In July 2025, the CLC elected to review referral fees, citing concerns around conditional selling and questionable sales tactics. In the interest of consumer choice, they are investigating the prevalence, transparency and value of these payments.
The SRA have been less vocal on referral fees of late, but it does have very strict rules in place already. Much like the CLC, its code of conduct states that the referral fees associated with the transaction must be disclosed to the client.
Past reviews haven’t changed anything significantly. A 2013 review by the CLC decided that “a ban on referral fees is not justifiable.” Similarly, the Legal Services Board in 2011 concluded that there was "insufficient evidence of consumer detriment to justify a general ban."
The CLC published the interim findings of its thematic review in June 2026. The report outlines how it assessed CLC inspection monitoring data, reviewed relevant complaints and conducted stakeholder interviews. Within a sample of 12 random practices of varying sizes, the use of referral fees varied significantly. Some firms relied only lightly on introducers (15% of work), while in other cases, referrals accounted for more than 85% of instructions. The issues and potential outcomes identified in the interim report are referenced throughout this article.
Brian Rogers FCMI brings up a valid point in his article, “Referral fees in conveyancing: if they weren't acceptable for personal injury, why are they acceptable here?” He states that referral fees for personal injury cases were banned in 2013 because the fee placed commercial incentive above the interests of clients. So, as he points out, “why does conveyancing continue to receive a regulatory pass?”
A key concern is that the client is often unaware of the referral fee. While both CLC and SRA explicitly state that there must be transparency around the referral fee, at times it is buried in the terms and conditions or not explicitly mentioned until the firm has already been instructed. This murkiness around transparency leaves a feeling of unease, with many clients unaware they’ve paid the referral fee at all.
The CLC interim report found inconsistent record-keeping of the sample firms they reviewed, with some written agreements missing or unavailable. The CLC outlined polarising views on referrals and consumer misunderstandings were flagged as one reason against them. The report stated:
“Our review identified that practices did not always put referral arrangements in writing nor were they regularly reviewing those arrangements, to ensure compliance with DPAC.”
Clients see the referrer as a trusted professional, so is it ethically wrong for them to refer someone if they’re getting a fee for it? If the client’s interests are no longer the paramount consideration, money could become the main motivator. It raises the possibility that the firm that wins the referral is the one that pays the highest fee, rather than the best firm for the client.
Concerns have been raised around some referral arrangements, with industry bodies recently describing the fees as a ‘hidden tax’ on the homebuyer. Brian Rogers FCMI mentions that he has encountered ‘upfront legal fees’ that the client assumes is going straight to the conveyancer, when they’re actually the referral fee going directly to the agent. The referrer receives their fee immediately rather than waiting until completion. As this fee never goes into the client’s conveyancing account, the money is not protected if the firm goes into administration and is non-refundable if the sale falls through.
The client has not been encouraged to shop around when a referral is made, and this raises concerns about whether the client is truly making a free and informed choice. First-time buyers are particularly vulnerable in these situations. They’re making the largest financial commitment of their lives and are being guided by their agent, believing they have their best interests at heart.
The CLC sourced feedback from the Consumer Reference Group (CRG) in the interim report. The CRG stated that many consumers are led to believe that the transaction will be expedited if the agent’s recommended conveyancer is used. They went on further to state that many consumers do not fully understand the market, rarely read terms and conditions and are emotionally vulnerable throughout the process. This leaves them open to pressures from introducers.
Some firms are heavily reliant on referrals to operate, as that’s where most of their instructions originate from. They are left then with little choice but to continue the referral relationship to keep their law firm afloat. In these instances, the power is in the hands of the introducer.
Brian Rogers FCMI also points out in his article that there are instances where the referrer expects updates on the case progress or dictates how the client relationship is handled. In these instances, conveyancing is then no longer an independent professional practice. Instead, it becomes a subcontracting arrangement where the referrer exercises control over the law firm. Some referrers have mandated suppliers, so the firm loses control over the cost and quality of this element of conveyancing.
“Respondents raised concerns about the impact of referral arrangements on independence and working practices. Estate Agents were perceived to exert undue influence over conveyancers and pressured practices to accelerate transactions, intervene in legal enquiries and prioritised speed over quality.”
-CLC Thematic Review of Referral Arrangements 2026: Interim Report
Some law firms are also tied into exclusivity clauses, unable to accept referrals from any other party, so they become truly beholden to the referrer. The introducer could demand that their instructions are transacted first or faster, which could put quality at risk.
Referral fees create a power imbalance. If your referrer negotiates harder or decides to change to another law firm, your pipeline is immediately at risk. If the client enlists the law firm for other services outside of conveyancing (such as will writing) the referral may also expect an additional fee for that.
The referral fee is oftentimes passed on to the consumer, and will pay more to the conveyancer than they would if they found the law firm organically.
“The level of referral fee varied across the CLC Lawyers we spoke with. Referral fees paid were £50, £100, £300 with some larger estate agents requesting £650 to £900 +VAT. Some conveyancers suggested that referral arrangements had become a significant commercial arrangement rather than simply a goodwill gesture.”
-CLC Thematic Review of Referral Arrangements 2026: Interim Report
This is a significant add-on cost when we consider current extreme cost-of-living pressures. Do we really want to discourage homeowners from moving due to high costs, when home moving is the very thing that our industry relies on for work?
In the interim report, interview participants expressed concerns that high fees can distort competition, undermine the financial viability of conveyancing firms and compromise professional independence.
If the law firm is not inflating their fee to cover the cost of the referral, then there is the danger that they will strip back the quality of their service instead to recoup these costs. The fee must be paid one way or another. Firms can also end up taking on unsustainable volumes of work to spread the cost. This low-margin, high-volume pressure leads to staff burnout and inefficient or lacking practices. In the interim report, the CLC stated that no one they spoke with admitted that high referral fees were passed on to the client. This suggests they are being absorbed by some practices as a ‘loss leader,’ which puts the quality of work at risk. However, the report did outline that:
“We were unable to determine, based on the data reviewed, whether referral arrangements affected the level of service provided to consumers.”
Some participants raised concerns about staff well-being, particularly in high-volume practices where firms take on work beyond their capacity due to concerns that declining instructions from introducers could jeopardise future referrals.
The buyer may fear that by refusing to use the recommended conveyancer, they could jeopardise their purchase. Some agents will also offer incentives to use the referrer, such as free floor plans or professional photos. These options may be unavailable to the client who chooses their own conveyancer.
Referral fees attract significant criticism, but is that reputation justified? Referrals can help consumers find a law firm quickly while providing valuable business for conveyancers. A recommendation is not inherently negative – provided it reflects genuine confidence in a firm’s service, reliability and expertise.
This is why transparency is key. Clients must be informed of any financial relationship and given the opportunity to consider alternatives. Not all referrals are fee-driven; many stem from genuine working relationships or confidence in performance. Estate agents also have a vested interest in smooth transactions, as poor conveyancing can damage their reputation and risk sales falling through.
An ethical referral relationship that isn’t purely transactional can be like a well-oiled machine; law firms and agents who collaborate well together can provide the homemover with a more seamless transaction. The CLC interim report stated that:
“Referral arrangements enable the conveyancer to establish a good working relationship with the estate agents and work together to improve the client journey.”
The majority of CLC lawyers interviewed were supportive of locally based referral arrangements, highlighting benefits including better understanding of the local market, improved communication, smoother chain progression and more realistic client expectations regarding conveyancing timescales.
A recent survey by Lyons Bowe Solicitors found that a third of buyers selected a conveyancer based on an estate agent recommendation, with only 40% comparing multiple firms. This is evidence of just how crucial this referral relationship is.
There is a valid argument that referral fees are simply another method of marketing. Rather than paying for adverts, SEO or business development, it is an easy way to secure business. And the fee itself is much like any other client acquisition cost.
An outright ban on referral fees would cause significant disruption to the sector. Some firms have built their business around instructions from referrers. A ban could see these firms go out of business, as they would likely struggle to generate direct demand themselves, having relied so heavily on introducers for so long.
There is also a danger that a ban could result in driving referral fees underground, moved off‑record. Transparency will go from murky to zero. There will also be a sudden surge in marketing from conveyancers, and competition will get tougher for those using techniques such as PPC to gain instructions.
Participants in the CLC interim report referred to the fees as ‘detrimental’ but several also called them ‘a necessity.’ Rather than an outright ban, a cap on the referral fee could be a valid alternative solution. The referral then becomes less about making money and more about referring the right law firm. Capping fees to around £100 could level the playing field for all law firms and be fairer for homemovers. This was a recurring potential solution outlined by participants in the CLC interim report.
Regulating estate agency can help address concerns around referral fees by better guiding behaviour. A clear code of conduct could introduce explicit rules around conditional selling. Mortgage broker Emily Franks has teamed up with trade publication FT Adviser to launch a petition calling for the introduction of estate agent regulation to put a stop to conditional selling. The MHCLG home buying and selling consultation also signalled intent to introduce mandatory qualifications and a professional code for property agents. Once the industry is properly regulated, any underhanded referrals should stop.
A further alternative to a ban would be stronger transparency; clear disclosure of the referral fee before instruction, and evidence that the client understands fully what they are paying for. The interim report highlighted the need to make it clear to clients that they have a choice of provider. Whilst they found that consumers do appear to be informed about the referral fee, “this is likely to be too late in the process for the consumer to make an informed choice about their provider.”
As a result of the interim report, an outright ban appears unlikely. If the CLC were to impose one, this would put CLC-regulated firms at a disadvantage. If a ban were to be put in place, for fairness, it should be applied across the entire sector. Overall, the report outlines that, “a ban on referral fees was considered commercially unrealistic.”
The CLC interim report outlines the key concerns relating to referral fees, and recommendations going forward include:
The CLC outlined that they require more evidence to make definitive conclusions, hence the interim report. They are advocating for a sector-wide discussion on the issue and a call for evidence. The topic remains very much a debate with strong views held from both camps.
The concern is that referrals can prioritise financial relationships over the quality of legal work, potentially leading clients to firms that are not the best fit for their needs. Would you prefer to be referred due to a commercial tie or based on your expertise and track record?
Although building referrals based on performance is challenging, it leads to a more sustainable business in the long run.
You don’t need to wait for the review to report before reducing your exposure. A few practical steps, in rough order of urgency:
Start by measuring your dependency. Pull last year’s instructions and work out what share came from each introducer. If a single source accounts for more than a third of your work, that’s concentration risk, and it’s the number to watch. Set your own threshold based on how quickly you could realistically replace that volume.
Check that your disclosure actually holds up. Both the CLC and the SRA already require referral fees to be disclosed, so the question isn’t whether you disclose but whether a client would say they understood. Look at when the fee is mentioned in your client care letter, whether it’s stated in plain figures rather than buried in your terms, and whether you keep evidence that the client saw it before instruction.
Read your referral agreements for the clauses that bite. Exclusivity terms, mandated suppliers (search providers, indemnity insurers, environmental report companies) and demands to transact certain instructions first are the arrangements most exposed if the rules change, and the hardest to unwind at short notice. Know which of your deals carry them.
Build one channel you own. Reputation, repeat work and recommendation take longer to establish than a referral deal, but nobody can switch them off. Past clients are the obvious starting point: they move again, they refer friends, and they need other legal services, yet most firms lose contact the day after completion. Our client retention tool, Convey Alerts, will notify you when your former client relists their property for sale. You can reach out to offer your services once again and drive loyalty. With tools like Convey Alerts, you can start owning client relationships again and taking back control of your pipeline.
In the interim report, participants noted that most conveyancers do not market directly to consumers due to high costs of doing so and given the sector’s typically thin profit margins. The beauty of Convey Alerts is that it is an affordable marketing technique and one that strengthens your customer retention rates and reputation.
Never lose sight of the fact that conveyancing is a people business. The transaction is all about people. Their lives. Their home. Win clients through being the best, not just from referrals. If you’re successful in the referral route, that’s great, but be mindful of the CLC review and perhaps start considering other avenues to source instructions – ones that you’ve secured through reputation, service and trust.