Nice little earner

With the Law Society of England and Wales set to review the relaxation of the rules for referral fees, the issue is as contentious as ever. For the last ten months, solicitors have been allowed to pay referral fees, provided they explain the situation to their clients and the arrangement does not compromise the independence of their advice to their clients.

The review will include information from many interested parties, with the results going to the standards board and then to the full council in May for a vote on whether the rule should remain as it is, whether it should be modified or whether the original ban should be reinstated. The issue is highly contentious, with its detractors maintaining that such a relaxation will, in the words of Kerry Underwood, "… lead to the destruction of the English legal profession. At the moment, referral fees are regarded as a cottage industry, whereby high street law firms pay for personal injury and conveyancing referrals. However, they are paying too much for cases which is biting into profits.

"But, if the lifting of the ban stays, cases will become commodities to an even greater extent and the big players - the banks and the insurance companies - will come in and buy up all the profitable work and sub it out to solicitors. That will allow non-lawyers to control the flow of work."

Those arguing in favour of abandoning the rule against referral feel that the rule was widely flouted and difficult to police; solicitors were also disadvantaged because other providers of legal services could pay referral fees.

Full article in the Law Gazette