Fixed fees to be 'renegotiated’ after referral ban
Claimant lawyers’ legal fees under the Road Traffic Accident portal scheme will have to be renegotiated as a result of the forthcoming ban on referral fees, the Ministry of Justice confirmed to the Gazette today.
An MoJ spokesman said the fees, which were calculated including an allowance for referral fees paid by claimants to obtain work, would have to be revisited.
He said the MoJ hoped that claimant and defendant lawyers would be able to reach a deal through negotiations brokered by a third party, as they had when the fixed fees were originally agreed.
However, he said that if this did not work, the MoJ itself was prepared to 'facilitate’ an agreement.
The spokesman said that work had not yet begun in relation to the fixed fee rates, as the MoJ was still at the stage of defining what is meant by a referral fee.
Comments
I trust that the Law Society
I trust that the Law Society shall support Claimant personal injury solicitors in this process. There must be a full and proper analysis of the alternative acquisition costs that lawyers would necessarily incur should referral fees be banned. The acquisition of personal claims via television and radio costs more per converted claim than the average referral fee. Is it therefore suggested that the fixed fees shall increase to take this into account?
Fixed fees will go down, not up
Hi Philip,
I can tell you that insurers are pushing for fixed fees to go down, not up - but those to whom I have spoken do acknowledge that some allowance will need to be made for the cost to claimant lawyers of bringing in clients in other ways, once referral fees are no longer permitted.
The claimant side will need to start crunching the numbers and come up with some compelling arguments as to why the fees should not be reduced by too much.
Rachel
Referral fees
This assumes that everyone buys in RTA work. My understanding was that the portal fees agreed were based on a fair payment for the work done and not the cost of generating the work. That was a commercial decision for firms to make. This link to charges and referral fees seems to be a response to recent spin by ABI.
Who says that the portal
Who says that the portal costs include any amount for referral fees? WHere does this nonsense come from?
Referral fees are not recoverable in assessed costs and there is no suggestion that they were included in predictive costs so why would insurers have agreed to include them in the portal costs? Isn't this just another myth being put about by insurers to get what they want?
The portal costs are too low for the work to be done by qualified lawyers. To reduce them will ensure that RTA claimants only ever deal with unqualified and inexperienced paralegals who are cheap enough to make the work economic. It may be "Access to justice" but it isn't just or fair to claimants.
Hi Beth, What the MoJ have
Hi Beth,
What the MoJ have told me is that the cost of referral fees was factored in to the level of fixed fees agreed for RTA portal claims, and so this will now have to be renegotiated.
Rachel
fixed fees should go up if referral fees are banned
We currently pay referral fees because the company we use are able to run a v sophisticated operation using TV and online; we are unable to market successfully ourselves at a lower fee. if referral fees were criminalised (this doen't really seem likely as there are too many ways around it) we would end up having to pay a lot more to market outselves; so the fixed fees would have to go up
How much do Aviva etc pay for advertising and wouldnt our insurance policies be a lot cheaper if they didnt advertise?
I think you will al be
I think you will al be (pleaseantly) surprised to learn that a typical CMC's net margins are around 28%.
Given a typical £700 referral fee this means that it costs £504 to attract and process a case.
Given that the lawyers will take over the processing element i.e. form filling, site photos etc, I would suspect that the true advertising fee is closer to £200 per matter.
This being the case, if the MOJ were to reduce the fixed fee by £500 it would leave us to spend the excess on advertising.
For 1,000 cases per annum that would leave a spend of £200,000 which should attract a reasonable volume
Jackson and "reforms"
You all seem to be missing a rather big point.
Your traditional Partner run high street businesses will close after the introduction of ABS in any event (it won't take Jackson to do that). That's because the CMC's will simply take the RTA Portal work in-house (or rather into their own "litigation-factories" set up by their own businessmen employing call centre kids), because that course will yield a higher return than selling the cases they have farmed.
If you want to carry on working as a "Solicitor" brush up on your probate skills - there are an increasing number of elderly people in England and Wales, many with dementia!
Who in their right mind would
Who in their right mind would want to remain a solicitor?
Fixed fees to be 'renegotiated' after referral fee ban
The MoJ seems to be suffering from amnesia in relation to the RTA portal negotiations.
APIL was closely involved in the negotiations and I can confirm categorically that the issue of referral fees had no part in the ultimate outcome. We will be raising this matter with the Ministry direct.
In fact, the figures were based on a combination of hourly rates and the time needed to deal with cases in the portal. The final figures were the result of an agreement between the parties, including, of course, the insurers.
The point that many solicitors don’t even pay referral fees has already been made in an earlier response. What hasn’t been mentioned is that, although still really in its early days, the RTA claims process is working well enough for insurers to be able to say they are already making savings on cases which go through the system. So the real question is: why aren't premiums coming down?
Exactly
"So the real question is: why aren't premiums coming down?"
Exactly. This question will be asked even more so once the insurers have stopped paying out referral fees and (so the logic goes) the number of claims drop, never mind if they then reduce the MOJ fixed costs.
All these issues were never about driving down insurance premiums, they are about increasing the insurers profit margin.
Glad to hear APIL will be raising this at the top level.
Predictive Costs Regime in 2003
Everyone knows that in 2003 referral fees were not around and the PCR calculation then was calculated without any knowledge of the same. The portal system we have now is also based on the same facts.
Do you honestly believe the insurers all sat round a table and said "its only fair that we include £700.00 towards a referral fee as we don't wont Solicitors out of pocket". The whole situation is getting out of control, we should all close down and simply say no more RTA claims. The insurers simply want the insurance renewals monies every year but dont want to pay out.
I am getting fed up of the hardship stories from insurers, I could walk in to every Solicitors office throughout England and Wales and find claims which could have settled without the need for litigation and save millions of pounds for the insurance companies every single year.
Insurers, Bankers, Mafia is
Insurers, Bankers, Mafia is there really any difference?