Latest available figures show a 16% rise in Public liability claims. Ciaran Breen asks whether the rise of the litigation culture in Ireland is unstoppable .

Anyone Asking whether Ireland was more litigious than the United States would expect to raise a laugh. But don't laugh too soon. Latest figures from the Irish Insurance Federation, concerning its 21 non-life members, show a 16% rise in Public liability claims between 1998 and 1999 (the latest year for which figures are available). The number of claims rose from 18,066 to 20,933, with a net liability incurred of IR£128.1m.

These figures are particularly shocking against a background of a net underwriting loss of IR£211.3m in 1999, up from IR£198m in 1998. And although the number of employers' liability claims fell slightly (by less than 1%), it comes as no surprise that there is considerable debate within Government and Business on how to cut the cost of Personal Injury Claims.

One of the most controversial features of Irish litigation is the concept of "No Foal No Fee" which continues to fuel litigation.

Ireland does not have a Civil Legal Aid Scheme such as exists in the UK and some other continental jurisdictions. The proponents of "No Foal No Fee" can therefore claim that "No Foal No Fee" provides the key to the courthouse for the poor and the Middle Class as they battle with large corporations and other defendants with substantial resources.

This perspective states that lawyers who put in place "No Foal No Fee" arrangements are simply facilitating access to justice. Another more cynical perspective, however, suggests that such lawyers are merely lining their own pockets by ensuring and encouraging litigiousness.

It is self-evidently the case that the "No Foal No Fee" system, adopted by many Plaintiffs' lawyers, encourages Plaintiffs to litigate where otherwise they might not. There is no sanction for the Plaintiff in this system, as the Courts make no enquiries as to the Plaintiff's capacity, in terms of his/her assets, to meet the Defendant's costs in the event that the Plaintiff is unsuccessful. Many doubtful actions thus reach the courts where, in the absence of "No Foal No Fee", such actions would not be contemplated.

With this as the context, there is a sound argument that "No Foal No Fee" contracts are contrary to Public Policy and void for being champertous. (For non-lawyers, champerty is an illegal agreement in which a person not naturally interested in a lawsuit finances it with a view to sharing the disputed property.)

There has been, for some years now, debate and tension between those who wish to reform the Irish legal system and those who advocate no change. In the interim, there has been some "tinkering" with the system such as the introduction of sharing of expert reports (S.I. No. 391 of 1998) and the offer of payment in lieu of lodgement (S.I. No. 328 of 2000). We are, however, a million miles away from the Woolf (UK) "Fast Track" system. Irish personal injury cases continue to have a long "shelf life" which adds to the legal costs bill.

Is there a political appetite for legal reform? As successive Governments have sought to limit the cost of compensation, they have found themselves grappling with a three-fold constitutional problem:

  • The Doctrine of Separation of Powers;
  • The Guarantees of Judicial Independence;
  • The Requirement that Justice be administered in the Courts.

    Obstacles to change
    Each of these three items presents formidable obstacles to progress in the setting up of a system independent of the Courts to assess compensation in Personal Injury cases. In 1997, however, the "The First Report of the Special Working Group on Injuries Tribunal" was presented to the Government. The Group recommended that the role and objections of a new Compensation Board be:

    "To establish and operate a voluntary system of mediation and arbitration of compensation in occupational injury cases ...... to encourage a speedy, fair, cost effective and non-adversarial approach to the settlement of claims in respect of personal injuries sustained in the work place."

    Little was heard of the New Personal Injuries Tribunal until recently when the Government signalled its intention to proceed to set up a "Personal Injuries Tribunal" to hear cases where liability has been conceded or is not at issue. The proposal, as currently formulated, has considerably angered the Bar Association (representing Barristers) and the Incorporated Law Society (representing Solicitors). In fact, the Bar Association indicated that it had engaged a firm of Consultants to "fight" the proposal. In decrying the Government proposal, both organisations have emphasised that their concerns relate to ensuring that all litigants, whether in respect of personal injuries or otherwise, have access to the Courts, as a constitutional right.

    If the Government is serious about its proposal to set up a Personal Injuries Tribunal, it will, inevitably, have to introduce a constitutional referendum, because Irish Law is governed by a Constitution or Bill of Rights. The burning issue for proponents of change is whether the Government has the political will to implement a Personal Injuries Tribunal.

    Meanwhile, some UK Liability Insurers have "voted with their feet" by pulling out of the Irish Market, citing the longevity of claims, exorbitant costs and frustration with the Irish Legal System as their reasons. This is an unwelcome development for the consumer of the liability insurance product. As the market contracts there is less competitiveness in both price and product, with the consumer becoming the loser.

    Proponents of change demand an alternative system of personal injury assessment which is less layered, more accessible and expedient. They urge that such an alternative system must provide legal representation at a lesser cost. It is argued that the case for reform is overwhelming and that without reform we will, truly, be more litigious than our American cousins.

    Ciaran Breen B.L. is Managing Director of Garwyn Ireland Limited.

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