Compensation culture – Recount demanded
The Legal Service Board’s recent report into referral fees revealed some interesting statistics.
It showed that the number of personal injury claims arising from RTAs has risen from the year 2000 to 2009 (see Figure 21 on page 96). This is despite the number RTA accidents involving personal injuries having decreased (see Figure 16 on page 83).
“In contrast to the decline of RTAs and RTA injuries, motor personal injury claims have been increasing from 400,000 in 2000-01 to 625,000 in 2008-09.”
The report concluded that:
“Overall therefore there is evidence that referral fees have facilitated a growth in the number of motor claims as individuals make claims that would not otherwise have arisen.”
On the other hand, there had been no corresponding increase in EL claims during the same period. The report commented on this apparent anomaly in this way:
“there is no evidence of a trend in the level of referral fees (or their equivalent) among trade unions, hence we would not necessarily expect to see an increase in the number of employer liability claims. Indeed, interviewees believed that the employer liability area was not facing a similar trend to the RTA sector because the employer liability sector had not seen as great an increase in marketing activity that had occurred in the RTA sector. Interviewees indicated that the increase in the number of claims in recent years was related to the economic cycle rather than referral fees.”
None of this seems a particularly convincing explanation for the lack of an increase in EL claims, with the possible exception of the economic cycle. It’s hard to have an accident in a factory when we don’t have any left in this country.
The report firstly seems to assume that EL referrals come mainly from trade unions. Although these are naturally significant, only a minority of employees are members of trade unions. Secondly, whenever I see a claims management company advertisement on television it is almost invariably focused on EL/trippers/slippers claims rather than RTA claims. I have seen very little indication of an increase in RTA marketing for claims in recent years, although I recognise that does not exactly amount to a comprehensive review of the subject.
However, assuming the figures for the rising level of RTA claims are accurate, this raises another issue.
Readers may remember the Better Regulation Task Force report on the “compensation culture” back in 2004. This concluded that the “compensation culture” was a myth and that the number of personal injury claims was going down. Looking back on the report it seems this conclusion was based on a graph showing a reduction in claims for the year 2003/04 (Table 1 on page 12). Since this report was published, it hasn’t been possible for a claimant lawyer to open their mouth without them repeatedly banging on about this conclusion.
However, looking at the figures contained in the Legal Services Board report, it appears that the 2003/04 figures quoted by the Better Regulation Task Force were an anomaly, if they were even accurate. Given the majority of personal injury claims are RTAs, and there are an increasing number of RTA claims despite the number of accidents decreasing, the “compensation culture” begins to look less and less like a myth. The Legal Costs Blog demands a recount.