A court has spoken out against payments and case referrals between solicitors, barristers at Robert Rhodes QC's 4 King's Bench Walk, and an arm of Claims Direct

Despite criticisms, senior costs judge Master Hurst refused to rule on whether fees paid to counsel by solicitors were referral fees, as it was the subject of an ongoing Bar Council investigation (The Lawyer, 24 September 2001), and was therefore out of his domain. Last week, The Lawyer reported that payments by solicitors to claims management companies were referral fees, which Hurst declared to be unlawful.

Hurst said that he could not comment on whether there had been any breach of the Bar's code of conduct.

The case centres on the activities of Ian Lee, a former full-time clerk at 4 King's Bench Walk, who became a consultant clerk at the set in 1996 – the year he signed an agreement with Medical Legal Support Services (MLSS), an arm of Claims Direct. This agreement made Lee an important conduit between MLSS, barristers and solicitors. Hurst ruled against three aspects of this agreement.

The agreement dictated that every MLSS case sent to a solicitor needed to have counsel's advice on quantum and sometimes merit. Such cases were sent from the solicitor to MLSS and then to Lee, who forwarded such cases to barristers at his or other sets. The counsel's briefs were returned by Lee to MLSS, which sent them to the solicitors.

Hurst concluded this was largely unnecessary as most of the cases were straightforward and could be dealt with by solicitors without the need to resort to counsel.

MLSS was so inundated with these cases that it dropped out of the loop and consequently cases went direct to Lee. This raised concerns as, despite MLSS dropping out, payments of £15 per case were still made to MLSS. These payments were made by the barrister who included it as part of his flat £95 bill to his solicitor. Hurst concluded that this £15 bill was “not reasonably incurred” and should not have been paid. He drew no conclusion on whether this applied to claimants.

Hurst said that the £15 payment was for services including credit control and marketing, but Bar Council rules outlaw special payments for preparation or administration that would normally be handled by instructing solicitors.

Lee was paid £25 by solicitors for each brief, which covered his “administration and other expenses”.