The Lord Chancellor has moved to tackle Britain's growing compensationculture, announcing that "ambulance-chasing" claims management companies are to be regulated by the Government.
Lord Falconer of Thoroton QC said he had been " disappointed" by results of an attempt by the industry to introduce self-regulation.
The companies have been criticised for encouraging spurious compensation claims and for their hard-sell tactics.
Lord Falconer said: "I believe the time has come to take clear and firm action. So I can announce today that we will legislate on claims managers.
"We will use the law to regulate their activities."
The industry's Claims Standards Council was set up last year as a " serious attempt" at a shake-up, but only a "small proportion" of companies had joined the body, said Lord Falconer.
"This is disappointing - bad news for consumers and bad news for society," he said. "Voluntary self-regulation has a role, but obviously we cannot rely on it. Some statutory teeth are needed."
He added that there should be a frontline regulatory body overseen by the new Legal Services Board, which is already set to be created to reform the way solicitors and barristers are regulated.
Lord Falconer said the Government supported "real claims dealing with genuine problems" but was opposed to "misplaced claims on wrongheaded issues".
Lord Falconer told a conference in London, organised by the Health and Safety Executive: "The notion that people can 'have a go' is hindering organisations from going about their normal business.
"Some people, wrongly, think the law has shifted into a new territory - a territory that favours spurious claims."
He criticised the way socalled "claims farmers" used advertising and highlighted the example of a firm of personal-injury solicitors which had been allowed to advertise on a police-accident report form. Lord Falconer described such tactics as "wholly unacceptable".
"I do not want to see public services - whether that's a poster in a hospital waiting room or an advert on a police accident form - used as a means to encourage spurious claims," he said. "The quantity and quality of much of the personal injury advertising we see on our TV screens, hear on the radio and read in the newspapers is, quite simply, unacceptable."
Janet Paraskeva, chief executive of the Law Society welcomed the announcement.
"Claims managers involved in misleading and aggressive marketing will only be deterred by tough penalties," she said. "The distasteful activities of some claims managers has damaged the confidence of consumers in the legal-services market. We hope regulation will stop claims management companies pressurising people into making unviable claims."