Personal injury claims in Scotland are set up in such a way that, if liability for the accident and injuries is admitted, in most cases it will then be possible to go on to negotiate a settlement of the claim without the need for court action.
The rules of the Scottish Compulsory Pre-action Protocol provide a way to calculate the fee which will be due to the solicitor based on the amount of compensation that is agreed. The rules also provide that the insurer will meet “all reasonable outlays”.
The sorts of “outlays” that are envisaged include: the cost of medical reports; police accident reports; and professional photographs taken to show the extent of any residual scarring stop
In most cases, calculation of the fee and recovery of the outlays related to an agreed amount of compensation is a formality. But sometimes an insurer will object to a particular outlay for some reason and in this article we will discuss an experience we had recently where insurers offered only a partial settlement of one of the outlays we had incurred and what happened as a result.
Background
We had a client who had been injured in a road traffic accident in Aberdeenshire. Liability for the accident was admitted to the extent of 100% and it was a binding admission. In other words, our client should recover “full” compensation.
Our client’s claim included an element for wage loss. They were an offshore worker and their unfitness for work had resulted in them missing a couple of trips offshore. Wage loss ran to several thousand pounds.
We obtained the usual wage loss information from the client’s employers and provided our calculation of wage loss to the insurers as part of the overall quantification of the claim.
They came back to us and said that they were not prepared to deal with matters on the basis of our calculation of wage loss.
The insurers stated that they wished to instruct a report from a forensic accountant as regards calculation of wage loss.
They arranged for that forensic accountant to contact us directly. We pointed out that it was not for us to deal directly with their forensic accountant. If they wanted to instruct such a report, they should do so based on the information we had provided and come back to us.
Proceeding on the basis that – for “equality of arms” – it was reasonable for us to get a forensic accountancy report if the other side were going to be getting such a report…
…we made enquiries of some appropriate possible experts and then instructed a forensic accountancy report of our own.
Evidently, the insurers did not anticipate that we would instruct our own expert – even though it seemed perfectly logical and fair to us – and their next step was to query the cost of the report we had obtained.
The cost of the report was £3,300.
The insurers claimed that the amount we had paid for the forensic accountancy report we had instructed was excessive.
According to the insurers, the amount that they were having to pay to their own forensic accountant was only £750.
It became obvious that the insurers had put their “mass production” forensic accountancy needs out to tender and their forensic accountants were during work for them at a reduced cost because they were getting a guaranteed and large volume of work from the insurers.
We explained to the insurers that apparently they did not inhabit the same universe as us, as High Street solicitors.
We do not use the services of forensic accountants very often. As a result, we did not have the possibility of getting a significant discount on the cost of such services because of the limited volume of work we would be providing to such an accountancy expert.
The insurers were not persuaded by our arguments.
The best offer they were prepared to make towards the cost of the forensic accountancy report we had obtained was £1,000.
It is not unusual to have disagreements with insurers.
We are well-used to having disputes with insurers over the value of our client’s claim.
But having a dispute, in addition, about the value of the firm’s claim for costs was unusual.
It was also challenging in the context of our relationship with our client.
We had an immediate potential conflict of interest with our client.
If we were not going to be able to recover all of our outlays from the insurer, who was going to pick up the shortfall?
We had incurred £3,300 for the forensic accountancy report and the insurers’ best offer was £1,000 – a shortfall of £2,300.
Would we have to bear that loss ourselves or ask our client to make good the difference?
In practical terms, from a client relations perspective, it would almost certainly have been the firm of Grigor & Young that would have had to absorb the shortfall.
After discussion with our client, we agreed that there was a basis for raising court action for our client’s personal injury claim compensation.
This was because the amount that the insurers had offered our client for their compensation was arguably still too low.
Taking the case to court was also a possible means to break the deadlock over the forensic accountancy costs. In negotiations, if the other side are entrenched in what they will or won’t pay, you’re stuck. Through the court, you introduce the possibility of independent arbiters: the judge (Sheriff) for the fair compensation amount; and the Auditor of Court (and, ultimately, the judge) for the fair level of recoverable costs.
In the circumstances, we raised an action in the Sheriff Court and our client was offered a settlement figure which was above the amount they had been offered prior to the raising of court action.
The amount was considered to be acceptable.
Agreement was reached on the increased principal sum and payment was received.
As regards the previously-disputed outlay for the forensic accountancy report, this then became an issue to be argued and discussed as part of the pursuer’s (i.e. our client’s) account of judicial expenses – which is the way that costs are recovered if a court action has to be raised and is successful.
We prepared the judicial account and submitted it to the Auditor of Court for taxation.
There was then negotiations regarding value of the account.
In these negotiations, the solicitors acting for the insurers did not at any time take issue with the cost of the forensic accountancy report which we had incurred. They did raise issues about some other entries in the account but not that one.
In the end, it was possible to agreement on the level of recoverable costs.
As part of the agreed court costs, it was possible to have the feeling that justice had been done as regards recovery of the full amount we had incurred for the forensic accountancy report.
It seems that the insurers were banking on our client – and us, as their solicitors – folding under the economic pressure imposed by the insurers.
Raising a court action involved waiting longer for overall settlement and also created an additional element of stress and uncertainty.
The insurers hoped that we and our client would prefer to see an early end to matters and settle for less.
There was a risk but it paid off in this case.
For example, although extra work was required on our part in taking the matter to court as compared with settling earlier in the process without going to court, the total costs which the insurers had to pay out in the end were approximately double what they would have had pay if they had made a pre-litigation offer which included full payment of the forensic accountancy expert’s costs as part of the solicitor’s expenses.
Our client would otherwise have settled for the amount they were offered in the pre-litigation negotiations; it was the unwelcome complexity caused by the dispute over the forensic accountancy fee level which led to the client’s decision take the matter to court.
How we can help
We hope you have found this case study – about how it can sometimes be necessary to raise a court action for a personal injury compensation claim for “out of the ordinary” reasons – to be interesting.
If you have any questions about this article or more generally about a possible personal injury claim, please get in touch with us.
All initial discussions about a potential claim are free of charge.
We will consider whether we can take on any claim for you either under legal aid or on a “no-win-no fee” basis. If it is no-win no fee, generally, we offer our services subject to a 10% success fee, which is half the normal percentage charged by providers of this kind of service within the Scottish legal system.
Please call us on 01343 544077 or Make A Free Online Enquiry.
Through Moray Claims at Grigor & Young LLP we aim to provide local advice from specialist, personal-injury-law-accredited solicitors so that your personal injury claim is free if it does not succeed, and costs you no more than 10% of your compensation if it is successful (and sometimes even then will cost you nothing).
