Minister calls for CMC and referral fee crackdown but gives hope to injured children

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By Legal Futures

11 July 2011

Parliament: witnesses lined up to give evidence to MPs

Justice minister Lord McNally has called for a crackdown on claims management companies (CMCs), as the Legal Aid, Sentencing and Punishment of Offenders Bill enters its committee stage tomorrow.

The Liberal Democrat peer also marked a change in the Ministry of Justice’s (MoJ) stance on referral fees, saying the government is now “sympathetic to the idea of a ban”.

He further indicated that if conditional fee agreements are not available for clinical negligence claims brought by severely injured children, the legal aid fund will step in to provide funding.

Responding to a series of questions in the House of Lords, Lord McNally – replying to solicitor peer Lord Phillips of Sudbury – said he has “always” had doubts about CMCs.

“There are more than 3,000 of them at the moment; 450 of them have had their authorisation cancelled by the claims management regulator. I would like to see a lot more of them cancelled.”

Last month, the health select committee called for a review of the regulation of CMCs amid concerns about their role in clinical negligence claims.

Lord McNally said the government is now looking at how to tackle the issue of referral fees “as part of our wider reforms, and at how we could do so [ban them] in a way that would be effective”.

Legal Futures understands that this comment reflects conflict within the MoJ between the renewed political interest in a ban – driven in large part by former justice secretary Jack Straw’s recent campaigning on the issue – and the practicalities of achieving one, such as how to define exactly what a referral fee is.

Up until Mr Straw’s intervention, the MoJ was not planning to act quickly on any ban. However, the minister did not commit to including anything on a ban in the bill.

On clinical negligence, Labour justice spokesman Lord Bach suggested that denying legal aid to severely injured young children was “an outrage in a civilised society”.

Lord McNally replied: “The government’s assessment is that in most clinical negligence cases, it will be possible to carry actions forward through arrangements with solicitors willing to take the cases. Where it is not, the special legal aid fund [for exceptional cases] will kick in.”

The committee considering the bill will hear evidence tomorrow and Thursday, ahead of beginning to scrutinise it line by line on Tuesday 19 July, the day the House of Commons rises for the summer. As we reported last week, there will be a further six days in committee, finishing on 13 October.

The committee is packing in those organisations giving oral evidence. In eight and a half hours of sitting this week, it will hear from 35 different people and groups on the three elements of sentencing, legal aid and civil costs reform.

The Law Society and Bar Council will be joined in an hour-long session with the Family Mediation Council and London law firm Leigh Day & Co, while the only session clearly dedicated to the Jackson reforms will hear from the Association of British Insurers, the Association of Personal Injury Lawyers and Action Against Medical Accidents.

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2 Responses to “Minister calls for CMC and referral fee crackdown but gives hope to injured children”

  1. This just goes to show how badly thought through the ‘justice’ bill is. The government has no clear programme for reforming the justice system, just a slash and burn approach that is swinging this way and that as different issues come to the fore. They should stop rushing through this bill and spend some time actually consulting with experts and thinking about how to make the system work better. But I bet they won’t and we’ll end up with a complete dog’s breakfast.

  2. Louise Restell on July 11th, 2011 at 10:25 am
  3. Any ban on referral fees must cover all lawyers/suppliers of legal aservices and must also cover not only personal injury work but others areas of practice – including residential conveyancing.
    Our firm does not pay either estate agents or claims management companies. There is no added value in a referral fee being paid.

  4. David Sheridan on July 11th, 2011 at 12:38 pm

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