Statutes Amendment (Claim Farming) Bill 2024
The Hon. J.S. LEE (17:05):
I rise to speak in support of the Statutes Amendment (Claim Farming) Bill 2024. This bill will prohibit the act of claim farming in relation to personal injury claims in South Australia. It would be reasonable to assume that most people may not be aware of the practice of claim farming. It is quite alarming to learn that there are unscrupulous firms out there that attempt to profit from the trauma and injury of individuals in this way.
Claim farming is a process of collecting the personal information of a person who has suffered an injury, usually through inappropriate or exploitative ways, such as cold-calling or unsolicited approaches. That information is then sold to a law firm or a claims management provider who pays for the referral and makes a profit from providing a service to the injured person. It is particularly concerning that claim farmers often target people with vulnerabilities, such as prisoners or residents of remote Aboriginal communities, and often use high-pressure sales tactics and deceptive promises of quick and easy compensation to secure the sale.
Selling information for personal injury claim referrals disrespects the best interests of the injured person and can be motivated by greed rather than by which law firm is the most appropriate to represent the case. I understand that it is difficult to quantify how widespread claim farming practices may be in South Australia, as it is largely done under the table. However, it is concerning to learn that there are reports of claim farmers targeting victims of child sexual abuse, following the establishment of the National Redress Scheme. This bill seeks to outlaw claim farming practices and to prevent them from becoming rampant in South Australia.
The bill will prohibit the sale or receipt of claim referrals for a benefit and will cover claim farming in relation to personal injury claims, including wrongful death claims. There will be exceptions for claims referred between law firms as part of the sale of a law firm or due to a genuine lack of expertise or a conflict of interest.
The bill will also introduce an offence for personally approaching or contacting a person to induce them to make a personal injury claim. It is important to note that there are several exceptions to this that would allow a person to be contacted if they had requested the contact or to allow friends or family to encourage an injured person to consider seeking compensation where there is no profit gain from the claim referral.
It will also be legal for law firms to approach existing or former clients about a personal injury claim in cases where the lawyer reasonably believes that the client would not object to the contact. For example, where a law firm may have provided legal advice or representation to a person for a family law case and it comes up that there is a history of childhood sexual abuse, the law firm could suggest that the person may have recourse to a personal injury claim. A law firm would also be able to approach a person at the request of a reputable support service, such as a community legal centre or industrial organisations, or approach people who they believe may be eligible to participate in a class action that the law firm is representing.
There are also provisions for investigation and disciplinary action to be undertaken by the Legal Profession Conduct Commissioner in relation to law firms that pay for claim referrals or make an unsolicited approach. I understand that the Law Society of South Australia has been consulted on this bill and has provided detailed submissions to the government, particularly regarding the carve-outs for law firms to make appropriate approaches to clients and when requested by community legal centres and industrial organisations. I am advised that the government will introduce several amendments in response to the Law Society's submission to further clarify such carve-outs and add several definitions to the bill.
While claim farming is not yet rampant in South Australia, I am encouraged to see the state government is following Queensland's example and taking a proactive approach to outlaw this shady and exploitative practice. It is important that the privacy and wellbeing of injured persons, victim survivors and their families are protected. I am particularly alarmed at the prospect of victim survivors of childhood sexual abuse being targeted by these unscrupulous claim farmers. I will be supporting this bill to help protect and serve the best interests of vulnerable members of our community. I commend the bill.