COVID-19: resilience is key to the future of court systems

Kennedys’ global footprint means we are uniquely placed to review the impact of COVID-19 on the functioning of court systems in different jurisdictions.

There are many developing themes. Reduced claims numbers during phases of lockdowns have been seen. A clearing of backlogs after lockdowns are lifted is experienced at varieties of pace. The forecast of at least one more trough in the usual numbers of claims at some point in 2021.

Amongst those common themes, two observations stand out which are bound by a shared factor: resilience. While defendant lawyers and insurers have generally coped well with needing to adapt to working and engaging remotely; claimant and plaintiff lawyers have, overall, coped less well. Further, our analysis has also confirmed that the determining factor when looking at whether a justice system can truly be said to be coping in the face of the pandemic, is the resilience of the court system itself in each jurisdiction. Singapore’s justice system stands out as a model of relative excellence – which perhaps comes as no surprise given that jurisdiction’s consistent drive to adopt cutting-edge legal technology. When compared to some other jurisdictions discussed, it is clear that delay, additional cost and a lengthening of the shelf life of cases (and delays to deserving claimants receiving compensation) often rests at the door of the court system.

In England and Wales there has already been delay to the much anticipated civil justice and MoJ Portal reforms. Further delay seems likely, while the UK Government battles to find any oxygen beyond a COVID-19 infected Brexit. While insurers may see advantages gained by reduced claims numbers neutralised by the lost opportunity to reduce their spend as a result of those delays to reform, we would argue that COVID-19 should cause a long-term change to global court systems and their operation.

We set out below on a jaunt around the world looking briefly at how each of our main liability groups have felt the impact of COVID-19 in their jurisdictions, with regard to claims volumes, the courts’ response and future trends.

Key points:

  • The need for operational resilience through the adoption and implementation of technology has proved key. It is apparent that claimant/plaintiff law firms have had difficulties and have generally coped less well.
  • In contrast, independent defendant lawyers and also insurers’ systems have generally been robust enough to enable a smooth transition to staff working from home, and maintain pre-pandemic service performance levels.
  • The response of the courts across the different jurisdictions has been mixed, with some faring better than others. The successful use of technology has again been key. Singapore is leading the way, with the judicial system moving at significant pace to erode the backlog caused by the initial court closures during the earlier stages of the pandemic.
  • All jurisdictions have experienced a dip in the volume of new claims in March and April 2020, with levels across all jurisdictions having since returned to normal.
  • COVID-19 related claims are now being seen or anticipated across all jurisdictions.
  • A dip in claims and litigation is expected in all Casualty and Motor related areas in 2021 and 2022.

England and Wales | Australia | Denmark | Hong Kong | Northern Ireland | Portugal | Republic of Ireland | Scotland | Singapore | United States

England and Wales

In England and Wales all personal injury claims below the value of £25,000 now need to start their life in the Ministry of Justice (MoJ) Portal. Through April and May 2020 we saw tens of thousands less claims being presented than normal. Claims are now again rising to near normal levels, but with ongoing and increasing numbers of restrictions on a local basis, it seems unlikely that normal levels will be achieved again until the pandemic has passed. 

The dramatic reduction in new claims notifications will work through to cause reductions in litigation in Q2 and Q3 2021. Insurers in the meantime will benefit in the shorter term by paying out less for first and third party claims. However, because of the government’s focus on Brexit and managing the pandemic, it also seems likely that the intended and radical reforms to the civil justice and personal injury markets will be delayed. That said, a senior Cabinet Member has recently expressed confidence that the expected reforms to whiplash claims will be delivered by the new April 2021 deadline. If that deadline is not met, any advantages that will be gained by the insurance market as a result of those reforms will be delayed, probably until late 2021 or early 2022.

Otherwise, while road accidents and workplace claims have fallen, construction site and factory incidents have now risen again broadly to pre COVID-19 levels. We are also seeing claims involving allegations of COVID-19 transmission being made.

We have seen no reduction in catastrophic injury work, presumably because claimant law firms, having furloughed their volume teams, are driving forwards the more complex, and more profitable work.

Contact: Richard West

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Australia

Australia’s experience of COVID-19 involves the parallel narrative of Victoria and, effectively, the rest of the country. After the initial national lockdown in March, most states returned to more regular functioning. However, a ‘second wave’ of infections in Victoria precipitated a hard lockdown (with some of the most stringent restrictions in the world) that has been in place for over three months. That lockdown is soon likely to be slowly relaxed in staged increments over the remainder of the year. The rest of Australia has, largely, eased restrictions to encourage more rapid economic recovery.

At the start of the outbreak, we observed a short stall in claims workflow, while the focus was on transitioning to remote working. Subsequently though, we saw the volume of liability claims bounce back quite strongly, remaining steady in most jurisdictions and with an increase in claims volume in Victoria. The ability of the local insurance market to transition to remote working efficiently has contributed to the stability in the claims market.

The courts have all transitioned to online, moving to platforms such as Zoom to carry out their hearing functions. Face to face trials have however resumed in a number of courts and states outside Victoria. As a result, the pandemic has not posed any impediment to litigated claims. Indeed, in Victoria, Kennedys has handled more trials in the last three months than in the previous two years. 

Clients are reporting that across their liability book, plaintiffs are demonstrating a greater willingness to “roll the dice” on claims which, pre-COVID, might not have made it to the courtroom, even in the face of an unfavourable draw of judge or with the risk of cost protection against them. Similarly, plaintiff firms have been more motivated to prosecute what they ordinarily would consider less meritorious, “borderline” claims to ensure there is a sufficient level of work for their staff and revenues are maintained. We have also observed a trend in previously dormant subrogated recovery claims being enlivened during the pandemic.

The significance of the divergent narratives referred to earlier is the longer term impact for new claims notifications. In the next few years, we expect that new notifications for personal injury and workplace injury claims will fall at a higher rate in Victoria than in the other jurisdictions in Australia. In NSW and elsewhere, insurers have started to report a slight decline in notifications, although they consider that this will be temporary, given that all other States experienced only short lockdowns.

Contacts: Michael Kavanagh and Chris Finn

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Denmark

COVID-19 is acknowledged as an injury in the Danish Workers Compensation Scheme. This has therefore resulted in a rise in the number of reported injuries relating to nurses, doctors, care staff in general and in other sectors like the police and teaching. As per 19 October the Danish authority processing these claims (AES) has received 1.531 COVID-19 related claims. In 759 of these 1.531 cases a decision has been made and from these 759 cases 479 have been recognized as a work related injury and the remaining 280 have been rejected.

Most of the reported injuries are expected to be rather uncomplicated, low value claims. However, we do expect to see cases regarding longer term “long-COVID” conditions, and that a number of these will be litigated.

Elsewhere, we have seen a decrease in reported injuries between mid-March to mid-May and reported road accidents are down by approximately 14% during that period.

However, in the middle of August the Association for Danish Insurers (Forsikring og Pension) stated that the figures were not extraordinary and could also be described as part of normal fluctuations. In addition, the Association stated that the number of reported injuries had returned to pre-COVID-19 levels in June and July, following the lifting of COVID-19 restrictions.

Overall, there has been a relatively small decrease in the total number of reported personal injuries (both workplace and non-workplace related) and no changes have been made to the process of claims. The reported decrease is not one we expect will have an noticeable impact on litigated cases in 2021 and 2022.

Contacts: Morten Erritzoe Christensen and Heidi Bloch

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Hong Kong

In January to March, there was a marked slowdown in litigated matters due to court closures, working from home and claimant solicitors having difficulty taking instructions from their clients. We also saw far more cases proceeding to settlement and to mediation, with claimants keen to secure damages during a time of such uncertainty.

All courts have now reopened but with social distancing restrictions in place. Personal attendance at hearings are now actively discouraged and courts have taken a more proactive approach to case management by ordering parties to agree directions and make paper submissions. The directions given are now of a much longer duration than prior to the pandemic, unfortunately adding to the duration of cases.

Most new claims still relate to accidents that occurred prior to the pandemic and so volumes currently remain steady. However, we anticipate there will be a slowdown next year in the higher accident rate sectors like construction, food and beverage, and retail. These sectors were already being impacted by the social unrest in Hong Kong before the pandemic but now with COVID-19, employment in those sectors has been severely affected. Fewer workers means fewer accidents. On the other hand, a downturn in the economy can result in an increase in work injury claims as people seek to avoid layoffs and termination of their employment.

We anticipate, and recent indications from the judiciary are, that the economic downturn is likely to have an impact on the sustainability of future loss of earnings claims, where a high possibility of being made unemployed as a consequence of the pandemic will be a factor in some cases.

In the coming months, we expect to see more COVID-19 related injury claims, working from home accident claims and more claims by delivery workers, especially from those working within food delivery.

Contact: Meiling Yip

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Northern Ireland

Northern Ireland has a devolved government but went into lockdown with the rest of the United Kingdom on 23 March. It became immediately apparent which of the claimant and other defendant firms had the ability to work from home and whilst our transition was seamless, it was clear that others were in difficulties. Furlough followed in some claimant (and defence) firms which led to a delay in live matters being dealt with. We did not furlough any staff.

As the country went into lockdown, the courts in effect closed down and all business was adjourned. The courts subsequently started administrative reviews of all matters on paper in early summer and have progressed to virtual hearings via “Sightlink” and oral hearings in COVID-19 safe courtrooms where the maximum number of people permitted in court is seven. This extends to the County Courts (where damages claimed are less than £30,000) and the High Courts (where damages claimed are in excess of £30,000).

New instructions, as expected, fell in the early months of lockdown. We expect given the restrictions, that the number of motor, hospitality related claims, and employer liability/public liability claims will all be down on pre-pandemic levels, although it may be next year before the effects are truly felt. 

As the lockdown progressed we started to see ‘virtual medicals’ and reports based on these being served, but now without some of the checks and balances afforded by a physical examination in person (for example where there are orthopaedic/whiplash complaints).

Catastrophic injury claims continue to be progressed, albeit obtaining medical evidence can be problematic. However, a recent, albeit extremely restricted, rise in examinations under clean room conditions, has enabled this in some cases.

We are seeing a bounce in ‘COVID-19 settlements’, which we anticipate is in part due to the need to maintain revenues.

Prior to lockdown the Department of Justice at Stormont announced a proposed change to the discount rate in Northern Ireland from 2.5% to -1.75%, which would have a dramatic impact on damages. We have urged the Northern Ireland Executive to calculate the rate so that it reflects what injured people do with their compensation in real life – by way of a system similar to that in England and Wales. The legislation is anticipated for Spring 2021.

Contact: Amanda Wylie

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Portugal

There were some fluctuations in claims numbers during the first lockdown in April/May, as expected. While claims decreased by an average of 30% when compared to the previous months; more non-life insurance were filed between January and June (most were motor claims), which represented a 5% increase over the same period in 2019.

With regard to life insurance claims, an increase has been seen in relation to investment fund related policies - which is mainly due to the recent legislation that has strengthened the regulator’s functions in that sector.

Overall, all trial dates were suspended during lock-down, together with general procedure time-limits, which has caused a mild delay in judicial proceedings.

Since June when the lockdown was lifted, the Portuguese courts have coped well and cases are being trialled at a normal rate. Whenever there is any need to use the remote access – be it due to a larger number of attendants or because someone is in a COVID at-risk group – the courts will hold the trial and any other hearings in that fashion.

Therefore, we may expect a normal flow of closed claims until the end of the year as only 41% of the 4,793 closed claims have been favourable to the claimant, which does not stand for an abnormal COVID-related pattern.

Contact: Paulo Almeida

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Republic of Ireland

Due to the pandemic, the personal injuries court lists were severely compromised between March and October of this year. All witness trials were effectively suspended. Any form of hearing without witness evidence were moved to remote hearings. In contrast to other jurisdictions, the courts have not embraced the use of remote technology, which has resulted in a staggering back-log in cases awaiting trial dates. Appeal Courts are allowing remote hearings and Kennedys represented a party in one of the first remote hearings in the Supreme Court in June of this year.

In August the President of the High Court issued specific practice directions to attempt to restart personal injuries actions, however her primary advice was for parties to attempt settlement prior to trial. As a result of limited physical capacity of courtrooms and the necessity for parties/witnesses to attend – to date a return to full hearings has not been possible and/or has been very limited. One example of case that is being listed are medical malpractice claims where the claimant is terminally ill, but otherwise witness trials are not proceeding.

At present a move to remote hearings has not allowed for a ‘return to business’ in respect of personal injuries trials and this scenario is likely to continue for the remainder of 2020. 

As a corollary of the inertia of the courts we have seen far more cases proceeding to settlement over the summer and to mediation, which is encouraging for insurers.

Overall, we have seen a 37% increase in the number of liability claims received since April 2020 to date, as compared with the same period last year. There was a significant drop in claims across all liability lines in March, April and May but once restrictions lifted in June, and insurers returned to their offices, we saw a huge influx of claims, which has continued. We are, however, expecting a dramatic decrease in new claims notifications in Q2 and Q3 2021. At the moment we are dealing with claims relating to accidents in 2018/19. 

We anticipate COVID-19 related employer’s liability claims in respect of care homes to be a growth area for claims notifications next year.

Contact: Joanne O’Sullivan

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Scotland

Initially most of the Scottish courts closed their doors and were only dealing with urgent business via “hub courts”. The Scottish Courts and Tribunals service published guidance notes and updates which resulted in different practices being adopted by the various Scottish courts. However, the vast majority of cases were suspended. All sheriff courts are now open but running on limited capacity and with limited staff, due to social distancing restrictions. Generally speaking, civil hearings (a proof) are being postponed by at least six months. Whilst court hearings in the largest courts are taking place virtually by Webex, many outlying courts (with less resources or smaller buildings) are relying upon teleconference or written submissions. 

On a positive note, all courts are now accepting documents electronically. However, we have seen an increase in case management calls (often fixed at very short notice) where sheriffs are encouraging parties to narrow the issues in dispute as much as possible and assessing the appropriateness of cases for virtual hearings. This is delaying cases that might otherwise have been resolved swiftly and is also resulting in an increase in costs which will likely be borne by defenders. We are now factoring such costs into our suggested reserves. 

We have also observed an increase in cases being raised shortly before they become time-barred. We suspect that this is as a consequence of the economic downturn, both on the part of pursuers themselves and pursuer firms. 

Further, we are starting to see COVID-19 claims, particularly in travel and tourism where a full refund is being sought for a holiday that was shortened or cancelled for reasons connected to COVID-19.

COVID-19 has delayed the introduction of Qualified One Way Cost Shifting (QOCS) in Scotland. QOCS should have been introduced in spring of this year. It was hoped that the final rules would be drafted and implemented by the end of this year but it remains uncertain. It is anticipated that there will be a flurry of litigated cases once QOCS is in place. We have, however, seen the introduction of rules to enable group proceedings to be raised.

Contact: Rory Jackson

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Singapore

Overall, there have not been any significant changes to our claim process and consequent liability defence process implemented by the courts.

In the initial two to three months of the circuit breaker lockdown, Singapore’s market for liability defence work experienced a slowdown. This applied across the board to all classes of liability defence work as claimant firms, insurers and businesses in general were temporarily put on lockdown, with limited access impacting the volume of new claims filed by claimant firms and received by insurer clients.

The partial re-opening of the local economy since mid-June has seen a sudden upsurge in new instructions, which we largely attribute to a build-up of claims that were not pursued during the two month lockdown. Mid-June also saw the courts re-open, and there has been a noticeable upsurge in the volume of work in court (both State and High Court), not least to try to clear the backlog of delayed hearings in court. We expect this momentum to carry through to the end of the year as our court administrators work to clear the backlog of cases held back in our court system for 2020.

Singapore’s courts embrace of technology has meant trials and other hearings have been held remotely, including via Zoom. Pre-trial hearings are effectively handled either remotely or through an asynchronous process that removes the need for representatives from each party to attend before the same adjudicator. Indeed, due to a shortage of resources in terms of manpower and administrative capacity, Singapore’s legal fraternity (and especially the liability defence bar) is struggling to keep up with the pace of fast moving courts.

Nevertheless, there has been an increased rate of closure of matters over the last two to three months and we are optimistic of this trend continuing through the new year. The challenge will be to keep pace with the rate at which the courts are addressing the backlog, with Singapore’s Judges and Registrars showing no signs of slowing down the wheels of justice.

Contact: Patrick Yeo

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United States

In the United States, the greatest impact on litigation caused by COVID-19 is the inability to conduct jury trials, including in civil matters. Therefore, with courthouses restricting the number of people allowed inside, problems have arisen. Ordinarily, potentially hundreds of citizens are brought to the courthouse every week to fulfil their jury service. Prior to the pandemic, these individuals would be taken to a relatively small jury assembly room to await being called up to a courtroom to be considered for a jury in a case. If selected, they will sit with eight to 12 other jurors through a lengthy trial. Obviously, this cannot currently happen.

In response, some states are piloting controlled jury trial programs for small cases, usually involving one plaintiff and one defendant. Jury selection would be conducted virtually. Expert witnesses would give their testimony via de bene esse examination (i.e. outside of court and prior to the trial). However, these pilot programs are experiencing problems. First, getting certain people to honour the jury notice they receive is challenging. Many individuals were made redundant, furloughed or otherwise lost their jobs during the COVID-19 restrictions and may have only just returned to their job or found new employment. As such, many are not willing to now tell their employer that they cannot come to work because they have to sit on jury duty for five days.

Second, due to an abundance of caution, the pilot programs are exempting individuals over a certain age from sitting on the juries, as these individuals are in the COVID-19 high risk category. Applications are already being filed with the court objecting to this on the grounds that this exemption denies the parties their right to have a certain segment of the population sit in judgment of their case. 

Finally, any jurors who do show up to the courthouse are being used for criminal and family court matters, as those divisions are said to take precedence over the civil matters. These pilot jury trial programs are slow to get underway, so the backlog of civil cases is growing at a fast rate, and it will take a long time for the court system to catch up.

At the same time, other court and litigation proceedings are being conducted virtually. Motion hearings, status conferences, settlement conferences, arbitrations and other pre-trial hearings are being conducted via Zoom. Likewise, depositions are being conducted via Zoom, although the consensus is that depositions conducted this way are not as effective because the attorneys cannot evaluate the witness as well as can be done in person. The number of mediations has increased and are being conducted successfully via Zoom and other platforms.

So far through the COVID-19 period, new defense matters in all segments of our practice have been coming to us at increased levels. Of course, with most plaintiff lawyers routinely waiting until the end of the statute of limitations period to file their cases, this steady stream of new cases is not entirely unexpected as they involve pre-COVID-19 incidents. 

However, we expect a downturn in the next 12 to 18 months given the COVID-19 restrictions and their impact on the activities that traditionally lead to accidents and lawsuits. For example, businesses are requiring that their employees work from home, and bars and restaurants are closed, so you have fewer people driving, which leads to fewer motor vehicle accidents. Likewise, with bars and restaurants closed, there will be fewer liquor liability cases. Moreover, construction was stopped for an extended period of time, thereby minimizing construction accidents. 

Elsewhere, the plaintiffs’ bar is already ramping up for COVID-19 liability cases.

Contact: John Gilfillan

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Kennedys has continued to offer a full and uninterrupted service to all clients in 2020. We have not furloughed any staff. Our business has proven itself resilient, and will continue to provide a first class legal service around the world, whenever our clients and their customers need it.

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Coronavirus (COVID-19)

As developments unfold, Kennedys experts across the world advise on what the COVID-19 pandemic means for you and your business.

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