11 July 2011
Tristan Hallam argues the tangible benefits, compensation and the financial system
I get quite annoyed when I see yet further press commenting on the issue of compensation culture, how we are looking for a 'fast buck' and how costs of litigation, in particular personal injury litigation, has spiralled out of control so that woe betide the poor insurers are suffering the pinch.
Let me assure you, insurers never really suffer the pinch.
There are of course occasions when large disasters have their significant effect upon the insurance market. It must not be forgotten that Lloyds names, although having an opportunity to make vast sums, also face ruin if the market goes against them.
What appears to be forgotten is that whilst there are thousands of people who suffer very minor symptoms such as whiplash symptoms who recover within no more than a few weeks and go on to make a full recovery (and whose claims are now dealt with in a very fast Ministry of Justice system that is meant to compensate them adequately, quickly and therefore put to one side their claims on the basis of fixed lawyer’s costs), there are still countless people who through no fault of their own suffer significant injuries that sometimes have a very dramatic effect upon their life.
The only way to support these people as we should do in society, is by compensating them by way of money. There is no other method. We can of course provide them with rehabilitation, physiotherapy and support from a medical perspective, however this does not compensate them for loss of earnings or indeed for the pain and suffering they have gone through and are likely to suffer with in the future.The compensation that these people receive is generally fair and reasonable.
The law is such in relation to personal injury law that it has been considered by the Courts for so long and from various different perspectives, that it is only reasonable compensation for losses that a Claimant is entitled to and no one in this country where a claim is brought, receives the millions of pounds that a Claimant does in the United States where damages are designed to penalise the Defendant.
The compensation an injured person therefore receives is a tangible benefit. It has a significant effect on rebuilding their lives. One cannot turn the clock back although many Claimants and clients I have acted for have said on numerous occasions that they wish they could only do so. This tangible benefit is in stark contrast in my view to the money that changes hands in other areas of society.
For example in the banking world we have seen huge highs and dramatic world shattering lows.I take the view that even if the sub prime mortgage fiasco had not taken place, the money world had grown to such a large extent that it simply could not support itself any further. I wonder therefore to what extent we are likely to have seen a recession, perhaps not as dramatic as the one that we are in at present, if the sub prime fiasco had not taken place.
From a lay perspective, this seems to make perfect sense. When a trader hatches up a complex mathematical scheme and apparently makes billions on this scheme, it is right to say that no actual money changes hands. It is all on paper. This trader then receives a massive bonus. This is however a tangible transfer of money since this trader then goes out and buys a luxury flat and fast car. The money the trader is paid by way of bonus is handed to him by way of a thanks from the vast sums that he had apparently created. He did so however only on paper. It was not like he was building something or indeed inventing.
Mr Dyson has made a personal fortune through inventing quite amazing products. Warren Buffett has equally made a massive fortune making him one of the wealthiest men in the world but has done so out of his own creativity, buying companies which then did remarkably well with his guidance and support making him even wealthier.
I have to question therefore whether a financial system which is based to no small extent on paper ideas which do not amount to anything substantial or solid, should have been allowed to grow to the extent it did in the first place. An accident waiting to happen? In the right circumstances, most certainly.
Tristan Hallam is a Principal Lawyer in Personal Injury in the London office of Slater and Gordon Lawyers.
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