Referral fee ban – debate over?

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11 February 2011

Posted by Neil Rose, Editor, Legal Futures

Telephone advice: legal aid savings from referral fees?

I don’t know if I’m one of the last people in the legal world to notice this, but the Ministry of Justice (MoJ) has made it quietly but abundantly clear that it will not be banning referral fees any time soon.

The Legal Services Board’s preliminary view – as expressed in last year’s discussion paper – is that it does not consider there to be a regulatory case to reintroduce a ban on referral fees. However, it conspicuously left open the option for the government to do so on policy grounds.

Whenever it is asked about referral fees, particularly given Lord Justice Jackson’s recommendation that they be banned, the MoJ consistently says it is waiting for the board to come to its conclusion.

That takes us to the proposals to develop the Community Legal Advice (CLA) telephone service as set out in the MoJ’s green paper to reform legal aid (consultation on which closes on Monday) – specifically paragraphs 4.277 to 4.280, which propose to expand the CLA service to include the option for paid-for advice services for clients who call but are ineligible for legal aid.

It says the CLA operator service would discuss with the client the options available to them, explain the charges associated with the paid-for service, and make the relevant referral. The LSC would set out in the relevant tender the requirements in respect of quality standards, maximum rates to be charged, assurances about standards of service for both eligible and non-eligible clients, and so on. “This proposal would enable CLA operators to route non-eligible clients to quality assured paid services seamlessly,” the paper says.

And here comes the kicker: “This approach will ensure that those who are not eligible for legal aid will still be helped to find a source of advice. It could also lead to legal aid fund savings, as it is expected that CLA specialist telephone advice providers could offer a referral fee.”

Well, there we have it. The government can hardly expect to profit from referral fees while not allowing anyone else to, can it? Can it?

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3 Responses to “Referral fee ban – debate over?”

  1. From Neil Rose:

    Brian Rogers of Lewis Hymanson Small left this comment via LinkedIn:

    “Would that do away with the need for CMCs? If you can go to the CLA with your legal problem why go elsewhere, especially when the public’s perception is likely to be that the CLA will be better and backed by the government(?)? If this became a source of good work for solicitors who paid a lower referral fee, why go with CMCs that charge more? Presumably the scheme would be totally compliant with the CMR/Code of Conduct so why would law firms risk doing business with CMCs where there is a high risk of non-compliance and SRA action? Unless I am missing something it seems a no brainer!”

  2. admin on February 11th, 2011 at 10:24 am
  3. It really depends on whether the CLA provider runs the service (and referrals) on public interest (best adviser for the job) or commercial lines (those who pay most get most cases).

    In times of limited funds it’s an idea which – if properly managed – is difficult not to support

  4. Richard Moorhead on February 11th, 2011 at 1:34 pm
  5. Well that’s an interesting thought. The CLA as referrer and a regulated CMC…

  6. Barbara Hamilton-Bruce on February 11th, 2011 at 2:17 pm

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