Personal injury lawyers have been warned that they face dire consequences if they fail to comply with the latest version of the consumer contract regulations, coming into force on 13 June.
Craig Budsworth, chairman of the Motor Accident Solicitors Society (MASS), said failure to comply with the regulations, which apply to conditional fee agreements signed inside and outside the office, could result in unenforceable contracts, loss of fees and fines from the Legal Ombudsman.
Mr Budsworth said one of the changes was extension of the cancellation period for contracts from seven to 14 days.
“If you sign up a lot of clients without complying, you’ll be a in a pickle. Some people are still selling without a cancellation process.”
The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 replace existing regulations introduced in 2008, covering sales made in the office or the client’s home, and earlier distance selling regulations.
The latest regulations require that consumers are given information on a range of issues, from identity of the supplier and details of how fees will be calculated, to the firm’s complaints-handling policy and arrangements for terminating the retainer.
For contracts made off the premises, or as a result of distance sales, there are detailed requirements on cancellation, such as giving consumers notification if there are no cancellation rights.
The Law Society has issued a guidance note on the new regulations. In its advice on ‘distance contracts concluded by electronic means’, the society said firms should ensure that clients acknowledge that placing an order implies an obligation to pay.
“If the client places an order by clicking a button or similar, it should be labelled clearly with ‘obligation to pay’ or something similarly unambiguous. If the above does not occur, the client is not bound by the contract.”
“This is something that needs to be on everyone’s agenda,” Mr Budsworth said. “It’s not difficult – it’s not a complicated major change. It’s a question of minor changes that need to be done, otherwise you’ll have a load of unenforceable contracts.
“Before April of last year this was less of an issue. Now, with deductions from damages, if a client complains and the Legal Ombudsman looks at the document and it doesn’t comply, the solicitor may have to repay the amount taken from damages and a fine.”