Law firm Minster Law has spoken out in support of referral fees.

Craig Underwood, director of legal services at the law firm, said: “I have reviewed all of the commentary from key stakeholders over the years on this issue and I believe the opposition comes from two camps. Firstly, from insurers who believe referral arrangements increase their claims costs by driving litigation and, secondly, from lawyers who cannot compete on price or service with those who pay referral fees.

“From our perspective referral fees are actually an efficient and cost-effective method of acquiring new business. They fund an entire claims and accident management infrastructure, enabling consumers to gain access to a wealth of services that would otherwise be expensive and inaccessible. We are completely transparent on our fees and how they are used.

“If referral fees were prohibited then other, potentially less transparent and more costly practices would prevail; for example marketing fees or the provision of discounted services to referrers.

“Either way, claims wouldn¹t decrease as costs associated with acquiring new business would still be incurred.”

Mr Underwood continued: “It is not referral fees that are responsible for increasing costs. It is a combination of irresponsible practices and inefficiencies on the part of both claimant lawyers and some insurers. ³In my view there is simply no justification for having to present low value personal injury claims to the courts.

“Of course this assumes that both the lawyer and the solicitor are prepared to act responsibly and in the interest of the claimant. Is it really beyond the wit of lawyers and insurers to be able to construct a claims process which provides the claimant adequate representation and a fair and reasonable compensation award and for insurers to maintain reasonable claims costs, which ultimately we all pay for anyway?”

Source: Post | 10 Mar 2010