Referral Agreement

Referral arrangements often start with only the basic terms recorded, such as the percentage fee share payable to the referrer for any referral that results in new business. They can quickly become contentious when situations arise that were not contemplated by the parties at the outset, such as extensive repeat business. It pays to have a proper referral agreement in place from the outset to avoid costly disputes later.

Where referral agreements need to be precise

A referral or introducer agreement sets out the terms on which one party pays the other for introducing clients, customers, or business opportunities. It covers what triggers a referral fee, how much is payable, any exclusivity arrangements, duration, confidentiality, and termination. Without a clear agreement, disputes about who introduced whom and how much is owed are common and difficult to resolve.

The drafting needs to address what counts as a referral; how long the referral 'tail' lasts (does the referrer get paid on year-two revenue from a referred client?); whether referrals are exclusive; and, in regulated sectors, whether the arrangement complies with the rules on inducements and disclosure.

For solicitors and other regulated professionals, getting the regulatory point wrong is a regulatory risk, not just a contractual one. The agreement does not need to be long, but it must be clear and address all potential areas of dispute.

Example: a typical scope and fixed fee

For a two-party referral arrangement, the typical scope looks like this.

What's included

• A consultation to understand the referral relationship
• Drafting of a referral or introducer agreement covering triggers, rates, exclusivity, duration, confidentiality, and termination
• Guidance on any regulatory considerations relevant to your sector
• One round of revisions based on your feedback
• Final version ready to use

What's outside this scope

• Negotiation with the other party beyond the scope described above
• FCA-regulated referral arrangements (seek specialist financial services advice)
• Tax advice

Fixed fee: £450, no VAT.

How I will approach your matter

Once you have instructed me, I will arrange a consultation to understand the referral relationship and any relevant regulatory considerations before drafting. The agreement will be specific to your arrangement.