Law Society moves to outlaw referral fees to agents...

Referral fees paid to estate agents by conveyancing companies could be outlawed, after a decision by the Law Society to lobby for their ban.

Estate agents typically receive £100 for each referral lead that translates into business.

The subject of referral fees was one of the topics probed in the latest research for the OFT. It found that 80% of estate agents recommend solicitors to their clients, and half of these receive fees. Whilst 57% received under £150 per case, 38% claimed to receive between £250 and £299. Over half the agents receiving referral fees told their clients not only of the existence of the referral fee but the amount.

The Law Society Council, which represents all UK solicitors, has adopted a motion to ‘make representations to government and the Legal Services Board that referral fees do not have a place in markets for legal services’ and that they should be banned.

However, because it is the Solicitors Regulatory Authority and not the Law Society which has the power to change the rules, the motion is subject to consultation.

Eddie Goldsmith, senior partner at Goldsmith Williams, said: “It’s difficult to understand why the Law Society wants to ban the payment of referral fees, when it made a policy decision to allow them just five years ago. The existing rules governing fees are clear and require full transparency, and in our experience at Goldsmith Williams, which spans 25 years, we have not received a single client complaint regarding referral fees.”