Funding of Personal Injury Litigation and Claims Culture: Evidence from the Netherlands

Abstract

In this article we address the financing of the litigation system (including legal assistance insurance) and the substantive law with respect to compensation for victims in the Netherlands, to find out whether these elements encourage a 'claims culture'. Special attention is given to the performance of the personal injury system by providing some empirical data, where available, on traffic accidents, work-related injuries and medical negligence.

We find that the increasing popularity of legal assistance insurance in the Netherlands has not led to an increase in the number of tort cases, whereas the substantive law and the resulting case law has to some extent been successful in preventing more cases from going to court by encouraging parties to settle out of court instead. Furthermore, it is not at all clear whether allowing attorneys to charge on a 'no win no fee' basis would change this situation, as contingency fees are currently already charged by commercial legal assistance agencies. If this finding were to be confirmed for other legal systems (in other countries), this may have important policy implications.

Keywords: claims culture, personal injury, legal assistance insurance, the Netherlands