Whilst not a secret, it’s something that many estate agents and legal firms prefer not to discuss and an issue they would happily avoid, but we feel the subject of paid referrals is something we need to be crystal clear about.
Since establishing in 1819, Milne Moser Solicitors has grown both in size and standing in the South Lakes and North Lancashire, building a well-earned reputation for our legal advice and representation and enviable standards for high customer service.
Our clients are happy to provide glowing testimonials of their experiences with us and, we are equally happy to say, they are comfortable enough to tell us frankly and honestly on the rare occasions when we may not have quite hit the mark.
Over these many years, our clients and professional associates – surveyors, mortgage and financial advisors, and even other estate agents – have also found good reason to recommend Milne Moser Solicitors to their friends, family and clients.
“There really is no greater compliment than having a new client referred to us.” says Justine Allen, a Partner at Milne Moser Solicitors. “It immediately reaffirms that we’re providing a great service and for a client or another professional to put our name forward is something we are always so appreciative of and will never take for granted.”
But not all legal firms are the same in this respect and the paying referral fees – particularly between solicitors and estate agents – is more commonplace than you might expect.
Put simply, if an estate agent, letting agent or perhaps a surveyor, financial advisor or architect, recommends a conveyancing firm or solicitor, they may well be doing so on the grounds that there are financial incentives involved in the shape of a referral fee.
We’d like to stress that this isn’t breaking any law and it is a practise which has been happening for as long as anyone can remember. That said, in 2019, the National Trading Standards Estate Agency Team launched new industry guidance on referral fees with an objective of making “previously hidden fees open and transparent to customers”.
With assistance from NAEA Propertymark, the Property Ombudsman, Property Redress Scheme, the Guild of Property Professionals and the Royal Institution of Chartered Surveyors, they looked to “improve transparency in the estate agency sector as part of the government’s aim to improve the home buying and selling process”.
Justine Allen continues: “Whilst there are transparency rules in place to protect the consumer, the reality is that these are frequently not complied with by agents or solicitors, and people need to be on their guard to be sure of the reason why a particular conveyancing firm is being recommended to them.”
“Milne Moser Solicitors have always taken the view that we do not pay referral fees for conveyancing work; we have never had to and have been able to rely upon our good reputation and word-of-mouth recommendations for new instructions.”
The paying for referrals is regarded by some firms as part of their business model and built-in to the final fees that clients are charged, a practise is one which is commonplace amongst large conveyancers (occasionally referred to as ‘volume conveyancers’ or ‘factory conveyancers’) where sheer volume of work to achieve profits is their driving objective.
“The size of these fees can be significant,” Justine continues, “and we have been made aware of firms paying in the region of £350 for each referral, so it is a potentially lucrative additional revenue stream for estate agents. When deducted from the conveyancer’s legal fee, this doesn’t leave much profit to play with and the cost of providing that service has to drop to accommodate it. When you think that conveyancing firms are there to protect their clients’ most valuable asset, this is quite a scary reality”.
“Consumers should also be wary in the event that they are contacted by legal service providers out of the blue as this can mean that their data has potentially been shared by an estate agent or broker, without their permission and in breach of GDPR and other data protection legislation.”
“Our position is that Milne Moser Solicitors will not pay for conveyancing referrals, nor will Milne Moser Estate Agents seek payment for referring our legal services”, concludes Justine.
“We will always welcome referrals from other estate agencies and there are several in our region who are happy to recommend Milne Moser to their clients, but this relationship is based on the quality of our work rather than any ‘back-handed’ financial arrangements.”
“By taking this stance, everyone – our clients in particular – can be assured of our best intentions when dealing with their matters and that our fees are solely based on the professional legal work we undertake on their behalf.”
National Trading Standards Estate Agency Team launches new industry guidance on referral fees
The Law Society Gazette – Conveyancing referral fees move up the agenda
Propertymark – Making referral fees transparent, NTSELAT guidance
Guidance on Transparency of Fees Involving Property Sales – Compliance with the Consumer Protection from Unfair Trading Regulations 2008 (Tom Crowther QC; Robert Brown – Solicitor, National Trading Standards Estate Agency Team)
Estate Agent Today – Goodbye referral fees? Conveyancing expert’s anger over IT crisis