Fraud and inducements

At the Westminster Legal Policy Forum, Richard Collins, executive director of the Solicitors Regulation Authority, said that although he could see why people felt that it was wrong for solicitors to offer inducements, to merit a ban he would need to see evidence of risk to clients. This raises a number of issues. First, Mr Collins’ concession amounts to a recognition that, at the very least, inducements just do not feel right. It is hardly surprising that people feel uncomfortable with marketing strategies designed to tempt people to litigate.  

I have heard many non-lawyers express the view that they feel the same way. Of itself this is a concern, especially as personal injury law has just been through a period of radical reform, when claimant lawyers in particular have found it difficult to win the public debate, with the result that accident victims generally have suffered. This is not, as Mr Collins suggests, simply about risks to clients, but also risks to the integrity of the legal profession and the civil justice system.

More specifically, however, I recently spoke to a barrister with a substantial practice acting for insurance companies in defending whiplash claims alleged to be fraudulent or exaggerated. He informed me that one of the indicators of fraud, applied by insurers, is the fact the claimant is a client of a firm known to offer inducements. As a consequence, even those with genuine injuries who are lured by an inducement face a heightened prospect that they will be accused of fraud.  

At the very least, one would expect their lawyer to be under an obligation to advise the client of the risks they face in choosing them to act. The lawyer should also have to explain that the benefit the client will typically get is a cash advance a few weeks earlier than they would otherwise be entitled to obtain from the insurer. Faced with that choice, it is difficult to imagine that a sensible claimant will choose the benefit of the (slightly) earlier advance in return for the heightened risk of experiencing stressful and contentious litigation, culminating in a tarnished reputation, or perhaps even imprisonment for contempt.  

With fraud in personal injury claims prompting a parliamentary inquiry, a Ministry of Justice consultation and the Law Commission contemplating taking a closer look, is it not time for our regulator to take the lead and investigate the presence or otherwise of a link between inducements and fraud?

Richard D Edwards, solicitor-advocate, E Rex Makin & Co, Liverpool