Referral ban ‘will not reduce costs’

first_imgBanning referral fees will harm the legal profession and will have no effect on reducing law firms’ marketing costs, the chair of the Claims Standards Council (CSC) said last week. Speaking at the CSC annual conference in Manchester, Accident Advice Helpline managing director Darren Werth said it is ‘shocking’ that the Law Society and Lord Justice Jackson want to ban referral fees. ‘It will drive businesses underground,’ he said, creating ‘a future not in line with a modern commercial world’ by ‘legislating against market forces’. The Legal Services Board’s consumer panel recently commissioned management consultants Charles River Associates to undertake an ‘economic study’ of referral fees. Jackson concluded in his final report on civil litigation costs that referral fees should be banned in personal injury cases, while the Law Society Council voted at the end of last year to press for a ban on referral fees. SRA chief executive Antony Townsend said last week that the SRA ‘supports and is contributing to the cross-sector review of referrals by the LSB’. Werth said: ‘In any economy where solicitors run businesses for profit, they need referrals. Solicitors don’t market their businesses very well. If a solicitor spends half of his marketing budget with an advertising company and the other half with a claims management company, which is the bigger evil? ‘Abolishing referral fees would have no impact on marketing costs. Without them, there would be far less competition in the marketplace with only large firms surviving. You outsource to the most effective provider, which will most likely be a CMC. ‘It’s ridiculous to single out referral fees as some kind of problem. Jackson fails to recognise the millions of pounds that CMCs have spent on promoting access to justice. There has been no government-led campaign on this.’last_img

Leave a Reply

Your email address will not be published. Required fields are marked *