Referral fees ban will ‘drive business underground’, says CSC chair

Darren Werth, the Claims Standards Council's chair states;

"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?"

Isn't it obvious Mr Werth? Surely the CMC is the bigger evil. If a solicitor spends half his marketing budget with an advertising company at least the solicitor has the whip hand and control of how his business is marketed. If he spends his money at the cash till of a CMC, the CMC calls the tune - "thankyou but we are increasing our referral fee by £100 per claim next month, take it or leave it" or "we have just been offered £150 more per claim by X and Co, your rivals from round the corner. Thanks for all your good work, but market forces dicate - unless of course you fancy making a counter offer - £200 extra per claim sound reasonable?" or simply "sorry but your face doesn't fit anymore - we will not be sending you any more work."

I worked in the industry for over 25 years - both as a solicitor and owner of an RTA practice, and thereafter as a co-owner of a CMC. I know that this is what happens. CMC's have only themselves to blame if referral fees are banned as is proposed. Greed has taken over. Neither is it an argument to say that "Solicitors don’t market their businesses very well." Perhaps it is time for them to learn. by creating a future (their future not that of CMC's ) in line with a modern commercial world.

As a lawyer, and having spent the last 12 months and not a small amount of money designing and developing a personal injury website to increase personal injury work directly to a solicitor rather than them buying work through a CMC (having already launched a successful no ferreral fee conveyancing site), I was very surprised to find such an apathetic approach by the legal profession, to the point where we are still looking for a partner firm despite no financial commitments whatsoever. The legal profession only has itself to blame for the rise of the CMC and the demise of the practice. At this rate I will be registering with the MoJ and joining the ranks of the 'traffickers in human misery'

What a load of twaddle by those with ideas of what Professional Accident Management Companies act like.

The only success is where a customer is happy at the end of the day.

Any solicitor who has to worry just how much another is paying for cases is a loss to themselves.

At present lesser solicitors have such little standing in their profession that they are offering money up front to Claimants to appoint them....they remain with little quality work. In our area they generally only get referral work from insurers who of course demand large payments and care little about the quality of the solicitor so long as the referred work brings in big earnings!....just the same as motor insurers demand payment from paint manufacturers in order to direct their 'approved Bodyshops' to use the paint manufacturers product....just motor trade tricks in the legal 'once a profession' infected by get rich quick standards.

There are a hundred different ways to by pass any 'ban' and if those with the pretence of morals understood the free market then they would leave well alone.
This may be a bit of a disjointed addition but.......
After all LJ Jackson has given the insurers their best wish list but it will not improve their own internal standards which we all know often breach most FSA Regulations and Guidelines...hence Third Party Capture.

It seems unlikely that insurers will develop their own skill levels beyond ensuring their own call centre kids are indoctrinated by the instructions on their chicken coop desk screens.....

Solicitors and understanding consumers- we still explain to customers what a solicitor is saying in their letter......just a matter of time before the likes of us own and operate our own firms of solicitors albeit acting in the areas of Tesco law initially before the rest becomes ours as the solicitors remain out of date with customer requirements.....after all conveyancing was first....the rest will follow as sure as night follows......or mediation will take over as it should and all will save?

Although my business is solely orientated around helping firms generate there own work, I wonder if as many firms hope, that if referall fees are banned how many potential claimants will actually choose to visit your law firm.

Some firms seem to be under the impression that clients are "choosing" to use a CMC, when in a number of circumstances they are cajoled and coerced into making a claim - where as many people who genuinely do have a claim will not do so. Moreover, how would a potential client choosing a solicitor differentiate your firm from any other?

Solicitors' hands are tied alot by rules 7 & 9 of the COC. CMC's are not. As for MOJ regulation it merely means paying a fee and carrying on regardless. No SRA keeping a keen eye on matters.

Referral fees offer some level of guarantee, an advertising campaign does not. Firms willing to do business like any other business, that is to say with a functioning sales and marketing department better get it right, or the consequences will be disasterous.

You also have to factor in embellished and, dare I say it, fraudelent cases. Is there enough work for everybody? I sincerely hope so.

Oliver Jones
The Legal Marketer

Perhaps banning referral fees will not make much difference to claim industry. Most of fairly reasonalbe size and large CMCs already have their own lawfirms or have started to set up in response to the changes. In this way they will continue operating and run their claims in house. Other CMCs will go underground or merge with large CMCs.

The danger is that these a new breed of CMCs/ lawfirms will be run by non-professionals who are likely to find ways to beat legal system and plague legal profession.