Law firms slammed by regulator over risky client practices on high-volume claims
The legal regulator has criticised law firms that handle high-volume consumer claims for poor practices that could harm the public, warning that urgent improvements are needed.
The Solicitors Regulation Authority (SRA) stated that it identified “significant concerns” regarding poor practices at law firms following a review of 25 firms and 50 case files.
The issues the regulator flagged were that some firms were not considering the best interests of their clients when setting up funding arrangements, making referrals, or deciding how to proceed with a claim.
The SRA also noted a lack of transparency in costs, as some clients were not provided with clear information on costs, potential liabilities, or the true merits of their case.
Only 11 of the 25 firms the SRA visited could provide evidence they had shared the required client care information with all claimants when taking them on, and only 12 had records that proved they had shared all the required information on costs and how claims would be funded.
As a result of the review, nine of the 25 firms visited are being actively investigated by the SRA.
This is on top of the 95 investigations it opened as of 31 July which related to 76 law firms involved in high-volume consumer claims work.
Last December, the SRA issued warnings to law firms that were using prohibited marketing practices to attract clients, such as cold calling and targeted online messaging, typically employed by those working on high-volume claims.
The regulator cited that ‘no win, no fee’ agreements by law firms should be made clear to clients that the agreements are not necessarily risk-free.
The issues surrounding pushing claims appear to be a key target for the SRA, as it teamed up with the Financial Conduct Authority (FCA) just last month, ahead of the motor finance ruling.
Both regulators issue warnings to law firms and claims management companies over ‘poor practices’ in motor finance claims ahead of the ruling.
Concerns about aggressive advertisements for motor finance claims, well before the Supreme Court’s decision, prompted the Lord Justices to condemn these practices as “disgraceful.”