What is a claims management company and what do they do?
A claims management company (CMC) is a business which manages your personal injury claim. There’s no legal definition of CMCs and there are few different ways a CMC can work, but generally they will act as a middle man between you and a solicitor or law firm.
CMCs are technically not legal professionals at all, they simply offer a claims management service. This means once they have details of your claim, they will usually then sell these details onto a solicitor for the highest price.
The work a CMC does is fairly minimal and there is no need and certainly no benefit in going via a CMC at all. For a claim regarding compensation of PPI mis-selling, for example, it is not necessary to go via a CMC or even a law firm.
If you want to make a personal injury claim then contact a solicitor directly, rather than paying a CMC to do this.
Your checklist: how to spot a claims management company
Sometimes it can be difficult to identify whether you’ve been contacted by a CMC or a solicitor. So, how do you tell if it’s a CMC? Here’s a checklist to spot those giveaway signs:
- Are they regulated?
Check to see whether they’re monitored by the Solicitors Regulation Authority. If they are not, they’re likely to be a CMC.
- Has their licence been cancelled?
CMCs should be registered with the Ministry of Justice (MOJ). You can check this on the claims regulation website here. The MOJ also maintains a list of firms whose licences have been suspended and cancelled – these are definitely to be avoided.
- Are they qualified?
Ask whether the person you’re talking to is a qualified solicitor. If they’re not, they are likely to be unqualified and may not be regulated. The Association of Personal Injury Lawyers is a useful place to start. It has details of hundreds of regulated and authorised solicitor practices specialising in personal injury law. Some will be local to you.
- How clear is the information?
CMCs give vague information about the claims process and even vaguer indications of when money will be charged.
The Citizen’s Advice Bureau says 72% of CMCs don’t say when they will charge their fees.
- Did they ask you to pay up front?
There’s no reason you should be paying anything off the bat before your case has even been taken up by a solicitor, and if you do pay a CMC, you’re basically paying them to call up a solicitor. A typical CMC will take details of your claim and sell on your case to a solicitor. When the solicitor or law firm gets in contact with you you’ll have to repeat everything you told the CMC anyway.
7 reasons you should avoid claims management companies
- They’re unqualified and can give the wrong advice.
CMC staff are very rarely legally trained. Unqualified staff provide ‘one size fits all’ advice without knowledge of the specifics of your accident.
Claims companies often mislead and provide inaccurate advice, so clients do not understand the agreements they are entering into. The company will ‘manage’ your claim by selling it to the highest bidding solicitor.
- They will sell your case to highest bidder.
CMCs are not interested in the needs of an injury victim after an accident – they make their money referring your business to whoever wants to pay for it.
- They are not local.
Even if you think you’re dealing with a local CMC, they may sell your case to a non-local solicitor, who’s highly unlikely to meet you in person and has no facility for home visits.
- There are hidden costs.
It’s often people who are worried about the expense of pursuing a claim who may be tempted by the seemingly low cost approach of using a CMC. However, the costs can be far higher than anticipated when you factor in the real charges behind the ‘no win, no fee’ hook. In fact, they rarely disclose the amount of commission they will take if a claim is successful and may not tell you when fees might be charged.
CMCs also often charge up front without knowing the amount of losses they can recover for you. The average fee CMCs charge upfront is £600, so the ‘no win, no fee’ promise looks increasingly unlikely when you view the stats.
The Citizen’s Advice Bureau warns people to think very carefully before using a CMC to make a claim as it can result in a huge expense. You can download the full CMC information sheet from the Citizen’s Advice Bureau here.
- Your case might not even get sold to a solicitor.
Some CMCs don’t even refer you to a solicitor and will instead encourage you to settle out of court, without a medical report, which could mean you receive a much lower amount of compensation than you deserve.
- Aggressive marketing tactics prey on vulnerable injured people.
Aggressive marketing tactics also include cold calling and text message advertising, where you’ll be told you’re entitled to claim thousands of pounds for an accident, regardless of whether you’ve had one or not. If you’re being bombarded with text messages from claims management companies then read our guide to Tackling Spam Text Messages.
- You might not actually get any money at all!
As well as the very real risk that hidden commission fees could eat up most of the losses you’ve recovered, there is also a good chance a CMC will not be in business to make the payment that they promised at the outset.
What’s good about claims management companies?
We’re legal experts – so we’re going to say: not a lot.
Yet there are ‘Best practice’ CMCs out there. A best practice CMC won’t charge you up-front fees; they won’t cold call you and should be able to advise you of free ways to make a claim before taking any personal details. However – these are rare, and difficult to spot!
What’s the difference between solicitors and CMCs?
If you want to make a personal injury claim there are a few things you need to know. Firstly you need to understand whether you have a right to make a claim in relation to the exact details of your situation and from there you need to know who can help you make the claim. You can find out lots more about the process in our step-by-step guide to your claim.
So, the first point of contact for an injured person should be a solicitor. Sadly, since the late 1990s many injury victims have been drawn in to contacting claims management companies. These unqualified claims handlers exist only to make money by selling the details of the injured person on to a solicitor.
Let’s look at some of the major differences between solicitors and CMCs:
|Claims management companies
|We are legally qualified, with professional membership.
We are an accredited practice by the Association of Personal Injury Lawyers.
|Often staff have no legal qualifications or training. Claims handling service only. Advice can be wrong and misleading.
|Transparent ‘no win, no fee’ scheme, so injured person knows exactly what they pay and when.
If the claim succeeds – injured person pays a fixed success fee, which is usually 10% to 20%, plus VAT of the compensation recovered.
Unsuccessful claim? No charge.
|At the end of the claim, fees are deducted that the claimant was unaware of. A claims company may insist on the medical expert the solicitor uses.
CMCs don’t have professional insurance either, so if they handle your claim poorly or are negligent you may not be able to get any compensation.
|Quality of medical experts
|We don’t use medical agencies. We build direct relationships with local experts at respected hospitals. Familiar with type of report and timescales.
|Medical agencies or whoever the CMC’s highest bidding solicitor uses. In many situations a personal injury solicitor has no choice but to use the agency because of a financial interest, often not disclosed to the client. In those circumstances it will be the medical agency and not the solicitor who chooses the expert.
|Local or national?
|ASD only acts for local people.
We guarantee a home visit by a solicitor within three hours of the initial call.
We use local medical experts from respected institutions like the Royal Hallamshire Hospital.
|The solicitor they sell your case on to could be remote from you. You may never meet your solicitor. Additionally, remote solicitors can be obliged to use medical agencies – not local medical experts.
Why are ASD Solicitors better than using a CMC?
At ASD we are legally trained solicitors and do not accept referrals from claims companies.
We ensure that our ‘no win no fee’ scheme is transparent and understood by all our clients. ‘No win no fee’ simply means that if your claim is unsuccessful, you will not be charged. Some solicitors do ask their clients to pay for expenses such as medical reports if the claim fails.
Since April 2013, solicitors have been forced by the government to charge their clients a success fee rather than the insurers. The success fee charged is usually 25% of the compensation recovered. In addition, some solicitors charge an insurance premium. They insist the client takes out a policy to pay for expenses if the claim fails; premiums can range from £35 to £1,500.
At ASD, we insist on transparency so you know exactly what you have to pay and when. If the claim fails, our clients never pay a penny – unless the claim brought to us was a dishonest one. If the claim succeeds, all you pay is a fixed success fee. There are no insurance premiums to pay or loans to take out, our firm funds the claim and if it fails, we pay the expenses. The success fees we charge are never 25%, but range from 10% to 20%, plus VAT of the compensation recovered.
The quality of our medical experts
Many people believe that the value of a personal injury claim is fixed, and not dependent upon the solicitor they use. This is fundamentally wrong. The value of a claim is not fixed but is ultimately determined by the quality of the medical evidence obtained. The medical evidence is often said to be the building blocks of a claim – if this is wrong, then you’ll get the wrong result and not receive as much compensation as you may be entitled to.
Unlike the vast majority of solicitors, we do not generally instruct experts through medical agencies, instead we speak to the medical expert directly. At ASD we only act for local people and we therefore only use proven local medical experts who operate from outstanding hospitals such as the Royal Hallamshire Hospital in Sheffield. We know the type of report they provide and the likely timescales.
Local is better than national
We’re passionate about acting for local people in Sheffield and the surrounding area, who have been injured on the road or at work. We believe clients would be much better served by a local firm rather than a national one.
We guarantee a home visit by a solicitor within three hours of your initial call. Clients receive expert advice from day one from a local specialist firm.
As we’re local we have built relationships with local medical experts in the Sheffield area over many years – as we mentioned above, this means we have excellent relationships and familiarity with their reports.
We’re financially solvent
At ASD we have been established for over 30 years and run our current account in substantial credit. This enables us to fund disbursements on behalf of clients without asking the client to pay, we rely upon recovering these expenses from the insurers at the end of the case. If a report is necessary we obtain it and pay for it, irrespective of cost.
We never ask clients to pay expensive insurance premiums: if the claim fails we pay the disbursements. Finally, in serious injury cases we are able to lend money to clients, interest free, to help them when they need it most.
Why should the financial position of a personal injury firm matter to a client? You would expect the same results irrespective of the financial strength of the personal injury firm. Unfortunately, it does matter.
Some solicitors do not have sufficient funds to pay for disbursements. Disbursements are payments that solicitors make on behalf of clients, such as paying for medical experts. We have clients who tell us that they were asked by their former solicitors to pay for these expenses themselves.
Other firms may be reluctant to pay for expensive expert reports until liability has been accepted in the fear of being left with a large bill, despite the instruction of an expert being necessary.
Finally to protect the firm against having to pay for disbursements if a claim fails, some solicitors will force the client to pay hidden insurance premiums which are then deducted from a client’s compensation.
Cut out the middle-man and speak to one of our solicitors in Sheffield about making a claim. One of our solicitors will come and visit you in person and refer you to one of our medical experts, so you receive a full assessment on your injury and honest, supportive advice from our solicitors on making a claim.
Richard and Ralph, can you give me any further info about this? I know you are regulated by SRA and APIL members – is there anything else we can add in here?