Claim farming - NSW

Claim farming is the practice of giving or receiving consideration for a claim referral or potential claim referral or soliciting or inducing a claimant to make a claim for personal injury. This practice is now banned under the Claim Farming Practices Prohibition Act 2025 (the Act) which came into effect on 9 April 2025.

When the Act applies

The Act applies to all personal injury claims as defined in s 11 of the Civil Liability Act 2002, including intentional torts. Some personal injury claims are not covered, including dust diseases claims, claims relating to tobacco use, workers compensation, and motor vehicle accident claims.

Criminal consequences

The Act makes breaches of its provisions a criminal offence with a maximum penalty of $55,000. Section 5 makes it an offence to contact a person:

• to solicit them to make a claim for personal injury damages; or
• to refer them to a third party to provide services in relation to a claim; or
• using a third party to contact a person for the above purposes,

if the person making the contact receives a fee or other benefit, or agrees or expects to receive a fee or other benefit, or asks that someone else receive a fee or other benefit because of the contact. Section 6 makes it an offence to:

• provide or receive a fee or other benefit for the referral of a claim in civil proceedings; or
• enter into agreements or arrangements relating to referrals of claims for a fee or other benefit.

Professional consequences

Conduct contrary to the Act by a lawyer can also amount to unsatisfactory professional conduct or professional misconduct irrespective of whether the lawyer has been convicted of an offence under the Act. Section 165B of the Legal Profession Uniform Law Application Act 2014, which sets out the conduct capable of amounting to unsatisfactory professional conduct or professional misconduct, was amended to include contraventions of the Act.

Costs consequences

The Act further inserts s 61A to the Legal Profession Uniform Law Application Act 2014 which provides that if a lawyer breaches the Act and is convicted, legal costs cannot be charged or recovered for the claim and any costs that have been paid must immediately be refunded. The costs can be recovered as a debt by the client.

Exceptions

Some exceptions apply to the application of the Act. It is not an offence if a lawyer acting for a claimant refers the matter to another person providing a service for the claim, or the claim is transferred because the law practice is sold. There is also an exception for advertising, marketing, or promoting a legal practice: s 7.

Publication updates

The By Lawyers Personal Injury (NSW) guides have been updated accordingly.