Posted 16th September 2011

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Yay! I´m entitled to £3,000. At least that is what the text message says which I´ve just received. Apparently I´ve also been involved in a car accident and I was injured. I don´t feel too bad actually, but who cares and where do I get my £3k?

Well quite a lot of people care actually. Not to mention all of us who are paying higher car insurance premiums as a result of the claims culture.

Of course I´ve not had any accident and I´m not entitled to any compensation. These texts, generated by claims farming companies, often based abroad, are part of a chain which leads up to some solicitors´ practices, through claims management companies, with a fee being charged for the lead at each stage.

Personal injury solicitors will typically pay £750 per lead for a standard claim. Some firms will pay up to £10,000 for a lead on a case involving injuries of the upmost severity, from which they can earn hundreds of thousands of pounds in fees.

If you don´t have much sympathy for the insurance companies (some of which themselves sell details of accident victims), the NHS paid out £863m last year in claims of which £274m went to solicitors, some of them claiming up to £900 per hour. Now economics isn´t one of my strengths but how is such a fee justified under any circumstances?

All of this will quite rightly sit uncomfortably with many. And it seems that the government agrees. Referral fees for personal injury cases are to be banned. Precisely when has not been decided, but it will certainly put an end to the high volume businesses which churn claims for excessive profits without much thought for the people that they are representing.

Along these lines, two solicitors in a major firm of solicitors have just been fined £20,000 each for sending out 6,000 letters claiming compensation and legal fees from people who had shared music files. Again, they had sent out the letters without much regard to the validity of the claims or the distress that their actions caused. They were more concerned with the money they could make. And how much did this venture net? Well after their firm had been ordered to pay an interim costs order to our regulatory body of £150,000, not a lot. Imagine explaining that one at the partners meeting….

Yay! I´m entitled to £3,000. At least that is what the text message says which I´ve just received. Apparently I´ve also been involved in a car accident and I was injured. I don´t feel too bad actually, but who cares and where do I get my £3k?

Well quite a lot of people care actually. Not to mention all of us who are paying higher car insurance premiums as a result of the claims culture.

Of course I´ve not had any accident and I´m not entitled to any compensation. These texts, generated by claims farming companies, often based abroad, are part of a chain which leads up to some solicitors´ practices, through claims management companies, with a fee being charged for the lead at each stage.

Personal injury solicitors will typically pay £750 per lead for a standard claim. Some firms will pay up to £10,000 for a lead on a case involving injuries of the upmost severity, from which they can earn hundreds of thousands of pounds in fees.

If you don´t have much sympathy for the insurance companies (some of which themselves sell details of accident victims), the NHS paid out £863m last year in claims of which £274m went to solicitors, some of them claiming up to £900 per hour. Now economics isn´t one of my strengths but how is such a fee justified under any circumstances?

All of this will quite rightly sit uncomfortably with many. And it seems that the government agrees. Referral fees for personal injury cases are to be banned. Precisely when has not been decided, but it will certainly put an end to the high volume businesses which churn claims for excessive profits without much thought for the people that they are representing.

Along these lines, two solicitors in a major firm of solicitors have just been fined £20,000 each for sending out 6,000 letters claiming compensation and legal fees from people who had shared music files. Again, they had sent out the letters without much regard to the validity of the claims or the distress that their actions caused. They were more concerned with the money they could make. And how much did this venture net? Well after their firm had been ordered to pay an interim costs order to our regulatory body of £150,000, not a lot. Imagine explaining that one at the partners meeting….