referral fees – commentary from Blake Lapthorn's Personal
Injury team
Blake Lapthorn welcomes the news that referral fees are going to
be outlawed by the Government.
Claire Howard, partner in the firm's Personal Injury
team in Southampton, said: "I am
concerned at suggestions that it is lawyers who want to keep
referral fees or are responsible for them. In fact that is not
the case."
The referral fees have stimulated the growth
of many new arrangements and companies to find lawyers for clients
and have created a market in supplying legal cases. This may
have appeared to offer greater choice for clients but the effect
has been to place many intermediaries in the structure of legal
services adding to costs and actually reducing clients' freedom of
choice. Whilst many companies involved are very professional
and responsible there have unfortunately been situations where it
seems that referral fees are giving rise to market forces
with the potential to stoke up litigation, adding to the costs of
dealing with cases and reducing client choice.
Lawyers do not sell information to anyone to
deal with a compensation claim; it is the lawyers who have to pay
the referral fee either to a claims management company or an
insurer for conducting cases referred to them. It is these
payments that increase our costs of conducting litigation on behalf
of clients. Under existing arrangements lawyers inform their
clients of the referral fees paid and any arrangements they have
with insurance companies. Whilst lawyers may advertise on
television, they are not allowed to do cold calling or send
unsolicited texts to anyone. It is a breach of our conduct
rules to do so. Claims management companies are regulated by
the Ministry of Justice. They have to adhere to industry
standards and not cold call anyone or make contact with a potential
client unless they have specifically agreed to their details being
passed on and being contacted.
Concluded Howard: "That clients should have
freedom of choice in selecting the lawyers who represent them is in
my view a fundamental principle of justice. This ensures trust
and transparency in the relationship between clients and their
representatives and ensures that they always act in clients' best
interests. We in Blake Lapthorn therefore welcome what we see
as a change which will emphasise these core principles."
