The Legal Services Commission (LSC) has attacked high street firms for attempting to charge a fee for referring clients on to specialist firms on its serious fraud panel.

The LSC has been alerted to the practice by firms on the specialist panel which object to being asked to pay money to other firms in order to take on publicly-funded cases.

But although one senior Chancery Lane source described the practice as "scandalous", the Law Society says that the firms in question are not breaking its rules.

One of the panel firms to have received such requests – and resisted them – is niche Fleet Street specialist Corker Binning.

"I have been approached with an offer of work together with a request for payment and I declined that offer," said name partner David Corker.

Another lawyer from a top London fraud firm said he had rejected a similar approach for fear it was illegal.

"We have heard the reports," an LSC spokesman told Legal Week. "The LSC does not approve of or encourage this practice."

Although fee-sharing among lawyers is not banned by the Law Society, a number of senior Law Society figures have expressed concern about the practice.

"The problem I see is that both solicitors may be putting their interests ahead of the client – they have to be content that they have exercised their referral choice on an honourable basis," said Edward Nally, who chairs the Law Society's standards board.

However, a Law Society spokesperson said: "Our professional rules do not prohibit referrals between solicitors – indeed when the referral is to a solicitor with particular expertise in the work, that will be very much in the client's interests."