A good old conspiracy theory

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18 February 2011


Posted by Barbara Hamilton-Bruce F.Inst.L.Ex., director of legal operations at Legal Futures Associate Accident Advice Helpline 

Hamilton-Bruce: CICA's behaviour could lead to breakdown of lawyer/client relationship

I need to start by saying that I do love a good conspiracy theory but recent behaviours emanating from the Criminal Injuries Compensation Authority (CICA) are really starting to make me think that the government is employing some good old-fashioned joined-up thinking in the civil justice arena.

For those who are not a user of the service, the CICA is part of the Ministry of Justice and responsible for administering compensation to people who have been physically or mentally injured because they were the blameless victim of a violent crime.

Fees for representation are incurred at the applicant’s expense similar to the arrangements used in the employment tribunal system without recourse to the scheme and Community Legal Funding is not available. Representation is an unreserved activity, so the applicant is free to acquire representation services within the open market and typically will be looking at paying a percentage of compensation recovered in representation costs.

On the face of it (putting aside all issues as to the adequacy of compensation available through the scheme), you might be inclined to think that this is a relatively simple process. Customer seeks redress through a government-funded scheme and is free to seek his or her own advice. The representative (and for these purposes I am going to assume a firm of solicitors) will usually enter into a lawful non-contentious business arrangement for payment of fees linked to compensation recovered.

The representative applies the standard mechanism for payment of legal fees when it is fixed to receipt of a payment (cf estate agent fees). The representative obtains the client’s authority for payment to be sent to them, ticking the CICA application form to alert the fact that representation is involved. Happy, represented applicant; happy lawyer who knows how and when he will be paid.

It seems that the CICA takes a dim view of such arrangements and, as ‘mother knows best’, is disregarding the applicant’s instructions on payment. The CICA will no longer administer compensation via the representative, instead making payment direct to the applicant’s bank account. What’s wrong with that, you may ask? The applicant still receives their payment.

Aside from appearing to emulate the behavior of certain third-party insurers, the CICA is taking the end stage of the process outside of representation arrangements by directly corresponding with the applicant. It is also removing the link to payment that is at the very heart of representation arrangements.

CICA’s website indicates that their reasons for the change are linked to the opportunity to decrease fraud and to prevent the CICA being drawn into disputes between applicants and their representations. Fraud, it appears, is linked to the misappropriation of funds by the representative and the disputes relate to a ‘number’ of complaints and some dissatisfaction expressed about the services provided. Representation for this unregulated activity will largely be provided by regulated services (law firms or claims management companies).

It seems to me that that the CICA’s policy behavior could be the direct trigger in the breakdown of the relationship or, even worse, the removal of legal services based on commercial concerns. The CICA’s refusal to accept the applicant’s lawful instruction on payment of compensation is a direct interference with the representation arrangement and based on the website examples given seems to throw into question the CICA’s perception of the ability of regulators to regulate and support the consumer.

The longstop effect of the CICA refusing to accept the applicant’s instructions is that, if solicitors cannot obtain a guarantee on payment methods, they may chose (1) not to provide representation due to the prospect of not obtaining payment or (2) require advance payment of legal fees and/or face the prospect of litigating against clients for recovery of fees. Both of these options possibilities appear to restrict the consumer’s ability to obtain redress.

So to return to my conspiracy theory… is this another way for the government to restrict access to justice or simply a mechanism to reduce the CICA compensation bill?



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