According to one of the country’s most senior judges, insurance companies are selling customer details to “no win, no fee” lawyers for as much as £10,000.
Lord Justice Jackson, the man who conducted a major review of civil litigation, accused those who sell the information as “middlemen who add no value” to the regime. He said the controversial practice should be banned.
Lord Justice is the latest high profile figure to criticise so-called “referral fees” where claims management companies, insurance firms, trade unions and others sell details of injury victims to lawyers who then encourage them to claim compensation.
Earlier this year following an investigation by Jack Straw, the practice was revealed the former Labour Justice Secretary, who said the cost of personal injury claims had doubled to £14 billion in 10 years.
The Government has said it is “sympathetic” to the idea of a ban but has not made any formal moves to do so.
Lord Jackson, who last year made 109 recommendations for a radical shake-up of civil litigation and the no win no fee system, said in some high value cases the referral fee can be at least £10,000.
They can account for half of the costs awarded in a successful claim, in low value cases.
“In the context of personal injury litigation, one consequence of the recoverability regime is that there is now far too much money swirling around in the system.This has led to a progressive escalation of the referral fees which lawyers pay to get a share of the business.Thus the beneficiaries are not the accident victims, but usually the referrers and (when no referral fee is paid) the lawyers,” he said In a speech in Cambridge.
He said that market forces compel personal injury solicitors to hand over a large part of the costs they receive to claims management companies, insurers and others.
Furthermore, Lord Justice Jackson accused the Law Society of representing the interests of compensation lawyers over the public in a joint campaign against planned cuts to civil legal aid and his proposed reform of civil litigation.