What Are Referral Fees in the Legal Industry and Why You Should Be Wary of Them

What Are Referral Fees in the Legal Industry and Why You Should Be Wary of Them

In today’s legal market, referral fees have become increasingly common. What many clients don’t realise is that these referrals frequently come with a price tag, often without you being aware of it until you read the small print.

This blog explores what referral fees are, how they work and why they continue to generate debate across the legal industry.

What Are Referral Fees?

A referral fee is a payment made by a law firm to a third party in exchange for directing clients to them. While solicitors must disclose these fees to you by law, many clients only find out after they have already committed.

Although perfectly legal when properly disclosed, referral fees can create conflicts of interest and can financially disadvantage the very clients’ legal services are meant to protect.

Impacts of Referral Fees

Recommendations May Be Driven by Payment, Not Quality.

A significant industry concern is that referrals made under financial arrangements may not reflect a solicitor’s true capability, service standards or suitability for a client’s needs. Introducers are often incentivised to refer clients to the firms that pay the highest referral fees rather than those with the strongest track record or the most relevant expertise. This can result in clients being directed to a firm that is profitable for the introducer; but not necessarily the best choice for their case. 

Ultimately, such practices risk reduced service quality and may prevent clients from receiving representation from the most experienced or well-suited firm available.

You Are Likely Paying for the Referral, Not the Firm

Despite what referral-based companies may suggest, someone ultimately pays the referral fee and it is rarely the introducer or the law firm. In most cases, the cost is passed directly to the client through higher legal fees or unnecessary add-on charges. Although the introducer receives the payment, law firms seldom absorb this expense. Instead, it is typically built into the client’s costs through increased base fees, additional administration charges or uplifted rates presented under different labels. The result is that clients may unknowingly fund the very referral that led them to the firm in the first place.

Legal Fees May Appear Higher Than Competitors

A firm that pays substantial referral fees—often hundreds of pounds per client—must recover these costs somewhere. As a result, firms engaged in paid referral arrangements frequently quote higher prices than those that rely on organic or merit-based referrals. 

These inflated costs may be built into the overall fee structure, making services appear disproportionately expensive even when the quality does not justify the increased price. 

This practice contributes to inconsistency in the market and can leave clients paying more simply because their referral carried a hidden financial burden.

Potential Conflicts of Interest

When an introducer receives a payment for sending a client to a particular firm, the recommendation can never be entirely impartial. Financial incentives often overshadow the client’s best interests, creating a clear conflict between what benefits the introducer and what benefits the individual seeking legal help. Because each referral generates income, the introducer’s guidance is inevitably influenced by profit rather than objective assessment. This raises legitimate concerns about whether the referral is genuinely aligned with the client’s needs or simply the most lucrative option for the introducer.

Reduced Transparency and Trust

Referral arrangements are often buried within lengthy terms and conditions, meaning many clients only discover the existence of a referral fee after they have already instructed the firm. While disclosure is a legal requirement, it does not guarantee clarity. In practice, many clients do not read detailed engagement letters, are unfamiliar with what a referral fee actually is or do not realise how it may affect the price they pay. This limited visibility undermines trust and prevents clients from making fully informed decisions, leaving them feeling misled once the true nature of the arrangement becomes clear.

How to Protect Yourself from Additional Fees

• Always get at least 2–3 independent quotes

• Do not rely solely on a single recommendation—especially from a party who stands to gain financially from it.

• Ask the firm outright whether they pay referral fees

• Solicitors are required by law to tell you if they pay a fee for your work. This should also be clearly set out in the client care letter or terms and conditions.

• Don’t be afraid to choose your own solicitor

You are under no obligation to use the firm recommended by an estate agent, broker or will-writing company. Your legal representation is your choice and choosing a firm based on trust, is always in your best interest.

RJM Solicitors’ Zero Referral Fee Promise

At RJM Solicitors, we are proud to operate a strict zero referral fee policy.

Every referral to or from our firm is based purely on merit, experience and professional reputation, not on financial incentives.

We believe clients deserve complete transparency, fair pricing and legal services driven by quality, not referral agreements.

Call RJM Today for a Free, No-Obligation Quote on 01685 373721 or email us on info@rjmsolicitors.co.uk

Experience honest, transparent and client-focused legal services without hidden referral fees.