The SRA published a brand new Warning Notice on 28/1/26 in relation to their concerns regarding the use of ‘no win, no fee’ arrangements in high-volume consumer claims, following their findings from their Thematic Review, which was less than complimentary about many firms in this sector.
As a reminder, Warning Notices are the really important ones! Failure to comply with them can lead to disciplinary action, so read them in full if relevant to your work 👀. To give you a headstart, here is our summary.
SRA’s main concerns about firms
- Lack of transparency about fees/ costs – clients need to understand exactly what charges they will/ may face whether their claim is successful or unsuccessful, and the potential risks of ‘no win, no fee’ arrangements.
- Prioritising commercial interests and the benefits of ‘no win, no fee’ arrangements to them, over their clients’ interests.
- Lack of due diligence on third-party referrers to ensure they are meeting the SRA’s standards, for example in terms of their advertising and approaches to potential clients.
- Failing to ensure that after the event (ATE) insurance, designed to protect clients from financial harm if their claim fails and the defendant seeks costs, is appropriate to their clients’ needs.
- Use of the term ‘no win, no fee’ in marketing materials and the risk of creating unrealistic expectations in terms of costs, prospects of success, risks etc. The SRA say you ‘must be cautious when using the term’ – no ban yet (as has been mooted), but is that the inference? As long as you follow the ‘musts’ below, you should be ok to keep using it.
The ‘musts’
- All communications with clients/ templates used must be clear, accurate, up to date and not misleading. ‘One size’ templates won’t necessarily ‘fit all’ – tailoring may be required.
- Clear explanation of all possible charges, including legal fees and success fees, disbursements, insurance premiums, cancellation fees, and any charges where the claim is unsuccessful. Don’t hide this away in the small print/ your terms of business.
- Pricing structures (particularly success fees) must be based on the risks involved and be justifiable, fair and reasonable.
- Actively check that clients have understood the information provided and the ‘no win, no fee’ agreement they are being asked to sign.
- Keep records of oral advice – attendance notes are your friend!
- Explain the right to complain…at the outset.
- Clearly advise of any other (free) options available to clients for pursuing their claim, such as ombudsman schemes.
- Absolutely no high-pressure sales tactics – no cold-calling, unsolicited approaches, aggressive follow-up communications – either by your firm or any third-party referrers.
- Put procedures in place to monitor/ review all marketing activities (including by third parties) and client care processes, and train staff on what is/ is not acceptable practice.
The SRA published an online ‘no win, no fee’ consumer guide last year which can be sent to clients to help them understand how firms should be working in this space. It also provides firms with a helpful framework to ensure compliance with their regulatory obligations.