Thursday, 30 August 2012

Five grand

What does “five grand” mean to you? Is it a significant sum of money?

If you’re entitled to both components of Disability Living Allowance at the highest rates then it’s a little over 8 month’s income.

If you’re a legal secretary it may be around 4 month’s net income.

If you’re a comparatively high earner managing to allocate the 10% of gross income that some recommend you should, you’ll buy a very decent family holiday with it.

If you’ve lost a finger, broken your arm or have significant facial scarring as a result of an assault it may be what you are awarded as compensation for criminal injuries.

It will buy ten laptops, five large televisions, a complete range of white goods for your kitchen - or one Segway.

According to the Office for National Statistics, it represents nearly 3 months average UK household spending in 2010.

I’d bet a significant sum of money (but nowhere near £5,000) that it means a lot to the majority of folk in this country.

But not to the Government or the insurance industry.

They want to raise the ‘small claims’ limit for personal injury claims from the current level of £1000 to £5000 – a 500% increase. What does that mean?

It means that unless an injured victim’s claim is worth at least £5000, they will not be able to recover any lawyers’ costs in pursuing their claim. If they need to use a solicitor or a barrister, they’ll have to pay for it out of the compensation they recover.

Compensation they may sorely need to replace weeks or months of income lost because of the negligence of another car driver, their employer, a highways authority, a doctor – and so on..

The idea is that they don’t need a lawyer to run a claim for such an insignificant sum of money. They can deal with it themselves.

Familiar with court process are you? Happy to learn at a time when the rest of your world is falling apart?  Content to wait, with no money coming in, for months…and months…and months?

Because you will. Insurers employ claims managers and lawyers whose primary function is to delay, discourage and frustrate claims. It’s a key element of their commercial ethos. They are really good at it and the only people who can beat them are the claimant lawyers who know the ropes.

They pay these people as part of their overheads that form part of the calculation of the insurance premium that they charge to all of us. They try to justify the assault on costs recovery by pointing to the cost of insurance to the general public.

This is the same general public who, having paid the premia, will be shafted when they have a claim but can’t afford the services of the only people who know how to deal with these cynical, selfish creatures.

Will the cost of insurance fall? Look at the annual accounts of some major insurers, see the value of the packages paid to executives and read what they aim to make for their shareholders. Read it and you will weep.

Sure, there is always a line to be drawn, a point at which it can only make sense to forget it and move on.

But it’s not £5000 or anywhere near. Even now there are pensioners and young kids who desperately need to be compensated for losses of less than £1000 but whose only true hope of a result lies in the compassion of lawyers that Clarke, Bojangley and chums deride as ambulance chasers.

This is a political issue. If you’re not lying in a hospital bed or struggling with a plaster cast right now, it may not seem important. It is.

Think of those who are and think of those who will be in the future – it may be you. Speak out - now.

By the way, current fees at Eton are £10,689 per “half” – which is a term – and there are three in a year.

You'll have to excuse me a while...

1 comment:

Julian Summerhayes said...

Good morning Michael. Well said. Well said. But as we both know it's never ending...And the fact remains that this Government, and I'm sure others to follow, will continue to delawyer the market. (Just imagine those poor, stressed DJs having to deal with all those LIPs.) Where does that leave the practice of law? Chasing ever higher value claims to justify its existence; and of course that will ultimately result in fewer firms. What a mess. Julian