Claim farming banned in South Australia – legislation update

On 30 October 2025, the Statutes Amendment (Claim Farming) Act 2025 (SA) (Act) received royal assent. The Act amends the Summary Offences Act 1953 (SA) (SOA) and the Legal Practitioners Act 1981 (SA) (LPA) and will make it an offence to engage in claim farming in personal injury claims.

What is claim farming?

Claim farming refers to the practice of making unsolicited approaches to people who have suffered injury and persuading them to commence a compensation claim. The personal information of the injured person is often collected by third parties and referred to law firms or claims managers in exchange for financial benefit.

The issue of claim farming gained attention following the Royal Commission into Institutional Responses to Child Sexual Abuse which revealed that a number of victims/survivors were cold called by businesses and law firms encouraging them to commence compensation claims.

Changes to the Summary Offences Act

The Act inserts Part 8A titled "Personal injury claim farming" into the SOA which contains two new offences. Section 42A makes it an offence to give or receive a benefit in exchange for a claim referral and Section 42B makes it an offence to approach or contact a person to solicit or induce them to make a claim.

The following conduct will not constitute claim farming under the SOA:

• Contacting a person at their request.
• If no benefit is received, and there was no intention to receive any benefit, from the claim referral.
• Contacting a person that is an existing or former client.
• Contacting a person believed to be eligible to participate in a class action.

The new offences will not prevent law firms from generally advertising their legal services.

The maximum penalty for contravening sections 42A or 42B is $50,000. If an associate of a law practice is convicted of claim farming, the law practice is not entitled to recover any fees, costs or disbursements that relate to the farmed claim. The law practice must also repay any amount received back to the person it was received from.

Changes to the Legal Practitioners Act

The amendment makes claim farming capable of constituting unsatisfactory professional conduct or professional misconduct. Disciplinary action under the LPA may be commenced against a legal practitioner irrespective of whether they have been convicted of an offence under the SOA.

Implications

The purpose of the Act is to prevent the exploitation of persons who have suffered injury in South Australia.

If a legal practitioner pays for a claim referral or makes unsolicited contact with an injured person to encourage them to make a claim, they may face disciplinary action under the LPA in addition to prosecution for contravening the SOA. The potential financial consequences faced by legal practitioners is a strong indication that claim farming is contrary to ethical standards.

The changes may lead to a reduction in the number of claims that are handled by insurers - particularly exaggerated or false personal injury claims which are sometimes generated by claims farming.

Key takeaways

• At this stage, the changes have not come into effect. They will come into effect once proclaimed.
• It will soon be an offence to contact a person to solicit them to make a claim and give or receive a benefit in exchange for a claim referral.
• General advertising remains permissible, but targeting and making unsolicited contact with potential claimants may constitute an offence.
• If a legal practitioner engages in claim farming, they may face disciplinary action irrespective of whether they have been convicted of an offence under the SOA.
• A legal practitioner convicted of claim farming must refund all amounts received and cannot recover fees for work associated with the farmed claim.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.