Cavity wall insulation: Firms under scrutiny
The Solicitors Regulation Authority (SRA) has opened dozens of investigations into law firms in relation to their conduct of volume litigation, it has emerged.
The regulator is now investigating more than 50 firms, a significantly increase since the summer, with the most common types of claims relating to financial products, housing disrepair and cavity wall insulation.
Between them, the firms are handling more than 150,000 claims.
Most of the cases involve conditional fee agreements amid concern about the use of the ‘no win, no fee’ label, which has raised by the victims of the SSB Law collapse.
The SRA said the most common issues in the investigations were clients acquired via cold calling or unsolicited approaches – whether by the firm directly or third parties – ‘no win, no fee’ being marketed to people on basis that there was no risk of them having to pay any costs when this might not be true, and firms taking on claims without merit or not managing claims properly.
The figures were released in the wake of the SRA publishing a warning notice to law firms on marketing their services to the public, which covered these issues.
In May, the SRA published a warning notice on high-volume financial services claims, together with guidance on the broader issue of claims management activity.
The regulator said it was “particularly concerned” about firms handling financial mis-selling cases taking proper instructions from clients and supervising staff when part of high-volume processes.
Issues included consumers reporting they did not consent to a law firm starting to act for them, poor due diligence during client onboarding “that leads to low quality and/or inaccurate claims entering the financial service redress system”, and failures to” act promptly or adequately in response to client instructions”, including where clients want to terminate their retainer.
Writing about bulk litigation on Legal Futures last month, SRA chief executive Paul Philip said: “We have had worries for some time, but recent cases, including SSB, have caused us to look under the bonnet and, while the picture is not yet complete, we have seen enough to persuade us that we need to begin to expose some of the problems we are finding.”
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