Tag Archives: referral fees

Ban the Bung

I have lamented elsewhere the fact that we are voting in the CBA Ballot when we have little idea what the CBA plan includes. The most detail that we have been given is in Richard Bentwood’s contribution to the CBA blog Voting No and the Uneven Playing Field. It would appear that alterations to the AGFS and a ban on referral fees is the aim of current engagement with the MoJ. 

Let’s just imagine that the result of the Ballot is a “no” vote and all our eggs are in this particular basket. Let us fast forward 18 months. The Lord Chancellor has passed into legislation a ban on the payment of a referral fee connected with the provision of advocacy service. Now what I am about to imagine is not a prophecy. I don’t know this is going to happen. I would say it is a realistic fear. That is not to partake in scaremongering. Yet those considering voting “no” need to consider the potential consequences and the prospects of the current proposal succeeding. As do the “yes” voters. 

Firm A have lots of Crown Court advocacy. They also have an office. Advocate B used to be in chambers, she used to do a lot of Firm A’s work. Firm A offer the provision of office space and diary management to Advocate B. They charge her 15% of all her income. She is still free to work for whoever she wants. As it happens she is now very busy doing most of Firm A’s work. It is really easy for Firm A as they don’t even have the cost of doing a brief, they just walk over to the corner of the office and hand her the file. No referral fee paid. 

Firm C have a duty contract. The beauty of this is that lots of their Crown Court work ends up listed on the same day. One of their solicitors has higher rights. He can do a long list of pleas. The firm rightly earn the money form all those that plead guilty early. Those that get listed for trial can be sent out to a freelance advocate (whether they be solicitor or counsel). With the brief is sent out an invoice for the work already done by the solicitor advocate. This is greater than the Bar’s guidance on what a PCMH should cost, but it is only a protocol. The parties are entitled to enter into whatever contractual arrangement they like. In exactly the same way as counsel share fees when a case unexpectedly cracks on a mention. The advocates who are offered the case are informed up front of the intended fee for the first hearing. It is up to them whether they accept it or not. 

These are two ways which, in a moment’s thought, someone with a look at how to create the greatest profit may get round rules against referral fees. The commercial mind is alive with such things. It will always find a way. And remember, increased volumes under Two Tier will mean increased potential for revenue from advocacy fee by volume too. Making the employment of an in house advocate a more attractive proposition once again.

Yet it is also suggested that in house advocacy has proved to be too expensive. And let’s say that the referral ban has been successful in closing all potential loopholes. Let’s say that the AGFS modifications have improved payment rates. So 18 months from now you have a reduced number of suppliers with certain volumes of work provided to them under the Duty Provider Contract. These are businesses in need of profit. As some predict, the revenues from these contracts have not been sufficient to cushion the blow of successive cuts.

So where do these businesses have to go now? In house advocacy doesn’t bring the profit. Any income from fee sharing, referral fees or admin charges have been ruled unlawful. There is a new Lord Chancellor in place (a natural consequence of this office becoming political rather than legal). So these businesses, who have some quite powerful collective bargaining muscle now areas have limited duty providers, need to find a way of increasing their share of the overall pie. They go so see a new Lord Chancellor with a budget to protect. The topic of the conversation? One Case One Fee. 

Tackling referral fees levels the playing field in about three square metres, somewhere in the vicinity of the corner flag. This does not save the Bar. This is not the boy with his finger in the dam. This is King Canute, trying to turn back the tide whilst, unbeknownst to him, a tsunami brews under the seas. 

Again, I repeat, I don’t know what is going to happen. And I am not trying to scare you. Whatever happens, there has to be more than just a ban on referral fees. And it would have to happen soon. We have to hope the Lord Chancellor really does love us. And loves us a LOT. 

In reality the best way to ensure the future of the Bar is to make sure the litigator and the advocate are both properly remunerated. Then I will take my chances that my ability will get me enough work. Now that is as level as I need the playing field to be.