Referral fees – the business of access to justice

Abstract

The paper examines the controversial issue of referral fees for personal injury claims. It looks at the function of referral fees in the civil justice system, their relationship to the guarantees of access to court and the right to seek legal assistance in ECHR Art 6, and the debate about promoting access to justice or a litigious society. It examines the experience of the referral fees market in England and Wales, where the costs of referrals have risen dramatically and there is concern that referrers are auctioning their customers to the highest bidder rather than helping them find competent lawyers. Sir Rupert Jackson recommended banning referral fees in his report on the costs of civil litigation, and the Government has announced it will implement this recommendation. The paper considers the potential effects of a ban on competition in the legal services market and its compatibility with UK and EU competition law. The paper argues that a combination of better regulation of the industry and proper regulation of costs rules is a better and more proportionate way of controlling legal costs and the quality of legal services than an outright ban. While referral fees have not delivered all the benefits one would expect from a for-profit independent referrals service, they can help people obtain information about their legal rights, and competent lawyers to enforce them. This service is particularly valuable given that the state has substantially cut public funding of the civil justice system in recent years.