Legal Aid, Sentencing and Punishment of Offenders Bill

Lord Goodhart Excerpts

Tuesday 20th March 2012 Lords Chamber

[Baroness Deech]

My Lords, I will try not to repeat myself, because I spoke about referral fees last week.

Briefly, in response to the noble Lord, Lord Beecham, the evil of referral fees is threefold. First, if the law firm can afford to pay a couple of hundred pounds for each case, then it stands to reason that the case could have been handled more cheaply. Secondly, when work goes to a particular firm of solicitors, it encourages that firm not to compete and not to do its job properly because, no matter what, the work will come to it. The case of the miners to which the noble Lord, Lord Beecham, referred and which I described last week did not arise directly from referral fees, but one can see the risk. If a firm knows that 23,000 cases will come its way willy-nilly, why should it try very hard? Why should it not take short cuts?

Thirdly, referral fees arrangements deprive the consumer of choice. The argument for referring consumers to a particular firm is that they would not otherwise know where to go. These charitable organisations, to which the noble Lord referred, could do the job just as well by listing a few firms and helping their clients to go to those firms without expecting money to come their way. As far as I can make out from research on the web—I stand to be corrected—on its web page on legal services the Labour Party says that clients who are members of the Labour Party will be referred to a particular firm of solicitors if they have a problem. If one continues to click through the pages, the firm says in very small print, buried deep in the internet, that for every case that comes to it from the Labour Party website several hundred pounds will be paid to the political party.

To make things even worse, referral fees, some of which may well come from legal aid, could be channelled inter alia to a political party. There is no case for referral fees. I encourage the House not to be wooed into any set of exemptions, even where worthwhile charities are concerned, because the bad nature of referral fees spreads throughout the system, regardless of who uses them. I hope that your Lordships will reject this amendment and any similar ones. Now is the time to end the practice of referral fees.

[Lord Goodhart]

My Lords, I agree entirely with what the noble Baroness, Lady Deech, has just said. Referral fees have for some years been a serious problem in almost all circumstances and have caused a great deal of trouble and unnecessary expense. It is not a case where, as the Labour Party has just proposed, it should be treated just as a matter where two firms are in business. This is a matter that requires to be removed.

[Lord Thomas of Gresford]

My Lords, in my youth I appeared for insurers and unions, and I did not pay anybody to get those cases. We competed on quality. The competition was there so that unions and insurers would send their work where they thought that they would get the best service, not where they thought that they would get the largest fee. It is insidious for fees to be paid to purchase cases from any organisation, whether it is a union or even the finest charity. It is not right that unions and charities should fund themselves in this way. The noble Lord has made the case from the point of view of unions and charities being funded. One has to look at it the other way round. Why should firms of solicitors or even barristers’ chambers—I have heard rumours about this—get work on the basis of how much they pay a person referring cases to them? It is a practice which has to stop.