Conveyancing Referrals – Stay Local!

December 2011

A Bill is going through parliament at the moment to introduce wide ranging reforms of the legal system covering not only widely publicised areas such as legal aid and sentencing, but also reforming the rules for payment of costs in accident claims. One proposal is to make payment of referral fees for accident cases illegal, essentially to try to outlaw “ambulance chasing”. The Law Society (the solicitor’s professional body) would like the government to go further and ban all referral fees. There is much debate over this but here is an example of why the Law Society have taken its view.

The other day I was alarmed when a new divorce client told me that she and her husband had already got a buyer for their matrimonial home and that they were going to use “the estate agent’s in-house solicitors up north somewhere”. They were going to charge £880 she said. Her friend who had come with her piped up that she had sold her house earlier in the year with a well reputed firm of Basingstoke solicitors who had only charged £600 odd. She wondered why her friend was using solicitors up north who were charging more. The answer seemed simple to me: the agents would be getting a large payback from the solicitors to push the work their way. My client felt committed but she will end up paying more and not having any direct contact with the solicitors.

The professional rules governing solicitor’s conduct require us to disclose any “referral fees” that we pay to third parties and indeed those third parties are under a duty to disclose their arrangements. I suspect that very few do. The result is that the consumer pays more.

It is not so much the referral fees I object to – we have to pay estate agents to refer work, although we hope that most of them refer to us because they know we are good and easy to do business with. We of course disclose this to our clients. What really annoys me is that there is a good choice of local solicitors all charging competitive prices and offering a local service.

  • Solicitors you can call in and talk to if there is a problem;
  • Solicitors whom you actually get to meet;
  • Solicitors that have offices that you can easily get to if you need to pick up or deliver documents in a hurry.

It is your choice: why not go local.

Nick Massey-Chase

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