The Legal Ombudsman (LeO) has warned law firms against making holiday sickness claims without “verifying the version of events” obtained by claims management companies (CMCs).
LeO said this was leading to allegations that claims were fraudulent and law firms would usually be held responsible for “any poor service by the CMC”.
In its overview of annual complaints data for 2019-20, LeO said described holiday sickness claims as a new trend.
It was “continuing to see complaints” about the way law firms were handling holiday sickness claims, some relating to issues raised by the Solicitors Regulation Authority (SRA) in a warning notice on the subject, last updated in November 2019.
LeO went on: “Of particular concern to us is the involvement of CMCs at the early stages of the claim and some of the practices applied.”
These included cold-calling people to obtain business, getting them to sign important documents such as conditional fee agreements, and failing to assess either the chances of success at the point of signing contracts or the risks of making a claim.
“In some cases, service providers are submitting the claims without verifying the version of events obtained by the CMC. This can lead to mistakes which are harder to rectify later on and can lead to allegations that the claims are fraudulent.
“Generally, we are holding the service provider responsible for any poor service by the CMC”.
LeO said the other emerging trend, producing a “pattern of complaints”, were claims relating to the purchase of properties in Cyprus and the mis-selling of mortgages with huge repayments.
“Over the years we have had a number of these cases, and they have picked up again in recent months.”
The issues raised by these complaints often included law firms overcharging or not completing work that has been paid for, “over-promising at the outset on what they will likely be able to achieve as a settlement” and “not being upfront with consumers about the court actions and what is happening”.
LeO said common themes and complaint types had “remained fairly consistent” with previous years, along with the number of cases where it found unreasonable service (51%).
Residential conveyancing was the most common subject of complaint – accounting for 28% of the total – with LeO noting that the “very process driven” nature of the market meant that “anything out of the blue that isn’t part of the regular transactions can cause issues”.
LeO said ensuring that the consumer is “updated regularly and has a clear understanding of costs and timescales involved will help alleviate a lot of concerns”.
Personal injury was the second complained-about area, with 15% of the total. The report said: “Consumers are unlikely to understand the full process involved in a personal injury claim…
“While providers undoubtedly provide information about the terms of a CFA and cost implications at the outset of a matter, in our experience many consumers do not understand it, and often believe that ‘no win, no fee’ is always correct.”
Family and wills and probate (both on 13%) came next, with family law complaints “some of the most challenging to resolve informally”.