The Solicitors Regulation Authority (SRA) has warned law firms that they are not doing enough to weed out “false or dubious” holiday sickness claims and that some are engaging in shady practices like encouraging clients to delete evidence.
It is also investigating information from the Claims Management Regulator that 31 firms have potentially improper referral arrangements with claims management companies (CMCs).
The SRA has been under pressure to take action on the issue, with the Association of British Travel Agents claiming a 500% rise in compensation claims since 2013 and the government poised to introduce fixed costs.
In a warning notice issued yesterday, the SRA said it was concerned that claims were being pursued without “proper analysis of the evidence or understanding of the legal position”.
The regulator went on: “Holiday claims provide an example of our concern that some law firms fail to engage properly, or sometimes at all, with the merits of their clients’ cases.
“This is of particular concern where there is evidence to suggest that the claim is false or dubious in some way.
“We are clear in our view that lawyers should not bring cases, or continue with them, where there is a serious concern about the honesty or reliability of the evidence.
“The extent to which law firms should verify their clients’ cases is risk-specific. For example, there seems to be a serious risk that many holiday sickness claims are not genuine.”
The SRA said examples of risk factors included that a claim was made some time after the incident, there was no report of the claim to the hotel and no extensive illness among other travellers, or that “the client ate or drank excessively”.
The regulator said it had seen not only failures to ensure that documentary evidence was analysed but “highly improper advice” to delete evidence.
“If there are allegations or concerns about a case, law firms must not turn a blind eye, but instead must engage with them and objectively assess whether the case can properly be pursued.
“An example of this might be allegations that claims are being generated or co-ordinated by organised criminals, as we have seen in ‘cash for crash’ cases.
“Law firms cannot simply ignore such allegations and nor can they simply assert that they consider them unproved or unfounded. They must engage properly with them and bear in mind their duty to the administration of justice.”
The SRA said it was concerned that law firms were breaching the rules by accepting cases from introducers who were cold calling, entering into improper referral arrangements, or submitting false or dubious claims in the hope of a settlement without further investigation by the defendant.
Solicitors were also warned to identify clients properly and not seek “unreasonable costs for a limited amount of work”, either from a client or defendant.
The regulator added: “There are now a number of reports of cases where claims have been dismissed as dishonest, leading to costs orders against claimants and even a criminal prosecution.”
SRA chief executive Paul Philip said: “This issue is very much of concern at the moment and we want to make sure that solicitors do not get caught up in bringing false claims. We expect all solicitors to act with the utmost integrity.”
Our PI Futures event on 19 September in Liverpool includes a major session on holiday sickenss claims. A few tickets are still available. Click here for more details.