Campaigners lobbying against what they call a ‘predatory claims culture’ have called for tighter regulation of the term ‘no win, no fee’ in advertisements.
A report by a group called Fair Civil Justice (FCJ) said that consumers are increasingly exposed to ‘widespread and targeted’ advertisements from claimant firms. Such advertisements, it is suggested, consistently understate and fail to highlight the risks of litigation, while overstating the potential benefits.
There is particular concern that people encouraged to sign up for ‘no win, no fee’ group claims may nevertheless face legal bills further down the line if they are unsuccessful.
The FCJ, a collection of business interests founded last year to seek what it calls a ‘balanced legal environment’, commissioned international firm CMS to look at how claims are advertised.
Its research found that the UK’s regulatory framework has not kept pace with how the claimant sector has evolved. The number of claims, it was put forward, have increased due to a proliferation of specialist claimant law firms, the sophistication of litigation funders, technological advances, the lack of pre-contractual information and increases in class action mechanisms.
Kenny Henderson, a partner and class action lead at CMS, said: ‘Claimants are rarely the winners and only receive a small fraction of awards even where claims are successful. Increasing levels of litigation are good for lawyers and litigation funders, but it is questionable whether it is good for consumers and it is definitely not good for the UK’s business environment.’
FCJ is calling on the Ministry of Justice and Advertising Standards Authority to enforce stricter regulation of the term ‘no win, no fee’ and to require law firms to tell potential claimants of adverse costs risks. This would involve a key information document outlining the risks associated with joining a claim prior to entering a contract.
The group also wants a new 60-day ‘cooling off’ period and the right for claimants signed up to group claims to terminate the retainer without penalty.
FCJ says consumers should not be prevented from talking publicly about the conduct of litigation and the level of compensation recovered, and a ban on targeted social media adverts for claims.
Seema Kennedy, the FCJ’s executive director and a former Conservative MP, said: ‘Policymakers must take notice and update the regulations to protect people from opportunistic claimant law firms.’
The FCJ launched at the end of last year and Kennedy wrote in the Gazette in January of its mission to protect the interests of consumers, business and the public sector.
Its website gives no details about its funding or membership but an article from law.com last December stated that it had been launched by the US Chamber of Commerce, a high-profile lobby group that represents business interests and has been particularly critical of the effects of litigation funders.
