A Merseyside solicitor has been rebuked and fined £2,000 for one of the first known breaches of the referral fee ban.
Janet Cruise, sole practitioner of Wolf Law Solicitors, admitted to paying £47,000 for 38 personal injury cases through an arrangement with a third party, Karl Fischer Limited (KFL).
Cruise had believed when she made the arrangement in April 2013, the month the fee ban came into force, that it would comply with the Legal Aid, Sentencing and Punishment of Offenders Act (LASPO).
Towards the end of 2012 she had been approached by Karl Fischer who said that his company, KFL, would enter a non-exclusive arrangement for payment of a marketing fee calculated at 50% of the recovered costs in any litigation.
KFL would refer claimants to Cruise who, in turn, had been referred to KFL by intermediate sources.
In a Solicitors Regulation Authority notice published today, the regulator said the arrangement grew to the point that Fischer worked out of Wolf Law’s offices and exclusively for the firm.
Cruise accepted the system ‘did not go according to plan’ and by the summer of 2013 she realised the business model was not compliant with the provisions of LASPO.
The SRA said Cruise waited until Christmas 2013 to terminate what it called ‘irregular referral arrangements’. The SRA said Cruise allowed the breach of LASPO to continue ‘either by omission or commission’.
An aggravating factor in the matter was that the SRA had issued a warning notice about the ban in October 2013, which Cruise was aware of, the SRA said.
Cruise explained she had devised a process to risk assess incoming claims, but had delegated the responsibility of implementing it.
The SRA said she placed an ‘unjustified and disproportionate’ amount of trust and reliance in Fischer, allowing him to be the first point of contact for claims.
Occasional spot checks on files were ‘inadequate’.
‘Had Ms Cruise not delegated so much to Mr Fischer for so long, and made herself the gateway for accepting all new work (as she should have done) this difficulty would not have arisen.’
As it was, Fischer left the firm in December 2013 and the SRA said there is still an incomplete picture of non-compliance.
But the regulator was satisfied that Cruise ‘knows and understands’ what has happened, has gained insight into her conduct and removed Fischer and the business model from her company.
She was found to have failed to achieve two outcomes of the code of conduct and was rebuked, fined £2,000 and ordered to pay £600 in costs.