SRA rewrites guidance on referrals

The Solicitors Regulation Authority has rewritten its guidance on referral fees to clarify solicitors' duties to their clients and the requirement of independence, ahead of a thorough review of the rules by the Legal Services Board next year, Solicitors Journal can reveal.

The move comes just ten days after the Law Society's dramatic policy change on referral fees at its November council meeting.

As first reported on solicitorsjournal.com on 5 November, the society has now switched position, no longer supporting referral fees and calling for a total ban instead.

The new Legal Services Board consumer panel, only appointed last Wednesday, has since announced it would tackle the issue as a matter of priority.

SRA chief executive Antony Townsend said the regulator considered the question last December and has already expressed support for a cross-sector review of referrals by the Legal Services Board.

'In the meantime, we believe that the new guidance will help firms to be clearer about what they need to do to ensure compliance with rule 9,' Townsend said.

The new guidance to rule 9 of the Solicitors' Code of Conduct, published by the Solicitors Regulation Authority's Rules and Ethics Committee this morning, emphasises the primary duty of a solicitor to his client under rule 1.

Until now, the guidance asked solicitors not to let the terms of a referral agreement 'affect the advice you give to your clients'.

Section 1 of the guidance now reads: 'You should not enter into a referral agreement with an introducer whose overall scheme or arrangement will not be in the best interests of the clients referred to you.'

A new section 2 says: 'You must ensure that your arrangement with an introducer ['¦] does not compromise your duties to act in the best interests of your client, to be independent and to provide a good standard of service.'

Other provisions ask solicitors to advise clients if arrangements already in place are not in the clients' best interests.

Solicitors are also encouraged to review their arrangements with referrers regularly.

An updated section on payment clarifies that consideration for the referrals need not be 'specifically identified as relating to the referrals of business' and could include 'a much broader relationship if the referrals take place as a result of that relationship'.

It also makes it compulsory for solicitors to disclose not only fees paid but also 'all other relevant information concerning the referral'.