The profit in accidental painBy John Sturgis Last updated at 00:00am on 18.04.01
Menacing black and white images of London appear: a car accelerates sharply as an old lady approaches a kerb, a dug up pavement waits to trip the unwary. London can certainly be dangerous but is it really this dangerous? It is according to one television advert now being shown, which urges viewers to call "if you've been involved in an accident".
This is nothing but "ambulance chasing", you might think. Except that this is not an example taken from the crassest end of the personal injuries lawsuit market, this is from Accident Line, the group endorsed by the Law Society, and is among the "softest" of the spiralling number of such ads, not even mentioning compensation or promising thousands of pounds, as most others do.
Law firms are resorting to ever more brazen tactics to generate profits from compensation culture. Teams of canvassers are being sent to shopping centres to ask members of the public whether they have recently had an accident. There are increasing incidents of telephone and door-to-door "cold calling".
There are even cases of companies - while denying that they are "ambulance chasing" - going as far as taking out adverts within hospitals so that they can catch accident victims while their wounds are still fresh.
At least half a dozen companies are now advertising on national television, together spending £3 million or more each month. Typically, these commercials feature an authoritative man or woman walking round an office full of attractive people in telephone headsets, asking typically: "Have you had an accident in the last three years? If you have, you could be entitled to thousands of pounds in compensation."
The sort of dogged marketing being used is bringing the whole sector into disrepute but there is no sign of any sanity returning: many participants are even now "exploring new marketing avenues" - ie, thinking of even more extreme ways of harassing the public into suing as competition becomes ever fiercer.
Not all of these will prove cost-effective of course. Claims Direct last week closed 13 of its 17 high street offices - it had at one stage talked of setting up a nationwide network of more than 100 - because they "weren't generating enough business". The company, though, promises "new marketing initiatives soon". You can be sure that anything that works will be done.
Even if you haven't had an accident you will be introduced to the consequences of the culture of blame when you go to renew insurance policies. The average car insurance policy rose by an unprecedented £100 last year, according to AA research, caused by insurance companies passing on the cost of compensation payments.
It is estimated that more than 10 million people injure themselves each year, of whom some five million are treated in accident and emergency units. The majority of these accidents occur in the home, which means there is usually no one to sue. However analysts believe that two million accidents, mostly on the road or at work, are the fault of third parties.
Once you have subtracted those thought not worth pursuing - as compensation of around £1,000 must be thought viable before anyone will take on the case - you are left with somewhere between 500,000 to a million cases each year. The average award made in such cases is around £3,000, with lawyer's fees worth another £1,000 or so, creating a market worth as much as £4 billion if every possible case led to a claim - a scenario that those involved in personal injury work seem determined to achieve. With the growing public appetite for litigation - three out of four people surveyed recently said they would sue for compensation after an accident - they may one day hit the target.
More than 90 per cent of cases are settled out of court so no one knows for sure how much of that possible £4 billion is currently being claimed but there is no doubt the figures are increasing way above the rate of inflation.
The compensation culture as a whole - including employment cases, medical negligence and so on - is now thought to be worth as much as £12 billion a year, with the cost increasing month on month as more and more people are encouraged to claim more and more in damages.
Here is our guide are the companies who, literally, are waiting for accidents to happen.
Claims Direct, the best known of the so-called ambulance chasers, faces fierce criticism for the cost of the premiums it forces on clients.
In some cases, this has devoured the lion's share of any award. Scalding victim Jason Pointing, for example, was awarded compensation of £1,525 but was left with only £63 after Claims Direct had taken its cut.
Cases of this type have helped to shatter Claims Direct's intended image of "helping the little man afford access to justice". As a result, Claims Direct's share value has fallen steeply. After flotation last summer its shares doubled in price, valuing the company at £681 million. It is now worth closer to £20 million.
The fallout prompted the resignation of the company's founder, former Wolverhampton taxi driver Tony Sullman, who started dealing in personal injury claims in a back bedroom after noticing "a gap in the market".
His place has been taken by Colin Poole, 36, a lawyer. Mr Poole has done very well out of personal injuries: he owns a £2 million 150-acre country estate in Shropshire.
Claims Direct has had its knuckles rapped by the Advertising Standards Authority for its internet adverts which implied that it was a firm of solicitors with a team of more than a 1,000 staff - and that 96 per cent of its claims receive a fair settlement.
The authority demanded that it remove the statements.
The biggest player of them all in this market is the TUC. For the unions, the rise of personal injuries lawsuits - as well as unfair dismissal, sex discrimination and other employee-versus-employer lawsuits - has been a new lease of life. In 1999, the last year for which figures have been collated, unions as a whole won £320 million in illness and injury-at-work compensation payments for a little over 50,000 people - dwarfing the caseloads and sums handled by any of the private companies who use television to win clients.
In London alone, in January this year, public services union Unison won cases worth £181,000 involving 37 different people.
A Unison spokeswoman said: "Often it takes an accident before an employer looks at changing unsafe working practices or replaces unsafe equipment.
"But if employers know we will vigorously pursue these cases when they arise then such actions may encourage them to provide a safer working environment. For us health and safety is a big issue."
National Accident Helpline
Founded almost a decade ago by two businessmen with no legal qualifications, Paul Follett and Alan Kennedy, who describe their "eureka moment" as being the realisation that no one in the legal sector had ever created a recognisable brand. Virtually all law firms take their unmemorable names from partners' surnames.
Although strictly local when they started out, in association with a Northamptonshire solicitor, they used the "National" name from the outset and quickly realised their idea of branding was a good one as response rates soared. National Accident Helpline expanded steadily throughout the 1990s and was first to advertise on television.
Since the market was fully deregulated, it has suffered badly in the face of competition, though Mr Follett - who describes himself as "absolutely not" a millionaire - believes National Accident Helpline will flourish again.
Unlike most of its competitors, it does not rely on insurance packages. Instead it acts as a "club" for a network of some 400 lawyers' offices across the country, taking a small commission out of the lawyer's fees. Mr Follett said: "The market cannot sustain the kind of competition it is seeing."
Run by Old Etonian, former Coldstream Guards officer and City insurance veteran James Innes.
Last November, using model and well-known accident victim Heather Mills for publicity purposes, the service was relaunched to try to claw back some of the ground lost to the likes of Claims Direct.
The cornerstone of the company's image is the fact that it is endorsed by the Law Society and therefore, it says, cannot afford to be seen as encouraging claims in a way that is at all distasteful.
Mr Innes said: "I don't think that the current froth and excitement at this new market will last."
Although Accident Line does advertise in the newspapers and on television, its annual advertising budget, at £2.5 million, is much lower than its competitors and the tone of the ads more restrained. It too uses an insurance system but its fees are staggered according to the value of the claim, ranging from around £300 to £3,000, which it says is fairer than the flat rates used by most others.
Vice-president of the Law Society David McIntosh says the scheme allows solicitors to handle the entire accident claim, unlike others, who treat solicitors like "donkeys on leads".
Nevertheless, Accident Line is not unimpeachable on the question of encouraging lawsuits. One promotional leaflet it issued asked: "It was just an accident ... or was it? Even if you believe that your injury was just an accident, and that no one was to blame, it's still worth talking to a specialist solicitor."
Mr Innes said this sort of thing is behind them: "We've learned lessons from the past. We have to be very careful about what we say."
The Accident Group, or TAG as it's known, is probably now the market leader. It is coming to prominence on the back of the kind of hard-sell tactics usually associated with double glazing or timeshare apartments rather than legal services.
Its television commercials carry the slogan, "Where there's blame, there's a claim". TAG is pioneering the use of cold calling and recently recruited around 200 sales people to tour the country. Each has a target of finding between four and seven new clients every day.
Stories circulating within the company suggest its founders made the leap from road traffic claims to all personal injuries work after a visit to the casualty department of a London hospital.
By using the most effective aspects of Claims Direct's marketing strategy, while offering considerably cheaper insurance premiums (at about £850 rather than £1,495), TAG is devouring much of Claims Direct's business.
Chairman Mark Langford, 36, has become very rich indeed. He lives in a Regency manor house with lake and indoor pool in the Cheshire stockbroker belt and owns a fleet of cars including two Ferraris, a Bentley and a Porsche. Last summer he achieved notoriety when it emerged that he had knocked down and killed a war veteran pensioner while doing 55mph in a 40mph zone in his red £120,000 Ferrari 355 F1 Spyder, shortly after getting his licence back from a 22-month ban for drink-driving. The judge, who fined him £1,000, said Langford had driven "like a frustrated teenager". The pensioner's widow is now taking civil action against him.
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