A local estate agent has sent the firm residential conveyancing work for years, and the firm pays a marketing fee on every completion. Pull one of those files at random and read the client care letter. The paragraph about referral arrangements carries the standard template wording, and the blank where the introducer's name and the fee should sit is still blank. Take a firm that receives sixty such matters a year and pays two hundred pounds a completion. On those illustrative numbers, twelve thousand pounds leaves the firm across twelve months in payments the client knows nothing about, and the money is recorded nowhere near the files that generated it.
The regulatory position is not obscure. A firm that receives work under a referral arrangement has to tell the client in writing that the arrangement exists and what fee or other benefit passes between the firm and the introducer. The disclosure belongs to the client rather than to the file, so it has to reach the person paying for the work, in terms they understand, before they decide whether to instruct. Alongside that sits the question of independence, because an arrangement must not compromise the firm's judgement or its duty to act in the client's best interests, which means the fee earner has to satisfy themselves that the instructions are the client's own rather than what suits the party who sent them. In personal injury work the position is firmer still, because referral fees in those cases are prohibited by statute, and no amount of careful disclosure cures a payment that should never have been made.
What a firm has to be able to produce
The practical test is evidential. For any given matter, a firm should be able to put its hand on three things without difficulty. The first is the written agreement with the introducer, current and in force on the date the matter opened. The second is evidence that the disclosure reached that client, meaning a dated document addressed to them and carrying the terms of the arrangement rather than an unfilled paragraph. The third is a record of what was paid on that matter and when. Firms that fail here rarely fail because they were trying to conceal anything. They fail because the three records sit in three separate places, held by three different people, and nobody has ever tried to line them up.
That is where the drift begins. Referral arrangements get negotiated once and reviewed never. The partner who agreed the terms has left, and the written agreement that ran for two years has now run for six on nobody's authority. The client care letter template carries a referral paragraph that goes out incomplete or gets deleted, because the fee earner opening the file does not know which introducer sent the client and has no field in the system telling them. Nothing connects the recorded source of the work to the disclosure that should have followed it, so the gap stays invisible until a client complains or a file is picked for audit.
What the office account is paying for
There is a financial dimension to the same problem. The payments go out through the office account, often on a monthly invoice from the introducer covering a batch of completions, and nobody reconciles that invoice back against the individual matters it relates to. So a firm pays for referrals on files it never opened, or keeps paying long after a source has dried up, and nobody knows the annual total leaving the business against work it was obliged to disclose. The accounting record and the compliance record answer the same question, and in most firms neither one is asked.
The Bracton AI Assistant reads across the whole caseload overnight rather than the single file somebody happens to open, so it compares the recorded source of every live matter against whether a referral disclosure went out on that matter, and puts the exceptions in front of a fee earner with the file reference attached. The assistant is built into Bracton, the case and client management platform, and a firm contracted elsewhere buys the assistant on its own, plugged into LEAP, Clio, Proclaim or whatever it already runs through the API the vendor provides, so there is nothing to migrate. Every output goes to a qualified fee earner for sign off before it leaves the firm.
Seeing the position on your own records teaches a partner more than reading about somebody else's. The client account review works from an export of your client ledgers, your cash book and your bank statements, read against the SRA Accounts Rules, so it reads your money rather than your correspondence, and it will not tell you which referral disclosures went out. What it does tell you is whether your own records stand up when somebody reads them against the rule they answer to, which is the test the referral file has to pass as well. If that is the question worth asking first, book a client account review.