Speaker 1 (00:02):

This is an ABC podcast.

Damien Carrick (00:08):

This is the Law Report. I’m Damien Damien Carrick.

Michelle James (00:12):

These laws are nation leading laws and it’s terrific to see Queensland seeking to stamp out this practice of claims farming, which is so detrimental to the personal injury claims industry.

Peter Carter (00:24):

The methodology that’s been used is a bit like using a sledgehammer to open a peanut. It’s the unintended consequences that are the problem.

Damien Carrick (00:32):

Queensland’s crackdown on claim farming. Also, a new study finds that there’s no consistency in when and how judges reduce prison sentences because of intense media coverage.

Dr Paul McGorrery (00:46):

We need to move to a space where courts aren’t constantly having to say, “I don’t know what I’m supposed to do with this, but I’m going to have to figure it out in this case. And hopefully as someone else figures that out in the future.”

Damien Carrick (00:59):

First, new trailblazing legislation in Queensland is designed to stop claim farming. It’s a practice where the public are cold called and encouraged to make compensation claims. Since 2019, Queensland has had legislation banning the practice for motor accident insurance claims, but these new laws extend this ban to personal injury and workers’ compensation. Brisbane personal injury lawyer Michelle James is national head of the Abuse law practice with Maurice Blackburn, and she’s a former Queensland head of the Australian Lawyers Alliance. She welcomes the new laws. Michelle James, what exactly is claim farming?

Michelle James (01:37):

There’s no uniform definition of claims farming, but generally it’s understood to be the practice of cold calling people and inducing or inciting them to bring claims for compensation across various regimes. So it could be in the motor accident space, it could be in the workers’ compensation space or indeed any form of personal injuries. And more recently, we’ve seen this practice particularly abhorrent in the abuse law space. So contacting survivors of sexual abuse, childhood sexual abuse, and encouraging them to make a claim. And we’ve seen instances, for example, of very personal information about such an awful thing to happen as a child being disclosed without consent to law firms who then try and incite people to make claims.

Damien Carrick (02:28):

What sort of harm does claims farming cause to say, post potential litigants or to the broader system?

Michelle James (02:37):

There are many harms from claims farming. So thinking first of all about the insurance that covers these various claims. Inducing people to make claims in this way, unfortunately, increases fraudulent claims, and that, of course, has an impact on the sustainability of the insurance schemes, which underpin all forms of personal injury claims. Secondly, of course, then there is the nuisance factor of being cold called and being induced to make a claim. Then the abuse space in particular, of course, there’s that retraumatization aspect as well. So across the board it’s a very damaging practice.

Damien Carrick (03:18):

Now, prior to 2019, more than 1.5 million Queenslanders were cold called with respect to compulsory third party motor vehicle accident claims. This led to a ban on claim farming in this sector. How big a problem was claim farming in that space and how effective has that 2019 legislation been?

Michelle James (03:39):

Well, it was a prolific practice in the CTP space, and we know from records kept by the Motor Accident Insurance Commission in Queensland that they had seen a spike in claims, particularly in those lower value type claims that really came out of nowhere. And they keep a very close eye on that scheme and were concerned about this practice. And through their advocacy, these laws were brought in and almost immediately we saw a drop in those claims that really had come out of nowhere, firms that had never really practiced in this space before. We saw those sorts of claims, particularly the lower end drop off. And so those laws have been very effective.

Damien Carrick (04:21):

So those laws around claims farming and motor accident and compulsory third party claims have been on the book since 2019. And Queensland has just passed new laws which have taken effect this month, which extend the ban on claims farming to all personal injuries and workers’ compensation cases.

Michelle James (04:42):

Queensland has really shown excellent leadership in this area. The Queensland government and the Attorney General, in particular, have really taken it upon themselves to stamp out this abhorrent practice of claims farming. So whilst other jurisdictions around the country do have other smaller prohibitions on paying for referral fees, no other jurisdiction in Australia has really taken this step of really stamping out the practice by these laws.

Damien Carrick (05:11):

What are the issues around claim farming specific to claims of historical sexual abuse? I understand that there are organizations that are involved in this space and would argue that they’re doing outreach work, survivor support work, that they’re simply trying to recover some of their expenses as they go out into the community and support people and inform people about their rights. What’s your view around those sorts of organizations?

Michelle James (05:36):

So firstly, any organization that is quite genuinely set up to provide advice or outreach or other support services to survivors of child and sexual abuse is to be welcomed. What is of concern are organizations who badge themselves or brand themselves as providing those services when, in fact, if you look behind the veneer of how they say they operate, they, in fact, do nothing of the sort. And in fact, what they do is they will cold call or approach or solicit people often with confidential information that they’ve received from other sources and try to hear their story where the person providing that information may believe that they’re providing information for the purposes of getting other services and other support. And in fact, the organization is seeking to package up that information and provide it to a law firm for a fee.

Damien Carrick (06:34):

And would you say, though, that it’s a clear black and white line or there’s a gray zone here between providing outreach support and the claims farming that you’re talking about here?

Michelle James (06:46):

Well, outreach support should be aimed at providing survivors of child sexual abuse with services such as counseling services, financial counseling services, other medical type treatment or information about legal rights. For example, under the National Redress Scheme, as well as under civil law, what it shouldn’t be is the taking of something that purports to be a statement and then selling that information onto a law firm for a fee, sometimes quite a large fee.

Damien Carrick (07:19):

Brisbane personal injury lawyer, Peter Carter, Director of Carter Capner Law, is a former national president of the Australian Lawyer’s Alliance. He has a different view of this new law. He wants to make it clear that he opposes claim farming, but says the legislation imposes new and counterproductive restrictions on the widespread longstanding practice of fee sharing where one lawyer refers a client to another lawyer.

Peter Carter (07:47):

I can’t pay a lawyer who wants to refer me a case because of my expertise. He’d prefer not to handle it and wants to refer it on. Normally, he’d share in the fees or quite often he’d share in the fees that I would generate in consideration of the referral. Now that practice is banned. So that’s an undesirable consequence because it means that that lawyer’s client won’t be getting potentially the best representation they could get. The solicitor himself might be in those circumstances incentivized to run it himself, and that’s not in the best interest. It prevents the system of cases going to the best qualified people to run them.

Damien Carrick (08:29):

So you’re saying, if I understand you, that somebody goes to their local solicitor and says, “Look, I’ve just had an accident. What are my options here?” That lawyer has a consultation with them and on reflection thinks, yeah, I better send them to somebody who specializes in this work. They do that. And there’s normally a fee arrangement for the referral of that kind of work?

Peter Carter (08:54):

Yes, exactly, a share in the fees that are ultimately generated or a payment upfront. So that practice is banned. Legitimate claims, no question of claim farming. Why do they need to ban that practice?

Damien Carrick (09:06):

And what percentage of your clients, you’re personal injury lawyer, are referred to you or handed on to you by other lawyers with these sorts of fee arrangements?

Peter Carter (09:19):

Well, probably 25% from other lawyers and a large number of those have that arrangement associated with them. Some lawyers don’t seek it, but many others do. And indeed is permitted under the Australian solicitor’s contract rules, which apply in Queensland. The legislation is trailblazing to that extent, but my complaint is how far it goes. Not only does it ban solicitors from paying their colleagues for a legitimate referral on a proper basis, another provision of the act says that you can’t, although the heading to the section says it’s a ban on approaching someone to solicit or induce them to make a claim, that’s not what the section says and that’s not what the ban is. The ban is you cannot approach and induce someone to make a claim.

Damien Carrick (10:13):

What scenarios do you envisage which might be of concern for you?

Peter Carter (10:18):

Very ordinary social scenarios at a barbecue or if I’m in a bar on Friday night, someone asks, “What do you do?” And I explain. And they bring up something about them. I would have to leave that conversation because otherwise I could be said to be inducing them to make a claim by explaining to them their rights. That’s an extraordinary ban on ordinary discourse and ordinary social interaction. If it came to the attention of the regulator, I could be severely dealt with for.

Damien Carrick (10:49):

Again, we really don’t know. We’re crystal ball gazing about how these laws might be interpreted.

Peter Carter (10:56):

I beg to differ. It’s not an interpretation question. If they wanted to avoid that interpretation, they would’ve framed the section that it was a ban on people approaching for the purpose of inducing or soliciting someone to make a claim. And they haven’t said that. They’ve said approach a person and, so it’s just two things, you approach, walk across the bar then and in the conversation. That’s the offense I would be committing even if it’s not prosecuted. I’m a lawyer, I don’t like committing offenses and I shouldn’t be committing an offense just by having regular social discourse in a social situation.

Damien Carrick (11:34):

Michelle James does not think the new laws will prevent conversations in social settings and says she welcomes the ban on fee sharing arrangements between lawyers.

Michelle James (11:44):

Well, Mr. Carter is entitled to his view, but what I would say is that these laws were wholeheartedly supported by the broader profession. The Queensland Law Society and the Australian Lawyers Alliance both unanimously supported these laws and this legislation. There’s nothing stopping a practitioner who receives an inquiry about a personal injuries matter who doesn’t have the required expertise to be able to bring that claim. There is nothing stopping them passing those details onto a law firm or a professional colleague who does have that expertise. What has been stopped is the practice of paying a fee for those referrals of more than $200. And I welcome these laws, the Australian Lawyers Alliance welcomes laws and the Queensland Law Society welcomes the laws.

Damien Carrick (12:31):

Peter Carter says, “Look, without these payments, some lawyers might try to go it alone rather than refer onto lawyers who are better placed to handle these sorts of claims because they don’t necessarily have the requisite expertise and that will mean worse outcomes for victims, for survivors, for potential litigants.”

Michelle James (12:50):

I don’t share that view. All lawyers, of course, are heavily regulated and we all understand our professional obligations to practice really in an area that we have some expertise. So we can’t say that his fears will not be realized, but my view is that that’s a very low risk that no lawyer would or most lawyers wouldn’t seek to practice in an area as complex as personal injuries with the risks associated with practice in that area unless they have that expertise. And in my view, the removal of this practice of paying for a fee sharing type arrangement, I just don’t see the risks that Mr. Carter is fearful of being realized as being realized as part of these new laws.

Damien Carrick (13:34):

Peter Carter says these laws contain prohibitions on certain forms of communicating about what services you offer. He says, “Under the new laws, it makes it an offense to approach another person and solicit them to make a claim.” And this language is very broad and could include somebody you might meet in a social situation or down at the pub where they ask you what you do and they ask you questions about their rights and what their situation might be.

Michelle James (13:59):

There’s nothing in this legislation that prohibits in a social setting. If somebody asks you a question about bringing a personal injury claim, there’s nothing in these laws in my interpretation of them that precludes you from providing them with advice. In fact, that’s what we do as personal injury lawyers. When people approach us and ask us questions about their rights, we’re able to provide them with that advice.

Damien Carrick (14:22):

Moving away from this new claim farming legislation, what are the laws around advertising for legal services in Queensland and, I guess, more broadly around the country?

Peter Carter (14:32):

Queensland and Western Australia have a very similar system restricting advertising in the personal injury field to print advertisements, billboards that refer only to your name, your practice areas, and your contact details. On the website, you can also include other things if it’s your own website, including the name of a person’s rights in the case of a personal injury and the terms on which you conduct the claim. For example, no win, no fee. So that’s what happens at Queensland. New South Wales, it’s largely unrestricted. It was restriction, but the restriction was substantially removed in 2015. And in Victoria, there are only the restrictions that are contained in the conduct rules, which is inoffensive and inappropriate unethical advertising. So the Queensland, again, has the strictest regime for advertising, and there’s an argument for relaxing the advertising rules if in the context of this claim farming legislation. So ordinary consumers can be better informed about their rights by people who are genuinely practicing in the area, not by claims farmers.

Damien Carrick (15:47):

When it comes to advertising restrictions, Peter Carter and Michelle James are on the same page.

Michelle James (15:54):

So it’s been the case for some several years since the early 2000s that personal injury lawyers are prevented from saying certain things about the services that they provide. And these laws were written at a time where digital and technological ways of interacting were nowhere near as prevalent as they are today. They were written in an era before smartphones, for example. And where websites were nowhere near as interactive and perhaps the first source of information that many people are used to going to these days. So for a long time, personal injury lawyers and law firms have not been able to educate the broader community about their legal rights in this area. And we say, Maurice Blackburn would say, that the laws are just not fit for contemporary practice, where we are very used to obtaining information these days on our smartphones or from the internet.

Michelle James (16:49):

And so certainly we welcome the parliamentary committee’s view that there should be a review of these advertising regulations that exist in Queensland to see whether they, in fact, are fit for purpose in a modern and more contemporary digital age. And whether, in fact, they serve any purpose at all or whether, to the contrary, rather than being a good and a helpful thing, they, in fact, operate as a means of affecting access to justice because those who’ve been injured can’t legitimately find out what their rights are.

Damien Carrick (17:25):

Michelle James, National Head of the Abuse Law practice at Maurice Blackburn and a former Queensland head of the Australian Lawyers Alliance and before her, Peter Carter, director of Carter Capner Law, a former national president of the Australian Lawyers Alliance.