Legal regulator issues warning over ‘no win, no fee’ marketing
The legal regulator has issued warnings to law firms working on high-volume claims, about the tactics used to try and attract new clients.
The Solicitors Regulation Authority’s (SRA) new warnings target law firms that are using prohibited marketing practices to gain clients, such as cold calling and targeted online messaging.
The notice comes following concerns raised in reports made to the regulator.
The SRA highlighted that the marketing and recruitment materials firms use to attract clients should not have the potential to mislead consumers.
The regulator cited ‘no win, no fee’ agreements, informing law firms that it should be clear that the agreements are not necessarily risk-free.
Before a law firm takes a ‘no win, no fee’ case, they take out an after the event (ATE) insurance policy to cover cost if the claim fails, however, recently some insurers are declining to pay out.
Earlier this year, Yorkshire-based law firm SSB Law collapsed leaving debts of £200m, while former clients face heavy costs bills for unsuccessful claims. It was reported that this firm’s former clients have called for rules around ‘no win, no fee’ cases to be tightened, as they face legal bills following the collapse.
Alongside this warning notice, the regulator published a ‘no win, no fee’ guide to help inform consumer choices. It revealed that it is currently doing on-site visits to more than 50 firms working in this area, and opened dozens of new investigations since the Summer.
Those firms under investigation are handling more than 150,000 claims on behalf of consumers.
Paul Philip, SRA’s chief executive stated that “no win, no fee arrangements can help people to access the expert help they need. But firms must always promote their services in line with high professional standards.”
“We are concerned about evidence of poor practice when firms are recruiting clients – whether that’s a failure to assure themselves that a lead has not come through a cold call, or not being clear about potential risks in taking forward a case.”
“We will take action against firms who aren’t working in their clients’ best interests or who are otherwise breaking our rules,” Philip added.