Vanquis v TMS Legal: A new (tortious) frontier?

Those following developments in the world of volume litigation – mass claims brought by claimant law firms, particularly against financial services organisations – will have noted with interest the High Court’s decision in Vanquis v TMS Legal earlier this year. The judgment rejected TMS’ application for summary judgment and/or strike out, allowing Vanquis – a bank – to pursue its claim in unlawful means conspiracy against TMS, a law firm which had advanced tens of thousands of allegedly unmeritorious claims against Vanquis.

Whilst we await further as the case proceeds to trial, we look at why this is important for those facing, or indeed funding, volume litigation.

The case

Vanquis is a provider of consumer credit, specialising in “second chance” lending to those with poor credit histories. TMS Legal is an SRA-regulated firm specialising in pursuing claims for irresponsible lending, acting for consumers on “no win, no fee” (CFA) terms.

Vanquis is pursuing a claim for unlawful means conspiracy against TMS, alleging that it was inundated with about 33,000 claims to the Financial Ombudsman Service (FOS) from consumers represented by TMS for mis-selling of credit products. Many of those claims were, Vanquis alleges, not properly arguable and had not been adequately assessed by TMS, having been handled by “unqualified staff with minimal supervision”. Over 83% of the claims were rejected by the FOS, withdrawn, or closed. However, where the FOS has received more than three complaints against the same lender in the same financial year, the lender must pay the FOS a fee (currently £650 per complaint) – regardless of outcome. The claims also affected Vanquis’ ability to deal with its customers since, following usual industry practice, it suspended lending where complaints had been raised.

Vanquis alleges TMS pursued the claims recklessly, indiscriminately, and in breach of TMS’ obligations to its clients – and seeks to recover its losses suffered as a result.

TMS applied to the Court to strike out Vanquis’s claim (including on the grounds that it disclosed no reasonable grounds for bringing the claim) and/or summary judgment (on the grounds that Vanquis had no real prospect of success).

Unlawful means conspiracy

Whilst unlawful means conspiracy is an established tort, its application to claims against law firms acting for claimants is uncharted territory.

The Judge acknowledged that whilst the facts of the case were novel, Vanquis could apply these “well-established principles to a new factual pattern”. Vanquis could “only stand a chance of succeeding on egregious facts”, but this “would be an example of egregious conduct by TMS” if Vanquis could make out its case at trial.

The Court held that Vanquis’ claim for unlawful means conspiracy was properly arguable on its pleaded case, alleging that TMS had:

i) Engaged in a number of unlawful acts against, and independently actionable by, a third party – TMS had breached their contractual and/or fiduciary duties to their clients when advising them in pursuing unmeritorious claims against Vanquis.

ii) Interfered with the actions of that third party (TMS’ clients) with which it had an economic interest – Vanquis’ ability to deal with its customers, in particular in having to suspend lending in response to the complaints, as a result of TMS pursuing the claims.

iii) Intended to cause loss by use of the unlawful means – TMS intended to cause loss to Vanquis as a consequence of pursuing the claims (in that loss to Vanquis was a “virtually certain consequence” of TMS’s actions and TMS knew this to be the case).

iv) Caused a loss – TMS had caused Vanquis to incur costs in defending the claims (and possibly other losses, including loss of profit from customers).

The case can now proceed to trial, although we understand that TMS has applied for permission to appeal the decision.

Burges Salmon comment

Vanquis concerns volume litigation being pursued in the financial services sector, one of a number of industries which has experienced an explosion of volume litigation in recent years.

The decision means that solicitors and claims management companies representing claimants in volume litigation could be liable for losses suffered by the defendant, where they know (or ought to know) that the claims being pursued are not properly arguable.

This case could be the first of many – the SRA having reported last month that it is investigating 76 law firms for their management of volume consumer claims¹, including claims for data breaches, diesel emissions, flight delays, housing disrepair and cavity wall insulation.

That legal representatives were taking a risk in pursuing volume financial claims on behalf of a wide range of claimants has been known for some time – the SRA published guidance² to firms in 2024 highlighting concerns about “low quality and/or inaccurate claims” being pursued, and issuing specific guidance on the need to consider the merits and advise each client on a case-by-case basis.

But until now, firms (and their clients) pursuing such claims in the small claims court (generally those worth up to £10,000) may have believed they had a relatively “free hit” – largely insulated from the risk of adverse outcomes if claims failed, given the general rule that they would not be liable for a defendant’s costs (absent unreasonable conduct).

This interim decision will give firms focusing on volume litigation pause for thought. Whether i) Vanquis can successfully make out its case at trial or ii) this opens the floodgates for similar claims remains to be seen, but the message is clear – firms which do not meet their duties to their own clients (of whom there might be tens of thousands) when pursuing volume litigation are exposing themselves to risk. That risk adds to a picture in which many bulk claims firms are facing regulatory action and/or claims by funders and insurers which stem from poor management of claims.

This article is the first in a series which will follow over the coming months on volume litigation, including further updates on Vanquis (including the outcome of TMS’ application for permission to appeal this decision) and a number of other key cases in this rapidly developing (and expanding) area.

Burges Salmon’s Dispute Resolution team is dedicated to achieving successful outcomes for our clients, focusing on resolving your disputes swiftly and effectively. We prioritise outcomes, not just process, in providing strategic and commercial advice.

If you would like to discuss any of the issues raised in this article, or the potential impact of the decision in Vanquis, then please get in touch with us below.