The Law Society today rebutted bar claims that solicitors are putting pressure on barristers to enter referral fee arrangements that damage the interests of clients.

Chancery Lane accused the Bar Council of ‘confusing the public interest with barristers’ interests’ in new advice to the bar which the Society said privileges barristers’ earnings above all other considerations.

The spat has arisen over revised guidance on the prohibition of referral fees issued last Friday by the Bar Council’s professional practice committee. This reinforces the bar’s longstanding hostility to referral fees, which it says can limit client choice and ultimately result in a ‘substandard’ service.

The guidance also hits out at the provision of junior barristers at discounted rates, describing the phenomenon as potentially equivalent to a disguised referral fee.

The guidance states: ‘Since the Access to Justice Act 1999, there has been a steady increase in the number of solicitors practising advocacy, whether as solicitor advocates or ‘higher court advocates’ (HCAs), particularly in family and in criminal law. The payment of referral fees between solicitors’ firms and freelance HCAs is now commonplace, particularly in criminal practice, where cross-referrals between solicitors happen regularly.

‘Economic pressure upon publicly funded solicitors’ practices, and particularly criminal practices, will continue to intensify as a result of the further reduction of police station fixed fees in some areas and the proposed introduction of best value tendering.

‘These pressures will increase the drive towards the request for referral fees. Thus solicitors will be incentivised to brief advocates based on economic criteria rather than on which advocate would provide the best representation for the lay client.

‘The Bar Council is aware of the increasing pressure being put upon members of the bar by certain solicitors to enter into referral fee agreements. The payment between solicitors of referral fees and the consequent increased use of solicitor advocates has diverted work away from young practitioners at the family and criminal bars. As a result, young barristers are losing valuable experience at an important stage in their career, are suffering financial hardship and, in crime, are finding difficulty in establishing a Crown court practice.

‘This has affected not only those barristers who are currently at the bar, but is likely to discourage the brightest and best applicants from coming to the bar.’

Mark Stobbs, director of legal policy at the Law Society, commented: ‘Solicitors have a professional obligation to ensure that the advocate chosen is suitable for the client and we have no evidence, other than that of disappointed barristers, to suggest that they are not complying fully with that obligation. The Bar Council’s guidance appears to confuse the public interest with barristers’ interests to gain as much work at as high a fee as possible.’

He added: ‘The Law Society agrees with the Bar Council that referral fees are pernicious. But negotiations over fees, which can result in reduced fees, are not the same as referral fees. It is for individual barristers to decide what rates they are prepared to accept for the work that they are given and the Bar Council’s guidance looks very like an attempt to enforce particular rates for nobody’s benefit but the bar’s.’

The Bar Council later responded to Stobbs’ comments. Chair Michael Todd QC said: ‘The Law Society could not be further from the mark by accusing the Bar Council of "confusing the public interest with barristers’ interests" in relation to the guidance which the Bar Council offers the profession in relation to referral fees.

‘The negotiation, payment and receipt of referral fees are, as Mark Stobbs rightly points out, pernicious, and they are against the public interest. We have made that case constantly and consistently to government, to regulators and to the profession, and we will continue to do so. I invite the Law Society, the Solicitors Regulation Authority and the Bar Standards Board to join with the Bar Council in taking the case for referral fees expressly to be outlawed to the Legal Services Board, government and to the public.

‘They must be stamped out.’