In order to understand the facts about referral fees, it is important to understand some of the history surrounding personal injury claims in the United Kingdom and how all the changes over the last two decades will affect your personal injury compensation claim.
A brief history of referral fees
Referral fees became popular after legal aid was replaced by conditional fee agreements. The so-called no-win, no-fee* agreements were introduced as a way to create greater access to justice for people who would not otherwise be able to pay for expensive legal representation.
This type of arrangement is still used today in all types of civil litigation, whether you are claiming for an injury at work, a car accident and even in medical negligence cases. Essentially, solicitors are able to claim a success fee from a compensation claim case they have won and this means higher fees for solicitors in winning cases.
Prior to 2004, referral fees were not permissible under solicitors’ professional rules. In other words, solicitors were not allowed to reward introducers by the payment of a commission or otherwise. This prohibition was lifted in 2004, which created a gap in the market. Entrepreneurs now saw an opportunity to place themselves between the solicitor and the client and to charge a fee for introducing the two.
The ban on referral fees
Claims management companies were created to play the role of middle man between client and solicitor. Insurance companies soon caught on and also began handing over clients to solicitors for a fee. The argument was put forth that monetary gain was distorting the reasons for making the referral. The referral was made because of the money that would be made, rather than providing the client with the best service. The consumer became nothing more than a commodity to be traded for a price.
This type of behaviour also led to the creation of a kind of compensation culture in the UK. The number of unnecessary, and perhaps even unworthy, claims increased because of this eagerness to sue. Clients were no longer referred to the best solicitor for their case, but rather referred to the solicitor willing to pay the highest referral fee. The client was no longer in control.
After some debate, the UK government again amended the law. As of April 2013, the payment or receipt of referral fees in compensation claims for personal injury or death are prohibited.
How do I find the right solicitor?
Accident Advice Helpline offers a 24-hour, free helpline. All of our advisers are well-trained and friendly. They will take the time to discuss the details of your accident and give you an honest assessment of the strength of your claim. If they believe you have a strong case, you will be referred to one of our solicitors. Since we are a law firm, no issues surrounding referral fees will play a role.
Call Accident Advice Helpline now on 0800 180 4123 to discuss your claim with a member of our expert team.
Date Published: December 29, 2013
Author: David Brown
Category: Personal injury claims