Why should legal fees be higher than compensation awards?

Insurance companies said recently that the UK’s personal injury compensation culture has to be stopped.

The comment was made after it was revealed that personal injury claims for trips and slips on pavements in parts of Lincolnshire and Yorkshire have cost in excess of £5 million over the last four years.

According to the latest research from the TaxPayers Alliance, 14 local authorities in the UK have paid out £5.01 million to settle claims and in excess of £5.5 million in legal fees.

Leeds local authority paid out the largest amount in compensation at £1.28 million, with an additional £1.6 million going on legal fees. Wakefield shelled out the second largest amount at £667,429 compensation plus £635,603 legal fees. In Hull, £235,450 was paid out in compensation and a whopping £810,026 in legal fees.

In fact nine of the fourteen local authorities paid out more in legal costs than they did in compensation awards.

James Dalton from the Association of British Insurers said the compensation culture has got out of control and the government must do something to bring down the cost of claims and associated legal costs.

He wants the government to ban the practice of personal injury solicitors paying for information about people who have been involved in accidents, as well as reducing hourly rates and fixed legal costs.

A spokesman for Leeds Council said it does its best to weed out claims that are fraudulent and it does carefully check legal fees before settling them to avoid wasting public money that should be going on the provision of frontline services.

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