Claim culture?

So it was bonfire night just over a week ago. This is where we celebrate the authorities identifying and removing a threat to our system of governance some 400 years ago. The Americans may find it particularly amusing that it falls at the same time as the presidential elections. (when I started this blog it was actually before bonfire night)

But what it did cause is my colleague to bemoan health and safety legislation and our culture of caution. He used a phrase along the lines of “We used to have much more fun back in my day.” I like to think that the drudgery of the reality of a lifetime of work ahead of him, reflecting the few years he has worked, over and over and over again until he retires, is finally starting to wear down his youthful exuberance.

However, he did make almost half a valid point in his grumble.

His grumble stemmed from the fact that a firework display somewhere seemed to have come to a decision that people were not allowed to take their own sparklers. Quite where this report came from, or the authenticity of the report, I am very suspicious about. The media is all too quick to apply the 'health and safety' label when it is not true, and this is something which the Health and Safety Executive is trying to correct.

But, if it is a true story, then it falls into one or other camps of health and safety.

The first is that it is a legitimate and proportionate measure required to protect people. This may be because of the number of people that attend the event - there are certain displays where, simply because of the density of people, you simply do not have enough room to wave a blisteringly hot piece of metal around at arm's length. And that is understandable. Now, if they could take the same attitude with cigarettes, often held at the level of a toddler's eyes, I would be over the moon.

However, that may not be the case. In order to undertake any organised activity there is currently a responsibility on the organisation to perform a risk assessment. The government is currently looking to relax these rule; however they are only one influencing factor, and often risk assessments are required under the Public Liability or Employer Liability Insurance policies. If the government does relax the requirements, knowing how desperately insurers attempt to decline cover where possible, these risk assessments will still be required, else failing to undertake one will leave you at risk that the insurance refuses to have anything to do with a claim.

And this is where the jobsworth comes to the fore. They are not normally sent by the council to make an assessment, they are normally a very well intentioned - albeit over-zealous, over-cautious or poorly-trained - individual within the organisation arranging the event. And they go around and they look at every tiny little thing, from the pins of a plug lying on the floor to the massive tower-crane dangling a concrete block over the school playground. They are usually, seriously over-zealous. They can file a ten-page report on an inanimate ruler (which may have sharp edges, or may break, or may be grabbed by a passing lunatic and stabbed into someone's ribcage). A little knowledge is a dangerous thing; particularly when the security of your own job involved identifying every dangerous thing and managing the risk associated with it: if there is nothing dangerous, suddenly you don't have a job.

And these are the roots of the stories about “Health and Safety means kids can't play conkers at school” or they may have to wear face protection. There is nothing in a single piece of health and safety legislation requiring face protection or outlawing a fun, if somewhat ridiculous, game (I only ever got up to a 23er at school, despite living next to a tree which produced the biggest conkers in the village. I blame dad's shoelaces). The reason that things get cancelled isn't usually because the Health and Safety Executive step in, it is because someone else considers there to be a risk. It is very, very subjective.

Over the summer, one of the concerts at Hyde Park got cut short at the end. You may have seen this one in the news. The organisers said that it was cut off because of health and safety. Not entirely sure where they got that one from, and neither was the Health and Safety Executive whose deputy chair was there watching it, and who rebuked this blame in an excellent press release. The organisers later said that the health and safety concern was due to road closures around the area which needed to be released as soon as the park closed. That is just pure nonsense:

1. the road closures would stay in place for as long as the police or council thought was necessary. They do not arbitrarily remove barriers allowing the free flow of traffic to plough down masses of people trying to get out.
2. even if there was a specified time for the removal of the barriers, it doesn't happen at once and could easily be managed to free-up the least chaotic routes first.
3. it was actually nothing to do with the road closures at all. The police and the council both confirmed that they would have kept roads closed “for as long as it takes”. It was purely a disingenuous statement from the organisers, because...
4. the real reason for the cut-off was that the gig licence expired at 10:30pm. This is pretty standard anywhere, and with good reason. Premises licences are not granted without some form of objection from local residents. They have concerns about the noise going on late into the night - and reasonably justifyably in some circumstances. Indeed at Hyde Park, complaints about the noise had doubled since 2008, and the council had therefore imposed restrictions on the number, duration and timing of gigs. It is this license condition that the organisers would have breached if they had allowed the gig to reach its natural conclusion. And what is the risk there? Purely commercial: they could have been fined for breaching the licence; or they could have found it difficult to tender for a new licence.

But let's be proportionate here - as ever, it is only the worst of these health and safety assessors that we ever hear about. In the vast majority of circumstances, there are a lot of practical and sensible assessors out there who will actually do what they can do to ensure that an event goes ahead

But why do these people exist in the first place?

Well blame is the main answer.

For some reason, the public seem to have come about an expectation that absolutely all risk can be managed-out. Not just minimised, but eliminated; and where it hasn't and there has been a failing, that there is blame. And where there is blame, there is a claim.

This attitude fails on so many levels.

It fails firstly because it assumes that all humans are - or should be - infallible, and that where they are not they should be punished for that mistake. We all make mistakes, and yet unidirectionally we expect to be forgiven them, have them overlooked, whilst dichotimously holding other people accountable for theirs.

It also assumes that there are no external influences. Sometimes, someone is unable to perform an obligation which is expected of them because they are stuck in traffic. Someone else, entirely outside the bubble of performance, has interfered with the expectations. Or maybe it isn't someone, but something. We've just seen tropical storm Sandy bear down on New York. Is there somebody personally responsible for that destruction? Of course not.

Thirdly it assumes that everything is possible. There are some things which simple are not (certainly yet) possible. There is always a risk that something freak occurs which shatters the windscreen of the car you are driving. Whilst everything has been done to ensure this does not happen - toughening the glass, laminating it, angling the screen to roll things over - it may still happen, and it may shower fragments everywhere. Unless or until we develop another material with the transparent properties of glass, but the strength of titanium, that risk will remain. And then, would the strength of titanium be enough?

And if we eliminate all risk, then we don't challenge ourselves. As a youngster I was allowed (or at least able, I'm not sure my mother actually knew we did it) to climb trees. There was considerable risk there. But, by sustaining those injuries, I knew the limits of my own strength, I understood the flexibility and fragility of the wood. Without taking risks, we wouldn't have the chemicals, materials, pharmaceuticals, innovation and entrepreneurship that we have today. So risk is, actually, a very good thing.

So where has this expectation of blame and claim come from? Well it has been learned. Once upon a time we used to accept that bad things happened, that there wasn't always someone to blame

But then, I am a solicitor and I do get a bit fed up with listening to people whine. I call them the “oh whoa is me” lot.

But does that not mean I am to blame? Is it not the lawyers cashing in on these?

Well, I'll start by making two points.

Firstly, no profession is without its bad-eggs. Just read the back pages of the Law Society Gazette and every week they list the solicitors brought before the Solicitors Disciplinary Tribunal for bringing the profession into disrepute. So there will be some who will abuse the system, or will work within the regulations but at the very extremes, pushing ethics and morals to the very limit.

But also, I'm not a personal injury solicitor. I deal with CoCo - corporate and commercial law. I specifically did not want to go down the PI route and being seen as an ambulance chaser. Not least, because I didn't want my friends berating me with their traumatic stories and exposing their scars to me and asking me who they should sue whilst I'm trying to enjoy a night out.

But lawyers have created this blame culture, haven't they?

There are good reasons for PI lawyers. People are injured through the faults of other people. Those injuries can be debilitating. They can require substantial, costly alterations to their accommodation, transport, lifestyle. So there is a particular justice which is obtained through PI claims.

So, are the lawyers harvesting these claims? Fostering weaker claims? Creating claims where perhaps there are none?

A little explanation here as to how personal injury claims work...

Once upon a time, personal injury followed the manner in which all other civil work does: that there is a contract between the solicitor and his client that the client will pay his fees. If a claim is successful, the solicitor would ask the court that his fees get awarded on top of any damages: that it is unfair that the claimant have to pay these legal costs which would not have been incurred if the wrongdoer had paid up at the earliest opportunity. Similarly, where the defender of any claim is held to have done nothing wrong, his legal team would ask that the claimant should pay there costs as clearly there was no claim to defend - it is wrong for the defendant to lose out and have to pay fees when he has done no wrong.

So, originally a claimant stood the risk not only of having to pay their own legal costs; but also - if they lost - the legal costs of the defendant on top. Double whammy.

Well, that's how it was seen. And it was considered that this meant that those that really needed the money, the damages, were prevented from access to justice. Because they couldn't stump up even the initial fees to their solicitors, let alone take the risk that they lose, people with some of the most horrendous of injuries, or subject to the most heinous of medical negligences, were left to foot their own bills.

Then, in 1995 the full relevant provisions (in the UK at least) allowed conditional fee arrangements - that the solicitor's fee was conditional upon the success of the case. Indeed, the solicitor would get a 'success fee' - an additional increase in fee to show the risk that had been accepted by the solicitor. This was coupled with 'ATE insurance' - insurance taken out After The Event that caused the incident, but that would cover legal costs related to it.

ATE meant that claimants no longer stood the risk of bearing the defendant's legal costs - they would be met by the insurer. All that was required was a sufficiently strong case to convince insurers to issue a policy, and the claimant bore absolutely no risk.

And that is the problem. Some solicitors over-stated the chances to insurers, who therefore issued more policies. Some insurers were eager to be seen as more accessible, and therefore issued policies more readily. In a perfect world solicitors with a poor success rate would have seen premiums rise, but it isn't a perfect world.

One of the results of this, was a slightly gung-ho attitude from some solicitors. A kind-of “the claim doesn't stand any chance of success, but we might as well give it a go, see what we can get” attitude.

And how successful was that attitude? Well, this is where perhaps the main problem lies.

Probably 90% of the time the defendants in a case would be insurers, or covered by insurance. When you are covered by insurance, there is an obligation to subrogate your claim to the insurers: you hand it over. They deal with it. They contact you when they need something from you; but as it is their money at risk, they handle the defence.

And this is where the calculators come in.

At the very outset of a claim, the insurers undertake a calculation. They look at the value of the claim and factor in the chances of success of the claim. Then they balance this out against their own cost: they look at the man-hours they will have to commit to any claim up to various points in the case.

So, we'll take a worked example.

Imagine they receive a claim amounting to £10,000. They calculate it has a chance of success of perhaps 10%. So the 'claim risk' is £1000.

Now, the insurers man hours cost, say, £50 per hour. This involves taking all statements, obtaining expert reports, counsel's opinion etc. So, at £50 an hour, if this claim takes up any more than 20 hours of the insurer's time, purely economically it would be better to offer the £1000 and settle.

And it happens. Regardless of the validity of the claim, purely because of the numbers. It happens with no report to the insured defendant - they have subrogated their claim, they do not have to give consent to any settlement.

And this is why, in my humble opinion, the system fails. Insurers. Or rather, economics.

Now, the system is changing. CDAs and ATE is going to be removed, meaning claimants will bear some risk.

It's actually not as bad as we make out. Research conducted for, I believe, the Law Society a year or so ago found that there wasn't a 'compensation culture', and that actually the number and value of claims issued had not changed appreciably since the introduction of no-win no-fee agreements. So where is the truth?

I think that whilst the value of claims may not have changed, the settlements may have.

But also, whilst the regulations may be being de-restricted, how many health and safety requirements come from those regulations; and how many come from insurance obligations? The same insurers who settle quickly apply stringent obligations upon an insured before they will cover a claim, they have created their own claim culture almost.

But I also think it is the reporting by the media which is most at fault. Unless you have a victim and a villain, you don't have a story. And the villain could be the over-zealous health and safety assessor, the insurance industry inflating premiums, or the evil motorist who hospitalised a child. The media portrays an uncomfortable contradiction: one of those dichotomies that keeps the press in press. On the one hand, health and safety inspectors are bumbling jobsworths, preventing “fun” from happening or the vexatious litigant suing for millions of pounds because of a broken fingernail; but when something does go wrong, they are all to quick to ask where the risk assessment was, who was in charge, how could this happen? They can't have it both ways.