According to the Association of British Travel Agents, there has been a 500 percent increase in compensation claims for holiday sickness since 2013. The Government is considering the introduction of fixed costs for such claims.
Genuine claims for holiday sickness can of course be pursued, but the SRA is concerned that claims are being submitted without proper analysis of the evidence or understanding of the legal position.
The SRA is investigating more than a dozen firms in connection with holiday claims, including over potentially improper links with claims management companies and payment for referrals of holiday sickness claims. The SRA is also seeing firms pursuing claims without the proper instructions of claimants.
Holiday claims provide an example of the SRA’s concern that some law firms fail to engage properly, or sometimes at all, with the merits of their clients’ cases. This is of particular concern where there is evidence to suggest that the claim is false or dubious in some way. The SRA is clear in their view that lawyers should not bring cases, or continue with them, where there is a serious concern about the honesty or reliability of the evidence.
The extent to which law firms should verify their clients’ cases is risk-specific. For example, there seems to be a serious risk that many holiday sickness claims are not genuine. Examples of risk factors in holiday sickness claims would include:
- The claim is made some time after the alleged incident
- There was no report of the claim to the hotel
- There was no extensive sickness amongst others in the same accommodation – see Wood v TUI Travel [2017] EWCA Civ 11 mentioned below
- The claim comes from or involves people generating claims in the resort
- The client’s contemporaneous report of the holiday was positive
- The client drank or ate excessively
The difficulties of holiday sickness claims are clearly evident from the case of Wood v TUI Travel [2017] EWCA Civ 11 in which the Court of Appeal commented:
…it will always be difficult (indeed, very difficult) to prove that an illness is a consequence of food or drink which was not of a satisfactory quality, unless there is cogent evidence that others have been similarly affected and alternative explanations would have to be excluded.”
Solicitors must engage with this and properly assess all of the evidence before submitting claims.
The SRA has also seen failures to ensure that all documentary evidence is collated and analysed. The SRA has seen highly improper advice to clients to delete evidence.
In all litigation, firms must immediately inform clients of their duty to preserve evidence and require it all to be provided for the firm to review. This is a critical duty to the administration of justice, including to prevent or reduce the public cost of unmeritorious claims. Firms must of course also be rigorous in storing, retrieving, analysing and acting upon evidence they hold, including disclosure where appropriate. Claims should not be submitted until the client has been properly advised on all relevant evidence and on the merits of their case – and when the client has given clear instructions and authority, on a fully informed basis, that the case should be pursued.
A narrow approach to this by the firm is liable to be treated as ‘turning a blind eye’ which of course can lead to dishonesty findings. In Barlow Clowes v Eurotrust [2005] UKPC 37 it was noted that a dishonest state of mind “may consist in suspicion combined with a conscious decision not to make inquiries which might result in knowledge”.
These principles apply to all litigation. The impact of unmeritorious claims on the administration of justice and indeed on those who are subjected to such claims means that solicitors must not pursue them or continue with them where there is evidence that they are false or clearly unmeritorious.
If there are allegations or concerns about a case, law firms must not turn a blind eye, but instead must engage with them and objectively assess whether the case can properly be pursued.
An example of this might be allegations that claims are being generated or co-ordinated by organised criminals, as the SRA has seen in ‘cash for crash’ cases. Law firms cannot simply ignore such allegations and nor can they simply assert that they consider them unproved or unfounded. They must engage properly with them and bear in mind their duty to the administration of justice.
The SRA is concerned that firms are failing in their duties to act in accordance with the Principles and Outcomes of the Code by:
- failing to ensure that they do not accept cases from introducers who are cold calling
- entering into improper referral arrangements
- bringing a claim acting without first investigating whether it is valid
- failing to objectively assess and investigate adverse evidence
- submitting false or dubious claims in the hope of a settlement without further investigation by the defendant
- failing to properly identify clients and confirm client instructions
- seeking unreasonable costs for a limited amount of work contrary to their fiduciary and regulatory duties – either from the client or the defendant
Firms who conduct cases which demonstrate one or more of these features may face regulatory action for breach of the SRA’s Principles.
The SRA’s expectations
The SRA expects that all those regulated by us comply with the Principles and Outcomes of the SRA Handbook 2011. The SRA expects that law firms and solicitors do not conduct fraudulent or questionable cases and that all costs charged to a client are explained, agreed and set at a reasonable rate.
The SRA Principles
Principle 1: Uphold the rule of law and the proper administration of justice. You have obligations not only to clients but also to the court and to third parties with whom you have dealings on your clients’ behalf (Part 1 – SRA Principles para 2.5).
Principle 2: Act with integrity. Personal integrity is central to your role as the client’s trusted adviser and should characterise all your professional dealings with clients, the court, other lawyers and the public (Part 1 – SRA Principles para 2.6).
Principle 4: You must act in the best interests of each client. You should always act in good faith and do your best for each of your clients (Part 1 – SRA Principles para 2.8).
Principle 5: You must provide a proper standard of service to your clients. You should provide a proper standard of client care and of work. This would include exercising competence, skill and diligence, and taking into account the individual needs and circumstances of each client (Part 1 – SRA Principles para 2.9).
Principle 6: You must behave in a way that maintains the trust the public places in you and in the provision of legal services. Members of the public should be able to place their trust in you. Any behaviour either within or outside your professional practice which undermines this trust damages not only you, but also the ability of the legal profession as a whole to serve society (Part 1 – SRA Principles para 2.11).
SRA Code of Conduct 2011 mandatory outcomes
You should have regard to the specific outcomes under the SRA Code of Conduct 2011, in particular those highlighted below.
Cold calling
There have been reports of introducers and claims farmers approaching holiday makers to generate sickness claims. Outcome (8.3) requires that you do not make unsolicited approaches in person or by telephone to members of the public in order to publicise your firm or in-house practice or another business. Outcome (9.4) requires you to be satisfied that any client referred by an introducer has not been acquired as a result of marketing or other activities which, if done by you, would be contrary to the Principles or any requirements of the Code.
Referral fees
Outcome (9.8) requires you not to pay a prohibited referral fee.
You should terminate any arrangement with an introducer or fee-sharer which is causing you to breach the Principles or any requirements of the Code (IB (9.3)).
Please see the SRA’s previously published guidance on the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO).
Where you have a referral arrangement that is not in breach of LASPO, you still need to comply with chapters 6 and 9 of the SRA Handbook when making or receiving any referrals.
Dishonest claims and taking unfair advantage
O (11.1) provides that you must not take unfair advantage of third parties.
Acting in the following way may tend to show that you have not achieved outcomes and therefore complied with the principles.
IB (11.8) demanding anything for yourself or on behalf of your client that is not legally recoverable.
You should not pursue claims or continue with claims where you do not have the claimant’s clear and express authority to do so.
When taking instructions, you should ensure you have clear details of the client’s identity. You should analyse the evidence rigorously. No claim should be made unless there is a sound basis for the claim and you have valid instructions. You should not demand anything from a third party, such as compensation for holiday sickness, where there is no legal right to recovery.
There are now a number of reports of cases where claims have been dismissed as dishonest, leading to costs orders against claimants and even a criminal prosecution. Solicitors do not help clients by bringing claims that have not been rigorously investigated, including consideration of adverse evidence.
Seeking improperly high costs from defendants may also constitute an attempt to take unfair advantage. Submitting such a claim to the court may also involve misleading the court.
Enforcement Action
Failure to have proper regard to this warning notice is likely to lead to disciplinary action.
