Referral fees for solicitors: what the rules actually say

Sections 56 to 60 of LASPO 2012 prohibit referral fees in personal injury and death claims. That is the whole ban. It is enforced by the SRA as a regulatory matter, it cannot be contracted around, and firms have been fined for arrangements that were referral fees in substance whatever the invoice said — 'marketing fees' priced per case have been looked straight through. Outside PI, no prohibition exists. Conveyancing referrals, private client referrals, commercial introductions, fee-sharing with introducers: all lawful. The recurring error is treating the PI ban as a general rule and either refusing legitimate arrangements or, worse, running them in embarrassed silence without disclosure. The silence is the breach. The SRA has never disciplined a firm for openly paying a disclosed conveyancing referral fee. Concealment is a different file.

Paragraph 5.1 of the SRA Code of Conduct for Solicitors carries the operative rules. In any referral or fee-sharing arrangement: clients must be informed of any financial or other interest an introducer has in referring them; fee-sharing arrangements must be in writing; clients must be told of any fee you pay or receive for their referral. Layered over that sit the Principles — independence, and the client's best interests — plus the standing requirement that referred clients have not been acquired through banned cold-calling. Practically: the disclosure goes in the client care letter, specifically, with the figure where one exists. 'The firm may have arrangements with third parties' is wallpaper, not disclosure. And instructions must come from the client; an arrangement that lets the introducer shape the retainer fails the independence test regardless of what was disclosed.

Private client and family work surfaces investment-shaped needs constantly — pension sharing on divorce, inheritance received mid-probate, trustees holding cash. A solicitor can refer such clients to an FCA-authorised adviser and receive a fee, disclosed as above. Two cautions carry weight. First, the old Code's explicit requirement to use only independent financial advisers was not carried into the 2019 Standards and Regulations, but the best-interests principle still makes the adviser's status, competence and charging model your business — a referral is a professional act, not a favour to a golf partner. Second, the perimeter: introduce, do not advise on investments. A solicitor commenting on which drawdown product suits a client is outside both permissions and insurance. The referral itself is the safe harbour. Stay in it.

The firms that handle referral fees well share one habit: infrastructure. A central register of every arrangement — counterparty, direction, trigger, amount, review date. A disclosure paragraph maintained by compliance, not improvised per matter. An annual check that each introducer still meets the standard you would defend at a tribunal. Per-matter logging so any file shows who referred whom, for what, and what the client was told. This is perhaps two hours a quarter for a small firm. SmartPeer was built for the outbound half of this — tracked referrals to vetted financial advisers and estate planners with client disclosure letters generated automatically — but tooling aside, the principle is fixed. Referral fees are a regulated firm's ordinary commerce. Undocumented referral fees are a disciplinary bundle waiting for a complainant.