Janet Cruise admitted paying £47,000 for 38 personal injury cases through an arrangement with a third party
Merseyside solicitor Janet Cruise has been rebuked and fined £2,000 by the Solicitor’s Regulation Authority (SRA) for one of the first known breaches of the referral fee ban.
Cruise, a sole practitioner of Wolf Law Solicitors, admitted to paying £47,000 for 38 personal injury cases through an arrangement with a third party, Karl Fischer Limited (KFL).
Cruise had believed when she made the arrangement in April 2013, the month the fee ban came into force, that it would comply with the Legal Aid, Sentencing and Punishment of Offenders Act (LASPO).
But the regulator said that in spite Cruise admitting that she first learned of the non-compliance problems in July 2013 she did not begin to terminate the irregular referral arrangements until Christmas 2013, some five months later.
This delay was not satisfactorily explained, the SRA said.
Towards the end of 2012, Cruise was approached by a person call Karl Fischer who was at the time, employed by another law firm.
He told her that he had a business proposal for her. His company, KFL, would enter into a non-exclusive arrangement for payment of a marketing fee calculated at 50% of the recovered costs in any litigation.
KFL would refer claimants to Cruise who, in turn, had been referred to KFL by intermediate sources.
In a statement the SRA said Cruise was satisfied at the time that the arrangement did not infringe LASPO.
But by the Summer of 2013, she realised that the referral was not complaint with LASPO. The firm had started to receive communications directly from the intermediate sources that contained the prospective claimants’ details and not through KFL.
The SRA said this was a breach of the LASPO regulations – adding that Cruise knew this was the case.
LASPO prohibits firms from acquiring personal injury clients by paying a third party for their referral to the firm.
Cruise explained she had devised a process to risk assess incoming claims, but had delegated the responsibility of implementing it.
But the SRA said she placed an ‘unjustified and disproportionate’ amount of trust and reliance in Fischer, allowing him to be the first point of contact for claims.