15 August 2005
Personal injury lawyers may insist there is no such thing as a compensation culture, but recent reports of ambulance-chasers milling around the victims of the London bombings have done little to assist their cause. Nevertheless, it was the Law Society that this month outed those (non-lawyer) claims companies for trying to capitalise on the still grieving victims and their families.
"Claims companies are trying to make money out of the bombings by luring people into agreements that will entitle the claims companies to large shares of compensation payments," commented the new Law Society president Kevin Martin on Monday (1 August). He was keen to make a wider political point about how the same regulatory vacuum that allowed discredited companies to prosper - the likes of Claims Direct and The Accident Group (TAG) - contributed to the present controversy. No doubt the society is hoping that the latest scandal will stiffen ministerial resolve to clamp down on claims companies in its Compensation Bill. "The companies are totally unregulated," Martin argues. "They try to appear bona fide, but the truth can be very different."
The Law Society went public after it was contacted by victims of the bombings who had already telephoned claims companies - one had offered its services on a 'no win, no fee' basis under the Criminal Injuries Compensation Authority (Cica) scheme for one-fifth plus a cut of the compensation.
Martin argues that 'no win, no fee' is inappropriate, because the bomb claims are "almost certain to succeed", and also because solicitors have promised to represent victims and their families free of charge as part of a major pro bono initiative. The Bombings Legal Helpline, which covers advice for the Cica scheme as well as wider legal advice, has attracted the support of the Secretary of State for Culture, Media and Sport Tessa Jowell and the Greater London Authority.
But there are claimant lawyers who feel that Chancery Lane's condemnation of claims companies is a tad disingenuous. "Practitioners do business on this basis and a lot of claims companies refer the cases to lawyers anyway," points out Jeff Zindani, managing director of Birmingham-based Forum Law. "To a certain extent, the claims companies are responding to market conditions."
The solicitor is not acting for victims of the bombings and would refer any such calls on to the Law Society. But he believes the society is "ashamed" of talking about how lawyers charge people. "They're masking the real issue, which is the way in which these cases are funded," Zindani adds.
If claimant lawyers advise clients on Cica claims, then out of necessity their fees come out of compensation. Cica says that, "in general", claimants do not need a lawyer and it has recently reminded people that it never pays out for legal costs. While lawyers reckon that the very straightforward cases are capable of being handled without legal help, they also argue that a large proportion of claims need expert advice.
"If you're seriously injured, then you need a lawyer to assist you," comments Colin Ettinger, the immediate past president of the Association of Personal Injury Lawyers (Apil). "Advising on a Cica case very often can be like a war of attrition, and there are a number of hurdles you have to climb and there are a number of places you can fall."
Claims company 1st Class Legal came under heavy flak in the press when it offered to represent victims of the 7 July attacks under the Cica scheme in return for a 22 per cent share of any payout. As a result of the furore, it now refers callers affected by the bombings to the Law Society helpline. It has also taken down a webpage which purported to run news relating to the attacks (including the names of the dead) as well as its helpline number.
The company is a leading member of the Claims Standards Council, the body charged with self-regulating claims companies. 1st Class insists that all callers were "advised that they could make a claim themselves directly to the Cica at no charge, and if [1st Class] represented them there would be a charge"."[This] was outlined in full," comments director Bob Gordon. "This was in line with what any law firm would do, as the Cica doesn't pay legal costs." 1st Class, he says, "apologises unreservedly" to anyone who has been "confused" by its website.
Zindani, meanwhile, advises clients on the Cica scheme on an hourly rate or on a contingency fee basis, which "ranges from 15 per cent upwards". He adds that there is always an element of proportionality involved and says that, for example, a 20-25 per cent fee on a £2,000 claim could be excessive.
The Home Office pays out more than £200m a year under the Cica scheme and claims it is one of the most generous systems in the world. It is not a view shared by most commentators, especially now that they have learnt of the relative pittance that the 7 July victims and their families will be receiving.
Under the scheme, basic payments for victims of the bombings will be £11,000 for the bereaved (or £5,500 each if there is more than one); between £1,000 and £250,000 for pain and suffering for injury "more serious than cuts and bruises"; and, for trauma "directly due to reasonable fear of immediate physical injury or death", from £1,000 for shock to £27,000 for "a serious and permanently disabling trauma"."'Compensation' is a misnomer and pay-outs should be recognised as a token of the Government," comments Clive Elliott, director of the Victims of Crime Trust. "Murder destroys more than the victim's life. It destroys marriages, families, neighbourhoods and communities and adversely affects the whole mood of the country. If you were to lose two arms, under the scheme you might get £220,000; but if you lose a loved one you get £11,000. The tariff beggars belief - it's totally clinical."
Claimant lawyers point out that the scheme is difficult for already traumatised people to deal with. It is also heavily circumscribed and, as well as legal costs not being paid, insurance payouts and welfare benefits are deducted from payouts. Claims have to be brought within two years as opposed to the standard three-year limitation period and compensation is capped at £500,000.
"The Cica scheme doesn't have a great reputation," comments Ettinger. "It's slow, probably understaffed and the impression you get is that they're defenders of the public purse rather than there to ensure that people are properly compensated."
However, as the Law Society points out, the victims of last month's attacks will at least be able to avail themselves of the help of the 23 firms that have so far signed up to the pro bono scheme.
this time offering their services to victims of the London bombings. But are they doing anything outside the remit of any PI lawyer? Jon Robins investigates