A major law firm handling motor finance claims has reduced its annual losses but continues to carry substantial liabilities as it waits for thousands of consumer cases to progress.

Manchester-based Consumer Rights Solicitors Ltd reported a pre-tax loss of £6.8 million for the year to August 2025, an improvement on the £10.3 million deficit recorded a year earlier [1].

Turnover increased from around £450,000 to more than £3.5 million, largely due to the recovery of disbursements on cases acquired from other firms.

However, the firm's accounts also illustrate the significant costs involved in financing high-volume consumer litigation while cases can take years to reach a conclusion.

Consumer Rights Solicitors had net liabilities of approximately £18 million, up from £11.3 million, and around £40 million was owed to creditors after more than one year.

Its auditor has highlighted the losses, liabilities and outstanding borrowing as creating a "material uncertainty" that could cast significant doubt on the firm's ability to continue as a going concern.

The firm, meanwhile, says the expected value of its caseload considerably exceeds the costs associated with pursuing those claims.

Motor finance claims firm values case book at £72m

Consumer Rights Solicitors is heavily involved in consumer finance litigation, including car finance claims and historic Plevin cases.

The firm estimated the value of its entire claim book at around £72 million by the end of July 2026.

That figure does not mean £72 million of revenue has been secured.

Much of the firm's work is undertaken under contingent fee arrangements, where payment depends on the outcome of cases. Accounting rules mean that contingent fee work cannot simply be recorded as an asset on the balance sheet to offset the firm's liabilities.

This creates an unusual financial situation for businesses operating large volumes of consumer litigation.

A firm may be funding legal work across thousands of potentially valuable cases while being unable to recognise the expected future fees from those cases as current assets.

How much of the estimated £72 million ultimately becomes revenue will depend on the outcomes of the underlying cases.

Firm secures £25m funding facility at 24% interest

The accounts also show the substantial cost of funding litigation while cases remain unresolved.

Consumer Rights Solicitors secured a £25 million loan facility from litigation funder Katch Fund Solutions in December 2025.

Interest is charged at 24% a year.

That followed an earlier £9 million facility from Katch in October 2024, also carrying annual interest of 24%.

Litigation funding can allow law firms to meet the upfront costs associated with large caseloads before cases generate revenue.

But borrowing at high interest rates also means delays can become expensive.

The longer a case takes to resolve, the longer funding may be required and the greater the potential financing cost.

That issue has become particularly relevant to firms involved in motor finance litigation, where the regulatory and legal landscape has changed repeatedly over the past several years.

Why are motor finance cases taking so long?

The motor finance dispute has developed through regulatory investigations, complaints, court proceedings and the creation of the FCA's Motor Finance Compensation Scheme.

The Supreme Court delivered a major judgment on motor finance commission cases in August 2025 [2].

It rejected the broader argument that car dealers generally owed fiduciary duties to their customers which would automatically make undisclosed commissions unlawful.

However, the Court upheld an unfair relationship finding under the Consumer Credit Act in one of the cases before it.

The FCA subsequently established its industry-wide Motor Finance Compensation Scheme in March 2026 [3].

The scheme covers certain agreements entered into between 6 April 2007 and 1 November 2024 where specified commission arrangements and other circumstances resulted in unfairness.

Around 12.1 million agreements could potentially qualify, according to the FCA, with approximately £7.5 billion in consumer compensation estimated at a 75% participation rate [4].

But parts of the scheme are currently suspended because of legal challenges before the Upper Tribunal [5].

That has created further uncertainty over when compensation will be calculated and paid.

For law firms that have already invested heavily in large portfolios of claims in relation to the wider car finance scandal, the result can be a substantial gap between spending money on cases and potentially receiving fees from successful outcomes.

Consumer Rights Solicitors expects cases to generate future revenue

Consumer Rights Solicitors believes its existing caseload could ultimately produce revenue substantially exceeding the costs of pursuing it.

Director Kavon Hussain told the Law Gazette that the firm had taken steps intended to ensure the viability of its work [6].

The company is also diversifying beyond its existing portfolio of Plevin and motor finance cases.

Its strategy is to remain in consumer litigation over the medium to long term while seeking additional work through a volume introducer for group claims in the shorter term.

This diversification could reduce the firm's dependence on the eventual outcome and timing of its existing consumer finance cases.

Whether its expected case values translate into the anticipated revenue will ultimately depend on how those cases progress.

Auditor highlights uncertainty

Despite the improvement in annual losses, the firm's auditor drew attention to its financial position.

Huw Nicholls of Armstrong Watson highlighted the company's net losses, liabilities and outstanding loans.

According to the auditor's report, those factors indicate a material uncertainty that may cast significant doubt on the company's ability to continue as a going concern.

A going-concern warning does not mean a company is expected to fail.

It means there is significant uncertainty that readers of the accounts should be aware of when assessing whether the business can continue operating and meeting its obligations.

Consumer Rights Solicitors remains an active company and says it has been taking steps to maintain the viability of its business.

Other consumer claims have already generated settlements

Not all of the firm's consumer litigation remains unresolved.

Consumer Rights Solicitors reported a 91% success rate across other financial mis-selling claims.

It said 3,630 of those cases were settled during the year, producing an average payout of £716.

The firm's turnover growth was also largely attributed to recovering disbursements from cases it had taken over from other practices.

Motor finance represents a different challenge because of the scale of the litigation and the continuing regulatory and legal uncertainty.

Court of Appeal decision provided a boost

Consumer Rights Solicitors also has cases being pursued through so-called omnibus proceedings.

These allow multiple individual claims sharing common issues to be included within the same claim form.

In June 2026, the Court of Appeal allowed thousands of motor finance commission claims against several lenders to continue using this arrangement [7].

The decision did not determine whether those consumers had valid car finance compensation claims.

Instead, it concerned the procedural question of whether their cases could be managed together in this way.

Hussain has confirmed that Consumer Rights Solicitors is progressing a number of cases using the omnibus structure.

That provides another possible route through which existing litigation could advance while the FCA car finance compensation process remains affected by separate legal challenges.

What does this tell us about the motor finance claims market?

Consumer Rights Solicitors' accounts provide a useful illustration of the financial model behind some large-scale consumer litigation.

A firm can spend substantial sums investigating and progressing claims long before it knows exactly when, or whether, those cases will generate fees.

That creates particular challenges where thousands of cases are affected by the same unresolved regulatory or legal questions.

It also explains why external litigation funding can play such a significant role.

Funding can provide the capital required to progress cases, but borrowing at rates such as 24% a year creates its own financial pressure if settlements take longer than anticipated.

The Consumer Rights Solicitors figures should not, however, be treated as representative of every solicitor or claims business handling mis-sold car finance complaints.

They relate to one firm's particular caseload, funding arrangements and financial position.

Consumers do not have to use a representative

The financial arrangements between law firms and litigation funders are also separate from a consumer's ability to make a motor finance complaint.

Consumers can complain directly to their lender without paying a representative.

They may alternatively choose to use a solicitor or an FCA-regulated claims management company for professional support, although fees can apply.

The FCA and Solicitors Regulation Authority have separately reminded representatives handling motor finance commission cases to ensure consumers do not end up with multiple firms acting on the same claim and are not charged unfair termination fees.

Consumers considering representation should therefore understand the agreement they are entering into, including how any success fee or other permitted charges would work.

What happens next?

The financial outlook for firms holding large motor finance case portfolios will partly depend on how quickly those cases can move towards resolution.

For Consumer Rights Solicitors, the gap between its current financial position and the value it places on its claims book is substantial.

The firm has cut its annual pre-tax loss and increased turnover, while estimating that its wider claim portfolio could be worth around £72 million.

Against that potential future value sit £18 million of net liabilities, substantial creditor balances and high-cost external funding.

The eventual outcome will depend on whether expected settlements materialise and how long they take.

More broadly, the accounts provide a glimpse into a less visible part of the car finance mis-selling claims market: the significant amount of capital being committed today in anticipation of compensation and legal fees that may not be realised until much later.

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References:

1. Manchester-based Consumer Rights Solicitors Ltd reported a pre-tax loss of £6.8 million for the year to August 2025, an improvement on the £10.3 million deficit recorded a year earlier - https://www.lawgazette.co.uk/news/motor-finance-claims-firm-cuts-losses-pending-predicted-revenue-surge/5127898.article
2. The Supreme Court delivered a major judgment on motor finance commission cases in August 2025 - https://www.supremecourt.uk/cases/press-summary/uksc-2024-0159
3. The FCA subsequently established its industry-wide Motor Finance Compensation Scheme in March 2026 - https://www.fca.org.uk/publications/policy-statements/ps26-3-motor-finance-consumer-redress-scheme
4. Around 12.1 million agreements could potentially qualify, according to the FCA, with approximately £7.5 billion in consumer compensation estimated at a 75% participation rate - https://www.fca.org.uk/publication/policy/ps26-3.pdf
5. parts of the scheme are currently suspended because of legal challenges before the Upper Tribunal - https://www.fca.org.uk/news/statements/motor-finance-scheme-partially-suspended
6. Director Kavon Hussain told the Law Gazette that the firm had taken steps intended to ensure the viability of its work - https://www.lawgazette.co.uk/news/motor-finance-claims-firm-cuts-losses-pending-predicted-revenue-surge/5127898.article
7. In June 2026, the Court of Appeal allowed thousands of motor finance commission claims against several lenders to continue using this arrangement - https://www.cliffordchance.com/insights/resources/blogs/group-litigation-and-class-actions/2026/07/convenience-in-the-driving-seat-court-of-appeal-keeps-5000-motor-finance-claims-together.html