canto-Lopez, ‘Ofgem’s Recent Trends in Enforcement: Settlements, Redress and the Consumer’s Interest’ (2016) 21(2) Utilities Law Review 66.

Consumer Redress Facilitated by Regulatory Authorities 239 An additional amount of £3 million was secured through alternative action.109 Of this £46 million, £26.4 million was, or will be, made available to compensate directly affected customers (and former customers). Any unclaimed consumer compensation was, or will be, paid to charitable organisations. The remaining £19.3 million took the form of payments to charities or other third sector organisations in lieu of financial penalties.110 More than 630,000 consumers benefitted from remediation schemes set up with money following seven investigations completed in 2015/16 and 12 investigations completed in 2014/15. Of those customers, around two-thirds received a direct compensation payment while the remaining third benefitted from projects set up by charities and other third sector organisations who received voluntary redress payments. In 2014, Ofwat agreed with Thames Water that the company would reduce prices by £79 million for its 14 million sewerage customers, and spend a further £7 million on schemes to benefit customers.111 Civil sanctions imposed or agreed by the Environment Agency from 28 January 2017 to 31 August 2017 totalled around £60 million, paid by 44 companies.112 The money was paid predominantly to local charities that had objectives to protect the local environment that had been harmed by the infringing emissions. In the previous period from 1 August 2016– 27 January 2017, total financial contribution to charities were £1,564,761 by 26 companies or individuals.113 The Gambling Commission agreed a settlement in 2014 with Betfred, under which £443,000 was paid to the victims of criminal activities by an employee of the company, and £344,500 was paid to socially responsible causes in lieu of a financial penalty.

D. The Behavioural Context of Regulatory Enforcement A significant advantage of including remedies on behaviour, market choice and redress in the remit and powers of enforcers is cost efficiency. Innovative regulators found that they could not only deliver mass redress effectively and efficiently, but do so more swiftly and at a lower overall cost than if public and private aspects remained to be pursued through separate avenues. Further, all the behavioural, sanctioning, compliance and restorative aspects of a case could be resolved at once through initiative taken by a regulatory authority that has sufficiently wide powers. Wherever a collective redress power exists, especially if it is embedded within a collaborative relationship between regulators and firms, it has been 109 Where appropriate, voluntary payments to charitable organisations have also formed a part of alternative action work. Perhaps most notably, Ofgem used alternative action to secure a payment of £3 million from National Grid to the fuel poverty charity National Energy Action, because National Grid had failed to meet its target for repairing non-urgent gas escapes on its gas distribution networks. In July 2015, another piece of alternative action work resulted in securing free energy for over 1,000 directly affected customers. The customers received free energy until the supplier involved had fully implemented Energy Ombudsman remedies that had previously been agreed for those customers. 110 These were paid to entities such as Citizens Advice Scotland, Citizens Advice England and Wales (includes funding for Citizens Advice Bureau programmes such as Energy Best Deal Extra and Energy Best Deal Extra Prepayment meter project), the Carbon Trust, StepChange and Business Debtline. 111 Available at www.ofwat.gov.uk/wp-content/uploads/2016/02/not_fne20140722tmssewerflood.pdf. 112 Enforcement Undertakings accepted by the Environment Agency (Environment Agency, 2017). 113 Enforcement Undertakings accepted by the Environment Agency (Environment Agency, 2016).

240 Consumer-Trader Disputes found to significantly speed up resolution of cases,114 thereby saving regulators’ and firms’ resources. Ensuring that all public bodies secure redress as an integral part of their supervision and enforcement actions, where appropriate and proportionate to do so, could significantly increase redress paid to those harmed, engage efficiencies between civil, regulatory and criminal proceedings, and encourage voluntary and ADR redress systems. In order to enable wider benefit from use of this regulatory redress technique, the use of redress powers should be mandated and encouraged by all public enforcers, and police and criminal courts should be encouraged to use compensation orders. This redress policy could be included in the Regulators’ Code and incentivised in the published Enforcement Policies of all enforcers.115

IV. Core Functions The dispute resolution pathway for consumers wishing to complain against traders has been transformed in recent years. The Resolver-to-Ombudsman pathway has emerged as a major option, and generally operates well in those sectors where leading Ombudsmen exist. Those bodies use advanced digital systems and so collect and aggregate increasing quantities of market data on the behaviour of traders, consumers and markets that is fed back well. However, the consumer landscape is still in transition and various parts need attention. Let us examine some of the major core functions. An important feature is that the Ombudsman jurisdiction is inherently wider than that of courts or arbitration. The latter apply the law and the former reach decisions on the basis of what seems fair and reasonable in the circumstances. This difference in scope is an important factor that adds to the attractiveness for consumers of Ombudsmen over an Online Court option. Would the courts be irrelevant under a model based around Ombudsmen? On one view, that result may seem inevitable. However, there is a strong argument that lack of clarity in rules to be applied by Ombudsmen (whether under Codes of Conduct, regulations or primary law) go outside the area of discretion of Ombudsmen and should be decided by those who are responsible for making and interpreting the relevant source materials. As noted above, some Ombudsmen have a mechanism for points of law to be referred to a court, and then the Ombudsman can apply the ruling in individual cases.

A. Information Extensive information on consumer rights and how to complain is now widely available on the internet. Of course, information is available from advertising or other information 114 The norm is for cases to be resolved by agreement between regulators and firms, at a far earlier stage than if formal investigations and prosecutions and civil proceedings had run their full course. The same phenomenon is found in use of similar powers in Denmark. 115 One way to do this would be to incentivise ethical business practice: see C Hodges, Ethical Business Regulation: Understanding the Evidence (Better Regulation Delivery Office, 2016). Complaint handling standards for financial services firms require voluntary initiatives: Financial Risk Outlook 2010, FSA, March 2010, 69. The FCA’s decisionmaking process in relation to taking regulatory action lists, among the factors that will be taken into account, any remedial steps that the person has taken in relation to the breach: Decision Procedure and Penalties (DEPP) Manual (Financial Conduct Authority) DEPP 6, para (2)(d).

Core Functions 241 supplied with products and services by sellers, which has been subject to increasing regulatory constraints in relation to accuracy. Some sites and analyses have developed reputations for independence and trust, such as MoneySavingExpert.com. Ombudsmen websites provide extensive information on consumer rights and pathways. Given the evolution in actors, technology and structures that is currently occurring, some modernisation is called for.

B. Advice and Assistance Many consumers do not nowadays need assistance in making a complaint against a trader. They may need assistance in checking the law. Consumer advice has traditionally been made available from bodies such as Citizens’ Advice and the consumer association Which? The clientele of bodies tends to be different socio-economic groups. A third source of legal advice from the introduction of legal aid in 1957 was solicitors, but successive cuts in public funding have closed down that option. Legal advice on some matters may be available through membership of a trade union or other organisation. Legal expenses insurance is widely available for some matters as an add-on to many household or motor insurance policies, but is not used save for pursuing specific legal claims. The Small Claims track was designed in the 1960s to provide a simple mechanism that could be operated without lawyers. The ADR pathways are designed to operate without lawyers. This is true of arbitration-based ADR schemes but is especially true for Ombudsman schemes, in which consumers can talk to a case handler. The Online Court has adopted the Ombudsman model of case handlers. Courts just process claims, they do not advise people on whether they have a claim, or some other sort of problem, or which process might be best to resolve it. Pro bono advice services are available to some county courts. If lawyers are too expensive to assume this role, the system has to accommodate intermediaries who provide more engaged assistance than judges traditionally do. Ombudsmen appear to have found this balance under a process that is essentially investigative. Court or arbitration processes find such accommodation of assistance to parties more of a challenge, since their procedures are essentially adversarial. Judges in Small Claims courts have made accommodations in this respect, and case handlers in the Online Court will need to be sufficiently trained and experienced to assume a number of relevant skills if that system is to be effective and command trust. The rationale of providing simple accessibility for consumers, rather than a multiplicity of diverse sources of assistance, has just been implemented by the UK Government in the consolidation of consumer advice for pensions, debt, money and consumer protection into the single financial guidance body.116 This principle should be applied across the consumer spectrum. The leading Ombudsmen have paid special attention not just to achieving just and fair outcomes in individual cases but to the quality and perception of the response to a complaint, both by the Ombudsmen themselves and by their business customers about whom the complaint is made. This engaged human response is seen not only as important in itself, but is also supported by research over several years that shows that consumers are

116 Financial

Guidance and Claims Act 2018, Pt 1.

242 Consumer-Trader Disputes prepared to return to buy the products or services from a business about whom they have complained as long as the business had taken the complaint seriously and treated them with respect, even if the consumer did not get the decision they wanted.117 Good complaint handling is seen as important by public and private sector Ombudsmen.

C. Dispute Resolution Pathways The position seems to be that ADR, especially Ombudsmen, are replacing courts, and have already done so in the leading regulated sectors. It is widely accepted that courts take too long to resolve small claims, even in the Small Claims Track. A 2018 survey, involving relatively limited numbers, confirmed a number of important points.118 First, both ADR and court processes were perceived to be simple and fair. Secondly, some ADR schemes still presented some problems, but so did courts. Thirdly, ADR processes were quicker and cheaper than courts. Fourthly, sums involved in ADR processes tended to be lower than those in courts, which appears to confirm a cost-proportionality barrier for the latter. Fifthly, ADR users had a typical profile of older educated males, which suggests that more outreach could be done. All the ADR and Ombudsman models are intended to encourage an initial step of direct contact between consumer and trader, so as to solve problems quickly and without further escalation or cost. Consumer businesses of any size operate customer care and complaint mechanisms. In consumer businesses with high reputations, those functions are highly responsive and impressive: they often aim to capture any and all information as feedback from consumers – good or bad – so as to be able to learn and improve.119 In some sectors, the existence and aspects of operation of consumer complaint systems are required under regulatory law.120 The Resolver platform emerged in around 2013 for consumers to enter their complaints and have them transferred to traders’ customer service departments. At the next stage, the Small Claims track adopts an informal procedure that facilitates discussion between the parties before a decision by a judge. An arbitration-based ADR scheme typically only involves a decision stage without mediation. A number of ADR bodies are based on arbitration, in which parties must agree to be legally bound by the result beforehand. That binding effect is intrinsically unattractive to many consumers. The typical Ombudsman track, as noted above, provides a three-stage process of triage, mediation and decision. Thus, the Ombudsman pathway is highly attractive. Any final recommendation by the Ombudsman is typically not legally binding on the consumer unless the consumer accepts it, in which case it is binding on the trader. That model is attractive to consumers, who are able to preserve their right to go to court if they wish. The main reason for the Ombudsman model becoming popular and spreading is because it is user-friendly and free for consumers to access and use. It is no surprise that the Resolver platform and the leading 117 In 2017 and 2018 that category of consumers totalled 75% in the surveys carried out by Consumer Action Monitor, at www.ombudsman-services.org/about-us/annual-reports/consumer-action-monitor-report. 118 Resolving Consumer Disputes. Alternative Dispute Resolution and the Court System. Final Report (Department for Business, Energy & Industrial Strategy, 2018). 119 C Hodges, ‘Best Practice in Customer Care in the UK’ in C Hodges, I Benöhr and N Creutzfeldt-Banda, Consumer ADR in Europe (Hart Publishing, 2012). 120 eg, financial services, energy and others.

Core Functions 243 Ombudsmen have linked up to form a seamless automated and efficient pathway. It will be interesting to see if the Online Court is attractive to consumers. It may simply be too late to displace Ombudsmen. Further improvements in the speed of the process are being made. For example, an artificial intelligence suggestion based on previous experience of similar cases, or an advisory opinion in the Resolution Plus system given by an Ombudsman right at the start of the complaint process can assist in solving cases within a few days that might otherwise take 16 weeks (8 weeks in the consumer-trader phase and 8 weeks in the Ombudsman phase). Any Ombudsman involved at that early stage will not be involved if the case goes to Ombudsman Services. This short-circuiting design is similar to the recent Dutch pre-advisory court opinion, and to a UK regulator’s ‘assured advice’ under the Primary Authority scheme. Although a good model has emerged in Resolver and the consumer Ombudsmen, it has not yet been fully developed. There are various inter-linked problems. Coverage of consumer ADR schemes (of whatever type) is not universal across all trade sectors, and it is confusing for consumers to attempt to find or use an ADR or Ombudsman scheme where traders do not respond. The issues therefore lie with a shortfall in the width of coverage and in making the consumer ADR system either sufficiently attractive or mandatory for traders in more, or all, sectors. The coverage issue has not been helped by a ‘hands off ’ policy in government, permitting competing ADR schemes to exist in different sectors. Competition between ADR providers is lowering quality, reputation of, and trust in, the Ombudsman/ ADR system, and confusing consumers and traders. Differences in price are undermining quality. Various developments in the UK are moving towards consolidation and extending coverage: • The motor sector has successfully shifted from its Motor Codes scheme into an independent Motor Ombudsman, which has (not surprisingly) led to an increase in consumer contacts, given a high level of trust in the concept of an independent Ombudsman. • The government intends to create a single Ombudsman in the housing market, mandatory for all landlords, estate agents, letting agents etc.121 • A single Ombudsman has been appointed in the rail sector. There is consideration in the aviation sector122 of how a compensation scheme should work in the interests of consumers’ and whether there should be a single mandatory ADR scheme.123 It should be standard for traders to make automatic electronic (re)payments to customers, without the need for passengers to make a complaint, backed by an Ombudsman system. • There should be a single Ombudsman for utilities (energy, water) and postal services.

121 Strengthening consumer redress in the housing market A Consultation (Department for Health, Communities and Local Government, 2018). 122 The Civil Aviation Authority attempted to achieve a single Ombudsman in 2015 by persuading airlines to join CDR schemes or create their own, but was unable to wield sufficient political pressure, and the result has been unsatisfactory and resulted in fractured coverage. See Consumer complaints handling and ADR: CAA policy statement and notice of approval criteria for applicant ADR bodies (Civil Aviation Authority, 2015) and previous consultation papers. 123 Beyond the horizon, The future of UK aviation. Next steps towards an Aviation Strategy (HM Government, 2018).

244 Consumer-Trader Disputes • The Pensions Ombudsman and the Financial Services Ombudsman could be merged. • There should be a single Ombudsman for professional services, extending the Legal Ombudsman. In 2019, it appears that government is moving to extend Ombudsmen schemes to more sectors and to make them both compulsory for traders in those sectors and to have sole jurisdiction. A 2018 Government Green Paper identified that key problems are lack of takeup in non-regulated sectors where ADR is not mandatory, low consumer awareness and difficulties in making complaints.124 It noted that having more than one provider per sector is not beneficial.125 Those are problems in relation to the users of ADR (consumers and traders) but some of the answers arise from the need to reform the intermediaries, namely the ADR system itself, its landscape and entities. Innovative solutions are being discussed for making ADR services attractive to SMEs so as to solve coverage and funding issues.

D. Collecting, Aggregating and Feeding Back Data The collection of data has a long history in all regulatory systems relating to consumer safety, such as the safety of medicines, medical devices and general consumer products. Specific reporting requirements and systems exist for medicines (pharmacovigilance), medical devices (medical device vigilance), food, biocides, cosmetics and general product safety (including RAPEX). Whilst Citizens Advice, the consumers’ association and similar bodies have collected data on trading behaviour and problems, no system has historically existed for the systematic monitoring of general trading behaviour, such as advertising, contract terms, quality of delivery, or for services generally. The arrival of large consumer complaint databases enables this general market monitoring function to be achieved. Means of combining data from traders, consumers, intermediary platforms, dispute resolution systems and regulatory authorities are now starting to be constructed. Attempts to share data on a more sophisticated manner between different public authorities are being explored. One rationale for data sharing between authorities is to be more efficient, but another responds to the recognition that evidence of wrongdoing (or even correct behaviour) by individual businesses in one situation (eg, tax compliance) may be a useful indicator of behaviour in another situation (eg, safety or environmental compliance).

i. The Need for Coordination of Regulatory Bodies It is a core function of a regulator to exercise scrutiny and surveillance of the market. But regulators are moving away from trying to be the focal point for complaints, since other sources of data can be more efficient. However, the various sources of data need to be joined up so that the regulator can have access to all aggregated data from all sources, and apply expertise in reviewing it. In the most advanced regulated sectors, the data aggregation

124 Modernising consumer markets: green paper (Department for Business, Energy & Industrial Strategy, 2017) paras 144–52. 125 ibid, para 152.

Core Functions 245 function is centred on Resolver and the Ombudsmen. This function requires collaboration between regulatory authorities, manufacturers, distributors and retailers.126 Attempts to share data on a more sophisticated manner between different public authorities are relatively new. An example of aggregation and feedback of data occurs to some extent, principally in relation to the safety of goods, although different mechanisms exist for different types of goods. Thus, distinct systems exist for medicines (pharmacovigilance), medical devices (medical device vigilance) and general product safety (including RAPEX). Systems do not exist for the systematic monitoring of general trading behaviour, such as advertising, contract terms, quality of delivery, or for services generally. These data collection systems usually operate within businesses, or centralise certain important data for individual public authorities, whether that is transmitted from businesses, for example as serious event reports, or direct from complaints received from the public. Data is also increasingly shared between different authorities, partly to be more efficient, and partly because it is recognised that evidence of wrongdoing (or even correct behaviour) by individual businesses in one situation (eg, tax compliance) may be a useful indicator of behaviour in another situation (eg, environmental compliance).

ii. Designing the System to Maximise Data Collection The question that arises is how to maximise information coming into the system. If one were going to try to collect as much data as possible, one would aim to connect as many databases as possible, and to rationalise the number of different systems so as to avoid confusion. The parameters for such a system should be: • A small number of clearly identifiable and linked pathways127 rather than multiple different and unconnected pathways. • User-friendliness. • Clear, integrated pathways for consumers: eg advice, triage, mediation, decision, application. The existence of both too many ADR bodies in the UK with different models, and of gaps in coverage, does not help to maximise the flow of data that could be put to good use. The Belgian model is the best model to date. It has a single national website and portal provided by the Consumer Mediation Service that provides consumer information and links to the relevant Ombudsman or other consumer ADR entities. The six leading sectoral Ombudsmen in Belgium are all located in a single building, and have worked together with increased coordination and alignment. 126 For general products see Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee: More Product Safety and better Market Surveillance in the Single Market for Products, COM(2013) 74, 13.2.2013; for medicinal products see Regulation (EC) No 726/2004. 127 This issue has recently been emphasised by the United Nations Commissioner for Human Rights in a Report on ADR (stating ‘The need for realistic and readily-identifiable pathways to an effective remedy’, emphasis added): Improving accountability and access to remedy for victims of business-related human rights abuse through State-based non-judicial mechanisms: explanatory notes to final report – Report of the United Nations High Commissioner for Human Rights – Note by the Secretariat (UNCHR, 1 June 2018).

246 Consumer-Trader Disputes A similar integrated ADR model operates in the Netherlands for most business sectors (financial services and health insurance providers have their own systems). A single body (De Geschillencommissie Stichting) administers around 80 different sectoral Dispute Resolution Boards that operate to the same basic template. The central body is strikingly efficient and keeps costs low: until recently it was funded 20% by the State and 80% by industry. It is, however, held back by operating through an arbitration model (involving decisions made by panels of three people), although it is aiming to introduce more mediation into the process. There is also a conundrum of how to extend ADR coverage to the many smaller traders who are not members of the 80 trade bodies that fund the central administration. The Low Commission called for streamlining of the many public and private Ombudsmen:128 The multiplicity of Ombudsman schemes with different powers covering private sector and consumer markets reflects a similar fragmentary pattern to that of the public sector, and there have been calls for reform to streamline redress systems across linked sectors and markets so that problems are less likely to fall between the redress ‘stools’. Both Which? and the Co-operative Party for example have called for the establishment of a single ‘Consumer Champion Ombudsman’, so that consumers who feel ripped off by energy firms, high-street stores, letting-agents and mobile phone companies would be able to direct their complaints at a single, all-powerful watchdog rather than battling with as many as 17 different Ombudsmen as they do now.129 There are also long running debates about whether statutory Ombudsman schemes covering financial, legal, private property transactions and other professional services might be joined up more effectively.

Since the Resolver platform has achieved extensive and unique market coverage in the UK, it effectively provides the basis of a national portal for complaints, that directs them first to the relevant traders and then to relevant CDRs/Ombudsmen. However, the system is able also to integrate advice and assistance to businesses on swift responses to individual complaints, and to assemble data from various sources (traders, Resolver and Ombudsmen) that are fed back to inform actions and behaviour. Resolver’s decision to become a not-for-profit entity opens the door to it becoming the de facto single national consumer portal, if integrated with Citizens Advice. The 2018 Consumer Green Paper emphasised the importance of data in future markets (eg, the need to collect and publish performance data).130 Older ADR models or courts do not provide for collection, aggregation or feedback of market data: Ombudsmen and Resolver do this well. The system should be redesigned so as to collect data that will then be used to drive behaviour and enforcement. Hence, these issues indicate a switch to universal application of an Ombudsman model of ADR and connecting in other sources, including information from traders and suppliers’ own monitoring, from competitors, and from users (questions, social media, complaints and claims). This points to a review of the architecture involving Citizens’ Advice, consumer associations, advisory bodies and platforms such as Resolver. There have been increasing calls for the consumer information and redress landscape to be rationalised. A Report for a Parliamentary committee recommended that there should be mandatory Ombudsman membership for traders in all consumer sectors, and this was 128 Getting it Right in Social Welfare Law. The Low Commission’s follow-up report (The Low Commission, 2015). 129 http://party.coop/2013/12/19/consumers-need-a-single-consumer-champion/. 130 Modernising consumer markets: green paper (Department for Business, Energy & Industrial Strategy, 2017) paras 67 and 68.

Core Functions 247 endorsed by the committee.131 The landscape needs rationalising and gaps should be filled, adopting the Ombudsman model as standard and mandatory.

iii. Information Feedback Being able to compile a significant amount of data on market behaviour, with minimal delay, enables the information to be fed back to affect the behaviour of traders, consumers, regulators and others. The leading Ombudsmen and Resolver are already performing innovative ways of doing this, to businesses of all sizes, not least including SMEs. Development of those actors should save resources of public bodies. Since September 2009, the FOS has published half-yearly figures on the complaints it has handled about individual, named, firms that have at least 30 new and 30 resolved cases during the period.132 The figures show the number of new cases and the percentage of closed cases in which the Ombudsman service changed the outcome in favour of the consumer. From the same date, the Financial Standards Authority (FSA) published regular reports of the overall number of complaints reported by all firms,133 broken down by type of firm, the products and services complained about and the cause of the complaints, as well as overall figures on the number of complaints closed within eight weeks and the proportion of complaints upheld or rejected by firms.134 From 2010, the FSA required firms receiving 500 or more reportable complaints in any six-month period to publish details of the complaints received in the period as well as details of all the complaints closed in the period. The regulator then aggregates the data and publishes it by firm.135 Similar publication arrangements have been adopted by other UK CDR entities, such as the Legal Ombudsman.136 All the leading Ombudsmen hold regular meetings with regulators and businesses (separately) to discuss the implications of the latest data and what actions need to be taken. In the financial services sector, recognition that joint scrutiny of trends in complaints data can help reveal common failings in firms’ conduct and that where these are identified early the regulators have an opportunity to address issues before they mushroom, led to a revised system being put in place for identifying emerging risks involving the responsible bodies in the 2010 and 2012 legislation.137

131 Report from the Ombudsman Inquiry (All-Party Parliamentary Group on Consumer Protection, 2019). 132 www.ombudsman-complaints-data.org.uk. 133 The figures which firms report do not include the complaints which have been resolved to the satisfaction of the complainant by the close of the next business day. 134 www.fsa.gov.uk/Pages/Library/Other_publications/complaints_data/index.shtml. 135 FSA originally proposed to publish the complaints returns submitted to it by firms. The industry argued that this would be unlawful, as this was confidential information collected for another purpose. FSA’s solution was to require the firms to publish, which meant the data were no longer confidential, so FSA could then republish them itself. 136 Since July 2012, see www.legalombudsman.org.uk/research-decisions/complaints-data.html. 137 Financial Services Act 2010 and Financial Services Act 2012, both amending the FSMA. See Discussion Paper 10/1. Consumer complaints (emerging risks and mass claims) (Financial Ombudsman Service, Financial Services Authority and Office of Fair Trading, 2010). The first case study related to precipice bonds, which involve a lump sum with a guaranteed high income level but the small print said that if the stock market falls below a certain level the investor’s ‘guaranteed’ income would come out of capital. There were a number of cases against one bank, mostly involving older customers, located right across the country, who were targeted through a phone call, hence indicating a formal policy rather than local practice. FOS informed the FSA, and the bank was fined £1.7m, and the FSA also indicated that consumers in a defined group should automatically be compensated, with others being entitled to go to FOS.

248 Consumer-Trader Disputes In the financial sector, a Co-ordination Committee138 comprises the FCA,139 the CMA, and the FOS. The FCA also liaises with the Claims Management Regulator, including sharing intelligence.140 The Committee considers: • whether new and emerging risks that have been identified are likely to result in mass claims if mitigation is not put in place; and • the relative merits of dealing with particular issues by regulatory action or by means of individual complaints. The Committee may decide to seek information from the industry or consumer bodies. If the FCA sets a clear timetable for regulatory action, the FOS can decide whether or not it would be appropriate to put cases on hold. Once the regulator has taken regulatory action, the FOS can decide whether or not it would be appropriate to dismiss complaints. The authorities noted that, in some instances, only the courts can provide an authoritative answer on the legal effect of a contractual term underlying a mass claim, for example when the law is unclear.141 An example occurred in relation to a lengthy dispute over the level of bank charges.142 Another example is the energy sector, where regular coordination meetings are held between the regulator (Ofgem), the Energy Ombudsman and Citizens Advice (whose Extra Help Unit case manages issues with vulnerable consumers) to consider the implications of the latest complaints data and determine who should take what action. Action can range from enforcement action by the regulator to conversations by one of the other bodies with individual companies or trade bodies.

E. Affecting Behaviour In the consumer trading sector, the function of affecting the behaviour of traders has been considered for the past 50 years to be a core function of public regulatory authorities (and not of courts). As noted in chapter two, the manner in which regulators approach this task has undergone a significant transformation in the past decade or so. Indeed, the spread and existence of regulators focusing on traders’ behaviour has diminished pressure on the courts and other parts of the dispute resolution system to try to address that role. In recent years, most of the consumer Ombudsmen have developed not only a strong relationship in support of regulatory authorities but have also been able to experiment with expanding into the behavioural space, by using and exploiting their unique asset of highly relevant data. Their ability to amass relevant data and publish it has considerable effect. 138 The minutes of the Coordination Committee are published at www.fsa.gov.uk/Pages/Library/Other_publications/coordination/index.shtml. 139 The FCA’s role includes undertaking comprehensive risk analysis and research to identify, at an earlier stage, the sources and nature of risks to retail customers: A new approach to financial regulation: building a stronger system (HM Treasury, February 2011). 140 See Memorandum of Understanding between the FSA and the CMR, at www.fsa.gov.uk/pubs/mou/fsa_cmr. pdf. 141 Discussion Paper 10/1. Consumer complaints (emerging risks and mass claims) (Financial Ombudsman Service, Financial Services Authority and Office of Fair Trading, March 2010) para 5.29. 142 Office of Fair Trading v Abbey National plc & Others [2009] UKSC 6.

Conclusions 249 However, the major change is the ability to engage directly with traders in a quasi-regulatory capacity to discuss actions that traders need to take to reduce the incidence of problems that are identified by the data, and also to assist directly by supplying consultancy services within the business organisation to support changes in behaviour and culture. Much of this has occurred spontaneously for two reasons. First, requirements for service providers to treat customers fairly have become central to regulatory requirements in regulated sectors. Secondly, many of the consumer Ombudsmen are empowered to make decisions on the basis of what is fair and reasonable in the circumstances of the case, taking the law into account. Regular meetings are held between the Ombudsmen regulators and service providers to address issues and behaviour. For example, Ombudsman Services holds regular meetings with the energy regulator Ofgem and Citizens Advice, in which data is shared and an action plan is agreed on which of them will do what in working with the relevant trading company or companies, and who will act to reduce consumer detriment. Ombudsman Services has been able to develop further assistance to businesses on achieving changed behaviour, in line with the emerging standard of Ethical Business Practice.143 These are very powerful and exciting developments.

V. Conclusions An excellent model has been identified that provides an integrated, efficient and effective means of monitoring consumer markets, identifying problems, solving issues of underlying behaviour, resolving disputes and making amends, and applying learning to reduce future risk. The integrated model involves various actors working together, from traders, consumers, regulators and new intermediaries like Resolver and Ombudsmen. In this integrated system the complaints and dispute resolution functions play a critical part in identifying and aggregating the data that drives surveillance, intervention and control of market behaviour. Consumers play an essential role,144 and should be encouraged to raise complaints with traders, perhaps through the Resolver platform, and then with Ombudsmen, involving digital files being flipped from traders or Resolver into the Ombudsmen. The data system only functions well if the various data sources attract sufficient data and are joined up. The model is still relatively new but it is clearly the model to be adopted as standard. It works well in some regulated sectors, but has yet to spread across all consumer markets. Various amendments need to be made to the consumer landscape to modernise and rationalise it. All ADR schemes should be Ombudsman schemes, not as arbitration-based ADR schemes or complaint functions within regulatory authorities, and all traders should be required to be subject to them. If consumer Ombudsmen are the new courts, they should be designed to act as such.145 Therefore, the issue to be addressed is to complete the coverage by Ombudsmen of all sectors, with all traders.

143 C Hodges and R Steinholtz, Ethical Business Practice and Regulation (Hart Publishing, 2017). 144 C Hodges, ‘The Consumer as Regulator’ in D Leczykiewicz and S Weatherill (eds), The Images of the Consumer in EU Law: Legislation, Free Movement and Competition Law (Hart Publishing, 2016). 145 C Hodges, ‘Consumer ombudsmen: better regulation and dispute resolution’ (2015) 15(4) ERA Forum 593.

250 Consumer-Trader Disputes We should complete the clear shift from courts to Ombudsmen in relation to consumer complaints. The structural recommendations for the new model are: • There should be a simple national system for consumer complaints, involving basically the same framework model (whilst permitting some relevant divergence and innovation). The state of the art model is that of the Ombudsmen and that should be the standard model. • There should be a single integrated national architecture of consumer Ombudsmen. This would comprise: ◦◦ A single national website for providing consumer advice and signposting the relevant Ombudsman. ◦◦ An integrated national structure for providing advice to people locally face-to-face, involving Citizens Advice and the Ombudsmen. ◦◦ An integrated national structure for Ombudsmen, involving only a small number of Ombudsmen (fewer than at present). • There should be a mechanism for referring points of law for decision by a court and reference back. A particular conundrum arises in extending coverage to all small companies (SMEs). The way forward on this lies in completing developments in the SME sector discussed in chapter fourteen below. When the Online Court arrives on the scene, will it retake cases from the Ombudsmen? Are they interchangeable? The Ombudsmen will probably retain their position, for three reasons: they already occupy important sectors and are likely to expand, they offer specialisation and they make decisions on a helpful basis. The Ombudsmen typically have considerable expertise in sectoral regulatory law, codes of conduct and practice. If a court were to be confronted by such a case it might need to ‘buy in’ expert evidence (which may be disputed and subject to scrutiny and cross-examination). So the duration and cost would be extended, even under a streamlined Online Court. Secondly, the Ombudsmen typically make decisions on the basis of what seems ‘fair and reasonable’ to the Ombudsmen in the circumstances of a particular case, taking the law into account; the court applies the law. The former is a wider exercise. The leading Ombudsmen spend time connecting with what the prevailing view might be in society generally at any particular time on what is regarded as fair. A consistent body of decisions is developed against the background of the matrix of regulatory and consumer law. In theory, the Online Court and Resolver-Ombudsmen will be in direct competition. This will confuse consumers. The latter mechanism is in some way more developed than the former, and already highly effective in providing data and working with both regulators and companies on affecting behaviour and culture. Either the two systems should be integrated (with the court system becoming the residual Ombudsman) or they should be rationalised and one discontinued. The court mechanism, for consumers at least, is the clear candidate for removal, and it may in any event become obsolete. From the governmental perspective, the ability to save public funds is relevant, because the Ombudsman system is funded by traders.

10 Personal Injuries I. Overview This chapter considers two distinct systems for personal injury claims, one relating to those handled by insurance companies and the other by the NHS. Different pathways apply to each and different reforms have occurred in each. The vast majority of road traffic, workplace injuries and public liability injuries are processed outside the court system through the bureaucratic practices of insurance companies.1 For those claims, the relevance of the court system has for some decades been only as a long-stop.2 Since tort rules are too uncertain when applied within an administrative procedure, the insurance claim settlement process simplifies the rules, substituting other criteria.3 The system is very liberal, since many more claims succeed than the strict rules of tort would allow. Most tort payments are very limited sums. In the late 1990s, many payments were little more than £2,500.4 In 2002, it was estimated that only 1% of cases resulted in a payment of £100,000 or more, and such cases comprised 32% of the total damages paid out.5 Hence, it is historically unusual for insurers to contest liability.6 Often insurers pay something for claims which, on full investigation, would be without foundation. A 2002 study found that insurers’ files ‘contained remarkably little discussion of liability’, and it was initially denied in only 20% of cases.7 About 89% of motor claims and 77% of employers’ liability claims are successful,8 although it has been suggested that of 150,000 cases supported by trade unions, about 95% result in some payment to the claimant.9 Overall, insurance brings closer approximation to the objectives of social insurance.10 A major innovation has occurred in the development by insurers of the online portal, which acts as a first stage to facilitate the settlement of claims by insurers without the need to commence court proceedings. If a claim is not agreed, it can be transferred into the court 1 RK Lewis, ‘Strategies and tactics in litigating personal injury claims: Tort law in action’ (2018) 2 Journal of Personal Injury Law 113; RK Lewis, ‘How Important are Insurers in Compensating Claims for Personal Injury in the UK?’ (2011), at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1939971. 2 The Royal Commission on Civil Liability and Compensation for Personal Injury (Pearson Commission) vol 2, (1978) para 509, finding that insurers are responsible for 94% of tort compensation for personal injury. 3 ibid. 4 P Pleasence, Personal Injury Litigation in Practice (London: Legal Aid Board Research Unit, 1998) Fig 3.17. 5 P Fenn, A Gray and N Rickman, The Impact of Sources of Finance on Personal Injury Litigation (Lord Chancellor’s Department, 2002) Table 1. 6 If it is the case that in some cases at least this is because it is cheaper to pay off a claimant than incur the costs of defending, an issue arises of the intrinsic injustice thereby created. 7 T Goriely, R Moorhead and P Abrams, More Civil Justice? The Impact of the Woolf Reforms on Pre-Action Behaviour (The Law Society and the Civil Justice Council, 2002) 103. 8 Lewis, (n 103) 7. 9 No Win, No Fee, No Chance (Citizens Advice Bureau, 2004) para 4.31. 10 FV Harper and Fleming James, The Law of Torts (Little Brown & Co, 1956) s 13.7.

252 Personal Injuries process with the advantage of having assembled much relevant evidence and defined the issues that remain in contention. The portal is now undergoing further transformation. In contrast, claims against the NHS have remained locked in a litigation paradigm. They have been buffeted by the diverse effects of changes in the past 20 years in legal aid, CFAs, ATE recoverability, fixed fees and so on that have been recounted in chapter five. Further twists in that story are set our below. The cost of clinical negligence to the NHS has risen inexorably, and has each year been labelled as ‘unsustainable’. The NHS Ombudsman, part of the Parliamentary and Health Service Ombudsman, also plays a role in complaints and injury cases against the NHS. Various strategies have proved to be ineffective, as concluded in chapter five, because the adversarial system inherently requires lawyers to be paid for by both parties in personal injury claims, as a consequence of their inherent complexity. An attempt to spread mediation has only recently occurred. It was suggested in chapter five that the answer lies in not trying to solve injury cases through an adversarial and fault-based system but to shift to an administrative redress scheme, as operated successfully in all the Nordic States and various other countries.

A. Switching by Solicitors We have seen above that changes have occurred regularly in the past 20 years (and more) in procedure, funding, costs and cost shifting. Major highlights have been the introduction of CFAs in 1990, of successive cuts on legal aid, of recoverability of CFA success fees and ATE premiums between 1999 and 2013, of fixed fees for low value personal injury claims in road traffic accidents in April 2010, of fixed fees for other types of personal injuries other than clinical negligence and industrial disease in 2013 and the existence of referral fees from 2004 until their ban in 2013. As noted below, fixed fees applied under the Claims Portal for road traffic claims from 2010 and from 2013 for employers’ liability and public liability claims. The changes in funding, costs and fees of personal injury (PI) litigation impact the business models of claimant law firms and led to changes in the legal market, as solicitors switched out of areas where they could no longer make money into other areas where they could. A major review was initiated by the Solicitors Regulatory Authority (SRA) in response to concerns about solicitor competence, behaviours and practices, and changes in the market. The 2016 Report found that PI legal services were primarily provided directly through solicitors and other legal; companies, but the introduction of alternative business structures (ABSs) had made it possible for insurers, claims management companies (CMCs) and trade unions to be involved in the ownership and/or management of an ABS.11 The personal injury legal market was worth £3 billion (the second largest UK legal services market segment) and there had been consolidation, with a total of 93 firms specialising in personal injury work in 2015, of which the largest 10 firms had a quarter of the market in 2013. The main findings of the Report were: • The move to fixed recoverable costs had had a significant impact on solicitors’ practices and might in some cases have led to under settlement as there was pressure to spend less time on investigation and to use less experienced staff thereby reducing solicitor costs. 11 An Assessment of the Market for Personal Injury. A final report for the Solicitors Regulation Authority (ICF International, 2016).

Overview 253 • Firms had been using less experienced solicitors and paralegals to triage and prepare cases in order to make cost savings. As a result, cases were being inadequately assessed and incorrectly valued. This was most clearly evident among firms diversifying into other areas of PI, such as clinical negligence, occupational disease and noise-induced hearing loss (NIHL). • A comparative skills gap existed especially in NIHL and clinical negligence, where a lack of specific knowledge prevented the identification and application of legal principles to factual issues. A small proportion of firms were taking on too much work, leading to errors and slower processing. There was also concern about the provision of medical evidence and the quality of medical reports, with over a quarter of interviewees believing that poor quality medical reporting occurred often in cases, and 76% stating that poor quality medical reports were having a detrimental impact on the rule of law and proper administration of justice. Judges were particularly critical of the deterioration in quality over the past decade. • There was a general acceptance among survey and interview respondents that fraudulent and frivolous cases were being accepted by solicitors, but at a declining rate since the 2013 reforms. • A large proportion of respondents (40%) believed that the fixed recoverable costs changes had resulted in an increased number of out of court settlements. ‘Litigation risk is potentially the strongest driver of settlement as no one can be completely confident what outcome will be achieved at trial.’12 • Initial assessment of PI cases (triage) was a particular challenge.13 After that stage, detailed gathering of evidence is required (and fraudulent and frivolous stages that have survived triage will be weeded out then).14 • The adversarial system gives rise to elements of gaming between the two sides. Two-thirds of respondents (66%) stated that the reputation of the claimant firm had an impact on the type of response by the defendant firm. It was felt by 82% of respondents that defendant solicitors frequently defended cases where the evidence suggests the only way forward was for the defendant to admit liability. If there is such a delay it might be caused by a number of different reasons, but 56% of defendants disagreed that cases were frequently defended in such circumstances. • Some claimant firms believed that defendant solicitors made pre-medical examination offers of settlement when the claimant was not in a position to ‘value’ the injuries. Almost half of all survey respondents viewed delay in payment as a common practice, while two thirds felt the practice put a strain on solicitors’ cash flow and significantly inhibited the rule of law and the proper administration of justice. • The referral fee ban and introduction of regulation of CMCs had reduced the number of CMCs, which had more than halved since 2009/10 (around 2,500 to 1000 in 2014/15) but despite this the turnover of CMCs had increased by 30% to £310 million in the 12 months to March 2015.

12 ibid,

para 6.1.2. para 7.2.2. 14 ibid, para 7.3.1. 13 ibid,

254 Personal Injuries • More than a third of solicitors interviewed (35%) felt there is a lack of understanding of the Rehabilitation Code in the industry. 30% of these felt this lack of understanding is having a significant and detrimental effect on consumers, the rule of law and the administration of justice. • The solicitor survey indicated that just under half (45%) of respondents planned to diversify in the next two years, either into other areas of PI, or away from PI into different areas of law. After the above Report, the SRA carried out visits to 40 PI firms, which found little evidence of any significant concerns in eight areas: operation of ABSs; case selection and triage; litigation process; medical evidence; defendant delay and costs; settlement; fixed fees; merger, acquisition or file purchase. It did find some causes for concern due to the practices of a small number of firms in the following areas:15 • introducers (one firm was found to have breached The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) and one firm was referred into our internal disciplinary processes for possible breaches of LASPO); • training, skills, knowledge and experience (several firms have never provided training in a number of areas, notably the Rehabilitation Code and 13% firms did not keep staff training records); • costs explanation (some firms are failing to consider an appropriate success fee for each individual case while others are providing insufficient costs information for cases that fall out of the claims portal); • acting on instructions (we found two files where confidential information was shared with a third party without client consent as well as other files where there was no evidence that instructions were confirmed at key stages of the litigation process); • fraudulent & frivolous claims (some firms do not obtain evidence of identity at the outset).

In March 2016 and December 2017 the SRA issued a Warning Notice to the profession:16 We are concerned that firms are: • failing in their duties to act in accordance with the Principles and Outcomes of the Code by: allowing third parties to cold call potential clients • entering into referral agreements that are in breach of the Legal Aid Sentencing and Punishment of Offenders Act 2012 • taking and acting on instructions from third parties without ensuring that the instructions originate from the client • settling claims without a medical report • paying damages or sending cheques to third parties without accounting properly to the client • bringing personal injury claims without their clients’ authority in some extreme cases, • bringing claims without the knowledge of the named client claimant • not training and supervising their staff adequately

15 Personal injury report: The quality of legal service provided in personal injury (Solicitors Regulation Authority, 2017). 16 www.sra.org.uk/solicitors/code-of-conduct/guidance/warning-notices/Risk-factors-in-personal-injuryclaims--Warning-notice.page.

Overview 255 The NAO noted that solicitors switched between different types of litigation in response to changes in funding and costs rules.17 As noted in chapter five, a 2017 study of 40 personal injury firms revealed that, despite the restrictions imposed by LASPO, 78% of personal injury firms had referral arrangements in place, and 48% had referral arrangements with CMCs.18 This strongly suggests that it is the behaviour of intermediaries rather than claimants that is the driving factor in personal injury claims.

B. Statistics The NHS Injury Costs Recovery (ICR) scheme aims to recover the cost of NHS treatment where personal injury compensation is paid by a private source, for example after a road traffic accident. The NHS has analogous subrogation rights.19 The principle behind this scheme is that those responsible for causing injury to others should meet the cost of NHS treatment. Funds recovered come mainly from the third party compensator/insurer. Thus, in UK the government may claim recoupment under the Social Security (Recovery of Benefits) Act 1997, under which sums are paid to the Compensation Recovery Unit (CRU) and thence to the Department of Work and Pensions. The current ICR scheme came into force on 29 January 2007, expanding the previous Road Traffic Act (RTA) scheme. Recoupment does not apply to sums paid by the Criminal Injuries Compensation Scheme, criminal compensation orders, the Vaccine Damage Payments Act 1979, haemophiliacs, the miners’ 1974 scheme, occupational sick pay and damages paid to dependents under the Fatal Accidents Act 1976. Payments are subject to a tariff and there is a ceiling on charges payable by compensators. For example, for the year from 1 April 2018,20 where the injured person is provided with NHS ambulance services, the charge is £208 for each occasion. Where the injured person receives NHS treatment, but is not admitted to hospital, the charge is £688. The daily charge for NHS in-patient treatment is £846. The maximum charge in respect of an injury is £50,561. In 2017/18, almost £124 million was recovered. The Department of Health publishes monthly updates on the amount of money recovered under the ICR.21 These show, first, that clinical negligence cases comprise a modest cohort in relation to other far larger types of claims (road traffic being by far the largest, followed by employment and public liability, each roughly the same size), and secondly, that the public purse recovers around £14 million annually in relation to clinical negligence cases. An overview of the numbers of different types of personal injury claims can be seen from the cases reported to the CRU, as shown at Figure 10.1. Private sector insurers or 17 Managing the costs of clinical negligence in trusts. Report by the Comptroller and Auditor General (National Audit Office, 2017) para 2.4. 18 Personal injury report: The quality of legal service provided in personal injury (Solicitors Regulatory Authority, 2017) 17. 19 The Health and Social Care (Community Health and Standards) Act 2003, Pt 3. www.gov.uk/government/ collections/cru. 20 The Personal Injuries (NHS Charges) (Amounts) Amendment Regulations 2018, SI 2018 No 141. 21 Compensation Recovery Unit performance data, at www.gov.uk/government/publications/compensationrecovery-unit-performance-data.

256 Personal Injuries other compensators who receive a claim for compensation must register it with the CRU irrespective of whether liability is accepted or denied, so that the CRU can later reclaim costs incurred by NHS hospitals and Ambulance Trusts for treatment from injuries from road traffic accidents and personal injury claims (Recovery of NHS Charges) and amounts of social security benefits paid as a result of an accident, injury or disease, if a compensation payment has been made (the Compensation Recovery Scheme). By far the largest category of personal injury claims in terms of number of claims is motor (roughly three-quarters),22 with employers liability and public liability significantly lower (both around 10%). Various major trends can be seen. First, clinical negligence claims have risen significantly from 2003/04. Secondly, motor claims rose steadily, doubling from 2000 to 2011, but have fallen back slightly since then. Compared to those two categories, employer and public liability claims have remained noticeably stable, peaking in 2013/14 and 2011/12 respectively and falling back since then. The main categories will be considered further individually. Thirdly, all claims (apart from the ‘other’ category) peaked around 2012 and have fallen since then, in some cases significantly. There may be various reasons for the fall in claims during the current decade. One possible factor is the increase in technology in motor vehicles, which has made them safer. However, it is highly likely that the restrictions on legal aid introduced with LASPO in 2014 (see chapter five) have had a significant effect. Figure 10.1 Personal injury claims notified to the Compensation Recovery Unit Total new Liability claims notified not known to the CRU

Clinical Negligence

Employer

Motor

Other

2000/01

10,980

97,675

401,750

7,815

94,000

*

735,932

2001/02

9,773

97,004

400,434

6,252

100,663

*

688,315

2002/03

7,973

92,915

398,870

6,347

109,441

*

706,697

2003/04

7,109

79,286

374,740

4,874

91,177

*

770,243

2004/05

7,196

77,765

402,892

4,463

86,966

*

755,875

2005/06

*

*

*

*

2006/07

8,575

98,478

518,821

3,522

79,841

1,547

710,784

2007/08

8,876

87,198

551,905

3,449

79,472

1,850

732,750

2008/09

9,880

86,957

625,072

3,415

86,164

860

812,348

2009/10

10,308

78,744

674,997

2,806

91,025

3,445

861,325

2010/11

13,022

81,470

790,999

3,855

94,872

3,163

987,381

2011/12

13,517

87,350

828,489

4,435

104,863

2,496

1,041,150

2012/13

16,006

91,115

818,334

17,695

102,984

2,175

1,048,309

Year

Public

*

*

*

(continued) 22 Commentators note a ‘strong culture of claiming’ in relation to RTA cases, and a higher possibility of spurious and fraudulent claiming: R Lewis and A Morris, ‘Tort Law Culture: Image and Reality’ (2012) 39(4) Journal of Law and Society 562–92.

Overview 257 Figure 10.1 (Continued) Total new Liability claims notified not known to the CRU

Clinical Negligence

Employer

Motor

Other

Public

2013/14

18,499

105,291

772,843

14,467

103,578

2,123

1,016,801

2014/15

18,258

103,401

761,878

12,972

100,072

1,778

998,359

2015/16

17,895

86,495

770,791

11,288

92,709

2,046

981,324

2016/17

17,894

73,355

780,324

20,047

85,504

1,692

978,816

2017/18

17,400

69,230

650,019

19,172

96,067

1,727

853,615

Year

* = figures not available.

Figure 10.2 Settlements recorded by Compensation Recovery Unit 2006/07 to 2017/18 Clinical Negligence Employer

Motor

Other

Public

Liability not known

Total

2006/07

9,325

215,820

469,642

3,793

94,621

566

793,767

2007/08

8,588

199,153

493,883

2,895

78,993

531

784,043

2008/09

8,538

163,324

546,147

3,295

80,538

538

802,380

2009/10

10,224

140,088

629,916

3,243

94,212

628

878,311

2010/11

10,813

98,586

659,671

3,463

93,220

727

866,480

2011/12

12,409

89,888

754,159

4,122

100,715

624

961,917

2012/13

12,955

90,189

786,587

9,584

109,906

496

1,009,717

2013/14

15,052

96,200

808,016

14,141

115,044

444

1,049,017

2014/15

17,299

97,097

951,437

12,996

111,555

436

990,820

2015/16

19,620

99,329

732,788

11,625

100,085

324

963,771

2016/17

18,449

133,934

755,366

13,194

92,042

505

1,013,490

2017/18

18,430

83,528

683,329

17,085

91,706

485

894,563

As Figure 10.3 shows, the largest sums recovered by the State are currently in employer (£68 million) and motor (£30 million) cases, followed by clinical negligence (£18 million). There has been a significant fall in the cost of public liability cases since 2010/11. The total recovered across all personal injury categories in 2017/18 was £123.6 million. As seen in chapter four, the ceiling for the small claims track for personal injury claims has remained at £1,000 since 1991. Over 80% of personal injury claims are allocated to the small claims track.23

23 Jackson,

108.

258 Personal Injuries

Figure 10.3 Recoveries made by Compensation Recovery Unit 2006/07 to 2017/18 in £ Clinical Negligence

Employer

Motor

Public

Liability not known

Total

2006/07

5,662,512.77

83,658,663.75

39,566,754.71

726,155.24

Other

10,056,453.44

43,017.49

139,713,557.40

2007/08

7,352,029.82

85,574,945.87

38,985,158.03

569,529.51

9,310,840.87

38,106.23

141,830,610.33

2008/09

9,756,832.58

80,982,473.80

37,868,936.09

812,956.44

8,687,484.79

56,877.07

138,165,560.77

2009/10

9,556,712.30

96,488,425.84

38,352,747.39

759,908.83

9,452,233.93

174,415.27

154,784,443.56

2010/11

11,355,690.97

75,834,759.13

41,072,611.98

909,794.54

10,606,832.81

68,343.40

139,848,032.83

2011/12

13,851,502.19

75,245,271.28

38,120,831.98

946,957.54

10,459,138.84

76,062.31

138,699,764.14

2012/13

14,756,267.61

71,336,357.06

36,165,277.90

1,009,172.47

9,614,093.86

54,175.86

132,935,344.76

2013/14

12,959,073.92

74,417,163.07

36,056,513.55

1,057,788.86

9,828,792.82

118,179.85

134,437,512.07

2014/15

14,043,706.35

73,719,340.95

32,280,370.93

1,137,645.58

8,510,389.92

28,726.62

129,720,180.35

2015/16

15,628,754.03

69,766,631.33

31,261,593.92

1,112,025.06

7,921,893.96

67,776.73

125,758,675.03

2016/17

18,127,873.28

68,824,913.42

30,063,642.68

1,350,643.56

7,621,284.35

38,017.81

126,026,375.10

2017/18

18,466,404.68

67,745,014.91

29,563,561.43

1,393,013.54

6,352,690.96

59,823.54

123,580,509.06

Pathways 259

II. Pathways A. Road Traffic, Employers Liability and Public Liability: The Portal The process for many low value personal injury claims is through a secure online portal.24 The portal is mandated as the means of exchanging information and evidence under25 the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents (RTAs)26 and the Pre-Action Protocol for Low Value Personal Injury (Employers’ Liability and Public Liability) Claims under £25,000.27 The Protocols describe ‘the behaviour that the court expects of the parties prior to the start of proceedings’ so that there will be no need for the claimant to start proceedings.28 For RTA claims, the Protocol applies to personal injury claims over £1,000 and with an upper limit of £25,000 where the accident occurred on or after 31 July 2013, or £10,000 where the accident occurred on or after 30 April 2010 and before 31 July 2013, in both cases on a full liability basis including pecuniary losses but excluding interest. Similarly, the Employers’ Liability and Public Liability claims are valued at no more than £25,000 and arising from an accident on or after 31 July 2013. The Portal is not designed for, nor accessible to, individual claimants.29 A small number of individuals (LiPs) use the Portal, most of whom are lawyers who make claims for their own injuries as they are familiar with how the Portal works. Claimants can only access it through instructing solicitors. The Portal was developed by the insurance industry and is operated by Claims Portal Limited.30 It was intended to reduce costs and improve efficiency where liability is admitted. As at February 2019, there were 4,618 claimant representative organisations registered and 828 insurer/compensators. The Portal has two set stages. At Stage 1, the claimant completes a Claim Notification Form (CNF) and must apply for a certificate of recoverable benefits from the Compensation Recovery Unit. The defendant sends a response which either accepts or rejects responsibility. If the defendant does not accept responsibility, or claims contributory negligence, or some other circumstances, or does not respond, the case exits the Portal and proceeds in court under the Personal Injury Protocol. If the defendant accepts responsibility, it moves to Stage 2, where the claimant will obtain a medical report from an approved expert and send it with a Stage 2 Settlement Pack to the 24 www.claimsportal.org.uk/. 25 When first introduced, this was the Pre-Action Protocol for Low Value Personal Injury (PI) Claims in Road Traffic Accidents (RTAs), which became effective from 30 April 2010. 26 Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents from 31 July 2013, at www.justice.gov.uk/courts/procedure-rules/civil/protocol/pre-action-protocol-for-low-value-personal-injuryclaims-in-road-traffic-accidents-31-july-2013. 27 Pre-Action Protocol for Low Value Personal Injury (Employers’ Liability and Public Liability) Claims, at www.justice.gov.uk/courts/procedure-rules/civil/protocol/pre-action-protocol-for-low-value-personal-injuryemployers-liability-and-public-liability-claims. 28 ibid, paras 2.1 and 3.1. 29 Lord Justice Briggs, Civil Courts Structure Review: Final Report (Judiciary of England and Wales, 2016) para 6.31. 30 The company has a Board of 13 non-executive directors and an independent chair, responsible for setting the strategy, finance and governance of the Claims Portal and approving new releases. The directors represent APIL, MASS, TUC, Law Society, insurers and the Association of British Insurers (ABI).

260 Personal Injuries defendant, who then has 15 days to make an offer and a further 20 days for the parties to negotiate. The claimant may claim an interim payment by providing specified information. If no agreement is reached, a pack is referred to court for the claim to proceed there.31 Claims that exit the Portal without agreement, and lower or higher value claims, proceed under the Personal Injury Protocol and court track. Negotiations may, of course, occur if a case exits the Portal or proceeds in court, and cases may be settled at any stage. Each Stage has fixed recoverable costs specified under a formula.32 As a result of the ‘compensation culture’ debate, on 31 July 2013, fixed recoverable costs were reduced from £1,200 to £50033 and the portal was extended to include claims up to the value of £25,000,34 and to include most employers’ liability and public liability claims.35 It was expected that the increase would capture around 95% of all RTA PI claims36 and this is believed to have been the case. The portal was initially funded by insurers through a levy, but pressure arose to spread the costs between insurers and claimants. In October 2015, plans were announced for claimant lawyers to have to pay a fee for every new claim lodged with the portal from next year37 but user fees were not introduced in December 2016 as planned. The Claims Portal cites the following benefits of its operation for users:38 • • • •

Information can be transferred between parties in a secure and efficient way. Decisions can be communicated quickly and easily. The cost of communications is reduced. By including some basic validation checks, the Portal helps to avoid inconsistent, incomplete or incorrect information being exchanged.

31 Jackson LJ held in the Court of Appeal in 2016 that a district judge did not have power to transfer a case involving a claim for £3,486 out of the stage 2 portal procedure and into the small-claims track, where it would have incurred ‘totally disproportionate’ costs: Philips v Willis [2016] EWCA Civ 401. 32 Practice Direction 45 – Fixed Costs, para 2.5: The amount of fixed costs recoverable is the sum of – (a) £800; (b) 20% of the agreed damages up to £5,000; and (c) 15% of the agreed damages between £5,000 and £10,000. For example, agreed damages of £7,523 would result in recoverable costs of £2,178.45, ie, £800 + (20% of £5,000) + (15% of £2,523). See www.justice.gov.uk/courts/procedure-rules/civil/rules/part45-fixed-costs/ practice-direction-45-fixed-costs. 33 This was compared by the government to equivalent fixed costs in Germany of £300: Tackling the Compensation Culture: The Legal Aid, Sentencing and Punishment of Offenders Bill. Improving Systems for All (Association of British Insurers, 2011). 34 In accordance with the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents (the RTA Protocol). This was recommended by Lord Young’s review: see Press release, T urning the Tide on Compensation Culture (Ministry of Justice), 1 May 2013, at www.gov.uk/government/news/ turning-the-tide-on-compensation-culture. 35 The Civil Procedure (Amendment No.6) Rules 2013, SI 2013 No 1695. This was to introduce the Pre-Action Protocol for Low Value Personal Injury (Employers’ Liability and Public Liability) Claims (the EL/PL Protocol). See Consultation. Extension of the RTA scheme to include employers’ and public liability claims up to the value of GBP 25,000 (Ministry of Justice, 2012). 36 Solving disputes in the county courts: creating a simpler, quicker and more proportionate system A consultation on reforming civil justice in England and Wales (Ministry of Justice, March 2011) para 66. 37 J Hyde, ‘Claimant lawyers to pay charge for every new portal case’ Gazette, 23 October 2015. A spokesman for Claims Portal said the charge was likely to be between £1 and £3 per claims notification form, which would be non-refundable. It would not have been recoverable by claimants from compensators as a disbursement and was to be used to cover the cost of the portal and related services. 38 www.claimsportal.org.uk/about/about-claims-portal/.

Pathways 261 Issues over the claims record of CMCs have been referred to in chapter five, as well as the sagas of referral fees and whiplash claims. Data from insurers on third party motor claims in the UK suggests that there is a strong positive correlation between the number of CMCs in a region and the proportion of private car insurance claims involving injury to third parties: in general, more CMCs mean more injury claims.39 There had been concern that claimant lawyers were choosing experts who were in effect ‘captive’: whether or not they were biased in supporting claimants’ injuries, additional fees were paid to referring lawyers, who sometimes owned the ATE insurance and expert advice companies. The changes associated with the electronic portal cut those links, since experts are now allocated from a list of approved medics maintained by the Portal. An initial evaluation of the Portal in 2012 found small reductions in low-value RTA claims and processing metrics.40 Around half of cases were found to have exited the process back into the court litigation track. The 2016 Report for the SRA referred to above found that only a quarter of respondents believed that MedCo achieved independence between Medical Reporting Organisations (MROs) and firms, with almost two-fifths (38%) disagreeing with this assertion. Over two-thirds (68%) of respondents thought that the quality of reports for consumers had not improved as a result of the MedCo system.41 The SRA’s December 2017 Report found that 25% of firms had been contacted by MedCo about perceived compliance issues, such as making multiple searches on the MedCo system to find a preferred expert and bypass the random selection process.42 A significant majority of firms had received an offer of settlement before medical evidence had been obtained. A significant majority of firms settle 95% of all personal injury matters. Pre-medical offers were not popular amongst claimant firms and were very rarely recommended.

B. Portal Statistics The Portal’s data from its start in 2010 until the end of 2017/18 year are at Figures 10.4 to 10.7.43 From commencement on 30 April 2010 until 31 August 2018, the portal created 6,517,557 claim notification forms, of which 1,913,521 left the process at the end of stage 1 (thus were not resolved when they were in it). In 2017/18, there were roughly 58,000 public liability injury claims, 46,000 RTA injury claims and 7,500 employers’ liability disease claims. As noted above, the fall since 2013 has been induced by LASPO and legal aid cuts.

39 Motor Third Party Working Party 2011 (Motor Third Party Working Party, 2011). 40 P Fenn, Evaluating the low value Road Traffic Accident process (Ministry of Justice, 2012). Mean general damages reduced 6%, mean costs 3–4%, and mean speed of settlement by 5–7%. 41 An Assessment of the Market for Personal Injury. A final report for the Solicitors Regulation Authority (ICF International, 2016). 42 Personal injury report: The quality of legal service provided in personal injury (Solicitors Regulation Authority, 2017) 7. 43 See www.claimsportal.org.uk/about/executive-dashboard/. The website states the following: Caveats: 1. The number of claims sent to an insurer includes duplicate claims created by multiple claimant representatives and duplicate claims created by the same claimant representative. Exact figures on the volume of duplicates are not known at present. 2. The number of Court Packs recorded on the system may not reflect the volume of claims that end up in Court. The Portal does not capture information relating to what happens to a claim after the parties have agreed the contents of a Court Pack. Some claims may go on to settle or leave the process before commencement of Court Proceedings.

262 Personal Injuries Figure 10.4 Statistics on use and average damages under the RTA Portal 2010–2018 2010/11 Claim 630,070 Notification forms created and sent to a Compensator Claim 257,432 Notification forms that left the process at the end of Stage 1 – Liability Claims that 16,818 left the process during Stage 2 Claims that 2,523 leave the process using the Exit function Court Packs 6,332 created Stage 2 103,733 Settlement Packs where agreement has been reached Average general £1,840 damages offered in Stage 2 after Contribution44

2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 796,919 883,242 771,709 864,647 856,596 776,178

2017/18 701,638

293,472

301,452

214,417

230,357

213,322

194,133

157,899

20,979

17,437

12,438

13,284

13,011

13,766

12,170

87,901

148,945

152,934

169,214

182,784

172,363

163,891

8,003

13,209

19,594

38,505

60,639

71,884

73,823

258,033

266,538

237,607

219,701

209,757

193,586

171,734

£1,988

£2,094

£2,558

£2,593

£2,643

£2,796

£2,812

Figure 10.5 Statistics on use and average damages under the RTA Portal 2010–2018 for EL (Accident only) claims 2013/14 2014/15 2015/16 2016/17 2017/18 Claim Notification forms created and sent to a Compensator

33,147

54,590

50,842

47,840

46,303

Claim Notification forms that left the process at the end of Stage 1 – Liability

12,585

25,598

25,002

22,874

21,303

178

652

932

793

Claims that left the process during Stage 2

655 (continued)

44 The increase in the average sums over time is to be expected, since claims processed at the start were new claims and therefore brought soon after the accident occurred, thereby including predominantly more minor injuries, whereas the more serious injuries took more time to be evaluated and to be brought as claims.

Pathways 263 Figure 10.5 (Continued) 2013/14 2014/15 2015/16 2016/17 2017/18 Claims that leave the process using the Exit function

5,941

12,322

13,377

11,869

11,516

Court Packs created

31

259

453

751

972

Stage 2 Settlement Packs where agreement has been reached

31

7,504

8,636

7,758

7,550

Average general damages offered in Stage 2 after Contribution

£3,055

£3,534

£3,975

£4,173

£4,320

Figure 10.6 Statistics on use and average damages under the RTA Portal 2010–2018 for EL Disease claims 2013/14

2014/15

11,821

22,030

15,773

9,784

7,479

4,361

8,084

6,819

4,171

3,609

51

328

237

171

96

4,140

11,014

7,880

4,575

3,450

20

109

56

27

30

Stage 2 Settlement Packs where agreement has been reached

300

980

1,046

664

485

Average general damages offered in Stage 2 after Contribution

£4,877

£4,072

£3,753

£4,191

£3,875

Claim Notification forms created and sent to a Compensator Claim Notification forms that left the process at the end of Stage 1 – Liability Claims that left the process during Stage 2 Claims that leave the process using the Exit function Court Packs created

2015/16 2016/17

2017/18

Figure 10.7 Statistics on use and average damages under the RTA Portal 2010–2018 for PL claims 2013/14

2014/15

2015/16

2016/17

2017/18

Claim Notification forms created and sent to a Compensator

53,925

76,709

67,199

60,415

58,119

Claim Notification forms that left the process at the end of Stage 1 – Liability

26,357

46,145

40,912

36,074

32,503

216

753

915

880

703

9,146

15,260

14,699

11,914

11,905

63

396

591

815

875

1,870

7,394

7,750

7,212

6,497

£3,147

£3,798

£4,038

£4,290

£4,340

Claims that left the process during Stage 2 Claims that leave the process using the Exit function Court Packs created Stage 2 Settlement Packs where agreement has been reached Average general damages offered in Stage 2 after Contribution

264 Personal Injuries

C. Proposed New Portal The Portal has clearly been a successful digitisation mechanism in processing many injury claims, narrowing issues, and promoting settlement. It ‘did what it said on the tin’. But it was designed to be used by lawyers and insurers. It was designed only to operate at the start of the formal process and dropped out if claims were not settled and had to be continued in court. It was not designed to provide a database of claims data: indeed, a key principle was not to produce management information that could give any company or organisation any commercial benefit. If the process were more inquisitorial, as in all Nordic countries,45 adversarial fees would be saved and the total cost should be less. The costs paid annually by insurers to claimant lawyers in around 2009 were £984 million for motor claims and £171 million for employers’ liability claims.46 Thus, could switching from an adversarial system save £1 billion in costs? Against the background that premiums had risen 80% since October 2008, a leading insurer considered in 2013 that removing lawyers from small claims would save each motorist an average of £60 a year, and £1.5 billion could be stripped from the cost of premiums.47 A robust triage system should be capable of weeding out and deterring fraudulent claims, and compensation payments would be awarded against a tariff rather than as claimed. The Chancellor proposed in late 2015 that the Small Claims limit for personal injury claims should rise from £1,000 to £5,000, effectively removing lawyers from the process. But could further savings be achieved – and fairness be promoted – by switching to an administrative system? The government has pursued these lines of thought. As discussed in chapter five, during the 2010–2020 decade various effects combined to make reform important. Major factors were the restriction of legal aid, the increase in LiPs, the added system costs of intermediaries such as CMCs and the increase in what appeared to be opportunistic claims (whiplash, holiday sickness). The HMCTS digitisation programme therefore inevitably included a fresh look at making injury claims easier for individuals to use, without having to go through lawyers. The Civil Liability Act 2018 regulated whiplash claims and damages and provided a new mechanism for changes to the discount rate (outlined below). A new portal was planned to become live in April 2020 that LiPs could use themselves, without lawyers, CMCs or any other facilitative intermediary, thereby saving t ransactional costs and leaving those who recover compensation with the full amount, or at least more than previously spent in agents’ costs. The details are not yet announced but the following aspects have been made public. The New Portal would only (at least initially) be for RTA claims over £5,000 for accidents occurring after April 2020. (The existing Portal and Protocol arrangements would, therefore, continue to operate for at least until the three year limitation period had expired in April 2023.) Compensation payments would be based on a tariff (with fixed sums depending on the injury and duration) rather than on the ranges given in existing Judicial Guidelines. The sums specified for general damages might well be lower than historically. Claimants would be required themselves to obtain medical reports, possibly from MROs listed as having been approved on the MedCo system: certification by

45 S

Macleod and C Hodges, Redress Schemes for Personal Injuries (Hart Publishing, 2017). Rupert Jackson, Review of Civil Litigation: Preliminary Report (HMSO, 2009) ch 24, para 2.1. 47 D Claydon, claims director of Aviva, quoted in Law Society Gazette (14 February 2013). 46 Sir

Workplace Injuries 265 doctors would therefore be a gateway requirement, and a report might perhaps be inputted online. Since the objective would be to provide a complete process, it would be necessary to provide services that could help individuals complete the online fields and subsequently negotiate to achieve resolution (ie, a mediation function, akin to a case officer in the Online Court) or proceed to a simple decision by an authorised person (akin to the Small Claims jurisdiction).

III. Workplace Injuries Long-standing public and private insurance-based arrangements exist for compensating workplace injuries.48 Most UK employers are required to hold employers’ liability insurance covering injuries to staff at work of at least £5 million from an authorised insurer.49 State social security provision includes Industrial Injuries Disablement Benefit (IIDB), which provides employed earners with benefits in the event of an injury arising out of and in the course of employment or suffering from an occupational disease prescribed in relation to that employment. Certain exclusions exist, for which alternative schemes may be available, such as the Armed Forces Compensation Scheme.50 Particular types of injury are dealt with under separate schemes, such as mesothelioma, pneumoconiosis, or chronic obstructive pulmonary disease, or vibration white finger. These schemes were created specifically to avoid blocking the courts with a large number of claims, as shown in the figures quoted above. A recent review by Macleod and Hodges concluded that the design of a scheme is critical to its cost efficiency – an adversarial scheme involving lawyers is not the best model, and can lead to fraud and abuse, whereas a Nordic-style administrative scheme is far preferable.51 Claims under the (no fault) administrative schemes are made to the schemes. Claims for IIDB are made to the State. Claims under employers’ liability are handled by employers’ insurers, now starting through the Portal, and rarely reach court. The number of Employers’ Liability claims made through the Portal are referred to above. Employment injury claims have been stable for many years, with just over 100,000 annually. The Trades Union Congress, however, believes that around 850,000 people are injured or made ill as a result of their job annually,52 and only around 60,000 gain compensation from their employer.53 Settlement payments are modest in the overwhelming number of cases, 48 www.hse.gov.uk/statistics/. 49 The Employers Liability (Compulsory Insurance) Act 1969, the Employers’ Liability (Compulsory Insurance) Regulations 1998, SI 1998 No 2573, the Employers’ Liability (Compulsory Insurance) (Amendment) Regulations 2004, SI 2004 No 2882 and the Employers’ Liability (Compulsory Insurance) (Amendment) Regulations 2008, SI 2008 No 1765. 50 See www.gov.uk/government/publications/armed-forces-compensation/armed-forces-compensation-whatyou-need-to-know and JSP 765 Armed Forces Compensation Scheme Statement of Policy (Ministry of Defence, 2017). The Armed Forces and Reserve Forces (Compensation Scheme) Order 2011, SI 2011 No 517. 51 S Macleod and C Hodges, Redress Schemes for Personal Injuries (Hart Publishing, 2017). 52 Occupational Health Statistics Bulletin, 2003/04, HSC, 2004. The most common injuries are musculoskeletal disorders such as back injury or RSI, injuries from slips and falls, skin diseases, and deafness. 53 The Compensation Myth (Trades Union Congress, 2014), quoting Association of British Insurers, Hazards magazine, May 2005. In contrast, some lawyers consider that over 95% of cases are settled out of court: Association of Personal Injury Lawyers, July 2005.

266 Personal Injuries perhaps now averaging £5,000 to £7,500, but with a small number of large payments.54 This low level of award calls for a low cost process. As with road traffic damage claims noted above, the process is significantly bureaucratic, dominated by insurers and claims managers. The questions arise whether the dispute resolution system is cost-efficient in relation to the size of claims, whether further efficiencies could be achieved in the cost of both employers’ liability insurance and claims processing, and whether more injured workers could receive due compensation if a different system existed. The average cost of Employers Liability insurance is 0.25% of total payroll costs55 and is the lowest in Europe, although premiums have increased in recent years.56 It was reported in 2017 that trade unions were supporting an increasing number of claims by employees brought against local authorities over diesel fumes, under the Control of Substances Hazardous to Health Regulations 2002 (COSHH), which require employers to either prevent or reduce their employees’ exposure to substances that are hazardous to their health.57 Some unions had set up a diesel emissions register for employees to record their exposure to toxic air.

A. Affecting the Incidence of Workplace Injuries Britain is one of the safest places to work. The UK has succeeded in reducing the incidence of workers killed and injured in the past four decades, as illustrated in Figure 10.8. Safety performance in Great Britain58 has steadily improved over the four decades since comprehensive modern regulation was introduced in 1974. The number of workplace fatalities has fallen (651 in 1974, around 300 in 1993/94, and 148 in 2012/13), as has the rate per 100,000 workers (2.9 in 1974 to 0.4 in 2013/14).59 The number of reported non-fatal injuries to employees fell by 70% between 1974 and 2007, and fell to 78,222 in 2012/13, a rate of 311.6 per 100,000 employees (which represented a fall since 1974 of 76%).60 The reason for this improvement is attributed to concerted adoption of a responsibility for safety by those involved in construction sites and operations and workplace safety, rather than just the advent of regulation as such.61 54 P Pleasance, Personal Injury Litigation in Practice (Legal Aid Board Research Unit, 1998) fig 3.17; P Fenn and N Rickman, Costs of Low Value Liability Claims 1997–2002: A Report Prepared for the Civil Justice Council (Civil Justice Council, 2003); ‘TUC survey July 2005’ and ‘DWP Review of ELCI, First Stage Report’ quoted in The Compensation Myth (Trades Union Congress, 2014). 55 Work place Compensation (Greenspan Bergman, 2002), a report for the Association of British Insurers. 56 The TUC considers that the rise is attributable to historical under-charging by insurers on employers liability policies, and by significant increases in legal and medical costs, which rose 50% between 1997 and 2002: The Compensation Myth (Trades Union Congress, 2014); Workplace Compensation (Greenspan Bergman, 2002). 57 ‘UK Civil Claims Continue to Escalate for Toxic Diesel Fume Exposure’, CMS Cameron McKenna Nabarro Olswang LLP, 21 September 2017. 58 ie, excluding Northern Ireland. 59 www.hse.gov.uk/statistics/history/index.htm. The rate of fatal injuries to workers fell by 38% between 1999/2000 and 2009/10: Progress in Health and Safety outcomes since 2000 (Health and Safety Executive, 2010). 60 Comments by Lord Grocott in Parliament in 2007, www.publications.parliament.uk/pa/ld200708/ldhansrd/ text/80704-0001.htm#08070478000003, quoted in R Lofestdt, Reclaiming health and safety for all: An independent review of health and safety legislation (Health and Safety Executive, 2011). 61 F Blanc, From Chasing Violations to managing Risks. Origins, Challenges and Evolutions in Regulatory Inspections (Edward Elgar, 2018); M Webster and H Bolt (Frontline Consultants), The effectiveness of HSE’s regulatory approach: The construction example (Health & Safety Executive, 2016) RR1082.

Workplace Injuries 267 Figure 10.8 Rate of fatal injury per 100,000 workers62 Rate of fatal injury (per 100,000) workers

3.0 2.5

Long term downward trend

2.0 1.5 1.0

Broadly flat in recent years

0.5 0.0 1981

2012/13

2017/18

In 2017/18 there were:63 • 1.4 million workers suffering from work-related ill health (new or long-standing); • 144 workers killed at work; • 555,000 non-fatal injuries to workers according to self-reports and 71,062 employee non-fatal injuries reported by employers under RIDDOR; • 31.2 million working days lost due to work-related illness and workplace injury; • £14.9 billion estimated cost of injuries and ill health from current working conditions (2015/16); • 12,000 lung disease deaths estimated to be linked to past work exposures; • 469,000 workers suffering from work-related musculoskeletal disorders (new or longstanding) and 6.6 million working days lost due to work-related musculoskeletal disorders; • 595,000 workers suffering from work-related stress, depression or anxiety (new or longstanding) and 15.4 million working days lost due to work-related stress, depression or anxiety; • total costs of £15 billion in workplace self-reported injuries and ill health in 2016/17, of which individuals bore £8.6 billion, employers £3 billion and government 3.4 billion. Florentin Blanc has recently pointed to interesting differences between the injury rates of the UK, Germany and France, and possible causes.64 The UK’s workplace injury rates are better than Germany and markedly better than France. Blanc considers that a major cause of the difference is the style of regulatory delivery and enforcement between the countries. In the UK, the Health & Safety Executive (HSE) has pursued a policy of supporting businesses and workers to take responsibility for safety and manage risks effectively. This is reflected not only in regulatory policy and delivery but also enforcement policy.65 Guidance was issued in 2015 to assist medium to large employers in their legal duty to 62 www.hse.gov.uk/statistics/fatals.htm: data from RIDDOR. 63 ibid. 64 F Blanc, From Chasing Violations to Managing Risks. Origins, challenges and evolutions in regulatory inspections (Edward Elgar, forthcoming). 65 Enforcement Policy Statement (Health & Safety Executive, 2009) 02/09, para 1.

268 Personal Injuries consult and involve their employees on health and safety matters, which said that they should ‘consider what employees say before you make decisions’.66 The approach has been notably successful in the construction industry,67 where stubbornly high accident rates, with 35% of the national worker fatalities (nearly 900 men) in the 1990s fell markedly. In 2012/13, the fatal and major injury rate for all other i ndustries was 72% of the 2001/2 figure. Instead of trying to increase inspections, which was an impossible task, the approach was68 to leverage influence within the industry supply chain in high risk areas, engaging and forming partnerships with parties able to effect widespread change (such as company directors or strategic bodies focused on particular interest groups or sectors). HSE’s role was as a catalyst, utilising its unique overview from official data of the harm being caused industry-wide and expertise in understanding reasonably practical controls (but explicitly relying on those who created the risk ultimately to control it). …. The new approach centred on influencing or triggering changes, reliant on the action of others. For the theory to work in practice it was crucial that the risks to be addressed could be recognised by industry as being significant (what), and that the parties engaged with (who) were relevant and influential.

However, the international comparisons tell a different story in relation to the incidence of road traffic injuries, where Germany is notably better than the UK. Blanc points to the fact that work-related accidents on public roads are not reportable to HSE, since responsibility for investigating them lies with the police.69 Oversight of over-worked van and lorry drivers is, therefore, missing in the UK. Might their behaviour be influenced to a greater extent by their colleagues and employers?

IV. Clinical Injuries A. Private Healthcare Negligence claims against all private healthcare providers – including general practitioners, general dental practitioners, nurses, physiotherapists and various other specialists, as well as surgeons operating on a private basis and private hospitals – are defended by their private insurers. Two primary medical insurers defend private (non-NHS) claims, the Medical Defence Union and the Medical Protection Society. The annual volume of such litigation is presumably close to the number of cases notified to the Compensation Recovery Unit, noted in Figures 10.1 to 10.3, in relation to cases where NHS or social security care has been provided to a claimant. The number of private clinical

66 Involving your workforce in health and safety: Guidance for all workplaces (Health & Safety Executive, 2015). 67 M Webster and H Bolt (Frontline Consultants), The effectiveness of HSE’s regulatory approach: The construction example (Health & Safety Executive, 2016) RR1082. 68 ibid. 69 F Blanc, ‘Does inspection make a difference: measuring outcomes from occupational safety and health inspections’ in G Russell and C Hodges (eds), Regulatory Delivery (Hart, forthcoming).

Clinical Injuries 269 negligence claims rose steadily from 7,109 in 2003/04 to 18,258 in 2014/15 before falling back since then to 17,894 in 2016/17. The Medical Defence Union (MDU) does not publish the number of claims received. In 2017 it closed 83% of claims without a compensation payment, paid out £62.8 million in discretionary indemnity claims and legal costs (of which £2.4 million related to members in Ireland), and received subscription income of £257.3 million (of which 99% was from UK members).70 It also received over 40,000 requests for advice or assistance from members and opened over 800 case files in relation to regulatory, disciplinary or criminal investigations. It reported that dental claims are typically more difficult to defend, but in 2017 it opened over 3,000 new cases and successfully defended over 58% of cases closed. In 2016, the MDU opened over 13,000 new case files, raised £261.8 million from membership subscription income, paid out £50.6 million in discretionary indemnity claims and legal costs, paid £28.7m in medical and dental advisory costs and £11.4 million reinsurance premiums, and had administration costs of £19.8 million. The MDU successfully defended 85% of cases closed during the year.71 The Medical Protection Society, which has 300,000 members around the world, 61% of whom are in the UK, opened 17,002 medical and 6,989 dental case files in the UK in 2017, and received 1,955 medical claims and 1,633 dental claims.72 Complaints by patients about a member of the independent sector, provided they do not relate to clinical negligence, may be made to the Independent Healthcare Sector Claims Adjudication Service (ISCAS) patient complaints adjudication service operated by the Association of Independent Healthcare Organisations, based on its Code of Practice.73 This is an alternative dispute resolution (ADR) mechanism, based on a standard model widely used across consumer-trader ADR schemes,74 although now tending to be replaced by Ombudsmen mechanisms. It has three stages, all of which are free to complainants. The first stage is local resolution, by the hospital manager (if the complaint is about a doctor). The second stage, which may be accessed as a quasi-appeal mechanism within six months after stage one, is usually dealt with by the Chief Executive of the hospital group or by a non-executive director or trustee. The third stage, again accessible within six months after stage two, is binding arbitration by an ‘Independent Adjudicator’ (IA). ISCAS members consider a range of remedies, which may include a goodwill payment in recognition of any shortfall in complaint handling, inconvenience, distress, or any combination of such factors. The IA may also award a goodwill payment of up to £5,000. It appears that private injury claims are made primarily against doctors (or dentists), rather than against the private hospitals in which they operate.

70 Report & Accounts 2017 (The Medical Defence Union Limited, 2017). 71 Report & Accounts 2016 (The Medical Defence Union Limited, 2016). £2.1 million of payments related to its Irish members’ claims. 72 Protection Through Partnership: Annual Report 2017 (Medical Protection Society, 2018). 73 A Code of Practice for the management of complaints in the independent healthcare sector for subscribing Members of the Independent Sector Adjudication Service (ISCAS) (Association of Independent Healthcare Organisations, 2013). 74 C Hodges, I Benöhr and N Creutzfeldt-Banda, Consumer ADR in Europe (Hart Publishing, 2012).

270 Personal Injuries The incidence of claims against private hospitals and clinics under ISCAS is extremely low. ISCAS received 101 claims and made payments in 81, averaging £813 per case.75 The statistics for the past three years are at Figure 10.9. ISCAS had an average administrative cost per case in 2017 of under £3,000.76 Figure 10.9 Claims against ISCAS 2015–2018 Jan 2015–Dec 2015 Jan 2016–Mar 2017 April 2017–Mar 2018 Total number of complaints adjudicated

54

78

101

Total heads of complaints

161

240

279

Upheld

35%

33%

28%

Partially upheld

36%

27%

35%

Nor upheld

29%

40%

37%

45

68

81

£29,263

£42,840

£65,815

26%

19%

12%

Cases where payments made Total costs % of cases where expert clinical advice sought

B. Public Healthcare The process for making a clinical negligence claim was summarised in chart form by the NAO in 2017: Figure 10.10. It looks somewhat daunting for an injured patient. Clinical negligence claims against all NHS bodies are handled under the Clinical Negligence Scheme for Trusts (CNST), a voluntary agreement established in the early 1990s, under which costs are pooled.77 Claims against NHS institutions are defended by NHS Resolution (NHS-R, renamed in 2017 from the NHS Litigation Authority (NHSLA)).78 The NHS-R handles various schemes,79 primarily the Clinical Negligence Scheme for Trusts (CNST), which pools litigation risk amongst all NHS Trusts, Foundation Trusts and

75 Annual Report 2017 (Independent Sector Complaints Adjudication Service, 2018). 76 Annual Report 2017 (Independent Healthcare Sector Adjudication Service). 77 The Clinical Negligence Scheme for Trusts, at www.nhsla.com/claims/Documents/CNST%20Rules.pdf. The CNST was established by Regulations originally made pursuant to the National Health Service and Community Care Act 1990, s 21 and subsequently the National Health Service Act 2006, s 71 as amended by the Health and Social Care Act 2012. See also Risk Management in the NHS EL(93)111 (London, Department of Health, 1993). 78 NHSLA is established under the National Health Service Act 2006, s 71: National Health Service Litigation Authority (establishment and Constitution) Order 1995, SI 1995 No 2800; National Health Service Litigation Authority Regulations 1995, SI 1995 No 2801. It was first established under the NHS Act 1977, s 11. 79 The others are the Liabilities to Third Parties Scheme (LTPS) and Property Expenses Scheme (PES), both covering non-clinical claims where the incident occurred on or after 1 April 1999, the Existing Liabilities Scheme (ELS) for incidents that took place before 1 April 1995, and the Ex-RHA Scheme, covering clinical claims made against the former Regional Health Authorities which were abolished in 1996.

Clinical Injuries 271 Figure 10.10 The process for resolving clinical negligence claims against the NHS80 Incidents1 (1.9 million incidents were reported in 2016–17, but all are due to clinical negligence) Patient may make a complaint (verbal or written) to trust Patient may request records from trust Disclosure of records by trusts (ideally within 40 days) Notification of claim to NHS Resolution (10,600 claims were made in 2016–17).2 Patient, or their representative, may make a claim directly to NHS Resolution or through the trust Investigation and formal response from NHS Resolution (usually within four months from receiving a letter of claim) NHS Resolution denies liability or challenges value of claims

Claimant issues claim form at court (4,100 claims were settled after this stage in 2016–17)

NHS Resolution accepts liability and agrees to settle

Claimant accepts the conclusion of NHS Resolution

Case management conference convened by the Judge to set direction for both the claimant and NHS Resolution to follow Trial if no agreement is reached through negotiation (82 claims were settled through trials in 2016–17) Compensation is ordered by the judge (22 in 2016–17)

NHS Resolution reaches agreement with claimant through negotiation

Claim successfully defended by NHS Resolution (60 in 2016–17) Claim concludes

Notes 1 Many incidents that load to clinical negligence claims are not included in the incidents reported to , or by, trusts. 2 Notification of claims in 2016–17 may have resulted from incidents prior to this year. Resolution of claims in 2016–17 includest claims notified in previous years, In 2016–17, 10,600 claims were made while 12,300 claims were resolved.

Primary Care Trusts.81 The NHS-R summarised the eight pooling schemes that it managed in 2018/19 as follows:82 The five clinical negligence schemes we manage are: • Clinical Negligence Scheme for Trusts (CNST), which covers clinical negligence claims for incidents occurring on or after 1 April 1995. • Existing Liabilities Scheme (ELS) is centrally funded by DHSC and covers clinical negligence claims against NHS organisations for incidents occurring before 1 April 1995. 80 Managing the costs of clinical negligence in trusts. Report by the Comptroller and Auditor General (National Audit Office, 2017) Figure 5. 81 It is not an insurance arrangement and so not subject to insurance regulatory capital requirements. 82 Annual Report and Accounts 2018/19 (NHS Resolution, 2019).

272 Personal Injuries • Ex-Regional Health Authority Scheme (ExRHAS) is a relatively small scheme, centrally funded by DHSC, covering clinical negligence claims against former Regional Health Authorities abolished in 1996. • DHSC clinical covers clinical negligence liabilities that have transferred to the Secretary of State for Health and Social Care following the abolition of any relevant health bodies. • Clinical Negligence Scheme for General Practice (CNSGP), is a new scheme which covers clinical negligence claims for incidents occurring in general practice on, or after, 1 April 2019. We also manage two non-clinical schemes under the heading of the Risk Pooling Schemes for Trusts (RPST): • Property Expenses Scheme (PES) which covers ‘first party’ losses such as property damage and theft, for incidents on or after 1 April 1999. • Liabilities to Third Parties Scheme (LTPS) which covers non-clinical claims such as public and employers’ liability. In addition we manage one other non-clinical scheme: • DHSC non-clinical – which covers non-clinical negligence liabilities that have transferred to the Secretary of State for Health and Social Care following the abolition of any relevant health bodies.

The total value of payments under these schemes is below. The overwhelming expenditure is on clinical negligence. The incidence of clinical negligence cases is about three times greater that of non-clinical negligence cases (Figure 10.11) and the cost per case of the former is far higher than that of the latter. Clinical negligence CNST ELS Ex-RHA DH Clinical Total

Value £ million 2,058.7 56.1 2.3 110.4 2,227.5

Non-clinical negligence PES

6.5

LTPS

45.6

DH Non-clinical Total Grand Total

5.5 57.6 2,285.1

The total numbers of clinical and non-clinical claims reported for 2007/8 to 2017/18 are at Figure 10.11. In relation to claims against the NHS, non-clinical claims have risen modestly but clinical claims rose rapidly from 6,652 in 2009/10 to a peak of 11,497 in 2014/15 (these are, of course, not included in the CRU figures) and have since fallen back somewhat to what appears to be a plateau of 10,673 in 2017/18. Between 2006/07 and 2016/17, the number of clinical negligence claims registered with NHS-R each year, under the CNST, doubled from 5,300 to 10,600.

Clinical Injuries 273 Figure 10.11 NHS Claims and Costs 2012/1383 to 2017/1884 Year

2012/13

2013/14

2014/15

2015/16

2016/17

2017/18

Clinical claims reported

10,129

11,945

11,497

10,965

10,686

10,673

Non-clinical claims report

4,632

4,802

4,806

4,172

4,082

3,570

Damages paid on £907.5m clinical claims

£840.7m

£774.4m

£950m

£1,083m

£1,632m85

Damages paid on non-clinical claims

£23.2m

£25.2m

£26m

£26.7m

£30.7m

£31.2m86

Total paid on clinical claims (damages and costs)

£1,259m

£1,192.5m £1,169.5m £1,488.5m

£1,707.2m

£2,227.5m

Total paid on non-clinical claims (damages and costs)

£51m

£51.6m

£53.4m

£59.4m

£57.5m

£57.6m

Legal costs of clinical claims where damages paid –– Claimants

£274.9m £76.5m

£259.3m £92.5m

£291.9m £103.2m

£418m £120.1m

£498.5m £125.7m

£466.6m £128.9m

Total paid for damages and legal costs

£1,310m

£1,245m

£1,223m

£1,547.9m

£1,764.7m

£2,285.1m

Total operating expenditure (including administration costs)

£5,413.9m £4,409.5m £3,750.5m £29,369.6m £10,519.7m £13,746.1m

–– Defence

83 NHS

Litigation Authority Annual Reports and Accounts for 2012/13, 2013/14, 2014/15 and 2015/16. Resolution Annual Reports and Accounts for 2016/17 and 2017/18. 85 Includes £404m PIDR element. 86 Includes £2.3m PIDR element. 84 NHS

274 Personal Injuries Figure 10.12 Number of new clinical and non-clinical claims reported from 2010/11 to 2017/18 14,000 11,945

Number of new claims

12,000 10,000

11,497

10,129 8,655

10,965

10,686

4,172

4,082

2015/16

2016/17

10,673

9,143

8,000 6,000 4,000

4,346

2,000 0

4,618

Clinical 2010/11

2011/12

4,632

4,802

4,806

3,570

Non-clinical 2012/13

2013/14

2014/15

2017/18

Notification year

C. Types of Claims: Obstetrics Dominate Cost There is a broad range of causes of clinical negligence claims against trusts. Almost 40% of clinical negligence claims against trusts are related to a failure or delay to diagnose or treat a patient.87 As at 2017, the most common reported causes are:88 • • • •

failure to perform a treatment or a delay in performing it (22% of claims); failure to diagnose a condition or a delay in diagnosing it (17% of claims); inappropriate treatment (7% of claims); and problems during operations (6% of claims).

The percentages of claims received in 2014/15 and 2017/18 by medical speciality type are shown in Figure 10.13. Several points arise here. First, some types fluctuate into and out of the top ten types, but the incidence and value percentages of various types is fairly low. Secondly, in 2017/18 there was a change from previous years in that the greatest number of claims received across all clinical negligence schemes related to the Casualty/A&E specialty (1,395 new claims) rather than orthopaedic surgery.

87 House of Commons, Committee of Public Accounts, Managing the costs of clinical negligence in hospital trusts Fifth Report of Session 2017–19, HC 397, 1 December 2017, para 1. 88 Managing the costs of clinical negligence in trusts. Report by the Comptroller and Auditor General (National Audit Office, 2017) para 1.8.

Clinical Injuries 275 Figure 10.13 Claims received by specialty in 2014/15 and 2017/18

Specialty Orthopaedic Surgery Casualty/A & E General Surgery Obstetrics Gynaecology General Medicine Radiology Urology Gastroenterology Paediatrics Psychiatry/Mental health Other (54 aggregated specialties)

Percentage of claims received 2014/15 14% 12% 11% 10% 6% 5% 3% 3% 2% 2% –

Value of claims received 2014/15 7% 8% 4% 41% 2% 3% 2% 2% 4% 7% –

Percentage of claims received 2017/18 12% 13% 9% 10% 5% 5% 4% 3% 3% – 3%

Value of claims received 2017/18 4% 9% 3% 48% 2% 2% 2% – – 8% 2%

32%

20%

34%

17%

Thirdly, the cost of obstetrics claims is markedly higher than other types, and this is due to the value of support needed for neonates who suffer neurological damage at birth. The number of such claims has remained fairly even over the past decade, at about 200 per year, but their value has risen inexorably: see Figure 10.14. Of the £6 billion of known claims at 31 March 2015, just over half related to obstetric claims with 75% of the total relating to incidents occurring before 31 March 2010. NHS-R commented in 2017/18:89 In 2017/18 despite obstetric claims representing only 10% of clinical claims by number, they accounted for 48% of the total value of new claims reported. The total value for individual maternity claims resulting in cerebral palsy/brain damage has continued to rise while the number of claims fell by 20 claims from 231 in 2016/17 to 211 in 2017/18. The CNST maternity collect to meet the projected cost of obstetric payments to be made in 2018/19 is £735.7 million.

D. High Claim Failure Rates It is notable how many clinical negligence claims fail. The number of cases resolved without payment of damages has been significant for some years (Figure 10.15).90 It has been increasing since 2008/9 and has possibly plateaued in the past two years but in 2017/18 stands at 45% for clinical claims (5,166). The conclusion is supported by the rebuttal rate of the MDU for medical claims, which rose from 70% in the five years to 2014 to almost 80% in 2014,91 leaving perhaps 2,800 paid claims. 89 Annual Report and Accounts 2017/18 (NHS Resolution, 2018). 90 See also Introducing Fixed Recoverable Costs in Lower Value Clinical Negligence Claims. A Consultation (Department of Health, 2017). 91 Report & Accounts 2014 (The Medical Defence Union Limited, 2015).

276 Personal Injuries Figure 10.14 A comparison of the number and total value of claims for maternal cerebral palsy/ brain damage across all clinical negligence schemes 2004/5 to 2017/18 300

200

181 179

228

218

200

990 1,036

927 894

50

1,325

1,400

189

1,200

1,131 1,168

1,000 800 600

658

621

557

1,600

231 211

220 205

1,348

150 100

223 195

1,800

Total claim (£m)

Number of claims

255

246

250

2,000

1,861

1,750

400

359

Number of claims

200

Total claim value (£m)

0

8 /1

7 20

17

6

/1

/1

20

16

5 /1

20

15

4 20

14

3

/1

/1

13

12 20

20

2

1

/1

20

11

/1

0 /1

20

10

9 20

09

8

/0

/0

20

07 20

08

7

6

/0

/0

06 20

05 20

20

04

/0

5

0

Notification year

Figure 10.15 Number of NHS-R cases resolved without payment of damages from 2004/5 to 2017/18 6,000

Number of claims

5,000

4,643

4,524

4,000

3,541

2,000

3,054

2,008 1,726

1,951

5,252 5,166

3,680 3,330

3,000

1,000

4,959 4,983

2,523 2,657

1,409 1,332

1,285

2,922

3,175

1,836 1,860 1,884

2,198

2,596

2,796 2,618

Clinical

2,515

Non-clinical

8

20

17

/1

7

16

/1

6 /1

15

20

5 /1

14

20

4 /1

20

3 /1

13 20

2 /1

12 20

1 20

11

/1

0 20

10

/1

9

09 20

20

08

/0

8

7

/0 07

20

20

06

/0

6 /0

05 20

20

04

/0

5

0

Closure year

E. Outcomes of Claims In 2016/17, of the 12,300 clinical negligence claims agreed by NHS-R, 66% were settled before the start of formal court proceedings, and 34% after.92 In 2017/18, 69.6% of the 16,338 92 Managing the costs of clinical negligence in trusts. Report by the Comptroller and Auditor General (National Audit Office, 2017) para 1.11.

Clinical Injuries 277 clinical claims were resolved without formal court proceedings and in the early stages more claims were resolved without payment of damages than with payment of damages, as shown in Figure 10.16.93 Just under one third of claims end up in litigation with fewer than 1% going to a full trial (where most end in judgment in favour of the NHS). Figure 10.16 Resolution of NHS-R claims in 2017/18

NHS-R has a policy of resisting claims that it considers to be unjustified:94 We continue to defend cases to trial where we consider there has been no negligence or where the amount claimed is thought to be excessive. We have taken 110 cases across all schemes to trial in 2017/18 with a success rate of 67%. This represents a fall of 4% (4 cases) in cases taken to trial on the previous year but an increase in the success rate by 2% from 65%. 74 cases were successfully defended and the majority of issues involved disputes on liability and quantum.

Most clinical claims involve small sums: in 2017/18 63% of successful claims involved under £25,000.

93 Annual 94 Annual

Report and Accounts 2917/18 (NHS Resolution, 2018). Report and Accounts 2017/18 (NHS Resolution, 2018).

278 Personal Injuries Figure 10.17 Levels of success and damages paid under CNST by NHS-R in 2017/18 Damages tranche £

No. of claims

% of total claims

4,983

46.23%

Nil (ie claims unsuccessful) £1–£1,000

% of successful claims (ie, settled for damages) n/a

184

1.71%

3.18%

3,475

32.24%

59.9%

£25,001–£50,000

866

8.03%

14.96%

£50,001–£100,000

556

5.16%

9.59%

£100,001–£150,000

202

1.87%

3.49%

£150,000–£200,000

129

1.20%

2.23%

£200,001–£250,000

167

0.62%

1.16%

£250,000+

316

2.93%

5.45%

10,878

100%

£1,001–£25,000

Total

F. Disproportionality between Costs and Damages There is a significant disproportionality between costs and damages in relation to claims against the NHS, especially those of small or modest value, see Figure 10.18.95 Small claims cost a lot to resolve. For claims under £1,000 the costs were around 250% of compensation paid.96 In 2014/15 the NHSLA recorded that, for claims resolved for less than £100,000 damages, the percentage of claimant costs has increased from just over 30% to 50% over the previous 10 years and as an absolute figure, increased almost three-fold.97 Figure 10.18 Disproportion between Damages and Claimant Legal Costs 300%

299% 273%

% Legal costs of damages

250% 200% 164%

150%

153% 112%

100% 50% 0%

107%

43%

83% 74%

51% 24% 27%

£1–£10,000 £10,001– £25,000

18% 20%

£25,001– £50,000

15% 16%

95 Report

41% 37% 11%

10%

17% 4%

% Defence Costs of Damages 14/15 % Claimant Costs of Damages 14/15

and Accounts 2014–15 (NHS Litigation Authority, 2015) Fig 4, p 10. Reports and Accounts of NHS Resolution. 97 Report and accounts 2014/15 (NHS Litigation Authority, 2015) 11. 96 See

27% 24% 8% 7%

15% 5%

£50,001– £100,001– £250,001– £500,001– £1,000,001+ £100,000 £250,000 £500,000 £1,000,000 Damages by tranche

% Defence Costs of Damages 13/14 % Claimant Costs of Damages 13/14

57% 54% 12% 13%

Clinical Injuries 279

G. Inexorably Rising Cost of Clinical Claims The cost of claims for clinical injuries based on tort has been a recurrent headache for successive governments. The cost of clinical negligence claims is rising at a faster rate year-on-year than NHS funding. The annual cost is expected to double from £1.6 billion in 2016/17 to £3.2 billion by 2020/21.98 Between 2010/11 and 2015/16, the average percentage of a trust’s income spent on contributions to the scheme increased from 1.3% to 1.8%, and the NAO’s analysis indicates that this could rise to about 4% by 2020/21.99 Between 2006/07 and 2016/17, the NAO reported that:100 • the annual costs of claims settled in-year increased from £0.4 billion to £2.0 billion. This represents the total defence and claimants’ legal costs, and total damages awarded for claims resolved during a given year, including both cash payments already made and reserves estimated for future periodical payments for those claims; and • annual spending on clinical claims increased from £0.4 billion to £1.6 billion, and is forecast to double again by 2020–21 to £3.2 billion (2016 estimate).

It was estimated in 2016/17 that liabilities for existing claims through the CNST, involving future payments or claims not yet settled, and potential clinical negligence claims for incidents that had already occurred but not yet made, were £60 billion, with a total provision across all NHS-R’s schemes of £65 billion.101 This is the second-largest provision across the whole of government’s accounts. The fact that both measures of measuring annual clinical negligence cost (annual cost of claims settled and annual cash spend) are growing is illustrated in Figure 10.18. The increase in the total cost of clinical negligence claims settled in-year between 2006/07 and 2016/17, from £0.44 billion to £1.98 billion, was a result of three factors:102 • A rise of 45% in the number of claims. In the ten year period, the number of claims against trusts notified to NHS-R doubled, from 5,300 to 10,600; and the number of claims where damages were awarded rose from 2,800 to 7,300. • A rise of 33% in the average damages awarded (mainly associated with high-value claims). The total damages awarded rose by 316% during this period, from £0.33 billion to £1.36 billion. • A rise of 21% in legal costs (mainly associated with claimant’s legal costs for low- and medium-value claims up to £250,000). Total claimant legal costs rose by 533% during this period, from £77 million to £487 million. The detailed figures for 2016/17 are as follows. NHS-R spent £1.6 billion on the CNST, comprising £974 million on damages, £602 million on legal costs (£480 million on claimants’ 98 House of Commons, Committee of Public Accounts, Managing the costs of clinical negligence in hospital trusts Fifth Report of Session 2017–19, HC 397, 1 December 2017, para 2. 99 ibid, para 1.16. House of Commons, Committee of Public Accounts, Managing the costs of clinical negligence in hospital trusts Fifth Report of Session 2017–19, HC 397, 1 December 2017, para 1. 100 Managing the costs of clinical negligence in trusts. Report by the Comptroller and Auditor General (National Audit Office, 2017) para 1.12. 101 ibid, para 1.13. 102 ibid, para 2.2.

280 Personal Injuries legal costs and £122 million on defence costs) and £10 million on claims operations.103 In 2015 total legal claimant costs paid by the NHS as a whole were reportedly 22% of clinical negligence expenditure and 38% of non-clinical negligence expenditure.104 The reasons for the recent increase in claims are seen as an artefact of changes in the legal system rather than in clinical practice. The NAO made the following telling observation: Changes in the amount of, or safety of, hospital activity could be one possible explanation for a rise in clinical negligence claims. However, the number of claims has doubled over the last 10 years, whereas the number of people treated only rose by 32% over this period, so this cannot account for all of the rise. On the quality of care, there is no comprehensive measure of safety of care in the NHS.105

The NAO identified the series of reforms to funding and costs of lawyers as having had a ‘significant impact’ on the rise of claims, notably:106 • the introduction in 1995 of ‘no-win-no-fee’ agreements, the improved terms for these agreements introduced in 2000 and the improved availability of insurance to cover the legal costs of unsuccessful cases reduced the financial risk to claimants and their lawyers of making claims. Since 2006–07, successful claims funded by this type of arrangement have increased more than the rise in the total number of successful claims …; • the introduction in 2010 of fixed legal fees for road traffic accident injury claims resulted in more legal firms expanding to clinical negligence markets. Fixed fees were expanded to other types of personal injury claims in 2013. As a result of these reforms, clinical negligence claims, where legal fees were not fixed, became more attractive. The estimated number of legal firms making claims, recorded on NHS Resolution’s database, increased from 760 in 2009–10 to 960 in 2013–14, before dropping to 840 in 2016–17;10 • the Legal Aid, Sentencing and Punishment of Offenders Act 2012 led to a spike in the number of claims received immediately prior to the new legislation coming into effect in April 2013. The act aimed to curb the disproportionate rise in legal costs resulting from excessive growth in the use of ‘no-win-no-fee’ agreements. It also introduced restrictions on the reimbursement of the cost of insurance taken out to protect against unsuccessful claims. Since the introduction of the act, the number of new claims has reduced slightly over the last three years; and • since 2004, claims management companies have been allowed to refer claimants to lawyers for a fee. This has led to increased market activity including advertising and reports of ‘claimant farming’ by these companies, for example, through ‘cold calling’. This activity has helped to increase people’s awareness and access to legal services. Following concerns of market abuse, in 2013, the government banned payments of referral fees to claims management companies. The number of claims management companies and the turnover of those involved in the personal injury market have since declined, which coincides with the leveling off of clinical negligence claims.

103 Managing the costs of clinical negligence in trusts. Report by the Comptroller and Auditor General (National Audit Office, 2017) para 1.12. 104 Triennial Review of the NHS Litigation Authority: Review Report (Department of Health, 2015) para 4.15. 105 Managing the costs of clinical negligence in trusts. Report by the Comptroller and Auditor General (National Audit Office, 2017) para 2.4. 106 ibid, para 2.8.

Clinical Injuries 281 The NAO concluded:107 Despite the increasing number of claims, the proportion of claims where damages are paid has remained relatively stable. This suggests that these legal reforms have improved access to legal services and encouraged more patients to get redress through claims than had done so previously.

As noted above, in 2017/18 provisions almost trebled over the previous four years to £77 billion, and total annual payments in clinical claims doubled to £2 billion (Figure 10.19).108 Figure 10.19 Payments on clinical claims for CNST, ELS and Ex-RHA, and DHSC clinical schemes from 2012/13 to 2017/18 2,500.0 2058.7

2,000.0

Clinical Negligence Scheme for Trusts

Payments (£m)

1,575.9 1,500.0

1,378.2 1,051.2

1,044.4

141.2

106.2 35.1

97.5 27.7

82.5 27.7

100.2 31.0

110.4 58.4

2012/13

2013/14

2014/15

2015/16

2016/17

2017/18

1,000.0 500.0 0

DHSC clinical scheme

1,117.7

Existing Liabilities & Ex-Regional Health Authorities scheme

Financial year

H. Drivers of Costs and Success Rates Until April 2013, if the claimant won, the CFA, its success fee, and the ATE premium would all be paid by the defence, and the success fee uplift was routinely 100% of the level of base costs.109 For agreements made from 1 April 2013, only the base CFA fee is recoverable from a paying defendant. Neither the success fee nor ATE premium are recoverable,110 save that, in clinical negligence cases only, an ATE covering the cost of the claimant’s experts’ reports is recoverable.111 The introduction of QOCS under LASPO was made on the basis

107 ibid, para 2.9. 108 Annual Report and Accounts 2017/18 (NHS Resolution, 2018) Figure 6. 109 Report and accounts 2013/14 (NHS Litigation Authority, 2014) paras 4.13–4.15. 110 Legal Aid, Sentencing and Punishment of Offenders Act 2012, ss 44 and 46, amending the Courts and Legal Services Act 1990, s 58. 111 The Recovery of Costs Insurance Premiums in Clinical Negligence Proceedings Regulations 2013, SI 2014 No 92; repealed and replaced by The Recovery of Costs Insurance Premiums in Clinical Negligence P roceedings (No. 2) Regulations 2013, SI 2013 No 379. The rationale for this exception was that without this protection, claimants would be unable to finance investigation of and bring claims.

282 Personal Injuries of Jackson LJ’s assumption that most personal injury claims were valid, and he wanted to encourage earlier settlement. Whatever the truth of that assumption of validity in relation to employment or road traffic injuries, the data in relation to clinical claims indicate a different picture. The picture may be significantly complicated by difficulties of proving liability and causation in relation to many clinical injuries but the high rate of claims for which no payment is made is clear. As a result of the 2013 changes in the costs rules, it appears that there was an increase in claims with poor merit or unjustified elements. More claims have been brought by lawyers who have moved into clinical claims as other work has become uneconomic, and engaged in strong marketing, but which have not been well substantiated.112 This change is associated with the fact that the number of claims in which no compensation was paid rose from 2,533 in 2009/10 to 4,909 in 2014/15 (and constituted 46% of the 16,459 cases resolved). In 2014/15 the NHSLA considered that claims valued at £1,183 million were resolved without payment of damages, and claimed legal costs of £97 million were challenged and saved.113 After the 2013 LASPO changes, growth in legal fees for claims with a value up to £25,000 slowed: between 2013/14 and 2016/17, the ratio of average claimant legal fees to average damages awarded for claims funded with ‘no-win-no-fee’ agreements fell from 2.9:1 under the pre-2013 arrangement to 1.8:1 under the post-2013 arrangement.114 The NHS-R has continued to combat ‘unreasonable’ costs and ATE premiums.115 The NHSLA reported in 2015:116 Increasing numbers of claims are being brought for lower values … Claimant costs for lower value claims are disproportionate and excessive. For claims where compensation is less than £10,000, claimant lawyers recover almost three times more in costs on average. This disproportion has increased from 2013/14 to 2014/15 at every level of damages, but in particular, at the lower end. Defence lawyers work to fixed costs arrangements, with significantly lower costs than Claimant lawyers at every value range.

Briggs LJ commented in 2016:117 [the] beneficial outcome of the Jackson Reforms, even when supported by costs budgeting and costs management, has not produced the result that the legal costs incurred in small and moderate value personal injury litigation (including clinical negligence) are now proportionate, particularly

112 ‘The introduction of low fixed fees in other areas of personal injury work such as motor claims has led to increasing number of non-specialist claimant firms entering the clinical negligence market. Evidence suggests many of these firms often work to high volume low value claims, rather than adopting a more targeted strategy.’: Report and accounts 2013/14 (NHS Litigation Authority, 2014) para 4.16. 113 Report and accounts 2014/15 (NHS Litigation Authority, 2015). 114 Managing the costs of clinical negligence in trusts. Report by the Comptroller and Auditor General (National Audit Office, 2017) para 2.17. 115 R Rothwell, ‘NHSLA “saves £6m” by fighting ATE premiums’ Gazette 5 July 2016. This reported disallowance of a ‘block-rated’ (rather than staged) premium of £1,802 in Mewis v Burton Hospitals NHS Foundation Trust in Worthing County Court, and reducing an insurer’s block-rated premium from £3,843 to £2,500, and reduction in the cost of a medical report from 3,591 to £2,400, in relation to damages of £7,000 in Martin v Queen Victoria Hospital NHS Foundation Trust. A spokesman for the NHSLA said that during 2015/16, the authority had faced ATE premium costs amounting to £38.3m, in 2,849 cases. It challenged the premium costs in 1,437 of these, and achieved costs reductions in 846 cases. This amounted to savings of more than £6m. 116 ibid, 9–10. 117 Lord Justice Briggs, Civil Court Structure Review: Interim Report (Judiciary, 2016) para 5.46.

Clinical Injuries 283 in the small minority of claims that go all the way to trial. On the contrary, wildly disproportionate expenditure still occurs, albeit not at the claimant’s risk. In those cases, the adverse consequences of that disproportionality lie not in impeding access to justice, but rather in increasing motor and employers’ liability insurance premiums, and in an increased litigation burden on the National Health Service in most clinical negligence cases. Thus the disproportionality remains a weakness of the civil justice system, but of a different kind.

The NAO’s 2017 report confirmed that claims funded by CFAs (no win, no fee) account for almost all of the increase in the number of clinical negligence claims,118 which it illustrated in Figure 10.20. The use of legal aid had clearly diminished in the ten-year period to 4% of claims as a result of successive reductions in availability, and the use of BTE insurance was almost minimal (2% of cases in 2016/17). Figure 10.20 Claimants’ legal funding arrangements for successful clinical negligence claims, 2006/07 to 2016/17 Total number of claims 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0

2006–07 2007–08 2008–09 2009–10 2010–11 2011–12 2012–13 2013–14 2014–15 2015–16 2016–17 Financial year 1,293 1,363 2,104 2,670 3,057 3,619 4,271 3,520 2,879 ‘No-win-no-fee’ pre 2013–14 811 2,082 79 745 1,985 ‘No-win-no-fee’ post 2013–14 3,752 200 312 278 415 402 321 234 157 122 149 Before the event insurance 158 909 1,041 955 1,133 1,094 950 719 556 433 379 306 Legal aid 904 764 521 780 809 855 706 742 772 Other 882 993

In 2017, the NAO said that both levels of damages and legal costs had grown much faster than general inflation, whereas defence costs had grown in line with general inflation:119 Between 2006–07 and 2016–17, the average damages, defence costs and claimants’ legal costs for successful claims increased by 61% (£116,000 to £187,000), 37% (£11,000 to £15,000), and 145% (£27,000 to £67,000) respectively [Figure 10.21.]. In comparison, general inflation increased by 19% over this period. The main factor contributing to the rise in damages awarded has been an increase in the average damages awarded for high-value claims, particularly maternity-related claims …. For example, between 2006–07 and 2016–17, the damages awarded for birth injury claims for patients with cerebral palsy and brain damage increased by £449 million (350%). In 2016–17, there were 590 claims with a value above £250,000, representing 8% of the total number of successful claims but accounting for 83% of the total damages awarded. Between 2006–07 and 2016–17, these claims accounted for 85% of the increase in costs of damages awarded (£0.9 billion out of £1.0 billion).

118 ibid, para 2.8 and Figure 12. 119 Managing the costs of clinical negligence in trusts. Report by the Comptroller and Auditor General (National Audit Office, 2017) paras 2.10 and 2.11.

284 Personal Injuries Figure 10.21 Average legal costs and damages awarded, 2006/07 to 2016/17 Average cost index (2006–07 = 100) 300 250 200 150 100 50 0

Claimant costs

2006–07 2007–08 2008–09 2009–10 2010–11 2011–12 2012–13 2013–14 2014–15 2015–16 2016–17 Financial year 237 245 100 113 142 142 135 166 167 186 203

Damages

100

96

149

125

132

180

149

163

150

168

161

Defence costs

100

97

126

102

88

105

94

97

108

130

137

GDP Deflator

100

102

105

107

109

110

112

114

116

117

119

Source: National Audit Office analysis of NHS Resolution data

The NAO noted that rising legal costs were the main contributing factor in rising NHS costs for low- and medium-value claims, largely funded by ‘no-win-no-fee’ agreements.120 In 2016–17, claims with a value up to £250,000 accounted for 63% of all the legal costs of claimants but only 17% of all the damages awarded. Between 2006–07 and 2016–17, the number of low- and medium-value claims more than doubled from 2,700 to 6,700, and the average legal costs of claimants also more than doubled from £18,100 to £45,500.

Since lawyers could claim up to twice their legal fees for cases they won – theoretically so as to cover the free legal services they provide to patients with unsuccessful claims – claims funded through ‘no-win-no-fee’ agreements tended to have legal costs that were proportionately higher compared with the value of the claims, than claims funded through other arrangements (see Figure 10.22).121

I. Proposals on Personal Injury Fixed Costs As examined in chapter four, the small claims track limit of £1,000 was due to increase for personal injury claims to £5,000 (costs in the small track are unrecoverable), and in 2017, Jackson LJ recommended a grid of fixed recoverable costs for all fast track cases (not just clinical), and a new ‘intermediate’ track for certain claims up to £100,000 which can be tried in three days or less, with no more than two expert witnesses giving oral evidence on each side.122 For clinical negligence claims, he recommended that a working party should agree a revised process for handling clinical negligence claims up to £25,000, on a grid of FRC. 120 ibid, para 2.16. 121 ibid, Figure 14. 122 Lord Justice Jackson Review of Civil Litigation Costs: Supplemental Report. Fixed Recoverable Costs (Judiciary of England and Wales, 2017).

Clinical Injuries 285 Figure 10.22 Claimants’ legal costs as a proportion of damages awarded by funding arrangements 2006/07 to 2016/17

In January 2017, the Health Secretary announced a fixed costs regime that would be mandatory for all clinical negligence claims worth up to £25,000, estimated to save the NHS in England £45m a year by 2020/21.123 This was a relief for claimant lawyers, who had been anticipating a rise to £250,000. Professor Paul Fenn’s evaluation of the proposals raised a number of criticisms in the assumptions and potential effects on claimant layers’ behaviour.124 However, further consultation showed that this would not be viable unless accompanied by a streamlined process, so the matter was remitted to a working party of the Civil Justice Council. The National Audit Office (NAO) commented in relation to medical negligence claims:125 In 2016–17, claimants’ legal costs for claims resolved with a value up to £250,000 (63% of all claimants’ legal costs) was £306 million. The Department … estimates that this could save up to £45 million a year. In addition, in July 2017, Lord Justice Jackson published his review examining options to extend fixed recoverable legal costs.126 It recommended that the Department and the Civil Justice Council should set up a working party with both claimant and defendant representatives to develop a bespoke process for handling clinical negligence claims up to £25,000, with fixed recoverable costs. It also noted that fixed recoverable costs would not be suitable for most clinical negligence claims above £25,000.

123 Introducing Fixed Recoverable Costs in Lower Value Clinical Negligence Claims. A Consultation (Department of Health, 2017). 124 P Fenn, Evaluating the proposed fixed costs for clinical negligence claims. An Independent review (Ministry of Justice, 2017). 125 Report by the Comptroller and Auditor General. Managing the costs of clinical negligence in trusts (National Audit Office, 2017) para 3.22. 126 Right Honourable Lord Justice Jackson, Review of civil litigation costs: supplemental report fixed recoverable costs (Judiciary of England and Wales, July 2017).

286 Personal Injuries In October 2017 the government announced plans to develop a State-backed indemnity scheme for GPs to protect them from the costs of clinical negligence claims, as a response to reduce the number of GPs leaving practice due to rising insurance premiums.127 In 2017, personal injuries scholar Annette Morris urged that the government should overhaul the entire civil claims process before implementing any increase in the small claims limit, in order to avoid the inevitable surge in litigants in person that increasing the limit for RTA claims would bring.128 She said: ‘We shouldn’t increase the small claims limit before we have created a system geared at the public and not lawyers.’ She continued that rights to tort compensation are not ‘fundamental or sacrosanct’ but contingent on balancing the interests of injured claimants, defendants and wider society. Much would depend, she noted, on the value society attaches to tort, whether it is seen as an economic drain or whether it provides accountability and addresses imbalances of power. Road traffic claims have increased almost eight-fold over the last 40 years and now dominate the system, constituting 41% of all claims in the 1970s but 80% of claims today. Morris concluded that tort law delivers wider benefits to society some of the time, but not generally in the road traffic accident context. ‘Most minor injury claims are straightforward and routine. Many involve limited input from paralegals in “sausage factories” where the overall system resembles insurance more than legal practice. In terms of damages, they involve going rates and compromise rather than meticulous individualised calculations of full compensation.’ The issue of costs reform continued to be considered into 2019 by a joint working party of the Civil Justice Council and the Department of Health.129 The Ministry of Justice rejected the Jackson proposal for an intermediate track.130

J. The Discount Rate Claimant lawyers and trade unions were delighted, and insurers dismayed, when Lord Chancellor Liz Truss announced in February 2017 that the rate that is applied to personal injury awards, on the expectation that they would be invested in the lowest risk investments, typically Index-Linked Gilts, would be reduced from 2.5% (set in 2001) to −0.75%.131 This meant that personal injury awards increased substantially. As a result, motor insurers were shortly afterwards reported to have recorded a loss of £3.5 billion in the previous year.132 The Lord Chancellor’s decision to reduce the discount rate added another £3.5 billion to the provision by NHS Resolution clinical negligence claims.133 The Medical Defence Union 127 Press release, ‘GP indemnity: development of state-backed scheme for England’. 128 J Hyde, ‘System needs to change before small claims limit rise’ Gazette, 26 October 2017. 129 Sir Terence Etherton, MR, speech ‘Civil Justice after Jackson’, Conkerton Memorial Lecture 2018, Liverpool Law Society, 15 March 2018, www.judiciary.uk/wp-content/uploads/2018/03/speech-mor-civil-justice-after-jacksonconkerton-lecture-2018.pdf. 130 Extending Fixed Recoverable Costs in Civil Cases: Implementing Sir Rupert Jackson’s proposals (Ministry of Justice, 2019). 131 Damages Act 1996: The Discount Rate – Review of the Legal Framework (Ministry of Justice, 2017). 132 Anon, ‘Ogden rate change costs insurers £3.5bn as motor premiums soar’ Gazette June 2017. 133 Managing the costs of clinical negligence in trusts. Report by the Comptroller and Auditor General (National Audit Office, 2017) paras 1.14 and 2.14. Applying the previous discount rate in 2015/16 increased the provision by £25.2 billion, £22.3 billion of which was solely due to a change in the Treasury’s discount rate. A further change to the Treasury’s discount rate in 2016/17 added another £0.6 billion to the provision. More than 60% of damages paid by NHS Resolution involved lump sum awards. The estimated increase in payments as a result of the change in 2016/17 was £500 million.

Clinical Injuries 287 made a substantial increase in its indemnity provision to £727 million (from £408 million in 2015).134 A Review was held,135 and in September 2017, Lord Chancellor David Lidington announced proposals to change the basis on which the discount rate was set, namely by reference to expected rates of return on a low risk diversified portfolio of investments rather than very low risk investments as previously.136 The Justice Select Committee proposed a number of changes in December 2017, including137 the establishment of a committee of experts to advise the Lord Chancellor on the appropriate rate; reviews at least every three years; and basing the rate more closely on the returns claimants actually obtain on their investments as opposed to return received on Index-Linked Government Stock, which is the current position.

In 2017/18, the risk of the discount rate had had a significant effect on the cost of claims:138 … in the last four years … our balance sheet provisions have almost trebled to £77 billion. In our main Clinical Negligence Scheme for Trusts (CNST), which accounts for 93% of the total provision, c£37 billion (over 75%) of the increase is due to changes in the HM Treasury discount rate we are required to use to value future claim payments at current values – this is a matter of measurement of future cash flows but does not impact what those cash flows will be. A further £4.5 billion results from the decrease in the personal injury discount rate (PIDR) that occurred in March 2017 and is a real increased cost to the NHS. Together these account for 86% of the total increase and neither can be controlled by the NHS. Approximately £23 billion is the estimated cost of new claims in those four years. At current prices the annual ‘cost of harm’ is now c£7–8 billion, roughly double the figure prior to 2016/17 as a result of the reduced discount rates referred to above.

The Civil Liability Act 2018, section 10 introduced regulation of the discount rate by the Lord Chancellor from 2020, on advice from an expert panel, closing this particular saga. From 5 August 2019 the discount rate was changed from −0.75% to −0.25% for personal injury claims, which was anticipated to save NHS £80m a year and save insurers £320m a year.

K. Costing Damages at Private Rates A major component of damages awarded in personal injury cases is the statutory requirement that requiring judgments should calculate the cost of care awarded at private rates, on the assumption that free NHS care is not used.139 The resultant level of damages awarded has been the source of complaint by insurers and NHS bodies for many years. The MDU has campaigned for repeal of the rule, which they say diverts ‘billions of pounds’ from NHS funds to the independent sector.140 134 Report & Accounts 2016 (The Medical Defence Union Limited, 2016). £2.1 million of payments related to its Irish members’ claims. 135 Consultation. The Personal Injury Discount Rate: How it should be set in the future (Ministry of Justice, 2016); An Assessment of the Market for Personal Injury. A final report for the Solicitors Regulation Authority (ICF International, 2016). 136 The Personal Injury Discount Rate: How it should be set in the future (Ministry of Justice, 2017); The Personal Injury Discount Rate: How it should be set in the future. Draft Legislation (Ministry of Justice, 2017). 137 Annual Report and Accounts 2017/18 (NHS Resolution, 2018). 138 Annual Report and Accounts 2017/18 (NHS Resolution, 2018), Chair’s Foreword. The change in discount rate added £404 million (33%) to the cost of damages settlements in 2017/18. 139 The Law Reform (Personal Injuries) Act 1948, s 2(4). 140 See www.themdu.com/about-mdu/fair-compensation/the-campaign.

288 Personal Injuries

L. Differential Use of Mediation Official policy is that litigation should be a last resort, and that parties should be encouraged to settle cases, by direct exchange of information and negotiation, or facilitated by ADR. Pre-action protocols set out the conduct that the courts would normally expect parties to follow, particularly in making orders on costs, which might penalise those who unreasonably act otherwise. Different pre-action protocols apply for general personal injury (trips and slips, and accidents at work),141 low value road traffic (£10,000 to £25,000),142 low value employers’ liability and public liability,143 clinical disputes144 and general disease and illness claims.145 The general aim of Protocols is stated as to:146 • encourage the exchange of early and full information about the dispute; • encourage better and earlier pre-action investigation by all parties; • enable the parties to avoid litigation by agreeing a settlement of the dispute before proceedings are commenced; • support the just, proportionate and efficient management of proceedings where litigation cannot be avoided; and • promote the provision of medical or rehabilitation treatment (not just in high value cases) to address the needs of the Claimant at the earliest possible opportunity.

In relation to clinical negligence claims,147 which includes all claims against hospitals, GPs, dentists and other healthcare providers, both NHS and private, the general scheme is that a claimant should request medical records (usually from a prospective defendant), which should be supplied within 40 days; the claimant sends a Letter of Notification outlining the nature of the claim, injuries and heads of damage claimed; the parties consider what steps should be taken to promote rehabilitation;148 the claimant then sends a more detailed Letter of Claim and the defendant sends a Letter of response, both generally in accordance with official templates; the parties consider whether the matter can be resolved without further recourse to the court; they then seek to narrow issues in dispute and to agree the chronology and key facts before taking the matter further in civil proceedings. In 2017/18, NHS-R settled 16,338 claims, of which (69.6%) were settled without proceedings being issued (of which 6,417 involved no payment of damages). In general, it 141 Pre-Action Protocol for Personal Injury Claims, at www.justice.gov.uk/courts/procedure-rules/civil/protocol/ prot_pic. 142 Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents from 31 July 2013, at www. justice.gov.uk/courts/procedure-rules/civil/protocol/pre-action-protocol-for-low-value-personal-injury-claimsin-road-traffic-accidents-31-july-2013. 143 Pre-Action Protocol for Low Value Personal Injury (Employers’ Liability and Public Liability) Claims, at www.justice.gov.uk/courts/procedure-rules/civil/protocol/pre-action-protocol-for-low-value-personal-injuryemployers-liability-and-public-liability-claims. 144 Pre-Action Protocol for the Resolution of Clinical Disputes, at www.justice.gov.uk/courts/procedure-rules/civil/ protocol/prot_rcd. 145 Pre-Action Protocol for Disease and Illness Claims, at www.justice.gov.uk/courts/procedure-rules/civil/ protocol/prot_dis. 146 Pre-Action Protocol for Personal Injury Claims, para 2.1. 147 Pre-Action Protocol for the Resolution of Clinical Disputes, above n 140. 148 In accordance with the Rehabilitation Code, issued by the International Underwriting Association of London Limited 2013, at www.iua.co.uk/IUA_Member/Publications. The aim of the code is to promote the use of rehabilitation and early intervention in the compensation process so that the injured person makes the best and quickest possible medical, social and psychological recovery.

Clinical Injuries 289 would appear that cases resolved before issue involve merits that are clear one way or the other. After issue but before trial, 4,846 (29%) were settled (of which 944 (5.8%) involved no payment of damages), and 124 (0.8%) were resolved at trial (of which 80 involved no damages).149 The NHSLA had a reputation for defending claims, in a robust fashion. There has recently been a change in approach. The NHSLA mediation service was launched on 31 July 2014, in which mediation by an independent and accredited mediator selected from a panel has been offered in all suitable cases. By 31 March 2015 offers to mediate had only been made in 65 cases, 9 mediations had taken place, and 14 offers to mediate had been accepted.150 The NAO later reported: Between July 2014 and August 2015, it piloted a mediation service for around 50 claims involving fatal accidents and care claims for elderly patients, most of which were resolved on the day of the mediation. In December 2016, the mediation service became available to all claimants on a voluntary basis. By the end of May 2017, 40 people had taken up the service.151

On 5 December 2016 NHS Resolution launched a new claims mediation service following the completion of a procurement process for a mediation panel.152 Against a target of mediating at least 50 cases from 1 April 2017 to 31 March 2018, NHS-R successfully completed 189 mediations, and reported that the mediation process reduced case durations. NHS-R also publishes thematic reviews from its data.153 One issue that has not received enough attention is the well-established dissatisfaction by claimants who had been through the litigation process not just because they might not have received monetary compensation but also because of a failure to supply ‘softer’ remedies such as a feeling that they felt cared for.154

M. Duration On average, it takes two to three years for a patient or their representative to notify NHS-R of a claim following a clinically negligent event.155 In 2016/17, it took 426 days on average to resolve a claim, up from 300 days in 2010/11.156 However, the NHS-R achieved significant reductions in time taken. The average duration of claims has fallen from a peak of 6.18 years

149 Annual report and accounts 2017/18 (NHS Resolution, 2018) HC 1215. 150 Report and Accounts 2014/15 (NHS Litigation Authority, 2015) 24. 151 Managing the costs of clinical negligence in trusts. Report by the Comptroller and Auditor General (National Audit Office, 2017) para 3.23. 152 Annual Report and Accounts 2017/18 (NHS Resolution, 2018). Contracts were awarded for an initial period of two years to the Centre for Effective Dispute Resolution (CEDR) and Trust Mediation Limited to mediate disputes arising from personal injury and clinical negligence incidents and claims. Costs Alternative Dispute Resolution was appointed to mediate disputes arising from the recoverability of legal costs. 153 eg, Learning from suicide-related claims. A thematic review of NHS Resolution data (NHS Resolution, 2018). 154 L Mulcahy, ‘Mediation of medical negligence actions: an option for the future?’ in MM Rosenthal, L Mulcahy and S Lloyd-Bostock (eds), Medical Mishaps. Pieces of the Puzzle (Buckingham, Open University Press, 1999) 158. 155 Managing the costs of clinical negligence in trusts. Report by the Comptroller and Auditor General (National Audit Office, 2017) para 1.9. 156 Managing the costs of clinical negligence in trusts. Report by the Comptroller and Auditor General (National Audit Office, 2017) para 3.16.

290 Personal Injuries in 2008/09. Meanwhile, the overall outcome that the overwhelming number of cases are settled has not changed much. Around 2008 only 4% went to court (including settlements that required court approval), and 41% of claims did not proceed beyond the notification/ investigation stages.157 However, the total time to resolve cases increased by four months on average between 2010/11 and 2016/17, from 300 to 426 days.158

N. Summary The NAO’s 2017 Report on clinical negligence concluded that although various defensive initiatives should help to slow the growth in the costs of clinical negligence, the costs and growth ‘are unlikely to turn it around in the next few years’.159 Spending by NHS-R on clinical negligence claims was forecast to nearly double to £3.2 billion in 2020/21 (based on its 2016 estimate), and might rise by a further £500 million in 2017/18 as a result of changes to the discount rate.160 It may be that the number of injuries for which compensation could fairly be paid is far higher than the number of claims, although such injuries may be relatively minor. In 2017/18, the NHS received 208,626 complaints,161 whereas the NHS-R closed 16,338 claims.162 In 2014/15 there were 1.4 million incident reports.163 From the opposite perspective, medical insurers object that damages are computed by reference to the cost of private care, rather than actual cost incurred, and this results in increased defence costs and insurance premiums, and attracting unnecessary and inflated claims.164 Reforms in the delivery of healthcare have also had a subtle but important effect on the legal standard applied to clinical negligence claims. The traditional legal test was whether the action of a clinician corresponded with a responsible body of medical opinion.165 The introduction of prescribed approaches in clinical care pathways replaced the traditional test with what constituted a consensus of medical opinion, based on meta-analysis of what produced better outcomes.166 Peysner describes this shift as a move from ‘I do what other people do’ to ‘I do what works’.167 He suggested that the shift partly reduces individual autonomy, especially to respond to individual or unusual challenging cases.168 157 ibid. 158 House of Commons, Committee of Public Accounts, Managing the costs of clinical negligence in hospital trusts Fifth Report of Session 2017–19, HC 397, 1 December 2017, para 6. 159 Managing the costs of clinical negligence in trusts. Report by the Comptroller and Auditor General (National Audit Office, 2017) para 3.27. 160 ibid. 161 At least as reported to the Health and Social Care Information Centre: Data on Written Complaints in the NHS – 2017–18 (Health and Social Care Information Centre, 2019). 162 Annual Report 2017/18 (NHS Resolution, 2018). 163 Public Administration Select Committee – Sixth Report: Investigating clinical incidents in the NHS, 24 March 2015. Of the total, 1,421 deaths were reported following incidents, 49,000 resulted in moderate harm; 4,500 resulted in severe harm. 164 See www.themdu.com/about-mdu/fair-compensation/the-campaign. 165 Bolam v Friern Hospital Management Committee [1957] 1 WLR 582. 166 A Samanta, M Mello, C Foster, J Tingle and J Samanta, ‘The Role of Clinical Guidelines in medical negligence Litigation: A Shift from Bolam’ (2006) 14 Medical Law Review 321. 167 J Peysner, Access to Justice: A Critical Analysis of Recoverable Conditional Fees and No-Win No-Fee Funding (Palgrave Macmillan, 2014). 168 However, the high rates of successful defences that continue to be reported by NHSLA and the MDU raise questions about whether this is so.

Clinical Injuries 291 Evidence of financial incentives acting on claiming behaviour is not difficult to identify. Intermediaries’ behaviour is significantly affected by funding and costs rules, and such service suppliers will seek to maximise their own profits (rents), by generating claims and minimising investigation of merits. As a result, the merits of some claims will not be significantly investigated or established. Intermediaries have switched away from less lucrative or types of claims and into clinical negligence cases as a consequence of changes in the remuneration regime. This has increased the volume of claims, and decreased the level of expert scrutiny seen in claims coming from the new market entrants. The overall cost of claims has risen with the increase in volume of claims, particularly in the cost of defending and rejecting unmerited claims. It is clear that the NHS could help itself in by how it responds to incidents, through immediate and local behaviours and systemically. Detailed examination of the response to incidents which subsequently turned into claims for compensation found:169 • Almost two thirds (63%) of respondents felt that no explanation for why an incident occurred was given to them. The majority of those that did receive an explanation waited ten days or more to receive it following the incident. • Less than one third (31%) felt they received an apology. A minority of those that did receive an apology rated the apology highly. • The majority (71%) of respondents did not think that their healthcare provider undertook any actions to investigate the incident in the first instance. • Only 6% of respondents felt that actions were taken that would prevent the same incident happening again. • Of those who did not make a complaint, the majority (72%) reported not knowing how to complain. • The majority (69–75%) rated the response to their complaint as ‘poor or very poor’ in terms of accuracy, empathy, speed of the response and level of detail.

O. Attempts to Introduce an Administrative Redress Scheme There is considerable scope to modernise and simplify the processing of personal injury claims. Further, improved claim processing systems could contribute to the improved collection of data in relation to each of the main types (workplace, clinical, motor vehicle) that should be used to feedback and drive improvements in practice, as with commercial regulatory systems. The need for claimants to prove negligence constitutes a significant barrier in medical cases. It may deter some injured people from bringing claims, and it may prevent those who have suffered injury from succeeding in obtaining compensation (a situation that is widely regarded as unfair in relation to babies with birth defects), but with the consequence that the NHS continues to provide general care in any event for such people. An approach that has proved successful in Ireland is to require all personal injury claims to be first subject to independent quantification of damages by the State Injuries Board,

169 Annual

Report and Accounts 2018/19 (NHS Resolution, 20189), 52.

292 Personal Injuries without taking any view on liability but on the assumption that the case is valid.170 This removes uncertainty over quantum, and has facilitated the subsequent settlement of cases, reducing the court workload. However, a more radical approach would be to shift investigation and decision on both liability and quantum aspects to an administrative body, which is what all Nordic States have done. The patient compensation schemes in all Nordic countries run on very low costs because cases are verified and decided by an independent cohort of administrative managers and an investigative system, thereby operating with one set of people performing the functions of advisers, advocates and judge. Proposals to introduce ‘no fault’ compensation schemes have long been mooted for clinical injuries.171 The NHS Redress Act 2006 was implemented only in Wales172 and is not viewed as a success.173 The Scottish Government’s policy is to introduce a no fault compensation scheme.174 Significant improvements in safety and practice, as well as further efficiency in processing, and saving money on courts, could be achieved by shifting all personal injury cases into a modern investigatory scheme framework. Administrative compensation schemes, generically but misleadingly referred to as ‘no fault’, have operated effectively in various countries.175 Such a shift would be to create an investigatory administrative scheme for personal injury claims, in order to reduce motor insurance premiums by perhaps £1.5 billion, simplify medical negligence litigation (reducing the NHS’ £400 million annual legal costs), and handle product liability cases, especially for medicines and medical devices.176 A possible future UK model would have an inquisitorial front end backed by riskpooling insurance, removing transactional cost and intermediaries (lawyers and litigation). The structure would ideally include different risk pools for all types of injuries, such as road traffic, workplace, healthcare, medicines, device implants and so on.177 It would incorporate a number of discrete existing schemes, such as miners’ diseases, vaccine damage and Thalidomide. It would have a transformative effect in some sectors, especially the NHS. In 2017 the NHS’s National Maternity Review (NMR) made a series of recommendations to improve the experiences of mothers, families and babies in childbirth, and 170 Personal Injuries Assessment Board (PIAB) Act 2003. 171 Sir Liam Donaldson, Call for Ideas, (Department of Health, 2001); Making Amends: a consultation paper setting out proposals for reforming the approach to clinical negligence in the NHS (Department of Health, 2003). 172 The National Health Service (Concerns, Complaints and Redress Arrangements) (Wales) Regulations 2011, SI 2011 No 704 (W.108). 173 V Harpwood, ‘Clinical Negligence and Poor Quality Care: Is Wales “Putting Things Right?”’ in PR Ferguson and GT Laurie (eds), Inspiring a Medico-Legal revolution: Essays in Honour of Sheila McLean (Ashgate, 2015). 174 A-M Farrell, S Devaney and A Dar, No-Fault Compensation Schemes for Medical Injury: A Review (Scottish Government Social Research, 2010); No Fault Compensation Review Group: Report and Recommendations (The Scottish Government, 2011); A Public Consultation on Recommendations for No-Fault Compensation in Scotland for Injuries Resulting from Clinical Treatment (The Scottish Government, 2012). 175 This has worked well for over 40 years in New Zealand and Nordic countries, for medical claims in France since 2006, and long been advocated by leading academic lawyers: P Cane, Atiyah’s Accidents, Compensation and the Law, 8th edn (Cambridge University Press, 2012); PS Atiyah, The Damages Lottery (Hart Publishing, 1997). 176 Consultation, Reducing the number and costs of whiplash claims (Ministry of Justice, 2012) at https://consult. justice.gov.uk/digital-communications/reducing-number-cost-whiplash/consult_view. 177 In addition, to deal with the PIP breast implant problems, private providers and manufacturers should be encouraged to establish mutual long-stop insurance arrangements for the rare instances where a private provider fails or has insufficient insurance, along the lines of investor protection funds.

Clinical Injuries 293 this included the creation of a Rapid Resolution and Redress, inspired by the Swedish no blame administrative patient compensation scheme. An important feature of the Swedish scheme was that the no blame culture that it supported in clinical practice had led to the administrators of the compensation insurance scheme being able to collect a body of sufficient size and accuracy that had enabled them to identify improvements in practice that, when fed back into clinical practice, had significantly reduced the incidence of babies who suffered brain damage at birth, illustrated in Figure 10.23.178 Other examples of the same approach reduced joint infection after joint prosthesis surgery and hip and knee arthroplasties after retraining in a large orthopaedic department in 2010 and 2011. A consequence of those happy outcomes was a major reduction in compensation payments. Figure 10.23 Swedish Patient Compensation Scheme (LÖF) data on settled claims involving serious birth injuries 2000–2015, per 100,000 babies born per quarter and per date of birth

The Department of Health consulted on implementing Rapid Resolution and Redress (RRR) proposals for the NHS. NHS-R published an analysis of 50 neonatal claims made between 2012 and 2016, which identified four areas of clinical practice that were common throughout claims (foetal heart rate monitoring, breech birth, staff competency and training and patient autonomy) but also stated three main areas of concern with the inability of the NHS system to learn lessons:179 • A lack of family involvement and staff support through the investigation process. • The quality of root cause analysis was generally poor and focussed too heavily on individuals. • Due to the poor report quality, the recommendations were unlikely to reduce the incidence of future harm.

178 See

S Macleod and C Hodges (eds), Redress Schemes for Personal Injuries (Hart Publishing, 2017).

179 M Magro, Five years of cerebral palsy claims. A thematic review of NHS Resolution data (NHS Resolution, 2017).

294 Personal Injuries The proposals for siting the scheme in NHS-R were, however, strongly criticised and scholars put forward an alternative scheme,180 based on research into some 40 no blame administrative schemes around the world,181 proposing the establishment of a new independent Ombudsman to oversee investigations and determinations of eligibility for compensation and levels and composition of compensation packages’ and the other from the RCOG.182 In November 2017, the Secretary of State for Health, the Rt Hon Jeremy Hunt MP, announced a major new approach following on the National Maternity Review, aiming to reduce the number of stillbirths, neonatal and maternal death and brain injuries by 50% to 2025.183 It involved a ‘no blame’ expert-led independent investigation team, that will liaise with families and healthcare professionals, to find out the facts, and what learning can be made. The process included an administrative redress scheme (the RRR scheme) that was supposed to operate quickly and far more cheaply than legal proceedings. At the same time, NHS-R launched a new scheme to incentivise local maternity and neonatal services by rewarding those that take steps to improve by demonstrating compliance against ten actions.184 Also, from April 2017, members were required to report to NHS-R within 30 days all maternity incidents of potentially severe brain injury,185 allowing NHS-R ‘to provide support to trusts and families and begin our own investigations at a much earlier stage’. This Early Notification scheme was trailed as a flagship for NHS-R’s new strategic approach.186 The various elements of this approach represented a huge step forward and advance on the original consultation proposals. The same week, the House of Commons’ Public Accounts Committee again criticised the government for being ‘disappointingly slow and complacent’ in responding to the inexorably rising cost of clinical negligence, citing ‘a prevailing attitude of defensiveness in the NHS when things go wrong, and a reluctance to admit mistakes, which is likely to be leading to more clinical negligence claims.’187 The Committee noted the lack of consistent data across the system, which prevented the NHS from understanding why some people choose to make claims or the root causes of negligence, ‘so it is not well placed to learn from mistakes’. The no blame investigative and redress scheme approach announced earlier that week should, if properly implemented, precisely address those failings. The fact that the decision was announced to create the ‘front end’ investigation unit based on a no blame principle and approach prima facie precludes the RCOG and the DH consultation approaches to 180 C Hodges, S Macleod and A Sampson, The Rapid Resolution and Redress Scheme for Birth Injuries. An Alternative Design (Foundation for Law Justice and Society, 2017). 181 S Macleod and C Hodges, Redress Schemes for Personal Injuries (Hart Publishing, 2017). 182 A Rapid Resolution and Redress Scheme for Severe Avoidable Birth Injury: Government Summary Consultation Response (Department of Health, 2017), www.gov.uk/government/publications/summary-ofconsultation-responses-rapid-resolution-and-redress-scheme. 183 Safer Maternity Care. The National Maternity Safety Strategy – Progress and Next Steps (Department of Health, 2017). 184 Annual report and accounts 2017/18 (NHS Resolution, 2018), HC 1215. Contributions to the CNST for 2018/19 would collect an additional 10% of the maternity contribution from members, which could be repaid to those members who demonstrated compliance with the ten requirements, plus a share of any unallocated funds. Those making progress but not meeting the ten actions may benefit from a lesser sum to help them improve their position. 185 Reporting claims to NHS Resolution, June 2017. 186 Delivering fair resolution and learning from harm: Our strategy to 2022 (NHS Resolution, 2018). 187 House of Commons, Committee of Public Accounts, Managing the costs of clinical negligence in hospital trusts Fifth Report of Session 2017–19, HC 397, 1 December 2017.

The Health Service Ombudsman 295 investigations. The next issue will be determining how to add on the ‘back end’ compensation and what form that ‘back end’ scheme will take. Assuming the RRR scheme proposed by the academics (of whom the current author is one) is established, it would form a platform from which to build out an administrative redress model across the NHS and far wider. The vision would be to expand the areas covered to encompass other types of medical problems, to fold in some existing stand-alone compensation schemes (vCJD, HepC etc), and to provide a platform that can be used for ad hoc or permanent other injury issues, such as product liability claims. Regrettably, the 2018 report on neonatal care showed that 1,123 of the 700,000 babies born in the country raised problems under the ‘Each Baby Counts’ scheme, of which different care might have made a difference to the outcome for almost three-quarters of the babies.188

V. The Health Service Ombudsman The Health Service Ombudsman is a division of the Parliamentary Ombudsman (discussed in chapter thirteen) and deals with administrative complaints against the health service.189 Unlike the Parliamentary jurisdiction, members of the public can lodge complaints directly with the Health Service Ombudsman. A Health Service Ombudsman for England, Scotland and Wales was first specified under the Health Service Commissioners Act 1993.190 Since devolution, separate legislation has been enacted for complaints about the National Health Service in Scotland and Wales.191 The mandate of PHSO is to investigate maladministration, not clinical negligence. Following introduction of the NHS’ new complaints system in 2009, the number of health enquiries received by the Ombudsman more than doubled in comparison with the previous year. The procedure is explained on the Ombudsman’s website.192 The complaint statistics for 2008/09 to 2014/15 are summarised at Figures 10.24 and 10.25 (in two tables because the details published have changed). It will be seen that the Ombudsman accepts for investigation only a very limited number of the complaints that are received. The PHSO is engaged in a five-year programme to significantly increase the number of cases it accepts, changing the criteria for investigation from ‘clear evidence that something went wrong’ to signs that there is a case to answer in relation to maladministration.193 188 Each baby counts. 2018 Progress report (Royal College of Obstetricians & Gynaecologists, 2018). 189 A drawback here is that the statutory basis of each jurisdiction, and procedures, differs. In 2007 closer operational working between the Parliamentary Ombudsman, the Health Service Ombudsman, and the Local Government Ombudsman was facilitated by their being permitted to share information, work jointly on cases with the complainant’s consent, and to issue joint reports: Regulatory Reform (Collaboration etc between Ombudsmen) Order 2007, SI 2007 No 1889. 190 Replacing the Health Service Act 1977 and the Health Service (Scotland) Act 1978. Separate provisions apply to Northern Ireland. 191 The Scottish Public Services Ombudsman Act 2002 and the Public Services Ombudsman (Wales) Act 2005. 192 www.ombudsman.org.uk/__data/assets/pdf_file/0003/1011/Bringing-a-complaint-to-the-Health-ServiceOmbudsman.pdf. 193 RESOLVE: News from the Ombudsman Service (PHSO, December 2015); The Ombudsman’s Annual Report and Accounts 2014–15 (Parliamentary and Health Service Ombudsman, 2015) HC 570. The number of cases assessed (looked at in depth) by the PHSO increased in two years from 400 to over 4,000.

Year Clinical Claims reported Non-clinical claims reported Damages paid on clinical claims Damages paid on non-clinical claims Total Expenditure on clinical claims (damages and costs) Total Expenditure on non-clinical claims Legal costs of clinical claims where damages paid –– Claimants –– Defence Total paid for clinical claims on damages, interim payments and legal costs Total expenditure on damages and legal costs Total expenditure including administration costs

194 Includes 195 Includes

2007/08 5,470

2008/09 6,088

2009/10 6,652

2010/11 8,655

2011/12 9,143

2012/13 10,129

2013/14 11,945

2014/15 11,497

2015/16 10,965

2016/17 10,686

2017/18 10,673

3,380

3,743

4,074

4,346

4,618

4,632

4,802

4,806

4,172

4,082

3,570

£907.5m

£840.7m

£774.4m

£950m

£1,083m

£1,632194

£23.2m

£25.2m

£26.0m

£26.7m

£30.7m

£31.2m195

£633

£769

£787

£863

£1,277

£1,259

£1,192.5m

£1,169.5m

£1,488.5m

£1,707.2m

£2,227.5m

£28m

£38m

£40m

£48m

£52m

£51m

£51.6m

£53.4m

£59.4m

£57.6m

£57.6m

£108.3m £44.8m £153,122

£103.6m £39.7m £143,291

£121.5m £42.2m £163,720

£196.1m £61,364 £257,443

£182.7m £48.2m £230,916

£418m £120.1m

£498.5m £125.7m

£466.6m £128.9m

£1,547.9m

£1,764.7m

£2,285.1m

£404m PIDR element. £2.3m PIDR element.

£274.9m £259.3m £291.9m £76.5m £92.5m £103.2m £1,258,880 £1,192,538 £1,169,586

£1,310m

£1,245m

£5,413.9m

£4,409.5m

£1,223m

£3,750.5m £29,369.6m £10,5519.7m £13,746.1m

296 Personal Injuries

Figure 10.24 NHS Claims and Costs 2007/8 to 2017/18

Figure 10.25 Types of health complaints received and accepted by the NHS Ombudsman*

received

accepted

received

2018/19

accepted

2017/18

8,655 1,633 9,670 1,835 10,482 2,007 10,968 1,908 10,932

received

accepted

2016/17

229

received

accepted

2015/16

8,086

received

accepted

2014/15

222

received

accepted

2013/14

accepted

2,142196 80197 6,304198 195199 6,924 177 7,403

2012/13 received

2011/12 received

accepted

2010/11 received

accepted

received

2009/10

accepted

NHS hospital, specialist and teaching trust

accepted

Number of complaints:

received

2008/09

1,302

10,090

908

GP

891

15

2,419

57

2,581

66

2,951

82

3,319

86

3,996

562

5,085

776

5,481

588

5,067

585

5,393

388

5,247

222

Primary care trusts

810

16

2,411

30

2,714

54

2,247

28

2,071

30

499

101

519

110

460

88

510

105

419

56

320

26

1,356

20

1,560

26

1,839

28

1,745

299

1,978

345

1,960

340

1,969

352

1,878

214

1,867

130

240

6

175

2

193

8

404

2

553

6

Mental health, social 510200 15201 1,393202 26203 care and learning disability trusts Strategic health authorities

16

196 Foundation

trust 813; non-foundation trust 1,329. trusts 34; non-foundation trusts 46. 198 Foundation trust 2,672; non-foundation trust 3,632. 199 Foundation trust 69; non-foundation trust 126. 200 Foundation trusts 232; non-foundation trusts 278. 201 Foundation trusts 6; non-foundation trusts 9. 202 Foundation trusts 798; non-foundation trusts 595. 203 Foundation trusts 14; non-foundation trusts 12. 197 Foundation

The Health Service Ombudsman 297

(continued)

accepted

15,030 323 16,336 400

received

346

963209 24210 1,225211 64212

accepted

136 14,429

13

received

5,084

1,236

accepted

Total

16

received

731204 10205 1,243206 22207 544208

1,037

2018/19

accepted

Other

0

2017/18

received

707

2016/17

accepted

659

2015/16

received

General dental practitioners

2014/15

accepted

Local Area Team

2013/14 received

accepted

2012/13 received

accepted

2011/12 received

accepted

2010/11 received

accepted

2009/10 received

accepted

Number of complaints:

received

2008/09

351

80

218

85

454

81

n/a

n/a

n/a

n/a

n/a

n/a

1,149

151

1,142

164

1,194

89

1,231

97

1,193

63

1,248

43

44

7

15

2

18

0

195

0

366

0

290

0

2,025

19,615

1,335

17,969 426 16,439 2,833 18,627 3,317 20,049 3,193 19,940 3,047 20,585

*Parliamentary and Health Service Ombudsman figures supplied under the Freedom of Information Act 2000.

204 Strategic health authorities 321; general dental practitioners 276; ambulance trusts 64; special health authorities 37; opticians 15; care trusts 12; pharmacies 6. 205 Strategic health authorities 5; general dental practitioners 3; special health authorities 1; care trusts 1; a mbulance trusts 0; opticians 0; pharmacies 0. 206 Ambulance trust 216; general dental practitioners; pharmacies 62; healthcare commission 531; strategic health authorities 300; special health authorities 85; opticians 18; care trusts 31. 207 Ambulance trust 12; general dental practitioners 9; pharmacies 1; healthcare commission 0; special health authorities 0; opticians 0; care trusts 0. 208 Ambulance Trusts 226, Pharmacies, 97, Care Trusts 88, Special Health Authorities 79, Healthcare Commission 36, Opticians 18. 209 Ambulance Trusts 262, Care Trusts 235, Independent providers 272, Opticians 32, Other health Authorities 21, Pharmacies 91, Special Health Authorities 49, Unknown 1. 210 Ambulance Trusts 7, Care Trusts 2, Independent Providers 12, Optician 1, Other Health Authority 1, Pharmacy 1. 211 Ambulance Trusts 347, Care Trusts 257, Independent providers 415, Opticians 37, Other health Authorities 18, Pharmacies 86, Special Health Authorities 57, Unknown 8. 212 Ambulance Trusts 3, Care Trusts 7, Independent Providers 19, Optician 1, Other Health Authority1, Pharmacy 1, Special Health Authorities 0, Unknown 0.

298 Personal Injuries

Figure 10.25 (Continued)

The Health Service Ombudsman 299 PHSO statistics are given in chapter thirteen. In 2017/18 the PHSO in England received a total of 24,664 complaints about the NHS, of which 5,545 were assessed and 132 resolved without the need for full investigation.213 In comparison, in 2012/13, 328 cases accepted, covering 400 complaints, were about the NHS. The percentage of complaints investigated about the NHS that are upheld either in part or in full was as high as 79% in 2012/13, but fell to 36% in 2014/15, possibly as a result of investigating a larger number of cases. The largest category complained about is hospitals (Figure 10.26). Figure 10.26 Investigation into NHS providers Q1–3 2018/19 Received

Accepted

Hospitals and Community Health Services

932

359

Primary Case services

267

84

Clinical Commissioning Group

104

35

Independent providers

77

33

NHS England

68

9

Ambulance Trust

35

4

Special Health Authority

18

4

3

_

1504

528

Pharmaceutical/non-departmental/public bodies Total

In 2014/15 the most common issues raised in the complaints upheld about the NHS in England were: • Diagnosis (delay in diagnosis, failure to diagnose and misdiagnosis)

30%

• Other: clinical care and treatment

23%

• Attitude of staff

19%

• Communication and information, including breach of confidentiality

16%

• Failure to treat

14%

The House of Commons Public Administration Select Committee (PASC) 2015 report noted criticism of the NHS Ombudsman function and called for its reform (which was partly already in hand).214 PASC supported the need for a ‘whole system’ approach to patient safety arrangements in the NHS, which would include the creation of ‘Freedom to Speak Up Guardians’ in every unit, as recommended by the second Francis Report.215 PASC’s primary recommendation was for the creation of an NHS medical accidents

213 The Ombudsman’s Annual Report and Accounts 2016–17 (Parliamentary and Health Service Ombudsman, 2017). 214 Public Administration Select Committee – Sixth Report: Investigating clinical incidents in the NHS, 24 March 2015, paras 75–78. 215 ibid, paras 132–34.

300 Personal Injuries investigation unit based on the Department for Transport’s Air Accidents Investigation Branch. It concluded: there is a need for a new, permanent, simplified, functioning, trusted system for swift and effective local clinical incident investigation conducted by trained staff, so that facts and evidence are established early, without the need to find blame, and regardless of whether a complaint has been raised. This would greatly reduce or remove the need for costly major inquiries into clinical failure. The reformed system should provide three key elements: • it must offer a safe space: strong protections to patients, their families, clinicians and staff, so they can talk freely about what has gone wrong without fear of punitive reprisals. They must be afforded legal immunity for what they say as part of an investigation, and such evidence should be exempt from the Freedom of Information Act, reflecting the practice of investigation bodies in aviation and other industries. This does not mean that anyone remains immune from prosecution on the basis of the findings of an investigation. • it must be independent of providers, commissioners and regulators, and so able to investigate whether and how the system as a whole was instrumental in contributing to clinical failure. In order to be able to carry out comprehensive investigations in all cases, it must be free to investigate non-NHS funded healthcare as well as the NHS. Exclusion of the independent sector from the jurisdiction of the new body would not be consistent with a whole system approach, which many witnesses regard as essential. Other health bodies, such as the Care Quality Commission, cover both NHS and independent health care providers. • for transparency and accountability, and to drive learning and improvement, it must have the power to publish its reports and to disseminate its findings and recommendations.216 What

Number

Details

Complaints about the NHS

174,872

All written complaints received by NHS organisations in 2013/14, reported to the Health and Social Care Information Centre.217

Complaints about the NHS accepted for investigation by the Parliamentary and Health Service Ombudsman

3,075

Of the 17,964 health-related enquiries the PHSO received in 2013–14, 6,093 were assessed and 3,075 were accepted for investigation.218

Incident reports on NHS England’s National Reporting and Learning System

1.4 million

Per year, of which 1.3 million are ‘low harm’ or ‘no harm’.219 Of the total, 1,421 deaths were reported following incidents, 49,000 resulted in moderate harm; 4,500 resulted in severe harm.220 (continued)

216 ibid, para 136. 217 Health and Social Care Information Centre, Data on Written Complaints in the NHS – 2013–14, August 2014. 218 Parliamentary and Health Service Ombudsman, The Ombudsman’s Annual Report and Accounts 2013–14, July 2014. 219 Q 17. 220 Ken Lownds [CCF52].

The Health Service Ombudsman 301 (Continued) What

Number

Details

Serious incidents

10,000+

More than 10,000 serious incidents are reported to the National Recording and Learning System annually which require investigation under current arrangements.221

Never events222

338

Occurred between 1 April 2013 and 31 March 2014.

Avoidable deaths in the NHS

Unknown

The Secretary of State for Health has stated that there are an estimated 12,000 avoidable deaths in NHS hospitals each year, but it is not known which deaths these are among the total of 250,000 hospital deaths.223

Clinical negligence liabilities

£26.1 billion

The NHS Litigation Authority’s estimate of the public funds that will be needed for current (£10.5 billion) and potential future (£15.6 billion) claims relating to treatment delivered up to 31 March 2014.224

Cases in which maladministration was upheld in the NHS included cases where deaths could have been avoided, breaches of cancer waiting times, families resorting to putting their family in private care following unsafe discharges from A&E on Christmas Day, leaving patients on a trolley (in one case for 33 hours, then left in an assessment unit for 42 hours).225 The Ombudsman commented: These cases show the impact that service failure can have on individuals and their loved ones. These case studies – which are a snapshot of our work – show the wide range of unresolved complaints we look at, many of which should be resolved by the organisations locally, without people having to refer the complaint to us. Good complaint handling has to start from the top, and leaders will recognise the valuable opportunities complaints provide to really improve the service they are delivering. Many people complain about public services to enable lessons to be learnt because they don’t want the same thing to happen to somebody else.226

221 Care Quality Commission [CCF57]. 222 A ‘never event’ is a serious, largely avoidable patient safety incident that should not occur if the available preventative measures are implemented. NHS England, Never Events reported as occurring between 1 April 2013 and 31 March 2014, December 2014. 223 Q 272 [Jeremy Hunt MP] and Department of Health [CCF64] and ‘Jeremy Hunt orders yearly study of ‘avoidable’ hospital deaths’, BBC News, 8 February 2015. 224 Report and accounts 2013/14 (NHS Litigation Authority, 2014). 225 ibid. Report on selected summaries, above. 226 Report on selected summaries, above.

302 Personal Injuries The 2009 common approach adopted the Health Service Ombudsman’s six Principles of Good Complaint Handling:227 • • • • • •

getting it right; being customer focused; being open and accountable; acting fairly and proportionately; putting things right; seeking continuous improvement.

The common approach specifies two stages in making complaints.228 Stage 1 is local resolution with the local healthcare provider. The GP, or hospital, or whoever the complaint is about should provide a copy of their complaints procedure, on request. Many of these complaints procedures will include some form of conciliation or mediation. There is usually a time limit of six months from the date when the action complained about happened. Stage 2 involves taking the complaint to the relevant Ombudsman service, which can investigate poor treatment and poor service by any NHS healthcare provider. The NHS complaints procedure does not provide compensation – it aims to discover whether something has gone wrong with the treatment of the complainant, and to offer an explanation or an apology to the complainant. If court proceedings are instituted, the NHS complaint procedure is not available.

VI. Discussion A. Workplace, Public and Road Traffic Injuries Road traffic and workplace injuries are compensated primarily through State-funded healthcare and social support payments, negotiations with private insurers and some specific administrative schemes. In these respects, Nordic States are more advanced than the UK in having applications processed through, and decisions made by, independent administrative schemes, after which insurers then fund allocated payments. In the UK, road traffic and workplace injuries have evolved into a world of direct negotiation with insurers, but where claimants are still best off instructing lawyers rather than trying to do it themselves. It is interesting to note the personal injury system in Ireland, where all non-medical injury claims are initially submitted online or otherwise by claimants or their lawyers to the independent statutory Injuries Board229 for quantum to be assessed, on the assumption that

227 Spotlight on complaints: A report on second-stage complaints about the NHS in England (Healthcare C ommission, 2009). See earlier, Principles of Good Administration (March 2007) and Principles for Remedy (October 2007). 228 Listening, Responding, Improving: A Guide to Better Customer Care (DH, 26 February 2009). 229 Personal Injuries Assessment Board (PIAB) Act 2003 (‘PIAB Act’).

Discussion 303 liability and causation exist. That stage then facilitates direct negotiation between parties or lawyers/insurers in settling claims. It is a half-way house that could be taken further.230 The shift from lawyers to the Board of much of the investigation function and the entire quantification function resulted in savings in litigation costs of approximately 50%.231 Online innovation has been created by the insurance industry, and the Portal has been a clear success, recognised by its adoption as standard through the relevant Protocols and its expansion in 2013 to EL and PL claims. It should be noted that it was created by the insurance industry, with the involvement of claimant lawyers. It is a streamlined and online process that works well in resolving claims that can be agreed between the parties, and collating the evidence and narrowing the issues on claims that cannot be immediately settled but which revert to the Protocol/court pathway. It might be criticised as having inherent resistance to reform, as it locks solicitors, insurers and listed experts into the system. The question of how to affect behaviour so as to reduce the incidence of road traffic and workplace injuries is interesting. The link between data and risk has been made in the workplace through the approach of the HSE, but not in road traffic. A different system might bring improvements.

B. NHS Clinical Claims The litigation-based system for clinical injuries is thoroughly old fashioned. It remains based on an adversarial litigation system in which the trigger is negligence. There is a strikingly high level of claims that do not result in any payment and are repelled at the first hurdle as having no legal merit. Equally, a significant number with merit are settled without the need for proceedings to be issued. However, mediation is only just being expanded as a tool to settle cases after they are issued. Recent attempts by NHS Resolution to use mediation are heroic but not the answer to the problem, given political rhetoric to defend claims that are seen as unjustified. The system has no initial online portal and suffers post-issue from the courts’ slow adoption on digital systems. The cost of the litigation-based system is unsustainable, both in terms of underlying damages and transactional costs. It is clear that the incidence of litigation has been driven partly by the incidence of underlying clinical problems and by lawyers seeking to maximise their intermediaries’ rents as the legal system has tinkered with the rules on costs and funding. The cost of processing the large number of low value claims is grossly disproportionate. Attempts to tinker with funding of litigation and costs rules have failed to solve the problem. The Woolf and Jackson attempts to control costs were aimed at fixing an unfixable system. Clinical negligence should not be in the court system, it should be in an administrative system. The attempt to restrain costs to make them proportionate to the sums involved, and to move towards (a low level of) fixed costs, fails to address reality. The vast majority

230 See C Hodges, ‘Ireland: The Injuries Board’ in S Macloed and C Hodges, Redress Schemes for Personal Injuries (Hart Publishing, 2017). 231 Annual Report 2013 (Injuries Board, 2014).

304 Personal Injuries of claims against the NHS involve low damages and the system takes time and effort (and hence cost) to investigate claims where the legal test is based on whether or not negligence has occurred. Most clinical claims involve small sums: in 2017/18 63% of successful claims involved under £25,000.232 The test inevitably means that a significant number of clinical negligence claims will fail (45% in 2017/19).233 Once they have been investigated, many can be resolved fairly swiftly, but a significant number reach trial of which a high percentage fail. In 2017/18, 69.6% of the 16,338 clinical claims were resolved without formal court proceedings and in the early stages more claims were resolved without payment of damages than with payment of damages.234 Just under one third of claims end up in litigation with fewer than 1% going to a full trial (where most end in judgment in favour of the NHS). Although claims may be brought without legal merit, this does not mean that there are not other good reasons for people wanting to complain. Although questions are raised over the level of fraud, research shows that other reasons for bringing legal claims include a desire to get at the facts of what happened, uncertainty over causation and whether negligence occurred. Hence, questions arise over the incentivisation of intermediaries, and whether such cases could be resolved more quickly. Are claimants seeking outcomes other than money, such as explanations and apologies – see chapter three? If so, could there be a better system for responding? If patients and families are seeking facts, explanations, apologies and assurance that lessons will be learned, improvements made and future risk reduced, one would not design a system in which the primary outcome and objective is payment of money as compensation. Key facets of such a system would involve investigation, communication and a system of feedback to practice that are all credible. Such credibility would come from demonstration that the core aspects worked reliably, including by involving an independent authority and a system that demonstrated that it does in fact learn and improve – which is not currently so. Such a system might well involve fewer outputs of money payments, or a lower level of payments. It would be based around providing care for patients throughout. The three core functions that need to be addressed are independent complaint handling (processing against objective criteria), providing a trusted independent investigation of serious incidents of harm, and intervening in NHS units to help improve culture.

C. The Perennial Problem of Culture in the NHS The NHS has given rise to a series of major disasters over some decades. All of the reports into them have identified culture as a critical causative element.235 In 2016 the Secretary of State for Health, Rt Hon Jeremy Hunt MP, announced a series of initiatives designed

232 Annual Report and Accounts 2917/18 (NHS Resolution, 2018). 233 Annual Report and Accounts 2017/18 (NHS Resolution, 2018). 234 Annual Report and Accounts 2917/18 (NHS Resolution, 2018). 235 Learning from Bristol: The Department of Health’s response to the Report of the Public Inquiry into children’s heart surgery at the Bristol Royal Infirmary 1984–1995, (2002) Cm 5363, i and 367; Fifth Report of the Shipman Inquiry, ‘Safeguarding Patients: Lessons from the Past – Proposals for the Future’ (9 December 2004) para 11.50; Independent Inquiry into care provided by Mid Staffordshire NHS Foundation Trust January 2005–March 2009. Volume I.

Discussion 305 to move ‘From a blame culture to a learning culture’ to create ‘the world’s largest learning organisation’.236 The package included, first, a shift in the inspection regime of the regulator of hospitals, GPs and social care providers, the Care Quality Commission (CQC), to support an open culture, modelled on the approach in aviation safety. Secondly, it involved establishing a new Healthcare Safety Investigation Branch (HSIB) modelled on the Air Accident Investigation Branch. Thirdly, it introduced a statutory ‘duty of candour’, backed by criminal sanctions. Fourthly, it required every NHS Trust to appoint ‘Freedom to speak up Guardians’. Fifthly, it involved a Rapid Resolution and Redress (RRR) scheme for neonatal injuries. The Parliamentary and Health Service Ombudsman also made a clear call in 2016 for establishment of a no blame culture in the NHS, following an investigation into avoidable deaths that indicated 40% of internal investigations were inadequate in finding out what had happened.237 Following this, in January 2017 the Public Administration and Constitutional Affairs Committee (PACAC) firmly supported the finding that ‘a fear of blame inhibits open investigations, learning and improvement’ and supported the vision for an ‘open culture’.238 It noted that the latest NHS staff survey reported that when asked whether their organisation treated staff involved in near misses, errors and incidents fairly, less than half (43%) said this was the case.239 PACAC also noted evidence that NHS managers and staff simply did not know what a ‘just culture’ is. It is clear that NHS culture continues to have real problems. In December 2018 the PHSO reported on a series of failures by Trusts and the CQC to protect a whistleblower and to take appropriate action against a Chief Executive.240 Speaking in 2010, Lord Neuberger, then Master of the Rolls, noting ongoing concern over personal injury litigation costs, agreed with the criticism of negligence as a basis for selecting those to whom compensation should be paid as a ‘lottery’, and that that view had been shared by William Beveridge in his 1942 report that presaged the founding of the NHS,241 in 1967 by the founders of the New Zealand scheme,242 and in the UK 30 years later

Chaired by Robert Francis QC, HC375-I (2010); Dr B Kirkup CBE, The Report of the Morecambe Bay Investigation (Department of Health, 2015) para 11; Learning from mistakes. An investigation report by the Parliamentary and Health Service Ombudsman into how the NHS failed to properly investigate the death of a three-year old child (Parliamentary and Health Service Ombudsman, 2016), also referring to A review into the quality of NHS complaints investigations where serious or avoidable harm has been alleged (Parliamentary and Health Service Ombudsman, 2015). 236 Rt Hon Jeremy Hunt MP, Speech at Global Patient Safety Summit, Lancaster House, 10 March 2016. See earlier Building a culture of candour: A review of the threshold for the duty of candour and of the incentives for care organisations to be candid (Royal College of Surgeons of London, 2014). 237 Learning from mistakes. An investigation report by the Parliamentary and Health Service Ombudsman into how the NHS failed to properly investigate the death of a three-year old child (Parliamentary and Health Service Ombudsman, 2016), also referring to A review into the quality of NHS complaints investigations where serious or avoidable harm has been alleged (Parliamentary and Health Service Ombudsman, 2015). 238 House of Commons Public Administration and Constitutional Affairs Committee Will the NHS never learn? Follow-up to PHSO report ‘Learning from Mistakes’ on the NHS in England Seventh Report of Session 2016–17 (2018) HC 743, 17 January 2017. 239 ibid, para 16, citing NHS Staff Survey 2015 Briefing Note, 10. 240 Blowing the whistle: an investigation into the Care Quality Commission’s regulation of the Fit and Proper Persons Requirement (Parliamentary and Health Service Ombudsman, 2018) HC 1815. 241 W Beveridge, Social Insurance and Allied Services (1942) Cmd 6404, para 262. 242 Compensation for Personal Injury in New Zealand: Report of the Royal Commission of Inquiry (Wellington, 1967) (the Woodehouse Commission) 19.

306 Personal Injuries by Professor Patrick Atiyah.243 He surmised that attention would turn to insurance-based schemes like that of New Zealand, which had been outside the remit of the review by Jackson LJ.244 Recent decades have also seen accusations on whether a ‘compensation culture’ exists or not. Lord Falconer described the idea in 2005 as ‘for every accident someone is at fault. For every injury, someone to blame. And, perhaps most damaging, for every accident, there is someone to pay.’245 Ten years later, Lord Dyson MR commented:246 19. One consequence of this is the view that as a society we have undergone a cultural shift. No longer is British society characterised by a somewhat philosophical and accepting approach to life. On the contrary, the view is taken that we are becoming more American in our approach; more ready to rush into litigation. To borrow from Tony Weir, we have become a ‘wondrously unstoical and whingeing society with (an) endemic neurosis’, and which rather than sees us ‘grin and bear it’ sees us ‘grit (our) teeth and sue’.247 20. Perhaps even more dangerously, this shift in approach has been accompanied by a growing concern that an unjustified burden is now being placed on employers, businesses, schools, the NHS and local and central government (as regards payment of compensation and, even worse, legal costs which often substantially exceed the amount of compensation). …

The means of compensating patients for harm is based on a liability and adversarial litigation system based on determining if blame is to be retrospectively attached to the conduct of individuals who are held to have caused the harm. The argument is that the continuation of such a blame-based and adversarial regime is a major barrier to development of a culture that openly and swiftly shares full information on medical mishaps so as to learn and improve. Even though other barriers exist, the compensation system is a major impediment. Blame has to be substantially removed from all situations, otherwise a just culture, and hence a learning culture, can never be created. Culture is built from the bottom up rather than by trying to impose it from the top down: the latter will fail. The medical negligence regime should be deconstructed and replaced by an administrative compensation scheme that applies factual criteria for triggering care. The issue of blame is also related to the design and culture of the regulatory landscape, where rationalisation is needed of the current plethora of regulatory bodies (professionals, organisations and products) so as to enable a systemic overview to be taken of the healthcare system and ability to address cultural issues. The current structures enable issues to ‘fall between the regulatory cracks’ and encourage different groups and their regulators to seek to avoid blame by saying ‘it wasn’t me’.

243 P Atiyah, The Damages Lottery (Hart Publishing, 1997). 244 Lord Neuberger of Abbotsbury MR, ‘Costs, Management, Proportionality and Insurance’ speech to the Personal Injuries Bar Association Conference, Oxford, 26 March 2010. 245 Lord Falconer, Compensation Culture, speech at Health and Safety Executive conference (22 March 2005), at www.woodwardsolicitors.co.uk/lordfalconer.pdf. 246 Lord Dyson MR, Magna Carta and Compensation Culture (The High Sheriff ’s Law Lecture, Oxford University, 13 October 2015) paras 17, 19, 20. 247 T Weir, ‘Governmental liability’ (1989) 40 Public Law 76.

Discussion 307

D. A No Blame Culture is Essential The adversarial and fault-based system prevents the development of an open no blame culture in the NHS. It is suggested that the whole culture of the NHS should shift to an ‘open, just culture’ as has been proved to work and be essential in aviation safety. Indeed, this objective has been set out at the highest political level. But it will not be achieved if elements of blame continue to exist amongst healthcare workers. That conclusion is equally clear from the aviation and other safety systems. The experience of the Nordic administrative redress schemes also clearly shows this. Their schemes are administrative and inquisitorial, rather than adversarial, and triggers are based on factual criteria rather than negligence. The independent intermediary body involves clinical and legal expertise and has low transactional costs. Its approach supports a ‘no blame’ open culture in clinical practice. The two concepts of ‘open culture’ and ‘just culture’248 have not been connected by NHS policy officials, and certainly not implemented by units on the ground. The NHS in England was described in 2019 as having chaotic organisation and that overuse of targets ‘has led to a disempowered culture, a learned helplessness culture, a top-down looking-upwards culture, a very hierarchical culture’.249 In July 2019, a Patient Safety Strategy repeated that blame prevented people ‘admitting’ errors but proposed to create a ‘patient safety culture’ without saying how organisations should proceed to create open and just cultures other than by exhortation.250 Research suggest that half all harm to patients as a result of medical care is preventable.251 Blame has to be removed from all of the operational, employment, professional, regulatory, investigatory and injury redress aspects of the system. This safety imperative justifies a shift in relation to injury redress and complaint schemes from clinical negligence criteria based on fault and from a system that is essentially adversarial, to a ‘no blame’ open investigation system and an administrative compensation scheme. Such a scheme would also save money on transactional costs, on the basis that a simple Ombudsman-like investigational system would be cheaper than having two sets of lawyers. However, it is essential that an open culture is maintained in every aspect of healthcare practice and all relevant organisations and relationships. From that perspective, some current aspects of regulation, employment and local operational practice and culture still constitute barriers to establishment of an open culture. The real improvements would come from significant reforms, especially in culture, rather than tinkering with the system. The NHS has not been able to instill a pervasive ‘no blame’ culture that is necessary to support

248 A just culture guide (NHS Improvement). Available at www.improvement.nhs.uk/resources/just-cultureguide/#h2-what-do-we-mean-by-just-culture. See Learning from deaths. A review of the first year of NHS trusts implementing the national guidance (Care Quality Commission, 2019). 249 C Smyth, ‘Health service is chaotic and dysfunctional, says NHS chief ’ The Times, 15 February 2019. See also Y Birks, F Aspinal and K Bloor, Understanding the drivers of litigation in health services (University of York and The King’s Fund, 2018). 250 The NHS Patient Safety Strategy. Safer culture, safer systems, safer patients (NHS England and NHS Improvement, 2019). 251 C Whyte, ‘Half of all harm caused by medical care is preventable’ (2019) British Medical Journal 17 July 2019, DOI: 10.1136/bmj.l4185.

308 Personal Injuries consistent voluntary reporting and learning.252 Meanwhile, the incidence of major incidents continues.253 If the NHS continues on the current trajectory, it will not succeed in acting as a learning organisation. The relevance of tort law in contemporary society was strongly questioned by Lord Sumption in 2017.254 Noting that Patrick Atiyah had roundly criticised fault 20 years previously, Lord Sumption levelled two basic criticisms at the use of tort law to address the problems of personal injury: the use of fault as the touchstone of liability and the scale of claims and at the corresponding social cost. He said: There are a number of arguments in favour of fault-free systems on the New Zealand model. One is that they are more efficient, because they avoid considerable investigatory and legal costs of attributing blame. The second is that if the object of the exercise is to address the problem of personal injury, there is no obvious reason to give special treatment to those victims who have had the good fortune to discover that their injuries were some one else’s fault. A third is that faultbased systems tend to influence behaviour in ways that are overdefensive and not necessarily in the public interest. …. the law of tort is an extraordinarily clumsy and inefficient way of dealing with serious cases of personal injury. It often misses the target, or hits the wrong target. It makes us no safer, while producing undesirable side effects. What is more, it does all of these things at disproportionate cost and with altogether excessive delay. It is sometimes suggested that the fault is a necessary element in any scheme of compensation, because it deters sloppy practices, thereby improving general standards of safety. I am sceptical about this proposition. Most of the available empirical studies have been carried out in the United States. … there is no consistent evidence of any deterrent effect specifically attributable to the prospect of fault-based civil liability. … It seems to me that the only possible justification for the law doing that is its social utility. Yet the arbitrary results and incomplete coverage of a fault-based system, combined with its prodigious cost and unwelcome side-effects, seriously undermine the social utility of the law of tort as a way of dealing with personal injury. … the courts have in practice moved noticeably closer to strict liability, albeit very gradually and without acknowledging that they are doing it. This is because the whole forensic process of attributing fault is inherently biased in favour of the Claimant. …. The whole forensic process lends a spurious clarity and inevitability to a chain of events that actually a lot less straightforward. The result may be very like strict liability, but it is strict liability with most of the uncertainty and all of the costs associated with a fault-based system.

252 Independent Inquiry into care provided by Mid Staffordshire NHS Foundation Trust January 2005 – March 2009. Volume I. Chaired by Robert Francis QC, HC375-I (2010); A promise to learn – a commitment to act. Improving the Safety of Patients in England (National Advisory group on the safety of Patients in England, 2013); K Evans, ‘Using the Gift of Complaints’: A Review of Concerns (Complaints) Handling in NHS Wales (Welsh Government, 2014); Public Administration Select Committee – Sixth Report: Investigating clinical incidents in the NHS, 24 March 2015; Learning not blaming: The government response to the Freedom to Speak Up consultation, the Public Administration Select Committee report ‘Investigating Clinical Incidents in the NHS’, and the Morecambe Bay Investigation (Department of Health, 2015). 253 The cost of the Francis Inquiry into the Mid Staffordshire NHS Foundation Trust was £13.6 million: Public Administration Select Committee – Sixth Report: Investigating clinical incidents in the NHS, 24 March 2015. 254 Lord Sumption, Abolishing Personal Injuries Law – A project, Personal Injuries Bar Association, Annual Lecture, 16 November 2017.

Recommendations 309

E. Affecting Behaviour It follows from the above that the NHS simply cannot achieve its aim of becoming a ‘learning organisation’ unless it is able to develop an open culture in which information is freely shared in an atmosphere without blame.255 As with achieving safety in aviation, the constant feedback of data is critical. The possibility of using data from injury cases and complaints to be fed back to drive improvements in service delivery has been widely noted.256 The approach to collecting and feeding back data in the NHS is very fragmented. Data on incidents, complaints and claims are not collected using a consistent classification and, therefore, the NHS does not have a good understanding of why some people make a claim and others do not.257 The NHS Ombudsman, private insurers and recently NHS-R258 pass back information on means to support improvement in safety, as does the new HSIB. Some of these bodies and streams of information are not joined up and conflict. Rationalisation is necessary. The conclusion is that large quantities of data and potential learning are available, but the blame system prevents its collection and use, and the means of affecting behaviour are also blocked. Providing thematic reports is a mechanism that is someway short of affecting behaviour and culture on the ground. There is no effective intervention mechanism to support the culture of local organisations.

VII. Recommendations The New Portal is a natural evolution from the 2013 Portal, and should fit with the Online Court concept – provided effective help can be given to individuals to register claims into the online system and a streamlined pathway can be provided that includes mediation and decision-making where needed. However, it is time for structural change. Injury claims should be made to an independent Injury Ombudsman who would operate an inquisitorial administrative scheme. As with the Nordic and New Zealand Accident Compensation scheme, different compensation funds would be funded from road traffic licences or insurers, employment levies and healthcare organisations. The Ombudsman should interlink with social security awards. The CRU function would be integrated.

255 C Hodges, ‘Affecting Future Behaviour: Deterrence or an Open Culture that Learns and Improves’ in chapter in P Vines and A Akkermans (eds), Unexpected Consequences of Compensation Law (Hart Publishing, forthcoming 2019). 256 Making Amends: a consultation paper setting out proposals for reforming the approach to clinical negligence in the NHS (Department of Health, 2003); Health Committee – Sixth Report, Patient Safety; Triennial Review of the NHS Litigation Authority: Review Report (Department of Health, 2015); Developing a patient safety strategy for the NHS. Proposals for consultation (NHS Improvement, 2018). 257 House of Commons, Committee of Public Accounts, Managing the costs of clinical negligence in hospital trusts Fifth Report of Session 2017–19, HC 397, 1 December 2017, para 5. 258 eg, Learning from suicide-related claims. A thematic review of NHS Resolution data (NHS Resolution, 2018).

11 Family Disputes I. Introduction The government accepts that ‘[f]amily proceedings deal with some of the most sensitive issues in the justice system, including parental disputes over where children should live and spend their time, protecting vulnerable children from abuse and neglect, and dealing with divorce and separation.’1 Four major distinct areas arise in the families and children area, which need to be considered separately. They are divorce, public law protection of children, private law disputes, and financial remedies. These types are examined sequentially below. In 2018, 262,399 family cases were started, including 114,821 matrimonial matters (largely divorces), 67,198 public or private law Children Act cases, 41,535 financial remedies and 20,056 domestic violence cases.2 The statistics are shown in Figures 11.1–11.4. Figure 11.1 Cases starting in Family courts in England and Wales 2006–2018

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Children Children Domestic Female Act – Act – violence Forced Genital Total public private Matrimonial Financial remedy marriage Mutilation Adoption cases law law Matters Remedies orders protection protection Act disposed – – 148,232 65,396 – .. .. – – – – 137,022 58,496 – .. .. – – – – 129,618 51,768 – .. .. – – – – 132,802 46,081 – 94 .. – – – – 134,105 46,173 – 111 .. – – 14,788 49,066 129,884 41,666 17,057 118 .. 11,088 263,667 15,237 52,062 125,125 42,950 17,318 109 .. 13,164 265,965 15,050 54,624 118,302 42,919 19,738 144 .. 14,800 266,577 14,909 42,114 113,322 37,655 20,295 137 .. 13,086 241,518 15,998 43,347 115,271 37,951 19,508 189 35 12,820 245,119 18,985 48,245 114,824 41,538 20,056 231 68 12,190 256,105 19,152 50,649 110,000 42,296 21,214 202 83 11,734 255,330 19,037 51,658 118,141 43,018 25,135 322 321 11,144 214,209

1 Transforming our justice system: summary of reforms and consultation (Ministry of Justice, 2016) para 4.1. 2 Family Court Tables at www.gov.uk/government/statistics/family-court-statistics-quarterly-january-tomarch-2017.

Introduction 311 Figure 11.2 Cases reaching a final disposition in England and Wales 2011–2017 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0

2011

2012

2013

2014

Children Act – public law Matrimonial Matters Domestic violence remedy orders Female Genital Mutilation protection

2015

2016

2017

Children Act – private law Financial Remedies Forced marriage protection Adoption Act

Figure 11.3 Summary statistics on the timelines of cases in the Family courts of England and Wales 2011–2018 Timelines of Private law cases from issue to final order

Timelines of care proceedings

Total Disposals

Average disposal duration (weeks)

Median disposal duration (weeks)

% disposed in 26 weeks

Total cases

Average case duration (weeks)

Median case duration (weeks)

2011

17,660

55.1

50.6

2012

22,639

49.5

44.7

12%

42,289

31.3

21.9

18%

43,358

31.2

21.0

2013

24,451

38.2

32.0

37%

46,968

30.1

21.0

2014

19,316

2015

21,472

29.9

25.6

55%

42,638

30.7

21.6

28.3

25.1

58%

37,986

26.1

18.1

2016

24,055

26.9

24.9

62%

40,383

22.3

16.6

2017

26,049

28.2

25.3

57%

41,069

22.8

17.7

2018

25,260

30.4

26.3

49%

37,699

25.7

20.1

Figure 11.4 Number of disposals and average time to first definitive disposal in the Family Courts of England and Wales by case type and legal representation of parties 2011–20183 Parties with legal representation Both applicant and Neither Applicant All types of respondent Applicant only Respondent only nor Respondent representation Number Mean Number Mean Number Mean Number Mean Number Mean of duration of duration of duration of duration of duration disposals in weeks disposals in weeks disposals in weeks disposals in weeks disposals in weeks 2011 22,903 23.8 12,401 16.2 2,036 38.7 2,524 28.9 40,614 23.1 2012 21,532 23.2 12,697 15.5 2,065 36 2,732 29.2 39,593 22.2 (continued)

3 Family

Court Statistics Quarterly Tables, Q1 2012–Q4 2018¸ Table 10.

312 Family Disputes Figure 11.4 (Continued)

2013 2014 2015 2016 2017 2018

Parties with legal representation Both applicant and Neither Applicant All types of respondent Applicant only Respondent only nor Respondent representation Number Mean Number Mean Number Mean Number Mean Number Mean of duration of duration of duration of duration of duration disposals in weeks disposals in weeks disposals in weeks disposals in weeks disposals in weeks 20,715 23.5 12,397 16.1 2,237 38.1 2,961 28.5 38,799 22.7 19,022 25.9 12,571 17.1 2,205 39.3 3,412 28.3 37,645 24.3 17,000 26.9 11,995 16.3 2,133 44.3 3,265 30.5 34,823 25.0 18,592 24.5 13,825 15.1 2,321 39.6 3,468 27 38,654 22.6 19,305 26.3 15,067 14.8 2,248 42.5 3,696 27.4 40,671 23.4 19,078 29.3 14,645 18.1 2,330 40.6 3,196 32.3 39,658 26.2

A major Family Justice Review (the Norgrove Review) was carried out in 2011 and found ‘shocking delays’ in the family courts.4 The recommendations included the need to coordinate a complicated organisational structure, involving an emphasis on mediation as a way of resolving disputes following the breakdown of family relations, and creating a new ‘divorce information hub’ to enable couples to access information and court processes quickly and directly. The government followed Norgrove by structural reform of the courts into a single Family Court. The Judiciary contributed to the Family Justice Modernisation review with a 2012 report by Ryder J,5 which recommended structural rationalisation into one single Family Court, comprising a network of Local Family Court Centres judicially led and managed by the Designated Family Judges, where all levels of judge and magistrate sit as Judges of the Family Court. A single Family Court was created in 2014, replacing a threetier structure, thus avoiding the delay of transfers between courts, and able to sit anywhere in the country.6 The government swiftly claimed in 2014 that the package of reform measures had worked and reduced the complexities and length of proceedings.7 The Lord Chief Justice noted in his 2015 report that the new Family Court had ‘bedded down well … The new structure has removed the delay and costs previously associated with transfers of cases between the county court and the magistrates’ courts …’.8 In response to the ‘unprecedented’ and ‘unsustainable’ volume of cases relating to children, interim reports on Public Law and Private Law cases were published in June 2019, referred to below.

II. Divorce 42% of marriages are expected to end in divorce; half of these occur within the first ten years of marriage. The number of divorce petitions in England and Wales in 2018 was 118, 141.9 4 D Norgrove, Family Justice Review. Final Report (Ministry of Justice, 2011). Care and supervision cases took on average 56 weeks. 5 Mr Justice Ryder, Judicial proposals for the modernisation of family justice (Judiciary, 2012). 6 Crime and Courts Act 2013, s 17, inserting s 31A into the Matrimonial and Family Proceedings Act 1984. 7 A brighter future for Family Justice: a round up of what’s happened since the Family Justice Review (Department for Education and Ministry of Justice, 2014). 8 The Lord Chief Justice’s Report 2015 (Lord Chief Justice, 2016). The positive verdict was echoed in Lord Justice Briggs, Civil Court Structure Review: Interim Report (Judiciary, 2016) para 1.18.1. 9 Family Court Statistics Quarterly, September to December 2018 (Ministry of Justice, 2019).

Divorce 313 Achieving divorce through a contested hearing is now rare and most divorces are dealt with on paper. The switch away from contested divorces began when the Divorce Reform Act 1969 introduced breakdown of marriage as the sole ground for divorce, followed by the rules on unreasonable behaviour, two years’ separation with consent or five years’ separation under the Matrimonial Causes Act 1973.10 For some time now, the prevailing practice of judges has been to interpret unreasonable behaviour widely and facilitate the divorce of parties who wish it, so ‘unreasonable behaviour’ cases are mostly agreed between the parties. In 2014, the President of the Family Division of the High Court of England and Wales asked ‘Has the time not come to legislate to remove all concepts of fault as a basis for divorce and to leave irretrievable breakdown as the sole ground?’11 In 2017, Lord Chancellor David Lidington decided that ‘the time is not right’ for a full review of marriage law,12 as recommended by the Law Commission.13 A Nuffield Foundation study concluded that the three fault-based grounds for divorce were relied on instead of the two separation-based grounds, often to try to secure a quicker divorce.14 It found that parties often feel under pressure to exaggerate allegations or retro-fit the reasons for their separation into one of the fault grounds. After the Supreme Court held that an unhappy marriage could not be terminated before the statutory separation period,15 the government announced in September 2018 its intention to change substantive law to a full ‘no fault divorce’ model,16 and issued a consultation in April 2019.17 If implemented, this change should cement the removal of complexity, delay and adversarialism from divorce cases. The 2016 policy statement by the Lord Chancellor and senior judges noted:18 For those people who decide to divorce, the process will be simpler. The majority of these cases involve a very straightforward court process. Only around 2% of cases are contested.19 Yet the rules and forms are long and complex and have changed little since the 1970s. We will simplify the process and put as much as possible of it online.

A. Digitising the Process The divorce forms and process are currently all being digitised and should be completed by 2020. The process is not inherently difficult and does not and will not require a lawyer 10 The Family Law Reform Act 1996 legislated for no fault divorce but the qualifications and safeguards enacted made the process too complicated and the provision was repealed without being implemented in the Children and Families Act 2014. 11 Sir James Munby, P, ‘21st Century Family Law’, The 2014 Michael Farmer Memorial Lecture, given at the 2014 Legal Wales Conference at Bangor University, 10 October 2014, available at www.judiciary.gov.uk/wp-content/ uploads/2014/10/munby-speech-bangor-10102014.pdf. 12 Letter from D Lidington to the Law Commission, 2017, see www.lawcom.gov.uk/government-says-notthe-right-time-for-review-of-marriage-law. 13 eg, Getting Married. A Scoping Paper (Law Commission, 2015). 14 L Trinder, D Braybrook, C Bryson, L Coleman, C Houlston and M Sefton, Finding Fault? Divorce Law and Practice in England and Wales (Nuffield Foundation, 2017). 15 Owens v Owens [2018] UKSC 41. 16 Reducing family conflict. Reform of the legal requirements for divorce (Ministry of Justice, 2018). 17 Reducing family conflict. Government response to the consultation on reform of the legal requirements for divorce (Ministry of Justice, 2019). 18 The Lord Chancellor, the Lord Chief Justice and the Senior President of Tribunals, Transforming Our Justice System (Ministry of Justice, 2016). 19 Family Justice – Guide to Family Law Courts (Ministry of Justice, 2015) https://assets.publishing.service. gov.uk/government/uploads/system/uploads/attachment_data/file/417011/guide-to-family-court-statistics.pdf, p 7 – 98% of petitions sent to the other party are consented too with the rest being contested.

314 Family Disputes (or two) and can be done by the parties themselves online. A fee of £550 is currently payable. Divorce cases are currently dealt with in Regional Divorce Centres. All of these are expected to be replaced by a single national facility in Stoke-on-Trent. The first phase – applications for uncontested divorce, allowing digital upload of marriage certificates – was rolled out nationally on 30 April 2018. By 14 September 2018, 13,767 online applications had been received, with an error rate of 1% (as opposed to 40% under the previous paper forms).20 Online providers have operated in the UK since 1999.21 Experience with online divorce noted high levels of customer satisfaction.22 Considerable international interest has been aroused by the introduction of an online divorce procedure in the Netherlands, the Rechtwijser scheme.23 However, it was not fully understood that that scheme was relatively limited in scope, voluntary for parties, and, although successful in a good number of cases, only involved a relatively small percentage of divorces in the country. The Norgrove Review proposed a new online ‘divorce information hub’ to enable couples to access information and court processes quickly and directly.24 A 2015 review comparing the consumer experience of online divorce with more traditional services made a number of findings.25 First, the market was working well: there were high levels of customer satisfaction for both traditional providers (79%) and online providers (83%). Secondly, consumers were making choices to reflect their needs: those using online divorce services tended to have more amicable (86%) divorces compared to those using a traditional lawyer (56%). Thirdly, online divorce services were reported to be significantly cheaper and more likely to be quoted on a fixed fee basis. By contrast those choosing face to face providers tended to value the reputation of the provider and its location more so than cost, and the online experience had some differences. For example, online applicants went through the process faster than those seeking face to face advice (on average 83% within eight weeks) and more users of online services than traditional services felt that the process was easier than they anticipated and involved less effort. A pilot of filing of certain proceedings for a matrimonial order via the web commenced in 2017 at Nottingham’s East Midlands Regional Divorce Centre. As at March 2018, the online divorce pilot was entirely digital and the rejection rate for errors in applications for uncontested divorces had reduced dramatically:26 The rejection rate for the old, paper based service was 40%. As at 31 January 2018 the online submission rejection rate is a mere 0.5%. It takes users 60 minutes to complete the paper based form, and only 25 minutes to complete the online form. Once again, the feedback from users has been very positive.

20 Reform Update. Autumn 2018 (HM Courts & Tribunals Service, 2018) 15. 21 eg, www.amicable.io/services. 22 K Troubridge and G Williams, Comparing methods of service delivery: A case study on divorce. Report of findings (BDRC Continental, 2015). Satisfaction was also high with the online Rechtwijser pilot in the Netherlands, although numbers involved were low. 23 See R Smith ‘The decline and fall (and potential resurgence) of the Rechtwijzer’ at http://legalvoice.org.uk/ decline-fall-potential-resurgence-rechtwijzer/. 24 D Norgrove, Family Justice Review. Final Report (2011). 25 Comparing methods of service delivery: A divorce case study (Legal Services Consumer Panel, 2015). 26 Sir Terence Etherton, MR, speech ‘Civil Justice after Jackson’, Conkerton Memorial Lecture 2018, Liverpool Law Society, 15 March 2018, www.judiciary.uk/wp-content/uploads/2018/03/speech-mor-civil-justice-after-jackson-conkerton-lecture-2018.pdf.

Public Law 315

III. Public Law These are cases where a Local Authority intervenes to protect the welfare of a child for care or supervision orders, often resulting in placement of the child with foster or other care. Figure 11.5 shows the number of children involved in public law applications, receipts, disposals and outstanding cases in England and Wales between 2015 and 2017. The number of applications rose by around 25% in 2015 and 2016. In 2018 19,037 cases were commenced and 1,837 children were made subject to Supervision and Special Guardianship Orders. Figure 11.5 Number of children involved in Public law applications, receipts, disposals and outstanding cases in England and Wales, 2015 and 201727 Number of children involved in Public law applications outstanding

12,000 8,000

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2016

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A distinct court pathway applies to these cases. They can involve evidence from multiple individuals (parents, grandparents, neighbours, social workers, police and psychologists). Such cases therefore inevitably take time in preparation of reports and involve hearing and assessing witnesses in what can be sensitive hearings. They are some of the most difficult types of cases to contemplate an online hearing. Legal aid has continued to be available for parties in public law proceedings, in which both merits and means are untested. Hence, achieving speedy conclusions presents a challenge for judges whilst some forces applying to parties and their lawyers incentivise delaying cases. The Children and Families Court Advisory and Support Services (CAFCASS) represents children in public and private family law cases.28 In 2017/18 CAFCASS worked with 131,205 children and young people, of which 72% were new cases. This area has undergone massive change in this decade. Before 2014 procedures were very long and typically took one or two years. Lawyers might take a number of points about the situation of a parent that would delay a case so as to keep a child with a parent or family. However, research indicated that if a child was to be removed from one to another set of

27 Annual Report and Accounts 2017–18 (HM Courts & Tribunals Service, 2018) Figure 8. 28 www.cafcass.gov.uk. CAFCASS has around 2,000 staff and was created on 1 April 2001 under the Criminal Justice and Court Services Act 2000 to bring together services previously provided by the Family Court Welfare Service, the Guardian ad Litem Services and the Children’s divisions of the Official Solicitor’s office. In 2018/18 its funding was £118.588 million plus £1.592 million for contact services.

316 Family Disputes adults it was beneficial for the child for that to occur without delay, especially if the child was under one or two years old.29 In announcing implementation of the Family Justice Modernisation programme in 2013, Lord McNally said:30 It is simply not acceptable that children wait, on average, over 45 weeks (and, until recently, over 56 weeks) for their care or supervision case to be resolved. Nor should we just accept the fact that the courts are the first port of call for tens of thousands of parents who apply every year over contact and residence issues. It is crucial that we do more to encourage them to resolve their disputes themselves, in more positive and constructive ways.

Following the Norgrove Report, the government proceeded with a Family Law Modernisation Programme, discussed below, and decided that public law cases should be resolved within 26 weeks. The Children and Families Act 2014 included measures to: • establish the presumption that involvement of that parent in the life of the child concerned will further the child’s welfare;31 • prohibit instructing an expert to provide evidence, produce expert evidence to a court, or cause a child to be medically or psychologically examined, unless approved by the court;32 and • introduce a 26 weeks’ time limit for completing care and supervision proceedings.33 A review was undertaken by Mr Justice Ryder (as he then was) on how to implement the Programme. The Ryder Report advocated robust case management, especially in public law cases, with the aim of completing non-exceptional cases within 26 weeks. The imposition of the 26 weeks’ limit constituted a very considerable challenge to achieve in practice. It is a target that is applied by the Ministry to judges but there is no mechanism to apply it to lawyers or parties other than through the case judge. The traditional lever of the judge observing that ‘this is going to cost you a lot of money’ has virtually no effect in public law cases. Parties can in practice be slow to realise what they have to do in order to assemble their evidence within the 26 week period.

A. The Care Crisis There has been an increase in care applications by Local Authorities (around 25% year on year), which has led to a situation that been termed a ‘care crisis’. HMCTS’ figures are that

29 See JD Osofsky, ‘The Impact of Violence on Children’, (1999) 9(3) The Future of Children – Domestic Violence and Children; KC Koenen et al, ‘Domestic Violence is Associated with Environmental Suppression of IQ in Young Children’ (2003) 15 Development and Psychopathology 297; BD Perry, ‘The neurodevelopmental impact of violence in childhood’ in D Schetky and EP Benedek (eds), Textbook of Child and Adolescent Forensic Psychiatry (American Psychiatric Press Inc, 2001); L Baker and M Campbell, ‘Exposure to Domestic Violence and its Effect on Children’s Brain Development and Functioning’. Learning Network Brief (2) (Learning Network, Centre for Research and Education on Violence Against Women and Children, 2012). 30 Speech ‘Reform of the family justice system’ by Lord McNally at the Local Family Justice Board, 25 April 2013. 31 Children and Families Act 2014, s 11, inserting s 1(2A) into the Children Act 1989. 32 Children and Families Act 2014, s 13. 33 Children and Families Act 2014, s 14(2).

Public Law 317 Public Law applications have risen steadily from 14,788 in 2011 to 19,152 in 2017.34 It is true that the number of children in England (but not Wales) has risen in the past 25 years (by 6.4% from 2007 to 2017). However, the proportion of children who were the subject of an initial child protection conference rose from 39 per 10,000 in 2009/20 to 64 per 10,000 in 2017/18; the number of children in formal ‘child protection plans’ increased by 102% in the 10 years to 2017/18.35 The number of children in care has risen in England from 47,950 in 1994 to 72,670 in 2017, and in Wales from around 3,000 around 1991 to 5,995 in 2017.36 A 2018 survey highlighted rises in children cases of issues of domestic abuse, mental health difficulties and substance misuse, as well as domestic abuse (present in possibly 50% of safeguarding cases).37 It appears that child welfare services are increasingly focusing on protective interventions.38 However, child social care is becoming the biggest area of financial challenge for social care authorities, with significant overspends in recent years.39 A wide-ranging review found that the focus of the Children Act 1989 on partnership with families to promote their children’s well-being has stood the test of time.40 However, it found a ‘strong sense of concern’ amongst professionals about a ‘culture of blame, shame and fear’ in the system, affecting those working in it as well as children and families. It was suggested that this culture has created an environment that is ‘increasingly mistrusting and risk averse and prompts individuals to seek refuge in procedural responses’.41 The review called for the promotion of ‘relationship-based practice’. It has been said: ‘Very few applications for care proceedings are refused or dismissed. … [there has been] a steady percentage increase in Special Guardianship Orders (SGOs) and a decrease in the use of Placement Orders (POs) since 2013/14 in all court circuits.42 There has also been a growing use of Supervision Orders (SOs) attached to SGOs.’43 The incoming President of the Family Division wondered in 2018 if responses might include an increased focus for non-urgent cases on information and welfare in the pre-proceedings period, including sending parents a ‘letter before proceedings’ as a ‘wake up call’, and on the need to extend the 26 week deadline to avoid unintended consequences.44 Legal aid remains available for parents in Public Law cases. Since the removal of legal aid noted below in Private Law cases, the overall completed workload and expenditure in civil

34 Different data were quoted by Sir Andrew Macfarlane, PFD, Keynote address ‘Crisis; What Crisis?’ to the Association of Lawyers for Children Conference, 23 November 2018. He cited data from CAFCASS that the number of applications for a care order rose from around 7,000 in 2008/09 to 11,159 in 2014/15 to 14,599 in 2016/17 and 14,226 in 2017/18. It should be noted that the number quoted in Figure 11.1 above for calendar year 2017 is 19,152. 35 C Thomas, The Care Crisis Review: Factors contributing to national increases in numbers of looked after children and applications for care orders (Family Rights Group, 2018). 36 ibid. 37 Research Report. Safeguarding Pressures Phase 6 (Association of Directors of Children Services, 2018). 38 See n 34, 51. 39 LGA Budget Submission Autumn 2017 (Local Government Association, 2017); Local Government Association Briefing Westminster Hall Debate on findings of the Care Crisis Review House of Commons 5 September 2018. 40 Care Crisis Review: options for change (Family Rights Group, 2018). 41 This wording was noted by Findings of the Care Crisis Review, House of Commons Library, 4 September 2018. 42 JE Harwin, B Alrouh, S Bedston, and K Broadhurst, Care demand and Regional Variability in England 2010/11 to 2016/11 (Centre for Child and Family Justice Research, 2018). 43 See n 34, 54. 44 Sir Andrew McFarlane, PFD, Keynote address ‘Crisis; What Crisis?’ to the Association of Lawyers for Children Conference, 23 November 2018.

318 Family Disputes representation Oct–Dec 2014 to Oct–Dec 2017 has been reasonably stable, with around 23,000 cases and total cost of £140 million: see Figure 11.6.45 Figure 11.6 Completed workload and expenditure in civil representation Oct–Dec 2014 to Oct–Dec 201746 Value (£m)

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Volume (000s) 30

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The 2019 Public Law working group focused its 57 core recommendations on the need to improve the wide variation in practice by Local Authorities (i.e. widespread poor practice) through sharing good practice, ‘a shift in culture to one of co-operation and respect that values and equally questions the contribution of all parties’ and a renewed focus on preproceedings work and managing risk.47 In the longer term, it called for reconsidering the role of CAFCASS, for legal aid funding for parents during pre-proceedings, and for review of the Special Guardianship system. As noted above, serious challenges arise in transferring public law proceedings to an online procedure. On the other hand, various other techniques have been developed that show considerable promise, such as Settlement Conferences and Family Drug and Alcohol Courts (FDACs).

B. Problem-Solving Courts, Settlement Conferences and FDACs A shift in approach to ‘problem-solving courts’ has been championed by Sir James Munby.48 In 2016 he noted that although the average duration of care cases had been reduced, an ‘astonishing achievement’ against a 14% increase in caseload, the increase seemed relentless and could reach 25,000 by 2020, making the position unsustainable and a looming crisis. He surmised that the reason for the rise was a change in the behaviour of local authorities, either in becoming more adept at identifying child abuse/neglect and taking action to deal with it, or in setting more demanding standards, lowering the threshold for intervention. He called for both more focused research, but also looking urgently for new, innovative and

45 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/696042/ legal-aid-statistics-bulletin-oct-dec-2017.pdf, Figure 7. 46 ibid. 47 Recommendations to achieve best practice in the child protection and family justice systems. Interim Report (Public Law working group, 2019). 48 Sir James Munby, President of the Family Division, View from the President’s Chambers (15): Care Cases-The Looming Crisis, September 2016, www.judiciary.gov.uk/publications/view-from-presidents-chambers.

Public Law 319 better ways of handling these cases, for example, by piloting and then rolling out the settlement conferences: I have said this before, but I repeat, because it is so important, we have to address what I believe is the pressing need for a radical rebalancing of the very functions and purpose of the family courts. It is a truism that the fundamental difference between the civil courts and the family courts is that the civil courts focus on what has happened in the past, whilst the family courts look to the past only to identify the problem before focusing on what needs to happen in the future. But as we presently understand it, this forward looking aspect is usually confined to providing a solution rather than solving the underlying problem – or, typically, the concatenation of underlying problems. The family court must become, in much of what it does, a problem-solving court.

Settlement Conferences started in July 2015 as a pilot in the Cheshire and Merseyside Court49 and are now standard practice there by all nine judges in relation to all family cases, public and private. In that Court, Settlement Conferences are offered to all parties after expert assessments have been done, and it is axiomatic that all parties must consent to be involved and can withdraw at any stage. Over 500 cases have now been involved in Settlement Conferences, with a 70% success rate. The Ministry of Justice issued guidance supporting the approach in 2017.50 As at March 2019, the approach is also used in 13 other areas across the country. A considerable advantage is that solutions can be crafted that are ‘out of the box’, sometimes addressing issues that have not been raised in the proceedings, which would be impossible in a contested hearing. The approach of parties has to be to try to resolve issues rather than fight each other, and the Settlement Conference assists this approach. The Protocol set out the aims and objectives as:51 to facilitate discussion of the issues, clarify information, analyse issues and promote understanding between the parties with a view to helping to identify solutions (including solutions which may be addressed by the consent of the parties and not necessarily within the Court process).

At the Issues Resolution Hearing or Directions Hearing the judge will raise the possibility for a settlement conference and give information to the parents or carers about them. If they agree, the case will be listed for a Settlement Hearing and a final hearing. The parties are provided with written information on the Settlement Conference in advance and must sign a consent form. They determine whether there is agreement in any of the issues. Anything said in the Settlement Conference is confidential to it, unless the judge stops it since it is discovered that a child is at risk. An audio recording is made. Involvement of the judge is only in the presence of the relevant party’s legal representative, or the Guardian or CAFCASS officer. The judge can give a neutral evaluation if the parties indicate that they wish this to be 49 Pioneered by HHJ Margaret de Haas QC, to whom thanks is due for the following information. 50 Settlement Conferences pilot and evaluation, at www.judiciary.uk/wp-content/uploads/2017/09/guidancefor-professional-parties-v2.pdf. The initial pilot was supported by academic review: A Summerfield, Exploring the early implementation and delivery of the settlement conferences pilot: A process evaluation (Ministry of Justice, forthcoming). However, a different view has been taken by some: J Brophy, Judicial Approaches in Settlement Conference Pilots in Children Cases. The Views and Experiences of Advocates (Association for Layers for Children, 2019). 51 Settlement Conferences Protocol as to Basic Principles, www.judiciary.uk/wp-content/uploads/2017/07/ protocols-and-annexes.pdf.

320 Family Disputes expressed. The judge is to repeat at all stages that there is no pressure to agree anything. The judge involved in the Settlement Conference will not be the Case Management Judge if the case continues, unless all parties are agreed. Sir James expanded the problem-solving theme in subsequent speeches. He stated that the legal systems for dealing with children are ‘far too complex, far too little coordinated, and serving far too many different and often conflicting objectives, to be effective in furthering the welfare of children and their families’.52 He highlighted in particular the lack of ‘mechanisms to facilitate collaborative, joint or even joined-up decision-making’ between the criminal and family courts. He called for the re-balancing of family courts as a problemsolving court, engaging the therapeutic and other support systems that ‘so many children and parents need’, and commended two successful initiatives that had been achieved largely without the initiative or intervention of Whitehall: the FDACs and PAUSE:53 FDAC is a combination of judicial monitoring and a multi-disciplinary therapeutic intervention tailored to meet the needs and problems of the parents in care cases where the underlying issue is parental substance abuse. Very careful independent academic research has proved that FDAC works and that FDAC saves money. More children are reunified with parents if the case has gone through FDAC than through the normal family court, and there is significantly less subsequent breakdown. FDAC increases the sum of human happiness and decreases the sum of human misery. And it saves the local authorities who participate significant sums of money: £2.30 for every £1 spent. Another, more recent, project which is already proving a great success is PAUSE, where the objective is to break the pattern we see so frequently in the family courts of mothers who find themselves the subject of repeated applications for the permanent removal of each of their successive children. (The dismal record is believed to be held by a woman who has lost nineteen children to the care system.) Again, as with FDAC, the approach is founded on identifying and then tackling the often numerous underlying problems and difficulties which have confronted the woman – in short, helping her to ‘turn her life around’. There are other projects adopting similar approaches.

The Lord Chief Justice reported in 2017 that:54 The judiciary has taken a leading role in looking for means of controlling the rise in public law cases through the pilot of settlement conferences and are supportive of other initiatives like PAUSE,55 FDAC56 and the New Orleans Intervention Model57 being piloted by LIFT,58 which seek to tackle the problems which drive families into public law proceedings.

52 Sir James Munby P, ‘Children Across the Justice System’, the 2017 Parmoor Lecture to the Howard League for Penal Reform, 30 October 2017. 53 PAUSE is a technique under which a woman who has had a child taken into care may be invited to agree to use contraception for a period of time in return for being given a package of support services as long as she remains without children. The approach has not yet been researched extensively and it remains unclear if it has positive long-term effect. 54 The Lord Chief Justice’s Report 2017 (Judiciary of England and Wales, 2017). 55 PAUSE – a therapeutic intervention model that works with mothers who have had more than one child removed from their care to help them break the cycle. Following a successful pilot the model is being rolled out across the country. 56 Family Drug and Alcohol Court. A specialist problem-solving court to deal with cases involving addiction issues. Parents who complete treatment successfully under FDAC supervision are more likely to have their children returned to their care. 57 New Orleans Intervention Model – this intensive social work intervention model is being piloted in a number of areas in the UK to determine whether it produces better outcomes than existing good practice. 58 London Infant and Family Team. A multi-disciplinary team at Croydon Children Services.

Public Law 321 In a subsequent lecture, Sir James noted that:59 there is the problem that the complex procedures (both statutory and as set out in the Family Procedure Rules 2010) for addressing the three central concerns of family law – status, relationship breakdown and the family’s finances – prevent the family court ever addressing the family’s problems holistically and in a simple ‘one-stop’ process. This fragmentation of the family court’s processes can lead only to delay, added cost and, worst of all, additional stress for all concerned. ….. We have somehow to create a one-stop shop in an enhanced re-vamped family court capable of dealing holistically, because it has been given the necessary tools, with all a family’s problems, whatever they may be. More narrowly, dealing holistically with the family court’s traditional concerns with status, relationship breakdown and family finances; more widely, and ultimately more importantly, dealing holistically with all the multiple difficulties and deprivations – economic, social, educational, employment, housing and health (whether physical or mental) – to which so many children and their families are victim.

FDACs specialise in hearing cases where local authorities are applying to remove children from their families due to substance misuse. They involve a judge and a therapeutic team, who work together on a therapeutic package that is tailor made for the particular person. The person meets the same judge every two weeks for a review of progress. The specially trained, dedicated judge provides direct, ongoing supervision and support to parents in recovery. The judges work closely with a team of social workers, psychiatrists, substance misuse workers and other professionals who offer a personalised package of support and treatment that gives parents the chance to overcome their addiction and show that they are capable of caring for their children. In many cases, no lawyers are involved. The 26 week rule does not apply to FDAC cases, so these cases can and do last longer than other public law cases. The distinctive features of the FDAC model are:60 • Judicial continuity – judges deal with the same case throughout. • A problem-solving, therapeutic approach provided via fortnightly court reviews. The reviews provide opportunities for regular monitoring of parents’ progress and for judges to engage and motivate parents, speak directly to parents and social workers, and find ways of resolving problems. Lawyers do not usually attend the reviews. • A specialist, multi-disciplinary team who work with the court. The team: ◦◦ carry out assessments and direct work with parents; ◦◦ devise and co-ordinate an intervention plan – enable and assist parents to engage and stay engaged with substance misuse, parenting and other services to address needs identified; ◦◦ provide regular reports on parental progress to the court and to all others involved in the case; and ◦◦ facilitate additional support for parents through volunteer parent mentors.

59 Sir James Munby P, ‘What is family law? – Securing social justice for children and young people’, Lecture at the University of Liverpool, 30 May 2018. 60 J Harwin, B Alrouh, M Ryan and J Tunnard, Changing Lifestyles, Keeping Children Safe: an evaluation of the first Family Drug and Alcohol Court (FDAC) in care proceedings (Brunel University, 2014).

322 Family Disputes Initial research supported the FDAC model.61 It was found that over five years family reunification was more likely to be sustainable after proceedings in the FDAC than in the ordinary family court, and mothers were more likely to deal with their substance misuse than parents who go through ordinary family courts, and that fewer children were likely to go into care as a result of FDAC’s ‘humane’ approach.62 They found that:63 • A significantly higher proportion of FDAC than comparison mothers were reunited with their children at the end of proceedings (37% v 25%). • A significantly higher proportion of reunified FDAC mothers than comparison mothers were estimated to experience no disruption to family stability (a combination of relapse, permanent placement change or return to court) over a three year period after proceedings ended (51% v 22%). The study also found that, compared to mothers going through the ordinary family court, a significantly higher proportion of mothers going through FDAC: • Stopped misusing substances at the end of proceedings (46% v 30%). • Were more likely to sustain substance misuse cessation during the five year period after care proceedings ended (58% v 24%). A second study reported on observations of 46 court hearings in 10 FDAC courts across England and interviews with 12 FDAC judges.64 It found that FDAC judges were implementing FDAC’s distinctive approach to care proceedings and were committed to its problem-solving approach. They thought the approach was fairer and ‘more humane’. The evaluation concluded that the approach could be successfully implemented in other courts. The FDAC concept was evaluated in 2016 as saving the State money:65 Across the 2014/15 caseload, the London FDAC cost £560,000 (in respect of specialist staff salaries, office costs etc.) and generated estimated gross savings of £1.29m to public sector bodies over five years. In other words, for each £1 spent, £2.30 is saved to the public purse. These cashable savings accrue primarily from FDAC’s better outcomes: fewer children permanently removed from their families, fewer families returning to court and less substance misuse. The savings generated by FDAC exceed the cost of the service within two years of the start of the case. Immediate savings In 2014/15, London FDAC initiated 46 cases at a cost per case of £12,170 on average. However, the upfront costs of the service are partially offset during proceedings because FDAC saves money on legal costs and experts witnesses and assessments. These immediate savings mean that the effective cost of the service was only £5,825 per case on average. 61 The model was pioneered by DJ (MC) Nicholas Crichton at the Inner London Family Proceedings Court in 2008, adapted from a model of Family Treatment Drug Courts (FTDCs) that has been used widely in the USA with positive results. 62 J Harwin, B Alrouh, M Ryan, T McQuarrie, L Golding, K Broadhurst, J Tunnard, and S Swift, After FDAC: outcomes 5 years later. Final Report (Lancaster University, 2016); JE Harwin, B Alrouh, K Broadhurst, T McQuarrie, L Golding and M Ryan, ‘Child and Parent Outcomes in the London Family Drug and Alcohol Court Five Years On: Building on International Evidence’ (2018) International Journal of Law, Policy and the Family, eby006, http//doi. org/10.1093/lawfam/eby006. 63 See www.lancaster.ac.uk/news/articles/2016/family-drug-and-alcohol-court-has-a-lasting-positive-effect-ontroubled-families/. 64 J Tunnard, M Ryan and J Harwin, Problem solving in court: Current practice in FDACs in England. Final report (Lancaster University, 2016). 65 ibid.

Private Law 323 Longer-term savings • FDAC keeps more children with their families. This saves public money that would otherwise be spent on taking children into care. This amounts to an average of £17,220 per case. • Families who appear in FDAC are less likely to return to court. FDAC therefore saves money on future court costs. Savings in the cost of parents returning to court either after reunification or with future children are £2,110 per case on average. • More parents in FDAC overcome their drug and alcohol addictions. This creates savings for the NHS due to reduced long-term need to provide drug treatment; and to the criminal justice system due to reduced drug-related crime. These savings amount to £5,300 per case on average.

Having been launched in London in 2008, by 2016 eight FDAC clusters served 19 local authorities at 12 courts.66 FDAC coverage was extended in 2018 to cover eight London Boroughs, supported by the FDAC National Unit, which was a partnership of five bodies.67 However, funding for the FDAC National Unit ceased in September 2018, although the materials developed remain on the FDAC website and advice and information is also available. There remains a problem in taking the FDAC concept further. FDACs are funded by Local Authorities, only a limited number of which are currently convinced of the (financial or other) benefits of the FDAC model. They work well in some parts of the country but not yet in many others where the Authority is not supportive of the model. Research on sustained long-term benefits is still somewhat limited. The Liverpool Drug Court was working extremely well but was allowed to fail for lack of funding.

C. Digitisation HMCTS is working on a seamless digital system for public law cases, so that evidence can be submitted and shared electronically and cases can be managed more securely and effectively.68 It will enable orders to be written and produced immediately in court, so that everyone will leave with clarity on what has been agreed.69

IV. Private Law These cases involve disputes between parties over who children should live with and spend time with.70 Figure 11.7 shows the number of children involved respectively in private law applications, receipts, disposals and outstanding cases in England and Wales between 2015 and 2017. In 2018, 51,658 private law cases were started. It is helpful that a CAFCASS officer is present at a Family Hearing Dispute Resolution Appointment (FHDRA), and judges do try to knock heads together, with the result that not many cases go on to final hearing. 66 Better Courts: the financial impact of the London Family Drug and Alcohol Court (Centre for Justice Innovation, 2016). 67 The partners were the Tavistock and Portman NHS Foundation Trust, the Centre for Justice Innovation, Coram, RyanTunnardBrown, and the University of Lancaster. See http://fdac.org.uk/about-the-national-unit/. 68 Reform Update. Autumn 2018 (HM Courts & Tribunals Service, 2018) 14. 69 See http://insidehmcts.blog.gov.uk/2018/02/07/designing-a-public-law-service-to-meet-user-needs/. 70 Child Arrangement Orders under the Children and Families Act 2014 relate to who children should live with and spend time with. Previous phraseology related to ‘residence and contact’ under the Children Act 1989 and before that to custody and access.

324 Family Disputes

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Figure 11.7 Number of children involved in Private law applications, receipts, disposals and outstanding cases in England and Wales, 2015 and 201771

0

Government reform through the removal of legal aid for private law cases has had huge impact. It was intended that mediation would replace lawyers and courts but this has not occurred, a major reason being that mediation has not been adequately included in the dispute resolution pathway or funded. Hearing times are increasing. No time limits apply to private law cases, which can get lost in the system.72 Lord McNally stated the principle that separated parents should resolve their disputes out of court wherever possible.73 Couples should be supported to reach their own agreements, and information was provided principally through a ‘Sorting out Separation’ web app. A new parenting plan was developed, aiming to provide a clear focus on the child throughout the dispute resolution process and help parents improve the way they communicate with each other.74 The 2012 review by Ryder J recognised that it was a significant and immediate challenge to develop effective methods of assisting self-representing litigants in private law cases, while maintaining fairness to all parties, and that self-representing litigants would need to be assisted to understand and comply with the procedures which are necessary to achieve fairness in financial remedy cases.75 Ryder J advocated that private law clients in cases involving children should have access to the new family justice system through the internet and/or telephone hub which would refer most cases to a mediator. However, the judiciary were not responsible for pre-proceedings processes (mediation) so the result was that a holistic integrated approach was not undertaken. Ryder J expressed concern at how the problem of self-representing litigants could be assisted to understand and comply with the procedures necessary to achieve fairness in financial cases.

71 Annual

Report and Accounts 2017–18 (HM Courts & Tribunals Service, 2018) Figure 9. J has been appointed to review the situation. 73 Speech ‘Reform of the family justice system’ by Lord McNally at the Local Family Justice Board, 25 April, 2013. 74 www.cafcass.gov.uk/grown-ups/parenting-plan.aspx, launched in March 2014. 75 Mr Justice Ryder, Judicial proposals for the modernisation of family justice (Judiciary, 2012). 72 Cobb

Private Law 325 A 2016 policy statement noted:76 The majority of separating parents will make arrangements regarding their children privately. Only around one in ten children of separating parents have their contact arrangements made in court.77 Even so, court use to resolve private family disputes in England and Wales is still high: almost 43,000 children cases and 38,000 finance cases were started in 2015.78 It is important to offer separating parents the opportunity to resolve issues equably between them, avoiding the stress, expense and aggravation of legal proceedings. We are considering how we can best help separating couples to do this, and a major part of this will be digitising and simplifying our processes and providing more information to enable people to make the right arrangements themselves.

The Family Division took over responsibility for the majority of appeals in private law cases from the Court of Appeal in October 2016, reducing the number of judges considering an appeal from three to one. HMCTS is developing systems to enable private law litigants to initiate and manage cases online.79

A. Legal Aid, Court Fees and Litigants in Person The improvements in system structure and process were, however, undermined by the government’s changes in legal aid and court fees.80 In December 2013, the government introduced a 20% reduction in the rates paid to most experts in civil, family and criminal proceedings. From 22 April 2014, the legal aid fee paid to solicitors in public family law cases was reduced by 10%. As discussed in chapter five above, from April 2013, most private law family cases were removed from the scope of legal aid from April 2013, although legal aid remains available for mediation and potentially available for advice and representation where there is evidence of domestic violence or child protection issues.81 This has led to an increase of litigants in person and a rise in professional but unregulated Mackenzie friends. Legal aid remains available for public family law cases (eg, care proceedings). Government sponsorship of CAFCASS was transferred from the Department for Education to the Ministry of Justice in April 2014.

76 The Lord Chancellor, the Lord Chief Justice and the Senior President of Tribunals, Transforming Our Justice System (Ministry of Justice, 2016). 77 V Peacey and J Hunt, Problematic contact after separation and divorce? A national survey of parents (Gingerbread, 2008). 78 Table 1, Ministry of Justice Family Court Statistics Quarterly: www.gov.uk/government/statistics/family-courtstatistics-quarterly-october-to-december-2015. 79 Reform Update. Autumn 2018 (HM Courts & Tribunals Service, 2018) 14. 80 M Maclean, ‘Renegotiating Family Justice’ in E Palmer, T Cornford, A Guinchard and Y Marique, Access to Justice. Beyond the Policies and Politics of Austerity (Hart Publishing, 2016) 199. 81 The Legal Aid Sentencing and Punishment of Offenders Act 2012. See Legal Aid, Sentencing and Punishment of Offenders Act 2012: Post-Legislative Memorandum. Submitted to the Justice Select Committee on 30 October 2017 (Ministry of Justice, 2017) Cm 9486 (para 94: most cases taken out of scope).

326 Family Disputes Fees in the Family Court were increased on 1 July 2013 and 22 April 2014 in line with wider fee reform in the civil and family justice system discussed above.82 In outlining its policy of achieving full cost recovery, the Ministry of Justice said: 7.2 The total cost of running the civil and family courts in 2011/12 was £594m. The gross fee income recovered was £503m. This amounts to 85% of the cost of running the civil and family courts and leaves a shortfall of £91m. The taxpayer funds this shortfall through the department’s spending settlement. The majority of family fees contained in these proposals have not been increased by the rate of inflation since September 2010.

As a result of the rise in court fees and cuts in legal aid, the number of private law family cases fell from 54,624 in 2013 to 42,114 in 2014. More parents were unrepresented in proceedings: the increase was 30% in the year following the reforms. The number of parents appearing unrepresented in courts was 42% in 2012/13 and rose to 62% in 2014/15. The Lord Chief Justice, Lord Thomas of Cwmgiedd, said in 2014 that the increase in LiPs in family and civil cases called for bold thinking in simplifying the process, including introducing a more inquisitorial form of process.83 Appearing before the House of Commons’ Justice Committee in January 2016, the Master of the Rolls Lord Dyson, the Senior President of Tribunals Sir Ernest Ryder and the President of the Family Division Sir James Munby were strongly critical of the fee increases. Sir James was reported as saying:84 there had been an increase in litigants in person but that ‘shamefully little’ had been done to help them understand the court process, with information provided to them ‘woefully inadequate’. He added that the court had attempted to make the court proceedings more accessible but often lawyers ‘don’t understand’ the kind of language used by the person in the street. Munby said incremental increases in court fees for divorce amounted to ‘another poll tax on wheels’ and were disproportionately affecting women. Asked about the chances of an online court being set up to bring costs down, he added: ‘I am disappointed by where we’ve got to after many months of work.’

It is unsurprising that the absence of legal representation has led to an increase in private law applications after the initial fall, as legally unsophisticated parties attempt to navigate the process themselves without legal help. The number of private law applications in 2017 was back up to 50,649, and between April and June 2017 was 13,029, a 3% increase on the same period in 2016. Those cases involved 28,278 children. Neither the applicant nor respondent were represented in 36% of disposals, compared with 34% in the previous quarter. In that quarter in 2017, 27,291 divorce petitions were made, down 10% on the same quarter in 2016. The increase in LiPs in family proceedings is charted in Figure 11.8. The number of grants under the Exceptional Case Funding (ECF) scheme has remained very low (70 in 2013/14, rising to 950 in 2016/17).

82 The Civil Proceedings Fees (Amendment No. 2) Order 2013, SI 2013 No 1410; The Civil Proceedings Fees (Amendment) Order 2014, SI 2014 No 874. See Court Fees: Proposals for reform (Ministry of Justice, 2013) Cm 8751. 83 Speech ‘Reshaping Justice’, delivered to the organisation ‘Justice’ on 3 March 2014. 84 J Hyde, ‘Senior judges lambast government over court fees’ Gazette, 26 January 2016.

Private Law 327 Figure 11.8 Representation status of parties in private family law proceedings with at least one hearing in the Family Courts in England and Wales 2012/13 to 2016/1785 Unrepresented parties

Represented parties

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Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2012–13 2013–14 2014–15 2015–16 2016–17

The government concluded in 2017:86 Over time the number of individuals in receipt of legal aid for private family matters, where evidence of domestic violence or child abuse is provided, has increased. This is likely to be a result of the [2013 on] changes to legislation, which all had the effect of making it easier to provide the required evidence. In 2013–14 there were 6,400 applications for civil representation in private family law where such evidence was provided, of which 4,400 were granted. In 2016–17 the number of applications had risen to 10,000 (an increase of 64% on 2013–14) and the number of grants to 8,300 (an increase of 89%). Figure 7 [11.8] shows these trends over time.

The number of private law cases in which both parties were represented fell from 46% at the start of 2012 to 19% in September 2018, and the percentage of cases where neither side had legal representation rose over the same period from 12% to 37%.87

B. MIAMs There is enthusiasm for mediation in solving family disputes but the current system does not adequately promote or achieve this. A number of mediation bodies exist in UK – probably too many.88 Detailed consideration has been given to prioritising the voice of children in mediation.89 Resourcing of pre-litigation advice and early ‘cooperation talks’ 85 Family Court Statistics Quarterly, January to March 2017 (Ministry of Justice, 2017) Fig 4. 86 Legal Aid, Sentencing and Punishment of Offenders Act 2012: Post-Legislative Memorandum. Submitted to the Justice Select Committee on 30 October 2017 (Ministry of Justice, 2017) Cm 9486, para 178 and Fig 7. 87 Family Court Statistics Quarterly, July to September 2018 (Ministry of Justice, 2018). 88 The Family Mediation Council is made up of national family mediation organisations: ADR Group, the College of Mediators (250 members), Family Mediators Association (400 legally trained members), The Law Society (solicitors), National Family Mediation (predominantly non-lawyers), and Resolution (2000 members). 89 Final Report of the Voice of the Child Dispute Resolution Advisory Group (Ministry of Justice, 2015).

328 Family Disputes (a form of ADR) was found to have greatly reduced family disputes in the courts in Sweden a decade ago.90 There is an expectation that judges and magistrates will be knowledgeable and supportive of mediation,91 but the landscape of providers is disorganised, and levels of knowledge, understanding and support for mediation are variable across the country. In 2011 a Practice Direction92 specified that contact with a mediator should have occurred before an application is made to the court for an information meeting. In 2012, the government said that that 124,420 couples who filed for divorce opted for mediation, at a cost of approximately £500 per case for a publicly funded client, as opposed to a claimed £4,000 for court cases.93 The Children and Families Act 2014 made attendance at a family Mediation Information & Assessment Meeting (MIAM) mandatory before a person can make a relevant family application, save where there is evidence of domestic violence or of a risk of domestic violence.94 Legal aid remains available for mediation on a means tested basis for people on a low income or receiving benefits. Additionally, if one party is eligible for legal aid for the MIAM, both parties receive funding for the MIAM and the first mediation meeting (only). However, the level of funding represents a loss for most mediation practices. Attending an information meeting about the possibility of mediation is far from being the same thing as attending a mediation. The use of mediation has not increased as the government planned. In October 2013 the number was 45% less than in the same month in 2012. The NAO confirmed in November 2014 that, since the 2012 Act came into force, fewer people were using mediation for family law disputes: The Ministry … expected 9,000 more mediation assessments and 10,000 more mediations to start in 2013-14. However, mediation assessments fell by more than 17,000 and there were more than 5,000 fewer mediations starting in 2013-14 than there were in 2012–13.95

In response to a Parliamentary Question in December 2014, the then minister Simon Hughes outlined the government’s plans to advance mediation in family disputes: The Government are committed to advancing mediation as the best way of reducing the stress on separating couples, alleviating pressures on the court system, and saving money for taxpayers. Last year, seven out of 10 couples who went into mediation had a successful outcome. In the past few months, we have set up a system where the first mediation session is free for both parties if one of the parties is legally aided, and we are already seeing an increased take-up in mediation as a result.96

The Ministry of Justice also outlined how it was supporting and encouraging mediation: The Ministry of Justice wants to encourage more people to mediate in family disputes instead of pursing an application in the court, which can be slow, stressful, and expensive. We have already taken significant steps to promote mediation, including making it a legal requirement that anyone considering applying to court for an order about their children or finances is legally obliged to

90 F Regan, ‘The Swedish Legal Services Policy Remix: The Shift from Public Legal Aid to Private Legal Expense Insurance’ (2003) 30(1) Journal of Law and Society 49; see R Moorhead and P Pleasance, ‘Access to Justice after Universalism: Re-engineering access to justice’ (2003) 30 Journal of Law and Society 1. 91 A guide is at www.judiciary.gov.uk/wp-content/uploads/2014/06/mediation-guide-for-judges-may2014.pdf. 92 Practice Direction 3A, Pre-Action Protocol for Mediation Information and Assessment. 93 Press release ‘New Mediation laws to help separating couples’ (Ministry of Justice, 2013). 94 Children and Families Act 2014, ss 1 and 10. See A brighter future for Family Justice: a round up of what’s happened since the Family Justice Review (Department for Education and Ministry of Justice, 2014). 95 National Audit Office, Implementing Reforms To Civil Legal Aid, 20 November 2014, HC 784 2014–15: p 7. 96 House of Commons Debates 16 December 2014 c1257.

Private Law 329 attend a Mediation Information and Assessment Meeting (MIAM) first, unless specific exemptions apply (for example domestic violence). (…) As of 3 November 2014, the first single session of mediation is publicly funded, without being subject to the means test, in all cases where one of the people involved is already legally aided. In this scenario, both participants will be funded for the MIAM and the first session of mediation. It is hoped that the combination of the compulsory MIAM with the free first mediation session will prove effective in introducing more people to the benefits of mediation, and diverting them from the courts.97

Research published in 2015 found that only 19% of a sample of 300 applicants had attended a MIAM before commencement of proceedings and 81% had not done so.98 However, mediation following MIAMs appears to indicate a solid conversion rate to settlement of 66%, and it was identified that there should be increased training to identify vulnerable clients and safeguarding issues. The Ministry’s information service reports that just under 70% of MIAM mediations have successfully resulted in settlement.99 As the Low Commission noted, legal advice feeds mediation, so if the former is cut, the latter will also fall.100 Briggs LJ noted:101 ADR in the form of judicial early neutral evaluation is offered on an infrequent ad hoc basis by various courts, including the TCC and the Chancery Division. Further, the District Judges who undertake both Family and Chancery case management outside London have successfully introduced a measure of early neutral evaluation into Chancery litigation about family property (such as TOLATA and Inheritance Act claims) by cross-application of their experience in conducting financial dispute resolution hearings in family cases. It is worth noting that all these examples of early neutral evaluation are undertaken by judges of the same or similar seniority to those who would try the relevant cases if not settled earlier.

There is clear evidence that since the LASPO and legal aid reforms the number of solicitors firms working in family law has shrunk. In September 2017, a solicitor was reported as saying said that ‘even a little’ publicly funded advice at the outset could signpost parties towards mediation or be provided with information which would help them to settle their case.102 Maclean and Eekelaar highlight a flaw in the policy of directing couples to mediation103 and the courts, in that it was solicitors who provided initial information and signposting to mediation.104 Hence, the intended use of mediation has not been achieved. The government’s 2017 post-legislative review concluded that the intended switch to mediation did not materialise, and MIAMs instead fell dramatically:105 LASPO did not lead to increased take-up of either MIAMs or family mediation sessions, as anticipated. Instead, the opposite occurred, with the number of people attending publicly funded 97 Ministry of Justice, Government Response to Justice Committee’s Eighth Report of Session 2014–15: Impact of changes to civil legal aid under Part 1 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, Cm 9096, July 2015: p 18. 98 B Hamlyn, E Coleman and M Sefton, Mediation Information and Assessment Meetings (MIAMs) and mediation in private family law disputes: Quantitative research findings (Ministry of Justice, 2015). 99 www.gov.uk/government/news/more-free-mediation-sessions-for-separating-couples. 100 Getting it Right in Social Welfare Law. The Low Commission’s follow-up report (The Low Commission, 2015). 101 Lord Justice Briggs, Civil Court Structure Review: Interim Report (Judiciary, 2016) para 2.91. 102 M Fouzder, ‘Litigant-in-person figures expose family courts crisis’ Gazette 29 September 2017. 103 Ministry of Justice and Family Mediation Council, Marketing Communication: Tips for Family Mediators 2014: 19. 104 M Maclean and J Eekelaar, Lawyers and Mediators. The Brave New World of Services for Separating Families (Hart Publishing, 2016). 105 Legal Aid, Sentencing and Punishment of Offenders Act 2012: Post-Legislative Memorandum. Submitted to the Justice Select Committee on 30 October 2017 (Ministry of Justice, 2017) Cm 9486, para 161.

330 Family Disputes MIAMs and mediation falling (see Figure [11.9] below). In 2012–13, the year prior to LASPO, there were 31,000 MIAMs113 and 14,000 mediation starts. By 2016–17, these figures had fallen to 13,000 MIAMs and 7,700 mediation starts, reductions of 61% and 44% respectively. Figure 11.9 Volume of publicly funded MIAMs and mediation starts in family law 2011/12 to 2016/17106 MIAMs

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Before LASPO most referrals to publicly funded MIAMs were made by solicitors holding a legal aid contract (around 6,200 in 2012/13) but this dropped to under 500 in 2013/14 and to nil from 2015/16. Modest increases in referrals from other sources occurred but nowhere near replacing the gap (in 2016/17 referrals were around 18,000 from private solicitors, 900 from client self-referrals, and 200 from other routes).107 The current conclusion is that MIAMS have been a major failure, with a very low rate of use. The Ministry of Justice selected mediation as the sole technique, whereas Dame Elizabeth Butler-Sloss when she was President pointed out that various forms of ADR were needed, and different modes might be needed in individual cases. There should be full flexibility in any given case. Arbitration can be useful in some cases: a family arbitration scheme was launched in 2012 by the Institute of Family Law Arbitrators (IFLA)108 initially confined to financial and property issues and has been extended to children cases, where it is expected to succeed. The IFLA requires members to be members of the Chartered Institute of Arbitrators and to have a specialist ticket. This is a slow start but should prove relevant unless the problems of private cases in court are solved. It was assumed that lawyers were against mediation and would block it being used in cases, whereas in fact lawyers were the gatekeepers that referred cases to mediation/ADR, and they were shut out of the process through cuts in legal aid and other restrictions. 106 Source: Legal Aid Statistics, January 2011 to March 2017. 107 Legal Aid, Sentencing and Punishment of Offenders Act 2012: Post-Legislative Memorandum. Submitted to the Justice Select Committee on 30 October 2017 (Ministry of Justice, 2017) Cm 9486, para 163 and Figure 2. 108 http://ifla.org.uk/. See L Ferguson, ‘Arbitration in Financial Dispute Resolution: The Final Step to Reconstructing the Default(s) and the Exception(s)?’ (2013) 35 Journal of Social welfare and Family Law 115.

Private Law 331 The Norgrove Mediation Task Force set out the right vision, namely an online system, with information and diversions. But the political decision was only to choose the cheap options from his list, and the system has not worked. There are various fault lines. The first is inconsistency that arises in the profession because of the existence of six professional associations of mediators who typically fail to adopt a consistent point of view, sometimes engaging in deep theological differences that fail to produce the required unity of approach. There are also solicitor mediators as well as sole mediators, in ideological competition. If agreement is reached between the family members, the Law Society requires that a written agreement is drawn up by two separate lawyers. That duplicates tasks and cost. The Dutch and British Columbia online models merely provide a button to be clicked to engage a single lawyer to produce a draft agreement. Only a single lawyer is needed in reality. There is a point about the geographic availability of mediation. A mediator needs to be available as soon as the judge has persuaded the parties to try mediation – outside the door or even inside – so they do not lose the momentum. Equally, a mediator should be available before they get to court and as soon as they start the pathway.

C. Conclusions on Private Law Cases Sir Andrew Macfarlane, President of the Family Division, said bluntly in late 2018 that private law is not working: ‘There are far too many parents coming to the court when they have no need to do so and, in reality, the court is not the best place to resolve their disputes’.109 He thought that it should be possible to greatly reduce numbers of cases in court. People have been badly affected by the cuts. Without legal aid people can really struggle under a system that remains based on an adversarial model. If someone has a drink problem and no money, they are unable to pay for DNA tests or an analysis of the police disclosure. People are now making applications without lawyers and this is causing real problems for some judges over their role as well as making cases longer. If more people had a lawyer, fewer applications might well be made. The traditional judicial threat of cost sanctions is ineffective. Saying ‘You realise this is going to cost a lot of your money’ merely drives cases out of the courts or leads to floundering by LiPs without assisting just and timely resolutions. In this context, any fall in sensitive issues such as domestic violence or forced marriage protection is worrying as it may well indicate that genuine cases are not reaching court but going unchecked. There is scope for transformative innovation. The Family Justice Council is to consider the potential for piloting Specialist Domestic Abuse Courts (SDAC) to handle civil injunctions, private law children and financial matters.110 The 2019 Recommendations of the Private Law working group were bold in calling for ‘ensuring that the most effective range of out-of-court family resolution services are available’ and for a national non-court dispute resolution (‘Family Solutions’) service.111 109 Sir Andrew Macfarlane, PFD, Keynote address ‘Crisis; What Crisis?’ to the Association of Lawyers for Children Conference, 23 November 2018. 110 Family Justice Council, Minutes of the Council Meeting, 25 June 2018. 111 A Review of The Child Arrangements Programme [PD12B FPR 2010]. Report to the President of the Family Division (Private Law Working Group, 2019).

332 Family Disputes It supported the view of the former Chair of CAFCASS that a large number of cases involving no child protection or welfare concerns should simply not be in court as ‘the court process risks escalating conflict to a point where it becomes harmful’ to families.112 Local arrangements needed to involve more ‘joined up’ collaboration between services, and Local Family Justice Boards should seize the initiative in creating local alliances of services to provide integrated support for families. MIAMS and conciliation should be further encouraged and the court should offer different tracks for cases.

D. Duration The official statistics shows that the average disposal times of care proceedings and private law cases have fallen from 2011 to 2017, respectively from 55 to 29 weeks and from 31 to 23 weeks (Figure 11.3). However, since 2015 there has been a steady state in public law cases (Figure 11.10) whereas although private law cases speeded up somewhat in 2016 the trend has since reversed. Figure 11.10 Public and Private Law summary statistics on the timeliness in the Family Court of England and Wales, 2015 to 2017113 Average time for first disposal of Public law cases

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V. Financial Remedies The official statistics record financial remedies cases as having fallen from 65,396 in 2006 to 41,666 in 2011, followed by a further (presumably LAPSO-related) fall to 37,655 in 2014 but since then a steady rise, to 42,296 in 2017 and 43,018 in 2018.114

112 A Douglas, ‘The Child Arrangements Programme’ [2019] Fam Law 45. 113 Annual Report and Accounts 2017–18 (HM Courts & Tribunals Service, 2018) Figure 10. 114 Family Court Statistics Quarterly, September to December 2018 (Ministry of Justice, 2019). See also Legal Aid, Sentencing and Punishment of Offenders Act 2012: Post-Legislative Memorandum. Submitted to the Justice Select Committee on 30 October 2017 (Ministry of Justice, 2017) Cm 9486, para 166.

Financial Remedies 333 The current statistics make it impossible accurately to disaggregate money and divorce cases.115 However, money issues are conceptually different from the official decoupling of divorce, and it has been recognised that the two types of case can be dealt with by distinct pathways. Many financial cases have nothing to do with divorce, for example because the parents are not married. Financial dispute resolution hearings have existed for around 20 years, in which judges typically try to ‘bang heads together’ to achieve settlements. Success rates are around 50–60% so the number of full hearings is relatively small. A number of advantages of delinking financial and divorce cases have been set out.116 Many lawyers specialise in either money or divorce, but many judges working in local family courts do not have specialist expertise in financial issues. A Financial Remedies Application will lead to the presence of both parties being physically present at court, and raises an opportunity for judges to talk to the individuals personally and humanely so as to assist in achieving resolution. The judiciary has led the introduction of a pilot Financial Remedies Court (FRC).117 It was announced in 2018 that 10 pilot schemes would be undertaken in 2018, although in the event one pilot only was undertaken. After this proved to be a considerable success, nine other pilots were announced in July 2018. In 2019 around one third of the country will be covered by FRCs and specialist judges. They will function separately from the regional divorce centres. The FRC affords the opportunity of converting from handling paper files to a fully digitalised mode, with forms and evidence uploaded and cases distributed amongst specialist judges. This is planned. A Consent Order project was started in 2018 involving a group of legal representatives.118 An online contested process should be available in March 2019. Therefore, a paper-free court will be created, involving specialist judges. Virtual directions appointments are planned to be introduced in 2019, each judge having skype for business facility. It is intended that the financial outcomes of all decided cases and consent orders will be entered into a database from which technological analysis might have potential to assist in predicting outcomes in financial cases. An option of private financial dispute resolution hearings outside court has become available, in which the independent function is taken by a retired judge or lawyer. This is expected to have some takers but the intermediary needs to be paid. Similarly, financial arbitration also has a place, and can be promoted by judges in FRCs. It is also important to be aware of the practical likelihood that orders will be complied with, and this requires some experience in thinking ahead: The Law Commission advised on this issue in 2016, noting that perhaps 4,200 enforcement cases related to family financial orders a year involving non-payment of up to £20 million.119 Amongst the Law Commission’s recommendations were the spread (from use in the Central Family Court) of 115 Well over two-thirds of divorce cases have no financial remedy: the percentage that did was 41% in 2003 and only 26.4% in 2014: E Hess and J Miles, ‘Financial Remedies Courts’ [2017] Family Law 625. 116 E Hess and J Miles, ‘Financial Remedies Courts’ [2017] Family Law 625; M O’Dwyer, E Hess and J Miles, ‘The recognition of money work as a specialty in the family courts by the creation of a national network of Financial Remedies Units’ [2016] Fam Law 1335. 117 Development of the FRC has been led by Mostyn J and HHJ Hess. See Sir James Munby, President of the Family Division, View from the President’s Chambers (18): The ongoing process of reform -Financial Remedies Courts, 2017. 118 Reform Update. Autumn 2018 (HM Courts & Tribunals Service, 2018) 15. 119 Enforcement of Family Financial Orders (Law Commission, 2016) HC 862.

334 Family Disputes enforcement liaison judges, a more effective and streamlined general enforcement application with clearer rules and more effective powers, such as disqualification from driving and banning travel out of the country.

VI. Scholarly Thoughts on Transformations An international review has concluded that two shifts are notable. First, the State has withdrawn from the private sphere when dealing with couples, but, secondly, control has been maintained or even reinforced when dealing with children and parenting.120 The editors supported the general principles of the Norgrove review: ‘Conflict should be minimized, process should be clear and simple, and administrative or non-adversarial in nature, and mediation should be preferred to legal process.’121 Professor Mavis Maclean supports the idea noted above that ‘Family law is generally concerned with the future of those involved rather than the righting of past wrongs’.122 She notes that the Children Act 1989 has a clear and exemplary focus on the welfare of the child. She also notes that the government was focused on lawyers rather than on the system and the role that they inevitably played in it:123 It is hard to avoid the conclusion that governmental suspicion of the legal profession plays a part in the development of this policy, and in our view based on our previous research this suspicion rests on an outdated idea of what lawyers do in family cases.124 When Philip Lewis examined the assumptions about lawyers in policy statements in 2000125 he identified the following: arm’s length negotiation between lawyers reduces communication and increases tension and conflict; negotiating through lawyers is associated with getting the best deal at the other’s expense; and lawyers interfere with agreements reached in mediation without their involvement. From the research Lewis reviewed, however, a different picture emerged, saying that ‘private negotiation is far from desirable in all cases’, and that ‘lawyers at least sometimes are used not just to give advice or negotiate with the other party but to solve problems by dealing with third parties on their clients’ behalf ’. Lisa Webley in her meticulous analysis of the documents published concerned with training and accreditation of family lawyers and family mediators shows how the assumptions that solicitors are adversarial and directive while mediators are facilitative and settlement orientated is an over simplification.126

Professor Patrick Parkinson has reviewed global changes in family problems, and identified profound changes, particularly in parenting after separation.127 He quoted Emeritus 120 M Maclean, J Eekelaar and B Bastard (eds), Delivering Family Justice in the 21st Century (Hart Publishing, 2015) 3. 121 ibid, 2. 122 M Maclean, ‘Renegotiating Family Justice’ in E Palmer, T Cornford, A Guinchard and Y Marique, Access to Justice. Beyond the Policies and Politics of Austerity (Hart Publishing, 2016) 200–01. 123 M Maclean, ‘Renegotiating Family Justice’ in E Palmer, T Cornford, A Guinchard and Y Marique, Access to Justice. Beyond the Policies and Politics of Austerity (Hart Publishing, 2016). 124 J Eekelaar, M Maclean and S Beinart, Family Lawyers: The Divorce Work of Solicitors (Hart Publishing, 2000); M Maclean and J Eekelaar, Family Law Advocacy (Hart Publishing, 2009). 125 P Lewis, Assumptions about Lawyers in Policy Statements: a survey of relevant research (Lord Chancellor’s department, 2000). 126 L Webley, Adversarialism and Consensus (Quid Pro Quo Books, 2010). 127 P Parkinson, ‘Family Laws and Access to Justice’ (2016) 8(1) Contemporary Readings in Law and Social Justice 37; P Parkinson, Family Law and the Indissolubility of Parenthood (Cambridge University Press, 2011).

Scholarly Thoughts on Transformations 335 Professor Margo Melli’s statement: ‘Today, divorce is not the end of a relationship but a restructuring of a continuing relationship.’128 Building on this observation, Parkinson noted that both parents retain parental responsibility after divorce, and that ‘the decision about what used to be called “custody” and “access” became, not a decision about the allocation of a bundle of rights, but about such practical issues as where the child would live and how much time he or she would spend with the other parent.’ He noted that the philosophy of the UK Children Act 1989 is that parental responsibility continues after separation as it existed before the relationship breakdown, subject to any orders to the contrary by the court. An important social background is the increase in children born outside cohabiting relationships, which is around 35% in UK and Ireland.129 Further, there have been ‘massive’ increases in litigation about parenting after separation in many jurisdictions. Parkinson notes that the immediate response is for more resources in courts, but he advocates a fundamental rethinking of the structural place of mediation within the family justice system, reducing courts’ discretion, and simplifying procedures. The argument on reducing the extensive discretion of family judges flows from the idea that encouraging people to settle their own disputes is likely to be of limited efficacy if laws remain centripetal. He says: Centripetal laws are laws that have the effect of drawing parties inexorably towards a judicial resolution, rather than conferring upon them the clear bargaining endowments which would facilitate settlements. … Centripetal laws assume that courts will make the decisions, and regulate the conduct and adjudication of cases within the court setting. Centrifugal laws send clear messages to people about their rights, obligations and entitlements, so that judicial resolution of disputes is made necessary only where the facts of the case or the scope of the rule are in dispute.130 Centrifugal laws will usually require general rules or principles which may not be sensitively attuned to all the different circumstances that might arise, but they simplify the messages the law gives, thereby reducing the numbers of disputes and assisting in the resolution of disputes by conferring bargaining chips. They provide a framework within which alternative dispute resolution may operate successfully. An emphasis upon private ordering, combined with the conferral of broad discretions on judges in the few cases which come to courts, is the worst of all worlds.

Parkinson’s argument on mediation flows from seeing parenting as first and foremost a relationship problem that requires therapeutic intervention, and only secondarily as a legal problem. Hence, he argues for a fundamental rethinking of the structural place of mediation ‘within the family justice system’, such as with Family Relationship Centres in Australia. Simple parenting plans can be used by mediators rather than expensive lawyers and judges. Mavis Maclean and John Eekelaar have written over family issues for many years. Their 2016 work observed the casework being done in practice by lawyers and non-legally qualified mediators, and concluded that the two groups were increasingly operating in the same

128 MS Melli, ‘Whatever Happened to Divorce?’, [2000] Wis L Rev 637, 638; see also B Neale & C Smart, ‘In Whose Best Interests? Theorising Family Life Following Parental Separation or Divorce’ in S Day Sclater and C Piper (eds), Undercurrents Of Divorce (Ashgate, 1999) 33, 35–37. 129 C Osborne, W Manning & P Smock, ‘Married and Cohabiting Parents’ Relationship Stability: A Focus on Race and Ethnicity’ (2007) 69 J Marriage & Fam 1345. 130 The terminology of centripetal and centrifugal law is derived from M Galanter ‘Justice in Many Rooms: Courts, Private Ordering and Indigenous Law’ (1981) 19 J of Legal Pluralism & Unofficial Law 1.

336 Family Disputes territory of practice.131 The major functions were often initial information for couples on law, triage of options, signposting them to making self-agreements, mediation or court. Mediation was increasingly being integrated into legal practice and was seldom used as a stand-alone service. A number of types of mediation were seen, being used by both mediators and lawyers:132 settlement; facilitative of problem-solving; therapeutic; and evaluative. Maclean and Eekelaar recommended that both lawyers and mediators should be authorised to provide the same core services, advising at the same time two parties contemplating separation, as joint clients, and to advise them in drawing up a separation agreement if they so desire. All those providing these services should have relevant accreditation in mediation and legal issues. Two current restrictions should be removed: the assumption that practising lawyers cannot advise two parties jointly and specific prohibitions in the mediation codes against a mediator offering advice. Maclean and Eekelaar noted a number of innovations in integration of mediation with courts and lawyers across Europe. A number of online options have been available, including Quickie Divorce, Managed Divorce, Wikivorce, pro bono offers by the Bar and solicitors, and services offered by the Co-operative Legal Services Alternative Business Structure. In Germany, courts undertake triage and court proceedings can be preceded by a mediation session: the normal rule that each side must be represented by a lawyer does not apply where divorce is by consent, where one lawyer may represent the parties jointly.133 In Belgium, a magistrate can require parties to meet with him or her to work on reaching agreement that will be given legal certainty. The process is free, legally aided, and if agreement is not reached, the parties return to court before a different magistrate.134 In the Netherlands, a scheme exists for lawyer mediators who commit to working in a non-adversarial way and negotiating with each other to reach agreement. If the discussions break down, parties can seek help of two separate lawyers who may also be FAS lawyer mediators.135 In the UK, one ‘Lawyer Supported Mediation’ scheme136 links mediation with legal services both before and during the process of provision of legal services.

VII. Conclusions Two strong strands underlie recent reforms in family procedures.137 First, government philosophy has been that the State should not be involved in private arrangements. So issues have been pushed out of courts, but the State is unable to disassociate itself from ultimate

131 M Maclean and J Eekelaar, Lawyers and Mediators. The Brave New World of Services for Separating Families (Hart Publishing, 2016). 132 L Boulle and M Nesic, Mediation: Principles, Process, Procedure (Butterworths, 2001), 21–29. 133 D Martiny, Grounds for Divorce and Maintenance between Former Spouses: Germany (Commission for European Family Law, 2002). 134 Maclean and Eekelaar, 140: Belgian Amicable Settlement in Court procedure 2013. 135 Maclean and Eekelaar, 130. The scheme is known as vFAS (Vereninging van Familierecht Advocaten Scheidingmediators). 136 M Lopatin ‘Growing Family Law Services in a Post-LASPO World: Mediation as Collateral Beneficiary’ (2014) 44 Family Law 1476. 137 The author is grateful to Sir James Munby for clarification of these points, although responsibility for their articulation rests with the author.

Conclusions 337 responsibility for the welfare of children. If that responsibility is to be taken seriously, early intervention is what works best, and means of doing this are not currently joined up. The courts’ approach is by nature more inquisitorial than the more adversarial style found in most other courts. The approach is underwritten by statute, namely the requirement that the court has a duty to have regard to the interests of the child as paramount. Secondly, the Rules were refocused in 2011 to introduce the ‘overriding objective’, hence to consider ADR in every case. However, the reality is that considering ADR almost never happens. Further, mediation is almost the only ADR model used, and mediation services are not simple to access, as they have to be accessed separately rather than being available as an integral part of the pathway. In two areas online and greater specialism appear to be on track to delivering significant improvements. These are the shift to simple online divorce and the spread of the Financial Remedies Court. Online Divorce, in which people have to answer a questionnaire that produces answers in relevant information fields, is a success. It has eradicated having to send back 40% of written petitions because they contained errors. Public Law cases need greater coordination between local specialist services, including social workers, health and mental health support and judiciary. The imposition of an arbitrary time limit (26 weeks) on one set of actors fails to address systemic issues involving other actors and does little for improving overall coordination. In addition to coordination of different official actors, coordination of public funding streams presents a real challenge. The constraints on Local Authority resources restrict adoption of imaginative policy developments. Greater coordination of local support services is indeed needed. One example of coordination, the FDAC, is threatened for these reasons. But there are likely to be other modes of coordination that should be developed. Chapter eight has noted similar multi-specialist responses to people with debt, housing and health problems that may cluster in addition to abuse and child problems and can be addressed through ‘problem-solving courts’ or other configurations of support. Coordination and triage is also needed at an initial stage, picking people up at Children and Family Centres, employment centres, GP surgeries, A&E units and police. Individuals offering information, mediation and judicial services should all be organised and work together with local coordination, allocating work amongst themselves as is appropriate to individual cases. Those models should urgently be developed as standard. Private Law cases remain a big challenge. The fall in numbers attending MIAMS – let alone substantive mediations – indicates that the system is simply not joined up. The implications of the removal of legal aid funding are significant and have not been addressed. Many people do not have available funds to achieve ‘private ordering’ of their affairs after the removal of legal aid. The resulting collapse of supply of family support by solicitors, many of whom were working either at a loss or pro bono in giving family advice, has meant that a great deal of support for people has evaporated and also that people are not being signposted to alternatives like mediation, are making too many applications to courts and are taking too much court time, necessitating sometimes uncomfortable changes in the position of the judiciary. This area is a major unsolved problem. The objective should be to address the root causes of social and personal problems. The concept has been discussed further in chapter two. It appears to be essential to provide some services free for those who need them and could not pay modest fees. The argument for this rests on both economic and social grounds:

338 Family Disputes the goal is to assist in solving people’s problems and relationships and to support a cohesive rather than fractured society. The more that this is done, the less society will need to spend on later and other interventions. The middle class have enough assets in a marriage but not enough to fight over, given the reality of cost of intermediaries and process. They typically lose a significant amount in legal costs fighting over relatively little. Too much goes into lawyers’ costs, and lawyers seem unable to grasp that they are a problem. Many people just want a quick and easy solution. The increase in LiPs pushes the courts towards being more user-friendly, and this is a direction that many family judges feel comfortable with, but they struggle with the absence of coordinated professional assistance that lies outside their remit, namely provision of information and support, triage in pointing up options, mediation, assistance on behavioural, financial, social and other aspects. Differences of opinion amongst judges meant that a common approach to McKenzie Friends could not be agreed. Underlying these problems is a pathway issue. As Mavis Maclean has said: How do people find their way towards professional help?138 As argued above, the initial stage is coordination of first tier information and support through local Children and Family Centres and others as described above, all linking with social support and entitlement services. For those families who decide to reorder their relationships, relevant specialist assistance should be available – property, accountancy, pensions and so on, linked with the Financial Remedies Court. The pathway for separating couples should be a simple and unified pathway joining up general publicly available information, initial access and triage, assistance for parties to selfdetermine outcomes including an online facility, mediation or other assisted negotiation where this can help, and determination by a judge where needed. The pathway would integrate human and online assistance. The Settlement Conference concept is an excellent stage in facilitating sensible and ‘out of the box’ solutions. The pathway would not be based on an adversarial model. There is no need for each party to have their own adviser. It is perfectly acceptable for a single mediator or judge to provide independent and impartial information and assistance on the law and on assisting a fair settlement between the parties. If agreement is not reached, a different judge will decide the case.

A. Core Functions Unlike almost all of the types of disputes covered in this book, the family area is possibly one where the model of identifying new issues, feeding back information and intervening so as to address them is least achievable – even if highly important. Technology can be transformative in some situations but remains a challenge in addressing behavioural issues. Intervening in a couple or family that has social and personality issues before they arise is not possible, and ex post intervention may not assist in ongoing relationships. That does not mean that there is little more to be learned. But the data loop model applied elsewhere

138 M Maclean, ‘Renegotiating Family Justice’ in E Palmer, T Cornford, A Guinchard and Y Marique, Access to Justice. Beyond the Policies and Politics of Austerity (Hart Publishing, 2016).

Conclusions 339 for ongoing organisations is clearly less relevant. On the other hand, the quality and timing of effective intervention is highly relevant. Many partners and children will clearly benefit from effective and timely intervention. The mantra is used that ‘In civil cases, we look at the past to decide things retrospectively. In crime and family, we are looking at the past to decide what to do in the future.’ So the question is: ‘How can we better identify past causes of problems so as to better address them for the future?’ The issues of fundamental importance in relation to family disputes are what sort of intervention is needed and how it is delivered. It is suggested here that the problem-solving model should be the over-arching principle, and that the model for delivery of legal and social assistance should be radically reformed. Almost all Public Law cases (care or supervision orders) are begun by Local Authorities.139 Data has recently become available, and its analysis has identified some useful facts, such as significant differences between Local Authorities in the numbers of children that they place into care.140 Questions are now being asked about why there is that variation. There is a clear North/South divide here. CAFCASS has a great deal of data that could be mined and put to good use. This is an area where feedback from the courts could help if the right information is collected and fed back through relevant channels, as discussed above. There is an important issue over the type of help that people need, and hence what skills are needed when and who might deliver them. As noted in other chapters, the system we have inherited is adversarial, which requires lawyers on both sides and a judge in the middle. The government’s preoccupation with reducing cost produced a focus on the immediate beneficiaries of such cost (lawyers) that missed the point about the nature of the role that some intermediary has to play in assisting parties in family and children cases. Of the core functions listed in chapter two, the focus needs to be on delivery of information, assistance, advice and representation. The feedback mechanisms there are not so relevant here, but the intervention function is highly relevant.

139 The

NSPCC has power to apply but does so rarely. Parents can apply for the revocation of a care order. University.

140 Lancaster

12 Property I. Introduction Disputes involving property can be divided into a number of distinct categories: private sales; objections to compulsory purchase or rating or planning decisions; renting or letting private properties, including eviction and failure to provide safe and adequate quality; and social housing provided by local authorities and housing associations. In recent years there has been widespread concern over behaviour in most of those areas, and tenants’ ability to raise complaints and have them resolved effectively and quickly. Government has recently produced a series of papers and proposals on reform of areas such as agents, landlords, leasehold law and social housing, in most cases seeking to reform both regulatory and redress aspects. The areas of regulation and redress have often been linked and need to be considered holistically together. Hence, there has been a drive to improve redress and behaviour generally. Further drivers have been the desire to address the consequences of austerity, and to increase safety after the Grenfell Tower fire. An overview of the current position in the main ‘sectors’ of property is given below, including major recent reform proposals in relation to regulation, courts, tribunals and Ombudsmen. The complexity of the property landscape has been illustrated by Ombudsman Services, as shown in Figure 12.1. Two general features are noteworthy at this stage. First, the government has adopted a general policy that it and the various groups of actors in the sector should work together in a spirit of cooperation, with authoritarianism held in reserve only if necessary for those who do not collaborate. The following are some examples of this. First, the government’s Green Paper on social housing of August 2018 set out ‘a rebalancing of the relationship between residents and landlords’ involving a ‘vision which values and respects the voices of residents, with landlords treating them with decency and respect’.1 Secondly, one of the government’s responses to the Grenfell Tower Inquiry was based on government, residents, industry stakeholders and sector experts all ‘working collaboratively’ to ‘together deliver a change of culture that puts people and their safety first’.2 Thirdly, the government’s radical reform proposals for housing disputes call for collaborative implementation of the new vision, especially with a Redress Reform Working Group.3

1 A new deal for social housing (Ministry of Housing, Communities & Local Government, 2018) Cm 9671. 2 Good practice on how residents and landlords/building managers work together to keep their home and building safe. Call for Evidence (Ministry of Housing, Communities & Local Government, 2018). 3 Strengthening Consumer Redress in the Housing Market. Summary of responses to the consultation and the Government’s response (Ministry of Housing, Communities & Local Government, 2019).

Introduction 341 Figure 12.1 Diagram of the main regulatory, professional and dispute resolution organisations in the property market4 University services Royal Institute of British Architects

New Homes Ombudsman

Residential Landlords Association

Housing Ombudsman

The Association of Residential Letting Agents

National Leasehold Group

Resolver Leasehold Knowledge Partnership

Home Builders Federation

The Property Ombudsman

Shelter

Chartered Institute of Building

Age UK UK Association of Letting Agents

Landlord Lettings agent

Local Government and Social Care Ombudsman

Property Redress Scheme

Council housing Housing Association

New Build

Architects Registration Board

Developer

Freeholder Federation of Master Builders

Local MP/ Councillor

British Property Federation

Who is your issue with?

Solicitor

Builder

Centre for Effective Dispute Resolution

National House Building Council

Financial Ombudsman Service

Auctioneers

Managing agent Architect

Surveyor Citizens Advice

Mortgage provider

National Approved Lettings Scheme

Which? National Housing Federation

Conveyancer

Deposit Protection Services

National Association of Estate Agents

National Trading Standards

My Deposits

Service provider Redress provider Stakeholders and trade bodies Advocacy groups and charities

Estate agent

National Trading Standards Estate Agency Team

MoneySaving Expert

National Landlords Association

Tenancy Deposit Scheme

Generation Rent

Legal Ombudsman

Royal Institution of Chartered Surveyors

Institute of Residential property Management

The reasons for adopting a collaborative approach may include the need to deliver change without using the traditional level of legislation, partly because of lack of Parliamentary time. Some changes might, therefore, be achievable by voluntary means. However, it is heartening to see an ethos of collaboration. The second general feature is that although there have been moves to reform court and tribunal processes, there is currently a major shift to use of Ombudsmen as the principal dispute resolution mechanism. The government funds the Leasehold Advisory Service, which is an independent body that provides 15 minutes of free telephone or written advice on residential leasehold and park homes law. Its website has advice guides on important issues, frequently asked questions, and an archive of decisions by the First-tier Tribunal (Property Chamber).5 Since the Grenfell Tower fire, significant information is provided on fire safety.

4 Reproduced

with thanks to Lewis Shand Smith and David Pilling of Ombudsman Services Limited.

5 www.lease-advice.org/.

342 Property

A. Sector Statistics In 2017 there were an estimated 27.2 million households in England.6 The number of private rented sector households has doubled since 1996/97 and the sector currently accounts for 4.7 million (or 20%) of households.7 The social rented sector accounted for 3.9 million households and the remainder were owner occupiers. There were also an estimated 4.3 million leasehold dwellings in England in 2016/17.8 As at 2019, there were roughly 2.4 million private landlords and 20,000 agents (covering sales, letting and managing).9 Complaints about residential conveyancing have been one of the largest areas for complaints to the Legal Ombudsman for some years.10 The Legal Services Board summarised the scale of residential property transactions in 2012:11 4.5 Taking conveyancing as an example, with 795k residential property transactions in England & Wales in 2010/1112 – assuming a buyer and a seller for each transaction – there were approximately 1.6m individual consumers interacting with the law in relation to this area alone – excluding house sales that fall through and remortgage applications. This would have been 3m in 2006/07. Compare this to the volume of family law proceedings in court where the combined number of proceedings in relation to divorce and judicial separation was 123k, and assuming two parties to each set of proceedings this would mean around 246k individual consumers interacting with the law in this area.13

In December 2017 the Law Commission announced that it was to start a project on residential leasehold and commonhold as part of its 13th Programme of Law Reform. The residential leasehold and commonhold project aims to improve consumer choice, provide greater fairness and make the process of enfranchisement easier, quicker and more cost effective. In February 2018 a call for evidence on commonhold was published with a full consultation due later in the year. The Commission aimed to publish solutions on

6 Families and Households: 2017 (Office for National Statistics, 2018) at www.ons.gov.uk/peoplepopulation andcommunity/birthsdeathsandmarriages/families/bulletins/familiesandhouseholds/2017. 7 Considering the case for a Housing Court A Call for Evidence (Ministry of Housing, Communities & Local Government, 2018) para 1. 8 Estimating the number of leasehold dwellings in England, 2016–17 (Ministry of Housing, Communities and Local Government, 2018). 9 Strengthening Consumer Redress in the Housing Market. Summary of responses to the consultation and the Government’s response (Ministry of Housing, Communities & Local Government, 2019). 10 See Annual Reports of the Legal Ombudsman to 2017/18. Residential conveyancing accounted for around 17.5% of the 7,500 or so complaints that it handled in 2011/12: Losing the plot: Residential conveyancing complaints and their causes (Legal Ombudsman, 2012). 11 Evaluation: How can we measure access to justice for individual consumers? A discussion paper (Legal Services Board, 2012). Having undertaken an extensive review, including the frequency of different legal issues, consumers’ response to legal problems, available technology and delivery of legal services and affordability of legal services, the Legal Services Board proposed measures of access to justice, split into the two broad areas of supply and demand: justice across five dimensions: demand for legal services, paths to justice, use of legal services, breadth of services, geography of services and access to the courts. This followed a wide concept of access to justice adopted by the 2004 Clementi Review, along with a number of dimensions (consumer focus, costs, proximity of supply and a strong legal profession) Sir David Clementi, Review of the Regulatory Framework for Legal Services in England and Wales (2004). 12 Property transactions