Law firms turn away more valuable enquiries than they realise.
Sometimes the firm is at capacity. Sometimes the enquiry falls outside its main practice areas. Sometimes the client needs help with a connected issue: a will after buying a house, an LPA after dealing with elderly relatives, probate after a bereavement, trust advice, estate planning, tax-sensitive family arrangements, or property work linked to a wider personal or business matter.
The usual response is polite but commercially wasteful:
“Sorry, we do not deal with that type of work.”
The client then goes back to Google, asks a friend, or speaks to another professional adviser. The original firm has helped no one, earned nothing, and possibly nudged a good client relationship towards a competitor.
There is another option.
In the right circumstances, a law firm can build a compliant referral network and receive referral fees for suitable introductions. Done properly, this is not about selling clients. It is about improving client service, protecting relationships and making better use of enquiries that would otherwise be lost.
Are referral fees allowed?
In most areas of work, yes.
The SRA rules do not impose a blanket ban on referral fees or fee-sharing arrangements. The key is transparency, client choice and proper control.
Where you refer a client to another person, receive business from an introducer, or share fees, the client must be told about any relevant financial or other interest. They must also be told about any fee-sharing arrangement relevant to their matter, and the fee-sharing agreement itself must be in writing.
Referral-related payments must not be made or received in relation to clients who are the subject of criminal proceedings. You also need to be satisfied that clients introduced to you have not been acquired in a way that would breach the SRA’s regulatory arrangements if the person acquiring the client were SRA-regulated.
Personal injury is another major statutory exception. Referral fees are prohibited in claims for damages following personal injury or death, and that prohibition can also catch related claims arising out of the same circumstances.
For many other areas, including private client, estate planning, trusts, property, employment, corporate work and specialist advisory services, referral arrangements can be legitimate. The better question is not simply:
“Can we receive a referral fee?”
It is:
“Can we show that the arrangement is transparent, client-focused and properly controlled?”
The commercial opportunity
Most firms already receive enquiries they cannot or do not want to handle.
A commercial firm may have owner-managed business clients who need estate planning, wills or LPAs. A family firm may be asked about conveyancing or trusts. A litigation practice may receive enquiries about contentious estates but not routine probate. A property firm may have clients who need wider asset protection advice after a purchase.
Those enquiries often arrive because the client trusts the firm. That trust has commercial value, but only if the firm has a sensible way to respond.
A managed introduction is usually better than a dead end.
Instead of saying, “We do not do that,” the firm can say:
“We do not carry out that work ourselves, but we work with a trusted specialist who may be able to help. With your agreement, we can introduce you. We will also explain clearly whether there is any referral arrangement or fee.”
That is a better client experience. It also allows the firm to capture value from work it would otherwise have turned away.
Case study: the commercial firm turning away probate and estate planning work
Take a commercial firm acting for owner-managed businesses, directors, shareholders and entrepreneurs.
Its core work is corporate, commercial contracts, employment and property. It does not have a private client department. It is not trying to become a wills and probate practice. But, every few weeks, an enquiry comes in that sits just outside its core services.
A long-standing client mentions that their father has died and asks whether the firm can help with probate.
A business owner asks whether their shares will pass smoothly to the next generation.
A director who has just sold a company asks whether they should update their will.
A client buying commercial property asks whether the purchase affects their wider estate planning.
A shareholder asks about LPAs after seeing a parent lose capacity.
The firm’s usual response is:
“We do not deal with that, unfortunately.”
That is understandable, but it leaves value on the table.
The client already trusts the firm. The enquiry has arisen naturally from the relationship. The firm is not cold-selling a service or pushing the client towards something they do not need. It is simply recognising that a connected legal need has appeared and making sure the client is properly looked after.
A better response would be:
“We do not have a private client team in-house, but we regularly work with a trusted specialist firm that deals with wills, probate, LPAs, estate planning and trusts. With your agreement, we can introduce you. We will also explain clearly whether there is any referral arrangement or fee.”
That changes the whole client experience.
The client does not feel abandoned and the firm remains useful. The receiving firm gets a warm introduction, and the referring firm may receive a properly disclosed referral fee. Everyone understands the scope of the arrangement.
This can work particularly well for commercial firms because private client needs often sit close to business owner relationships. Succession planning, shareholder protection, LPAs, wills, trusts, estate administration and property arrangements are not random add-ons. They are often part of the same wider picture: protecting wealth, family, business continuity and control.
The compliance point is that the arrangement must be set up properly. The commercial firm should not refer every client automatically. It should be satisfied that the receiving firm has the right expertise, supervision, capacity and service standards. The client should understand the referral fee position and remain free to choose another adviser. There should also be sensible boundaries around future contact with the client.
A non-poach clause can help, but it should not be oversold (the client always has the right to instruct whoever they want on a future matter). What the agreement does is set expectations between the firms, reduce the risk of inappropriate cross-selling, and make it more likely that the client relationship is respected.
Without that framework, the commercial firm simply turns away good enquiries or makes informal introductions with no commercial return and no protection.
With it, the firm can improve client service, generate referral income, and build a more rounded professional network without trying to become a private client practice itself.
What does a compliant referral arrangement need?
A compliant arrangement needs more than a friendly understanding between two firms.
First, the client must be told about the arrangement in plain English. If the firm has a financial interest in making the referral, say so. If there is a fee-sharing arrangement, explain it. Avoid burying the point in dense terms of business.
Second, the referral must be in the client’s interests. A referral partner should not be chosen simply because they pay the highest fee. You should be comfortable that they have the right expertise, capacity, supervision, service standards and regulatory standing.
Third, the client must retain choice. The client should not be pressured into using the referral partner. They should understand that they are free to choose another firm.
Fourth, confidentiality and data protection need to be handled properly. Do not pass client information to another firm or professional adviser unless you have a proper basis for doing so. In most cases, that will mean clear client consent before making the introduction.
Fifth, the arrangement needs monitoring. Firms should know how referrals are made, what clients are told, whether the service is good enough, and whether any issues or complaints have arisen. A written agreement is important, but it is not the whole answer.
Choosing the right referral partners
The best referral networks are built deliberately.
It is not enough to know a friendly partner at another firm. You need to understand what the receiving firm can actually handle, how they supervise the work, how quickly they respond, how they price matters, and what sort of client experience they provide.
For private client and related work, that might include wills, probate, estate administration, LPAs, trusts, estate planning, taxable estates, property issues, vulnerable clients, business succession and more complex family arrangements.
For other firms, the useful network may include employment, commercial property, family, litigation, Court of Protection, agricultural property, pensions, sanctions, immigration or specialist regulatory work.
The commercial opportunity is real, but the quality of the referral partner is what makes the model sustainable.
We can help
JBL Compliance can help firms turn informal referrals into a proper, SRA-compliant referral arrangement.
We can help you:
- identify suitable referral partners;
- review or draft the compliance framework around the relationship;
- prepare client-facing disclosure wording;
- check whether your process deals properly with consent, confidentiality and client choice; and
- build a simple monitoring process so the arrangement remains compliant in practice, not just on paper.
For firms that regularly turn away enquiries for wills, probate, LPAs, trusts, estate planning, property or other specialist work, this can be a practical way to improve client service and create value from work that would otherwise be lost.
If your firm is turning away good enquiries, JBL Compliance can help you build a compliant referral model and connect you with suitable referral partners.
