For the good of society, judges should throw out spurious cases more readily and claims managers must be regulated, says Claire McKinney

Lord Falconer's recent speech outlining the government's response to the Better Regulation Task Force (BRTF) report, Better Routes to Redress, was, in the main, music to my ears.


Where I disagreed with the Lord Chancellor was in his conclusion that a compensation culture does not exist in this country. As with the BRTF report, he referred to statistics showing that the number of cases registered with the Compensation Recovery Unit have not increased. This is only part of the picture and ignores all of the less meritorious claims that claimants' solicitors have been compelled to purchase under their agreement with a claims management company, but which will never be actioned, let alone registered with the Compensation Recovery Unit.


Whether a claims culture exists or not, the perception that it does and the fear of being sued affects the way we behave in society. Lord Falconer recognised this when he referred to organisations becoming risk averse, local authorities cancelling events and doctors practising defensive medicine. His speech highlighted the fact that there are accidents where no one is to blame and that people should take reasonable care for their own safety.


I hope that the judiciary will heed the plea to resist spurious claims for the good of society. It is too easy to forget the link between the cost of dealing with spurious claims and increases in insurance premiums and Council Tax.


Interestingly, Lord Falconer did not maintain that conditional fees had contributed to the claims culture, but more that they afforded access to justice to a greater number of people. The latter point has to be acknowledged but divorcing the claimant from his own solicitors' costs, which he will never have to pay, is hardly a deterrent to a claims culture. The BRTF recommended that the Department for Constitutional Affairs (DCA) should carry out research into the impact and effectiveness of contingency fees. I hope that the fact that this was not referred to by Lord Falconer does not mean it is forgotten.


Another recommendation of the BRTF was that the DCA should carry out research into raising the small claims track limit coupled with urging more consideration of mediation and rehabilitation. This was very much supported by Lord Falconer and the sterling work headed up by the Department for Work and Pensions on the Employers' Liability Compulsory Insurance claims pilots, and vocational rehabilitation is evidence of the government's commitment.


The insurance industry's huge challenge is how to deal with the claims management industry. Whether you love them or hate them it would seem that claims management companies are here to stay. The BRTF's primary recommendation was that the industry should attempt to self-regulate, but if that was not achieved with Office of Fair Trading approval by December 2005, then regulation would be imposed. Lord Falconer supported this approach.


The work in this area has begun and a brave attempt has been made by the Claims Standards Council to provide a draft code. However, the challenge is not just to have a code, but to demonstrate acceptance and adherence by the industry.


What is missing from the rules at present is the requirement for additional financial security to protect consumers. They could be protected by a requirement for claims management companies to take out a bond along the lines of ABTA-associated travel agents. This might be yet another disincentive to those entering the industry to make a quick buck and then retreat to a villa in Spain, but that can only be a good thing.


Claire McKinney is president of the Forum of Insurance Lawyers and a partner at Davies Lavery in Birmingham