30 October 2012

Solicitors putting barristers under increasing pressure to pay referral fees, Bar Council warns

Solicitors are putting barristers under “increasing pressure” to enter into referral fee agreements, to the detriment of clients, the public interest and the junior Bar, the Bar Council has claimed.

In new guidance, the Bar Council’s professional practice committee (PPC) also advised that the provision of junior barristers at discounted rates is capable of amounting to a banned referral fee, and strongly warned chambers against offering a junior member’s services for free or at a discount in return for instructions for more senior barristers.

Both the Bar Council and the Bar Standards Board have long been strident critics of referral fees, and the guidance reflects this position and the ban on paying to procure instructions in the Bar’s code of conduct. The PPC said referral fees threaten to compromise the integrity of those who receive them, and at best limit the client’s choice of advocate. “At worst, they can result in the lay client receiving a substandard service.”

The payment of referral fees is having a “damaging effect upon the viability of practice for younger members of the Bar, particularly where representation is publicly funded”, the PPC argued.

It explained: “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.”

The PPC said the intensifying economic pressure on publicly funded solicitors’ practices, and particularly criminal practices, will increase the drive towards seeking referral fees. “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.”

It said this will also discourage “the brightest and best applicants from coming to the Bar” because pupils typically begin their career many thousands of pounds in debt. “The junior Bar will not only see the quality of its new members diminish, but also its diversity. In time, this will impact upon the quality and diversity of the senior Bar and the judiciary.”

The guidance makes it clear that disguised payments are prohibited. “The PPC takes the view that the provision of junior barristers for a fee clearly below the market rate, or below that prescribed by regulation or subject to an applicable protocol, is capable of amounting to a disguised commission payment…

“The provision of junior barristers at discounted fees of this sort (or even for no fee at all) in return for securing instructions for other members of chambers, particularly more senior members, is also prohibited. Not only does this involve a disguised referral fee, but it also involves a serious abuse of the most vulnerable in the profession.”

 

By Neil Rose

Tags: Bar Council, referral fees