Costs and NIHL

Recent pronouncements by the ABI have challenged the amount of costs that insurers are paying to solicitors firms who represent claimants suffering from NIHL/tinnitus. The view expressed by the ABI is that insurers on average are paying £3 in legal costs for every £1 that they pay in compensation to the afflicted person.

These statements should be seen as part of the ongoing programme of the insurance industry to reduce legal costs across the board readily observable in recent years, with the creation of the Portal, the reduction in Portal costs, the introduction of fixed costs in some species of Fast Track claims and the continuing pressure on guideline hourly rates.

In turn it has been observable that despite the decline of many heavy industries the number of deafness claims coming forward do not seem to have slowed, with numerous claims coming from industries very far removed from mining, boiler making or shipbuilding which featured so heavily in the cases of 30 years ago.

A further point of significance is that many of the claims presented these days seem to be at the sub 10 DBA level of hearing loss and some just above the level of impairment that might be contended to be de minimis.

No doubt there is a thesis begging to be written on the correlation between the number of claims being presented and the rise of the claims management industry now respectably clothed and regulated by the provisions of the Compensation Act 2006.

The combination of a desire to cut costs and the rise in claims is pointing towards a clash or more accurately series of clashes as the respective sides lock horns on what are reasonable and proportionate costs to recover for a standard NIHL/deafness claim.

The starting point for all NIHL/tinnitus claims these days is potentially the Pre-action Protocol for Low Value Personal Injury (Employers Liability and Public Liability) Claims. I say potentially, because although this Protocol includes within its scope disease claims, such claims fall outside the scope of the Protocol where there is more than one defendant, and in NIHL/tinnitus cases it is very common to have more than one potential defendant.

Assuming that the case proceeds within the Protocol, costs are fixed for a claim litigated outside London and worth less than £10,000 at £300 for stage 1, £600 for stage 2 and a further £500 for stage 3, plus VAT plus reasonable disbursements falling within 45.19. More valuable claims worth more than £10,000 attract higher fees but these are still a fraction of the value of the claim, adding a further £700 plus VAT at stage 2.

If a case within the Protocol, falls outside it for whatever reason, and there is no argument to a paying party within rule 45.24 to point to unreasonable behaviour on the part of a claimant, costs will be at large. This is because of the exclusion of disease claims from Fast Track fixed costs in rule 45.29A. There is no indication that this side of the election in May 2015 there is any appetite to extend the matrix of fixed costs to disease claims, and probably little point so long as the Protocol excludes multiple defendant claims.

So with costs at large, it can safely be predicted that the battleground will focus on a number of key issues which are regularly raised in points of dispute.

The first is proportionality. Given the new test of proportionality and the requirement that there be a reasonable relationship between the sum recovered and costs, if compensation is paid in the sum of £3000, paying parties will surely argue that costs should not exceed or greatly exceed £3000 pointing no doubt to the levels of costs prescribed for other types of personal injury claim by the fixed costs regime.

The second relates to the issue of common costs in deafness claims. Where a claimant brings a claim against 6 defendants and loses/discontinues against 5, why he should be able to recover all his common costs as well as his individual costs against the unlucky sixth defendant? The law on division and apportionment and the discretion of the court to make a “special order” might be scrutinised.

The third relates to the grade of fee earner used and in turn the hourly rates charged. The results of the Foskett review have been discussed elsewhere on this blog: but a move to explain or emphasise how these cases are conducted by grade E fee earners with a faithful computerised companion telling them what to do and which buttons to press can be anticipated. This will in turn bode ill for the use of counsel to settle statements of case or other paperwork, at least in the run of the mill case.

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