The collapse of Thomas Cook has left law firms and their holiday sickness clients in limbo, the Gazette has learned.
Hundreds of cases – including some where compensation had been agreed – effectively became worthless with the liquidation of the travel operator at the start of the week.
Claimants who have begun proceedings against Thomas Cook for sickness suffered while on holiday are likely to join a long list of creditors owed money by the company.
Their legal representatives may also find themselves out of pocket by thousands of pounds, having spent money on disbursements, medical reports and court fees that they expected to recover from Thomas Cook as the defendant. These funds could be claimed back from ATE insurance providers if their policies cover this scenario, but that is likely to have a knock-on effect on the insurers and future premiums.
Holiday sickness claims became an attractive option around six years ago for law firms facing significantly reduced fixed fees for personal injury work. The number of claims – a major bugbear for tour operators like Thomas Cook – has come down since fixed recoverable costs were introduced last year.
However, there remains a number of firms that run holiday sickness claims, many of which did so on a no win, no fee basis. They have been contacting clients this week trying to find alternative arrangements.
The Insolvency Service has said the current priority remains repatriating stranded travellers. Any claims already lodged with the company will be dealt with by the Official Receiver during the course of the liquidation.
It is understood some claimant lawyers may examine whether they can seek to change the defendants named on each claim.
There has been rancour between some claimant lawyers and Thomas Cook over the handling of claims in recent years. The Gazette has been told that Thomas Cook ran satisfaction surveys – with a potential £2,500 prize voucher for those taking part – which were sometimes shown in court as evidence that claimants suffered no problems while on holiday. Other claimant lawyers have told the Gazette they experienced Thomas Cook drawing out claims and defending them when there was no justification for doing so.
Thomas Cook had also issued warnings to customers about a ‘new scam’ targeted at British holidaymakers where claims management agents were ‘preying on customers at popular resorts across Europe, motivated by the fees that they make for every sickness claim submitted’.