MoJ bans referral fees outright By Joanne Harris 9 September 2011 09:54 17 December 2015 14:32 Sign in or register to continue reading. It's FREE Sign in Email Password Keep me logged in Forgot your password? Not registered? It's FREE! Register now Register with The Lawyer Anonymous 9 September 2011 at 12:16 When will people realise that it is not the fee that is the problem, it is the ginormous hourly fees charged by the claimant lawyers that is and there is nothing the government can do about over inflated hourly rates so it picks on this instead. An easy win for the insurance bods Reply Link Anonymous 9 September 2011 at 13:17 First poster seems to lack understanding of this area. Well in excess of 80% (probably over 90%) of all RTA cases are already subject to a fixed fee regime, so hourly rates simply do not come into it. Will the insurers be announcing how much they will be reducing premiums by in light of this development? Reply Link Anonymous 9 September 2011 at 14:12 It would be very nice if that was the case. But from what I saw working in costs, claimant lawyers will do practically anything in their control to avoid the fixed costs regime and insurance companies wont run cases to detailed assessment. The referal fees aren’t necessary but I highly doubt that a ban on them will not affect our insurance premiums. Would it be possible for firms to take on in-house claim management teams to find ‘victims’ who so rightly deserve money for a little bump in their car? Reply Link Cameron 9 September 2011 at 15:28 Does this mean I will stop receiving texts telling me that “……I may be entitled to a lump sum payment for my recent accident”? Reply Link Anonymous 9 September 2011 at 15:43 It astounds me that the insurance companies are trying to wriggle out of this with little or no culpability. Up until recently many of them have been selling on claims and making vast profits by charging lawyers referral fees. Arguably, they are also one of the main contributors to the increase in the number of people making claims. If you have the misfortune of having an accident they are very quick to advise you about the possibility of making a claim and to sell your details on to solicitors. And yet they still try and suggest that an increase in premium is all down to the lawyers and so called “compensation culture”. It is about time somebody started looking a little more closely to the insurance companies for answers. Reply Link Anonymous 9 September 2011 at 15:53 What we need to be very clear about is “referral fees” could well emerge as perfectly legitimate fractional share fees ! in any ABS venture. If you are thinking of selling your defendent PI business, some claims management companies may be more interested following the announcement. Is the time right to sell up ! Reply Link Anonymous 10 September 2011 at 12:22 I thought it was facinating about the referral fees, it sadly shows a complete lack of understanding on behalf of the government about what to do to reduce PI claims. You can ban referral fees but- it will just mean referral organisations will just invoice each firm they “refer” work but set the invoice up like a marketing fee for the fees they have incurred and the marketing conducted on behalf of each firm- eg TV adverts. Im guessing that the referral firms will set themselves up as some sort of co-operative orgainisation . To me that is quite legitimate-all firms eg solicitors are entitled to budget for marketing, if they pay someone else to do it for them I think that is fair. The only way to kick the PI market up the preverbial is to reduce claimants costs so that “referrals”/ paying for cases/ “marketing fees” for cases at say £500 per case becomes unaffordable i.e at the momment there is enough profit in PI for firm to stomach the referral fee- if you take out success fees and reduce costs then the £500 per case becomes untenible as there is no profit in the work if you take those sorts of margins away. So, as for the current plans- are we are really left with the Status Quo but with a bit of restucturing. Everybody is happy save the insurers. Claimants firms because they can still “buy” in work and Defendant firms becasue case volumes remain high (they need the work as much as anyone- so don’t squeal about referral fees as it has directly resulted in you getting more work and making more profit.) Reply Link Gary 11 September 2011 at 11:54 So, why not just ban the Claimants lawyers from being able to recover the costs from the other side?? If you have ever dealt with Claimants lawyers in PI matters on a regular basis like we do, while there are some that are great at looking after their clients, there are others that are diabolical ….. The average Claimant is terrrified of lawyers and just takes what they say right. Only people to loose here are the small Claimants. Reply Link Anonymous 13 September 2011 at 10:04 Whatever the merits or otherwise of these postings, if those who posted them are solicitors they should be ashamed. There are appalling misspellings in them, of elementary words. The profession uses words as its tools and the least we can do is use them correctly. Reply Link Anonymous 13 September 2011 at 11:27 Its all about the Insurers, they delay settlements so claimants issue costs go up, they pay referral fees, they sell their insureds data, they are the main culprits. The government does not have a clue in this area, if they targeted the Insurers like they should have kept a closer eye on the banks alot of the issues would resolve. Reply Link Rural bliss 18 November 2011 at 16:29 “Well in excess of 80% (probably over 90%) of all RTA cases are already subject to a fixed fee regime, so hourly rates simply do not come into it.” This is precisely the problem. The fixed costs were set at a level that assumed the work would be done by skilled solicitors charging (jn those days) £150 per hour. In fact the vast majority of routine p.i. cases are handled by unqualified numpties paid £10 per hour but charged out at 10 or 20 times that amount. This leaves a vast profit in the fixed costs regime – so vast, that out of a typical costs figure of £1,300 the solicitors can afford to pay half in referral fees and STILL come out on top. The government were conned into agreeing fixed costs that were way too high, and they need to be reduced by 50% or more. This would bring down premiums – and get rid of referral fees as a side-effect – far more quickly than the proposed ban on referral fees, which will simply be circumvented by the parasites who inhabit this murky world. Reply Link Anonymous 21 November 2011 at 18:25 High street Solicitors are so bad at marketing and generally running a small business that the banning of referral fees must ultimately be a good thing – it might force them to be more entrepreneurial in drumming up business. There is a huge unserved market out there. Solicitors need to think of SELLING their services eg for every conveyancing client did you draft their wills? If not why not? Keep in touch with them with regular newsletters – don’t just forget about them when the job is done. Sponsor fetes etc at local schools. Keep in touch with your local newspaper and advertise. I could go on! Reply Link Name Email Cancel reply Threaded commenting powered by interconnect/it code.