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National law firm Slater and Gordon is introducing an innovation for Australians trying to recover their losses due to bad financial advice - a new service which can include access to insurance against the risk of a hefty legal bill if they lose their claim.
Similar to the law firm’s No Win No Fee™ legal service for other forms of claims, the RECOVER™ service offers eligible investors the opportunity to pay their lawyers’ litigation legal fees - and the premium for any insurance taken by them - only if their case is successful.
RECOVER™ can include the following options for eligible individuals:
- A fixed price assessment of the merits of their case before legal action is begun
- A No Win No Fee™ arrangement for their own legal costs if legal action proceeds
- Access to insurance (provided by a third party) to cover the defendant's legal costs and their own disbursements if their case is unsuccessful*
ASIC’s recent report “Compensation for retail investors” found that some investors who could have sought compensation did not do so, while others were unwilling to spend money on getting legal advice. The report found that cost was one of the main barriers to investors pursuing legal action against a financial planner to recover their loss. One investor interviewed for the report was quoted as saying “I wasn’t going to risk any more money”.
Slater and Gordon's head of commercial and project litigation, Ken Fowlie, says RECOVER™ will fill a void in the current Australian legal market by giving mum and dad investors options, including not having to pay upfront the ongoing legal costs of often expensive litigation to pursue valid claims against negligent advisors.
“It will give people the option of pursuing justice without worrying about throwing good money after a bad investment,” Mr Fowlie said. "Litigation always has a degree of uncertainty - RECOVER™ can minimise that uncertainty."
For many individuals, the upfront cost of legal action or the risk of adverse costs has discouraged them from pursuing their legal rights unless part of a class action. For individual investors, the Financial Ombudsman Service can only award up to a limit of $150,000 while litigation funders tend to only fund much larger individual investor claims. For those in between, Slater and Gordon's new service, RECOVER™, may be the answer.
“Individuals can now get a fixed price assessment of the merits of their case, and for eligible clients we will offer arrangements where further fees will be payable only on a successful outcome,” Mr Fowlie says.
“In addition, insurance can provide protection to eligible clients if their claim is ultimately unsuccessful. Individuals can thus start their claim knowing that their costs, and, if necessary, those of their opponent, are largely covered. This is an innovation for Australian investors; the prospect of a No Win No Fee™ arrangement for their own legal fees as well as the potential to access insurance in relation to the other sides’ costs. This model is already widely available to claimants in the UK.”
“A core value of Slater and Gordon is to make legal services affordable to more Australians - RECOVER™ will allow access to justice for more mum and dad investors who have suffered loss from bad financial advice.”
* Eligibility for insurance cover is determined by the insurance provider that offers the product. Slater and Gordon Ltd is not authorised to provide or recommend insurance products.