Thu, 23 May 2013
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MoJ bans referral fees outright
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.)
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