Why you should use a solicitor and not a claims management company

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Lee Dawkins looks at the rise of the Claims Management Company and explains why you should always use a solicitor

What is a Claims Management Company?

The Claims Management Company, or CMC, is a relatively recent phenomenon. They  arrived on the scene when solicitors were first permitted to deal with personal injury claims on a No Win – No Fee basis.

CMCs are now big business. They have gradually edged solicitors aside and account for the lion’s share of the personal injury claim market. They have also branched out into other field of law such as PPI and care home fee claims.

Are CMCs legally qualified?

Many consumers believe that CMCs are the same as solicitors, but this is most definitely not the case.

CMCs are not firms of solicitors, they are private businesses. you don’t need to be a lawyer to start up a CMC. In fact very few of the people who operate them have any legal qualifications whatsoever.

Most Claims Management Companies make their money by acting as middle men. So rather than dealing with the case themselves they make money by passing it on to a lawyer.

Where a CMC does venture to give legal advice the quality of that advice is often suspect. We would recommend that people tread very carefully and always seek a second opinion from a qualified solicitor.

So is there any benefit to the consumer in going to a CMC ?

CMC’s rarely add anything. Consumers are therefore better off going direct to a solicitor of their own choosing. That way they can be certain that the firm they have selected are genuine specialists in this field of law. They can also avoid the problems commonly associated with CMCs outlined below.

What are the advantages of using a solicitor?

Solicitors operate in accordance with a very strict code of conduct.

The key features of the solicitors’ code of conduct include:

  • acting with integrity
  • not allowing their independence to be compromised
  • acting in their client’s best interests at all times
  • protecting their client’s money and assets.

How do I know if I am dealing with a claims management company?

It can often be difficult to distinguish between a CMC and a genuine solicitor. Some CMCs encourage this uncertainty. Its therefore sometimes necessary to ask the right questions and read the small print.

One way of telling the difference is by ascertaining who the regulator is. Solicitors are regulated by the Solicitors Regulation Authority, known as the SRA. By contrast some CMCs are registered with the Ministry of Justice while others are completely unregulated.

What is the biggest problem with CMCs?

The most common complaint relates to costs, with some CMCs charging unnecessary up-front fees.

Another concern is hidden costs.

Unlike solicitors, CMCs are not obliged to provide consumers with best advice. So for instance, while a solicitor is required to tell a prospective PPI claimant that they can make a claim themselves without incurring the cost of an intermediary, a CMC is under no such obligation. A 2012 poll carried out by Citizens Advice in relation to PPI claims revealed that:

  • 2 out of 3 CMCs don’t tell consumers how much they will charge
  • 72% of CMCs don’t indicate when their fees will be charged
  • 4 out of every 5 CMCs fail to notify consumers of their cancellation rights
  • less than 50% gave a clear assessment of the consumer’s chances of success

And if the CMC claim does succeed there are no guarantees that they will still be in business when the case is concluded. Solicitors’ practices are far more stable, but in the unlikely event that something does go wrong consumers will at least be able to rely on the solicitor’s professional insurance policy. They can also have recourse to the Solicitors Compensation Fund.

Why are CMCs so popular?

CMCs trade on the confusion that exists among consumers about providers of legal services. Their success is also due in part to the aggressive marketing techniques CMCs employ.

Solicitors are highly regulated in how they can market themselves. A CMC however is free to engage in all sorts of dubious practices, including cold calling and those very annoying text messages that most of us have received.

Its also likely that some consumers think that dealing with a CMC will be a cheaper option, even though this is rarely the case.

Call our FREE legal helpline

Don’t let the fear of legal fees stop you from obtaining advice from genuine solicitors. We operate a free, confidential, legal helpline. Call us for free initial guidance on 0808 139 1606.