The referral fee conundrum

Referral fees have always been a contentious subject for all those involved in the provision of legal services. The concept of touting for business has always struck a nerve among the profession this side of the Atlantic. The question of paying third parties referral fees often gives rise to similar feelings and, as advertising has in the past, referral fees divide the profession.

Advertising or touting by solicitors was prohibited until 1987. While the ban for advertising was then lifted (much against the passionate efforts of many), solicitors were still prohibited from paying referral fees to third parties. That ban was partially lifted in 1988 but there remained a ban on paying referral fees to reward introducers of business. There were some slight amendments in 1991 but referral fees remained in the main banned until March 2004. 

In 2001 the Office of Fair Trading published