Proposals for a major overhaul of state compensation, for miners and other workers suffering from industrial disease, could trigger a surge in costly court action – and provide a bonanza for 'no win-no fee' lawyers, a legal expert has warned.
The Government is considering changes to the no-fault disability payments which currently cost the exchequer more than #770 million a year.
But the lawyers, too, are under fire. The surge in litigation will put the controversial issue of fees back under the microscope.
Darren Smith, a partner and product liability specialist in the Birmingham office of international law firm Reed Smith Richards Butler, believes some claimant lawyers, including well-known firms, stretch the legal costs system to breaking point – making lavish claims in order to fund the purchase of luxury items such as private planes.
"A number of MPs – particularly those in mining constituencies – have become very critical of the way some claims have been handled and have asked questions about the scale of lawyers' fees in relation to the amount of compensation they win for their clients," he added.
"It is a reflection on the system that these cases are often viewed as a chance for the lawyers to make a lot of money. Often the injured party can become secondary.
"The sums involved are astronomical, with billions of pounds paid out on compensation and legal costs, and some small firms pocketing millions in fees.
"Industrial injuries are very profitable for many law firms."
For almost 60 years Industrial Injuries Disablement Benefit has been paid to employees injured at work, or contracting diseases from contact with hazardous materials such as asbestos, where liability was hard to establish.
At present there are hundreds of thousands of claimants, but with manual industry in decline, services on the rise, and greater numbers of women in the workplace, the Department of Employment and Welfare Reform wants a shake-up of the system.
Mr Smith warns that if the Government decides to abolish the benefit there will be a flood of litigation.
"The Government now seems to feel that since most of the historical claims have been dealt with there aren't likely to be many cases where an injured party doesn't know who to proceed against," he said.
With changes to the law last year favouring claimants with regard to burden of proof, the Government now feels that the workplace has altered so much over the past few decades that the benefit scheme has to change to reflect modern practice.
"But people who are disabled through work are still going to demand compensation, and if the state won't pay they will turn to the law for satisfaction," Mr Smith said. "As the people involved are unlikely to have the resources to fight their way through the courts there will almost certainly be a rash of 'no win-no fee' cases, funded by lawyers who are prepared to work for up to a 100 per cent increase in their costs if they win."
A knock-on effect will be felt in the insurance industry which will have to pick up the bill for employers facing potentially massive claims – both from individuals and groups of workers whose health has been harmed by contact with dust, fumes or chemicals.
Mr Smith says this will result in an increase in the premiums paid by businesses in several sectors.