New South Wales takes legislative aim at “Claims Farming” practices
Published on June 6, 2025 by Matthew Forshaw
9 April 2025 signalled the commencement of the NSW Government’s attempts to curb the practice known in the legal industry as “claims farming”, with assent given to the Claim Farming Practices Prohibition Act 2025 (NSW) (the Act).
Claims farming, also known as claims harvesting, is a practice where third-party entities solicit individuals who may have legal claims—usually personal injury claims—and then sell these leads to law firms. It has long been criticised as a predatory and unethical business model that exploits vulnerable individuals for commercial gain.
NSW Attorney General Michael Daley stated:
“The NSW Government has legislated to put a stop to the insidious practice of claim farming that exploits the trauma of vulnerable people. The predatory practices can worsen the trauma and distress experienced by victim-survivors. No one should be harassed or intimidated into making a civil compensation claim which may not be in their best interests.”
The issue gained significant media attention recently following a series of raids across NSW and Queensland, which led to seven arrests over an alleged sexual abuse claim farming scheme. As part of the police investigation, a search warrant was also executed at a prominent Sydney law firm, highlighting the seriousness with which authorities are now pursuing these matters.
Key provisions of the Act
The Act makes it a criminal offence for a person to:
- Contact a potential claimant to solicit them to make a claim in circumstances where that person or a third party receives, agrees to receive, or expects to receive a fee or other benefit as a result of the contact.
- Receive, agree to receive, or expect to receive a fee or benefit for referring a claim to another person, or arranging for a third party to receive a benefit for such a referral.
- Provide, agree to provide, or arrange to provide a fee or benefit to another person in exchange for the referral of a claim.
In effect, both those “farming” the claims and those paying to receive the referrals—most often, law firms—would now be committing criminal offences. This represents a major shift, as the legislation now imposes a clear duty on the recipient of the information. Previously, if a person or law firm was unaware that a claim may have been farmed or fraudulently induced, there was little risk in accepting the referral. That is no longer the case.
Professional and financial consequences
The Act also amends the Legal Profession Uniform Law Application Act 2014 to prevent a law practice or its associates from recovering legal costs for work done on a claim if that claim is connected to a conviction under the new Act.
Further, any contravention of the legislation may be considered unsatisfactory professional conduct or professional misconduct, even if a lawyer has not been criminally convicted. This opens the door to serious disciplinary action, including fines, suspension, or even removal from the profession.
Scope and exceptions
It is important to note that the Act is not retrospective, meaning any conduct that occurred prior to 9 April 2025 is not prosecutable under this legislation. However, if such conduct was fraudulent in nature, prosecution may still be possible under the Crimes Act 1900 (NSW).
The legislation does allow for broad exceptions, particularly around lawful advertising by individuals or legal practices. Firms may still promote their services, provided this is done in accordance with accepted professional and ethical guidelines.
Looking ahead
The introduction of the Claim Farming Practices Prohibition Act 2025 marks a strong legislative stance by the NSW Government against exploitative practices that have plagued the personal injury sector. By criminalising both the farming of claims and the purchase of referrals, and by attaching professional consequences for those involved, the Act aims to restore integrity to the claims process and protect individuals from coercion and manipulation.
While the Act does not apply retrospectively, its deterrent effect is expected to reshape how personal injury work is sourced and managed in NSW going forward. As investigations continue and further allegations come to light, this legislation may prove to be just the first step in a broader regulatory crackdown.
Please note that this article does not constitute legal advice. If you are seeking professional advice on any legal matters, you can contact Carroll & O’Dea Lawyers on 1800 059 278 or via our Contact Page and one of our lawyers will be able to assist you. If you or a loved one have been injured, use our Personal injury Claim Check now.
Disclosure and important note: This article is based on our own legal research and thinking. Some of its content has been generated with the assistance of artificial intelligence. The authors have checked and approved this article, including the AI generated content, for publication.
