In September, the Solicitors Regulation Authority (SRA) proposed the ban and other transparency measures, in its discussion paper, ‘How can the high-volume consumer claims market work better for consumers?’. It warned the ‘label doesn't give consumers an accurate view of what could be involved when pursuing a claim—in particular, the risks to the consumer and potential costs they might incur’.
In January 2024, law firm SSB Group collapsed, owing £200m to funders and other creditors. Many of its thousands of ‘no win no fee’ clients were subsequently pursued for adverse legal costs. In October, a Legal Services Board-commissioned independent review by Northern Ireland firm Carson McDowell criticised the SRA for failing to act efficiently and effectively.
Responding to the SRA proposals this week, however, the Law Society suggested the regulator resolve its own internal failures first before introducing other changes. It advocated for solicitors to keep using the ‘no win no fee’ term, emphasising they must do so ‘accurately with caveats’ to reflect risks. It called on the SRA to create ‘standardised onboarding protocols and clearer guidance’ and ensure consumers have the correct information about third-party funding and insurance.
Law Society president Mark Evans said: ‘No win, no fee is a well-established phrase, familiar to both lawyers and consumers.
‘While it is imperfect, banning its use would likely have unintended consequences and may risk consumer confusion if changed. Clients should also be informed of the potential deductions from damages, the basis for any success fee and the possibility of additional costs even if they win.’
Evans suggested stronger safeguards on third-party funding, a ‘vital’ but ‘risky’ source of finance.
‘The Law Society is concerned about possible liquidity risks in some high-volume claims firms, especially when income is solely derived from funders,’ he said. ‘The SRA should assess whether firms have the right funding and operational capacity and should conduct robust checks to protect consumers from exposure to financial risk.’
