The Lord Chancellor, Lord Irvine has finally set a new discount rate in personal injury (PI) cases, ending years of waiting by lawyers who claim his failure to do so has left PI victims millions of pounds short
But while lawyers have urged Lord Irvine to set the rate at below 2 per cent (The Lawyer, 16 April), he has actually set the discount at 2.5 per cent. A discount rate is the amount subtracted from a victims' damages to account for any profit gleaned from the investment of the award. On the basis of a House of Lords decision in Wells & Wells, the rate is set according to the yield on Index Linked Government Stock (ILGS) in which the average competent person would invest. But claimant lawyers say that the current ILGS rate is below 2 per cent, while at the time of Wells & Wells it was 3 per cent. The Lord Chancellor was given a statutory power to set the new rate when the Damages Act 1996 was enforced, but he failed to do so until last Thursday. Irwin Mitchell was looking at the possibility of judicially reviewing the Lord Chancellor for his failure to set a new discount rate. John Pickering, head of PI at the firm, also pointed out that Lord Irvine should have published his consultation paper on discount rates by autumn 2000, as he received responses in May of that year. The Lord Chancellor's Department said: "The rate set is calculated to avoid over or under compensation of claimants."