Following a lengthy review of the existing civil justice system, the Lord Chancellor concluded that litigation as it stood, was costly, unequal and disproportionate.

Cases took too long to reach court and the system generally was too adversarial with little promotion of amicable negotiations to resolve outstanding claims. Changes were inevitable.

Lord Justice Woolf introduced his sweeping reforms on the 26th April 1999 (the rules and pre-action protocol was published in January 99) all claims involving Personal Injury and subsequent civil litigation must be dealt with strictly in accordance with the reforms.

The impact on the industry has been massive. Any solicitor issuing proceedings unreasonably or prematurely, will face a costs penalty or additional sanction.
Litigation must not be entered into without good cause or without substantiating that the insurer has fallen foul of the Pre-Action Protocol.

The Pre-Action Protocol governs how claims should be dealt with before litigation is commenced, the document defines how solicitors and Insurers must now conduct themselves during negotiations.

In brief :

A letter of claim must be sent to the Insurer and the defendant (the third party) advising them of the basis upon which a claim is to be presented. This letter should contain brief concise information concerning-

- Claimants name and address, date of birth, national insurance number (for CRU/DSS purposes). Brief details of the injury, the allegations of negligence against the TP and (optional) details of the medical or other expert that you wish to instruct.

The Insurer must acknowledge the letter within 21 days - any breach will enable the solicitors to issue proceedings without being penalised by the courts. The Insurer must furthermore admit or deny (with evidence) liability, within 3 months of the letter of claim having been acknowledged. If liability is in dispute, both sides will be required to make suitable enquiries and present witness evidence. Any issues must be discussed and agreements made wherever possible.

Either party can nominate an expert to provide evidence in support of the claim. Usually the claimants solicitors will nominate 3 such experts for agreement - the objective of the protocol in terms of expert evidence, is for the parties to agree a 'mutual'expert thus minimising costs. Once experts have been nominated, the receiving party has 14 days to confirm agreement or to reject the nominated experts and counter propose alternatives. If the deadline is missed, the party failing to comply with the protocol is precluded from using an expert in the relevant field of expertise. This is a crucial aspect - a solicitor should always nominate first and place pressure on the insurer to comply with the protocol.

A solicitor cannot issue proceedings for 21 days following disclosure of their experts evidence.

In the event of a 'mutual' expert being formally agreed upon, the instructing party receives the report and provided they are happy with the content, release a copy to the other party. Both parties have the option of asking supplementary questions to the expert and replies are sent out simultaneously to each party ensuring a fair and equal exchange of information.

Proceedings should always be a last resort unless an insurer is in breach of the protocol or liability is firmly at issue - negotiated settlements are expected.

One mechanism within the reforms that involves a post litigation initiative, is the Part 36 Offer To Settle. A claimant or a defendant can make a formal offer setting out what they believe to be the value of any head of damage or a proportion of liability that they are willing to accept. The offer is made with a view to putting your cards firmly on the table and allowing for the prospect of an early resolution to the claim. Your solicitor or representative will send a formal letter specifying your offer.

The insurer will accept or reject the offer and in most cases - counter propose. An insurer must pay into court the full value of any Part 36 Offer that they make within 14 days of litigation commencing.

The risk to both claimant and defendant is that the other parties offer/value of claim, may be preferred by the court and if you do not beat it significantly, then you become liable for costs from the date the formal offer was made. It is a confusing but highly effective mechanism and both sides are having great success implementing such offers and settling claims in their favour.