There is no evidence to justify the government’s plan to ban personal injury solicitors from offering up-front inducements to potential claimants, the Law Society has argued.
The prospective ban was the most eye-catching feature of the latest series of personal injury reforms announced by the Ministry of Justice, and will have the support of many practitioners.
However, Law Society chief executive Des Hudson said: “There is no evidence to support suggestions that anyone would launch a spurious legal claim or embark on litigation just because they were being offered a free iPad just as it is a myth that we live in a compensation culture.
“Whiplash claims are less of a problem of fraud and much more likely to be a problem of exaggeration or an insurance industry approach where it has been easier to pay all claims, pass on the cost to motorists and not challenge improper cases.
“The risk to the public interest here is obvious – making it harder for honest accident victims to be compensated will help only the shareholders of insurance companies.”
Liverpool-based Hampson Hughes is arguably the firm best known for offering inducements – now £2,000 for an accepted case.
Speaking to Legal Futures earlier this year, Paul Hampson, Hampson Hughes’ joint managing partner, agreed that there is “no evidence to suggest that incentives have an adverse effect on clients or encourage spurious claims to be made”.
He added: “Firms that offer incentives have strict terms and conditions that must be met before incentives are given. This means that they are only offered to victims of genuine accidents.”
He said Hampson Hughes offers an advance of damages to clients who request it. In order to qualify, clients must have attended a medical with a doctor, liability must have been admitted by the third-party insurer and the solicitor must be happy with the claim overall, having assessed liability, causation and quantum.
Mr Hampson continued: “It’s worth noting that it is often clients facing exceptional hardship that request incentives. This can assist with anything from funding for private medical treatment to aid their recovery to covering the cost of essentials such as rent, utilities and food if they have had to take time off work and suffered loss of earnings as a result of the accident.
“In order to meet these needs we’ve increased our incentive to £2,000, which we feel is enough to cover most initial expenses.
“It is easy for some to disregard up-front payments as not being needed but it takes time for claims to be settled by insurers, leaving a large period of time when the client is at a financial disadvantage. It’s our belief that such payments massively assist clients and help restore them to their pre-accident position more quickly.”