Slater & Gordon (ASX: SGH) has hit back at the ABC following Sunday's report that the law firm has been engaged in the practice of "claim farming" using data obtained by online doctor booking service HealthEngine.
The ABC alleged over the weekend that Slater & Gordon had been paying a marketing firm called PreLegal $1,290 for each new client recruited for personal injury compensation claims.
Based on information obtained from "secret internal documents", the ABC went on to allege that PreLegal had generated 214 new clients for Slater and Gordon between March and June last year.
Additionally, the ABC claimed that Slater & Gordon had a referral arrangement with Medibank Private which generated six matters for the firm, and another referral relationship with car rental company Compass Claims which allegedly referred 549 customers to Slater & Gordon.
"Claim farming", whilst not explicitly illegal, is considered controversial within the legal profession. Under Australian solicitor rules, paying for client referrals is permitted so long as it is disclosed to the client in question and does not create a conflict of interest for the lawyer.
The practice has been banned in some Australian states like in Queensland for personal injuries litigation and Western Australia where spotter's fees are prohibited.
At the crux of its report, the ABC alleged that Slater & Gordon had a partnership with HealthEngine via a third party arrangement with Bannister Law.
The ABC claimed Slater & Gordon obtained the personal details of approximately 200 HealthEngine users per month between March 2017 and August 2017. Allegedly, 40 of these users became clients.
Senior lawyers at Slater & Gordon allegedly wanted the relationship with PreLegal to end because of the professional and reputational risks of the controversial behaviour.
Speaking to Lawyers Weekly, a Slater & Gordon spokesperson said: "As Australia's leading plaintiff law firm, we remain committed to creating mechanisms for Australians to access justice."
"Our board and management uphold the highest ethical standards in meeting the firm's legal obligations. We are proactive in ensuring that any marketing we undertake is compliant with applicable laws and confident that it meets the highest ethical standards."
"Slater and Gordon has acted and continues to act in accordance with all its legal and ethical obligations regarding its marketing activities. We confirm that neither we nor anyone on our behalf is engaged in 'claims farming'."
"We are not prepared to disclose or discuss the commercial relationships we have with other parties and provide confidential and commercially sensitive information."
Following the ABC's reports, Federal Health Minister Greg Hunt has ordered an "urgent review" of HealthEngine.
Lawyers have also called for "claim farming" to become criminalised, with Maurice Blackburn's Rod Hodgson wanting the fringe problem eradicated.
"We are a profession to not regard it as a major problem, it's at the edges," says Hodgson to the ABC.
"I would not like to see any proliferation of claims farming in Australia. It's a spot on a large body, but we do not want that cancer to metastasise."
Business News Australia