Referral ban ‘will not reduce costs’
Banning referral fees will harm the legal profession and will have no effect on reducing law firms’ marketing costs, the chair of the Claims Standards Council (CSC) said last week.
Speaking at the CSC annual conference in Manchester, Accident Advice Helpline managing director Darren Werth said it is ‘shocking’ that the Law Society and Lord Justice Jackson want to ban referral fees. ‘It will drive businesses underground,’ he said, creating ‘a future not in line with a modern commercial world’ by ‘legislating against market forces’.
The Legal Services Board’s consumer panel recently commissioned management consultants Charles River Associates to undertake an ‘economic study’ of referral fees. Jackson concluded in his final report on civil litigation costs that referral fees should be banned in personal injury cases, while the Law Society Council voted at the end of last year to press for a ban on referral fees. SRA chief executive Antony Townsend said last week that the SRA ‘supports and is contributing to the cross-sector review of referrals by the LSB’.
Werth said: ‘In any economy where solicitors run businesses for profit, they need referrals. Solicitors don’t market their businesses very well. If a solicitor spends half of his marketing budget with an advertising company and the other half with a claims management company, which is the bigger evil?
‘Abolishing referral fees would have no impact on marketing costs. Without them, there would be far less competition in the marketplace with only large firms surviving. You outsource to the most effective provider, which will most likely be a CMC.
‘It’s ridiculous to single out referral fees as some kind of problem. Jackson fails to recognise the millions of pounds that CMCs have spent on promoting access to justice. There has been no government-led campaign on this.’
Comments
The banning of referral fees
The banning of referral fees would result in redundancies for many conveyancing solicitors, legal executives and other non qualified personnel.
Refereral Fees
I do not understand this argument ( I am not surprised that you remain anonymous in the circumstances).
X number of conveyancing jobs (per month or year) will still need to be done by someone, regardless of whether or not referral fees are banned. The problem is the potential conflict of interest that could arise between the client the agent and the conveyancer.
The law society has set down regulations to govern this issue, but I am far from convinced that all solicitors (let alone conveyancers) follow these regulations, or that the agents understand them.
Referral fees are effectively pricing high street solicitors out of the conveyancing market. As a consequence it is those solicitors who stand to benefit most from the banning of referral fees.
Referral Fees
I agree it is likely that some large factory firms are likely to be affected by referral fees being banned. And that will likely lead to redundancies. However the quality and experience of those people being made redundant, though it is hardly a nice posiion to be in, their being lost to the profession will not harm it.
Personal and very eye opening, frightening and unhappy experience of working at a factory firm tells me that if they individually, and Firms like them, are hit by this, it will be a considerable plus for the legal profession. The conveyancing jobs that they get purely as a result of financial clout rather than quality and professionalism, will go to the Firms who will complete the job with the proper amount of expertise and customer service, but who at the moment cannot compete with the "pile it high, do it cheap" brigade. So ultmately in the long term the winner will be the client (who lest we forget is the paying customer here and therefore the most important person in the transaction).
And also the Firms who go for quailty rather than quantity, expertise rather than cheap and nasty, will prosper, and those not prepared to put their house in order and invest in good quality knowledgeable staff, will ultimately pay the penalty.
The reputation of the profession will increase, whilst the incompetent and inefficient fall by the wayside. I fail to see how anyone can see that as being a bad thing? Except those with a vested interest of course!
Lovely jubbly
Bosh bosh bosh, money in the pot, a few deals in the pipeline and off to Lazarote with the Mrs. Our conveyancers are available 24 hours and we get £x squid a pop.......sorted and geezer.
banning referral fees
Banning referral fees will not change a thing.
All you need to do is advertise on the Agent's website at an agreed rate to compensate for not paying referral fees. Its already going on now to avoid the need for disclosure on referral fees.
Referral fees are a red herring.
THE SOLUTION: Regulate who should do conveyancing - if the Government are serious about improving the conveyancing process (that HIPs have so obviously failed to achieve), and these conveyor belt 'dial 1 for dumb and 2 for even dumber' factories will go under.
OK there will be job loses from these factories but two highly attractive benefits result:
1. lower PII cover for us all
2. a surplus of people who can be available to help get refuse collection back to weekly
Cost of conveyancing
I did not think this arguement was about costs but about professionalism and the independence of the profession. I thought it was about the client feeling confident that their interest are being out first. Silly me - what was I thinking?
Itsa kinda magic
"Conveyancing for £99, referral fee £50, £49 x 50 transactions per month =£2450 x 12 months =
£29,400 less indemnity insurance, staff costs, marketing costs.........add high net worth client........
£25,000 per annum X 3 school fees..............less f oops.........?