September 5, 2014
With sensational headlines such as 'compensation-itis' and 'compensation culture out of control', we are likely to have caught wind of the 'compensation culture' sweeping across Britain. But are these headlines simply fuelling a backlash against a misconception, and is there any hard evidence to back up the existence of a compensation culture?
Many believe the tendency to claim compensation stems from the USA where large damages payouts and expensive law suits have made headlines for years. In Britain, a rise in solicitors publicly offering American style 'no win no fee' services have often been blamed for the increase in people enticed to claim for compensation on our side of the Atlantic. This is fuelled by the exposure of claims management companies who purposefully seek out claimants thanks to the regular payments they received for doing so.
It is easy to lambast such practice, but are we looking rationally at the facts and have we considered what would happen if justice wasn't easily accessible for those who need it?
Compensation Culture Facts
Recent research by YouGov revealed that only 25% of Brits who suffer a personal injury are likely to make a claim, which is actually down on 2013's figure of 29%.
Of the 75% questioned who were in a position to make a claim but didn't, the reasons given included the following:
1. Their injury wasn't perceived to be bad enough (35%)
2. Don't believe in claiming compensation (22%)
3. Not thinking their case was strong enough to win (9%)
This therefore explicitly states that 22% - almost a quarter - of those involved in an accident that could give rise to a claim for compensation would not claim simply because it isn't in their nature - this hardly suggests a rampant 'compensation culture' in which any accident is claimed against.
What needs to remain central in examining compensation issues is that the financial cost should never be a bar in restricting access to justice, and is the core principle behind no win no fee funding. The YouGov report showed that only 5% of those eligible to pursue a claim decided not to do so due to the concerns about cost, and this is something that should be celebrated.
Controlling the market
The compensation arena is in no way lightly regulated, and there have been sweeping changes to fee rules in recent years in an effort to control personal injury claims. Some, such as banning solicitors from paying case referral fees from third parties, stem the tide of those who may be unduly encouraged by fee-hungry referrers. However steps such as forbidding the recovery of the success fee from the negligent party has only meant that the injured person has to give up a portion of their compensation award to pay towards solicitors' fees.
Regulation is of course necessary to ensure the system is not abused, but in doing so we must ensure this does not end up harming those who deserve to be compensated for an accident.
Confusion over unsolicited calls
Despite the change in the law, the YouGov report suggests that there is still activity in the market place relating to unsolicited contact to encourage claims. I'm a personal injury solicitor, and even I have received numerous calls and text messages encouraging me to claim for an accident that never happened!
However what should be remembered with these figures is the fact they are in no way instigated by solicitor's practices. A solicitors' practice is forbidden by their code of conduct from making unsolicited contact with potential clients, and so it is a misconception that they are behind such text messages or calls.
The role of compensation - protecting the vulnerable
Interestingly, of those contacted by a 'cold' call, text or email, 13% of those who had decided not to claim, were persuaded to do so. Some may find this shocking but I would argue this is not necessarily a bad thing - if you have been injured through someone else's negligence, why shouldn't you claim?
There are of course instances in which people make fraudulent claims and unfairly claim damages for fictitious illness or injury, and these should be stamped out. However instead of focusing on removing the right to claim compensation altogether, we should focus on ensuring we only take on authentic cases, and that people know the system cannot be taken advantage of. Fraudulent claims are also not a new phenomenon, and we cannot simply blame modern culture for those who wish to bend the law.
To me it seems dubious to suggest that a claim rate of only 25% justifies a label of a British compensation culture. What we should be concentrating on is the 75% of people who could have claimed claim but didn't; it is these people who have not had access to the justice to which they were entitled?