The Advertising Standards Authority (ASA) has upheld a complaint over a law firm’s claim that its ‘no win, no fee’ clients would receive all of their damages.
However, it emerged after the ASA made its finding that the firm, London practice Lorrells, had closed down.
While operating, Lorrells challenged the validity of consumer credit agreements, working under conditional fee agreements to try and write off the debt on behalf of clients.
According to the ASA, the firm’s website stated: “Our service to you is on a ‘no win no fee basis’ and you will receive 100% of any money that we reclaim on your behalf.”
This was challenged by Lloyds Banking Group, “who understood that solicitors claimed their fee directly from the redress payment from the lender to the customer”, and questioned whether the claim on the website was therefore misleading and could be substantiated.
Lorrells did not respond to the ASA’s enquiries and an adjudication published today upheld the complaint under four parts of the UK Code of Non-broadcast Advertising, Sales Promotion and Direct Marketing (called the CAP Code).
It said: “The ASA was concerned by Lorrells LLP’s lack of response and apparent disregard for the code, which was a breach of CAP Code rule 1.7 (Unreasonable delay). We reminded them of their responsibility to provide a response to our enquiries and told them to do so in future.
“Because we had not been provided with evidence to show that customers received 100% of any money Lorells LLP reclaimed on their behalf, we considered that the claim had not been substantiated. We therefore concluded that the ad was misleading.”
It also breached rules 3.1 and 3.3 (Misleading advertising) and 3.7 (Substantiation).
The ASA ordered that the advert must not appear again in its current form and referred the matter to the CAP Compliance team.
The Solicitors Regulation Authority (SRA) confirmed to Legal Futures that Lorrells closed on 8 September. An ASA spokesman explained: “The complainant identified the ad in July and we first contacted the advertiser in August, so they had an opportunity to respond before they ceased trading.
“If it becomes apparent that a business has ceased trading in the course of an investigation, we will make a decision as to whether there is value in carrying on. In this case we weren’t aware of the circumstances until we contacted the SRA to let them know the outcome of our investigation.
“We are not obliged to stop an investigation if a company has ceased trading and there is often a public interest in carrying on and putting on the record why the ad breached the code.”
There is no memorandum of understanding between the ASA and SRA, but the spokesman said that “we will often draw to the attention of a relevant industry regulator a ruling against one of their members if we think it throws up something that will be of interest to them”. In this case, it was the failure to respond to the ASA.