Exploding the myth
While the better regulation task force has exposed the myth of a compensation culture, Janet Paraskeva sets out why claims farmers should be regulated
It was interesting to see how last week’s media characterised the Lord Chancellor’s remarks about the myth of a compensation culture in the UK. While some journalists managed to get it right, some in both the press and broadcast media were reporting that the Lord Chancellor had warned lawyers to end Britain's compensation culture or face government regulation.
Sloppy reporting is always frustrating, but it is particularly exasperating with this issue, which has already suffered so much from poor media coverage. What Lord Falconer actually said, in a thoughtful speech on the issue, was that ‘if the claims management sector does not put its own house in order we will consider how new formal regulation could be introduced’.
|
It is good to see that at last some sense is being spoken about the so-called compensation culture. The Law Society has long been arguing that the idea that the UK is in the grip of a compensation culture is completely ill-founded.
Lord Falconer was responding to a report published in May by the Better Regulation Task Force (BRTF), following a detailed investigation, in which it found no evidence of a claims culture. What it did find was evidence that there was a fear of a compensation culture and that the myth was largely perpetuated by the press, and in particular some ‘senior commentators’. Ironically, it seems that those who most decry the possibility of a compensation culture are probably responsible for perpetuating the belief that there is one – resulting in more and more of the bizarre decisions by schools and local authorities that journalists are so quick to mock.
In fact, the reality is very different from the myth. Few people know that Britain spends less on compensation than any other major industrialised country. Or that the number of new claims in 2003 was much lower than it was five years ago. According to the Court Service, the number of new claims issued in the county courts has fallen by 32% in the past five years.
People are also unaware that the number of solicitors’ firms carrying out personal injury work fell from 28% in 1999 to 21% in 2002 – mainly because fewer firms see this line of work as reasonably profitable. Rather than lining lawyers’ pockets, the no win, no fee scheme can be risky for lawyers. And the public does not realise that there was only a 2.6% increase in the number of personal injury claims in 2003 – and that increase was mainly the result of a growth in industrial disease-related claims from workers such as miners and those suffering asbestosis. The number of accident claims remained largely static, rising only by 0.2%.
Alongside an ignorance of the facts, the other factor that fuels the perception of a claims culture above all else is probably the activities of the claims management companies. As Lord Falconer argued, the way these companies advertise their services is often pernicious and misleading.
With one or two reservations, the Law Society warmly supports the BRTF’s report. Several sensible recommendations were made in the report about how to address the issue.
In particular, we support the task force’s call for claim farmers to be regulated. The Law Society always advises anyone who believes they have a genuine claim to contact a solicitor. If solicitors step out of line they are answerable to the Law Society. Claims farmers are answerable to no one, and the public has no comeback against shoddy performance.
In his speech, Lord Falconer issued a final warning to claims companies that they should introduce a scheme for self-regulation or face government regulation. We believe that the constitutional affairs secretary should give them until autumn 2005 to put their house in order. If they have failed to come up with a proper voluntary code by then, he should introduce regulation. If they do manage to put a voluntary code in place before then, it is essential that it is agreed by the Office of Fair Trading.
There are other sensible recommendations in the BRTF report about advice for consumers and advertising in NHS hospitals and surgeries, and about greater use of mediation and the better management of occupational health. The one recommendation that does concern the Law Society is the proposal to raise the limit for the value of personal injury claims in the small-claims track from £1,000 to £5,000. The problem is that personal injury cases between £1,000 and £5,000 can involve complex issues of liability, and defendants will almost always be insurers that will have expert in-house advice and will instruct lawyers. This means there could not be a level playing field for litigants-in- person and in our view this would diminish access to justice for a large number of people.
While frivolous claims must be discouraged, the final point that must never be forgotten in this debate is that anyone who has genuinely suffered injury because of someone else’s negligence should be able to claim compensation. Nothing should stand in the way of that.
Janet Paraskeva is the Law Society chief executive
No comments yet