By Philip Hoult


Solicitors should not be banned unilaterally from paying referral fees while such payments can still be requested from other providers of legal services, the Law Society Council has said.



Adopting a policy statement on the controversial issue at its November meeting last week, the council said that if referral fees are to remain, 'there should be strict rules... aimed at reinforcing a solicitor's independence and duty to their client, which should be robustly enforced by the Solicitors Regulation Authority (SRA)'.



The Law Society should also make representations to the government, the statement said, 'as referral fees have the potential to limit access to justice and reduce the quality of legal services'. Further research was needed into whether referral fees have a place in the legal services market, it added.



The statement comes a month before the SRA is due to receive a final report on its enforcement and information campaign, and decide what further action to take. The SRA said in September that compliance was improving, but there were also serious concerns over some firms' dependency on introducers.



The council's statement followed Law Society research that found unease among both payers and non-payers of referral fees about their use and impact on competition. But many had changed their business structures and felt they would be negatively impacted if a ban was reintroduced.



The report revealed 'mixed views' about reintroducing a ban. Solicitors in the personal injury market are split 50:50, largely along the lines of payers and non-payers. In residential conveyancing, 'there is a strong view that the ban should be reintroduced - even among some of the firms currently paying introducers'.



Law Society chief executive Desmond Hudson said: 'We believe that we have adopted a pragmatic approach which recognises the need for a level playing field for all providers of legal services, while still upholding the core values of the profession. The impact of referral fees on the market for legal services is not a matter for solicitors to address in isolation.'



Richard Barnett, senior partner of conveyancer Barnetts and a council member, said: 'It is essential that solicitors are allowed to compete fairly and equally in the marketplace.'



However, Fraser Whitehead, council member and partner at Russell Jones & Walker, warned that there remain 'major concerns' with the practical operation of referral fees.