Labour turns attention to making referral fees a criminal offence and halving portal fees in LASPO battle

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By Legal Futures

12 March 2012

Parliament: Labour eyeing more defeats of government

Making the ban on paying referral fees for personal injury work a criminal offence is among a range of changes to part 2 of the Legal Aid, Sentencing and Punishment of Offenders Bill that will be put to the House of Lords this week, after peers inflicted six defeats on the government over its legal aid reforms.

With the government under pressure following last week’s votes, Labour frontbenchers Lord Bach and Lord Beecham, a solicitor, have laid an amendment calling for the maximum penalty for breaching the ban to be two years in prison.

Other amendments relating to referral fees include a bid by former House of Commons speaker Lord Martin to exclude payments made to trade unions from the ban, and changes suggested by Conservative solicitor Lord Hunt to close loopholes, such as ensuring that the ban covers payments that are not made directly to the referrer.

Liberal Democrat Lord Clement-Jones is seeking to extend the ban to payments made to provide marketing services by unsolicited SMS text message, unsolicited telephone calls or any marketing in a hospital or other primary treatment centre.

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Lords Bach and Beecham also want to halve the fees payable to claimant solicitors under the RTA portal, taking them to £200 for stage 1, £400 for stage 2 and £125 for stage 3.

Lord Beecham is trying to introduce the 10% rise in damages to the face of the bill, and to limit the exceptio

ns to qualified one-way costs-shifting to claims that are fraudulent or so unreasonable that they were or could have been struck out.

There will be attempts to carve out overseas human rights, industrial disease, insolvency, and environmental cases from the scrapping of recoverability of success fees and after-the-event (ATE) insurance premiums.

Lord Lester of Herne Hill QC and former Labour deputy prime minister Lord Prescott have laid an amendment on defamation and privacy cases that would allow recoverability of a success fee of up to 50% and an ATE premium where the litigation would not have been commenced but for the conditional fee agreement; the winning party’s base costs, success fee and ATE premium are proportionate to the remedy claimed; and it is in the interests of justice for the losing party to pay.

Alternatively a success fee of more than 50% and ATE would be recoverable if the losing party was responsible for the base costs being disproportionate.

Further changes sought by LibDem peer Lord Thomas would introduce statutory regulation of third-party litigation funding and of third-party capture by insurance companies.

The first two days of the bill’s report stage last week saw peers vote to retain legal aid for welfare benefit appeals, all victims of domestic violence, and medical reports in clinical negligence cases. However, the government narrowly survived the vote to bring clinical negligence as a whole back into the scope of legal aid. It is likely to argue in the Commons that the measures are financial in nature, meaning the Commons can override the amendments.

The report stage resumes today with more votes expected first on bringing areas of work back into the scope of legal aid before attention turns to the Jackson reforms.

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