Conveyancers and their brown paper envelopes

Kick backs paid to estate agents by conveyancing companies could be outlawed, after a decision by regulators to lobby for their ban.

The Law Society, which represents all UK conveyancing solicitors, has tabled a motion to ‘make representations to government and the Legal Services Board that referral fees do not have a place in markets for legal services’ and that they should be banned. The Council of Licensed Conveyancers, who regulate Licensed Conveyancing Firms has not made a similar motion.

My firm stopped paying estate agents fees a while ago now. I don’t know what it is like outside London but in London estate agents typically receive anywhere between £100 and £400 for each referral lead that converts into a conveyancing instruction which reached completion.

The motion follows recent research by the Office of Fair Trading which found that 80% of estate agents recommend conveyancing solicitors to their clients, and half of these receive referral fees as a result. I believe that the OFT report underestimated the level of commissions being paid and the level of disclosure to clients.

One can expect some law firms who pay large referral fees to win business fight “ tooth and nail “ against a ban on referral. No doubt they will role out the argument that they have not received a single client complaint regarding referrals fees. But do their clients know that a referral fee has been paid ?