SRA Handbook

Fee sharing and referrals

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Version 11 of the Handbook was published on 01/10/2014. For more information, please click 'History' Above

Chapter 9: Fee sharing and referrals

This chapter is about protecting clients' interests where you have arrangements with third parties who introduce business to you and/or with whom you share your fees. The relationship between clients and firms should be built on trust, and any such arrangement should not jeopardise that trust by, for example, compromising your independence or professional judgement.

The outcomes in this chapter show how the Principles apply in the context of fee sharing and referrals.

Outcomes

You must achieve these outcomes:

O(9.1)

your independence and your professional judgement are not prejudiced by virtue of any arrangement with another person;

O(9.2)

your clients' interests are protected regardless of the interests of an introducer or fee sharer or your interest in receiving referrals;

O(9.3)

clients are in a position to make informed decisions about how to pursue their matter;

O(9.4)

clients are informed of any financial or other interest which an introducer has in referring the client to you;

O(9.5)

clients are informed of any fee sharing arrangement that is relevant to their matter;

O(9.6)

you do not make payments to an introducer in respect of clients who are the subject of criminal proceedings or who have the benefit of public funding;

O(9.7)

where you enter into a financial arrangement with an introducer you ensure that the agreement is in writing;

O(9.8)

you do not pay a prohibited referral fee.

Indicative behaviours

Acting in the following way(s) may tend to show that you have achieved these outcomes and therefore complied with the Principles:

IB(9.1)

only entering into arrangements with reputable third parties and monitoring the outcome of those arrangements to ensure that clients are treated fairly;

IB(9.2)

in any case where a client has entered into, or is proposing to enter into, an arrangement with an introducer in connection with their matter, which is not in their best interests, advising the client that this is the case;

IB(9.3)

terminating any arrangement with an introducer or fee sharer which is causing you to breach the Principles or any requirements of the Code;

IB(9.4)

being satisfied that any client referred by an introducer has not been acquired as a result of marketing or other activities which, if done by a person regulated by the SRA, would be contrary to the Principles or any requirements of the Code;

IB(9.5)

drawing the client's attention to any payments you make, or other consideration you provide, in connection with any referral;

IB(9.6)

where information needs to be given to a client, ensuring the information is clear and in writing or in a form appropriate to the client's needs;

IB(9.7)

having effective systems in place for assessing whether any arrangement complies with statutory and regulatory requirements;

IB(9.8)

ensuring that any payments you make for services, such as marketing, do not amount to the payment of prohibited referral fees;

IB(9.9)

retaining records and management information to enable you to demonstrate that any payments you make are not prohibited referral fees.

Acting in the following way(s) may tend to show that you have not achieved these outcomes and therefore not complied with the Principles:

IB(9.10)

entering into any type of business relationship with a third party, such as an unauthorised partnership, which places you in breach of the SRA Authorisation Rules or any other regulatory requirements in the Handbook;

IB(9.11)

allowing an introducer or fee sharer to influence the advice you give to clients;

IB(9.12)

accepting referrals where you have reason to believe that clients have been pressurised or misled into instructing you.

In-house practice

Outcomes 9.1 to 9.3 apply to your in-house practice.

Outcomes 9.4 to 9.8 apply unless it is clear from the context that the outcome is not relevant to your particular circumstances.

Notes

(i)

This chapter should be read in conjunction with:

(a)

Chapter 1 (Client care)

(b)

Chapter 4 (Confidentiality and disclosure)

(c)

Chapter 8 (Publicity)

(d)

The SRA Authorisation Rules

(e)

The SRA European Cross-Border Practice Rules