The Solicitors Regulation Authority has revealed it is talking with financial regulators to understand how so many clients of collapsed firm SSB Law are left facing huge legal bills.
The regulator is investigating in the aftermath of the Sheffield claims firm going into administration earlier this year.
Potentially thousands of clients who had made cavity wall claims through the firm may be liable for wasted costs – with several cases where defendant lawyers have sent demands for thousands of pounds.
The SRA said that it is investigating whether SSB acted in compliance with professional standards.
Part of that investigation is to understand why ATE insurance providers have not paid the defendants’ costs in these cases. A sample of client files is being inspected and the firm’s systems and processes being checked. Directors and/or employees of SSB may also be summoned for interview to clarify why claimants who believed they were covered by no win no fee agreements are potentially liable.
‘In terms of SSB Group, we will investigate a range of issues including whether the firm properly assessed the merits of claims, explained any potential liabilities to clients and what information it gave to its clients about the ATE insurance policies,’ said the SRA.
‘This case raises questions about the role of ATE insurance providers and surveyors - as well as whether there are broader issues in relation to legal services. We are therefore liaising with the Financial Conduct Authority (which regulates ATE providers) and the Royal Institution of Chartered Surveyors (which regulates surveyors) to share information and insights and understand what action they may be taking, looking at the involvement of ATE providers and surveyors in these cases and to consider whether there are any wider issues or gaps in the current market.’
Clients are directed in the statement to report matters of concern to the legal or financial ombudsman services, but the SRA dampened expectations that the profession may provide redress through the compensation fund.
‘Unfortunately, unless we find that there has been dishonesty on the part of the solicitors in question or client money has not been accounted for, then the requirements of the fund’s rules will not be met in order for payments to be made in this situation.’
The investigation into SSB is likely to continue until autumn, while discussions will continue with the FCA and the Ministry of Justice about consumers protections around ATE insurance and what reforms may need to be made.
Lawyers estimate that at least 1,400 claimants – most in the north of England – may be saddled with costs bills they had not expected.
One claimant told the Gazette last month he was living in fear of the bailiff knocking at his door after receiving a £38,000 legal bill from defendant lawyers.
It is understood that demands for repayment have been paused while the situation is clarified about whether claimants were covered.
SSB went into administration owing more than £200m – mostly to litigation funders but also to a string of barrister chambers, medical reporting agencies and claims management companies. It employed around 220 staff, all of whom were made redundant.
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