SRA pledges action against door-knocking claims firms

Solicitors getting work through door knocking and cold calls are being warned they risk breaking Solicitors Regulation Authority rules.

The regulator today issued a warning notice for claims firms relying on prohibited marketing practices including directly targeted online messaging. There is understood to be particular concern that some firms are not checking on the tactics of claims management companies or lead generators who secure them cases through banned practices.

The SRA says it has received increasing reports about cold calling and unsolicited approaches and has been alerted by the recent collapse of firms who had signed up large numbers of clients.

Former claimants who had instructed collapsed firm SSB Law have said they were approached on the doorstep by people saying they might have a cavity wall case. Many of those individuals have then been left with demands from defence lawyers for repayment of thousands of pounds. The SRA has an ongoing investigation into SSB Law and the firm closed earlier this year.

The SRA revealed it is currently investigating more than 50 firms in relation to bulk litigation, many of which are linked to no-win no-fee offers. This number is up significantly since the summer with dozens of these investigations newly opened in recent months.

Between them the firms being investigated are handling more than 150,000 claims, most commonly relating to financial products, housing disrepair and cavity wall insulation.

The regulator is warning firms to make sure marketing and recruitment materials used to attract clients do not have the potential to mislead consumers. In particular, when marketing the benefits of ‘no win, no fee’ agreements, firms are being told to make sure they are clear that the agreements are not necessarily risk-free and they might and clients might still become liable for costs.

Paul Philip, SRA chief executive, said the organisation does not want to curtail firms promoting their services but this must be done 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,’ said Philip. ‘We will take action against firms who aren’t working in their clients’ best interests or who are otherwise breaking our rules.’

Solicitors are allowed to advertise services to the public so long as this is done in a ‘non-intrusive and non-targeted way’.

Sending leaflets to people’s homes is allowed, but only under specific circumstances where the distribution could not be considered to be targeted Leaflets could be sent to all homes within a large geographic area, but may not be sent only to homes or individuals based on information known about them.

The warning notice comes at a time when politicians, campaigners and some practitioners are calling for greater protection for clients of bulk litigation firms.

A LinkedIn post by Giles Peaker, a partner at Anthony Gold Solicitors, received wide attention this week after he complained about the practices of some housing disrepair firms. ‘These claims farmer fed, legally incompetent firms are a menace,’ said Peaker. ‘Their success fees and ATE premiums are outrageous and they have no idea what they are doing in law. They leave tenant clients in the lurch after under-settling claims on unenforceable terms.’

He called on the ‘feed line’ from claims management companies to be cut off, for referral fees to be prohibited for this type of work and success fees capped at 25%of damages.

Former clients of SSB Law called earlier this year for regulators to clamp down on lawyers' promises to run cases on a no win, no fee basis. Debra Magdalene, an administrator for the SSB Victims Support Group, said: ‘We need to ban this term “no win, no fee” because it is misleading. We need fair practices to ensure homeowners are not trapped by legal costs.’