Are You Too Scared to Risk Having Some Fun?

IS the compensation industry damaging trade and our ability to enjoy ourselves?

THE man canvassing for a No Win, No Fee agency said it all by admitting "some claims are genuine". They are, to be sure. People said accidents will happen. That's no longer the case. Someone must take the blame. Writs thud on the floor almost before the claimant has banged his head on the pavement.

We thought the "sue society" was confined to the US but it's caught on here. Compensation culture is making people's lives a misery.

Any public place - theatre, cinema, restaurant, church, school, pub - has to give warnings which become ever more ridiculous. Fast food joints will warn that hot coffee might actually be hot. Supermarkets print instructions on ready meals that the packaging should be removed before the goods are put in the oven. Soft drink manufacturers suggest you remove the bottle cap before drinking the contents. Bags of peanuts will inform you that they may contain nuts.

Nanny, it would seem, always had common sense but the nanny state has turned what should be common sense - or, perhaps, the lack of it - into a gold mine for the legal profession.

A government drive to end or at least curb the UK's compensation culture has been welcomed by the Federation of Small Businesses.

It seems government has woken up to the burdens being placed on business caused, in part, by frivolous claims from companies offering No Win, No Fee deals. Lord Charles Falconer, the Lord Chancellor, committed the government to overcoming this problem, announcing last week that ambulance chasing agencies are to be regulated.

Falconer said there was the perception there was easy money waiting to be had and this was causing serious problems. "People become scared of being sued, organisations avoid taking risks and stop perfectly sensible activities," he said.. "It creates burdens for those handling claims and critically it also undermines genuine claims."

Carol Undy, FSB national chairman, welcomed the move, saying frivolous litigation inspired by a US-style blame culture was costing small businesses as well as other public bodies.

"Business owners feel under pressure to settle out of court even where the case against them is weak and the whole business community is suffering through inflated liability insurance premiums," she said..

Alarmingly, figures seem to keep growing. The Institute of Actuaries published recent research showing the growing UK compensation culture is costing around £10bn a year, or 1% of GDP, and increasing by 15% annually.

That's corroborated by David Rose, a spokesman for Norwich Union, which has seen a marked increase in claims over the last 15 years.

"The Institute of Actuaries estimates compensation costs the UK around £10bn a year," he said. "And, for every £100 we pay out, £40 goes to the lawyers. That means they are raking in £4bn annually.

"We are seeing more claims. And more spurious claims. It's all based on this idea there's no risk to you. You won't pay - win, lose or draw. And that is not wholly true. Somebody pays somewhere and the cost of compensation is passed on to people through increased insurance premiums, additional income tax and National Insurance, higher council tax as the NHS, local authorities, businesses and the likes of the government have to pay out.

"And bodies like local authorities have to pay legal teams to defend claims and investigators to look at problems. You can see the costs building."

Rose added: "Of course, we would never argue against people who are genuine. It is right people have access to justice. But it is the people who are not genuine who are ruining it."

Another vociferous critic is Montgomeryshire MP Lembit Opik.

"This whole compensation culture has stopped people volunteering," he said, "as insurance premiums have soared. Opportunities for young people to do things are decreasing as risky activities are frowned upon. People very much regard litigation as a money-making activity and at the heart of it is the No Claim, No Blame culture."

Opik talks about the way the whole of society is losing "because lawyers are fishing for work".

But what is the view from the legal profession? According to John Devoy, head of the litigation team at Chester-based legal firm Aaron and Partners, the answer to the question as to whether there has been a big increase in compensation claims depends on who you talk to.

"The Association of Personal Injury Lawyers claim there is not, but the insurance companies who end up paying out on the vast majority of claims beg to differ," he said..

"The important thing is the perception in the market place which is certainly that compensation claims are on the increase and that we are moving towards a blame and compensation culture.

"I think it fair to say claims across the board are on the increase but not to the extent that the public thinks. This perception is undoubtedly fuelled to some extent by the lawyers and claims companies themselves who market and advertise far more than they ever used to do."

And yet, many legal companies are being tarred with the same brush - that which says they are all out to make money under false pretences.

"From a purely money making perspective, it is hard to see why the legal profession would have a problem with growth in the compensation culture," noted Devoy.. "What does concern many solicitors is the adverse publicity the perceived growth in the compensation culture gives to the profession as a whole. The big rise in solicitors advertising for claimants who have suffered an injury can give rise to a public perception lawyers are nothing more than 'ambulance chasers'. This is not an image that any solicitor wants of the profession."

Claim firms could force us to close

JONATHAN Ellis-Williams's business near Pwllheli is badly affected by the rise of the compensation culture. He agrees potential claims could spell the end of his business.

"If you open up the Yellow Pages and look under solicitors, count the pages devoted to No Win, No Fee businesses," he said.. "That's the root of the problem.

"There's no-one to represent business. We have no comeback as, if we challenge a claim, our insurance policy is null and void. So, if a solicitor puts in a claim for £2,000 we can do little to defend that claim."

Ellis-Williams runs a quad biking centre, an activity which, in recent years, has attracted considerable publicity because of some high-profile accidents. It seems that adults can make claims relating to accidents which happened up to three years ago, children right from birth to their 18th birthday. "If someone claims about something which happened three years ago, we're left scratching our heads wondering who was on duty at the time and so on," said Ellis-Williams. "We could spend a lot of time defending these cases but what we cannot do is defend our innocence. We're seen as being guilty until proved otherwise and we have definitely moved into a culture where no-one at all is responsible for their actions.

"Our firm is set up for fun and enjoyment and people know the risks. But we find it's those who shout loudest who get to the front of the queue. "And, as a small company, we can't employ the legal teams some of the big companies have on hand. It's the reason we could really be examining whether we want to stay in business."

source: ic North Wales (Last Updated: Wednesday, 30 March, 2005)

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