Referral Fees Are For Touts

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Referral Fees Are For Touts

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The acceptance by an Advocate and Solicitor (“Introducer”) of any form of payment (such as commission) from any person merely for introducing clients to such person without the provision of legal services by the Introducer, is tantamount to touting on the part of the Introducer. Likewise, an Advocate and Solicitor shall not make any form of payment to any person for introducing clients to such Advocate and Solicitor.

Provided that this Ruling shall not prohibit the sharing of fees and costs by an Advocate and Solicitor with a qualified person, for legal services rendered by the Advocate and Solicitor.

Bar Council Ruling 14.23 | Payment for Introducing Clients | Took Effect on 15.1.2019

Lawyers are prohibited from accepting referral fees for merely introducing a client to another person without providing any legal work. This tantamounts to touting.

Lawyers, however, may work together and share fees. That means Lawyer X can introduce Client Z to Lawyer Y and work together with the latter to attend to the former’s work, which can be fee-shared. If Lawyer X merely introduces Client Z to Lawyer Y, he is not entitled to a ‘referral fee’.

The rule’s purpose is to prohibit lawyers from acting as a tout. A lawyer should be in the business of providing legal advice, representation and counsel. A lawyer should not look for clients and pass work on for a fee. That is not the primary nor even secondary work of lawyers. You do not need a legal education and training for that.

If work has to be referred, it is done as a matter of competency and professionalism. For example, if an intellectual property or admiralty matter comes to me, I generally decline it. It is not in my circle of competence. I would tell the enquirer that I am not competent to advise him and recommend a suitable lawyer.

I do not charge the enquirer a fee for the recommendation and my time in looking for a suitable lawyer for them. I do not ask for a referral fee from the lawyer I recommended. It is their good fortune. I am doing it to be helpful.

It is a pleasure and service enough to be useful to connect the enquirer to a suitable lawyer and end their tedium of making unfruitful inquiries. If it costs me so little to facilitate a win-win situation between others, why not facilitate it? I’d like to think it adds to the total sum of goodness out there. Assuming it all goes well, of course.

In the early years of my firm, a senior lawyer called me up about a matter he wanted to refer to me.

He asked whether I agreed to cut him in if he referred a client to me. As I had never participated in such an arrangement before and was curious about the rate, I agreed.

He said if it worked out, he wanted a cut of 30% of all invoices issued to the client as his referral fee. He did no work whatsoever. He didn’t even turn up for the first meeting with the client. 30% of all invoices for a measly introduction!

I was non-plussed.

I, of course, had no intention of fulfilling such a ridiculous arrangement. In any event, such an agreement would be void under section 24(e) of the Contracts Act 1950 for being against public policy, i.e., that advocates and solicitors cannot tout. It would go against that anti-touting policy. That’s how I would have argued it if push came to shove.

But I had a less contentious route available.

After the consultation with the client, I disclosed my arrangement with the introducing lawyer. I told them it was in their best interest not to proceed with me. Given that arrangement, they would not get full value for their money if they came with me. I recommended them another firm, which they were happy with.

That was the last referral I received from that lawyer. Just as well.

The easiest way to do this is to be genuine and work together. The fee can be negotiated and shared as agreed between the lawyers.

The point is client introduction in itself is not legal work. I recognise its significance and value in terms of financial opportunity. But the introducing lawyer must bring some legal game to the table. They must get involved in the case, not take their cut and disappear.

They must have some competency about them. Otherwise, they really have no business advising that client where to go because they are in a conflict of interest position. Their recommendation is limited only to lawyers who will give them a cut of the fees, not a suitable or appropriate one.

Lawyers should not be in the business of introducing clients for referral fees. Those kinds of lawyers are not interested in legal practice or the law. They are only in it for the money. The tragedy is that these kinds of lawyers would probably make more money in other employments.

Referral fees from introductions are a short-term play. It is mostly a series of one-off situations. The introducer becomes unnecessary once a relationship is established between the lawyer and the client. There is no serious growth or application regarding legal abilities or experience. There is not much in the way of personal growth because the relationships are more transactional than personal.

They become non-legal ‘lawyers’, i.e., qualified lawyers without legal knowledge or abilities. They are part of the legally qualified corpus of client formation and care, which is found in hotels, bars, restaurants, nightclubs, and sporting facilities and events instead of courtrooms, arbitration rooms, prison appointment rooms, or boardrooms.

Genuine lawyers would and should want more than just a cut of the fees. They would also want a cut of the work so they can grow, learn, and cultivate real legal skills and experience. That will earn lawyers the work – the reputation for effectiveness, trust and competency.

Referrals should be done in the bona fide spirit of helping someone in legal need by introducing them to a suitable and appropriate legal practitioner with the appropriate expertise or experience to advise them without expectation or demand for some commission or other and refusing it if given.

That is the mark of an advocate and solicitor and quality in the best traditions of the bar.

Referral fees are for touts.

An advocate and solicitor shall not do or cause or allow to be done, anything for the purpose of touting directly or indirectly, or which is calculated to suggest that it is done for that purpose.

Rule 51, Advocate and solicitor not to do or cause touting, Legal Profession (Practice and Etiquette) Rules 1978

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