Saving A Fortune for Canadians: Part 3 of 5

“I can refer you to somebody…” ever heard that line? You almost definitely have, perhaps your realtor talking about getting a mortgage … or your accountant discussing some legal work… or even your physician in the context of seeing a specialist. You think they’re being helpful. You even feel you owe them for their doing you a favour.

There’s another way to translate this seemingly helpful statement, “I know somebody who may be inept but will pay me a fat commission if I introduce you and you take their service.” Sometimes this kickback is legal. Sometimes it is not. Sometimes the victim is very wealthy. Sometimes, he or she is a terminally ill person with meagre financial means.

That commission can very easily run into ten thousand dollars for what is presented as a personal favour. Over the years, I’ve seen my fair share of disingenuous accountants, lawyers, physicians, brokers amongst others present their referring me to others as altruism, only to then learn the nauseous underlying reality.

Yes, physicians partake. And a few are stupid enough to get caught.[i] They don’t get struck off by the way for this corruption. Lawyers’ professional bodies even regulate kickbacks, euphemistically called ‘referral fees’, even if many instances, lawyers flout their own rules.[ii]

What can you do about this? First, if the relationship allows for it, put the question on an e-mail to the referring person. Ask them straight, “just to clarify – do you have a commercial benefit in this introduction? I’d just like to know in advance.” You may not be told the truth but it’s a good step to have the issue put up in writing.

Second, if the referring person does respond in the affirmative, raise your eyebrows and ask for an element of that back. Is the lawyer’s referral commission of $10,000 a fair price for an hour’s work? Or is $500 enough? Eventually, the client inevitably ends up paying for the referral fee. There are no ifs and buts to it.

Finally, if you’re going to seek a referral, get hold of somebody who is good at what they do as opposed to somebody who you are simply referred to. Online research and even a more casual chat amongst those in the know can be helpful, “Do you know of any good experts in this space?” … without the need to being referred is a good way to start. This last piece is about being smart in positioning the conversation. 

[i] https://www.cbc.ca/news/medical-journal-says-clinic-offered-kickbacks-1.971239

[ii] https://lso.ca/lawyers/practice-supports-and-resources/topics/managing-money/fees-and-disbursements/referral-fees