Compensation culture? What compensation culture?

Britain, we are constantly being told, is broken. It's not just the economy, although that's certainly pretty broken. It's not even that our politicians, journalists and bankers are morally bankrupt, although some of them certainly are. No, one of the main reasons Britain is broken is because we are in the fervent grip of a compensation culture.

At least that's what our politicians think.  I disagree. I don't think  we are awash with people out to make a fast buck by pretending they have suffered an injury or that something they did through their own stupidity was someone else’s fault.  Of course, perception is often as important as reality.  Stories like  ‘Teacher awarded £300,000 for slipping on a grape’ fuel the idea that our schools and hospitals are not able to buy books or pay nurses because they are forking out millions in compensation and legal fees.

But you don’t get awarded £300,000 for nothing and the teacher in that case was left in chronic pain and unable to work because the school had failed to do anything about litter.  As the claims management companies are fond of asking, were you injured in an accident that wasn’t your fault?, because if it was your fault you won’t be entitled to anything.  The High Court yesterday proved that very point when it dismissed a paralysed young woman's claim  for £6 million damages.  She had suffered her injuries when she dived into an indoor swimming pool at a party.  But the judge found that the pool’s owner was not liable as the pool was not unsafe for diving and there was no suggestion that he should have banned the adults from swimming in it.  This is a tragic outcome for the young woman, but, ultimately, no-one else was to blame (David Allen Green has written more about this on his marvellous Jack of Kent blog).

So if the law is designed to ensure only those injured due to the negligence of others get compensation, why is there such a fuss about it?  Well, it’s probably a combination of things.  First among these, according to insurers, many solicitors and Jack Straw, are referral fees.  Typically, solicitors pay these to insurers and claims management companies (and just about anyone else who might know if a car accident has taken place) for personal injury cases.  The chairman of the Bar Council, Peter Lodder QC, has said they are ‘bribes’ lawyers should be chosen on their skill and expertise, not who has paid whom.  I have a lot of sympathy with that view, but I am not entirely sure how banning them is going to ensure consumers really do get a choice of solicitor, although it may, in the short term, stop those mysterious phone calls you get from companies you’ve never heard of after a car accident (or in my case, scrape down the side of my parked car while I was in the supermarket).

Number two on the list is probably whiplash claims, which make up about three quarters of all personal injury claims arising from road traffic accidents, twice the European average, apparently.  As the insurers put it ‘it’s unlikely we’ve got the weakest necks in Europe’.  So they’ve come up with a whiplash lie detector that calculates the probability the claimant really does have an injury based on the cars involved, the speed they were going and the visible damage.  The problem is that it’s likely it will only help provide certainty for the top and bottom five percent of cases. Brilliant plan.  What about the ones in the middle?  And how do you know that a shunt from behind in a queue of traffic isn’t going to cause an injury?  I don’t want to be alarmist, but remember Natasha Richardson who died after a bump on the head and thought she was ok?

So that’s referral fees and whiplash claims, what else is fuelling this rapacious appetite we Brits have for getting money for nothing?  Well, if I were being very controversial I would argue it’s probably down to the professionals involved.  Lawyers and insurers don’t like each other very much, so getting them to sit down and chat about things and work it out nicely is a bit like trying to get Obama and the Tea Party to agree on a budget.  And none of them like the claims management companies very much.

The insurers say that the system is bloated with cash and dodgy claims and it’s all the solicitors’ fault.  Solicitors say insurers deliberately delay admitting liability for injuries and try and fob claimants off with quick, inadequate settlements.  The claims management companies just play them off against each other and litter daytime TV with dreadful (if effective) adverts.

The government, on the whole, seems to agree with the insurers and is proposing a raft of reforms that will certainly shake things up a bit (the ‘Jackson’ reforms) and may even try to ban those claims adverts.  The insurers think this is great and will make the system more efficient and effective.  Solicitors think it will curb access to justice and put many of them out of business.  The claims management companies are just going to find another way to get claimants.

Somewhere in the middle of all this is an injured person who may, or may not, have been asked what they actually want.  Astonishing really.  So actually, if we’re being really honest about it, the compensation culture, if indeed there is one, is created, perpetuated and lovingly nurtured by the very people who complain about it all the time.  QED.