| Copyright (c) 2010 Evolution Legal | | | | previously stated they would) as it is not a very |
| When LJ Jackson sat down to re-write the future of | | | | capitalist thing to do, but in any event they didn't |
| legal services, top of his list seemed to be the | | | | want to ban them for those jolly good Solicitors, just |
| banning of referral fees and from all around it was 3 | | | | for those awful, ambulance chasing CMC's!!!!! Cheers |
| cheers for Jackson. Well hang on LJ you and your | | | | Henry, there's nothing like a free market economy to |
| gang are just plain wrong. | | | | ensure a level playing field is there? |
| Do you remember as far back as 1999 and the | | | | When the claims management market was regulated |
| newly written Access to Justice Act? If you can you | | | | in 2004, advertising for clients in hospitals was mostly |
| will recall that referral fees were banned at that point. | | | | abandoned by CMC's, only to be replaced at the |
| Hence convoluted business models (translation: back | | | | speed of sound by Solicitors. Who are the ambulance |
| door referral fees), the rise of Claims Direct and The | | | | chasers again? |
| Accident Group, severe malpractice (lawsuits still | | | | The snobocracy also appears closer to home. I was |
| ongoing?) and grossly inflated ATE premiums - all of | | | | recently having a few beers with some chaps from a |
| which led to satellite litigation, technical challenges and | | | | law firm to whom we refer work to (I wont name |
| an industry meltdown. | | | | names although I should!). Now this firm has |
| In 2004 sanity prevailed and there was a change to | | | | conservatively had 500 Personal injury referrals from |
| the Solicitors referral code, allowing referral fees to | | | | us in about 2 years and yes they pay us a fairly |
| be paid if handled in a transparent manner and this | | | | standard referral fee on a per case basis. It was all |
| resulted in the most stable period that the personal | | | | very convivial until the 3rd or 4th pint was downed, |
| injury sector has enjoyed for a long time and | | | | when the sneering dismissiveness began. |
| increased access to justice for the man in the street. | | | | "All you do is fill a form in and send it on to us" "We |
| This, coupled with the regulation of Accident | | | | do all the work" "All you do is sell claims on" |
| Management Companies resulted in a significant | | | | I was shocked to be honest. |
| watershed in the personal injury market. | | | | Not because these people seemed ignorant of how |
| If referral fees are banned once again, we will | | | | much work and marketing spend goes into to |
| undoubtedly see the return of back door payments, | | | | securing a contract with an Insurance Broker for |
| malpractice, legal challenges, back to the instability the | | | | example, so that the phone rings and there is a client |
| market endured around the start of the Century. | | | | on the other end needing assistance after an |
| The future threatened is completely out of kilter with | | | | accident. I already knew these were effectively |
| the modern commercial world and is effectively one | | | | house cats, sitting behind their desk being fed a |
| of legislation against market forces. | | | | steady diet of new clients each day, not knowing or |
| With the millions and millions of pounds spent by | | | | caring how that new client magically appeared in front |
| CMC's and Solicitors on advertising, the public are | | | | of them. |
| more aware than ever of their rights and of the | | | | But the level of malevolence in which their diatribe |
| availability of access to justice. Jackson believes his | | | | was delivered took me by surprise. These "Solicitors" |
| changes are about access to justice, but he has | | | | (they aren't actually qualified) were more than happy |
| monumentally failed to understand the market, | | | | to go and secure their pay rises on the back of |
| apparently looking upon CMC's as some sort of | | | | bringing a commercial relationship to the Partners, |
| "parasitical leach" and let's face it, who cares what | | | | happy to earn their bonuses on recovered legal |
| happens to them? | | | | costs, but actually they resent us as well. |
| In practice, referral fees paid by Solicitors to CMC's | | | | But what does this all mean for those outfits at the |
| merely form part of a marketing budget that the | | | | other end of the referral process, especially |
| Solicitor would no doubt have spent on some other | | | | Insurance Brokers? |
| sort of marketing drive, such as advertising, but has | | | | Are they going to lose their valuable revenue stream |
| chosen to spend the money with a CMC as there is | | | | of referral fees from their clients who have had |
| a some form of a guaranteed result - so who's | | | | non-fault accidents? If so does anyone care if this |
| decision is it to spend the marketing budget with an | | | | sends a few of them out of business? |
| advertising agency or with a CMC? | | | | Well yes we care! CMC's and Insurance Brokers have |
| So what is a referral fee? Certain people seem to | | | | a good understanding of what is required for the |
| use the term to imply some sort of dishonesty, but | | | | person who was actually involved in a non-fault |
| of course only when discussing those dastardly | | | | accident needs, the actual brass tacks of sitting on |
| CMC's! | | | | the side of the road with a car you cant drive and 2 |
| It is also perplexing that the legal snobocracy fail to | | | | screaming kids in the back. |
| realise that the year is 2010 and that Solicitors are | | | | The Broker understands because that's his client and |
| business people and are not following some kind of | | | | he wants them to renew their policy with them next |
| vocation. Operating a law firm on the basis that the | | | | year, so he wants the client to have an A1 level of |
| public will find you through membership in MASS or | | | | service, after all claims are the shop window of the |
| APIL or by walking into your office on the High | | | | Insurance process. The CMC understands because he |
| Street will result in failure, and the clever law firms | | | | wants the Broker to refer more clients to them, so |
| know this. But also please note: No-one is holding a | | | | who benefits? The client sat on the side of the road |
| gun to the head of the poor Solicitor, being bullied by | | | | with 2 screaming kids that's who! |
| the awful CMC. They choose to pay a CMC because | | | | At this point the Broker probably isn't thinking about |
| it is usually the most effective use of the marketing | | | | commissions or referrals, just the service that the |
| buck. | | | | client gets and there is the crux of the matter. For all |
| Furthermore, why is it that CMC's are the parasites, | | | | the talk about referral fees being banned, yes some |
| but Solicitors are perceived as "seekers of truth and | | | | CMC's will probably go to the wall and maybe even a |
| justice"? The marketing model for acquiring new | | | | few insurance brokers as well, but the real victims will |
| clients is broadly the same yet Conservative Shadow | | | | be the policyholders who will have any choice |
| Justice Minister Henry Bellingham, recently | | | | removed from their decision making process and be |
| commented that if the Tories got into power, they | | | | left with a massive call centre to talk to and try and |
| now don't want to ban referral fees (as they | | | | sort out a problem. |