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Thursday, 8 February, 2001, 18:09 GMT
Boom in compensation demands

Injury claim management companies have received a bad press
By the BBC's business reporter, Virginia Eastman

More people are being encouraged to demand compensation for accidents by claims management companies who promise instant riches.

Their critics call them ambulance chasers while their fans say they offer people who can't afford legal fees a chance to go to court.

They have started to advertise aggressively in the UK and these advertisements usually contain the voice of a claimant who has suffered some terrible misfortune and the tale of how the "white knight" claim company came to deliver him or her lottery-size compensation awards.

But sceptics warn that these companies charge high fees and in some cases, the victims can make the claims without expert help.

Culture change

The claims management company is new to British culture, a recent export from the USA.

For many people who can't afford legal help, these companies appear to offer their only recourse to legal services for personal injury.

To complicate matters, the Office of Fair Trading (OFT), is looking at whether or not lawyers should be allowed to offer similar services.

Soon lawyers could be making cold calls.

No win, no fee claim companies are becoming the target of bad press
White knights or ambulance chasers?

Already claims management companies plan to spend 2m in advertising over two years.

Large payout

The most popular advertisement concerns the sad tale of Declan Swan who nearly had his eye taken out by an older rougher child wielding a stick.

It is a real story and Lisa Swan needed help when her son's eyesight was jeopardised.

She says she is grateful to Claims Direct who won 10,000 for Declan from the Criminal Injury Compensation Authority (CICA), as she would never have got the money any other way.

But there was another way - she could have gone directly to the CICA herself and achieved the same result by filling out forms.

Beware the fees

In fact, Howard Webber of the CICA makes the point that in some cases the individual can save money by going straight to the authority and not paying the claim company's fees.

"Certainly there are fees to pay if you receive an award and if you have used a claims management company there'll be quite a large fee to pay."

Still the award was a definite win for Declan.

But not everyone is so lucky.

Take Tom Gough from Leicester. Tom was awarded 3,000 when he was injured at work but only received 1,700.

The back of his cement truck fell off injuring him in the process.

Claims Direct pursued Tarmac, his employer, on his behalf.

Tarmac admitted the liability and 3,000 was deemed the appropriate amount of compensation.

The no win no fee terms are made clear in the small print but if you do win there is a "fee" of 1,300.

This left Tom with a final sum of 1,700; far short of what he had expected.

Chasing ambulances

A torrent of bad press brought on by cases like Tom's has brought with it a massive slide in the company's share price and the tag ambulance chaser.

From a high of 350p per share it is currently sitting at around 40p.

Claims Direct was the Confederation of British Industry's "Company of the year" last year and has enjoyed growth of 471% over the previous year.

Certainly there are fees to pay if you receive an award and if you have used a claims management company there'll be quite a large fee to pay.

Howard Webber, CICA

The Chief Executive, Colin Poole is under no illusions that this year will be anything like that.

"If a claim from our company spurs a company into putting a finger guard on a piece of machinery after an accident with a worker and that means the company has to bear the brunt of higher insurance premiums for them - then good! It is a good thing that the company has been forced to put its house in order."

Cultural change

However successful these companies are, questions remain as to the impact this will have on British culture.

One claims management company has the slogan "Where there's a blame there's a claim".

But should that extend to the playground?

Dr Frank Furedi, Professor of Sociology, University of Kent believes that people may interact differently with each other if they are encouraged to perceive others as potential adversaries as a result of being litigious.

Others will obviously argue that since people can't claim legal aid for personal injury cases, it offers some a chance to have their day in court.

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