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Referral Fees for Conveyancing – Still causing trouble?

Why would anyone ask their estate agent to recommend a Conveyancing Solicitor? Many do, and agents are always happy to recommend a firm. But how many people then discover that the Solicitor has had to pay a fee to the agent for this introduction? 

Daily Mail columnist Sebastian Kelly has been writing about this practice recently, following the report of the Legal Service Board on the referral fees in the legal professions. Paying such fees is a commonplace practice, not only by solicitors, but concerns have been raised as to whether a Solicitor paying such a fee is going to be working for the client or the agent. Sebastian’s view is that the payment of such fees should be prohibited, although the LSB’s report did not go that far. Instead, the Board proposed that each of the bodies regulating the various branches of the legal profession, such as the Solicitors Regulation Authority, should make regulations which would in particular require that any such fees should be notified to the client.

Estate agents have a vested interest in a sale going through, because they won’t be paid until completion. With the current low volume of conveyancing work, Solicitors may rely on introductions from a local agent to get work. So, will the buyer who goes to a Conveyancing Solicitor recommended by the agent be getting a fair deal if a large chunk of the fees paid to the Solicitor end up being paid as a referral fee to the agent (who will also be getting the commission for the sale from the seller!)? Won’t the Solicitor be more worried about not upsetting  the agent than putting the client’s interests first?

Many Solicitors accept paying such fees as a necessary part of obtaining work, and I recently saw an article in the legal press recommending that firms should make effective use of any connections with other professionals who might be able to introduce clients. The fees are paid not only for Conveyancing work, but in other areas in which Solicitors practice, such as personal injury claims. The days when people had a ‘family solicitor’ who did all their legal work have long gone. Solicitors firms need to find clients, and even for long-established firms this can be difficult. Most firms are too small to fund anything but local advertising, while effective use of the internet is beyond the capability of most. This can make it difficult for homebuyers to know which Solicitor to choose, especially first-time buyers who have had not previously needed legal advice for anything.

We turn to the internet to research almost anything now, including to compare prices and buy services. I assume that insurance companies pay fees to those price-comparison websites which allow me to check the best deal for my car insurance. So if I choose a Conveyancing Solicitor in this way should I be concerned if the Solicitor has paid a fee to a website such as this one. In my view this is no different to any other payment for advertising. The main thing to remember is that this website’s concern is that you get a good service at a good price, so your interests are put first. Unlike the seller’s agent, whose main concern is getting the sale completed, the website has no interest in the concerns of any other people involved in the transaction.

Conveyancing Solicitors found online in this manner will be acting for you, and you alone, and will put your interests first at all times. As I’ve said before, if they discover that the legal issues are insurmountable, or the risk too great to proceed with the sale, they will advise you not to go ahead.

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