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Appeal by solicitor manipulating referral arrangements successfully dismissed

12 March 2010

Reed v Solicitors Regulation Authority [2009] EWHC 1183 (Admin)

This appeal revisited a matter in which our team of professional discipline solicitors had brought successful disciplinary proceedings in the Solicitors Disciplinary Tribunal on behalf of the Solicitors Regulation Authority, following which the solicitor was ordered to pay a substantial fine.  

The solicitor had, prior to a change in the rules permitting such arrangements in certain circumstances, entered into a series of complex and intentionally hard to follow referral arrangements with a leading PI insurer and claims handler in an attempt to circumvent the ban against fee sharing and referral fees.  The referral fee was paid to the insurer through wholly-owned subsidiaries which had been set up to undertake certain investigative work.  The evidence showed that the solicitor believed that the fees paid to these subsidiaries were greater than the value of the work which she was contractually obliged to instruct them to undertake.

The solicitor appealed, arguing that she paid the intermediary companies for work which they genuinely carried out and that the SDT was wrong to look beyond that.  The appeal was dismissed, the court holding that it was right that the SDT had pierced the corporate veil and found that the true situation was that the insurer referred cases to the solicitor and received payment for doing so.