By: 9 September 2013

Law firms who still work with claims management companies (CMCs) have been warned that information of their dealings will be soon handed over to the claims management regulator after the Ministry of Justice (MoJ) ordered some 150 CMCs to explain their business transactions with law firms.


According to the Law Gazette, some PI firms are in a state of panic over the investigation which is asking for details of business models, solicitor panels, and even invoices.


Michelle Garlick, head of regulatory compliance for national firm Weightmans, told the Law Gazette, that firms should be aware of what information is being shared.


‘As part of a firm’s own due diligence and monitoring, firms should be asking the CMCs they have agreements with about the MoJ questionnaire,’ she said. ‘Have they completed it and returned it to the MoJ? Would they be prepared to let the firm see a copy of the reply? If not, why?’


Garlick, who has advised some CMCs on their responses, said firms should have nothing to fear if they had carried out a risk assessment of their relationships with CMCs, and had documentation to back it up. However, he said, simply telling the Solicitors Regulation Authority (SRA) – which is bound to see the results of the investigation – that any payment is not a referral fee will not be enough.