I note that some of my colleagues have previously posted blogs surrounding the issue of referral fees; what they are, how they affect you and why should look out for them.
Today I was reading an article on the Guardian’s website relating to this particular fact once again, as the Legal Services Board have been carrying out a lot of research in to the area. It is thought that by the end of the summer a decision shall be made about whether or not these fees should be banned altogether.
By next Monday the Legal Services Board will have released information about how the referral fee system is impacting on the economy. Shortly after this release they will also be confirming the results of the report carried out with the board’s consumer panel.
Referral fees used to be banned, but in 2004 this ban was lifted and since then the area has become an area of contention for many; with fees somewhat spiralling out of control. A few years ago a personal injury claim would have been ‘purchased ‘for approximately £300 – £400 but now you are looking somewhere in the region of £800!
The majority of the business comes from Claimant Management Companies (CMCs). I am sure that many of you have heard of, if not dealt with a CMC at some point. They often ‘swoop’ in following your accident and offer you all kinds of wonderful things i.e. vehicle repairs, a replacement vehicle – all for ‘nothing’. They will often carry out a lot of the preliminary work with regards to a claim and they are generally not legally trained. When they reach a point whereby they cannot continue with the claim any further they will then ‘sell’ your claim on to a firm of Solicitors. You will often find that CMCs have ‘panel solicitors’ whom they have contracts with and who they sell the majority of the work on to.
Another example is if you have paid an extra £20 – £30 on your motor insurance policy when you took the policy out. This will cover you for legal expenses in the event you are involved in a road traffic accident and you are injured. However, the same system of referral fees applies here also. Your insurers are likely to advise that your case has been passed to a panel of their Solicitors and they shall be contacting you to discuss the progression of your claim. What they do not tell you is that those solicitors have paid a nominal fee to the insurance company for your case.
But how does all of this affect you?
Well, how do you think the service levels you receive will be affected if your firm has already spent so much money before your claim has even started? Money from a budget used to run your claim for compensation taken out before the case has even begun? If that large sum of money (sometimes up to £800!!!) has already been spent, will they have enough left to spend on keeping you regularly updated? Will the volume of calls to you significantly drop as a result?
Will they have enough to fight to make sure you get the maximum compensation from the other side? Will they even have enough to make sure they cover all of the losses you have sustained as a result of the accident? The (up to) £800 they have already wasted on the referral fee; does this mean that is £800 less to spend on your claim for compensation?
We have dealt with many client’s who have come to us having allowed their insurers to sell their claim to a panel of Solicitor’s, and nearly all of them are calling us for a reason – they are not happy with the level of service they are receiving!
This will be shocking for a lot of you as this information is often contained in the small print and no one will ever explicitly tell you about it. Do you want to be dealing with a firm of Solicitor’s that sees you as a ‘commodity’ rather than a client? Do you want someone dealing with your claim who isn’t prepared to spend the time, money, or resources on ensuring that you receive the best possible outcome? I suspect not, and therefore my advice to you would be to spend some time looking around for a solicitor that is 100% independent – Solicitor’s who do not have any ties to claims management companies or insurers. You are likely to receive a much higher level of service as their main priority will be YOU – the client – as they will have no obligations to anyone else, meaning that they can provide you with the best possible service.
Hopefully the Legal Services Board will make the right decision when it comes to the referral fees. Hopefully they will do what they need to do in order to ensure that client’s are receiving good and fair levels of service.
