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UNITED KINGDOM: U.K. SUITS RISE AS MORE PEOPLE SEE THEMSELVES AS VICTIMS

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LONDON-Litigation in the United Kingdom is booming, particularly in terms of personal injury and employment-related claims.

Just a few years ago most Britons would have taken what life threw at them on the chin, satisfied with free medical care and a substantial welfare system to fall back on. That's no longer the case; injured parties now consider themselves victims and are looking for compensation.

And help is at hand for them. More and more lawyers specializing in personal injury claims, the relaxation of restraints on legal advertising, proposed legal reforms to speed litigation and create greater access to justice, and the growth of consumer groups and media interest all are encouraging a transformation in victims' expectations.

The advent of Britain's litigious society is proving a bonanza for lawyers, but it has worrying implications for businesses, professionals and local government authorities.

A few years ago, very few people tripping on a sidewalk would think to sue for compensation. Today, however, "the great majority would claim," said Bill Sulman, risk and insurance manager for Nottingham County Council and a former chairman of the Assn. of Local Authority Risk Managers. "We are seeing a 20% annual increase in such claims, year on year."

Mr. Sulman attributed the change to "an increase in people's awareness and expectations," caused partly by media attention and lawyers selling their services more publicly than before.

"Some lawyers now are setting up next to hospital casualty departments (emergency rooms)" in an effort to drum up business, noted Mr. Sulman.

"The level of consciousness has been raised dramatically," agreed Barry Howard, partner of London law firm Howard & Howard.

"Years ago, whoever would have thought of suing anybody? There's been a tremendous change in society," said Mr. Howard.

A new breed of plaintiffs lawyers, meanwhile, claims to be meeting the demands of Britain's changing society.

The Assn. of Personal Injury Lawyers was formed in April 1990 by a group of plaintiffs lawyers "dedicated to the improvement of services provided for victims of accidents and disease."

APIL has helped raise the profile of personal injury litigation in the United Kingdom. Its 2,900 members and other lawyers throughout the country now are seeing a massive increase in business.

"We've seen a 300% to 400% increase in personal injury claims in the last two years," said Mark Harvey, a partner of Welsh law firm Smith Llewelyn Partnership in Swansea.

And not just personal injury claims are soaring; employment-related claims also are growing, lawyers point out.

"There's been a massive increase in claims against employers, particularly discrimination cases," said Sarah Winter, an associate partner in the Birmingham office of London-based law firm Eversheds.

However, even among plaintiffs attorneys, there is concern the litigation bug is becoming too infectious. They worry that the advent of "ambulance-chasing" and doubtful claims are leading to a negative image of the legal profession and unrealistic expectations from accident victims.

"The main problem in this country is the increased expectation of plaintiffs. They hear of awards in the U.S." and expect to get similar settlements here, said David Hance, insurance executive with pharmaceutical group Glaxo Wellcome P.L.C.

Meanwhile, significant differences between the legal systems in the United Kingdom and the United States mean the huge awards sometimes seen in the United States are unlikely to be seen in the United Kingdom, he said.

For example, awards in the United Kingdom are made by judges, not juries, and British judges rarely award punitive damages, known as exemplary damages in the United Kingdom, said Mr. Hance.

Leading defense lawyer David McIntosh, a senior partner with London law firm Davies Arnold Cooper, is critical of the "campaigning" plaintiffs lawyers who raise people's expectations.

"The importation of U.S.-style ambulance-chasing has generated an expectation of compensation which didn't exist a decade or so ago," Mr. McIntosh said.

Mr. McIntosh said he thinks the tide turned when the Law Society relaxed its rules on lawyers' advertising in 1986.

Although a code of advertising conduct was drawn up by the lawyer's professional and regulatory society, some lawyers "have gone up to the wire as to what they can do," he said.

He pointed out that some law firms are even advertising on the back of hospital appointment cards.

However, Mr. McIntosh praised the establishment last December of a code of conduct for members of the Assn. of Personal Injury Lawyers.

Among its 11-point code of conduct, APIL stipulates that "no APIL member shall pursue a frivolous claim, . . .give the client false expectations. . .(or) undertake false, deceptive or misleading advertising."

Mr. McIntosh recognizes the aims of APIL and regards the organization as an important "force for improving the standards for plaintiff lawyers."

Mr. McIntosh thinks it is now necessary to calm down the litigation circus. "What is called for is a dose of common sense," he said.

The Assn. of Insurance & Risk Managers echoed his concern.

After a proposal last year by the Law Commission that motorists should pay for the hospital treatment of people they injure in accidents, AIRMIC warned of the consequences of such a proposal on Britain's increasingly litigious society. Under the British National Health System, all ill and injured citizens are entitled to free health care, and no one, regardless of liability, is made to pay for NHS hospital treatment.

AIRMIC Executive Director Ina Barker warned that forcing negligent parties to pay their victims' hospital costs would push up insurance costs and "increase legal costs as more cases are likely to be settled in court."

"This will inevitably result in a significant increase in the total cost to society as the NHS and insurers add the administration cost to the transfer of responsibility," she said.

Ms. Barker also emphasized that risk management is a far more effective tool than legal redress in ensuring safety.

"Britain urgently needs to develop and foster a risk management culture if it is to avoid becoming a society obsessed with apportioning blame and seeking legal redress," she pointed out.

And certainly risk management is becoming one of the most important components in corporations' and insurers' defense.

"The growth in litigation already is impacting corporate clients" in several areas, noted Derek Howie, assistant U.K. liability manager for London-based insurer Eagle Star P.L.C.

"Professional liability and employers liability claims are increasing," he said, adding there is "no doubt that employers are becoming more risk-aware."

Mr. Howie pointed out that in the workplace, trade unions have become significantly more active in pursuing legal compensation for their members.

According to the latest figures available, the trade union movement won a record 304 million pounds ($495.5 million) in damages for members who were victims of workplace injury and ill health in 1985.

Insurers must accept it is now inevitable that "the first reaction of most people is to sue," said Mr. Howie.

"People understand their rights; there are more lawyers around, and it is easier for people to complain" with many more consumer advocacy groups, noted David Forster, marketing manager of Zurich Municipal, a Portsmouth, England-based business unit of Zurich Group P.L.C. specializing in insuring municipalities.

As a result, there is a greater need for organizations "to understand the laws, their obligations and health and safety" issues, said Mr. Forster, adding that local authority insurance managers now are becoming "proactive risk managers" and striving to prevent claims altogether, as opposed to just buying insurance coverages.

"More and more claims are being made when the liability is not clear. People are mistaking insurance with compensation," he said.

Meanwhile, courts are allowing damages in new areas, including for stress-related injuries, he noted (see related story).

As a result, Zurich Municipal has been emphasizing its role as a risk management company, according to Mr. Forster.

"We've been working very hard in the last five to 10 years introducing a risk management culture. It is the only way to deal with the direction society is moving," said Mr. Forster.

Relationships between insurers and businesses also are improving as risk management practices increase, said a spokesman for Guardian Insurance Ltd., a subsidiary of Guardian Royal Exchange P.L.C.

"Risk management will play a significantly more important role" as it becomes more important to prevent claims in the first place, he added.

Leading employment lawyer Gillian Howard agreed that the increased litigation is "having a prescriptive effect in making companies behave."

As a result of the increased assertion of employee rights "companies are much more aware and concerned," she explained.

Ms. Howard is representing a woman who is taking her former law firm employer to court, claiming more than 600,000 pounds ($978,000) in compensation, as a result of contracting dysentery while on a business trip. The plaintiff claims her company did not prepare her for the risks associated with traveling overseas or take care of care sufficiently when she was ill. (BI, Feb. 10).

Mr. McIntosh agrees that businesses have tightened up their health and safety and employment procedures as a result of the increased litigation.

"Genuine cases are a force for improvement in safety," he said, adding, however, "that frivolous claims don't teach anyone lessons."

Employers are becoming more aware of their responsibilities as employees become more aware of their rights, said Ms. Winter of Eversheds.

"People are far more willing to have a go and sue their employer. Previously there was a stigma attached to suing an employer," she noted.