A 'borderline negligent' law firm has been ordered to pay costs rather than passing them on to its client in a failed housing disrepair case, a local authority has reported in a warning to claimant firms. According to City of York Council, the unnamed solicitors were given 14 days in which to give reasons why they should not have to pay the £9,414 costs themselves. 

According to the council, the county court case had been brought by a firm advertising itself as ‘no win, no fee’ on behalf of a tenant who claimed their home had mould, damp and plaster defects. 

The council said the case was the latest in a pattern of unsuccessful claims from no win, no fee firms.

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.’

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The issue of housing disrepair claims ending in claimants facing legal bills is a hot topic, with the government and Solicitors Regulation Authority meeting twice last month to discuss whether action needs to be taken in relation to so-called bulk litigation.

Clients of defunct Sheffield firm SSB Law have faced bills for defence costs despite being told by the firm that they would not have to pay anything. In total, the SRA has more than 80 live investigations across 74 firms with potentially 200,000 plus claims between them, most commonly relating to financial products, housing disrepair and cavity wall insulation.

The Civil Justice Council report on litigation funding in May said the problems reported by clients of SSB Law and another closed firm Pure Legal may be examples of a ‘much wider systemic problem’.

‘That problem, put shortly, is that law firms have, through securing portfolio funding, developed high-risk and unstable business models that depend on unrealistically high levels of return,’ said the report. ‘Concerns were also raised about the ultimate source of such funding, the extent to which lawyers have carried out effective due diligence of potential claims and thus whether unmeritorious claims are pursued, whether clear explanations of the nature of the funding and ATE insurance have been given to clients, and the manner in which potential clients have been identified.’

The CJC working party recommended that the government investigates this portfolio funding model and considers whether further regulatory reform is required.

 

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