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Monday, 10 June 2013

You can ban referral fees but you can't ban accidents!

The last few weeks have been dominated, and rightly so, by Hillsborough and the impact of the proposals in relation to criminal legal aid. 

In the meantime how are things with the other beleaguered wing of the legal profession – the Personal Injury Lawyers? Their world changed beyond recognition in April this year. I summarised the position in the run in to those changes –

In the two months that have gone by we have seen a few firms decide to run off their work with a view to closing. Others have knuckled down and revised the way that they do business to adapt to the new world. The full impact of the drastic cuts in fees will not really been seen until next year and cases are still being concluded under the old rules. One thing that had an immediate impact was the ban on referral fees.

This ban was driven by insurers who argued that it would reduce the effect of the mythical ‘compensation culture’. In fact, it was soon apparent that their main target was the level of fees recoverable by victims. And that is something that they have largely achieved. But how are firms coping with the ban? According to the SRA many are simply flouting it –

From firms that I have spoken to that is far from the case. The ban is set out in the act of parliament known as LASPO. It is worth looking at what was banned. The act says that there is a referral where –

(a) a person provides information to another,
(b) it is information that a provider of legal services would need to make an offer to the client to provide relevant services, and
(c) the person providing the information is not the client;

So many firms have redirected their spending on marketing initiatives, employment of former claims management staff and various hot-key arrangements where the person providing the ‘information’ is the client. None of this is banned. What has happened is that lawyers have adopted a more business like approach to their work. In the meantime you can't ban people from havong accidents, incurring diseases at work or becoming victims of medical blunders. For all of their efforts, neither the insurers nor Mr. Grayling are going to make them go away.

While we are on this topic I do want to give a shameless plug to the Liverpool Law Society PI Conference on 19th June –

The agenda covers a range of topics from costs budgeting to Google rankings. Speakers include the ever popular Dominic Regan and Neil Rose . Be there or be square!

1 comment:

  1. That is quite a loophole they’ve found in the ban, rendering it almost useless until it can be revised to accommodate the proper intended function. For now, all that can be done is to take note of those firms who practice such activities.