The Legal Ombudsman has suggested that the practice of offering people no win no fee for personal injury claim should be brought to an end after dishing punishments accumulating to £1m in the space of a year.
Chief Ombudsman, Adam Sampson has raised his concern over the use of Conditional Fee Agreements (CFAs) claiming that they have seen examples of very poor service over the past year where such arrangements are in place, since the implementation of the Jackson Reforms.
He said: “The ‘no win no fee’ market has become increasingly aggressive, with many law firms competing for cases and sometimes prioritising sourcing a large number of customers over a careful selection process.
“A business model which consistently overvalues the chances of success can drive lawyers into unethical practice in order to avoid financial meltdown. This report raises genuine questions as to whether the ‘no win, no fee’ label should be used at all.”
But the other argument that can be made from the legal ombudsman’s revelations is that the extreme cuts to costs that were brought in as part of the Jackson reforms are the cause for such negative examples of service and that instead of removing no win no fee services, a review on the level of the cuts should take place.
This especially after the revelations from the Competition Commission (CC) before Christmas that the insurance industry’s dirty tactics and poor ethics was in fact the reason for the increase in insurance premiums and not the level of claims being encouraged by as they alleged, greedy ‘ambulance chasing lawyers’.
The Ombudsmen went on to highlight structural weaknesses in CFAs and cited these as the reason that some lawyers were able to pass the risk of unrecovered costs onto the consumer.
Meanwhile the Advertising Standards Authority has warned that referring to CFAs as ‘no win, no fee’ agreements was risky and could in fact leave those who do it liable for undisclosed costs such as insurance if they lose their case.
Responding to the report from the Legal Ombusdsman, the Law Society President has hit back saying: “No win, no fee solicitors are bringing justice to the masses for people denied legal aid. Solicitors working on conditional fee agreements take on significant risk with these often complex cases.
“The Law Society is pleased that the ombudsman agrees with us that solicitors need to be very clear with clients on their agreement terms and commends our model agreement.”