McQuater: SRA should take targeted approach
The Law Society has argued against banning use of the term ‘no win, no fee’ by solicitors, which would risk diverting consumers to unregulated firms.
Meanwhile the Association of Personal Injury Lawyers (APIL) said the Solicitors Regulation Authority (SRA) should focus on identifying “problem players”, rather than impose tougher regulations on all high-volume claims firms.
Both were responding to an SRA discussion paper on how to make the high-volume consumer claims market work better for consumers.
The following month, the regulator apologised for failures in its oversight of Sheffield firm SSB Law, which went into administration in January 2024, owing funders over £200m.
Among the ideas raised by the SRA were whether to “restrict, prevent or caveat” use of the term ‘no win, no fee’ or ban it “across the board”.
The Law Society said that while the phrase was “imperfect” and could be misleading without proper explanation, banning its use “would likely have unintended consequences and may risk consumer confusion”.
Unregulated firms, such as lead generators, marketing platforms and funders, often played “a central role in initiating claims” and used the term freely in their advertising.
“If solicitors were prohibited from using the term, they would be placed at a competitive disadvantage in attracting clients, while unregulated providers – who are not bound by professional standards or obliged to offer a comparable level of consumer protections – would continue to use it.”
While the society shared concerns about the accuracy of the phrase, a “caveated and regulated use of the term by solicitors is on balance preferable to an outright ban, which would be likely to reduce consumer protection overall”.
Solicitors offering “genuine ‘no win, no fee’ arrangements – where consumers are not liable for any costs, unless they win – should be allowed to continue doing so under that label”.
The society said law firms whose retainers exposed clients to additional liabilities should be required to use “more accurate formulations, such as ‘no win, you don’t pay our fees (but other fees may be payable)’ or ‘no win, some fees’”.
APIL did not explicitly oppose banning ‘no win, no fee’ in its response and instead called on the regulator to “undertake further investigation about the use of the term by firms, and the understanding of the term by consumers”.
It said: “The introduction of standardised wording and/or a checklist of information requirements could better achieve the aim of informing and giving confidence to clients.
“Regardless of whether the term is restricted/banned, the SRA should continue to work on identifying the firms that are not effectively complying with their communication and client care standards.
“If the term is restricted or banned, law firms must have a reasonable time to adjust their marketing approach.”
APIL said it did not believe that there should be “an overhaul of the high-volume consumer claim sector, or a higher regulatory threshold for those conducting high volume claims, as a result of issues that have arisen due to the SRA’s regulatory failures”.
When firms had “good processes in place to manage high-volume claims, client needs are met”.
John McQuater, APIL executive committee, commented: “Penalising all firms that deal with high-volume claims by introducing tougher regulations because of the actions of a few rogue players would be like using a sledgehammer to crack a nut.
“The SRA should take a targeted approach to swifty identify problem players and intervene early, including reacting quickly when clients raise concerns.
“The current system of handling high-volume claims generally works well and allows consumers access to justice in circumstances where it would not be viable for a firm take on individual cases.”
The Law Society’s response put an emphasis on the SRA sorting out the internal regulatory failures identified by the Legal Services Board’s review of its oversight of SSB Law before introducing changes to processes surrounding high-volume consumer claims.
President Mark Evans added: “The SRA should work with the profession to explore developing standardised onboarding protocols that require firms to disclose key information in plain language.
“This includes the nature of the legal agreement, the potential costs, the risks of litigation outcomes – not only those inherent to litigation, but those particular to the client’s case and individual vulnerabilities – as well as the implications of funding and any insurance arrangements.
“The SSB case revealed that many consumers affected by the firm’s conduct were unaware of the risks they faced, suggesting a need for clearer, enforceable standards for consumer-facing communications.”
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