"You've never had it so good"

Posted: 22nd November 2010

Lord YoungIn July 1957 Harold McMillan was of course referring to the post-war economic boom in the UK. Baron David Young’s assessment of the state of the nation in November 2010 came on the day that our Government, looking for more than £80,000,000,000 worth of cuts that are already starting to hurt so many people, had to accept that it would need to contribute billions to the bale-out required to save Ireland’s economy from collapse.

The same Lord Young recently unveiled his “Common Sense” report into perceived compensation culture, the headline feature of which is an attack on overzealous health and safety regulations.

Some of the measures will be uncontroversial, no doubt. Schools, rescuers and other well meaning people need to feel that they can do the good things that they do without being sued.

The same may not be said of such aspects as the proposed implementation of recommendations by Lord Justice Jackson earlier this year. Key features of the Jackson proposals were that success fees, which encourage lawyers to take the risk of funding cases for which legal aid is no longer available, and ATE insurance against the risk of adverse costs should no longer be recoverable (by successful claimants) from insurers, but instead paid out of their compensation.

Opponents say that whether innocent victims choose to accept that, or put pressure on their lawyers to shoulder increased expenditure and risk without reward, the potential damage to the rights of injured people is obvious. Ultimately, lawyers will not run difficult and risky cases because the winners will no longer pay for the losers. Insurers are rubbing their hands at these proposals, as they are at the idea of extending the current fixed cost schemes to capture yet more cases.

Lord Young’s recommendations are based on his perception of a “climate of fear” described in these terms. "The advent of ‘no win, no fee’ claims and the all-pervasive advertising by claims management companies have significantly added to the belief that there is a nationwide compensation culture. The ‘no win, no fee’ system gives rise to the perception that there is no financial risk to starting litigation; indeed some individuals are given financial enticements to make claims by claims management companies who are in turn paid ever-increasing fees by solicitors. Ultimately, all these costs are met by insurance companies who then increase premiums (sic)”.

Elsewhere in the report (Page 20) Lord Young records the fact that last year both the Law Society and the Bar Council, the professions’ membership organisations, “recommended that referral fees be stopped, on the grounds that they have the potential to limit access to justice and reduce the quality of legal services on offer.”

Noting that others, including the new regulatory body the Legal Services Board, argue there is little evidence of this (!) Lord Young says that he is “in no doubt that the payment of referral fees and the accompanying culture that sees claimants rewarded before the legal process has even begun creates a climate in which business, the public sector and even voluntary and charity organisations fear litigation for the smallest of accidents and then manage risk in accordance with this fear”.

Against that background, the report produces a vague recommendation to “restrict the operation of referral agencies and personal injury lawyers”.

Michael Williamson said “ironically, whilst the report identifies the root problem in this industry, which is the buying and selling of cases by claims farmers and insurers, the recommendations seem to give it low priority in contrast with the desire to adopt Lord Jackson’s ideas of taking yet more money away from genuine claimants and those who champion their legitimate rights.

Direct marketing by lawyers is already eclipsed by the opportunists who should have no place in the process, stepping in to demand many hundreds of pounds for cases, good and bad. Now insurers and these parasitic entities will continue to profit in the trade of injured people’s claims, whilst a significant proportion of the cost of fighting them falls back on the claimants and their representatives.”

The Prime Minister has been quick to distance the government from Lord Young’s comments yesterday anticipating that his Lordship, estimated to have a personal wealth in the region of thirty million pounds, will not be making so many speeches in the future.

Michael concluded, “it remains to be seen whether the Government will recognize that many of the recommendations of Lord Young’s report are also out of touch with reality and should follow the path of their author.”