The Law Society has urged regulators not to ban the term ‘no win, no fee’ amid concerns about high-volume claims firms. As part of its response to the Solicitors Regulation Authority consultation following the report into the failure of SSB Law, the solicitors’ professional body said the focus should be on making sure firms are using the term properly.

Former clients of the Sheffield firm SSB were told their cavity wall insulation claims would be run on a ‘no win, no fee’ basis, but many were later hit with defence costs bills running to thousands of pounds when it emerged that the claims were not insured.

The SRA was heavily criticised in a report published last month by the Legal Services Board and responded by asking for views on how to protect clients of high-volume claims firms. One of the biggest concerns is that ‘no win, no fee’ does not give consumers an accurate view of what costs could be involved and the risks they are taking on, prompting discussion about whether to institute a ban.

The Society backed the idea of standardised protocols when clients are signed up requiring firms to disclose key information in plain language.

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This information would include the nature of the legal agreement, the potential costs, the risks of litigation outcomes, as well as the implications of funding and any insurance arrangements.

Mark Evans, Law Society president, said: ‘The SSB case revealed that many consumers affected by the firm’s conduct were unaware of the risks they faced, suggesting a need for clearer, enforceable standards for consumer-facing communications.’

But he added: ‘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.’

The Society said the SRA should get its own house in order before considering changes to the sector, making sure that in future it is equipped to deal with the kind of reports being made about potential problems at SSB Law.

Evans added: ‘The findings in the SSB case underscore the importance of addressing the risks involved with high-volume consumer claims. The case revealed inadequate financial scrutiny in the SRA’s authorisation and supervision processes, and these regulatory shortcomings should be a priority for the SRA.

‘The SRA must have enhanced oversight, accompanied by improved internal systems for intelligence sharing and risk profiling, with a greater readiness to identify red flags and take the necessary action promptly.’

The regulator is investigating the conduct of 76 high-volume consumer claims firms. In addition, over the summer it wrote to 500 firms asking for detailed information about their caseloads and demanding they make compliance declarations.