Referral fees not linked to a rise in claims

The controversial practice of lawyers paying referral fees to brokers and accident management companies has not fuelled increased compensation payments, according to a new report for the Legal Services Consumer Panel.

The report finds that claims management companies have helped more personal injury claimants to achieve redress, without fuelling a “compensation culture”. It suggests that excessive or fraudulent claims are rare on the basis that insurers settle more than 90% of claims. But it recommends action to tackle pressure-selling by insurers to accept their lawyers.

The panel’s finding on referral fees runs counter to the Jackson Review of personal injury costs, which recommended banning referral fees.