By John Durbin, Senior Business Development Manager
(Estimated reading time: 4 minutes 27 seconds)
It seems amazing to think that we are 10 years on from The Jackson Reforms and LASPO – the Legal Aid, Sentencing and Punishment of Offenders Act, which came into force in April 2013. In advance of some significant amendments to the CPR, we take a look back at the key moments.
Back then, up to 2 months before LASPO was due to kick in, there was plenty of uncertainty; solicitors trying to get clients signed up to CFAs and secure ATE insurance before the deadline. This included cases where legal aid was still available but likely to run out past April 2013. This saw an influx of cases insured; in the first 3 months of 2013, Temple saw 19,640 policies incepted, which at the time was a 360% increase on the same period the previous year.
When LASPO started, many insurers (and law firms) felt ‘cheap was best’ when it came to ATE. The general consensus was, because clients would have to pay for their ATE premium, they would baulk at this concept and shop around for the best price. This initially created a ‘race to the bottom’ amongst insurers, which included a certain £1 ATE policy being introduced.
It was not long before this approach faltered; many insurers were unable to make a profit and had to cut their cloth accordingly. The result was an increase in premiums as well as some law firms deemed to be ‘underperforming’ and therefore, looking for a new insurer… In reality, many clients felt the pre-LASPO approach had been ‘too good to be true’ and there was actually little push back from clients when they were required to pay for their premium.
At Temple, we knew that sustainability of the premium and products would be key, and this was our preferred stance – not a ‘land grab’ approach taken by others. We applied a ‘quality over quantity’ criteria when selecting our business partners – this allowed us to price our premiums with foresight.
10 years on, we stand by our approach, which is supported by the 50+ coverholders who have continued to use Temple from April ’13 to the present day. In addition, Temple was subsequently able to reduce certain premiums in June 2020. This not only ensured, but it proved we have the client’s best interests in mind.
LASPO also brought about a new set of challenges from the defendants. With clinical negligence cases still being allowed a proportion of the premium to be recovered, it was not long before a precedent would need to be set. Temple was the first insurer to defend its recoverable premium at the Senior Courts Costs Office (SCCO) and achieved a positive recovery in the case of Nokes. Briefly, Master Leonard concluded in that matter that insurers must be able to offer a compliant product which is realistic and competitive. He advised that on the evidence, Temple had come up with a compliant, competitive product which the claimant has accepted.
This case, alongside judgment in the more recent West & Demouilpied Vs Stockport NHS Foundation Trust (2019), have supported ATE insurers in the way recoverable premiums are calculated and made the overall costs recovery process easier.
As we approached 2017, a large proportion of pre LASPO cases (where 100% success fees were allowed) had settled and, with post-LASPO CFA’s now allowing a maximum 25% success fee, law firms profit margins were being squeezed and they began to seek solutions to offset client disbursements. Given that ATE insurance covers client disbursements, joining the two together looked like the obvious way forward.
This prompted an evolution of ATE products where a disbursement funding solution was included, either direct from the insurer or a third-party funder. We suddenly began to see switch away from the cheapest premiums being the primary focus of the ATE product; but also the simplicity (and price) of any disbursement funding solution offered.
Temple had recognised this need in 2016 and are proud to say we were the first ATE insurer to offer a disbursement funding solution to the market. As the market evolved, so have our products; in doing so, we have created a market-leading offering which can be tailored to individual law firms.
So what next?
Almost ironically, 10 years on and April 2023 should see substantial change and a contradiction to The Jackson Reforms and LASPO. This will see Qualified One-Way Costs Shifting, one of the major changes introduced in April ’13, likely to receive a revamp thanks to amendments to the CPR.
This, together with the much-discussed Fixed Recoverable Costs (FRC) – now predicted to come into force in October 2023 – will once again cause uncertainty in the market and force ATE insurers to review and potentially have to develop new products.
However, and to end on a positive note, Temple has reviewed its current products in line with the CPR changes and can confirm there is no reason for us to amend our policies. We can also confirm that work is going on behind the scenes looking at the impact FRC will have and what possible new products we can create.
In summary, whilst an insurable risk remains, Temple will continue to lead the way in the ATE market.
We want to hear from you. The future for claimant clinical negligence holds challenges such as fixed costs and challenges to Qualified One Way Costs Shifting. To share your thoughts please email firstname.lastname@example.org or call 01483 577877.
John joined Temple in 2022 and brings with him over 19 years’ experience in the legal expenses industry, with 17 of these specifically relating to ATE insurance.
As Senior Business Development Manager, John’s role has him covering the breadth of the UK, meeting with Temple’s existing business partners as well as establishing new business relationships. Whilst his primary focus is growing and developing our clinical negligence and personal injury offerings, which can include disbursement funding, he is also very able to discuss Temple’s commercial and BTE products.
John is well known in the industry for making business partners feel at ease when they meet. He prides himself on understanding customers’ needs and being able to work collaboratively, which frequently results in established working relationships for many years.
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