Get talking – Funding the compensation culture

Materials World magazine
,
3 Oct 2015

In his return to Get Talking, Mark Godden laments the impact of solicitors on the working culture of Great Britain. 

Funding the compensation culture

During the mid-1980s, long-standing rules governing the conduct of the UK’s legal profession were tweaked to allow solicitors to advertise. I wonder if anyone at the time realised how far-reaching the impacts of this seemingly innocuous change would be. In retrospect, it seems the decision to allow solicitors to promote their services in the marketplace catalysed a major transformation of the UK’s industrial landscape. 

‘Ambulance-chasing’ claims management companies seem to run prolific, and highly enticing advertising campaigns, using many different media channels, inviting potential clients to stake personal injury claims at virtually no financial risk. Advertisements routinely include ‘shopping lists’ of injuries along with possible levels of compensation. Here is an example that I recently encountered –

Knee injury – £4,300-70,700

Back injury – £200-118,300

Eye injury – £1,620-197,500

Leg injury – £6,700-100,000 

This style of advertising has undoubtedly led to an increase in the number of fraudulent claims being made against innocent companies by scurrilously inventive claimants.  

I resolutely believe that anyone who has suffered a genuine injury as a consequence of work activities should be legally entitled to seek fair compensation and that all employers have a moral, as well as a legal, obligation to maintain safe systems of work. That being said, as a mine manager, I find that I spend a depressingly large amount of time and effort systematically preparing defences against future opportunistic claims against either myself or my employer, brought to court on a no-win-no-fee ticket. Most companies now commit a massive amount of time, effort and money to minimising the risk of speculative and fraudulent claims being successfully made against them.

The prevailing compensation culture has increased the influence of insurance companies over other industries in a way that was hitherto unimaginable. In many instances, insurers have become unofficial regulators, often exerting control in areas where they have little practical experience. The naturally risk-averse stance of most insurance companies has, in certain circumstances, led to some costly and frankly over-the-top precautionary working practices being foisted on companies that wish to remain insured. Imagine the benefits, if all of these non-productive (backside covering) resources could be re-allocated in more positive and productive directions.

Despite recent Government moves to curb the no-win-no-fee culture surrounding employment tribunals, which at its peak was estimated to cost UK employers £1.6 billion each year in defence costs, there appears to be little chance of getting the personal injury claims genie properly back into its bottle. 

The seemingly inconsequential decision to allow the legal profession to start advertising 30 years ago has no doubt benefited some lawyers, but at what cost to industry?

Mark Godden CEng FIMMM