No Win No Fee Compensation Culture Myth

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26th August 2011

You may have read in the daily newspapers, or elsewhere, that the Government has decided to take action to stem the tide of what they, and the insurance industry, call the "compensation culture". Now, this phrase is not new; it was invented by the insurance industry at least 10 years ago.

The insurance industry's argument has always been that this compensation culture was born out of the "no win, no fee" legislation brought in by new Labour in 2000. However, this argument does not even stand up to the most basic of examinations.

If lawyers do not get paid for running cases which lose under the no win, no fee system why would they encourage doubtful or "dodgy" cases? Of course the answer is they would not and, as a consequence, it is nonsense to suggest that there is even a "compensation culture" in existence let alone that it has been fuelled by no win, no fee lawyers.

The compensation culture is a myth invented by the insurance industry which, sadly, this Government has bought into and believes. The truth is that if these proposals for change are introduced in October 2012, as looks likely, the loser will be the genuine compensation claim victims whose damages will be reduced and who will in many cases struggle to find a solicitor to take on the claim.

Whether the Government softens its approach remains to be seen but I predict real and general prejudice to compensation claim victims after October 2012 if these draconian changes are not dropped or significantly amended to leave an even playing field.

Please don't be fooled by the insurance industry. My bet is that any savings they make by paying out fewer claims would go to their shareholders and not be passed on to the motorist in reduced premiums. This is exactly what happened in Australia when they changed their legal system in a similar way.