SRA: Language of referral fee guidance was clear, tribunal said
Two personal injury lawyers who tried to blame “unhelpful” ethics guidance from the Solicitors Regulation Authority (SRA) for paying banned referral fees have been fined by a tribunal.
The Solicitors Disciplinary Tribunal (SDT) said the onus was on Parvez Anwar and Umran Aziz to ensure they complied with LASPO and the SRA’s referral fee guidance.
The tribunal found “it had been written in language that was perfectly clear” and there was no evidence that the solicitors had written to the SRA for clarification or further help.
The pair, who both qualified in 2008 and set up Manchester firm Zen Law in 2013, told the SDT “they could not do their own marketing” and instead used claims management companies (CMCs), with their relationship with three of them under scrutiny before the tribunal.
It recorded: “[They] told the tribunal that the SRA’s ethics guidance was unhelpful in that it did not give examples of how firms working within a referral arrangement would have to adapt to be compliant.
“[They said] other firms felt the same way and that the SRA itself did not appear to have a full understanding of how the industry operated.”
The solicitors claimed that their staff had been trained to follow the “correct procedures” and there may have been “occasional lapses” but this was “not the norm”.
However, counsel for the SRA told the tribunal that Mr Anwar had admitted receiving client information before clients had contacted the firm, and that payments were fixed and were ‘per case’.
He said Mr Anwar had accepted in an interview with the SRA that “the payments were for recommendations ‘and nothing else’”, meaning that “no genuine services” were being provided.
The tribunal referred to an invoice from one of the CMCs which had four columns – one for the client names, one for the number of cases, one headed ‘cost per case’ and the other ‘amount’.
“There was no description of any work undertaken, let alone marketing. The cost per case was £400 in each instance.”
The SDT described Mr Anwar’s evidence, adopted by Mr Aziz, as “evasive and contradictory”.
The tribunal said: “The respondents had attempted to resile from their earlier admissions and in doing so had contradicted the account given in their interview, correspondence and witness statements.
“The respondents’ evidence was contradicted by the documentary evidence in respect of the level of fees, the calculation of fees and the basis upon which the fees were charged”.
Mr Anwar and Mr Aziz were found to have failed to act with integrity in paying prohibited referral fees to a minimum value of £7,560, over a period of four years.
The SDT found that the men had also failed to provide clients with accurate information “regarding the financial or other interests which the introducers had in referring clients to the firm”.
Further, they permitted or made incorrect payments from client account to office account on accounts of costs and from client account for disbursements when there were insufficient funds, causing a minimum cash shortage of just over £2,000.
They were also found to have failed to post bills and paid disbursements to office account, causing a credit in office account of over £87,000.
The SDT said Mr Anwar failed to adequately carry out his role as COFA and Mr Aziz as COLP.
The tribunal concluded that breaches of the accounts rules were “the result of sloppiness”, the LASPO breaches were not done “with specific intent” and there had been no loss to individual clients.
The solicitors were fined £10,000 each and ordered to pay £11,800 in costs on a joint and several basis.
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