Rise of ‘free’ firms used by millions

NO-WIN, no-fee claims firms emerged in the Nineties, when the government restricted and later abolished Legal Aid for personal injury cases.

It meant those who signed the new Conditional Fee Agreements (CFAs) could make a personal injury claim without having to worry about paying legal costs if they lost.

The no-win, no-fee deals were first allowed for a range of court cases in England and Wales in 1995. Three years later, a move was made to extend them to all civil cases, with the exception of family courts.

It wasn’t long before TV adverts showing people falling from ladders or being involved in car accidents became commonplace.

The personal injury market is now valued at nearly £4 billion a year. But the practice has come under considerable criticism from those who believe they make money out of a ‘compensation culture’.

And the firms which use the agreements have been accused of making money from those who make claims against publicly funded bodies, such as the NHS.

Lawyers who use CFAs will say there is no gravy train, because firms lose money from unsuccessful cases. In the past, these firms have also been accused of using unscrupulous means to get leads for new claimants.

Cold calls from staff asking whether you’ve been involved in an accident are still common. However, in 2012 a law was introduced to forbid companies who deal with drivers after a car crash, including mechanics and car-hire firms, from selling on clients’ details to personal injury lawyers.

Insurers have also become unlikely victims of the industry. Trade body the Association of British Insurers has blamed personal injury lawyers for soaring car premiums.

It says many insurers have had no choice but to increase the cost of cover, to meet the demand of payouts to claimants for injuries such as whiplash.

In a bid to tackle the high number and cost of whiplash claims and tackle fraud, the Government is planning to implement a Whiplash Reform Programme.