Lifting referral fee ban will give green light to “least ethical” solicitors

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15 June 2015

Referral fees: money flying out of the public purse?

Referral fees: money flying out of the public purse?

Ending the ban on referral fees in legal aid cases risks approving the practices of some of the solicitors’ profession’s “least ethical and least professional members”, barristers have claimed.

In an uncompromising response to a Solicitors Regulation Authority consultation on whether it should lift the ban, the Criminal Bar Association said “the payment of referral fees is unethical, against the public interest, and ought to be wholly outlawed”.

It continued: “Such payments have no place in publicly funded work and are an improper use of public funds: they do not represent value for money, and are not payments for legal services. They exist solely to benefit solicitors, who use them to trade cases without giving proper consideration to the interests of their clients.

“The CBA is concerned that the SRA thinks it is appropriate even to consult on this issue, since (in our view) the principled case against referral fees cannot sensibly be disputed. The use of referral fees risks giving approval to the practices of some its least ethical and least professional members.

“We invite the SRA to give serious consideration to banning all payments and receipts of referral fees of all types, irrespective of the category of payer or recipient, in all publicly funded work.”

The CBA argued that given the tight margins in criminal defence work, the “inevitable consequence” of permitting referral fees to be paid would be a reduction in the quality of the service provided.

It would also lead to “increased demands” for the payment of referral fees at other stages in the provision of legal services, such as solicitors demanding their payment by advocates.

“The CBA is aware, anecdotally (because no one has as yet blown the whistle), that instructing solicitors have demanded payments from counsel to secure instructions in better paid legal aid cases.”

The response was more cryptic in relation the SRA consultation’s statement that “some people allege that referral fees are already being paid directly or indirectly, for example, to acquire advocacy cases or to ‘swap’ multi-handed cases”.

The CBA said: “If the SRA is serious about rooting out improper behaviour, it should simply dip sample multi-handed cases across the nation. Of course, there will be many cases where referrals and recommendations are made entirely properly.

“However, we suspect that any careful investigation would also reveal many examples where firms of solicitors become involved that lack any reasonable connection to place or client, or indeed any particular or specialist expertise. To the question ‘why was such a firm instructed?’, there may be no easy answer.”

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