Private equity-backed Winn Solicitors is ramping up its operation to handle mis-sold business energy contracts as it bids to diversify from its core personal injury business.
The Newcastle-based practice is looking to hire more than 100 new employees, on top of the 350 it already has, to take the lead in the nascent market.
Winns reckons it can claim up to 20% of a company’s gas and electricity bills back from their energy broker or others who received the benefit from the mis-selling.
It has partnered with energy management company PanoServe for referrals and access a detailed database of historic tariffs. PanoServe takes 15% of any compensation for claims referred to Winns.
Chief executive Jeff Winn explained that the types of mis-selling included brokers hiding high levels of commission, telling clients they had searched the market for the best rate when in fact they were tied to one or a handful of suppliers, and acting as agent for both the client and the energy company at the same time.
He said brokers, which were unregulated, would be easier to target than energy companies, but some had already gone out of business or might do so in the future.
The issue with energy companies was whether they knew what was going on, while he also predicted that they would fight claims hard.
“It don’t think it’ll be an overnight success because there’ll be a lot of pushback from energy market,” he said.
Claims will be run under a conditional fee agreement (CFA) that guarantee clients will retain at least 50% of their damages, rather than face the risk of their damages being swallowed up by having to pay unrecovered costs.
Clients will not have to take out after-the-event insurance as Winns will pay any costs owing in unsuccessful claims. Though the CFA is pegged to higher hourly rates, he said this arrangement worked out cheaper for the vast majority of clients.
Winns’ first claim is seeking six-figure damages for itself, alleging that it was overcharged because of energy brokers incorporating hidden commissions into their deals.
Mr Winn described it as a “chastening personal experience”. He explained: “At the time we were naïve and didn’t understand that mis-selling within the gas and electricity market was rife.
“We noticed that our electricity and gas bills had risen quite sharply and contacted the broker. The broker fobbed us off telling us that wholesale rates had risen, and it was just where the market was.
“He reassured us we had the best deal. We did not have the best deal, and we were being lied to.”
Winns is not the first firm to operate in this area, however. Business Energy Claims, a claims company that says it was the first to tackle energy broker mis-selling, refers its cases to Gateshead practice PG Legal.
Winns has hitherto only handled personal injury claims and the related activities, such as medical reports and credit hire. The new Official Injury Claim portal is set to launch on 31 May, pushing all road traffic accident claims worth less than £5,000 into a small claims regime with no costs shifting.
Predicting that many injured people would still need help navigating the regime, Mr Winn said the firm has re-engineered its processes to handle them, deducting 25% under a CFA.
However, he said the lack of clarity about the claims track and costs regime that would apply in the event the defendant insurer made a claim of fraud or fundamental dishonesty was a significant problem.
Winns has moved into accident management for insurance brokers in anticipation of the reforms and now operates 24 hours a day.
The solicitor said that, with far smaller number of calls at night, staff working then were able to review claims that had come in during the day and prepare the paperwork for those arriving in the morning, speeding up the process significantly.
“We thought we’d struggle to recruit but it’s surprising how many people want to work in the middle of night,” he said.
Mr Winn calculated that a 10% increase in the volume of non-fault work handled by the firm would make up for the reduction in income from what would now be small claims.
“We’ve got to pedal harder to make the same,” he said.