Leeds taxpayers are forking out more than £3m a year in legal costs to defend largely unsuccessful compensation claims against the council.
Figures obtained by the YEP show that the city’s lawyers’ bill for defending claims of personal injury or damages made against the council has been steadily rising over the last five years.
However, the authority successfully defends 75 per cent of cases, and the actual payouts are a fraction of the legal bill. The figure rose from £2.6m in 2008/09 to a high of £3.2m in 2011/12. The legal costs for last year were £3.1m. At one time, the council was paying as much as £2 in legal fees for every £1 in compensation paid out.
The majority of payouts were for trips and falls and pothole damage. But there were also some tiny payouts, including £24.95 for a falling object which caused a bruise, and £10 for an ankle injury.
The authority has recently led trailblazing work to change legislation and reduce the inflated legal costs associated with compensation claims. The new rules will slash the cost to the taxpayer of such claims in the future, and new work is already under way in Leeds to try and save the authority around £300,000 a year on its own insurance.
A Leeds City Council spokeswoman said: “We strongly defend compensation claims where appropriate and in fact do so successfully in about three quarters of cases. The council will not tolerate fraudulent claims and works hard to prevent any abuse of public money.”
Frank Morrison is insurance manager at Leeds City Council.
He and his team have led trailblazing work in the city which has contributed to securing a change in legislation which will dramatically slash the compensation claims legal bill for the city’s and the nation’s taxpayers.
He explains: “When a claimant is successful in securing compensation, any legal costs they have incurred are payable by the defendant.
“Claimants’ legal costs have become a very significant cost to defendants to the extent that for many claims, as much as £2 has been paid in legal fees for every £1 paid in compensation.”
He explains that the issue goes back to the late 1990s, when the Civil Procedure Rules was enacted. This led to the rise of “no win, no fee” legal firms and claimants’ legal costs went from representing around £1 for every £2 compensation to the exact opposite.
“Leeds City Council pays most claims from its own funds as this is more cost effective than buying insurance,” Mr Morrison explained. “Most large organisations do the same thing. These costs therefore represented a massive drain on public funds.”
As part of his work, Mr Morrison carried out some analysis work with ASDA in Leeds, who had similar concerns about the rising cost of claimant legal fees, and they jointly presented their research to the Ministry of Justice. Leeds City Council also employed an in-house costs assessor who scrutinised the costs bills received - and in almost every case, the assessor had been able to reduce the amounts claimed.
Eventually, the Government commissioned a review, the report of which recommended an overhaul of the civil justice processes.
The new legislation was included as part of the Legal Aid, Sentencing & Punishment of Offenders Act 2012 (LASPO) and took effect from July 31 this year.
Previously, a personal injury claim of £2,000 could easily have come with a legal costs bill of £4,000.
The same claim will now have fixed costs of £1,300 payable if the claim is successful. “This is likely to save the taxpayers of Leeds hundreds of thousands of pounds each year,” Mr Morrison said.
A Leeds City Council spokeswoman said: “We are delighted to have played a part in achieving this, and this new law will help councils and other public bodies all over the country significantly reduce their spending at a time of great financial pressure on unnecessary or inflated legal fees.”