No Win No Fee cases are cropping up ever more frequently in all areas of public life. Colloquially referred to as ‘ambulance chasers’, firms specialising in No Win No Fee cases are opening up the legal system to more people who may not have been able to afford to take legal action in the past.
On paper it seems like a good idea as everyone is entitled to justice. However, there are people taking advantage of the No Win No fee system and trying their luck against companies or their employers. As it doesn’t cost them anything up-front, they are prepared to sue anyone in the hope of getting some money.
Unfortunately the No Win No Fee industry is also hitting the property sector with tenants being rather litigious and more than happy to contact a lawyer if they feel that they have been wronged rather than settling any disagreement amicably. Some even see it as a money-making scheme and have made several claims.
Oliver Wharmby of Lonsdale Insurance Brokers said that he is seeing a rise in ‘serial litigants’, according to an article in the Property Industry Eye. He said that about three-quarters of all professional liability claims are made by letting agents, who put in a claim when they have had claims made against them.
The most common claim was for ‘breach of duty’ with personal injury claims coming second.
In the article, Mr Wharmby cites an example of a claim from a tenant who fell down the stairs which he blamed on a faulty light which had been reported. The tenant sued the landlord who in turn sought to sue the agent. However, the claim was unsuccessful.
In another case, a tenant moved into a home using false documents and never paid his rent or deposit. After six months, the tenant was evicted with the estimated cost of the loss of rent plus legal fees and repairs to the property being between £25,000 and £30,000. Thankfully the agent had insurance and so the cost to him was the £500 excess on the policy.
As Mr Wharmby advises, a professional indemnity policy will cover the landlord or agent for costs and expenses involved in a claim, even if the claim has no substance.
The increasingly litigious climate coupled with the rise of No Win No Fee law firms means that there is an increased risk of a landlord or agent being sued. That is why professional liability insurance is a sound investment.
One way in which to minimise the risk of being sued or having a claim successfully made against you is to keep accurate and up-to-date records of all conversations and dealings with tenants. You can use specialist inventory software to make this easier, allowing you to keep all your data in one place.
It can be used to keep records when you check tenants in and out of a property, together with those related to property inspections and all back-office administration duties.
Efficient record keeping is one way in which to reduce the risk of being pursued by No Win No Fee lawyers.