New releases

Referral fees and Red Tape in seventh version of Handbook

The seventh version of the Solicitors Regulation Authority (SRA) Handbook is now in force.

Changes for Version 7 include the Outcomes that deal with the ban on referral fees in personal injury cases, and the removal of rules put forward in the first phase of the Red Tape Initiative. The referral fees rules were agreed by the SRA Board on 23 January, while the Red Tape proposals were ratified at a specially-convened meeting on 27 February.

Referral fees are dealt with by two new Mandatory Outcomes, which can be found in Chapter 6 and Chapter 9 (of the Code of Conduct) respectively, and which state that "you are not paid a prohibited referral fee" and that "you do not pay a prohibited referral fee". On top of the two new outcomes, the Glossary defines prohibited referral fees, while Indicative Behaviours in the Code illustrate how the outcomes can be achieved, avoiding the need to include detailed prescriptive rules.

The ban on referral fees has been introduced by the Government amid concerns of the high cost of civil litigation, rising insurance premiums, increasing numbers of claims and the perception of a "compensation culture", where people are encouraged to claim for minor or even fictitious injuries. The ban comes into force on 1 April 2013 as part of the Legal Aid Sentencing and Punishment of Offenders Act 2012 (LASPO).

The Red Tape Initiative takes advantage of the flexibility offered by outcomes-focused regulation by removing rules and processes that are no longer necessary. The changes include:

  • Removing restrictions on charging by in-house lawyers employed in not-for-profit organisations
  • Allowing in-house solicitors employed by local authorities to charge charities for legal services in their local area
  • Approval of RELs and RFLs as new managers and owners
  • Approval of a single COLP and COFA in related authorised bodies
  • Simplification of our regulation of training contracts for trainee solicitors
  • Simplification of our pre-admission processes and requirements

The SRA has committed to this being an ongoing initiative, with the programme already garnering further suggested areas for consideration, which will be looked at over the coming months. A second consultation will start next month and report back in June for Handbook changes planned for 1 October 2013.

The seventh version of the Handbook can be accessed here:

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