Foil's Neil McLaughlin relishes the opportunities ahead to tackle the pay-out culture

' "The compensation culture feeds off confusion." So said Lord Falconer, Lord Chancellor, at the Health & Safety Executive's (HSE) conference on 22 March.

His speech illustrated government recognition that something is not right in the way the man on the street perceives his rights if he is injured in an accident.

The debate on whether a compensation culture exists has now moved on. No one is crowing that they have "won" the argument, but insurers can be satisfied that there is now an acceptance that real people and real lives are affected by the perception of compensation (and a lot of it) being available for accidents.

So what is being done about it?

We can start with the Department for Constitutional Affairs' (DCA) Strategy for 2004 to 2009 - "the Five-Year Plan". It sets out many objectives in areas such as compensation disputes, looking to build on progress made since the update of the Civil Procedure Rules.

We can also look to the recommendations of the Better Regulation Task Force (BRTF) whose report was published in November 2004 .

As well as this, the government has set up a ministerial steering group and an action group to take a hard look at the compensation system and identify just how the waste in the current system can be cleared out.

So what of these groups? "Not just talking shops," Lord Falconer has said. But we've heard that before. Why will this be different?

It would be naïve to expect guarantees that insurers will get everything they want, but the Forum of Insurance Lawyers (Foil) is committed to participating in the action group and bringing whatever influence it can to achieving a fair compensation system - one that we and our clients believe gives us a level playing field.

Foil president, Andrew Underwood, attended the first action group meetings. Foil's agenda is to achieve concrete changes to perceptions of compensation, to include practices surrounding compensation payments and the way they are obtained.

Its biggest aim is supporting efforts to tackle any public perception that all accidents deserve compensation. They do not. Accidents happen and the world is not risk-free.

This is best summed up by the HSE, whose key message is the "sensible management of risk", not eradication of any risk at all (however slight) for every task or activity.

Foil will also contribute to the continuing funding debate. Its position on additional liabilities is unchanged - that they should not be recoverable between the parties - but the issue is wider than that. Foil's view is that the issue of fixed costs across lower-value personal injury claims needs to be addressed.

It is difficult to see how any changes to lower-end claims will have much impact, unless they include changes to the traditional 'time spent' basis of charging.

Concrete recommendations must be made on streamlining the process of how a claimant obtains compensation. Everyone seems to support this aim - certainly the BRTF and bodies such as the Citizens' Advice Bureau.

Lord Falconer said the compensation culture feeds off confusion. He could have said that it is confusing, certainly to the lay claimant faced with a claims farmer, then a solicitor (who might be at the other end of the country), examination by a surgeon for a simple whiplash claim, payments to after-the-event insurers, jargon about conditional fee agreements and shortfalls in costs: the list goes on.

Foil will explore whether best practice on the defendant side of the fence can be replicated throughout the system to help avoid frictional or transactional costs. We will ask what each stage of the process adds to the goal of achieving fair compensation at an acceptable level of expense and without delay.

Emotive topic
Debate over the small claims limit must also continue. In 1998 Geoff Hoon, then Minister of State at the Lord Chancellor's Department, faced a frosty reception at the Foil AGM when he insisted that the limit would not be raised.

But it is still at the same level now! Leaving aside the fact that seven years of inflation should have had some impact, the main issue is whether the limit should be raised more radically, from £1,000 to, say, £5,000.

This is an emotive topic and Lord Falconer is currently against raising the limit. But, crucially, and taking his cue from the BRTF Report, Falconer said "we need research to tell us what would be lost by increasing the small claims limit for personal injury". Foil is committed to contributing to that research.

Foil will also continue to support and participate in alternative dispute resolution. We will work with groups such as the Association of District Judges to make best use of, for example, court-based mediation schemes.

Resolved differently
There is currently no consistency across courts in the approach to mediation schemes; equally, the experience of Foil's members is that some claimant lawyers are enthusiastic about mediation, others hostile. This could lead to two claims of similar value and issues being resolved very differently depending on where you are and who you are dealing with.

Foil also needs to look beyond its immediate area of interest - the claim itself - and work with bodies such as the HSE to achieve sensible risk management. Health and safety may cost money, but claims cost a lot more. Claims costs are now at an unacceptable level, and to quote Lord Falconer again: "compensation cannot come at any cost".

The compensation system is a huge machine and we will not see changes overnight, but they will happen. The best way to shape that change is to be part of the process. IT

' Neil McLaughlin is vice president of the Forum of Insurance Lawyers and a partner at Morgan Cole

Foils aims for sensible compensation

  • Tackling the perception that all accidents merit compensation
  • Contributing to the funding debate
  • Contributing to the small claims limit debate and research
  • Supporting and participating in alternative dispute resolution
  • Working with organisations to achieve sensible management of risk
  • Topics