Fees for Claim Settlement in the Field of Personal Injury: Empirical Evidence from the Netherlands

Based on data supplied by five dutch insurers for the years 2001 – 2006, the authors analyse the development of hourly fees charged by attorneys and other legal representatives (claims agents) in personal injury cases. The analysis focuses on cases that did not go to court but where, according to dutch law, a fee shifting rule applies: that is, the (insurer of the) losing party must pay the costs of the winner's legal assistance. One may expect that such a fee shifting rule would to some extent restrict competition in the market. The data indeed appear to suggest that in the netherlands fees of personal injury lawyers have increased rather dramatically in recent years: more than double price and wage inflation, and much more than the fees of, for example, a trustee in bankruptcy. We offer some explanations for this based on the well-known law and economics literature. Although the fee increase we found may indeed be related to the dutch fee shifting rule, the data we collected (which all relate to recent years) did not allow us to make a sufficiently robust connection between the two. They do, however, provide a rare and valuable insight into modern personal injuries practice in the netherlands.