Fees were illegal - what now?
The general feeling is that the removal of ET fees will be good for lawyers and conversely some insurers too. On the one hand, without fees we expect more claims but given that the reduced perception of risk to employers has been a big barrier to selling legal services, their absence should stimulate demand for professional advice.
BTE and defendant insurers will see increased costs for fighting an increased number of claims, but they should see more sales and in turn good profitability if they get their pricing right.
After 2013 the combination of introduction of ET fees, unfair dismissal being increased to 2 years service and the introduction of early conciliation at ACAS, claims dropped by 79%. In the same period our average costs for claims has escalated 4 fold due to the involvement of funders and their reluctance to settle without a profitable return, longer hearings due to Judges with time on their hands and cost escalating tactics.
With the removal of ET fees a few weeks ago there are clearly concerns that claim numbers will rocket. In light of the expected 40-50% increase in claims and a spike in vexatious ones now is the time to alert employers of the value of professional legal advice and effective insurance (from us of course).
That's a new claim every five minutes!
One part of the insurance market will feel more pain than others though, they are the insurers who extended their Professional Indemnity and Directors & Officers policies with ‘free’ employment cover, thinking that the claims have all gone away. They will have to adjust pricing or row back on cover.
Will there be a surge in late claims?
As we understand it, with effect from 28 July when the judgment was handed down, fees became illegal and the Government undertook to refund all fees that had been paid since implementation. The Government has yet to announce the mechanics in relation to reimbursing fee payments. (For example we don’t know whether interest on the sums to be rebated will be available).
The Government has been silent regarding redress for individuals who potentially would have brought a claim but were deterred from doing so due to the affordability of fees and the UNISON judgment does not as far as we can tell, contemplate that possibility. In fact UNISON’s press release alludes to the fact that the true extent of detriment inflicted by the fee regime may never be known. We guess that the Government could be open to challenge by individuals claiming that the imposition of fees deterred them from making a claim. However, the usual tribunal time limits would need to be rolled back to permit late applications.
All of which means that although there could be a number of still-in-time cases to excite Claims Management Companies, we do not expect a large surge of legacy claims
If we were to imagine that the lime limits were removed to allow the backlogged cases through;
- Individual claimants need to persuade the tribunal that the reason they did not pursue a claim was solely due to the imposition of fees.
- Anyone who did not attempt settlement through free early conciliation would not be eligible.
- Those who would have qualified for fee remission but didn’t pursue a claim would not be eligible.
- Claimants who are deemed to have had the means to pursue an action at the time would not succeed in the argument that they had been prevented.
There could in theory be a tranche of eligible claims that were unable to settle or under-settled, did not qualify for fee remission or have suitable funding but the passing of time will almost certainly cloud the issues originally in dispute. Changes of personnel at respondent employers and the fact that aggrieved employees have moved on and found alternative employment will impact on whether claims are likely to be pursued and there is little enthusiasm for the option of DBAs in employment tribunals, especially for small claims.
Legal expenses insurers will not react to ‘late’ claims as they will regard them as pre-existing matters and therefore not insured, but of course they will still need to be professionally defended.