Solicitors demanding referral fees could be ‘named and shamed’ by bar
Naming and shaming solicitors who seek referral fees for passing work onto barristers has been mooted by the Bar Standards Board in a bid stamp out the practice.
The Bar Council has already taken advice on whether referral fees amount to bribes, though that advice has not been made public.
While the bar’s code of conduct prohibits commission payments for work, its rules do allow for advertising and publicity. But a BSB meeting last week heard that some solicitors ask for referral fees when passing work to barristers, and that some barristers are looking into forming an entity regulated by the Solicitors Regulation Authority in order to be able to take fees.
BSB vice chair Geoffrey Nice QC noted an example of a barrister who had a previously booked case taken away because they were not prepared to hand over 20% of the fee to the solicitor.
Bar Council chair Michael Todd QC said: ‘Payments occur across the board, but are particularly egregious in publicly funded work.’ He said that the Bar Council regards such payments as a crime and will take all steps to stamp them out. Nice said that the effect of referral fees is that the lay client may not get the best barrister for the case, but rather the barrister who is prepared to give away part of their fee.
A report for the Legal Services Board consumer panel in 2010 found that there was no evidence referral fees had caused consumer detriment in either the conveyancing or personal injury market. But the government is set to introduce legislation that would ban referral fees in personal injury cases next April.
BSB chair Lady Deech suggested putting together a list of solicitors who take referral fees.
Agreeing, barrister member Patricia Robertson QC said: ‘If we know who the solicitors are, we could name and shame them. Solicitors have no business offering referral fees knowing full well that it’s a breach of the bar’s code of conduct.’
Robertson highlighted the conflict between the regulatory regimes of the SRA, which permits referral fees and the BSB, which does not.
She said: ‘The SRA is in a difficult position as it’s become the established practice on their side of the fence.’ But she suggested further engagement with the SRA to require clearer disclosure about such payments.
An SRA spokesman told the Gazette that if a solicitor were to request a referral fee in the knowledge that it would put counsel in breach of their regulatory obligations, the solicitor would be at risk of breaching their code of conduct, specifically of failing to act with integrity and taking unfair advantage of a third party.
But he said that it is primarily the duty of counsel to ensure they do not do anything that would put them in breach of their code of conduct. He said: ‘There is, however, a wider point in that any referral a solicitor makes to a third party (such as counsel) must be in a client’s best interests, and not merely because the third party is prepared to make a payment to the solicitor for the referral.’
The solicitor, he said, should properly account to the client for any financial benefit they receive as a result of the client’s instructions - and pass on to the client savings generated through the referral fee.
The Legal Services Commission said its contract with solicitors does not allow the acceptance or payment of referral fees in publicly funded cases. A spokesman warned: ‘We carry out regular audits to ensure firms are contract-compliant, and if we find evidence of someone accepting or paying referral fees, we can take action.’