Law firm directors who continued to flout the referral fee ban for four years after it was imposed have each been fined £10,000 by the Solicitors Disciplinary Tribunal.
Parvez Anwar and Umran Aziz, from Manchester personal injury firm Zen Solicitors, claimed that Solicitors Regulation Authority guidance on referral fees was unhelpful in explaining what they were permitted to do. They insisted payments made to various claims management companies were marketing fees and to cover other expenses incurred in running those businesses.
But the tribunal heard evidence that one set of invoices referred to the ‘cost per case’ as being £400, and that commercial agreements being drawn up ‘did not reflect the reality’ of what was going on.
The tribunal said the pair’s evidence was 'evasive and contradictory’, and questioned their responses to investigors in respect of the level of fees, the calculation of fees and the basis upon which they were charged.
Their explanation of paying different fees of £400 and £800, namely that it reflected the different types of marketing activity they were funding, was 'unpersuasive’ and not supported by any evidence.
The tribunal said it was satisfied that Anwar and Aziz caused or permitted the payments of prohibited referral fees in breach of the Legal Aid, Sentencing and Punishment of Offenders Act 2012. This continued until August 2017. Both solicitors were found to have lacked integrity.
The pair had stated that payments were completely reasonable and within the bounds of regulations. They suggested many other firms paid similar fees and denied these were prohibited fees with reference to the SRA ethics guidance.
They told the tribunal the SRA’s guidance was ‘unhelpful’ in that it did not give examples of how firms working within a referral arrangement would have to adapt to comply. Other firms apparently felt the same way and there was a sense that the SRA 'did not fully understand' how the personal injury market worked.
Anwar and Aziz were ordered to jointly pay £11,800 in costs.