Compensation culture: Fact or fantasy?

In my Presidential address I want to examine ‘compensation culture’. This I imagine is something with which W. S. Holdsworth, notwithstanding his truly encyclopaedic knowledge of English law, would have been unfamiliar. We can let him off though. The term was apparently not coined until 1993; when it first appeared in The Times newspaper in an article by Bernard Levin entitled Addicted to welfare.

Since 1993 the term has become ubiquitous. It has filled numerous newspaper column inches, and continues to do so. I am sure you are all familiar with the types of stories in which it features. They tend to involve the payment of large amounts of money to individuals for seemingly trivial injuries. There was, for instance, the story that ran in June and July 2011, of the school pupil who received nearly £6,000 compensation. His hand had been burnt at school during his lunch break. The burn was the result of spilt custard. Last July a cleaner was reported to have received just over £9,000 in compensation for pulling a groin muscle after ‘stumbling over a mop handle’ and falling over. And last November, it was reported that a teaching assistant received £800,000 compensation. She was said to have suffered a finger and elbow injury that occurred after she had tripped over the waist strap attached to a wheel chair. Stories such as these give rise to the perception that something has gone seriously wrong with civil justice in this country. In this lecture, I want to consider whether there really is a problem and, if so, what should be done about it; or whether there is merely a perception of a problem and, if so, why that should be and what we should be doing about that. This is an issue which has certainly excited the media.

Compensation culture does not simply exercise the media. It has featured in two government studies: 2004’s Better Routes to Redressby the Better Regulation Task Force (the BRTF Report) and 2010’s Common Sense, Common Safety by Lord Young. It was the title, and subject of one Parliamentary Report and was the impetus behind the Compensation Act 2006. It was also the subject of a critical study published last year by the Centre of Policy Studies, entitled The Social Cost of LitigationThat study formed the basis of more newspaper column inches through a follow-up article by one of the study’s authors, Professor Frank Furedi, in The Daily Telegraph. The article’s title, ‘The compensation culture is poisoning our society’, leaves no room for doubt about the view taken in the study. Most recently it has featured as an underpinning to the Government’s consultation on whiplash claims which arise from road traffic accidents.

What does it mean thought to talk of a compensation culture? The term means different things to different people. In 2003 it was defined by a working party established by the Institute of Actuaries as,