Ban on paying for work to be enforced

Solicitors who pay for work in breach of the introduction and referral code have been put on notice that they need to change their arrangements to comply or face action from the Law Society.

The warning follows the decision of the Society's ruling council last week to retain the ban on paying for introductions and referrals.

For the second time this year, the council voted narrowly against abolishing the code and replacing it with a system in which any payments are disclosed to the client.

Personal injury and conveyancing are the main areas affected by the code.

Later, Andrew Holroyd, chairman of the standards board, said: 'In the light of the council decision, the standards board will come back to the council in the spring with a rule which clarifies the ban so that it can be properly enforced.

'This may well affect some existing referral schemes.

Solicitors, therefore, have a short window of time to ensure that any arrangement they have for the referral of work will comply in the future.'

Several council members told the meeting that, as former President Michael Napier put it, 'this is a horse that's bolted'.

However, opponents expressed concern over solicitors' independence if the ban were removed.

Mr Holroyd told the council that the code has 'fallen into disrepute'.

He said the current position was 'unworkable', and 'unacceptable' to many in the profession.

The paper before the council said that problems with interpreting the current code had led to mixed messages to the profession, with many solicitors ignoring it.

It said that if abolition were not approved, the rule would be reworded and clarified to apply to all payments, or other inducements, to introducers, direct or indirect.

'This would catch many of the payments currently being made to introducers by solicitors, including "administration fees" and "marketing fees", which many solicitors (and introducers) do not believe are subject to the current ban,' it said, predicting that 'many solicitors' firms would find themselves in breach' and may also challenge the rule.

Patrick Allen, president of the Association of Personal Injury Lawyers and its representative on the council, said his group would oppose the Society enforcing the rule.

'These schemes are in everyday operation and are a legitimate way of generating business,' he said.

'They have developed naturally [over the past ten years] from the relaxation of the ban on advertising.'

He suggested that the council could take a different approach to a blanket ban by agreeing a specific carve-out for personal injury work.

Others have also mooted this.

Neil Rose