Plan to cap personal injury legal fees
Insurers have welcomed a fresh initiative by David Cameron to tame what he called the “health and safety monster”: a curb on the amount of money lawyers can earn from personal injury cases.
The prime minister claimed some small companies were forced to make out-of-court settlements in such cases because of fears of very high legal fees, even if they felt the case was speculative and that they were likely to win in court.
Insurers, which have long called for an end to Britain’s supposed “have a go” compensation culture, welcomed the plans to cap legal fees in personal injury claims of up to £25,000, extending a scheme that already applies in the case of road traffic accidents.
The Association of British Insurers, the industry body, has complained about a rise in “spurious and exaggerated” personal injury claims and “excessive” legal costs. According to the ABI, the number of personal injury claims received by insurers rose 72 per cent between 2002 and 2010.
Otto Thoresen, ABI director-general, said: “We have long campaigned for reforms to halt the compensation bandwagon to reduce frivolous claims and excessive legal costs.”
But lawyers were annoyed by Mr Cameron’s remarks to a business audience in Maidenhead. David Bott, president of the Association of Personal Injury Lawyers, said the government was acting “without proper consideration as to the implications for injured people”.
Mr Cameron also reinforced earlier warnings from Nick Clegg, deputy prime minister, that the government intended to launch a renewed crackdown on tax avoidance in the Budget in March.
He said the government was looking at taking “general anti-avoidance powers” allowing Revenue & Customs to tackle companies which they believed were trying to exploit loopholes in the tax system.
Mr Cameron said the government was doing its bit to cut the rate of corporation tax and businesses should recognise that “we should pay that rate of tax rather than try to avoid it”.
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