Is the Law Society Regulation Board really surprised that there are major breaches of the referral fee rules (see (2006) Gazette, 21 September, 1)? Given that one of the first principles we are taught is never to give an undertaking with which we cannot comply, it is strange to find regulation inflicting a rule on us with which we cannot ever guarantee compliance.
While it is straightforward for a firm to notify clients of the existence of a referral fee arrangement, and to ask the broker to undertake to comply with the code, it is nigh on impossible for any firm to obtain this undertaking if the introducer does not want to give it. It is even more difficult to ensure that introducers are complying with the code.
When we asked the Law Society how it felt we might 'ensure compliance', it suggested post-completion questionnaires and random telephone calls. I am extremely surprised that the board found that as many as 39% of firms were 'ensuring compliance'. The only way to ensure compliance is specifically to request a copy letter from the introducer to the client, notifying the client of the fee and countersigned by the client.
Most firms that receive introductions will not want to rock the boat for fear that a provider of fee income would defect to another firm.
We are not empowered to regulate introducers, and we should not be required to impose our standards on other professionals. Imagine the outcry if other professionals sought to impose rules on us. If the Law Society wants to ensure that introducers comply with the code, then it should lobby the introducers' regulators to make compliance with our code part of their professional rules. Until then, firms should only be required clearly to disclose the arrangement to clients.
Cameron Robson, White Rose, Chester
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