Compensation culture

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A compensation culture is 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, even when the injury is trivial or the connection is tenuous. The term is pejorative, and commonly used in Britain and Ireland. The stereotypical wrongly-sued victim is a local authority on whose uneven footpath someone has tripped and fallen, and the plaintiff is an individual who formerly would have just cursed their back luck, but is now persuaded by an ambulance chasing law firm or claims management company to sue.

Among the criticisms made of supposed "compensation culture" are:

Frivolous lawsuits may be settled out-of-court if the cost of defending a case is greater than the settlement amount
Liability insurance may be 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 impossible to disprove the existence of certain claimed injuries, such as whiplash or emotional distress, increasing the likelihood of perjury by plaintiffs feigning such injuries. A BBC Watchdog investigation revealed that The Accident Group company was encouraging the public to make bogus claims for compensation^[1].

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

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.^[2]

Others criticise 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."^[3]

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.