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LASPO - CLAUSE 135A HAS HEARTS IN MOUTH

Personal injury professionals have had their fair share of scary moments during the past few years. This month, we review the progress of legislation currently shaping the industry and take a look at some of the issues which have had some drawing deep breaths.

The current round of reforms and proposals comprising the Legal Aid, Sentencing and Punishment of Offenders Bill will shortly break for Easter, but not before putting the frighteners on a few people.

Throughout March, the LASPO Bill spent time with its third reading by the House of Lords, whose members sometimes appear the only ones interested in tabling amendments or voting down ideas from their colleagues in 'The Other Place'.

Premextra has followed its course carefully, noting the force with which Lords have fought back against some of its proposals. By the end of the month, the number of government defeats had almost gone into double figures and were LASPO not about to move back to the Commons you would not have bet against its eventual failure.

However, for personal injury professionals and the insurance sector this is game-changing legislation; a fact illustrated by the frenzy of activity when one proposed amendment seemed like it could be 'backdating' one of the new law's key plans - recoverability of success fees.  

The now infamous 'clause 135a' was introduced by Justice Minister Lord McNally on 12th March and subsequently blogged about and reported on, as many thought it could mean all conditional fee agreements currently in play will only be granted recoverability if the claim is settled and a costs order obtained before April 2013.

"Well, at this point those of a claimant disposition may want to make sure they are sitting down before reading further," wrote Simon Gibbs of Gibbs Wyatt Stone. "Now, whatever the serious flaws to the current system, to retrospectively end recoverability would be surprising to all concerned."

In the space of a working day, commentators understandably tweeted, blogged and retweeted the news, only for John Hyde eventually to report in the Law Society Gazette that the Ministry of Justice itself had stepped in to quell the panic. "The MoJ has now clarified that amendment 135A is aimed solely at bringing collective conditional fee agreements (CCFAs) into line with plans for individual CFAs," he wrote. "A MoJ spokeswoman said cases launched on or before 31 March 2013 would allow claimants to recover success fees from losing defendants. After that date the government's reforms allow for up to 25% of potential damages payments to cover that expense."

With the legislation heading towards the home straight, Mark Savill, partner at Lyons Davidson tells Premextra the question remains as to whether the government will accept the over-riding principle of access to justice that the Lords voted in, or whether they will reverse this and the other amendments on grounds of cost.

"The debate in the Lords was disappointing for the insurance industry in that many of the interesting elements around costs were not debated despite being tabled as amendments.  There was also a rudimentary reaction to the costs of ATE within the legal process without the risk context of some of the headline grabbling premium examples," he says.

"Despite the discussion on costs, funding and ATE premiums there was little if any mention of the place of BTE insurance; the government and the industry need to pick up and examine this as part of the legal service debate.

"At the end of the Report stage it is clear that without any other solutions coming from within the industry, the real impact is going to come from the consultation process going on now outside Parliament on changes to the Portal and the level of legal fees."