Executive Team by wuxiangyu


									MRC Meeting                                                          Agenda Item: 10/32
23 June 2010

            Extending the RCN Legal Advice and Assistance Scheme

1.    Purpose

      To propose to the Executive Team an extension of the current RCN Legal
      Advice and Assistance Scheme, to provide a further benefit for RCN
      members, in addition to increased revenue for the College. The paper will also
      update ET on a recent change to the administration of the existing Scheme.

2.    Background

      Currently the RCN provides a personal injury legal service for members who
      are either injured in work, or on their way to or from work. The service in
      England and Wales is delivered through a panel of agent firms of solicitors,
      appointed following competitive tendering, last undertaken in 2006. In
      Scotland and Northern Ireland an equivalent service is provided by agent
      solicitors Anderson Strathern and Campbell Fitzpatrick, respectively.

      The Scheme in England and Wales operates through what is called a
      Collective Conditional Fee Agreement (CCFA) entered into between the RCN
      and each panel firm (CCFAs are not permitted in Scotland or Northern
      Ireland). The effect of this agreement is that:

      (a)      The RCN agrees to indemnify its members in the event that they
               become liable for legal costs incurred if the member loses his or her

      (b)      The panel firm takes the risk that in the event that the claim is
               unsuccessful it will have to bear its own legal costs, including any
               disbursements incurred (such as medical experts and employment
               reports, barrister’s fees and so on) in running the case.

      (c)      Further, following investigation into the merits of the claim, the firm
               will bear any investigatory costs incurred if it concludes that the claim
               fails to satisfy the 51% chance of success requirement under the

      (d)      In agreeing to indemnify its members in these circumstances, the RCN
               is entitled to recover on each case, through the agent firms, a ‘notional
               premium’, broadly equivalent to the cost that would have been
               incurred by a claimant insuring against the risk of losing the case.
               Currently these notional premiums are fixed at between £400 and
               £4000, depending on the complexity and value of the case. This
               generates an income for the RCN, which offsets any RCN liabilities
               arising from lost cases.

      (e)      Lost cases are now an unusual occurrence no doubt largely resulting
               from robust risk assessments undertaken by the panel firms when

MRC Meeting                                                         Agenda Item: 10/32
23 June 2010

               determining whether to pursue a claim (after all, it is clearly in their
               own financial interests not to pursue unmeritorious claims). The last
               financial year (2009/10) was in fact the worst for some time, and
               unfortunately included a case in the Channel Islands where legal costs
               are generally wholly disproportionate to those incurred in the rest of
               the UK (and CCFAs do not exist). Even so, the RCN had to indemnify
               members liable for costs in four lost cases, to the value of £73,396
               (more than half of which was for the CI case). This contrasts with a
               notional premium income of £206,772.02 over the same period (and a
               further £121,000 was recovered by way of costs on long-running
               personal injury claims still conducted in-house).

      (f)      Irrespective of the proposal in this paper it will be necessary to
               reconsider this year the terms of the CCFA and the current levels of
               notional premia, moving towards staged notional premiums in each

3.    Proposal

      It is proposed that the RCN extends the current Legal Advice and Assistance
      Scheme to provide a service to members in the following circumstances:

      (a)      RCN members injured in work.
      (b)      RCN members injured on the way to or from work.
      (c)      RCN members who are injured by non-work related accidents (though
               this will not cover clinical negligence claims).

      The purpose of this proposal is two-fold: to provide added value and benefit
      from being an RCN member, ensuring that when victims of accidents
      members are served by an RCN approved (and therefore, expert) panel firm of
      solicitors; and to provide the RCN with additional revenue allowing it to
      continue to offer its members a first class legal service.

      In making this proposal it should be noted that other unions such as Unison,
      Unite, GMB, CWU and USDAW provide legal support for members’
      accidents outside of work (each of those unions also makes an exception for
      clinical negligence claims).

      Consideration has also been given by the legal management team to extending
      the Scheme to provide cover for RCN family members, who suffer accidents.
      However, a provisional view from corporate legal advisers Bates Wells
      Braithwaite is that this may create RCN constitutional difficulties, given the
      limitation in the Charter to providing support for ‘members in adversity’. It is
      understood that Unison, and possibly Unite and GMB, offer some limited
      legal support for their members’ families.

      It is also proposed that the RCN agrees to indemnify its members in the same
      way as we do currently for accidents occurring in work, or to and from work.

MRC Meeting                                                        Agenda Item: 10/32
23 June 2010

      To that end the RCN would need to extend the existing CCFA, and set
      notional premiums (probably staged), to cover the extended cases. The
      alternative to this would be to not indemnify members but for the RCN to
      arrange for what is known as ‘after the event insurance’ with an ‘after the
      event’ insurance provider. This would generate commission for the RCN from
      the insurance provider, but we have been advised that it is unlikely that the
      revenue raised by commission would be as significant as the value of notional
      premiums recovered. Nevertheless, it should be pointed out that with after the
      event insurance the financial risks to the RCN of a lost case would be limited.

      On balance, it is the legal management team view that in the light of the
      history of the current Scheme, extending it to cover non work related accidents
      involving members, does not significantly increase the risk of the RCN having
      to pay for lost cases, given the management of that risk by the panel firms of

4     Improving the Administration of the Legal Advice and Assistance
      Personal Injury Scheme

      Recently the Legal Services Directorate along with RCND introduced an on-
      line and telephone referral system for processing new personal injury claims
      for members. In the past members were expected to contact their local
      regional office in the event of an accident covered by the Scheme. They were
      then invited to complete an application form which was forwarded to the
      Legal Services Directorate for a preliminary review, before being transferred
      to the agent firms of Solicitors. There were inevitably delays in this process.

      Now when a member has an accident they have two options: complete an
      online questionnaire which is then sent direct electronically to contact points
      in the Legal Services Directorate; or speak to an adviser at RCND, who will
      take them through the standard questionnaire over the telephone. Their replies
      are then e-mailed to a contact point in each of the RCN legal areas across
      England and Wales. Upon initial review by a senior lawyer, the form is then
      e-mailed direct to the relevant firm of solicitors, who will immediately
      commence the investigation into the merits of the claim. Panel firms of
      solicitors have noted a significant improvement in the speed in which claims
      are sent to them, and there has also been an increase in the volume of referrals.

      Following completion of the trial period of the new on-line/RCND system, it
      is proposed to further advertise the Legal Advice and Assistance Scheme more
      widely, to encourage members to use the RCN and not private firms of
      solicitors (recent articles on the Scheme have appeared in RCN Bulletin).
      There is evidence that some members are approaching private firms of
      solicitors first before contacting the RCN. This creates additional work for the
      RCN lawyers in rejecting requests for indemnification of costs incurred by
      those solicitors, and re-establishing contact with the member.

MRC Meeting                                                        Agenda Item: 10/32
23 June 2010

5     Resources, Costs and Implications

      Assuming a growth in the numbers of referrals to RCN panel solicitors, the
      only resource implications are an increase in workload for RCND and the
      RCN Legal Directorate, in initially registering the claims. Nevertheless,
      RCND is keen to continue to promote this Scheme, and to be involved in the
      new administrative arrangements, and it is anticipated that any additional
      workload will be met from existing staffing resources.

6     Risks

      Currently the RCN Scheme is more limited than other rival union schemes in
      respect of personal injury claims. By extending the Scheme the RCN will
      ensure that it remains a competitor in the current market for trade union legal

      There are risks associated with any agreement to indemnify members in
      respect of their liability for lost cases. However, we do not believe that this
      represents a significant risk over and above the current risk we already take in
      acting for members on work related accidents, and on the journey to or from
      work. Further, it is expected that the income generated by additional notional
      premiums will more than offset any costs payable by the RCN in the event of
      a lost case.

7     Diversity

      There are no diversity implications from this proposal.

8     UK Wide/4 Country Perspective

      Any change to the current Scheme must apply across the UK and agent
      solicitors for the Northern Ireland and Scotland Boards have been approached
      to agree to the proposed extension. That agreement is expected. The current
      on-line/RCND service is only available to members in England and Wales,
      though discussions are underway to enhance the process across the UK, if at
      all feasible.

9     Strategic Plan

      Objective 9 building the RCN as a business to enable an efficient membership
      organisation and, specifically, objective 9.1 achieving value for money.

10    Confidentiality Statement

      This paper is confidential.

MRC Meeting                                                      Agenda Item: 10/32
23 June 2010

11     Recommendation

       The Executive Team is invited to accept the proposal to extend the Legal
       Advice and Assistance Scheme in relation to personal injury claims for non-
       work related accidents. If accepted, the paper will be tabled with MRC.

Originator:    Chris Cox, Director of Legal Services
Date: 08/04/10


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