Bar broadside on referral fees ‘confused and self-serving’
The Law Society today rebutted bar claims that solicitors are putting pressure on barristers to enter referral fee arrangements that damage the interests of clients.
Chancery Lane accused the Bar Council of ‘confusing the public interest with barristers’ interests’ in new advice to the bar which the Society said privileges barristers’ earnings above all other considerations.
The spat has arisen over revised guidance on the prohibition of referral fees issued last Friday by the Bar Council’s professional practice committee. This reinforces the bar’s longstanding hostility to referral fees, which it says can limit client choice and ultimately result in a ‘substandard’ service.
The guidance also hits out at the provision of junior barristers at discounted rates, describing the phenomenon as potentially equivalent to a disguised referral fee.
The guidance states: ‘Since the Access to Justice Act 1999, there has been a steady increase in the number of solicitors practising advocacy, whether as solicitor advocates or ‘higher court advocates’ (HCAs), particularly in family and in criminal law. The payment of referral fees between solicitors’ firms and freelance HCAs is now commonplace, particularly in criminal practice, where cross-referrals between solicitors happen regularly.
‘Economic pressure upon publicly funded solicitors’ practices, and particularly criminal practices, will continue to intensify as a result of the further reduction of police station fixed fees in some areas and the proposed introduction of best value tendering.
‘These pressures will increase the drive towards the request for referral fees. Thus solicitors will be incentivised to brief advocates based on economic criteria rather than on which advocate would provide the best representation for the lay client.
‘The Bar Council is aware of the increasing pressure being put upon members of the bar by certain solicitors to enter into referral fee agreements. The payment between solicitors of referral fees and the consequent increased use of solicitor advocates has diverted work away from young practitioners at the family and criminal bars. As a result, young barristers are losing valuable experience at an important stage in their career, are suffering financial hardship and, in crime, are finding difficulty in establishing a Crown court practice.
‘This has affected not only those barristers who are currently at the bar, but is likely to discourage the brightest and best applicants from coming to the bar.’
Mark Stobbs, director of legal policy at the Law Society, commented: ‘Solicitors have a professional obligation to ensure that the advocate chosen is suitable for the client and we have no evidence, other than that of disappointed barristers, to suggest that they are not complying fully with that obligation. The Bar Council’s guidance appears to confuse the public interest with barristers’ interests to gain as much work at as high a fee as possible.’
He added: ‘The Law Society agrees with the Bar Council that referral fees are pernicious. But negotiations over fees, which can result in reduced fees, are not the same as referral fees. It is for individual barristers to decide what rates they are prepared to accept for the work that they are given and the Bar Council’s guidance looks very like an attempt to enforce particular rates for nobody’s benefit but the bar’s.’
The Bar Council later responded to Stobbs’ comments. Chair Michael Todd QC said: ‘The Law Society could not be further from the mark by accusing the Bar Council of “confusing the public interest with barristers’ interests” in relation to the guidance which the Bar Council offers the profession in relation to referral fees.
‘The negotiation, payment and receipt of referral fees are, as Mark Stobbs rightly points out, pernicious, and they are against the public interest. We have made that case constantly and consistently to government, to regulators and to the profession, and we will continue to do so. I invite the Law Society, the Solicitors Regulation Authority and the Bar Standards Board to join with the Bar Council in taking the case for referral fees expressly to be outlawed to the Legal Services Board, government and to the public.
‘They must be stamped out.’
Comments
Bar broadside on referral fees
Kudos to the Law Society for correctly interpreting the
intentions of the Bar on the subject of referral fees.
The Bar cannot dictate to Solicitors, terms they consider suitable
to their economic survival. Period.
The Bar/Referral Fees
The Bar Council's new guidance note on referral fees makes claims as to the negative effects of referral fees on clients and junior barristers. It also makes claims about the legality of some actions relative to the payment or receiving of referral fees. Irrespective of the rights or wrongs of referral fees the Bar Council offers no quantitative evidence to support or prove any of its claims. Perhaps a more informed debate as to why solicitors live and prosper in a commercial environment where referral fees seem, according to the Bar Council, to be rife might point to a solution? After all, what might seem to be a justified attempt to maintain the standards of the Bar could run the risk of accusations of protectionism especially as there is no agreed, established, outcome-based, quantitative QA scheme to measure and compare the standards of practitioner
Bribery Act
As any competent criminal solicitor should realise, a lay client has a reasonable expectation that his solicitor will choose the best available advocate to represent him/her in court.
If in fact, the solicitor chooses the highest bidder instead of the best, then he/she has effected an improper performance of their relevant function, of choice of advocate.
That constitutes an offence under Section 1 of the Bribery Act.
Referral fees breach Unified Criminal Contract
As the new Bar Council Guidance says, the Legal Services Commission’s Unified Contract Standard Terms explicitly prohibit contract-holders from making or receiving any payment (or any other benefit) for the referral or introduction of a client, whether or not the lay client knows of, and consents to, the payment. The Bar Council's view is that the payment or acceptance of a referral fee is also contrary to the Criminal Defence Service (Funding) Order 2007.
Yet some solicitors continue to extract referral fees from counsel, particularly, when an HCA conducts the PCMH, in the form of a high percentage payment from counsel's trial fee which they can easily extract as the whole case fee is paid directly to the solicitor in these circumstances. These 'kickbacks' are wholly unmerited as the solicitor receives a Litigator's Fee for their work and the PCMH fee for the HCA in any event.
There are instances of solicitors demanding referral fees where a self employed counsel conducts the PCMH. In one murder trial, I was instructed by solicitors who wanted a percentage of my trial fee, but became very coy when i enquired as the identity of the Instructed Advocate. Eventually, I found out that a self employed counsel conducted the PCMH. After the trial, the solicitors insisted that I fill in the claim form so that payment of the whole case fee would be made to them. I did not comply and I never paid them. They wrote to demand a percentage of my fees. I replied by asking them how they proposed to comply with he Legal Services Commission’s Unified Contract Standard Terms in respect of such a payment. They never replied or gave me another brief. Sometimes counsel just has to do the right thing.
The CBA is reportedly writing to every criminal chambers to ask if they have ever paid, or currently pay, referral fees. It will be interesting to note any absentees amongst the replies.