Personal injury Clients will often be advised by their Solicitors about making sensible offers to their opponents’ solicitors or insurers. These offers are made under Part 36 of the Civil Procedure Rules which regulate how litigation is to be conducted between parties.
So what is Part 36?
Part 36 is all about negotiating, and avoiding the need for long-running and expensive litigation. A Claimant who makes a sensible part 36 offer is putting their opponent under pressure to come to the negotiating table. This is because an opponent who ignores a part 36 offer does so at their peril. The Court will often punish an opponent who ignores a part 36 offer which is then ‘beaten’ at a trial by awarding an uplift on the winning party’s compensation by as much as 10%. The Court might also order the losing party to pay higher legal costs as a sanction for not having accepting what the Court would deem to be a sensible offer.
A worked example
Let’s say a Defendant has admitted liability for a person’s accident at work. Normally the Claimant’s Solicitor arranges a medical report. In this example, the injured client’s Solicitor values the injuries (known as general damages) and associated losses (known as special losses) as being worth between £15,000.00 and £17,000.00. A sensible Part 36 offer in that situation would be for, say, £16,000.00. What would usually happen next would be that a well-advised Defendant would probably make a counter-offer of around £14,000.00 and the claim would more than likely settle (after negotiation) at around £15,000.00.
Sometimes, however, events are not so straightforward. Either side may make Part 36 offers at any time, even before medical evidence has been obtained and the true value of the claim is known. A recent case settled by our team demonstrates the pitfalls of trying to assess the risk of a Part 36 offer when medical evidence has not been finalised.
Our client suffered a fairly serious hip injury when she slipped in a sports hall. She also instructed us that she had suffered psychologically as a result of her disability and the devastating effect it had on her life. Our opponent made an offer of settlement of £10,000.00 before any medical evidence was obtained. It was very difficult to advise the client whether to accept the offer of £10,000.00 as, at that stage, we had no idea what the client’s medical expert would say in their report. We arranged a report from an orthopaedic surgeon which was supportive. The surgeon also recommended that a report should be obtained from a psychologist.
The clock was running against our client. Usually a report from a psychologist takes somewhere between 1-3 months to complete. When a Part 36 offer is made, the party who receives the offer has just 21 days to accept it. If you accept it after the 21 days are up, any costs incurred by the party making the offer are payable by the other side. There was no way we had time to arrange a report from a psychologist within the 21 period so, after explaining the risks of not accepting the £10,000.00 offer to her, our client instructed us to continue to obtain the further report.
The hip injury and associated special damages were worth approximately £9,500.00 (crucially less than the £10,000.00 offered) so, if the psychological report was unsupportive, the Claimant was in real danger of having to pay the opponent’s costs from the end of the 21 day period.
The psychological report took much longer than anticipated and, when it finally arrived, was unsupportive. The psychologist’s opinion was that other factors in our client’s life were responsible for her psychological distress, rather than the effects of her accident in the sports hall.
The Claimant was now left with choice of gambling that a Judge would assess her knee injury and special losses at more than £10,000.00. (£10,000.01 would have been enough) or to cut her losses and to accept the £10,000.00 out of time (months later than the 21 day period). She, sensibly, instructed us to try to negotiate a settlement. We approached the Defendant’s Solicitors and managed to negotiate a settlement where the Claimant ended up paying £1500.00 of their costs (the costs that had been incurred since the 21 day period had expired) whilst accepting their £10,000.00. Our client therefore ended up with damages of £8500.00.
The phrase ‘one in the hand is worth two in the bush’ was never more appropriate. The Claimant could have settled the claim months earlier and received £10,000.00. In the end she suffered further worry and months of uncertainty before ending up with £8,500.00. In the end, this was a reasonable result. Had the Claimant elected to take her chances with the Judge at a Trial, the opponent’s costs would have been higher still, perhaps as much as the £10,000.00 offered. She might have been in a situation where she had to go through the stress of a trial and ended up with nothing!
The whole point of offers under Part 36 is to encourage parties to settle claims early and before further costs are incurred. This case was a lesson in the risks associated with not accepting an offer when you have no way of knowing whether the total value of the claim was worth more than the offer made. Litigation is an uncertain and risky game and it is often better to take a safety first approach.
At Taylor&Emmet our experienced litigators will always advise you on any aspect of personal injury claim. please do not hesitate to contact our team on 0114 218 4000 or email firstname.lastname@example.org.