16 December 2011

Bar Council accuses solicitors over referral fee pressure and “abuse”

Solicitors are putting barristers under “increasing pressure” to enter into referral fee arrangements, with some trying to take “improper advantage” of advocates by abusing the ‘one case, one fee’ rules in criminal work, the Bar Council has complained.

Issuing guidance to emphasise that barristers are forbidden from paying referral fees to procure instructions and may also fall foul of the Bribery Act 2010, the Bar Council’s professional practice committee (PPC) also warned that referral fees are having a “damaging effect on the viability of practice” for younger members of the Bar, with potential long-term consequences for the profession.

The guidance said that since the Access to Justice Act 1999, there has been a steady increase in the number of solicitors practising advocacy, whether as solicitor-advocates or higher court advocates (HCAs), particularly in family and in criminal law.

“The payment of referral fees between solicitors’ firms and freelance HCAs is now commonplace, particularly in criminal practice, where cross-referrals between solicitors happen regularly.”

It said growing economic pressure upon publicly funded solicitors’ practices, and particularly criminal firms, will “increase the drive towards the request for referral fees”.

The PPC continued: “Thus solicitors will be incentivised to brief advocates based on economic criteria rather than on which advocate would provide the best representation for the lay client. The Bar Council is aware of the increasing pressure being put upon members of the Bar by certain solicitors to enter into referral fee agreements.

“The payment between solicitors of referral fees and the consequent increased use of solicitor-advocates has diverted work away from young practitioners at the family and criminal Bars.

“As a result, young barristers are losing valuable experience at an important stage in their career, are suffering financial hardship and, in crime, are finding difficulty in establishing a crown court practice. This has affected not only those barristers who are currently at the Bar, but is likely to discourage the brightest and best applicants from coming to the Bar.”

The guidance said that accepting an improperly low proportion of the fee paid where the solicitor is the “instructed advocate” in a case amounts to the payment of a referral fee by a barrister.

It said some solicitors are trying to use the ‘one case, one fee’ rules for their “own financial advantage”.

It explained: “Under those rules, all fees in the case are paid by the Legal Services Commission to the ‘instructed advocate’ for him to distribute to other advocates who also appear to represent the defendant. The instructed advocate is supposed to be the advocate with primary responsibility for the case…

“But some solicitors with higher court rights of audience seek to take improper advantage of the deeming provision, which deems the advocate who attends the PCMH [plea and case management hearing] to be the instructed advocate. They appear at the PCMH in order to be deemed to be the instructed advocate and thereby to gain control over the distribution of the advocacy fee for the case, but with no intention of conducting the trial.

“Instead, they exploit their position as fund-holder to retain as much of the fee as possible, seeking to negotiate down the payments made to any advocate (typically counsel) from outside their firm who appears at the trial. The PPC considers this an abuse of the system.”

Tags: Bar Council, Barristers, referral fees