While it has been in the headlines of late, the issue of rising personal injury claims and their impact on insurance premiums – and thus on businesses across the country – is nothing new.
Figures from the Public Injuries Assessment Board (PIAB) show that between 2006 and 2017, the number of claims awarded rocketed by 127 per cent to 12,663, while the value of these claims soared by 174 per cent to €315 million.
In 2017, some 33,114 personal injury claims were made through the PIAB, up from 23,000 the year before, while in the courts, some 22,417 personal injury suits were filed that year, a slight increase on 2016.
The case of Fine Gael TD Maria Bailey and the swing at the Dean Hotel in Dublin has thrown it once more into sharp focus.
There has been less focus, however, on the legal profession and how its structure may be encouraging people to take claims they otherwise might not.
First popularised in the US, and latterly in the UK, where it gave rise to personal injury lawyers becoming known as “ambulance chasers” for their apparent propensity to solicit clients at the site of accidents, most personal injury and medical negligence claims are taken on a “no foal, no fee” or “no win, no fee” basis.
By offering such terms, lawyers may find it easier to take on clients, as it means that someone with a claim can appoint a solicitor to represent them, without incurring any expense if they lose.
If the case is settled either through the PIAB, or if it goes to court and the plaintiff, or the person taking the case wins, then at this point they will pay for legal costs incurred out of their award – although if it goes to court they might find costs awarded in their favour, too.
No advertising
In the UK, solicitors have been entitled to offer terms on a “no win, no fee” basis since 1995. Given the proliferation of advertising around it, there have been fears that it has led to a “have-a-go” culture – after all, people may be more inclined to lodge a claim if they don’t fear winding up out of pocket if they don’t succeed.
In Ireland, there are restrictions on how solicitors can offer such services, on the back of the Solicitors (Amendment) Act 2002. These regulations state that advertising legal services “relating to contentious business” such as personal injury disputes, at no cost or at a reduced cost, are not permitted. This includes using expressions such as “no win, no fee’, “no foal no fee”, “free first consultation”, “most cases settled out of court “, etc.
As Minister for Finance Paschal Donohoe recently told the Dáil, these "existing solicitor regulations have helped prevent the type of situation currently pertaining in the UK from evolving to anywhere near the same extent here".
Nonetheless, while advertising the service is not allowed, offering it is not, which gives rise to the peculiar situation whereby solicitors need to communicate that they will offer terms on such a basis, without “advertising” this service.
A quick Google search shows that many personal injury solicitors have gotten around this restriction by using slight variations of these terms on their websites.
When you search for a personal injury lawyer, you might find a section entitled “No Win No Fee Solicitors Explained”, or “No Win No Fee Solicitors Defined”, and a paragraph explaining how the solicitor can’t advertise such terms, but will offer legal services on this basis.
According to the Law Society, while it has issued reprimands to solicitors for breaching its regulations in this respect, there have been no cases of alleged misconduct on such grounds.
Expensive cases = no claims
Proponents of the “no win, no fee approach” argue that given the risks of earning no fees, solicitors will only take on the cases that stand a good chance of winning. Others claim that it serves a broader public good, in that it facilitates those who would otherwise be unable to lodge a claim, given the cost of legal fees.
But if “no win, no fee” is so important in terms of offering access to justice why ban the advertising of it?
Another issue is that, with the heightened risk for the solicitor of winding up with no fee, comes heightened costs. In the US, for example, you can expect to give up more than a third of your award, should you win, in legal fees, while in the UK it’s closer to a quarter. In Ireland, solicitors are prohibited from charging a percentage of an award, but fees do differ.
Opting for a “no win, no fee” approach can sound more attractive for a potential claimant to begin with, but it does make it difficult for the consumer to shop around on legal fees. If they don’t know how much exactly they might be entitled to, then it can be difficult to determine at the outset, when signing a contract.
And “no win, no fee” doesn’t always mean this. If you lose, you might still have to stump up for medical costs or court stamp duty. Not to mind the defendant’s legal costs, which could be substantial. If your claim is settled through the PIAB costs can’t be awarded against you but it is a possibility in court. To soften this potential blow, many solicitors will offer to arrange so-called “After the Event” or legal expense insurance to cover this.
No win, no fee is not the only potential low-cost approach available to consumers. Claimants are free to make a case themselves through the PIAB, while the Legal Aid Board also offers a potentially much cheaper alternative, at around €150-an-hour for a solicitor. A State-funded service, the board offers legal advice to those who might not be able to afford to pay for a lawyer themselves.
However, it’s understood that the vast majority of claims made through PIAB are done so via a solicitor, with only a minority coming through the Legal Aid Board or individually. Of the 18,248 applications for legal services to the board last year, just 261 or 1.4 per cent, related to personal injuries, including medical negligence.
‘Free’ cases = more cases?
There is also the issue of whether or not allowing people to easily make claims allows for the potential abuse of the claims system. As one Dublin-based personal injury firm of solicitors notes on its website, offering services on a no win, no fee basis “allows those who are injured to pursue a claim without the concern of how they will pay their solicitor in advance for their service”.
While this might be true, it also arguably encourages people to make a claim where otherwise they might not have done so.
