Inquiry: Compensation Bill may increase cost of litigation

A government effort to restate the common law of negligence is redundant and should be scrapped, the constitutional affairs select committee said this week.


Following an inquiry into the compensation culture, the MPs said clause one of the Compensation Bill 'may even have the perverse effect of increasing, at least in the short term, the amount and cost of litigation' because of the need to define the 'desirable activity' to be protected under the Bill.


The inquiry found that, contrary to public perception, the number of personal injury claims has not increased in recent years, although it said the introduction of conditional fee agreements 'has adversely affected the reputation of legal services providers, whether professional lawyers or not'. It also found that inappropriate regulation - combined with public perception and misleading media coverage - can lead to an exaggerated fear of being sued.


The committee welcomed plans to regulate claims farmers, but casts doubt on the Claims Standards Council's ability to undertake the role. It said more detail was needed on issues such as restricting personal injury advertising in public buildings.


The committee also expressed surprise that the Department of Health has produced an 'ambitious compensation scheme' in the NHS Redress Bill without setting out any detail on how it would work or sufficiently consulting doctors and lawyers.


Committee chairman Alan Beith MP said: 'There is a real problem with excessive risk aversion in Britain today, but it is not caused by personal injuries litigation or the "no-win, no-fee" system. The root causes, such as misunderstanding of risk assessment, are what need to be addressed.'


Law Society chief executive Janet Paraskeva stressed the importance of tackling the compensation culture myth and called for the regulation of claims farmers 'without delay'.