Speeches and Papers
Steve Mark
NSW Commissioner for Legal Services
Medicine & Law Conference 2001
Medina Grand, 189 Queen Street, Melbourne
Friday 4 May 2001
In mid-2000 I was paid a visit by representatives of one of the medical colleges who were seeking my help in understanding lawyers relationships with their clients.
In short, I was told that the medical profession had recently performed some preliminary research which disclosed that people who lodged workers compensation or personal injury claims, got sicker, stayed sicker longer and were less likely to fully recover from their injuries than people who did not lodge claims. This had brought them into direct conflict with their Hippocratic oath - that the processes within which the medical profession were so intrinsically involved concerning personal injuries was not a healing one.
Apparently, after some consideration, the Plaintiff’s Lawyers Association was contacted with a view to discover whether the legal profession, also intrinsically involved in the process, shared these medical practitioner’s concern over the well being of the injured, and to explore ways of attempting to systemically address the problem.
The lawyer contacted, upon being informed of the preliminary research done by the medical profession, and with the proposition that perhaps something should be done to address the problem was not interested. He apparently said, “our job is not to make the injured well, but to get them the greatest amount of compensation for their injuries possible.”
The representatives of the medical profession that approached me were trying to explore ways to open up a dialogue with the legal profession, and wanted my advice on how best to achieve that end.
I began by explaining the fiduciary relationship that exists between a lawyer and their client and the duties a lawyer has to the court, the client and the community. Also, and perhaps inevitably, the adversarial nature of the legal system was discussed and the role that the medical profession, the legal profession and the insurance industry play within it. It was thought that all parties would benefit from open discussion about the issues they saw as important in attempting to reform or even fully understand the system involving claims of motor vehicle or work related injuries.
Subsequently, a conference was held in October 2000 involving the medical profession, the legal profession and the insurance industry at which I gave a short paper concerning what I saw as the problems with the present system and a simplistic model which would address these problems - a perspective gained from my role as the Legal Services Commissioner in New South Wales where I receive all complaints about the legal profession. It was a beginning.
What I wish to do today is to restate some of the background information I presented at that conference and again mention a model of dealing with personal injuries from the perspective of the injured rather than, as so often happens, from the specific perspectives of the professions, the insurance industry or the Government.
BACKGROUND OF COMPLAINTS
As stated, I come from the perspective of one who takes complaints against legal practitioners. The Office of the Legal Services Commissioner receives complaints against solicitors, barristers and licensed conveyancers in New South Wales.
Of course, not all legal practitioners attract complaints and those lodging complaints against legal practitioners often lodge complaints because of a particular concern, or they come from a particular perspective. However, the pool of complaints against practitioners dealing with personal injuries that flow from work related accidents or from motor vehicle accidents must be a good source of at least general expressions of consumer concern about the process.
My Office receives complaints against lawyers acting for plaintiffs and those acting for defendants, but the majority we receive are against plaintiff lawyers. In the 1999/2000 financial year, 17.5 percent of our complaints against legal practitioners involved personal injuries or workers compensation matters (out of a total of approximately 3,000 complaints all up) and 18.7 percent of just under 9,089 telephone enquiries in that year dealt with concerns related to personal injuries litigation.
Types Of Complaints Received
Types of complaints that we receive concerning personal injuries include the following:
- “no win no fee” advertising
- being pressured to settle
- costs
- communication
- delay
“No Win No Fee”
Many solicitors who practice in the area of personal injuries will take cases on a speculative basis or, “no win no fee” where the practitioner states that they will only receive a fee if their client wins the case.
The problem we have in this area is that some of these practitioners advertise the fact that they will take on such cases without mentioning that the client will most likely be liable to pay the solicitor’s disbursements or out-of-pocket expenses (which can be substantial as they can include medical reports, barristers fees or other expert reports), or the liability the client may find themselves faced with should they lose the case. Also, often not discussed in these arrangements is what liability for costs the client will face if the case is settled out of court, which occurs in the majority of cases.
The OLSC tends to approach complaints in this area on the basis that the client is entitled to believe what the solicitor says in their advertising and therefore, it is important for practitioners to be cautious about what they tell their clients their liability might actually be for costs in a speculative arrangement.
Since 1994, legal practitioners in New South Wales have been required to disclose their costs to potential clients, as that year saw the abolition of scale fees in most areas of law. However, concerns have been expressed about the efficacy of disclosure by a solicitor to a client who is being taken on on a “no win no fee” basis. Obviously, if a client is told that they will not have to worry about paying any fees if they are unsuccessful, or that they have absolutely nothing to loose, they have little incentive to worry about the level of fees the legal practitioners will be charging them. However, the defendants insurer may well have a concern. A question could then be asked, in these sorts of cases, should disclosure by the solicitor be to the insurer rather than to their client?
Another concern about disclosure is that the client who accepts a “no win no fee” arrangement with a solicitor may not be aware of the amount of disbursements that will actually be charged. It is my view that the majority of small disbursements charged, for example photocopying, telephone, faxes, courier fees and travel should be absorbed into the solicitors profit costs in their hourly rate. Particular items such as barristers fees or medical or other expert reports should be negotiated as single items with the client so that they are aware of the costs of each of those items.
Perhaps a more esoteric concern could be raised here as well. Over the past few decades the proliferation of areas in which members of our society can seek damages as a result of accident or injury has grown exponentially. It may be that we now expect to be compensated by third parties when we suffer any injury whatsoever. Is it therefore an incentive for people to litigate where legal practitioners offer their services to personal injury victims on a “no win no fee” basis?
Recently, there have been proposals floated in New South Wales for the banning of any advertising in personal injury cases on a “no win no fee” basis. Whereas this may have grave difficulties in being accepted by the ACCC, it also in my view, does not address the underlying concerns, and would not change the way lawyers pursue these cases or communicate with their clients.
Pressure to settle
Consumers of legal services involved in personal injuries litigation cite pressure to settle as one of the most common complaints raised against barristers and solicitors. We receive complaints from consumers, who had been told, particularly by their solicitors that they had a “good case” and could expect a large settlement to be subsequently told on the stairs of the court, or after seeing the opposition’s evidence, that they might lose their case. This occurrence could come four, five or more years after the commencement of their action. In such instances, it is almost always the case that the consumer has simply not been properly informed about the possible outcomes of their case.
It can be very hard for a consumer who has been told that they might get, say, $600,000.00 at the beginning of a case to now be advised during the pressure of a court hearing that they should accept an offer of less than $100,000.00 as full settlement of their claim. This can be particularly confronting when they are informed that they could lose their case and be liable for the other side’s costs if they proceed to court which could result in them losing everything, including their home. To make matters even worse, they are often given a very limited amount of time to make this decision which could affect their life dramatically.
We also receive complaints that legal practitioners have informed their client that they would refuse to continue with the case if the client ignores the lawyer’s advice to settle and still wishes to proceed to court. Clients feel that this is a type of blackmail - that they are being abandoned in their wish to continue running their case and have their day in court. Lawyers often feel incredibly frustrated with their clients failure to understand the dilemma that they find themselves in, facing the real prospect of losing the case and having to pay the other side’s costs if they fail to take the lawyer’s advice to settle.
Popular belief is that courts deliver justice, and therefore, it is not surprising that consumers often want their day in court to achieve this end. Without strong communication skills, legal practitioners may lead their client to believe that there is some sort of conspiracy between their lawyers and the lawyers acting for the insurance company, colluding to convince the client to drop their action. This almost always leads to complaints to my Office.
COSTS
Disclosure
It is a major concern of this Office that a significant percentage of the legal profession appear not to be disclosing their costs. Costs disclosure, which was brought in under the 1994 amendments to the NSW Legal Profession Act is a process by which a lawyer must disclose an estimate of their costs for any particular action, but if such an estimate is impossible to give, they must disclose the means of determining their costs (usually their hourly rate) as well as any departures from the original estimate or significant increases along the way.
Failure to disclose can amount to professional misconduct under the Legal Profession Act, but disclosure to a consumer of anticipated costs by their lawyers is largely irrelevant where the client has obtained the lawyer on a “no win no fee” scheme. The consumer has been told that they have nothing to lose by commencing litigation as the lawyer will only be paid out of the proceeds of settlement if the client wins, but if the client loses there will be no cost to pay (other than that mentioned above in relation to disbursements or the other side’s costs). Indeed, it will be the insurance company that will be likely to pay the lions share of the solicitors costs.
Solicitor/Client v Party/Party Costs
One of the biggest areas of confusion, and as a result an area of complaint to this Office, concerns the problem that many members of the community have in understanding the distinction between solicitor/client costs and party/party costs. While this is a particularly difficult area, complaints to this Office show that insufficient numbers of practitioners are taking the time to explain to their clients how costs work in personal injuries cases. Clients do not understand the distinction between solicitor/client and party/party costs and certainly get confused when they think that their matter has been settled - “including costs” - which leads them to believe that they should pay no costs, and yet they receive a sizeable reduction in the amount of the settlement that they can retain based on the difference between solicitor/client costs and party/party costs.
An additional problem here is that many consumers find the fact that their solicitor, who has already received his fees by retaining his solicitor/client costs from the settlement funds, is then charged with the responsibility of negotiating for the consumer’s party/party costs from the other side. Consumers have complained to this Office that they feel that the solicitor has no incentive to do the best job for them in obtaining party/party costs because the solicitor has already received their fee. This perception can be exacerbated by the fact that in extreme cases years can pass before the party/party costs are finalised.
CONDITIONAL AGREEMENTS
When a legal practitioner takes on a client’s case in a personal injuries matter, on a “no win no fee” basis, the NSW Legal Profession Act 1987 allows the practitioner to claim a 25 percent “uplift” in fees if the client is successful. This is a form of reward to the solicitor for carrying the client for what might be a number of years in pursuing their rights which they would not otherwise be able to pursue.
The experience at the OLSC (admittedly a skewed sample of the entire profession as we just deal with the brickbats and not the bouquets) is that the uplift is regularly claimed even in situations where liability was never at issue. We think this is inappropriate and concur with the findings of various other investigation and research projects which have suggested that this practice should be curtailed.
COMMUNICATION
Problems of poor communication or misunderstood communication are at the heart of perhaps 80 percent of the complaints that are received by my Office. In relation to personal injuries litigation, most of the communication complaints we receive are about people being incredibly confused about the process they are going through. In addition, we get many complaints about costs which have been explored, at least to some extent, above. Much of my Office’s time is spent explaining processes that the individual consumer is engaged in.
It is our view that there is a better way of getting this information to the consumer. What we suggest is that a checklist of requirements be created in consultation between the legal profession and the insurance industry as to what occurs in a common personal injuries matter. This could then be distributed to consumers by both legal practitioners and insurance companies, where appropriate.
DELAY
Perhaps the biggest area of concern expressed to my Office by people suffering personal injuries and caught up in the legal system in search of remedies is the amount of time that the process takes. It is simply inhuman to expect a person to attain any sense of self worth or positive attitude when years can pass after an injury before any compensation becomes available, notwithstanding the minuscule amount the statutory schemes offer by way of interim payment.
Complainant after complainant pass through my Office stating that they cannot get any information for months at a time out of their solicitor or the insurance company acting for the other side. We hear horror stories of the destruction caused to relationships, the physical and mental health of the injured and to the community generally by the huge delays involved in compensating people for their injuries.
In addition, we are often told that the compensation desired by the injured was not necessarily financial in nature. Many simply wanted to get back to work or otherwise try to regain their identity as contributing members of society.
The most often heard comment by complainants to my Office in this area is, “if I only knew what I was going to go through, I would have never lodged a claim.” It is for this reason that it is of no surprise to me whatsoever that the medical professions research now shows that the process involved in motor vehicle and work related injury cases makes people sick. I am only surprised that it has taken them so long to do the research which confirms what most others know.
SO WHAT HAVE WE AT THE OLSC BEEN ABLE TO DEDUCE FROM THE COMPLAINTS WE HAVE RECEIVED?
First of all, consumers of legal services in the personal injuries arena (including motor vehicle and workers compensation cases), often complain to us of being uninformed and feel uninvolved in the process. We hear comments that the plaintiff often feels the most insignificant person in the whole process, particularly where that process involves litigation. Consumers find it difficult to get easy-to-understand information about the process, have difficulty dealing with their legal advisers and the jargon they often use and feel that they are unclear as to who is on their side in the adversarial world they find themselves in.
We hear concerns expressed about having to visit many doctors for expert medical opinion, some being their own treating doctors, and some being medical specialists that the insurer requires them to visit. They are confused about the role that these doctors play and whether or not they are partisan. Many of those who complain to us state that they did not really wish to pursue litigation, they only wished to return to work or otherwise get on with their lives. We have also had concerns expressed to us about people having problems with rehabilitation providers who they feel have over-serviced them by giving them an irrelevant treatment for perceived injuries.
Another issue that has been raised with my Office is that there appears to be no real incentive for any of the parties involved in personal injuries litigation for early settlement. Notwithstanding the 1998 amendments to the NSW Motor Accidents Act which put in place procedures which encouraged early settlement and the recently proposed changes to the WorkCover Scheme in New South Wales, it is still my view that there are few real incentives towards that goal. The medical profession is paid for giving expert reports on the injuries of an individual (from both the plaintiff and defendants perspective), the legal profession is paid by the hour and the insurance industry has its money in other investments which must encourage the retention of that money for as long as possible rather than paying settlements early. While these rather simplistic views may be arguable, it still seems that there is little real incentive for the parties to settle early.
Perhaps the most pressing concern about personal injuries litigation is the point of view from which it emanates, and that is an adversarial legal system. Both consumers and legal practitioners have been enculturated to expect adversarialism in the process. Particularly where legal practitioners advertise a “no win no fee” arrangement for handling personal injuries litigation, it suggests that there is little to lose for the consumer bringing an action.
Legal practitioners often believe that their primary duty lies to their client, when actually that duty lies to the court (and through that duty to the court, a duty to the community). As lawyers are well-skilled in adversarial tactics, they perceive their duty to the client as requiring them to be aggressive in their dealings with the insurer, so as to obtain the best result for their client. It may well be the case that insurers react to this aggression also expecting adversarialism and therefore the “mind set” is one conducive to litigation and not settlement. The medical profession also gets caught up in this adversarialism by providing medical assessments at the request of one or the other of the two sides, sometimes becoming entrenched in their views.
Legal practitioners could find themselves on the receiving end of a complaint alleging professional misconduct against them for not doing their very best for their client. It is our view at the OLSC that the adversarial mentality in this jurisdiction tends to encourage legal practitioners to treat each matter that comes to them as if it will result in litigation where on most indicators the majority of cases settle and do not litigate. This is costly, time wasting and destructive to the injured party.
Recent amendments to motor accidents legislation and proposed changes to the NSW Workers Compensation Scheme go someway towards resolving these adversarial problems, but do not, in my view, address the underlying culture in both the legal profession and the insurance industry that still denies consumers their dignity and a role to play within the process, and promotes adversarialism and resultant litigation.
CONCLUSIONS
As mentioned at the beginning of this paper, the OLSC receives complaints about legal practitioners in New South Wales. One of the significant areas of complaint has been in relation to personal injuries and workers compensation cases. What I have attempted to do in this short paper is to identify some of the areas in which complaints are lodged, and the reasons behind them. I have also made a number of statements about what I consider to be the “mind set” or culture that gives rise to the number of the complaints that we receive. What I would like to attempt to do now, is to sketch out a very brief scenario about how personal injuries can be better handled to the benefit of all.
Firstly, it appears to me that the prime cultural barrier to a smooth personal injuries resolution process is the fact that the present system is based on an adversarial model. We simply can no longer afford to treat each personal injury or workers compensation cases as if it is being prepared for litigation. Indeed, it seems imperative that whatever process is established, its focus should be to avoid litigation to the extent it is humanly possible to do so. Estimates of the percentage of claims which settle, as distinct from those which proceed to litigation range from 30 percent to 80 percent with some as high as 95 percent. With these figures alone, it seems ridiculous to approach each personal injuries claim as if it will ultimately result in litigation.
Notwithstanding the changes to the Motor Accidents Act and the Workers Compensation Scheme in New South Wales which attempt to encourage early settlement, it is necessary to increase the “incentives” to that end. Perhaps it should be a disciplinary matter for the legal profession not to settle early. However, it is difficult to envisage how such a disciplinary offence would work in practice. Similarly, it might be possible to make bias in medical reports to be a disciplinary offence within the medical profession. This may go some way to reduce the plaintiff doctor/defendant doctor syndrome.
However, rather than concentrating on the negatives, we should seriously consider a fundamental shift in the way personal injuries resolution could be achieved.
It is imperative that the focus throughout the process be on the injured party and their needs, and not on the adversarial stances of the legal profession and the insurance industry. A process which focussed on attempting to resolve the “problem” which has arisen as a result of a personal injury, should be foremost in the system. We need a system which will take a problem solving approach as seen through the eyes of the injured party. Careful exploration of the needs of the injured party and how they can be put back, as close as possible, to the situation they were in prior to the injury, should be the philosophical focus of the process.
It seems to me that this is unlikely to be achieved where the first person an injured party often sees is a lawyer charged with the responsibility of doing the best job that they can for their client, in an adversarial system, and where the practitioner is prepared to take the case on on a “no win no fee” basis.
However, it is essential to retain lawyers in the process in doing what they do best, which is to look after the rights of the injured person. This role of advice, assistance and support does not necessarily have to be performed within an adversarial model. It could occur where the lawyer advises their client through a process of mediation or dispute resolution as is now becoming more and more common in all jurisdictions of legal practice.
It is also hard to imagine how the system will be fundamentally improved while the insurance industry can benefit from stringing settlements out or making unrealistically low settlement offers in the hope that a certain percentage of those offers will be accepted due to the stress and strain of proceeding down the adversarial path. This area of insurance practice needs more direct regulation.
I would therefore like to sketch out a very simplistic model which would benefit immensely by more thought and work from those interested in the reform of this area. The model that I would propose is a problem solving model based on the principles of mediation and not those of an adversarial legal system.
The proposed model would contain the following elements:
- An agency be established to oversee the process which would work within a problem solving approach focussing on the “problem” experienced by the injured party.
- This authority would need to involve representatives of the medical profession, the legal profession and the insurance industry.
- This would be the first port of call for a person injured either through a motor vehicle accident or the result of a workplace accident.
- Upon attendance at the agency the injured person would be assigned a lawyer as an adviser or guide either from staff members available in the agency or on referral to the private profession. This individual would act on request by the injured party to explain the procedures and assist in the resolution of the problem caused by the person’s injury. The primary purpose of the adviser would be to ensure that the injured person’s rights are protected.
- The first task of the agency would be to work with the injured person to determine what the definition of the actual problem is. This would of course have a medical component, but it may also have psychological, developmental or other work related components that would need to be addressed. The intention would be to involve the injured party in determining what was actually necessary to put him or her in a position as close as possible to the one that they were in prior to their injury. This might include returning to work, being retrained, or just getting on with their life as early as possible.
- Litigation would have to be the last resort, used only in exceptional cases and not seen as the first option.
- The agency would bring the stakeholders (medical professionals, legal advisers, insurance industry representatives and others as required) together at the beginning of the process to determine what role each will play in the resolution process.
- The process would next involve the representatives of the three bodies determining how the resolution process should be designed. For example, the process may need to determine on what criteria the parties would agree that the injuries sustained might have stabilised. This could involve a decision on how many medical reports would be required and from which doctors they would be obtained. A neutral list of doctors should be compiled by the agency supplied by the medical profession. Disciplinary sanctions should be provided where doctors established bias to either the injured party or the traditional defendants.
- Mediation would ensue immediately upon liability being admitted by the defendant or their insurer. In cases where liability was not admitted at an early stage, the agency would determine whether a mediation process could be adopted to establish liability. Litigation over liability should be a last resort available only after all other processes of mediation and arbitration had been exhausted.
- Fair compensation in terms of 75 percent of the injured person’s salary or other benefits should be made available to the injured party while the process continues.
- Compensation available to the injured party should not be limited to financial compensation, but include retraining and assistance to get back into the workforce whenever possible.
- Where compensation was either exclusively or in part financial, the quantum should be determined through mediation with the legal adviser or guide looking after the interests of the injured party.
- As the process would be driven by the needs of the injured party, the process briefly outlined above would undoubtedly be much quicker than the present system of preparing for adversarial litigation.
- The agency would collapse much of the responsibility in New South Wales of the Motor Accidents Authority and the WorkCover Authority with a resultant savings to the State.
- The agency must also fundamentally address the issues of risk management in the community so as to reduce the incidence of workplace or motor vehicle accidents, such should be the main focus of the scheme, and be properly resourced.
- The accountability of this agency would be determined on approval ratings by injured parties done either by way of exit survey or subsequent study. In addition, there must be a reduction in the overall cost to society of the scheme for this scheme to be successful. To date, I am not aware of any costing of present schemes which look at the societal cost of injuries for motor vehicles or work related accidents in a holistic way. Research would need to be taken on the cost and impact of the current scheme that exists now prior to this agency coming into being which would allow comparisons in the future. This is a long term project which would look at the cost to society of injuries which are not resolved. The present scheme leaves many such injuries either unresolved or exacerbated by the process, at a presently undetermined cost to society.
This short outline would be improved dramatically by interested parties applying their expertise and time to further development of some of the ideas presented here.
Finally, real reform of the personal injuries area with the resultant reduction in costs of green slips in the Compulsory Third Party Schemes and of costs to employers and society for the blow out in WorkCover costs will not occur unless we fundamentally change the system within which our efforts of reform are directed. The present system is based on adversarialism, litigation and a focus on the interests of the legal, insurance and medical professions rather than being driven by the needs and perceptions of the injured party.
As John Della Bosca, New South Wales State Minister for Industrial Relations was quoted as saying in a recent newspaper article in relation to work related injuries:
“The system does not exist for politicians, doctors, lawyers or insurance companies; it exists to help people who are injured at work and I am determined to make them the priority.”
I share the Minister’s concern but doubt that fundamental changes will occur without a basic rethink of the adversarial nature of the present system.
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