The SRA is under pressure from government to address alleged misconduct in bulk litigation firms. The profession has a case to answer, but councils must not be given a free pass
No details were divulged, but when the Ministry of Justice summoned the Solicitors Regulation Authority for talks last month about so-called bulk litigation firms, one can imagine the overriding message was: ‘Do something!’
MPs’ inboxes have been filled over the past two years with messages from clients of firms which thought they had a claim for housing disrepair, cavity wall insulation or finance mis-selling. Many of the firms that ran thousands of these claims have collapsed, and those clients are now facing demands to pay defence costs despite ‘no win, no fee’ assurances.
The SRA has been concerned for some time about potential misconduct in such claims. The involvement of the government suggests that disciplinary action could be stepped up; and legislation to restrict these areas of work may not be far behind.
The regulator has more than 80 live investigations across 74 firms running 200,000 claims between them. The costs of this enforcement work are a significant contributor to the SRA’s budget increase of £16.6m next year.
Six matters relating to the closed Sheffield firm SSB Law are at an advanced stage of investigation. Questions remain about whether claims had adequate insurance cover and the methods used to on-board thousands of cases.
SRA chief executive Paul Philip said this week: ‘It is a huge issue and we have very serious concerns about firms involved in bulk litigation.’
Amid political and regulatory pushback, local authorities sense an opportunity. They are often the defendants in housing disrepair claims from tenants, and with finances stretched, they are keen to bury this burgeoning sector.
As the SRA and government were putting their heads together, City of York Council fired a shot across the bows of claimant firms. It highlighted a recent case heard in York County Court in which the claimant solicitors – whose identity was not revealed – were required to pay the £9,414 costs of bringing a tenant’s unmeritorious claim. According to the council, the district judge in the case described the firm’s handling of the matter as ‘borderline negligent’ and ruled that the client should not be burdened with the costs.
Michael Pavlovic, executive member for housing, planning and safer communities, said: ‘We have an ongoing campaign advising tenants to tell us about any concerns with repairs so they can be put right. This is the third failed housing disrepair claim made by no win, no fee solicitors resulting in tenants being ordered to pay many thousands in costs.’
Pavlovic encouraged tenants to talk to officers rather than lawyers, adding: ‘These claims against the council divert time and money from tenants’ homes.’
The council did not say how many claims against it had been successful.
Lawyers working in housing disrepair insist some local authorities are leaving tenants’ homes in a pitiable state and then spending precious public resources fighting legal battles.
'It is increasingly common for landlords to breach both settlement agreements and court orders, and for legal costs to exceed the value of repairs'
Hamzah Sharif Hashmi, Zen Law Solicitors
Hamzah Sharif Hashmi, head of litigation at Zen Law Solicitors, said one client had been complaining to the London Borough of Hackney since January 2020 about the condition of their flat. The matter settled in March this year with the council agreeing to carry out specific works. Not a single repair has since been completed, despite numerous follow-ups from the claimant solicitors. The deadline for finishing the work passed this week and the firm is preparing to issue proceedings for breaching the agreement.
Hashmi said the repairs cost £13,000, but the legal costs of fighting the case are likely to have exceeded that sum already.
‘This is a complete disregard of legal process, a continued breach of a legal agreement and a mockery of our client’s legal rights,’ he said. ‘Our client is living in conditions that were supposed to have been addressed years ago and they continue to suffer. Unfortunately, this is not an isolated incident. It is increasingly common for landlords to breach both settlement agreements and court orders, and for legal costs to exceed the value of repairs.’
Hackney Council was approached for comment.
Ministers are doubtless justified in seeking to ensure that the legal profession reins in practices that leave members of the public with large legal bills. Tightening the rules governing such claims will delight those having to defend them.
But the possibility that some bulk cases may have been mishandled does not mean there are no genuine claims for housing disrepair or shoddy cavity wall insulation. Defendants must not be granted the latitude to be negligent.
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