A key element of the Government's strategy for reducing insurance costs may have to be revised, writes Carol Coulter, Legal Affairs Correspondent
Much of the strategy behind the establishment of the Personal Injuries Assessment Board is in doubt following the High Court judgment that it cannot refuse to deal directly with solicitors acting for claimants.
Other legal actions are likely to follow, including a challenge to the provision that claimants cannot seek their legal costs.
With that, the whole basis on which the PIAB is predicated will be undermined.
When, as minister for enterprise, trade and employment, Ms Mary Harney announced legislation setting up the board, she said: "It will be a paper-based system. There will be no lawyers."
Its first chairwoman, also chairwoman of the Motor Insurance Assessment Board (MIAB), Ms Dorothea Dowling, famously incensed members of the legal profession by describing the planned PIAB as a "lawyer-free zone".
This followed considerable discussion of the fact that legal costs, including expert fees, added some 40 per cent to the cost of insurance claims. By eliminating lawyers from the cases where liability was not an issue, it was argued, costs would be significantly reduced and insurance premiums would fall as a result.
However, all cases of compensation claims, even where liability is contested, must go first to the PIAB. It then provides the claimant with a certificate of release if the case is being contested, and the case goes to court.
This means cases that will end up in court must be initially registered with the PIAB. If no solicitors are involved the claimant will have to take the first legal steps.
Ms Dowling, along with her board and staff, attempted to put the "lawyer-free" policy into effect by refusing to communicate with solicitors engaged by claimants to represent them to the PIAB, corresponding instead with the claimant directly. This was challenged by Mr Declan O'Brien, through his solicitor, Mr Denis Boland.
As the High Court pointed out in its judgment yesterday, there was no provision for refusing to communicate with a claimant's lawyer in the Act. Therefore the refusal was ultra vires, or outside the PIAB's legal power.
There was a very good reason why the Act does not contain any provision for excluding legal representatives, and indeed it has a number of references to the right to legal representation.
This right is a constitutional one, and any provision in the legislation to remove it would have been unconstitutional.
During the High Court case, counsel for the PIAB outlined its policy, which distinguished between what the board regarded as vulnerable clients - people who, because of ill-health, being recently bereaved or other reason, required legal representation - and those who were not vulnerable and therefore, in its view, not in need of such representation.
The board corresponded directly with this latter type of client and, if asked, would send copies of correspondence to solicitors.
A person with a language or literacy difficulty "might" be regarded as coming within the category of a vulnerable person, as might people living overseas.
However, counsel for the Law Society pointed out that this led to an effective inequality between two categories of people appearing before the PIAB.
If two elderly men of equally limited literacy skills had a collision, where one was mainly at fault and caused injury to the other, the person who was liable would be represented by an insurance company with a full battery of its own legal advice, while the injured party would not be represented by anyone.
This reflects the "anti-claimant" culture of the PIAB, according to the Law Society.
The PIAB had argued that it was not a court of law, that no issue of liability is being decided and no litigation is involved. What it does is essentially an administrative function, and not the administration of justice. Therefore the question of the right to legal representation, which it does not dispute, does not arise.
Mr Justice McMenamin did not agree. He pointed out that the right to legal representation had been recognised in relation to "quasi-judicial hearings to statutory bodies even of a strictly administrative type".
This right had been recognised where the matters are "of serious consequence to the parties or impinge upon their rights", which, in his view, the issue of compensation for injury does.
The question now arises: if there is a right to legal representation of claimants to the PIAB, can such claimants not seek their legal costs? That is explicitly excluded at the moment, but there are other cases where the right to legal representation has been found to extend to the right to legal costs. Mr David Nolan SC, who speaks on behalf of the Bar Council in relation to the PIAB, said that the flaws in the legislation identified by this case were only two among many. He predicted that the next legal challenge would be on the issue of costs.
If this happens, the whole purpose of the PIAB as part of the Government's strategy for reducing insurance costs will be in tatters.
Meanwhile, support for the PIAB is beginning to weaken. It received the enthusiastic endorsement of the ICTU when it was set up, but dissent has begun to emerge among the unions representing the employees of private industry, who feel their members may be disadvantaged.