Stephen Byers' claims that lawyers are cashing in on compensation actions at the expense of schools and the NHS have sparked outrage from the legal profession, says Grania-Langdon Down

Crass, nonsensical, illogical, simplistic and just plain wrong are some of the exasperated comments of personal injury lawyers at allegations by former cabinet minister Stephen Byers that there has been a 'dramatic growth' in the 'blame, claim and gain' culture (see [2004] Gazette, 18 March, 4).

Mr Byers told a recent conference in Birmingham on future needs in education and healthcare: 'Money is being taken away from saving lives and educating our children to pay for a compensation system in which the real beneficiaries are the lawyers and claims management companies (CMCs).'

He suggested introducing a no-fault compensation scheme for all cases involving the National Health Service (NHS) or schools, with maximum financial limits.

Mr Byers proposed going even further, with a new system that avoids the legal process but provides life-long care and assistance where appropriate, without fault needing to be proved, alongside an effective public complaints procedure and disciplinary action against staff if necessary.

A former law lecturer, Mr Byers also called for a review of conditional fee agreements (CFAs), a cap on costs paid to lawyers and more effective regulation of CMCs, while insurance companies should be required to develop new procedures to resolve claims more quickly without going through the legal process.

He said there has been little public debate about the growth in 'this blame, claim and gain culture - yet the consequences for our society are dramatic', with playground equipment fenced off and teachers advised not to supervise school outings.

'Little public debate? Where has he been for the last couple of years?' asks David Marshall, president of the Association of Personal Injury Lawyers (APIL).

'The government reviewed it twice last year and to suggest there has been no debate in the media is astonishing.'

He also points to figures collected by the Compensation Recovery Unit, which recovers from the compensator amounts equivalent to social security benefits paid as a result of injury, accident or disease.

These show the total number of accident and disease claims has gone down slightly from 735,931 between April 2000 and March 2001 to 706,697 in 2002/03.

The latest figure for April 2003 to January 2004 is 610,447.

Mr Marshall, managing partner of south London firm Anthony Gold, challenges Mr Byers' statistics that compensation claims from schools have reached 200 million a year - the equivalent of the salaries of 8,000 teachers - while NHS payments for clinical negligence have risen from 1 million in 1974 to 477 million, enough to pay for 22,700 nurses.

'His mathematics are crass,' he says.

'I am pretty sceptical about the figures for the claims against schools - are they just children making claims or do they include claims by teachers against their employers? Should they be the only employees who, if their employers are negligent, are not entitled to sue?

'The 1 million for NHS claims in 1974 is a very soft figure - there wasn't Crown indemnity then, so if someone was injured by a doctor, they had to sue the individual; the NHS didn't pick up the tab.

Clearly the number and amount of claims have gone up, but you can't make a direct comparison.'

Mr Marshall also dismisses Mr Byers' suggestion of no-fault compensation schemes as 'a simplistic solution which doesn't add up and won't deliver the social benefits that we need'.

He explains: 'The chief medical officer (CMO) spent two years looking at this in great detail and came out with a categorical rejection of a no-fault scheme only last July.

The first reason was it was completely unaffordable - the CMO calculated there were 800,000 adverse incidents every year in the NHS, yet only about 8,000 people bring medical negligence claims, and not all of those are successful because fault is very hard to prove.

He estimated the cost of a no-fault scheme would be 4 billion each year.

'The other factor was that a no-fault scheme would take away all concept of accountability - arguably, litigation has actually made hospital trusts take risk analysis and prevention more seriously.'

While Claire McKinney, president of the Forum of Insurance Lawyers (FOIL), agrees with Mr Byers that too many people look on the public purse as an easy source of compensation, she is also against no-fault schemes.

'The problem is they don't encourage risk management.

If I am a headmistress and I know someone injured at my school is going to get compensation regardless of whether or not I am at fault, why am I going to spend scarce resources on putting risk management strategies in place? However, what everyone in society needs to be aware of is the cost of these claims is being borne by all of us through our council tax or insurance premiums.'

She says the Department of Work and Pensions held a meeting recently for all stakeholders, including FOIL and APIL, to develop some pilot schemes for dealing with low-value claims without involving lawyers.

'The government, judiciary and insurance world are all determined to "de-lawyer" the process as far as possible and FOIL's view is "quite rightly so", 'she says.

But does that provide individuals with a level playing field? No, says Andrew Twambley, a partner with Manchester specialist personal injury firm Amelans, emphatically.

'If you take lawyers out of it, it will always be an uneven playing field because there will always be someone on the other side who knows far more than the individual complainant.'

Mr Twambley says the idea that there is a compensation culture makes great headlines - the latest involve a ban on backstroke in some public swimming pools.

'It is a useful club for the government to beat lawyers - even your granny has heard of it,' he says.

'But there is simply no evidence to back it up.

If anything, the number of claims is going down.

Obviously there are some silly claims that are blown out of all proportion, like the tabloid story of someone trampled by some animals in a safari park under the headline "I was eaten by a wildebeest".

'But these have reduced dramatically since the end of Claims Direct and The Accident Group.

There were despicable cases of salesmen hanging around schools encouraging mums to make claims, but those have now gone.

Insurers aren't stupid - if you take on a silly case, they won't pay and it will go to court and you will lose and you won't get paid for 18 months' work, and will lose all the money you have spent on disbursements.'

Amelans is behind possibly the biggest push by personal injury solicitors to reclaim the market from less creditable CMCs through its InjuryLawyers4U marketing consortium, which has so far spent more than 5 million on advertising.

When it comes to no-fault schemes, Mr Twambley says: 'They just mean the injured party doesn't get proper representation and there is inequality of bargaining power.

It is a way of saving damages, not costs.

The simplest way to reduce costs is for insurers to make sensible offers early on and not try to drag things out in the hope the injured party will give up or accept a lower figure.

Under no-fault schemes, that sort of bullying would be the norm.'

He says it is a 'bit rich' for Mr Byers to criticise CFAs when he was in the government when it extended their operation to all personal injury cases.

'The government brought them in to avoid paying legal aid.

They invented the system and the genie is now out of the bottle.'

Mr Marshall agrees: 'It is particularly unfair to blame the lawyers when the government brought conditional fees in against lawyers' advice.

We have always been prepared to talk about ensuring costs are proportionate, which is what the rules say - the question is how you deliver that.

'It is why we entered into discussions on pre-issue road traffic accident costs because we felt there was a predictable course to those cases.

That doesn't apply, for instance, to employers' liability, because the way defendants deal with those cases can vary tremendously.

A cap on the costs paid to lawyers would just be a crude mechanism that isn't sensible.'

Mr Byers was 'too busy', according to his office, to discuss his speech.

However, it comes as ministers are looking for ways of reducing the costs of claims against public authorities.

David Lammy, junior minister at the Department for Constitutional Affairs, has made it clear that there will be 'no more funds' for legal aid.

The Legal Services Commission (LSC), meanwhile, is working on a consultation paper, to be published mid-April, on whether there are specific categories or situations currently within the scope of legal aid where CFAs could be encouraged - although it says it does not have any plans for a general replacement of legal aid with CFAs.

An LSC spokesman explains: 'For example, in clinical negligence cases, we are interested in exploring a combined approach where public funding would remain for the investigative stage but CFAs are introduced thereafter.'

For Ms McKinney, the problem with CFAs is that the claimant is 'totally divorced' from the cost of the claim.

'We would like to see some link between complainant and cost, that is contingency fees where the cost comes out of the damages.

The way the arrange-ments are structured at the moment has gone wrong, so complainants are not worried that the costs will come back to haunt them, which can lead to an abuse of the system.'

Kerry Underwood, senior partner of Underwoods in Hertfordshire, is the author of two books on costs.

He says there are two reasons why legal costs have gone up - both directly attributable to the government.

'The first is the Woolf reforms, which make it necessary to do a huge amount of work, even in the simplest cases.

The second is the recoverability of the success fee and the after-the-event insurance premium from the defendant.

'I think recoverability is wrong because the claimant is already avoiding the risk of paying their lawyer in the event of defeat.

It is unfair that defendants, as well as paying damages and ordinary costs, should be hit by extra charges which are purely dependent on the funding arrangements which the claimant's solicitors happen to have with their client.'

However, he says it is 'extraordinary' that Mr Byers should complain about CFAs.

'The government introduced them to save the public purse in terms of legal aid because they knew solicitors wouldn't pursue risky cases if they weren't going to get paid if they lost, so he can't have it both ways.

'Solicitors are hardly the most daring of professionals, so the idea that they are bringing stupid claims is simply untrue.

Look at the number of cases being lost at court - that hasn't gone up at all.

I suggest what is happening is the woeful decline in public services - transport, schools, hospitals - has led to more negligence and if Mr Byers thinks the public will be reassured if claims can't be brought against those sectors, he must be on another planet.

'His alternative is to suggest no-fault schemes, which would send claims rocketing by removing any responsibility from individuals.

The idea is absolutely nonsensical, utterly illogical and, ironically, would create the very compensation culture he is complaining about.'

The one area where Mr Byers did get support is over his call for more effective regulation of CMCs.

Law Society chief executive Janet Paraskeva says the Society is pleased that the Clementi review into the regulation of legal services devoted a whole chapter to it.

She explains: 'CFAs opened up a new market for unregulated and unqualified claims companies, and we are very anxious about their aggressive marketing techniques.

The most recent example we have is that claims companies - sometimes using names that make them sound like law firms - are cold-calling widows of people who have died from mining-related illnesses.'

She points out that the Society's council has drawn up a new referral code that allows law firms to buy cases but requires solicitors to make that clear to clients.

'We will also come down very hard on any firm found to be using a referral agency which uses techniques, such as cold-calling, which are against the code.'

Overall, she says, the Law Society sees no evidence that there is a compensation culture.

'If you benchmark the amount of awards against other European countries or the US, we aren't even on the starting blocks.

I know teachers, for instance, are worried about taking a school trip for fear of claims against them.

But negligence claims need to be upheld because that way trips are properly planned and lives are less likely to be put at risk.'

As Mr Underwood says: 'The best reality check for all professionals, including lawyers, is that if you make a mistake, you can be sued.'

Grania Langdon-Down is a freelance journalist