The Law Society Council called last week for a regulatory impact assessment to be carried out by its next meeting in July on the effect of reinstating the ban on paying referral fees.

In demanding the assessment by 51 votes to 28, the council ignored a plea from the standards board for time to conduct further research.



The board's review of referral fees - conducted at the request of the Master of the Rolls when he approved the lifting of the ban in March 2004 - had asked for the controversial rule permitting them to be retained for the time being (see [2005] Gazette, 12 May, 1). It also recommended improving awareness and enforcement of the rule.



Former Law Society President Carolyn Kirby, who proposed the assessment, told the council: 'I ask myself who wants referral fees and who benefits from them. The answer, in my mind, is no one to who whom we [the council] owe a duty.'


However, other council members warned of the impact on law firms - particularly those in the personal injury arena - of a return of the ban, with the potential loss of work to claims management companies and organisations such as the RAC.


David McIntosh, another former President, said: 'I would like to vote against referral fees but I would think three times about putting a number of firms out of business.'


Meanwhile, standards board chairman Andrew Holroyd told council that it should 'only act on evidence and nothing more'. He said: 'Anything else and we will be challenged for acting unreasonably.'


Law Society chief executive Janet Paraskeva said Chancery Lane would consult with those who would be affected by a return of the ban and also with important stakeholders as part of the assessment.


She said: 'We are investigating what can be undertaken in the limited time available in order to give the council as much information as possible.'