I must say the SRA’s decision to permit cash inducements came as something of a surprise, particularly as the Ministry of Justice had already made a decision to ban CMCs offering cash inducements in an attempt to clean up the advertising in the personal injury sector. It is a rare thing that CMCs are regulated more tightly than law firms.
Personal injury law and practice has struggled with its reputation both in the media and the eye of the public, despite doing sterling work for injured people. The reputation suffers because of the visible signals that firms display on billboards and in their advertising. A quick internet search reveals firms willing to offer £1,000 upfront, £1,500 upfront, and £100 and £200 ‘cash bonuses’ on top of damages. Such advertising does little to portray the solicitor as ethical and honest – it is, to be frank, tacky.
It also creates the impression of an environment of easy money, offering upfront cash with no need to prove a genuine injury. Any payment will usually be made before the client undergoes a medical and is bound to create an environment that attracts the fraudster.
Certainly, it can be in the interest of the injured person to receive an advance on their damages, particularly if they are in financial difficulties as a result of the accident – but let’s not forget that an advance on damages – an ‘ interim payment’ – is permissible under the current system after a claim has started should it be required. Indeed, via the portal, many claims are settled relatively quickly in any event, so there is often little delay in receiving compensation.
Worryingly, cash inducements will sway an injured person towards making a decision to appoint a solicitor based on immediate financial gain, rather than selecting the best, most appropriately qualified solicitor to do a job. Sometimes you need a specialist, particularly in the more complex cases.
Cash inducements also distort competition. Many ethical firms would shy away from such incentives – rightly so – and the SRA has put them at a competitive disadvantage with this decision.
We firmly believed that case inducements should be banned. It is a mystery as to why they continue to be permitted.