Referrals

Essential Elements to Successful Referrals

• Immediate responses to enquiries.
• Clear and precise instructions.
• Regular follow-up.
• Compliance with the Braxton Network Quality Standard.
• Attendance at Braxton Network conferences to build links with other members.
• Investing time in new initiatives

Introducing Work to Other Member Firms
Members should always be aware of opportunities as they arise to
involve other members of the network with their clients. For
instance, members should actively encourage parent company
clients to consider the appointment of other member firms to work
within the group.
Feedback on any actual or potential assignment involving other
member firms, whether won or lost, should always be given to all
participating firms.
Where a geographic location is required that is not covered by an
existing member firm, headquarters’ views should be sought.
Work should not be referred to members of other accounting
networks without first discussing the situation with headquarters.

Responding to Enquiries from Other Members
When members receive an enquiry on any issue from another
member firm it should be treated with the same degree of
diligence and urgency as would a client request.
In particular, any deadlines included in the request should be
respected. If for any reason they cannot be met, an immediate
response should be made to the requesting firm explaining the
situation and seeking to resolve the timetable issue.
In return, members sending the enquiry should give performance
feedback to the receiving firm.

Language Skills
Although it is recognised that it is not practical to expect all partners
and staff in member firms to be fluent in English, we expect those
responsible for answering the telephones to be able to process an
enquiry in English and for there to be at least one partner in each
firm who has sufficient skills to be able to conduct a meeting and
correspond in English.

Procedures for Handling Referred Work
Where a member wishes to introduce work to another member,
other than very simple enquiries, the Braxton Network
Referral Tracking System should be used which can be accessed
through the extranet. Full details on the use of the system are
available on the extranet. It is essential that all individuals within the
member firm who may be responsible for initiating a referral are
made aware of these procedures.
Clear instructions should be included in the Referral Tracking
System, preferably with a telephone follow-up to ensure the
instructions have been understood.
Every effort should be made to give adequate notification to the
receiving firm of any recommendation for new business as early as
possible, but all parties need to understand that sometimes this is
not possible and work together to achieve a mutually positive result.
Fee arrangements should be discussed at the outset as part of the
assignment planning and agreement reached as to whether the
local client, the parent or the referring firm will be billed for work
undertaken.
The receiving firm should be permitted to make contact with the
local client and to carry out a proper evaluation of the services
required in order to provide a fee quotation. Where this is not
possible, the lead firm should be prepared to confirm in writing
that it will underwrite any non-reimbursement of valid time costs
incurred by the receiving firm which have arisen from errors in the
information the lead firm supplied to the receiving firm. In addition,
it is appropriate for a member to provide a fee quotation based on
the information provided so long as this is clearly stated.
Particular care should be taken by the receiving firm to deal with
the potential client and their existing advisors in accordance with
the instructions issued by the referring firm.
Where as part of the tendering process there is a fee negotiation,
the lead firm must agree any proposed fee modifications with the
other member firms concerned before committing them.
It should be noted that, as a result of anti-money laundering
legislation, member firms receiving an introduction from within the
network to act for a client may be obliged to carry out their own
checks on the client’s identity.
Although the regional co-ordinators/chairs and headquarters can
assist by advising on issues or by giving relevant background
information etc, as a generality they are not responsible for coordinating
joint proposals. These are always the responsibility of
the member firms involved with the client.
Member firms should normally exchange an engagement letter
where one member is asked to undertake work for another. Care
must be taken in the wording of the engagement letter to avoid the
creation or perception of a joint venture. The letter should state that:

• The parties do not intend to be joint venturers and/or
  partners in respect of the engagement
• None of the participating firms has a right to exercise
  management control over the other firm(s).

In addition, there should be no provision for the member firms to
share the profits or losses from the engagement.
These provisions will not be relevant where two or more members
are jointly carrying out an assignment.
Further guidance on the approach to tendering for multinational
work is set out in the Information for Tenders document, which can
be found on the extranet.

Where a tender is unsuccessful, the lead firm should notify the other
member firms involved of the result and the reasons given for it.
Although one of our major strengths is the independence of each
member firm, in dealing with international assignments it is
important to stress to the client or potential client the effective way
in which we can work together and that all members share a
common ethos and approach to dealing with assignments. Again,
guidance on how to achieve this is included in the tender guidelines.
It is important when dealing with a referred client to remember that
the primary relationship with the client is generally with the firm
making the referral. Care should be taken when dealing with local
management not to damage this relationship. However, it is the
responsibility of the referring firm to make the local firm aware of
any relevant local sensitivities.

Charging for Referred Work
Requests for information from one member firm to another can
either be in relation to an existing client, a potential client or a
general enquiry.
Where a general enquiry is made of a member firm on the
expectation of a new client appointment for the firm receiving the
enquiry, generally no charge should be made to the enquiring firm
for any advice given.
Where professional work is carried out in relation to a proposal that
could result in a client win for the receiving firm, again generally no
charge should be made.

In other cases, where the enquiry takes say less than one hour to
deal with, normally no charge should be made to the requesting
member. Where a significant number of such enquiries are made
over a period of time between the same firms, this should be
discussed between those affected and, where appropriate, a fee
agreed.
In all other situations it is reasonable for the firm dealing with the
enquiry to make a charge for its time, but its basis and the details
of the recipient of the bill should be discussed with the enquiring
firm in advance of the work being undertaken. The basis for this
charge should be at the member’s normal hourly charge rate(s).
For the avoidance of doubt, this last category would include work
undertaken (in excess of one hour) in relation to a proposal being
made by the enquiring firm that would not otherwise result in any
fee for the receiving firm.
Before referring a client to another member firm, the referring firm
should take due care, as far as is possible, to validate the
credentials of the client and its ability to pay for advice received.
Thereafter it is the responsibility of the receiving firm to ensure
that all its terms of engagement are adhered to, including the
settlement of fees.
When a member firm is requested to assist another member on a nonchargeable
assignment, the requesting member should be prepared to
pay for the advice in accordance with the above guidelines.
Referral Fees

Basis of fee

Braxton Network’s bye-laws state that all members must pay
annual dues to maintain their membership which shall include “a
percentage, established from time to time by the board, of all net
fees collected by such Member during the preceding year for
services resulting from a referral by another Member”.
The amount of referral fees is to be notified to headquarters by the
member receiving the work at least every six months retrospectively
using the standard form.
The amount so notified is to include all work received as a result of
an introduction from another member, ie it would include new work
for a client previously introduced and ongoing work even where the
introducer has left the network. However it would exclude work for
a new client introduced by a former member of the network.
The rate payable is currently 7.5%, payable for the first five years that
work is performed on the introduction. After five years no referral fee
is paid.

Examples of specific engagements
1. Joint initiatives between member firms – where two or more
member firms join together to provide a specific type of service,
such as responding to a tender for a government organization, it
will not be treated as referral income even though one firm may
lead the assignment. Member firms who are approached to
participate in the tender and/or receive instructions relating to
such an assignment but who were not part of the original group
who came together, will pay a referral fee.
2. Joint presentations for work – where a number of member firms
come together to target a specific potential client and jointly
present for work there will be no referral fee. This differs to
those situations where a single firm has targeted a potential
client and, as a result of which, it selects other firms to work
with it to present jointly to the target, which would be treated as
a referral.
3. A member firm wins an assignment as a result of the efforts of
another member firm – this will be treated as a referral.
4. Fees received by one member firm for the peer review(s) of
another member firm – these will not be treated as referrals.
5. Work done for another member firm which does not relate to a
client, eg advising on practice issues – this will not represent
referred work.
6. A member firm wins a client as a result of an introduction from
another member firm. The client later acquires a subsidiary –
the total of these fees should be reported as a referral and the
five years start with the original referral.
7. A member firm wins a client as a result of an introduction from
another member firm. That client introduces a new client to the
member firm – the fees from the new client do not count as a
referral.