The Solicitors Regulation Authority (SRA) has already closed down five firms, is currently investigating 76 law firms involved in these types of claims, and has written to more than 500 other firms asking them to complete a mandatory declaration of compliance.
Last week, it formally asked lawyers for their views on the issue by 14 November, in a discussion paper, ‘How can the high-volume consumer claims market work better for consumer?’. It is exploring five areas in particular—transparency and clarity, risks around third-party litigation funding, after-the-event insurance, regulating a changing marketplace, and wider improvements for consumers across the system.
One potential reform under consideration concerns the use of ‘no win no fee’, which the SRA paper states ‘falsely implies that there is nothing to be lost in commencing such litigation, which is clearly not the case’. The SRA asks, ‘Should we seek to restrict, prevent or caveat use of the term “no win, no fee”? Should this marketing term be banned across the board?’
The regulator said it will shortly issue further warning notices to firms highlighting their obligations regarding ‘no win no fee’ cases and use of litigation funding.
Chair of the SRA board Anna Bradley said: ‘The risks and issues we are seeing in the high-volume consumer claims market are unprecedented.
‘Too many firms don't have their house in order, so we need to use all the levers at our disposal to protect consumers and identify poor practice.’
Law Society president Richard Atkinson said effective regulatory oversight was ‘essential’ but cautioned against ‘going too far. Over-regulation, or any measures could restrict access to justice and harm people that these services are meant to protect’.
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