Head of Kennedys Liability Division, Richard West, said “Whilst we welcome the intention of the ban on referral fees, Kennedys is keen to ensure that there is no room for exploitation of any loophole”.
“Kennedys is concerned that a law firm could seek to pay to “receive” services in return for receipt of cases. Such firms would therefore receive “for free” the claimant injury cases thus exploiting the current loophole”.
Services which might be used as “payment” include training, risk management assistance, commercial expertise and business consultancy from those referring the prescribed business. The firm could also make significant payments towards a referrer’s marketing costs, or provide funds for the running of the new jointly owned business as set out under the Legal Services Act 2007.
Kennedys believes it is important for the Government to clarify the limit of “paid for services”. Kennedys calls for the limit to be set along lines that are proportionate to the service being paid for, for example, by reference to the usual commercial rate.
Kennedys welcomes the proposal to deal with breach of the rules by way of regulation. However, “Kennedys is concerned that it appears to be a situation of every regulating body being required to pass their own rules. Guidance and consistency is required as to what sanction a breach should involve - any sanction imposed must be greater than the benefit that is being obtained in return for the referral fee payment(s).”
“Kennedys is also disappointed that the proposed reduction of fixed costs has been dropped by the Amendment. We maintain that a reduction is necessary in combination with referral fee ban.”
The new amendment announced by Justice Secretary, Ken Clarke, to be included in the Legal Aid, Sentencing and Punishment of Offenders (LASPO) Bill will seek to ban referral fees. The LASPO Bill will be reach report stage in the House of Commons on 31 October, before going to the House of Lords for further consideration.
For further comment, please contact Mark King on 020 7667 9203 or by
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