In support of its general theme, the report highlights a “key” debate which is said to centre around the reach of the US legal system and the spread of the “compensation culture”. It is said that the report reflects growing concerns that this aspect of the US legal culture is spreading to other regions. It reports that 55% of respondents believe that US-style compensation culture is developing elsewhere in the world, while just 5% disagree.

While the perception is itself very important it has no basis in the facts. The Better Regulation Task Force, albeit in 2004, considered this question of the growth of the “compensation culture” in its report Better Routes to Redress and concluded that there was no factual evidence to support it. It recorded as at 2004 a 9.5% reduction in claims relating to accidents in the year before publication and no particular growth previously. The report referred to the compensation culture as an urban myth. It said:

This is also shown in court statistics. The most recently published for 2006 show that, apart from specified money claims, which is essentially debt collection, the number of claims is pretty constant. The Lloyds report rather pooh-poohs this fact by suggesting that the actual number of cases that reach court is just the tip of an expanding iceberg. Certainly the Ministry of Justice would seek to encourage parties to resolve disputes without recourse to the courts. The culture in litigation has definitely changed over the past 10 years, with parties encouraged by their lawyers to achieve a settlement without going to court. Even so, if there were a burgeoning claim culture, we would see some passage through the statistics to an increase in claims issued, but there isn't.

So what of the potential import of US-style claims here, or indeed, the export of claims from here to the US. Navigant recently published a review of what it termed “credit crunch” litigation, describing it as a tsunami of litigation in the US. Without enjoining in the statistical arguments, when one examines the nature of that litigation much of it would not get off the ground here. The bulk is either mis-selling arguments or shareholder class actions for misleading the market. Both are difficult claims to pursue here. No doubt an economic downturn is bound to lead to more disputes but the very nature of our civil process, with loser pay rules and our law, do not lend themselves to US-style litigation.

Of more concern might be the long arm of the US legal system, with claims being effectively exported to the US. This point has been exercised recently in the US courts in relation to shareholder claims but whereas there have been some indications that the US court would entertain claims from English shareholders, recent decisions show a more conservative approach as to who can sue there.

In the US, litigation has a significant part in the regulatory process backed by an individualistic culture in which access to pursue rights before the court is paramount. The development of capitalism produces more and more regulation. No surprise then that in the US litigation should increase exponentially as things go wrong. In Europe we have different traditions and place our trust in government to regulate. Many complain here of an ever-growing body of regulators and regulation. Indeed, one result of the Better Regulation Task Force was the appointment of a new regulator for claims companies.

Recently the European Commission has been talking of allowing private litigation to fill the regulatory gap in resources between the regulators and the regulated particularly in competition claim. In its green paper on Private Redress in Competition, the Commission sought to promote private redress as a method of regulation but in the subsequent white paper it has pulled back from much of what it said initially with the public statement that it had specifically rejected introducing US-style litigation process.

The perception reflected in the Lloyds report is in itself significant and important. While an economic downturn is bound to see an increase in disputes, it is not litigation that poses the threat here or in Europe but more the litigious process of regulation with a growing band of regulators, domestic and European, overseeing every aspect of corporate life.