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.’
Comments
Barristers -be careful not to bite the hand that feeds you
Whilst I am not advocating that barristers should pay referral fees, barristers do clearly want to have their cake and eat it.
Firstly, the biggest challenge for most law firms is getting in enough of the right quality of work. This cost real money – whether it's web related marketing, telemarketing, advertising or inviting clients to events. Barristers however get their share of the lucrative resulting work completely free – all solicitors get in return for most barristers is, perhaps, an invite to an annual drinks party.
And remember,at the same time, many of these barristers are looking to get involved marketing directly for criminal law or proposing to take clients directly, without the need of an inconvenient solicitor.
My advice to the bar in general – be careful not to bite the hand that feeds you i.e. us solicitors.
Referral Fees paya by Solicitors should breach ethics too!
I wholly support the Bar's position on a ban on referral.
I wish the Ministry of Justice would outlaw it too - both directly and indirectly in all parts of the regulated profession !
20 years ago, the Bar invited their solicitors to good days out at F1 or Epsom racing etc.
Solicitors did the same for Clients too.
There are too many parasitic relationships in the business now.
We should have a single code of conduct covering all consumer/business facing legal services.
The Bar is pretty sane already because you can so easily show around.
We get referrals from the Chambers we use and it is an undiscussed quid-pro-quo for using them.
The biggest challenge for most law firms is getting in enough of the right quality of work. This cost real money – whether it's web related marketing, telemarketing, advertising or inviting clients to events.
It certainly isn't true that barristers get their share of the lucrative resulting work completely free – whilst some solicitors get only an invite to an annual drinks party, valued ones get wined and dined and invited to luxury events where they meet potential contacts - which in turn generate litigation and advice needs which go back to the same chambers.
In our view, it is the referral fees that mess up the quid pro-quo.
I do however agree that barristers looking to get involved in direct access should be treated differently as they're direct competition without the need for the excessively expensive insurance from the SRA's pool or the increasing and excessive red tape from the SRA.
There should be a single pool of insurers for all legal providers whether MoJ regulated, SRA Regulated or Bar Regulated.
I agree
I think it is utterly shameful that there are Solicitors prepared to appear at the first hearing, become the Instructed Advocate and then sell on the case for a share of the entire fee to a barrister. It is disgraceful and goes against the Solicitor's obligation to instruct the best advocate for the client.
It is also the case that there are Solicitors who will pay clients a share of the fee to be instructed and to encourage others to instruct them. Sometimes these fees are disguised as payments to the defendant for work done.
I remember years ago at a SAHCA event being told by one Advocate how he had been approached by a "broker" who could pass on all sorts of major cases for a share of the fees. This advocate declined-but he knew there were plenty of others willing to sup with the devil.
No doubt such activity happens through greed and through the certain knowledge that the SRA is even less effective and therefore less frightening that the FSA.
A recent series of events at Newcastle Crown Court about the transfer of legal aid raised serious concerns ignored by the Court and by Counsel in equal measure.
Perhaps even worse are the solicitors who lie to and decieve people at Court so that they are instructed ahead of the Duty.
The SRA has no fear factor to dissuade those tempted to stary from straying.
A solicitor HCA is perfectly
A solicitor HCA is perfectly at liberty to instruct Counsel at a fee agreed between both parties, according to LSC advice; indeed this was encouraged by them as an intended consequence of the scheme
Rather than the Bar getting
Rather than the Bar getting all uppity at the Solicitors who apparently ask for these 'criminal' payments - if they are illegal then why the hell isn't the Bar Council striking off ALL BARRISTERS who have paid them?
Answers please Baroness Deech and Mr Todd QC...
Bribes
There is one case pending at the BSB with two charges relating to the payment of referral fees to a solicitor. A similar case was listed on 17 July 2012, but mysteriously disappeared from the BSB site without any record of the charge not being upheld or adjourned!
I had one solicitor attempt to extract 50% of my murder brief fee. When I queried the identity of the Instructed Advocate, I was told: 'your instructing solicitor is Mr x'. The IA turned out to be a fellow junior and no fee was ever paid to the solicitor.
The Instructed Advocate should be the trial advocate who is familiar with the evidential and procedural requirements at the PCMH. There are too many HCA's doing PCMH's who never do trials but are just there to ensure the solicitor retains control of all the graduated fees and is in a position to pressurise counsel's clerk to accept trial briefs for less than counsel's proper brief fee. All this at a time when both CPS and graduated fees have been cut.
The Bar Council should have fought this erosion from the beginning. If we had responded with a tenth of the direct action mounted by the farmers over a 2p cut in the price of milk, we would not be in the subservient and financially precarious position we are in today.
Solicitors requiring barristers' referal fees
The practice of solicitors requiring barristers to pay referral fees is shabby to put it at its highest. I don't think I need set out the reasons because I think that both the public and most reasonable solicitors would regard this as undesirable.
However, a solicitor as a fiduciary, is under a professional obligation to disclose any referral fee to his client and pay it to the client unless the client agrees to his keeping it. Possibly some may negative this in their terms of business.
But if they do not, and do not disclose the payment to their clients and account to the client, that conduct would be a breach of fiduciary duty. I can see good arguements that this would contravene principles 1, 2, 3, 4,6 & 7 of the Code of Conduct. Breaching 6 princples out of 10 in one go is not bad.
Time for a warning shot from the SRA I think. This sort of this is certainly not in the public interest.
It has to be said that the very fact that this pracitce has apparantly become common is a measure of how far down the slippery slope the solicitors' branch of the profession has travelled and it is not edifying.
John Gossage, solicitor.
Referral fees
Best policy: to ban ALL referral fees, inc. between solicitors (e.g. for conveyancing work) and between them/others (e.g. where Estate Agent bribes or is bribed to refer conveyancing work).
At my firm, our invariable house rule is that we do not pay (and we do not receive) any referral fees. "Secret commissions" are a breach of any principal/agent relationship- so when/why did some solicitors conveniently choose to 'forget' this?
Clients must be reassured that we are wholly disinterested parties!
Ban all such fees
Our policy on paying out referral fees has always been "we never pay or accept referral fees or commission". Makes life so much easier and I don't have to worry about an inadvertant breach of the rules around them.
I suspect that IFAs started the rot in some of our colleagues. I've been offered commission, paid for "holidays" and told "you're mad, (large) firm X is making thousands".
That said, isn't the Bar rule a bit odd given that as more and more barristers join law firms (Ok, ABSs) and share fees that is not much different? If it is the secret nature of them that's the problem, then make sure they have to be open.
Looks to me like the SRA will
Looks to me like the SRA will once again expand its field of
influence. The SRA will be peddling fast to do their way or else.
Who regulates the regulator? Not a whisper was heard.
When two organisation within the Justice system cannot
get their act together what confidence does that breed for mere mortals.?
Referral fees and integrity of profession
Payment of referral fees by barristers to solicitors for referring them legal work and Acceptance of fees by the solicitors is a serious debatable issues and It demands a thorough discussion and debate among all the legal professionals.
Whereas the SRA code of conduct 2011 mandates that independence and integrity of the profession should be maintained. It casts duty upon the professionals to act in the best interests of their clients, provide a proper standard of service to their clients and behave in a way that maintains the trust the public places in the profession.
On the other hand chapter 9 deals with the issue of fee sharing and referrals. It casts a duty to protect the best interests of their clients while making arrangements of fees sharing and referrals. Chapter 9 describes how to keep your independence and integrity when dealing with issues of fee sharing.
Now the debatable issue is whether both the principles can be dealt with by a solicitor in all situations arising during his practice carrier. No hard and fast rule exist to determine the effectiveness of the system.
I may have misunderstood by I
I may have misunderstood by I thought nominating a HCA as instructed advocate and then negotiating a division of the brief fee was and is perfectly proper.The brief fee is carved up in chambers by counsel in any event.And before the Bar get all high and mighty about acting in the best interests of the client let's consider all those cases where briefed counsel becomes unavailable two days before the trial because of a six week trial he/she "is absolutely tied to".....
Solicitors requiring barristers referral fees
Interesting debate throwns out a few issues :
It is time for The Bar to stop acting like caged animals in their attack on solicitors and instead establish why this issue has arisen . It is not about solicitors greed.
Solicitors who approach defendants passng themselves off as duty solicitor at courts from Highbury to Hendon deserve investigating. Solicitors who pay fixers deserve investigating; Chambers that send pupils to the magistrates' court for next to nothing on the basis that solicitors send the breifs to senior tennants also deserve investigating , as do the clerks who attend auctions for cases.
For many years self employed consultants have attached themselves to solicitors firms, as a quid pro quo for running their practice and duties from the firm as well as using other resources avaialble, they have shared a percentage of any fees billed with that firm, it is a perfectly legitimate practice
In this brave new world of ABS there is no reason why a member of the bar with a decent practice, who decides that their clerk is actually not providing any value other than collecting a percentage of the fee and that chambers rent is simply a waste of much needed income, should be prevented from entering into an arrangement with a solicitors practice . Barristers' clerks have been a huge drain on public funds when to paraphrase Max Hill QC in his attack on solicitors, they are mere facilitators and intermediatries, who no longer add ay value to the practice of many. Who can blame those members of the bar that seek to bypass the employment of clerks.
If a client instructs the firm because of the working relationship with the barrister , or the solicitor advises the client that there is a wider pool of barristers from which s/he can choose , there cannot be any prejudice to the client and any share of the fee covers the overheads that would have otherwise covered clerks fees and chambers rent.
Naming and shaming solicitors who seek referral fees
When I entered Articles in 1958 it was common practice to pay a barrister a 'Retainer' so that in the event of proceedings he/she would not accept instructions to act against your client. In the 1960s the Bar decided that, 'this was not a good thing,' and the practice was discontinued much to the regret of barristers and solicitors. The retainer was non refundable; it was usually less than £10.
Referral Fee Free Zone
Members of the CBA (John Cooper QC and myself) launched a 'Referral Fee Free Zone' yesterday for Chambers to show their public opposition to bribery.