Dispelling compensation myths

'Compensation culture' is one of those alliterative phrases beloved of headline writers.

It paints a picture of a US-like environment where clowns at children's parties are forced to pay crippling professional indemnity premiums, and where the spilling of a hot drink results in years of litigation.

It is usually followed by the caveat: the only people who benefit are the lawyers.

The old chestnuts will reappear now the government's regulation watchdog has announced the launch of an investigation into the effects of compensation litigation.

That is not to say that the issue should not be scrutinised.

As a society we are more litigious than we were 50 years ago.

But the questions should be: How much more litigious are we? In what circumstances are we more likely to seek compensation through litigation? And what is the actual effect of greater use of litigation?

It is lazy for commentators to blame lawyers for whatever ill they perceive exists.

And in fact, statistical reality debunks many of the myths.

The Department of Works and Pensions' compensation recovery unit recorded 615,000 claims in 2002/3, a 0.5% rise on the year before, but only a third of the estimated number of accidents.

That statistic reinforces figures released last autumn by market analyst Datamonitor, which also predicted only a 2.1% increase in claims by 2007.

Rights, and the citizen's access to them, are cornerstones of an advanced democracy.

The review is necessary as it will help to strike the delicate balance between access to justice and economic efficiency.

It is also to be hoped that it will prevent myths being accepted as facts.