Compensation Culture

Compensation Culture

"Compensation culture" describes a society in which it is acceptable for anyone who has suffered a personal injury to seek compensatory damages through litigation from someone connected with the injury. The term is especially used to describe the legal climate with regard to torts in Britain and Ireland by advocates of tort reform.

Tort reformers criticize legal systems they deem to represent a "compensation culture" as resulting in:

• Frivolous lawsuits that may be settled out-of-court if the cost of defending a case is greater than the settlement amount.
• Liability insurance becoming prohibitively expensive where there is a high risk of compensation claims, making it impossible to host mildly dangerous activities such as children's sports or other public or community events.
• Lawyers who offer to take cases on a "No win, no fee" basis may encourage the misleading belief that such cases are risk-free, when in fact the defendant's legal costs may be awarded against the plaintiff.
• It may be difficult to disprove the existence of certain claimed injuries, such as neck and back strains, other soft tissue injury, or emotional distress, increasing the likelihood of perjury by plaintiffs feigning such injuries.

Some critics of the concept of a compensation culture believe it is largely an urban myth perpetuated by sensationalist media coverage of a small number of cases. For example:

The Government is determined to scotch any suggestion of a developing ‘compensation culture’ where people believe that they can seek compensation for any misfortune that befalls them, even if no-one else is to blame. This misperception undermines personal responsibility and respect for the law and creates unnecessary burdens through an exaggerated fear of litigation.

Others criticize the implication that seeking compensation for injury is always suspect. A report by the Better Regulation Council states "The compensation culture is a myth; but the cost of this belief is very real."

The report also suggests the factors which led to an increase in litigation in Britain in the 1990s were:

• the abolition of legal aid for most personal injury claims;
• the introduction of conditional fee arrangements;
• the appearance and growth of claims management companies. The largest of these, Claims Direct and The Accident Group, collapsed.