Government to outlaw legal referral fees

Referral fees are paid by an advocate in exchange for instruction. There are concerns in the legal profession and more widely that this practice is abused by firms who refer clients to advocates with whom they have a financial relationship, thus denying clients the potential choice of a suitable high quality advocate.

Despite a number of restrictions already in place, there is anecdotal evidence that they still occur. Today (1 October 2015) the government has launched a consultation on changing the law to crack down on this practice. The government is also seeking views on how to better identify and prevent disguised referral fees.

The consultation also proposes the establishment of a panel of publicly-funded criminal defence advocates. Only advocates on the panel would be able to secure criminal legal aid work. The panel is designed to address the concerns raised in Sir Bill Jeffrey’s 2014 report on the provision of independent criminal advocacy and by members of the legal profession.

Other proposals in the consultation paper include the introduction of stronger measures to protect client choice and safeguard against conflicts of interest.

Launching the consultation, Shailesh Vara said:

This government is determined to ensure we continue to have vibrant and effective advocacy in our courts. That is why we cancelled proposed cuts to criminal legal aid for barristers earlier this year, and today we are going further.

The payment of referral fees to secure instruction is unacceptable – which is why we want to change the law in order to tackle this issue. The guiding principle in advising clients on their choice of advocate must always be the competence and experience of the advocate – rather than their willingness to pay a referral fee.

The creation of a panel of publicly funded criminal defence advocates will deal with the concerns expressed by judges and legal practitioners, as well as Sir Bill Jeffrey during his Review of Independent Criminal Advocacy.

Alistair MacDonald QC, Chairman of the Bar, said:

We welcome the publication of proposals to safeguard the quality of advocacy in England and Wales. A comprehensive ban on referral fees and measures to ensure that clients have a genuine choice of advocate are vital to maintaining an independent Bar in the public interest. We shall study the government’s proposals very carefully.

Today’s consultation paper proposes measures to preserve and enhance quality standards, reduce financial incentives and make the process of choosing an advocate more transparent.

Preserving and enhancing the quality of criminal advocacy

The detailed proposals are:

A panel of publicly funded criminal defence advocates

If implemented, the panel would ensure that publicly funded criminal defence advocacy in the Crown Court and above would be undertaken by advocates who have successfully applied and been accepted onto the panel. This would provide valuable quality assurance and enable the government to have greater confidence in the quality of publicly funded defence advocacy in the most serious cases.

A statutory ban of referral fees

A new statutory ban on referral fees is proposed. The government want to ensure that advocates are instructed because they are operating at a high level of competence and have the right experience to do the job well – not because of their relationship with an instructing litigator, or because they were prepared to pay a fee to secure that instruction.

Identifying and prevent disguised referral fees

Views are requested on how disguised referral fees can be identifying and prevented. These can include ‘administration’ or ‘management’ fees paid by advocates. If such payments are in practice a way of securing instruction, they are unacceptable.

Stronger measures to protect client choice and safeguard against conflicts of interest

A client should be able to make an informed choice of advocate on the basis of clear and impartial advice. The government wants to ensure there is no conflict of interest in a litigator’s advice on choice of advocate, which could arise from financial considerations. Views are welcomed on steps that could help prevent any conflict of interest, for instance restricting the instruction of advocates within the same firm as the instructing litigator, or amending standard contracts to better reflect the obligation of litigators to provide impartial advice to clients on their choice of advocate. This could include a requirement for the litigator involved to sign a declaration, to the effect that client choice had been provided, giving reasons for recommending a particular advocate.

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