Legal - Compensation Claims: Seeing sense on compensation culture

The title of Lord Young's report, Common Sense, Common Safety, is indicative of a no-nonsense approach to tackling the perception of risk in society. The report is endorsed by the Prime Minister and has the full backing of the cabinet, so it should not be taken lightly.

Critics say that the proposals around compensation are too broad brush: full implementation of the Jackson Review on civil costs, including removing recovery of success fees and after-the-event premiums; restrictions or a complete ban on high-pressure advertising techniques by claims farmers and lawyers; an end to selling injury claims for referral fees; extension of the Ministry of Justice's new RTA claims process into all fast-track accident claims. Others have accused Lord Young of talking up a compensation culture that exists only in the eyes of the media, yet the very reasons why he was asked to produce this report are clear to many every day through adverts in newspapers, on radio and TV, as well as texts and e-mails soliciting claims.

Dose of reality
In truth, it is high time that people were discouraged from believing that every incident should lead automatically to a claim. As the Prime Minister said often before the general election: "We simply cannot go on like this."

Compensation culture is not the sole focus of the report, which also aims to remove "senseless rules" that inhibit volunteering and introduce more proportionate risk assessment for low-risk businesses.

Arguably, we have been here before. Some of the proposals on claims farmers and on the law of negligence echo the words of former Prime Minister Tony Blair in speeches leading up to The Compensation Act (2006). There is a need to revisit these issues though, learning the lessons from 2006 and the astonishing growth of claims farmers since they were regulated.

The referral fees debate will roll on: the Legal Services Board has indicated that there is nothing wrong with them but fails to consider how a lawyer can find up to £1,000 from fees generated by a claim to pay to an intermediary without any obvious advantage to the client. An enlightened view of consumer interest is to accept that the £1,000 does not all need to be in the system in the first place so that other consumers, those who pay insurance premiums, do not lose out.

The end of Lord Young's report sets out an ambitious timetable for full implementation by April 2012. That date is not coincidental: there is a real imperative to ensure his recommendations are in place before the London Olympics so that the thousands of volunteers needed to make the games a success are not deterred by fear of claims farmers and petty claims.

Andrew Parker is head of strategic litigation at Beachcroft.