Events over the last 12 to 24 months in the cavity wall insulation property damage, and mortgage and other fiancial mis-selling claims arena, has shone a spotlight on the conduct of some claimant solicitors.
Claimant soilcitors’ referral sources and funding arrangements have given rise to a significant consumer protection issue – that of duped consumers and claimants as victims rather than perpretators.
When faced with a claim it is worthwhile looking beyond what might be described as traditional fraud indicators focusing on the claimant. Take a deeper dive into the claim to check if those bringing it are more culpable, with the claimant deserving a more understanding and sympathetic approach.
Unscrupulous claims management companies
There are unscrupulous claims management companies who cannot be trusted to provide claimants with the advice and assistance they need when instigating a claim.
Claims farmers often misrepresent their place within the claims supply chain or misrepresent the potential risks (or, conversely, the financial rewards) a claim may present.
There are examples of claimants being misled while signing up to claims with the promise of a significant level of damages and on basis of good prospects of success. Their claims were then withdrawn, putting claimants in breach of their retainer with the solicitors, and leaving them open to recovery and pursuit of costs by the solicitors who misled them.
In most cases claimants have honest intentions. However, increasingly they are being exploited by professionals within the claims supply chain whose sole intention is to maximise their own financial rewards and increase the numbers of claims referred to legal representatives.
More often than not this goes hand in hand with claimants being encouraged to put forward claims following a cold call or marketing approach by a lead generator or claims management company. Frequently, Google Spoofing activitiy unwittingly places the claimant in the hands of a claims management company.
While the methods by which these claims farmers contact their would-be customers varies, the use of technology to drive these opportunities has increased in recent years. It is hoped the Online Safety Act may go some way to curbing the rise in tech-driven scams, but the increasingly rapid, and seemingly unregulated, growth of AI is a significant cause for concern.
Housing disrepair claims
One area rife for exploitation is housing disrepair claims. The traditionally motor focused personal injury law firms and claims management companies are moving to this more fertile area.
Within our practice we have seen a significant increase in housing disrepair claims over the last 12-24 months. There has been an increase in low-value housing disrepair claims with the cost of repairs and value of damages being inflated just high enough to allow the claim to be considered unsuitable for the Small Claims Track when proceedings are issued.
This trend in this area looks like continuing until at least October 2025, with the liberty of not being subject to fixed costs. This means not only can claimant’s representatives leverage more money from these claims, but they can continue to operate in an area more lucrative than the motor and liability sectors.
The extension of fixed recoverable costs has left claimants without qualified legal representations as claimant solicitors cannot afford to take on the claims. Claims management companies are stepping in to fill the gap, creating further opportunity to take advantage of claimants.
In the interim, the potential to earn hourly rate costs has meant that claims farmers (both claims management companies and solicitors) have become more involved. We believe this is problematic because it encourages spurious claims, and those tenants who have genuine claims will share more of their damages with their solicitors if they are successful.
Some law firms who might not have been involved in these niche areas previously are also moving in. They do not have the right knowledge or skill set and treat consumers as a commodity in the claims process.
Claimants may be vulnerable as consumers, which means they would fall with the vulnerable definition within the new fixed costs regime for other claim types. This includes personal injury for accidents occurring after 1 October 2023. This would allow for increased costs to be recovered by claimant solicitors where that vulnerability has required extra work: for example, overseas workers for whom English may not be their first language. This ensures the maximum financial advantage can be gained from bringing a claim on that person’s behalf.
Clyde & Co will be producing a wider report around the topics and issues raised in this article in the coming months. Sign up to receive more information.
