Referral rule change
A change to the referral rule came into force on the 13th November 2009. The changes in the main increase the range of rules to cover all circumstances. For instance when acting for a referred client, the solicitor must act in the client’s best interests and guarantee that the conditions of the referral do no have an influence on the duty to be impartial and provide a good level of service. Where a pre-exisiting agreement exisits, which the client may have endorsed with the introducer the rules now provide that the solicitor must inform the client of that agreement and advise whether it serves the client’s best interests. The widening of the range does, however, exempt “before the event” providers (BTE) from a number of rules, meaning that BTE Insurers can carry on restricting decisions made by their policy holders’ legal representatives.
Also there is a new recommendation that the firm performs frequent reviews of its referral agreements to guarantee they stay rule compliant. The rules have expanded the meaning of ‘consideration’ for a service or referral to include intangibles like the broader relationship involving the introducer and the law firm.
The full wording of the rule can be found of the Solicitors Regulation Authority (SRA) website.