A recent award of ¬£23 million over a lifetime is a new UK damages record
Paul Paxton, partner and head of the Personal Injury Department at Stewarts law, also says that with a serious disability comes a much higher risk of matrimonial break-up.
Can foreigners bring their disputes to the UK?
London remains a major centre for litigation. More generally, the UK is chosen as the applicable law for many disputes because you are assured of a fair hearing with a clearly defined legal pathway and time-frame. From a personal injury perspective, save perhaps for claims in North America, the way damages are assessed here is always likely to produce a higher award than other jurisdictions. A number of accidents occurring abroad often present a choice of litigation venue. For the injured party, the UK could well be the primary choice.
Personal injury claims generate great sums of money. Where does it go to?
It is true that damages received for life changing injuries continue to increase. However, these high awards are not a “lottery‚Äù win for our clients but reflect their needs and the increasing costs of providing them.
For example, I have been recently involved in several ¬£10-15 million settlements. One of the cases, involving annualised payments for care would equate to an award of ¬£23 million over a lifetime; this being a new UK damages record. These high awards often reflect significant care needs, which inevitably remain unsatisfied within public sector. Add to that the cost of equipment like wheelchairs and prosthetics, new purpose-built accommodation, earnings loss and private treatment. The award needs to cover a lifetime care for those who are often young at the time the accident occurs.
How are these awards assessed?
Wealth management for these clients is critical. In assessing their awards, the courts take into account that funds will be invested and, for many years now, they have anticipated a net return of 2.5% per annum. That is a challenging feat, without taking significant risk, given we have had interest rates at all-time lows. Our clients beauty-parade several wealth managers, all of whom have experience in the field of disability and understand that the needs may vary during different stages of our clients’ lives.
Disability has limited respect for the wealthy, to the extent that it is just as possible for a wealthy City banker to crash his Aston Martin as it is for an unemployed young man to crash on his moped. It is true to say that those who already have significant income are likely to receive more money for sections of their case. Earnings loss and income are an obvious reference point. It is also much more expensive to adapt a mansion for disabled living than it is to purchase more modest bungalow.
It tends to be the case that the wealthier clients pre-accident already have financial advisers in place to assist.
What strategies work well for the high-net-worth individuals?
It is commonplace now to specifically set up personal injury trusts to assist clients with the management and investment of funds received. Almost inevitably, those trusts will have a professional trustee, well-versed in wealth management. Regrettably, it is a fact of life that with a serious disability comes a much higher risk of matrimonial break-up and, to that end, there has been a growth in prenuptial arrangements for those who have or are about to receive substantial damages claims. In such circumstances, clear and independent advice should be sought as to how that fund will be treated in the event of a breakdown. Although the value of the claims continues to increase, this very much reflects need not greed. Wealth management is a valuable tool to ensure that awards are capable of lasting a life time of significant need.