Parliament: Interest in volume litigation
Volume litigation, consolidator law firms and unregulated legal service providers are the focus of a new consumer protection programme launched by the Legal Services Board (LSB).
This will include considering whether the reserved legal activities need to be revised.
The oversight regulator said there was “clear evidence” of risks to consumers from the “dramatic growth” in volume litigation in recent years, exemplified by cases such as SSB Law.
It noted the public, parliamentary and political interest in volume litigation, including a ministerial roundtable on mass claims in June 2025, the Supreme Court ruling on motor finance claims, and “policy in development by the Ministry of Housing Communities and Local Government to address the risks of ‘claims farming’” in housing disrepair claims, particularly following the introduction of Awaab’s Law.
In a paper on consumer protection approved by its board last month, the LSB said it would “continue to make the case” in support of the Civil Justice Council’s (CJC) recommendation in the summer that the Financial Conduct Authority (FCA) regulate all litigation funding as a form of loan “to ensure a single and cohesive regulatory framework”.
When it came to portfolio funding – used by the likes of SSB – the LSB also agreed with the CJC that the FCA and Solicitors Regulation Authority (SRA) should work together to develop “co-regulation”.
The LSB would also consider whether it needed to use its statutory powers to gather information from the frontline regulators to help it “understand whether current legal regulatory frameworks adequately protect consumers from unfair or misleading funding arrangements”.
Frontline legal services regulators should be held to account to ensure “all law firms and legal professionals engaging with third-party litigation funding comply with their obligations and maintain high standards of client care”.
The LSB should also use its “market intelligence function” to better understand “whether and to what extent the potential misalignment of incentives between funders and law firms is creating risks to consumers”.
On consolidator, or ‘accumulator’, law firms, the LSB said the “notable increase” in law firm mergers came with “a growing risk to consumers, particularly where law firm acquisitions involve the movement of large numbers of clients”.
Axiom Ince illustrated “the harm that consumers experience when large accumulator firms collapse”.
The “openness” of the alternative business structure model enabled “private equity investment, which means firms acquired for investment purposes may face greater risks to their viability, particularly if investors retain the ability to withdraw investment at short notice and focus on short-term gains at the expense of sustainable growth”.
At the same time, an “over-focus on quick profitability introduces other risks if the level of investment in quality and compliance is not sufficient”. These “increased viability risks” could lead to law firm closures.
In response, the LSB said it would monitor trends in accumulator firms and in mergers and acquisitions, gathering intelligence and analysing risk.
On the unregulated sector, the LSB said it would “explore voluntary standards” as a means to improve unregulated services and undertake a consumer research project “to explore how consumers expect AI [artificial intelligence] and online legal tools to behave”.
The LSB added that the programme would consider whether regulation was targeted where there was greatest risk of harm to consumers.
“In light of the increase in the use of unregulated services and AI, it may be timely to review the current reserved legal activities…
“Under section 24 of the [Legal Services] Act, the Lord Chancellor has the power to add any legal activity to the list of reserved legal activities on the LSB’s recommendation.”
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