What next for referral fees, asks Patrick Allen
The Law Society Council voted to permit referral fees in 2004 and new rules enabled claims companies and insurers to make open agreements for referrals. In the past, lack of transparency had caused consumer harm when services were deemed to be hidden referral fees and unrecoverable. Terms could now be developed which were advantageous to clients as they included minimum service standards and guarantees such as no deductions from damages. The stability of large volumes of work enabled firms to invest in IT and develop specialist teams.
The legal landscape has changed out of all recognition since 2004, especially in the areas of personal injury (PI) and conveyancing. Claims companies have grown and perfected their internet and TV advertising. They are regulated by the Ministry of Justice which does not report any great problems. This change in the landscape was confirmed in the 2007 report by Moulton Brown for the Law Society (Referral arrangements and legal services report 2007)—“We found it difficult to identify any firms, which are not paying referral fees and conducting
