Can law firms pay referral fees in England and Wales?

In England and Wales, law firms cannot pay or receive referral fees in personal injury or death claims: section 56 of LASPO 2012 bans them. In other work, the SRA Code of Conduct permits referral arrangements subject to conditions, including telling clients about any financial interest and putting fee-sharing agreements in writing. Referral fees are not allowed for clients in criminal proceedings.

This post describes what the legislation and the SRA's published guidance say. It is not legal or regulatory advice, and any actual or proposed arrangement should go to your COLP, and if needed to the SRA's ethics helpline or your own adviser. It is part of our guide to how law firms get clients.

What is a referral fee?

In ordinary terms, a payment made to someone for introducing a client, or received from someone for sending them a client. The legal definitions are wider than that. Section 56 of LASPO treats a referral as providing information to another person that they would need to offer the relevant legal services, where the person providing it is not the client. The SRA's Q&A on the personal injury ban notes that "payment" has a broad meaning, covering any form of consideration, whether the benefit goes to the regulated person or a third party, and it includes sharing profits from a case.

Paragraph 5.2 of the SRA Code of Conduct for Solicitors adds an important presumption: where it appears to the SRA that you have made or received a referral fee, the payment will be treated as one unless you show it was not made as such. In other words, the burden sits with the firm.

Are referral fees banned in personal injury?

Yes. Section 56 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 prohibits a regulated person from paying or receiving a referral fee for prescribed legal business, which covers claims for damages for personal injury or death and related business. It also prohibits being paid for arranging for another person to provide services to a client in that work. The ban has applied since 1 April 2013 and the SRA monitors and enforces it for the firms it regulates.

The SRA's guidance makes two further points worth knowing:

• Payments for genuine services can be lawful, but must genuinely be for the service. The SRA's Q&A says a regulated person needs to be satisfied that any payments are purely for the marketing or other services provided, and not for the referral of business.
• Structuring around the ban is not the end of the question. The SRA has said it is concerned that some firms set up arrangements that do not breach LASPO but fail to consider their wider duties to clients, which may breach its Standards and Regulations.

The SRA's guidance on referral fees and its Principles lists risks it has seen, including deducting payments from damages without proper informed consent, leaving advice on funding to an introducer, and steering clients to services where the firm receives a commission.

Can solicitors pay referral fees in other areas of law?

Outside the personal injury ban, the SRA Code of Conduct permits referral arrangements, subject to its requirements. Paragraph 5.1 of the Code, as published, covers referrals, introductions and separate businesses. In summary, it requires that:

• clients are informed of any financial or other interest you or your business has in referring the client to another person, or which an introducer has in referring the client to you;
• clients are informed of any fee-sharing arrangement relevant to their matter;
• fee-sharing agreements are in writing;
• you do not make or receive referral fees for clients who are the subject of criminal proceedings; and
• clients introduced to you by a third party have not been acquired in a way that would breach the SRA's regulatory arrangements if the person acquiring them were regulated by the SRA.

That last point matters for any firm buying enquiries from a marketing company. How the introducer found the client is the firm's concern. Paragraph 8.9 of the Code, for example, says solicitors do not make unsolicited approaches to members of the public, other than current or former clients, to advertise legal services.

Read the Code itself for the exact wording. The summary above is ours.

Can a law firm pay for marketing or lead generation?

The SRA's Q&A on the personal injury ban draws the line at what the payment is for. Paying for advertising, a directory listing or marketing services is different from paying for a referral, but the SRA expects a firm to be satisfied that payments are for the service and not for the referral. A pay-per-lead arrangement in personal injury is exactly the kind of structure a firm would need to examine very carefully with its COLP.

In other practice areas, paying a lead generation company may still be a referral arrangement, with the disclosure and written agreement requirements of paragraph 5.1, and the introducer's methods still matter. There is no safe assumption either way; it depends on the arrangement.

What should a firm check before any referral arrangement?

Not advice, but a list of questions the published rules raise, to take to your COLP:

• Is any of the work personal injury or death, where section 56 of LASPO applies?
• Could any client be the subject of criminal proceedings?
• What exactly is being paid for, and could it look like payment for referrals? (Remember paragraph 5.2's presumption.)
• How does the introducer find clients, and would that method breach SRA rules if the introducer were regulated?
• How and when will clients be told about any financial interest or fee-sharing arrangement?
• Is the agreement in writing?
• Does the arrangement affect the firm's independence or the advice clients receive?
• Who reviews the arrangement, and how often?

How do firms grow referrals without paying for them?

The strongest referral relationships in legal services are usually not paid at all. A referrer sends people to a firm because it makes them look good to their own client. That gives a firm three things to get right:

• Be reachable. A referrer's client who rings and gets voicemail reflects badly on the referrer. They notice, and they stop.
• Be quick. Referred enquiries are warm but not captive. The Legal Services Consumer Panel's 2025 tracker found 57 per cent of people who had a recommendation still looked for more information before making contact, and many shop around.
• Close the loop. Tell the referrer, only with the client's consent, and without any detail of the matter, that their contact was looked after. A thank you costs nothing.

A simple operational method: list your top ten referrers by instructions over the last year. For each, write down the name of the person at your firm who owns the relationship, when you last spoke, and how their referrals are answered. Most firms find at least one referrer who stopped sending work and nobody noticed. For how to measure referral sources in the first place, see repeat instructions and referral sources.

What about reciprocal referrals?

Two firms or professionals agreeing to refer to each other raises the same questions as a paid arrangement: is there a financial or other interest the client should know about, and is the recommendation genuinely in the client's interests? The Code's requirement to inform clients of "any financial or other interest" is not limited to cash. Recommending a professional because they are the right person for the client is the test to hold yourself to. Again, your COLP is the right person to ask about a specific arrangement.

A worked example: the unpaid referral that was lost

A hypothetical example with invented numbers. A local accountant refers around two clients a month to a firm's private client team, with an average fee of £2,000 per matter. Over three months, two of the six referred clients ring at lunchtime, reach voicemail and instruct elsewhere. The accountant hears about it from one of them.

The lost fees are £4,000. The larger cost is the relationship: if the accountant quietly stops referring, the firm loses about £48,000 a year of work, without ever knowing why. No referral fee would have fixed that. Answering the phone would have. We explore more ways to protect referral income in business development ideas for law firms, and the general method for not losing enquiries in how to generate leads for a law firm.

What should a firm track to know its referrals are healthy?

Whatever arrangements a firm has, the operational measures are the same, and none of them involves money changing hands:

• Instructions by referrer, monthly, so a referrer who goes quiet is noticed within weeks rather than at the year end.
• Time to first contact for referred enquiries, measured separately. Referred clients deserve the fastest response the firm has, because two reputations are at stake.
• Conversion of referred enquiries. It should be higher than for strangers. If it is not, look at how they are handled.
• Feedback to the referrer, recorded as done or not done for each referred client, only with the client's consent and without any detail of the matter.

A useful habit is a quarterly note to each significant referrer: not a sales pitch, just a thank you and a line on anything that has changed at the firm, such as a new team member or a new service. It keeps the relationship warm without any question of payment.

Firms that do this well also tend to agree internally who handles referred enquiries. If an accountant's client rings and is passed around three people before anybody takes their details, the accountant will hear about it.

Where WasilX fits

Cam, our AI Engagement Coordinator, takes calls on the firm's line at any hour, says it is AI, asks the firm's own qualifying questions (including how the caller heard about the firm), books the call back and sends the firm a summary. That protects the referrals a firm already has. We do not advise on referral arrangements. If you would like to talk about the enquiry side, we are happy to.

Frequently asked questions

Can solicitors pay referral fees in England and Wales? Not in personal injury or death claims, where section 56 of LASPO 2012 bans them. Elsewhere, the SRA Code of Conduct permits referral arrangements subject to requirements such as informing clients and putting fee-sharing agreements in writing. Check any arrangement with your COLP.

When did the personal injury referral fee ban start? The ban in section 56 of LASPO 2012 has applied since 1 April 2013, according to the SRA's guidance.

Can a law firm pay a referral fee in a criminal case? The SRA Code of Conduct says you do not make or receive referral fees in respect of clients who are the subject of criminal proceedings.

Is paying for marketing the same as paying a referral fee? Not necessarily. The SRA's guidance says payments must genuinely be for the marketing or other services provided and not for the referral of business, and the Code presumes a payment that looks like a referral fee is one unless the firm shows otherwise.

Do clients have to be told about referral arrangements? The SRA Code requires clients to be informed of any financial or other interest in a referral and of any relevant fee-sharing arrangement.