Referral fees don’t go away. I’ll probably be writing later about the latest SRA consultation, but my immediate attention’s been caught by the latest guidance on the subject from the Bar Council’s Professional Practices Committee (PPC).
This guidance reminds barristers about the bar’s rules against referral fees. Much is uncontroversial, but it also suggests that an agreement to accept a fee that is clearly lower ‘than the market rate’ could breach those rules. It’s pretty clear that the aim is to ‘do something’ about the criminal bar’s concerns that some solicitors are inviting criminal barristers to undertake advocacy for less than the ‘bar protocol’ rate.
The Law Society’s understanding of the position is that paying referral fees in legally aided cases breaches the legal aid regulations. However, in cases covered by standard fees or where there is a single advocacy fee to be apportioned between more than one advocate, there is nothing improper in negotiating a fee which differs from the protocol. Accepting a lower rate does not amount to a referral fee.
It seems to me that, in trying to prevent competition on price in this way, the PPC is entering dangerous and arguably protectionist ground.
The guidance is supported by an explanatory note and it’s interesting to see how that document moves from what many would regard as common ground – that referral fees are a bad thing because they put an incentive on referrers to choose the person who pays the highest fee rather than the most suitable for the client – to a position that they threaten the demise of the bar. In particular, the argument seems to go that, by being unable to negotiate a fee, junior barristers will be starved of work.
So it becomes quite difficult to tell whether this is a public interest view or one that aims to protect the fee rates of the junior bar. The two aren’t necessarily the same thing and I’m not sure that this guidance will achieve the latter.
The argument is that there are many barristers in the market competing with each other on quality, so quality should be the sole criterion for solicitors to choose an advocate. But isn’t it pretty trite economics to say that quality isn’t the only criterion in markets and that price plays a part in distinguishing between practitioners? Why shouldn’t a practitioner undercut the rest of the market by offering a low fee, provided the work can be done to an appropriate level? Is it truly improper for a barrister to agree, say, a low standard rate with a firm of solicitors, or the Treasury Solicitor or some other body, because they will guarantee a certain volume of work?
If that’s true, this will have implications for quite a lot of barristers. Indeed, isn’t it usual for junior barristers to get a career because they can undercut the competition? By seeking to limit those barristers to the protocol, the PPC seems to me to be actively inhibiting competition and may achieve the very demise it seeks to prevent.
The note adds that referral fees are commonplace among solicitor advocates. I assume this refers to the negotiating on price that the PPC has defined as a referral fee rather than anything that is prohibited by the regulations – it seems unlikely that such an august body would make allegations of illegality without referring to reputable evidence. I haven’t seen such evidence and the Bar Council hasn’t contacted the Law Society with any.
Many solicitors who themselves are hard hit by the cuts in legal aid will not appreciate the suggestion that they are letting their economic interests cloud their professional duty to their clients. Practice at the criminal bar does not automatically convey a right to work for a particular fee and solicitors are entitled to shop around provided that they do not damage their clients’ interests. The PPC’s comments don’t strike me as a good way of improving relations between the professions.
In fact, they might want to review the guidance again, perhaps without the criminal bar present, to work out exactly what they are trying to achieve.
What is ironic is that the guidance makes clear that fees paid by barrister to their clerk are not prohibited. These are, of course, the oldest referral fees in the profession. I suspect that a number of solicitors and even a few barristers might feel that, in some cases, they have the same pernicious effects as the bar claims for referral fees generally. But they’ve always been here and the bar couldn’t manage without them. So that’s alright.
Mark Stobbs is the Law Society's director of legal policy