Lawyers need to “move on” and deal with the realities of referral fees and advertising, according to representatives of the Solicitors Regulation Authority (SRA) and the MoJ’s claims management regulatory department.

At the recent Association of Personal Injury Lawyers (APIL) conference in Newport, South Wales, Bronwen Still from the SRA and Kevin Rousell, Head of claims management regulation at the MoJ, stressed neither outcome of the access to justice bill can go “back in their box”.

Kevin said: “The debate needs to move on. Lawyers need to make it work. The Legal Services Board is now up and running and enforcing the rules.”

However, John McQuater, newly elected APIL President, said: “Commoditisation causes a massive problem. I voted against both referral fees and advertising, as I predicted the state high street firms are now in.”

The use of referral fees to buy in a personal injury claims also concerned delegates, who ranged from sole practitioners, high street firms and larger practices to barristers. Many suggested consumers miss out by having a solicitor “thrown at them”, and have actually lost out on choice and the traditional interaction made when approaching the high street market.

Better the devil you know
John Stapleton, GMTV presenter and chairman of the conference, played devil’s advocate and proposed claimants may not understand the referral fee process. However Kevin pointed out that inducements, referral fees and advertising, so long as they are transparent, included in the profit margin and concur to the rules, aren’t misleading.

Kevin said: “Putting referral fees back in the box wouldn’t solve anything. In fact, it would only drive them underground. There have always been unregulated referral fees in one shape or another and banning them would only harm the claimant.”

But it wasn’t all doom and gloom. A handful of delegates came forward with support for referral fees and said they do offer clients choice, and help those unused to the legal service get experienced legal representation.

Choice for claimants and a positive market force were deemed to be the benefits of the use of advertising and referral fees in the personal injury sector.

Nicholas Bevan, Associate at Bond Pearce LLP, however wasn’t impressed. “I think we’ve seen just how disastrous market forces can be.

“It has been left to the experts to pick up the pieces of the slashed Legal Aid budgets. We’ve done exceptionally well to help the injured claimant but this economic environment has also allowed claims management companies to thrive. This is why solicitors feel isolated and high street practices simply can’t compete or survive.”

Bronwen reiterated the SRA has put a lot of effort in to monitor and punish those abusing the system, such as the recent miners’ compensation cases.

“We will be addressing the root of the problem, and we need the sector to play by the rules and highlight the fraudulent work of others,” she said.

Missing the point?
Throughout the lively keynote session APIL members largely lamented on ‘the good old days,’ before referral fees, perhaps masking the more sector-shaping legislation to come.

As one personal injury lawyer from Irwin Mitchell noted: “I think we’re slightly missing the point here. What about the very real threats from non-solicitors? We’ve not had one conversation about Norwich Union or Virgin and the effect of the so-called Tesco law.

“In a few months time, Tesco law will be here, up and running. Those who haven’t stepped up their efforts to advertise or play the referral game to their advantage will be lost against such experienced marketers,” she said.

John McQuater was also officially elected as new APIL President at the conference, and stressed he will continue to help deliver the key agendas for APIL: to ensure the FSA takes action on third party capture, to regulate insurer activity in this market and protect the claimant; to promote the Employers Liability Insurance Bill (ELIB) to government, and to drive reform of damages for care.

Of those keen to criticise claimants and their lawyers of the “fundamental right” to claim compensation, John said: “Our job is not just about a process, but about people…It may be that those driven purely by commercial instincts simply fail to understand there may be those who try to put people first.”

“I do really do not think those insurance lawyers fighting the costs war in the comfort zone or taking risk-free retainers are in a position to pass judgement in the value of the work we do.”