The government must abandon its current proposals to ban referral fees in personal injury cases and start again from scratch, Chancery Lane has urged.

Writing in the Gazette today, Law Society policy chief Mark Stobbs says the relevant amendments to the Legal Aid, Sentencing and Punishment of Offenders Bill (LASPO) will have ‘unintended consequences’ and should be ditched.

The government’s real problem with referral fees is not ethical, but that it thinks they encourage frivolous claims, says Stobbs. LASPO’s agenda is to cut the number of claims, he adds, but this ‘won’t work’ because the major claims-handlers and insurers will enter into alternative business structure arrangements with law firms and ‘internalise’ the referral fees that they are currently receiving.

Meanwhile, Stobbs adds, firms that currently pay referral fees will not be able to compete, resulting in less client choice.