Joanne O'Sullivan

The global law firm set out its recommendations on the matter in response to a Department for Justice and Equality consultation on setting the personal injury discount rate.

It has recommended that an independent expert panel should be established to advise on the appropriate discount rate every five years, based on evidence of what people actually do with their compensation.

In its response, Kennedys said: “Claimants and other investors are not routinely advised to invest 100 per cent of their capital in government bonds or any other assets. Investment advice to an ordinary prudent investor will be to invest in a diverse portfolio of investments.

“This will avoid or protect against the situation a current investor in government bonds faces, i.e. that their investments are not producing any return but are creating a loss. That is not the outcome expected by a very risk-averse investor.”

Joanne O’Sullivan, partner in the Dublin office of Kennedys, said: “The overriding principle at stake there is that injured people should receive 100 per cent of the compensation they are awarded – no more and no less. Any mechanism utilised in the setting out of the discount rate should reflect the reality of how claimants actually invest their award.

“We do not consider it appropriate for those setting the discount rate to ignore the impact on defendants, particularly when in effect the compensation system is funded largely by taxpayers and consumers. Any change should attempt to be fair to all interested parties.”