Q I know that the ban on referral fees has just been lifted, although there are safeguards in place. My firm receives the occasional referral of clients from a removal company. There is nothing in writing and months can go by with no new clients coming from this source. If we want to start paying for such work, do we need to make the arrangements more formal?


A The new provisions relating to payments for referrals are set out in section 2A of the Solicitors' Introduction and Referral Code 1990, but there are other provisions in the code dealing with referrals generally, with which you need to comply.



Section 2(9) requires firms to keep a record of agreements for the introduction of work. If the agreement is not in writing, you will need to have a written record setting out the terms. In the absence of a written agreement, or a sufficiently detailed record, you may have difficulty establishing that you have complied with the code. Section 2A(2) will oblige you to obtain an undertaking from the introducer to comply with the terms of the code.


The undertaking could be contained in the written agreement, which could also deal with the requirements of the code. That, in turn, will affect how the introducer operates, covering such areas as the restrictions on how the introducer is to acquire clients and the information to be disclosed to the client concerning the referral.


The Law Society's standards board has issued guidance on the changes and the amended rules. It was published as a supplement to the Gazette of 25 March 2004.



Question of ethics is compiled by the Law Society's professional ethics guidance team. Send questions for publication to Austin O'Malley, the Law Society, Ipsley Court, Berrington Close, Redditch B98 0TD; DX 19114 Redditch