Personal injury referral fees are fees paid by solicitors to claims farmers and others who refer personal injury leads to them. Solicitors who cannot generate sufficient work by reputation alone, will often buy work in this way.
Typically, a solicitor has to pay between £700 and £1,000 for a personal injury lead. If a solicitor has paid a referral fee, they must disclose to the client that they have paid a fee and the amount of the fee paid.
In recent years, the insurance industry have been largely responsible for fuelling the growth in the number of personal injury claims by selling claims on to their small panel of solicitors. With their snouts in the trough, the insurance companies have made tens of millions of pounds a year in this way.
For some time, the government has been actively discussing the banning of referral fees for personal injury claims. This can only be a positive move. However, worried at the potential effect of this move on their income, insurance companies are now rapidly setting up their own in-house law firm operations to enable them to process the work. They are hoping that the fee income generated will replace the lost referral fees.