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Session 1999-2000
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Delegated Legislation Committee Debates

Draft Conditional Fee Agreements Order 2000

Fifth Standing Committee on Delegated Legislation

Thursday 16 March 2000

[Mr. Eric Illsley in the Chair]

Draft Conditional Fee Agreements Order 2000

9.55 am

The Parliamentary Secretary, Lord Chancellor's Department (Mr. David Lock): I beg to move,

    That the Committee has considered the draft Conditional Fee Agreements Order 2000.

I welcome you to the Chair, Mr. Illsley, for what I hope will be a brief debate. The draft order was laid before the House of Commons on 21 February. This instrument, together with negative procedure regulations laid before the House on 10 March and rules of court, will give effect to Parliament's intention to increase access to justice through making it easier and more affordable to use conditional fee agreements. The order was approved in the other place on 2 March.

Conditional fee agreements will redress the fundamental problem of the British legal system, which is that it is open to very few people unless they are legally aided. The majority of people—those above income support level—have been unable to litigate, because they cannot afford to pay lawyers' fees if they lose. In practice, they have been excluded from access to justice.

I have no time for antipathy towards conditional fee agreements from an elite legal profession, snug in its ivory tower. How can they have so little regard to the fact that conditional fee agreements are giving hundreds of thousands of people access to justice, who could not previously have contemplated going to law to assert their rights?

Under conditional fee agreements, lawyers share the risks of litigation with their clients. That is nothing new. Risk sharing in litigation has always been a way of life. In cases that are taken under civil legal aid, lawyers are paid at the normal rate if they win and at a reduced rate if they lose. Lawyers have been prepared to take cases for less than their normal fees in the event of losing or have used Thai-trading style arrangements. Expert trade union solicitors, to whom I pay tribute, have shown that they can run complex and highly uncertain cases without an uplift and still flourish on that basis. The Government have been careful to ensure the protection of lawyers and clients alike within a fair and balanced scheme.

Section 27 of the Access to Justice Act 1999 substituted the existing section 58 of the Courts and Legal Services Act 1990 with two new sections. The new section 58 set out the conditions that were to be satisfied to create an enforceable conditional fee agreement. Read together with the new section 58A, it provides that all civil and criminal proceedings under section 82 of the Environmental Protection Act 1990 may be the subject of an enforceable conditional fee agreement. Other criminal proceedings and family proceedings remain outside the ambit of those provisions. Under the new section 58(4), the Lord Chancellor may specify the proceedings for which a conditional fee agreement can provide for a success fee. Paragraph 3 of this order provides that success fees may be agreed for any civil proceedings.

Success fees will therefore be available in all civil cases. The new provisions for recovery will make their use attractive in cases not involving money for both claimants and defendants. Claimants in those cases cannot currently rely on the prospect of recovering damages to meet the success fee and any insurance premium against the risk of costs. From 1 April, it will be easier for them to use conditional fee agreements. Defendants will benefit similarly by being able to use conditional fees. If they are successful, their success fee will be recoverable from the claimant.

The new section 58A(1) allows the use of conditional fee agreements in proceedings under section 82 of the Environmental Protection Act 1990. Section 82 allows people aggrieved by a statutory nuisance to seek an order for that nuisance to be put right. Those cases concern, for example, the failure of a landlord to maintain rented housing in a habitable condition. In the light of representations from housing support groups, the Government have decided that conditional fee agreements can be made in those cases, but a success fee will not be available. Paragraph 3 of the order therefore makes that exception.

Under the new section 58(4) the Lord Chancellor also sets the maximum success fee applicable to conditional fee agreements. In the consultation paper issued last Autumn he took the opportunity to seek views on whether the current limit of 100 per cent. for the success fee continued to be appropriate. Opinion among respondents was mixed. Some, including insurers and some solicitors firms, felt that no maximum was needed as assessment by the courts would weed out success fees set at an unreasonable level. Others believed, particularly in respect of personal injury cases, that the 100 per cent. limit should be retained to protect unworldly clients.

Mr. John Burnett (Torridge and West Devon): Does the Minister agree that, if there is an unlimited uplift, that is a contingency fee arrangement?

Mr. Lock: That is a reasonable point, and if the hon. Gentleman will bear with me for a moment, his concerns will be met.

The Law Society and the Bar believed that, for proceedings that may be heard in the commercial court and the technology and construction courts, a limit of 100 per cent. was neither needed nor desirable. It was argued that the same would also be true of some shipping cases in the Admiralty court. Clients in proceedings heard in those courts tended to be sophisticated users of litigation services who did not need the protection afforded by the 100 per cent. limit.

However, on balance, taking account of the point made by the hon. Member for Torridge and West Devon (Mr. Burnett), we propose that for the time being the maximum success fee should remain at 100 per cent. for all claims. Paragraph 4 of the order retains this maximum for all agreements involving success fees. The Government want to see how the new scheme for conditional fee agreements develops before deciding whether to make any changes. The Lord Chancellor wishes to expand the role of his Department as sponsor of the legal sector, especially in the international sphere, and will keep under continuous review what is best, in partnership with the providers and users of legal services. In the meantime it is proposed, in the balance of interests of the various parties operating in the civil justice system, not to set a higher limit.

Paragraph 2 of the order revokes the Conditional Fee Agreements Order 1998. This instrument is central to the new scheme for conditional fees. I commend it to the Committee.

10.2 am

Mr Nick Hawkins (Surrey Heath): I join the Minister in welcoming you, Mr. Illsley, to our proceedings, which will be short, but are nevertheless important. I was delighted to see the hon. and learned Member for Medway (Mr. Marshall-Andrews) attending the proceedings this morning. I am only sorry that he was delayed and did not hear the Minister's astonishing attack on elite lawyers, in which he echoed the words that the Lord Chancellor so often uses: it was reminiscent of attacks on fat cats.

I know that the Minister, coming from a chambers in which I practised, does not feel comfortable with such attacks and did not read them out with any conviction. I appreciate that it is the Lord Chancellor who puts such words into his mouth, but the hon. and learned Member for Medway and many members of the legal profession, particularly those at the Bar outside these hallowed halls, will be reading the Hansard of the Committee's proceedings with enormous interest. When the Minister's words become part of leading articles in, say, The Lawyer or The Times law section, he may have cause to regret that the Lord Chancellor insisted on him reading out such specious rubbish. It is astonishing for members of the legal profession at any level, in either branch of the profession, who represent people on legal aid to hear Ministers attacking them, and it will be hugely resented.

Having always supported the concept of conditional fee agreements, Conservative Members remain extremely concerned, as the shadow Attorney-General, my hon. and learned Friend the Member for Harborough (Mr. Garnier), has pointed out in many articles and debates, that there is as yet no proper system involving insurance companies to provide enough facilities for CFAs. I realise that the Minister is saying, sensibly, that the Government want to see how this will work, but I hope that when he responds to what I have said—and to what, no doubt, the hon. Member for Torridge and West Devon will be saying—he will address the genuine concern that is shared widely across the House and which many Members expressed during the many debates on the Access to Justice Bill. The issue is serious. I know that the Government will keep it under review but I want the Minister to recognise that we continue to have serious concerns that are shared across the profession.

Along with many Labour Back-Bench Members in this House and Labour Peers in the other place, we last year called the Bill ``the denial of access to justice Bill''. That is another reason why I am pleased that the hon. and learned Member for Medway is here this morning. The concern is that certain people, who have become known as the MINELAs—middle income, not eligible for legal aid—would be further hampered by the so-called Access to Justice Act 1999.

The Minister and the Lord Chancellor have continually failed to understand or respond to the arguments. Given all the speeches, especially the powerful speeches made by peers such as Baroness Kennedy of the Shaws, that were made in the debates on the 1999 Act, there is no doubt that many members of the Labour party are concerned, and the Minister knows of those concerns. Nevertheless, we do not oppose the order. We recognise that concerns remain, and the order represents a further opportunity to ventilate them, but I do not wish to prolong the debate.

The hon. Member for Torridge and West Devon will, no doubt, express similar concerns, because, like me, he regularly talks to the Law Society, the Institute of Legal Executives and the Bar Council. Many of us have friends in the various branches of the profession who express those concerns. I hope that the Minster will respond to them and, in due course, understand that Committees considering statutory instruments are not the place to make specious attacks on members of an elite profession, as he puts it.

10.6 am


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