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At the end of 2023, we received a number of reports that SSB's clients were unexpectedly being pursued to pay adverse legal costs in relation to their discontinued cavity wall insulation (CWI) litigation claims.

SSB had arranged after the event (ATE) insurance for clients to cover the other side's costs in relation to their CWI claims on a 'no win, no fee' basis. However, the ATE insurance providers have declined to meet the costs as expected under the insurance policy, and so the defendants have pursued SSB's clients for costs.

It is a type of legal expenses insurance policy taken out to provide cover for legal costs and expenses incurred in litigation in the event a claim is unsuccessful. These policies are commonly used in litigation, including what are sometimes called 'no win, no fee' cases.

We continue to progress our investigation into SSB. We are reviewing files, interviewing staff from SSB, and have taken several victim impact statements.

Our role is to identify any misconduct that brings a solicitor's right to practise into question and take appropriate action to protect the public. We can allege misconduct using a sample of files to demonstrate themes of misconduct. As such, it is not necessary for us to look at every file or rely on every complaint received in order to allege misconduct against the firm, or any solicitors involved.

Our investigation covers a range of key areas. In particular, we are reviewing how the firm obtained its work, and how the claims were handled by staff, including whether clients were properly advised and whether their instructions were followed. We are also looking closely at the After the Event (ATE) insurance obtained, and whether the solicitors complied with their obligations to keep the ATE insurers updated regarding the merits and progress of claims.

We are also looking back to previous complaints that were made about SSB and this issue and assessing their relevance to our ongoing enquiries.

We are committed to moving as swiftly as possible to complete our investigation. We originally aimed to do this by the autumn. Due to the volume of evidence and complexity of issues, we now anticipate we will have completed the investigation early in the New Year. We will take action where we find evidence that solicitors have fallen short of the standards the public expects.

We have a range of powers to take action against solicitors and firms to protect the public and act as a deterrent. This includes being able to fine solicitors up to £25,000, rebuke them and put controls on how they practise.

In cases of serious misconduct where our view is that a more significant sanction is needed, we will take cases to the independent Solicitors Disciplinary Tribunal (SDT). They have the power to issue unlimited fines and stop solicitors from practising – either for a limited period (a suspension) or indefinitely (striking off).

If that happens the SDT prosecution will have its own timetable.

We have already taken action against a solicitor involved in this work, placing conditions on the way they work in order to protect the public. You can see this action on the solicitor's record on our Register.

Our investigation is continuing, and we may take further action in due course.

We have an ongoing investigation into another firm, Pure Legal, which went into administration in November 2021. Some of Pure Legal's files were transferred to SSB and other firms following the administration of Pure Legal.

Our investigation into that firm also includes, among other issues, similar concerns about clients being unexpectedly pursued for defendant's adverse costs after claims being handled by Pure Legal either failed or were discontinued. We are aiming to conclude our investigation into Pure Legal early in the New Year.

All firms we regulate must have professional indemnity insurance (PII) in place. If a regulated law firm has been found to be negligent, the client may be able to claim on their PII.

Unfortunately, we are not able to give legal advice, but clients may wish to seek independent legal advice. There are online resources - Thinking of using legal services? guidance, and the Legal Choices website – they can use to find cost-effective legal support.

The SRA has also been liaising with regulators and insurers about other routes to redress and identified that there may be an alternative option to settle matters for SSB's former clients through working with insurers of the cavity wall installation companies.

Installation companies and their insurers may be able to claim back their costs through SSB's insurance, rather than pursuing SSB's former clients for adverse costs.

We know of one insurer who has paused claims against individuals while it seeks to claim money from SSB's insurers. Other insurers have reached an agreement to not pursue the debt from the individual impacted. This is on the basis that the individual assigns over to the insurer their rights to bring any new claims against SSB's PII.

We have written to the insurers we are aware of in these cases to say we believe there is a benefit in other insurers taking a similar, pragmatic approach.

We cannot, however, offer legal advice to clients impacted. Each individual will need to consider carefully their options. This relates to their options for redress, or for bringing a negligence claim, or in relation to any offer - for instance, from an insurer to drop their claim - to decide what is right for them and their circumstances. Impacted clients may wish to seek legal advice.

We also will continue our ongoing liaison with the Financial Conduct Authority, who regulate insurance companies, to consider this and other options for redress.

We operate a compensation fund. Our early view, however, is that this fund is unlikely to assist former clients of SSB where they are being pursued for costs. The fund only pays out in situations where there has been dishonesty or a failure to account for monies held by a firm and there is no other avenue for recovery.

Our early view is that the main key allegations we are likely to raise will not involve dishonesty. As the fund is a fund of last resort, even if the firm acted dishonestly, under the rules of the Fund those affected would need to pursue a claim against the firm or its insurers first.

This means that unless something new comes to light, unfortunately for the majority, if not all, of those being pursued for costs, the fund is unlikely to assist them.

We are continuing our conversations with other regulators and organisations to explore other routes of redress.

The Financial Ombudsman Service (FOS) provides redress for consumers of financial services, such as insurance products like ATE. Whether FOS are able to assist, will depend on the status and location of the ATE provider, as well as the details of the case.

Those affected may be entitled to bring a complaint to the FOS against their ATE insurers in circumstances where that insurer has declined to cover the costs awarded against them. There are also some limited circumstances in which a complaint might be made to the FOS against the professional indemnity insurer for SSB or the insurers for the installers of the cavity wall insulation. These are usually where the individual can show their entitlement to claim against their policies through:

• obtaining a judgment
• an arbitral award
• being able to demonstrate an enforceable agreement or
• obtaining a declaration from a court against either SSB or the installers.

There is guidance on the FOS's website explaining how people can complain to it (after they have complained to the ATE insurance providers first).

If clients want to complain about the quality of the service they have received from SSB, they should continue to contact the Legal Ombudsman (LeO). However, LeO will not be progressing complaints until the outcome of our investigation is known. There is guidance on the LeO's website explaining how people can make a complaint.

We are here to make sure law firms meet high professional standards. There are times when firms decide to stop acting on certain types of cases and transfer the work to another law firm. When that happens, the firms involved in the transfer must meet certain obligations, including making sure they inform clients of the planned transfer and their options.

These options can include the client agreeing to the transfer of files. Alternatively, the client can ask for their files back and seek representation from another law firm or not seek further representation at all.

Such transfers can also happen when a firm collapses. Following the collapse of SSB, some CWI claims were transferred to JMR Solicitors. JMR then decided it cannot continue to act in these CWI claims and agreed with Hugh James Solicitors to transfer the cases to that firm. We liaised with both firms about this process and their obligations, including informing clients. Clients can choose to have their files returned and for Hugh James not to represent them.

Hugh James has published information to support those affected on its website.

Members of the public can find further information in our choosing a solicitor section.

We will continue to update this statement when there are substantial changes.

In addition to our investigation, these cases raise questions about the role of ATE insurance providers and surveyors in these cases. We have been liaising with the FCA (which regulates the ATE providers) and the Royal Institution of Chartered Surveyors (RICS) (which regulates surveyors) to share information and insights and understand what action they may be taking.

More broadly, these cases raise wider issues about whether the bulk litigation market is working as well for the public as it should be, and whether there are appropriate protections in place.

We are progressing work – including targeted visits to firms working in this area – to assess these issues and develop our evidence base. The issues we are seeing are complex and cut across multiple sectors and regulatory regimes. This includes claims management, finance and insurance. We are committed to working with a range of stakeholders in progressing this work and exploring potential solutions to make sure consumers are appropriately protected.

Separately, our oversight regulator, the Legal Services Board (LSB) has commissioned an independent review to look at the regulatory events that led to the collapse of SSB. We welcome the review and we will take on board any feedback it provides to us and consider any recommendations it makes to improve our work.