Every day at Shoosmiths, we meet people whose worlds have been turned upside down because they or a close family member has suffered life-changing injuries through no fault of their own. Unimaginable as it might seem, until it actually happens to a family, accidents kill and seriously injure thousands of men, women and children each year. Neither age, wealth nor status afford protection against being in the wrong place at the wrong time.
The people we meet are trying desperately to rebuild their lives despite some being no longer able to walk or look after themselves independently. They might not be able to pursue their chosen career, earn a living to support their family anymore or, perhaps, complete their education and training just to reach the world of work in the first place. Often, the ripple-effect of serious injury may mean the lives of those closest to them are shattered, too.
Of course accidents happen every day. Most are trivial and many are completely unavoidable. We rightly learn to put them down to experience and move on. However, when an accident is completely avoidable, happens because someone else was reckless, careless or wholly indifferent to the safety of those around them and has serious consequences we begin to feel differently. If the accident results in death or other serious injury and the person responsible tries to blame you or shirk responsibility then understandably we start to look at what we can do about it.
I have long held the view that the surest way to turn a doctor’s patient into a solicitor’s client is to fob them off with a superficial or misleading explanation when they enquire whether they were made worse by the care or treatment they received. When faced with serious life-changing injury and a sense of a lack of accountability people rightly look to the justice system. There one would hope to secure not only an apology and an assurance that the same thing won’t happen to somebody else, but also an assessment of fair compensation for the injury.
The purpose of compensation
Compensation is not there to punish. Rather it is intended and carefully calculated to put the injured person or their surviving dependents back in the financial position they were in, prior to the injury being sustained, so far as money ever can.
Compensation is not, after all, a form of profit or windfall. Without fault on the part of the defendant there will be no compensation at all. Even then entitlement to every pound has to be proven according to the strict law of evidence and as well as fall within the complex rules which set out what is, and what is not, regarded by the law as an injury. It is meant to help a victim of injury to financially sustain themselves in more serious cases for the rest of their lives. For those no longer able to look after themselves it will have to cover the cost of care and loss of earnings. It might also have to be used to pay for essential adaptations to the home as well as a long course of rehabilitation. Where death resulted the compensation payment will be to support a family who may have lost their main or only breadwinner.
In short, a compensatory award will go some way towards helping to provide financial security to an injured person and their loved ones as they look for some peace of mind in the face of a daunting and uncertain future. For those with permanent disabilities caused by the fault of the defendant, ensuring that award is sufficient through being calculated and supported by evidence is absolutely essential. The injured person will be financially dependent upon it for the rest of their life – however long that may be. For most claimants there is no coming back for more if the original award was wrongly calculated.
The affirmation on 30 March 2017 from Lord Chancellor and Justice Secretary, Liz Truss that she was 'absolutely committed to the principle of full compensation - the 100% principle', was a positive message for victims of personal injury and medical accidents and an assurance that is very much welcomed by the team at Shoosmiths.
Despite this assurance, however, these remain challenging times for individuals seeking redress for serious injuries caused to them. Justice is not nearly so readily accessible as it once was.
Access to justice challenges
When I started in practice in the 1970s most of my clients were eligible for legal aid. Gradually, over the years, financial eligibility tests fell behind inflation until only a few of the most financially disadvantaged could obtain legal aid following an injury. Then in the 1990s the government decided to withdraw legal aid for personal injury cases and brought in a no-win-no-fee system to provide an alternative route to affordable justice. Many, myself included, said this was a bad idea but the changes came in regardless of concerns expressed by the legal profession. Over the years since then more and more civil cases have been “taken out of scope” of legal aid – in other words, irrespective of financial means many deserving and serious cases are simply not eligible for any help with legal fees.
Now the circle is squaring as the rules around no-win-no-fee agreements are being tightened by degree because, some say, it is too easy for an injured person to bring a claim. Many claimants are now having to put up a share of their compensation, if they win any, against legal fees to make it possible for lawyers to run the cases as well as their clients need and deserve when facing life changing injuries.
Earlier this year, insurance industry reaction dominated news of an adjustment to the ‘discount rate’ – the calculation the courts apply to help them work out how much compensation should be awarded to an injured individual to pay for their future needs. Compensation received now has to be put aside and invested to keep track of inflation to be able to pay, for example, for a care worker in 20 years’ time. The calculation treats claimants as risk averse investors, applying an interest rate to the compensation award based upon them investing their lump sum in low risk index-linked gilts.
When the Justice Secretary, belatedly, adjusted the discount rate from 2.5% to -0.75% early in 2017, to reflect what is happening in the broader economy with interest rates (very low) as compared to inflation (rising), parts of the insurance industry appeared outraged. The adjustment will mean larger compensation payments being awarded in more serious cases – but this will simply ensure that, in the face of poor real rates of return on invested money above inflation, the injured person will be able to make their award stretch to support them throughout their lifetime. The numbers are calculated so that the award of compensation will have been used up by the date of death.
Still, in the wake of the Justice Secretary’s announcement, headlines raised the spectre of the ‘compensation culture’ once more and insurers warned that premiums would go up as a result. To counter this the Association of Personal Injury Lawyers (APIL) stressed that, with the discount rate having been unaltered since 2001, ‘it was very important that the rate was reduced because people with serious, life-changing injuries were not receiving the compensation they desperately need’.
It is not just the seriously injured who are under threat. Continuous lobbying by the insurance sector has played a part in recently announced changes to the small claims court limit for personal injury claims too. The Ministry of Justice (MoJ) announced in February that the small claims limit should rise to £5,000 for road traffic accident whiplash cases and to £2,000 for other personal injury claims. This will force many cases through the small claims system – a court designed for people to represent themselves in very straightforward cases. It opens up the risk of personal injury victims having to represent themselves against insurance company specialist legal teams and so put them at a major disadvantage. Without their own legal representation in place it will be more difficult for claimants to work out and evidence the value of their claim, thus creating a real risk for under-settlement. Though not due to come into force until 2018, it seems inevitable that the changes will restrict access to justice for some claimants. When set against the stripping away of civil Legal Aid that we had already seen in recent years, this latest legal reform is another challenge for people trying to secure rightful compensation in the event of an injury caused to them.
Defending the right to seek redress
The route to securing justice, then, is not as straightforward as it once was. Many people financially obliged to seek redress when others have caused them injury are being painted with a broad brush of disdain colloquially known as the (so called) compensation culture. This is ironic because I have never met a seriously injured person who would not prefer to have their health restored than receive an award of compensation. A good many come to law reluctantly having been, as I have said, fobbed off by those who they expected would take care of them. Even then the law around compensation for injuries in England and Wales has never been generous. Against this difficult backdrop, having seen the difference that compensation can make to an injured person’s life and prospects, we continue to fight and apply our expertise to secure the best possible outcome for our clients.
Where someone is unnecessarily injured as a result of an avoidable accident caused by another person’s fault the accident victim is entitled to compensation. That has long been and should remain the law of the land. We welcome Lord Chancellor Truss’ confirmation that the centuries old principle of full compensation should continue to guide government policy when bringing forward law reform. This will not please those who would prefer to do away with or compensation claims but principle should in this instance prevail.
By Richard Follis, Head of Personal Advisory Division
Richard Follis - Head of Personal Advisory Division at Shoosmiths