More than one-third of compensation awards goes in fees

Legal and administrative fees accounted for 35% of the compensation awards made last year amid fears of rising levels of payouts, according to new research.

The Institute of Actuaries report, 'The Cost of Compensation', found that 10.2 billion was awarded in compensation last year.

The figure was found to be increasing annually by 15%.

The report said the UK could follow down the route of the US compensation culture, but differences in the legal system meant the scale of awards is likely to be lower.

'However, there is some concern that if after-the-event insurance takes off, that may push us more towards the US system,' it said.

A Law Society spokesman said: 'People are more aware of their rights today than they were perhaps 20 or 30 years ago, and this is not in itself a bad thing.

There is a distinction to be made between those who sue with good reason and a culture where people frivolously seek compensation with ridiculous claims.'

Victoria MacCallum