From cash-for-questions to referral fees: a short history of institutional dysfunction

The Leveson Inquiry is gripping. All manner of the great and the good seem to be involved in the government’s quest to unravel the culture, practice and ethics of the press. Yesterday Hugh Grant gave evidence; later this week Steve Coogan, J K Rowling, Max Mosley and Garry Flitcroft will appear. We’re only at the outset, too: this one will run and run.

At the same time as Lord Justice Leveson, sitting in the Royal Courts of Justice, does his best to deal with the phone hacking scandal, a mile or so away in the Old Bailey a jury is hearing evidence in the trial of Gary Dobson, 36, and David Norris, 35, who are accused of the murder of Stephen Lawrence in April 1993. The jury will reach its decision in due course, but the facts of this case are already well-known. Indeed, the tragic murder of Stephen Lawrence and the resultant bungling by the police led to an Inquiry led by Sir William Macpherson, whose report was published on 24 February 1999.

The Macpherson report developed the notion of institutional racism, which it defined as follows:
The collective failure of an organisation to provide an appropriate and professional service to people because of their colour, culture or ethnic origin. It can be seen or detected in processes, attitudes and behaviour which amount to discrimination through unwitting prejudice, ignorance, thoughtlessness and racist stereotyping which disadvantage minority ethnic people. It found that institutional racism was prevalent in the Metropolitan Police Service (and other services), and had played a role in the flawed investigation into Stephen Lawrence’s murder by the police.

More recently, we have seen the scandal of MPs’ expenses. Jumping back a quarter of a century, there was the notorious cash-for-questions debacle. And to return to the present, there has been justifiable public outrage at the outsize and disproportionate scale of bankers’ bonuses.

All of these things, it seems to me, bear a relation to what ails the personal injury sector. I have written often on the many problems which beset this industry. They may not amount to outright criminality, as in some of the analogies above, but they are significant nevertheless and range from the issue of referral fees to a pervasive lack of market transparency, to blatant profiteering, via victim auctions and the endless merry-go-round of commissions, to endemic conflicts of interest. Again, while not criminal acts they are they connected to phone hacking, institutional racism, cash-for-questions, MPs’ expenses and bankers’ bonuses because in each instance malpractice has become systemic. It becomes second nature to those working in each particular sector or industry. They get away with it, and keep getting away with it, for so long that in time they don’t even recognise that their conduct is wrong.

I think, then, that what we witness periodically is institutional dysfunction. Hopefully the Leveson Inquiry will enable the media to put its house in order; similarly, it seems there is now a strong following wind to enable the personal injury sector to reform. But change will only be accomplished via a holistic approach, like that of Macpherson; one which acknowledges that the whole needs to be tackled, rather than just its isolated constituent elements.

As I have said, one means to reform is to embrace the notion of professionalism. This is a subject in itself (what is it, indeed, to act and behave as a professional?) but one thing goes with the territory as much as ethics, honourable conduct and fair play: the idea of accuracy. Accuracy of information, accuracy of intent, accuracy of advice.

Accuracy, too, in the figures disseminated by insurers. Of late, they have been in the habit of saying that insurance premiums have risen between 30 and 40 per cent, because of ‘compensation culture’. They haven’t.  The true figure, according to an analysis of the Association of British Insurers own figures by the Access to Justice Action Group, is around 4.8 per cent for cars and motorcycles. If the figures for commercial and other vehicles are added, insurance costs actually fell by 3.3 per cent. Getting this right – dealing only in the true facts – would be a big step forward in the drive to resolve the problems in the personal injury marketplace.