Solicitors will soon be able to pay third parties for introducing new business following a vote by the Law Society Council to lift the ban on referral fees - bringing an end to nearly a decade of dispute over the issue.

The change to the Society's introduction and referral code - which was backed by a 43-34 majority in last month's council meeting - means that solicitors will be allowed to enter into agreements for the introduction of new clients with other businesses such as estate agents, banks and marketing companies.

The new rule, which is subject to approval from the Master of the Rolls, will not apply to legal aid work or any criminal proceedings.

The council has voted down several attempts to relax the ban in recent years.

Council member Phillip Hamer, who proposed the change, argued that the time was right for the ban to be lifted in light of the Clementi review's focus on anti-competitive practices.

'We have a much better chance of surviving in a recognisable form following the Clementi review if we move on this now,' he said.

Deputy Vice-President Kevin Martin also urged council members to vote in favour, as its transparency would make it easier for the Office for the Supervision of Solicitors to enforce the rule.

Speaking after the meeting, Law Society chief executive Janet Paraskeva said the new rule would be 'clear, enforceable and in the public interest' but stressed it would be subject to certain safeguards.

'For example, the introducer must not cold-call clients, must tell the client of the payment and must not influence how the solicitor advises the client,' she said.

Association of Personal Injury Lawyers president David Marshall said he was glad the matter was resolved and backed the built-in client protection measures.

'Clarity was needed on this one way or another,' he said.

'We are not in favour of people paying for referrals, nor against it.

We need a level playing field where solicitors know what the rule is and where it is capable of being enforced.'

But council member Denis Cameron, chairman of the Society's land law and conveyancing committee, complained that a debate on the rule had been cut short and said he was considering tabling a further amendment at the next council meeting stating that solicitors can only accept referrals where the referring party has no interest in the case.

This would exclude estate agents, for example.

Mr Cameron added that lifting the ban could hit conveyancing solicitors hard.

'The margins they are operating under are already tight - how are they supposed to fund the cost of the referral fees?' he demanded.

See Letter "Sharing and caring" (see [2004] Gazette, 8 January, 12)

By Paula Rohan