The Solicitors Regulation Authority’s (SRA) recent guidance on the referral fee ban is “extremely unhelpful” and only aimed at extremes of behaviour, regulatory expert Andrew Hopper QC has argued.
Mr Hopper – who has been widely consulted on compliance with the ban – was mainly critical of the warning over agreeing with an introducer to deduct money from clients’ damages. He said solicitors should not worry about doing this so long as they have client consent.
Only if they are asked to hand over all of the client’s damages should there be a warning bell, he advised last week’s Motor Accident Solicitors Society annual conference in London.
“The idea that a client isn’t going to get all of his damages is not problematic, although there have been times during the history of the SRA when they have seemed to think that any deductions from damages is bad,” he said.
“But this plainly is wrong, particularly in the present post-LASPO climate. So this guidance is probably aimed at extremes of behaviour.”
He said that unlike the SRA’s initial guidance – which he praised for saying “what we could do rather than what we couldn’t” – the new guidance “relapses to old SRA” and talked “in general terms about concerns rather than giving specific useful examples”.
Mr Hopper said he was advising clients against offering inducements, despite SRA guidance in June indicating that solicitors can do so.
“The SRA is not saying ‘do it’ – they’ve done what the SRA does and issued unhelpful guidance about it, which is entirely consistent with outcomes-focused regulation… It’s a sort of warning thing which says ‘we’re not saying you can’t but we really don’t like it’.”
Firms were likely to be pursued under the general principles rather than a specific rule, he suggested.
Mr Hopper also highlighted a danger for solicitors in taking leads from data mining companies that come from people who have ticked a box allowing partners of a company to contact them, so-called Data Protection Act opt-ins. He said the Claims Management Regulator had determined that this was “not informed consent for the purposes of inviting a call in relation to legal business” and so constituted a cold call.