Personal injury firms are running the risk of misconduct through their dealings with claims management companies, the SRA has reported.

The regulator issued a warning notice expressing concerns about the way certain firms are bringing in work. This is the second time in two years the SRA has felt compelled to remind solicitors of their responsibilities, and coincides with a review of 40 firms that uncovered issues which could lead to misconduct.

Among the issues identified are a failure to meet with and take instructions from clients; settling claims without a medical report; and paying damages to third parties instead of directly to the client. In extreme cases, firms have brought claims without the knowledge of the named client  - although the regulator does not say whether any solicitors have been prosecuted for such actions.

The review of 40 firms in the sector found most had adequate systems and processes in place to curb wrongdoing. However, some rely on just one claims management company for leads, do not adequately train staff and/or fail to carry out enough checks at the outset of the claim to reduce the risk of fraud.

The best firms work with claims management companies registered with the Ministry of Justice, have formal agreements with claims managers stating that they will not cold call, and carry out random compliance visits to CMC premises.

Paul Philip, SRA chief executive, said the often contentious nature of personal injury work, involving vulnerable clients and large settlements, means firms must be alive to issues of good practice. ‘Our updated warning notice lays out our concerns and reiterates what law firms and the profession need to do to uphold the rule of law and proper administration of justice,’ said Philip.