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Caution issued on recovery agents, says the Department of Justice

The Department of Justice warns the public to beware of touting activities by recovery agents advertising their services in helping clients handle claims for accident compensation on a "no win, no charge" basis.

It warned today such activities can constitute offences of champerty and maintenance, and there is concern the interest of the victims of personal injury cases may be jeopardised as their legal rights to compensation may not be fully protected.

The caution was issued today after Police arrested 21 people for champerty and maintenance offences across Hong Kong July 3, charging two with conspiracy to commit maintenance, champerty and conspiracy to commit champerty.

The department said people injured in accidents, including employees injured at work and traffic accident victims, should seek proper legal advice from solicitors or the Legal Aid, Labour or Social Welfare Departments.

In their advertisements the recovery agents claim they will help injured people pursue claims for a fee chargeable only when they are successful in recovering damages. However, pursuant to agreements, the victims would have to pay the agents a substantial portion of the compensation obtained from the defendants.

Unlawfully maintaining or sharing the profits of legal proceedings can be a crime subject to jail terms and fines.

A new announcement of public interest will be broadcast on all television and radio stations from tomorrow to remind people to be aware of these unlawful activities.

Illegal Recovery Agents are Targeted by the Police with 3 Arrested

3rd July, 2008, HONG KONG

Efforts have ascalated on combating the illegal activities carried on by unscrupulous recovery agents.

Critics have on numerous occasions expressed serious concern on the activities of recovery agents in Hong Kong. These recovery agents operate under the "no win, no fee" purported pledge. Many are in the disguise of non-profit making bodies.

They appeal to injuried workers and traffic accident victims because they demand no legal fees from them. In some cases, the agent or a related party even provides high interest rate loans o victims to meet their daily expenses before a case is settled. By the time of settlement, the interests incurred will have taken away a substantial part of the compensation.

At the same time, the agent charges a substantial portion of damages recovered as high as 30%. Concern was expressed that recovery agents is easily driven to early settlement for lesser work to be done and because of such ill motive, resulting in a lower amount of compensation ignorant to the victims.

According to this issue of Legal Aid Council newsletter, the Government has produced a radio API which is ready to be launched. The TV API will be completed very soon. Besides and most importantly, police are investigating 9 cases on recovery agents and 3 arrests have been made.