FightingBack

Even on the basis of lies, damned lies and statistics there is, in fact, no statistical proof of a compensation culture. It just feels like there is – and it’s compounded by the often frivolous nature of claims.

Why do companies settle rather than fight cases? Often the decision is not in the hands of the company but with its insurer, and for insurers, small claims are simply a numbers game. But there are other economic issues that play their part in terms of time for management and staff tied up in the claims process. Another factor is publicity and if you watch any TV programme on the subject the consumer is always right.

In the infamous hot drinks litigation McDonald’s actually fought back. It did so to protect its brand and because it felt it had done all that it reasonably could to purvey its coffee safely, short of refusing to sell coffee at all. The successful defence cost a lot of time and money but it did identify what is required to take the fight to the opposition: a willingness to collate detailed evidence, a good legal argument, a long-term view of the brand and the consequences of a ‘floodgates’ rush of claims if a position is not secured, and maximum co-operation from current and former staff.

Can smaller companies take the same line as McDonald’s? Of course they can, as long as they are prepared to take the time to get their act together and receive proper, cogent advice on their position. Very often, small owner-managed businesses, despite fewer resources, are the most vigorous in resisting spurious claims because the owner is so incensed. Mid-sized businesses should show the same backbone. If they did, the number of spurious claims would be reduced more effectively than by the introduction of any new legislation.

RISK ASSESSMENT

Just as flogging a dead horse is a waste of time so is defending a claim with no chance of success, where there is no point of principle and the costs are likely to be disproportionate. Herein lies the problem at the heart of compensation culture: how does management tell if a claim is genuine?

A proper knowledge of your legal and statutory obligations is the starting point and then the implementation of staff training, risk assessments, proper recording of information at the time of an incident and the fostering of a ‘safety culture’ are all highly recommended. If your business has no knowledge about an incident, it is vulnerable right from the word ‘go’.

The prime minister, Tony Blair, has announced that the curbing of a style compensation culture in the UK will be among the government’s priorities during the next parliamentary session. However, it’s doubtful whether any legislative change will alter the compensation culture.

Compensation in the UK has far too great an emphasis on financial awards. There is even a club for solicitors who have broken the £100,000,000 payout mark. Changing the focus from compensation to rehabilitation – be it prompt medical treatment so accident victims are not dependent on the National Health Service for immediate and long-term health care, or vocational re-training after permanent injury to improve accident victims’ quality of life – and away from a lottery mentality is essential to stop the growth of spurious claims.

Anne Davies, head of health and safety at solicitors Vizards Wyeth, deals with all aspects of liability insurance. She can be contacted by email at: acd@vizardswyeth.com