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The new Code of Conduct (in force from 1 July) contains a
comprehensive section on Referrals of Business (r9). This does not
apply to referrals between lawyers, but referrals from and to non-lawyers.
The key element is that the solicitor must ensure that the introducer
complies with the Code of Conduct. The solicitor and referrer must enter
into a written agreement, and as part of that the introducer must
undertake to comply with the provisions of r9.
Note that 9.02 specifically says that the solicitor must be satisfied the
clients referred by the introducer have not been acquired as a result of
marketing or publicity, or other activities, which if done by a solicitor
would be in breach of any part of the Code. The most obvious point is
that this must never cover ‘cold calling’. Moreover, it is essential that
the solicitor knows how each and every client was obtained by the
introducer (whether the work comes from estate agents, brokers,
mortgage companies, legal expenses, insurers, unions, the RAC, etc). In
addition, the agreement must ensure that the introducer, before making
the referral, tells the client how much they are receiving from the solicitor
for the referral. So, if the AA or an insurance company is selling the case
to a panel solicitor, it must state each time to each client how much that
body is receiving for that case! Frankly, this will be a sea-change in
culture and one wonders how clients will react when advised that the AA
(or whoever) is getting a hefty fee for referring their case.
The solicitor must also disclose this before he accepts instructions, and
the solicitor’s disclosure to the potential client (unlike the referrers)
must be in writing.. © Practical Lawyer
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June 2007 |
