BLM - thanks for the concession

For those practitioners certain that the economic environment arising as a result of the Coronavirus epidemic might herald a revised assessment of what constitutes impecuniosity, help is at hand on the website of BLM. The story can be accessed as a pdf document at the link below (just in case it disappears) but the feature is reprinted below the link for convenience. Some emphasis in bold is added by us. Whilst it purports to address the level of damages associated with personal injury claims in challenging economic times, some of the concessions constitute quite material own goals in respect of the precarious economic future faced by claimants who might not hitherto have been considered impecunious:

"The assessment of loss of earnings claims, whether the “but for the accident” position or residual earning capacity, now need to be assessed in the context of the economic conditions unfolding as a result of the Coronavirus pandemic. As always  a forensic approach to the evidence within a particular case is needed, but overlaying that must be a wider understanding of the changing economic conditions within which a claimant is, and/or would have been, making their living.

Risks of unemployment: Reduction factors

The risks to future employment are usually taken into account using the reduction factors set out in the Ogden tables. These factors are generic and they are subject to the limited parameters used against which to assess employment risk – current employment status, age, disability and level of education. The factors  in the anticipated 8th edition of the Ogden tables have not been recalculated to reflect more recent data on changes in employment status. This raises questions as to whether the methodology applied based on these factors alone will continue to provide a reliable basis for assessing employment risk, particularly in the exceptional economic conditions we are now entering.

It is likely to be some years before we see reduction factors that reflect the impact of the virus on the risks of unemployment during working lives.   This may open the door to challenge the applicability of those adjustments and to argue for an alternative approach in the highest value cases where this might make a tangible difference, almost certainly requiring expert evidence to do so.

The nature of the award

Adverse economic conditions, and some employment sectors harder hit than others, may need other approaches to fairly compensating for future loss of earnings. There will be cases where the multiplier and multiplicand approach no longer reflects the uncertainties the claimant would have faced. A Blamire award may better reflect all the increased uncertainties. Conversely, a Smith v Manchester award for ‘handicap on the labour market’, may need to reflect increased periods of unemployment in a hard and competitive employment market.

Assessing the ‘residual’ earning capacity

Assessing a claimant’s residual earning capacity will continue to be dependent on medical evidence as to the injury effects on employment potential. It will now be necessary to consider how the business or industry in which an injured claimant is able to work has been, or will be, impacted by the economic impact of the virus, and if that is adequately reflected in the manner in which residual earning capacity is assessed. The economic impact on the employment sectors open to the claimant after the injury may be very different to those affecting the “but for” employment.

Assessing the claim ‘but for’ the accident

General points to consider include:

  • The likelihood that any pre-accident employment/earnings would have continued;

  • The potential for promotion and increased earnings; and

  • The risks to future employment.

Each of these issues will now need to be considered with reference to the statistical evidence and any comparator evidence, in the context that many occupations may prove to be less likely to continue as they otherwise would have done. There may be less likelihood of increased earnings in the “but for” scenario than might previously have been thought, and possibly increased likelihood of reduced earnings or more periods of unemployment.