Concerns over non-specialist firms moving into clinical negligence

Date: 04/08/2014

Hospital corridor

Huge changes to the personal injury (PI) market post-LASPO (Legal Aid, Sentencing and Punishment of Offenders Act) are resulting in a worrying trend in clinical negligence work that could have damaging consequences for the legal profession and drive up insurance premiums in the long term. Richard Whale, Sales Departmental Manager for DAS LawAssist, and Lesley Graves, Managing Director at Citadel Law, look at these changes and the effects they are having.

What are the changes?

New fixed-costs regulations were introduced in April last year, but for many law firms it is only now that the real impact is beginning to bite. PI cases brought prior to April 2013 are being settled, and firms are finding themselves with a new caseload of claims covered by fixed-costs rules. With these new cases failing to bring in the necessary fee income, many of the traditional ‘trip and slip’ PI firms are looking to diversify to shore up revenues. They see running complex clinical negligence claims as a good option given that this work is not covered by the same fixed-costs rules.

Why are problems arising?

The problem is that many of these firms simply don’t have the expertise required. These cases can be very different to standard PI cases and can include complex medical conditions such as birth injury, spinal cord damage and brain injury. They require specialist medical knowledge and generally work on much longer timescales.

Audits of numerous firms’ caseloads by consulting law firm Citadel Law have shown that many are putting themselves and their clients at risk. Non-specialists can risk losing or under-settling complex clinical negligence cases. This means letting down vulnerable clients who may require significant financial support and will be unaware they are not instructing experts in the field. Proper governance and risk management are vital to the success of today’s solicitors, but, by taking on cases outside their area of expertise, firms are opening themselves up to the risk of regulatory breaches, professional negligence claims, bad press and ultimately business failure.

This is not just a concern for the firms themselves. There are potential consequences for the profession as a whole. Poor quality service to clients and any consequent rise in professional negligence claims cast the profession in a bad light and lead to a lack of trust. We are already seeing negative headlines associated with solicitors overcharging and the cost of the NHS clinical negligence bill. Poor management of clinical negligence cases will only exacerbate this.

How does this affect the ATE insurance industry?

We also risk rising ATE insurance premiums. These firms are looking to their insurers to provide ATE insurance to cover clinical negligence cases. They are all looking for immediate, easily accessed insurance under delegated authority from day one. Not all insurance firms will insure non-specialists on this basis but there will always be others that will. As they take on extra risk they will find themselves paying out more often for lost cases and recouping less due to under-settlement. In the end we are likely to see the fallout in terms of rising premiums, potentially damaging to those insurers’ existing panel of firms who find themselves being asked to pay more because of other firms’ poor records.

Ongoing advice

Traditional PI firms need to think carefully about diversifying into clinical negligence and, if they decide to go ahead, should consider how they will manage this process to mitigate the considerable risks. If they decide this is the route for them, they will need to look at staffing and whether they need to bring in solicitors and other personnel with the necessary technical skills.

Risk management and good governance are key, and firms new to clinical negligence work will need to ensure they have the right professional indemnity cover and potentially work with ATE providers to conduct more in-depth assessments of cases before they will be insured. They will need to supervise both their staff and client files effectively to ensure cases are valued correctly, that service levels are adhered to and that the level of technical advice given is appropriate.

That such firms take these steps is critical to the success of their businesses, their clients and the profession as a whole.

Comment from DAS Law

“From a legal practitioner’s perspective, clinical negligence cases are technically complex cases. Often separate expert evidence is needed to establish breach of duty and causation. Clinical negligence cases are also far more likely to have limitation issues, since it is not uncommon for a claimant to discover that they have been the victim of a negligent clinical act several years after the event – the effects could take years to manifest themselves, for example with delayed diagnosis of a slow-growing cancerous tumour.

Firms who are not experienced in clinical negligence work will find themselves up against specialist defendant firms of solicitors who are geared up to defending these cases and will use tactical policies to deflect cases where they can - for example, asserting a case is being brought out of time.

Gaining recognised specialist accreditation, such as the Law Society’s Clinical Negligence panel accreditation, will help firms to differentiate themselves as being knowledgeable in this area of law and clients should seek such reassurance of a firm’s expertise.”

Follow Company: