Legal practices

Written by Georgia Durham

Key developments in 2025

In 2025 the rapid adoption of AI by lawyers has led to notable risks particularly in the submission of non-existent legal citations in court documents. Two cases - Ayinde and Al-Haroun - highlighted the dangers of relying on AI-generated research without proper verification. In each case the court reported the lawyers involved to their regulator. More recently in Ndaryiyumvire v Birmingham City University a firm was penalised with a wasted costs order after submitting fictitious authorities resulting in the claim being struck out. These events underline the risk of regulatory action, wasted costs orders, and potential claims against lawyers and their insurers.

Meanwhile, the number of high-volume low-value consumer claims has increased significantly. In Vanquis Bank v TMS Legal a lender claimed that TMS caused it loss by unlawful means through breaching its duties to its clients (who had borrowed from the lender) by pursuing thousands of meritless claims which were submitted recklessly and indiscriminately. The lender argued that TMS' aim was to enrich itself through carrying out minimal work and submitting claims without assessing whether they were properly arguable in the hope that some would be successful and it would achieve a fee. The lender's economic loss was a virtually certain consequence of that business model and TMS knew that to be the case even though its aim was not to cause the lender economic loss. The court refused TMS' application to strike the case out. The unusual circumstances highlight the widening risk for insurers as lawyers develop new business models.

High volume consumer claims businesses often rely on unqualified staff to carry out the work at a low cost. This approach has been called into question by the recent Mazur decision where the court considered what constitutes the conduct of litigation and whether it was unlawful for unqualified employees to undertake certain activities even under the supervision of a qualified person.

Only those who are authorised (including SRA-regulated solicitors) or exempt (such as litigants in person) are entitled to conduct litigation under the Legal Services Act 2007. The judge concluded that employees can support authorised solicitors conducting litigation but are not entitled to conduct the litigation themselves either under the supervision of an authorised individual or by virtue of the firm's authorisation. The question of whether a person is conducting litigation is one of fact and degree in every case and the substance of what they were doing must prevail over form.

The judgment has prompted concerns about the validity of litigation steps taken by unqualified staff, leading to costs challenges and the risk of professional claims if clients are adversely affected.

What to look out for in 2026

CILEX has been granted permission to appeal the Mazur decision any many firms will hope to receive clarity from the Court of Appeal next year.

The SRA is prioritising higher professional standards to restore confidence in legal services. This has been prompted by misconduct cases such as the Post Office Horizon scandal. It plans to strengthen continuing competence requirements between November 2025 and October 2026 with a consultation anticipated soon. It is also aiming to improve the quality and timeliness of its investigations. 

Separately, HM Treasury announced that AML supervision for law firms will transfer to the FCA with a consultation in November 2025 and the transition expected after 2026. This shift to a rules-based regime may increase compliance and investigation risks for law firms and may prompt some to seek enhanced investigations cost cover from insurers.