Why we don't pay referral fees

At the end of a transaction, there is no better feeling than being praised for the work you have done. It motivates and drives us all as lawyers. We often receive calls and emails from estate agents and sale progressors stating they will be recommending us to future sellers and buyers, but at the same time, they ask if our firm offers referral fees. Our answer is a resolute no.

It is still common practice for many conveyancing firms to pay referral fees to estate agents who recommend their services. We can appreciate that the more referrals agents make, the more reward they receive, but at what cost? We often work on the opposite side of conveyancing firms that offer such referral fees and find the firms can be slow, causing unnecessary delays. Agents sometimes complain they cannot speak directly with the firm to whom they have made the referral and must relentlessly chase to receive an update.

The issue raises the question, "Are estate agents recommending the firms because they pay a referral fee or because they have had good experience and can support their recommendation based on merit?". 

Which is best for the client?

We all know that recommendations are a driving force behind people's decisions about what they buy and the services they use. If an estate agent the client has already trusted to sell their property recommends a conveyancer, the client is likely to feel that the recommendation is a good one.

As part of National Conveyancing Week, we want to "Inform; Educate; Assist; Motivate and Reassure" [1] Estate Agents when responding to a client request for whom they recommend and to highlight the benefits of referring their clients and buyers to a solicitor/ conveyancer who they know to be good at the job and not merely for the referral fee.

However, a closer examination reveals potential conflicts of interest and ethical concerns arising when solicitors pay estate agent referral fees.

Possible conflicts of interest

Referral fees are payments solicitors give to estate agents for client referrals. While this may seem harmless, it can become a conflict of interest that can harm the client. This symbiosis can quickly devolve into a conflict of interest detrimental to the client's best interests. 

When solicitors pay referral fees to estate agents, there's a risk that the agent's recommendation may be influenced more by financial gain than by the solicitor's competence and suitability for the client's needs.

Another concern is the erosion of trust and transparency. Clients expect their chosen professionals to act in their best interests without any underlying financial motivations. However, when referral fees are involved, doubt could be cast upon the sincerity of the recommendations. 

Clients may rightfully question whether they're being directed towards a solicitor based on merit or merely as a result of financial arrangements between the estate agent and the solicitor.

Why we get recommended

The benefits of estate agents referring to Birkett Long include;

- We have teams across multiple specialities, including Family Law, Wills, Trusts and Probate and Business teams, to name a few. When an issue arises in a transaction where further support is needed, we have teams who are able to assist, e.g. Declarations of Trust, obtaining Probate in house or even property disputes. This allows for transparency and regular updates for agents.

- We are often asked by other teams if we have any recommendations of estate agents whom we have worked with and found to be excellent at the job. Work with us, and you will have an opportunity to build a relationship with our firm. Our family team has clients who need to sell their properties due to divorce, and our probate team has properties to be sold following the proprietor's death. We will recommend agents who have been invaluable to our past transactions and have shown their drive to reach the end goal for our clients.

- We are not afraid to ask you for an update. Conveyancers often face a brick wall when we are ready to exchange. Days are spent waiting for a conveyancer on one side of a transaction to come back to us to provide an update on their position. As the agent, you have the benefit of speaking directly with both parties to a transaction and resolving issues faster. We recognise when we need your support and will reach out to see where we can work together for our client's benefit

The benefits to our clients;

• A referral should result in happy clients and happy agents. When you make a referral to us, we want to ensure we stand up to your recommendation. We have received numerous testimonials from clients showcasing our communication and value. Our goal is to ensure clients receive good service and communication throughout their transaction.

• Recommendations based on experience reduce any conflicts of interest. The commercial relationship between agents and conveyancing firms offering referral fees might not have the client's best interest at the heart of the transaction.

• We pride ourselves on the service we provide, offering good communication and a designated conveyancer at the end of an email or call ready to provide an update. We have a team of 6 conveyancers, 4 conveyancing assistants, and 2 members of our team committed to providing quotes, handling enquiries and opening files. When a conveyancer is on annual leave, another member of the team will step into their shoes with full knowledge of the file.

Our view

We do not pay referral fees as we do not believe referrals should be made with the promise of receiving a fee for the recommendation. Referrals should be based on estate agents’ experience and knowledge of conveyancers and their firms. Building a relationship with us can, in turn, create a positive discussion about our experience with you and improve our in-house referrals to excellent estate agents who we know and trust.

This blog is part of Birkett Long's National Conveyancing Week celebrations. If you would like to discuss our conveyancing services, please get in touch. I can be contacted on 01206 217328 or via email at sarah.murphy@birkettlong.co.uk.