The phone calls started about two years after the car crash that left Susan Lowe with horrific injuries and killed her 27-year-old son.

Key points: Paying for client referrals is broadly permitted by legal industry rules, but the practice has been banned in some states

Paying for client referrals is broadly permitted by legal industry rules, but the practice has been banned in some states Industry association, the Australian Lawyers Alliance, wants criminal penalties for lawyers involved in claims farming

Industry association, the Australian Lawyers Alliance, wants criminal penalties for lawyers involved in claims farming Among other small law firms known to use telemarketing to attract new clients, internal documents seen by the ABC show personal injury giant Slater and Gordon is paying commissions to a company for client introductions

"They were asking, 'Have you had an accident in the past year? We can get you compensation'," she said.

Ms Lowe pleaded with the callers to leave her alone, telling them she already had a lawyer working on her personal injury claim.

But they would not take "no" for an answer.

"Every time they rang up I had to re-live the accident. I'm trying to get over this and trying to move on, but you can't because they're on the phone all the time asking about the accident."

Ms Lowe had become a target of a practice known as claim farming, where telemarketers try to recruit clients for personal injury claims and then sell the client referrals to law firms.

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It is banned in some states and against ethical guidelines in others, yet authorities have long believed claim farmers have only been used by a handful of small law firms — like the one that tried to sign up Susan Lowe.

But now a giant of Australian plaintiff law is getting in on the act.

Senior lawyers warned firm to stop direct marketing

The faltering law firm Slater and Gordon is hard-selling its personal injury services via telemarketing, despite its own senior lawyers warning almost a year ago the practice was unethical and possibly illegal.

Paying for client referrals is broadly permitted under the Australian Solicitors Conduct rules, as long as it is disclosed and doesn't create a conflict of interest for the lawyer.

However, the practice has been banned in some states, for example in Queensland in personal injuries litigation, or in Western Australia, where spotter's fees are prohibited.

Slater and Gordon's Melbourne headquarters. ( ABC News: Scott Jewell )

The ABC has obtained secret internal documents from the firm that reveal it has paid a telephone marketing firm called PreLegal $1,290 for each new client it recruited for workplace injury and traffic accident compensation claims in Victoria, South Australia and Tasmania.

The documents show the arrangement netted Slater and Gordon 214 new clients during a pilot between March and June last year and was expected to result in more than $3 million worth of fees for the firm.

But they also reveal senior lawyers wanted management to end the relationship because it presented serious professional and reputational risks, and because direct marketing could fall foul of the law in some states.

The lawyers also called on Slater and Gordon to band together with its competitor plaintiff law firms, Maurice Blackburn and Shine, to campaign for a national ban on direct marketing in the personal injury law sector.

The relationship with PreLegal was paused last year. Yet the ABC understands Slater and Gordon has since resumed sourcing clients from PreLegal, which operates a call centre in the Melbourne suburb of Chadstone.

Firm denies claim farming

Slater and Gordon declined a request for an interview and did not respond directly to questions about whether the practice was in breach of any laws or professional duties.

"Neither we nor anyone on our behalf is engaged in 'claims farming'," Slater and Gordon said in a statement.

"Slater and Gordon has acted and continues to act in accordance with all its legal and ethical obligations regarding its marketing activities."

PreLegal also declined the ABC's interview request, saying in a statement that it does not contact members of the public without their consent.

Medibank, car rental company revealed as other partners

PreLegal weren't the only company with referral deals in place with Slater and Gordon.

A referral arrangement with private health insurer Medibank Private resulted in just six cases for Slater and Gordon during between October 2016 and August 2017.

Medibank is another Slater and Gordon partner named in the internal document.

However, the documents state that Medibank planned to increase the number of referrals in the 2018 financial year.

In a statement, Medibank said it refers customers to a variety of personal injury law firms and does not receive commission fees.

"If a customer chooses to appoint a lawyer then this is a private arrangement for them," it said in the statement.

Slater and Gordon also struck a deal with car rental company Compass Claims, which provides vehicles for people involved in accidents.

The documents show Compass Claims referred 549 customers between March 2016 and August 2017 and received a $1,100 commission for each customer that became a Slater and Gordon client.

Compass Claims did not respond to the ABC's request for comment about the relationship and the disclosure of the referral relationship to its customers.

Of all the deals laid out in the internal document, the PreLegal deal proved to be by far the most profitable partnership, resulting in an average of 200 referrals each month.

The company's sole director is Melbourne businesswoman Vicki Tutungi, who the ABC understands is related to Slater and Gordon's head of personal injury law for Victoria, Dina Tutungi.

Neither the law firm nor PreLegal would confirm the relationship.

PreLegal is a wholly-owned subsidiary of a company called ProLearn Corporation, which has a background in direct marketing for vocational educational courses.

ProLearn is currently recruiting call centre workers, via employment website Seek.com, with the "ability to convert opportunities on the phone into sales" listed as a key area of responsibility for applicants.

'Perhaps desperate times?' for Slater and Gordon

Senior law industry figures believe PreLegal's business model in an example of claim farming.

Rod Hodgson, a senior lawyer with rival firm Maurice Blackburn and a director of the Australian Lawyers Alliance, believes Slater and Gordon's recent financial troubles may have pushed it to start direct marketing.



"Slater and Gordon has been the subject of much public comment over a number of years, and perhaps desperate times have called in their minds for desperate measures," he said.

Lawyer Rod Hodgson says the profession did not want claims farming to proliferate in Australia. ( ABC News: Alexandra Blucher )

Slater and Gordon was pushed to the brink of financial collapse by a disastrous $1.2 billion takeover of UK personal injury firm Quindell in 2015.

A rescue deal with its lenders last year resulted in 95 per cent of the company's shares being owned by a group of investors led by US hedge fund Anchorage Capital Partners.

The documents obtained by the ABC reveal that at the same time Slater and Gordon was negotiating that deal, it was also finding new ways to source clients through referral partnerships with a range of "partner" companies.

Lawyers alliance wants claims farming criminalised

Slater and Gordon's expansion into direct marketing comes as authorities around the country take steps to clamp down on the practices.

Last year, the New South Wales government banned paid referrals for traffic injury claims and restricted the types of claims that attract a lump-sum payout.

Mr Hodgson welcomed the wave of reform, but said restricting payouts was a blunt instrument for addressing the problem.

"What happens there is that a baby can disappear with the bath water, or to put it more specifically, people with entirely genuine claims, meritorious claims, deserving of having those rights pursued and their injuries properly compensated miss out because of an attack our people's rights legislatively," he said.

The Australian Lawyers Alliance wants criminal penalties for companies involved in claim farming.

"We as a profession do not regard it as a major problem, it's at the edges," Mr Hodgson said.

"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."

