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Is it time to change the rules?

Reading a well known periodical recently, I noticed that the Nigerian economy had neared doubled in size!  Reading on, it seems that the old method did not take everything into account.  This system of improving, or more properly ‘adjusting’, the figures is known as ‘re-basing’ the economy.

Looking more closely, whole industries had developed since the last rebasing, telecoms and the movie industry either did not exist or where very small at the time.  These industries now form a large part of the Nigerian economy.

At the same time I heard a snippet on the Today programme (radio 4), the European Union is looking into local economies’ Gross Domestic Product (GDP) and has found there are things that do not appear in official figures, prostitution and drugs for example (I kid you not).  According to the EU, these are part of the local economy and should be included in GDP.  It seems that individual country’s contribution to the EU depends on GDP, so increasing the size of economies means that the EU coffers grow even larger, without a headline increase in contribution levels, cunning or what?

Focusing for a moment on our particular industry, legal services, the LASPO Act has rebased the claimant litigation economy, introducing the need for an economics ‘test’, what are the costs of pursuing an action against the likely rewards?  As the saying goes ‘some people need a reality cheque’ (pun intended) both in terms of the risk of litigation and the likely outcome in respect of damages.  It maybe a little unfair, but it’s not uncommon for clients to think their case is more promising and worth more than experience tells us.

So before we trot off to see underwriters and funders we help you by going through a ‘re-basing’ of sorts with any proposal that we see.  We cast a critical eye over the proposal, is the case really worth £5M?  Does it make sense to run a case worth £50,000 when costs are likely to be in excess of £100,000?  Whilst this critique is more likely to ‘deflate’ a case, the exact opposite of what tends to happen when GDP is ‘re-based’.  Through a spot of positive criticism (may not be needed!) we can get a proposal into the best possible shape before going to the market.

Keep an eye out for our future ‘blogs’ in which we give handy tips on applying for insurance and funding.