An auction website where solicitors who make the highest bid win the right to take on a case is already generating business, the Gazette has learned. The backers of Legalbid.co.uk said their model is no worse – and, in some cases, better – than other referral arrangements in the market.

Legalbid is run by Northern Accident Solutions, a regulated claims management company. It auctions off mainly personal injury (PI) cases, with road traffic claims starting at £350 to £400.

Denise Kitchener, chief executive of the Association of Personal Injury Lawyers, said: ‘The concept of bidding on personal injury cases in this way is at best distasteful and means injured people are being treated like consumer goods, rather than vulnerable individuals.

‘We understand the demands and pressures on PI lawyers to bring in cases but, while the use of referrals is a regulated activity, this approach is akin to bidding online for a car and detracts attention from the fact that we are dealing with seriously injured people.’

Tony Goff, chairman of the Motor Accident Solicitors Society, said: ‘Bidding for referrals clearly offends against good taste but it does not, it appears, offend against Ministry of Justice or Solicitors Regulation Authority (SRA) rules.’

James Molloy, sales and marketing manager of leading PI firm McKeowns, argued that the client's best interests were not served by selecting a law firm purely on the basis of its willingness to outbid another. ‘Inflated acquisition costs eat directly into a firm's resource for handling cases, and a line must be drawn,’ he said.

Robert Kennedy, Legalbid’s sales manager, said the site allows solicitors to acquire work in their area and specialism – as opposed to the more random distribution of some big work introducers – as and when they are able to handle them. Unlike other introducers, no other commitments are required; for example, solicitors do not have to agree to use a particular insurance product or funding line. ‘It’s just another way of doing it,’ he said. ‘It’s not us who have opened up the sale of PI work.’

An SRA spokesman said: ‘New methods of acquiring business may look very tempting in the current climate. However, they should always be approached with caution. Solicitors should ensure they are compliant with rule 9 [on referrals].’