10. Claim farming and other unethical behaviour

What is a claim farmer?

10.1‘Claim farming’ refers to the practice of procuring information about victims to persuade them to make a civil claim.

10.2Claim farming might include:

• Making unexpected phone calls or emails to survivors.
• Pressuring people to sign legal documents that they don’t understand.
• Keeping excessive or high fees hidden.
• Saying nothing about free legal advice and help available from knowmore.[3]
  3. The people who do this are called claim farmers.
• They gather information and give it to lawyers for money.
• If the survivor wins compensation or receives redress, then the lawyer gets paid a percentage, sometimes a very high percentage.
• The unethical lawyer uses this money to pay claim farmers to do the same again, so that they can exploit more survivors.
• Sometimes, they might pay money to survivors (rather than lawyers) who know other survivors, in exchange for names and contact information.

Why are claim farmers a problem?

10.4knowmore said that claim farmers and exploitative lawyers:

• Undermine the ability for victims and survivors to make informed decisions.
• Reduce how much compensation or redress is given to victims and survivors.[4]
  5. Bravehearts Foundation (Beyond Brave) (Bravehearts), a redress support service, said that clients reported being subject to ‘daily calls’ discouraging redress and while offering free services with hidden costs.[5]
  6. Maurice Blackburn, a private law firm, said that they had been approached by claim farmers ‘from time to time’ and turned them away.[6]
  7. Shine Lawyers, another private law firm, said:
• Claim farmers have targeted prisons and ‘[w]e are particularly concerned about the impact… in prison environments where misinformation has potential to disseminate quickly.’[7]
• Lawyers should be required to disclose information about free services such as knowmore.[8]
  8. knowmore told us that claim farming has been a big problem in Australian prisons for a long time. Claim farming in prisons has increased since the law changed to allow prisoners to apply for redress from 4 April 2024, but there has been no ‘meaningful’ action in response.[9]
  9. However, Kelso Lawyers (a private law firm) said that claim farmers have helped build awareness of the National Redress Scheme (the Scheme). While this not the way survivors should find out and ‘not the approach that Kelso Lawyers would take’, the claim farmers have helped with ‘spreading the word’.[10]

Searching for names

10.10Australian Catholic Redress (ACS) Limited said that ‘trawling through victim’s files for other potential clients’ is another possible claim farming method.[11]

10.11ACS Limited told us:

• ACS Limited are receiving requests for documents and files relevant to civil claims. Those requests are a legal process called a subpoena.
• Those subpoenas are aiming to find ‘the names and details of people’ who are possible victims and survivors.[12]
  12. For example, Bravehearts said:
• A ‘predatory’ law firm is alleged to be targeting remote communities in northern Queensland.
• This law firm found out who has applied for redress, how to contact them and then pressured redress applicants to sign documents with ‘false hope’ promises of large payouts.
• Bravehearts described clients ‘blaming themselves for believing these lawyers and feeling stupid for not knowing what they were signing’.[13]
  13. Bravehearts said that this law firm had sent a subpoena (a legal order).
• The subpoena asked Bravehearts for information including ‘every application for redress we submitted on behalf of clients’.
• The subpoena was withdrawn ‘but we fear that this is not the last we have heard from them.’[14]
  14. Bravehearts told us that clients will not approach support services if they think their information will be shared, and said that documents related to making a redress application should be protected.[15]
  15. Karp O’Neill Lawyers said there can be a ‘fine line’ between ethical and unethical conduct. For example, gathering documents to find witnesses relevant to the case is legal; however, doing the same thing to find potential clients is ‘probably in breach’.[16]

Fees and costs

10.16When a lawyer agrees to represent you, this is usually done for an agreed price or rate, although lawyers occasionally do work for free (pro bono). A lawyer will ask you to sign a legal contract called a costs agreement. For example:

• Some of the work could be done for a fixed price (such as an hourly rate).
• Some work is done in exchange for a percentage of the compensation or redress payment the survivor receives (a commission).
• Some lawyers are not paid unless the client wins (no win-no fee) but the definition of a ‘win’ or a ‘fee’ can be complicated.
  17. knowmore said that they knew of private law firms charging between $10 000 and $30 000 to assist with redress applications.[17]
  18. Maurice Blackburn said that ‘unscrupulous’ law firms are targeting redress applicants in Northern Territory, with half or the entire redress payment eventually absorbed into costs paid to the lawyer.[18]
  19. Micah Projects said that many redress applicants are unprepared for these encounters:
• Costs agreements are hard to understand.
• There is no explanation about the consequences of litigation (contesting your case in court).
• Alternatives to litigation may not be explained.[19]
  20. Survivors and Mates Support Network (SAMSN) said that many clients had reported:
• Lawyers who promised ‘very large’ compensation.
• Pressure to start civil litigation to get compensation.
• The compensation received not being ‘anywhere near’ what was promised.[20]
  21. SAMSN said that failing to advise on alternative processes, such as redress, is something that ‘breaches ethical standards’ within the legal profession.[21]
  22. SAMSN said that they had helped clients who started civil litigation and found:
• The fees charged are ‘quite high’.
• The stress caused became ‘worse than the abuse itself’.
• In most cases, lawyers did not tell the client about the Scheme.[22]
  23. People with Disability Australia (PWDA) said that people had to pay unexpected fees if they chose not to continue with their claim.[23]
  24. Karp O’Neill Lawyers suggested that private law firms could receive a fixed amount of money (around $3000) to give advice. They said: ‘A simple solution would be to offer a nominal sum to a law firm to review victims’ circumstances of abuse so that victims can make considered choices.’[24]
  25. Karp O’Neill Lawyers added that they usually help with redress applications on a pro bono basis (for free) and occasionally charge between $1500 and $2000.[25]

Stopping claim farmers and unethical conduct

10.26The Women’s Cottage said that ‘the government is failing in its duty’ by allowing Scheme applicants to be ‘caught up by exploitative law firms’.[26]

10.27The Women’s Cottage said that the relevant recommendation ‘already exists’ in the Committee’s Second Interim Report and ‘needs to be implemented’.[27]

10.28In November 2021, the Committee recommended:

• Make it unlawful for lawyers to charge contingency fees for services delivered with respect to Scheme applications.
• Impose a legal obligation on lawyers to advise a potential client of the availability of free services (knowmore and the Redress Support Services), and to certify such advice has been provided, before executing a costs agreement for a Scheme application.
• Considering a cap on fees that lawyers can charge for services delivered with respect to Scheme applications.
• Make it an offence for any person to:

• contact a person without their consent and solicit or induce them to make a Scheme application; or
• give or receive any money or other benefit in exchange for a referral to make a Scheme application.

• Establish a set of expected practice standards for lawyers and survivor advocates providing services with respect to Scheme applications.
• Establish a specific complaints process within the Scheme to deal with concerns about the conduct of lawyers and representatives from survivor advocacy businesses.[28]
  29. In July 2023, the Australian Government responded to this recommendation to say that while it is ‘supported in principle’, there are ‘limited levers for the Commonwealth to regulate private law firms’.[29]
  30. Australia’s states and territories have different laws for regulating fees and claim farming practices.[30] We were also advised that there is limited visibility over the conduct of private law firms and limited ways for the Australian Government to regulate them.[31]

Queensland laws

10.31We heard that Queensland changed its laws to prevent claim farming practices.

• The Queensland Parliament passed the Personal Injuries Proceedings and Other Legislation Amendment Bill 2022 (Qld).
• Most of the amendments took effect from 1 July 2022.[32]
  32. While law changes in Queensland are having a positive impact, knowmore cautioned that claim farmers and exploiters could ‘simply move their business elsewhere’ and other Australians do not have ‘equal protection under the law’.[33]
  33. Bravehearts suggested that now Queensland has changed its laws, communities in the Northern Territory, New South Wales and Western Australia ‘where no such laws exist’ have become the target of exploitative behaviour.[34]
  34. We heard that similar laws should be created everywhere in Australia:
• The Women’s Cottage said that ‘Queensland seems to have got somewhere in dealing with claim farming’ and ‘the rest of the country urgently needs to follow suit’.[35]
• SAMSN said that other jurisdictions ‘should introduce legislation similar to Queensland’.[36]
• PWDA said that ‘greater consistency of laws and related standards across all states and territories would minimise these issues’.[37]
  35. Bravehearts cautioned that since Queensland’s laws changed, some law firms have attempted to ‘circumvent’ them.[38]

Footnotes

[1]Department of Social Services, Submission 9, p. 7.

[2]Bravehearts Foundation (Beyond Brave) (Bravehearts), Submission 16, p. 5.

[3]knowmore, Submission 14, p. 58; Bravehearts, Submission 16, p. 6; Maurice Blackburn Lawyers, Submission 18, p. 3; Rachel Neil, knowmore, Committee Hansard, 8 April 2024, p. 4.

[4]knowmore, Submission 14, p. 59.

[5]Bravehearts, Submission 16, p. 6.

[6]John Rule, Maurice Blackburn, Committee Hansard, 23 November 2023, p. 5.

[7]Shine Lawyers, Submission 31, p. 3; People With Disability Australia (PWDA), Submission 13.2, p. 5.

[8]Shine Lawyers, Submission 31, p. 3.

[9]knowmore, Supplementary Submission 14.5, p. 27.

[10]Jade Cooper, Kelso Lawyers, Committee Hansard, 23 November 2023, p. 6.

[11]Australian Catholic Redress Limited (and others), Submission 25, p. 11.

[12]Australian Catholic Redress Limited (and others), Submission 25, p. 11.

[13]Sylvia Skinner, Bravehearts, Committee Hansard, 7 July 2023, p. 29.

[14]Sylvia Skinner, Bravehearts, Committee Hansard, 7 July 2023, p. 29.

[15]Sylvia Skinner, Bravehearts, Committee Hansard, 7 July 2023, p. 29.

[16]Peter Karp, Karp O’Neill Lawyers, Committee Hansard, 23 November 2023, p. 6.

[17]knowmore, Submission 14, p. 58.

[18]Maurice Blackburn, Submission 18, p. 3.

[19]Micah Projects, Submission 4, p. 7.

[20]Survivors and Mates Support Network (SAMSN), Submission 6, p. 5. See also: SAMSN, Supplementary Submission 6.1, p. 3; Craig Hughes-Cashmore, SAMSN, Committee Hansard, 7 July 2023, p. 9.

[21]SAMSN, Supplementary Submission 6.1, p. 3.

[22]SAMSN, Submission 6, p. 4; Craig Hughes-Cashmore, SAMSN, Committee Hansard, 7 July 2023, p. 9.

[23]PWDA, Submission 13, p. 6.

[24]Karp O’Neill Lawyers, Submission 26, p. 2.

[25]Peter Karp, Karp O’Neill Lawyers, Committee Hansard, 23 November 2023, p. 6.

[26]The Women’s Cottage, Submission 12, p. 2.

[27]The Women’s Cottage, Submission 12, p. 2.

[28]Joint Select Committee on Implementation of the National Redress Scheme, Second Interim Report of the Joint Select Committee on Implementation of the National Redress Scheme 2021, pp. xvii–xxi.

[29]‘Australian Government response Second Interim Report of the Joint Select Committee on Implementation of the National Redress Scheme’, July 2023, p. 13.

[30]PWDA, Submission 13, p. 6.

[31]Department of Social Services, Submission 9, p. 7.

[32]Personal Injuries Proceedings and Other Legislation Amendment Act 2022 (Qld), s. 2.

[33]knowmore, Submission 14, p. 61.

[34]Bravehearts, Submission 16, p. 5.

[35]The Women’s Cottage, Submission 12, p. 2.

[36]SAMSN, Supplementary Submission 6.1, p. 4.

[37]PWDA, Submission 13, p. 6.

[38]Sylvia Skinner, Bravehearts, Committee Hansard, 7 July 2023, p. 29.