Legal Services Bill [HL]

House of Commons

Session 2006 - 07
Internet Publications
Other Bills before Parliament

Legal Services Bill [HL]

Legal Services Bill [HL]
Schedule 16 — The Law Society, solicitors, recognised bodies and foreign lawyers
Part 2 — The Administration of Justice Act 1985 (c. 61)
264

      (5)
For subsection (3) substitute—
“(3)
Despite section 24(2) of the 1974 Act, section 20 of that Act
(prohibition on unqualified person acting as solicitor) does not apply
to a recognised body; and nothing in section 24(1) of that Act applies
in relation to such a body.”
5
      (6)
Omit subsection (4).
      (7)
In subsection (5) omit “corporate”.
      (8)
In subsection (7) for “Secretary of State” (in both places) substitute “Lord
Chancellor”.
      (9)
In subsection (8)—
10
(a)
for ““the Council” and “the Society” have” substitute ““the Society”
has”,
(b)
after the definition of “the Society” insert—
““legal services body” has the meaning given by section 9A;
“manager”, in relation to a body, has the same meaning as in the
15
Legal Services Act 2007 (see section 208 of that Act);”,
(c)
omit the definition of “officer”,
(d)
in the definition of “recognised body” omit “corporate”, and
(e)
for the definition of “registered European lawyer” substitute—
““relevant legal services” has the meaning given by
20
section 9A;
“solicitor services” means professional services such as
are provided by individuals practising as solicitors or
lawyers of other jurisdictions.”
     (10)
Omit subsection (9).
25
77
After that section insert—
“9A
Legal services bodies
(1)
For the purposes of section 9, a “legal services body” means a body
(corporate or unincorporate) in respect of which—
(a)
the management and control condition, and
30
(b)
the services condition,

are satisfied.
(2)
The management and control condition is satisfied in the case of a
partnership if—
(a)
at least one of the partners is—
35
(i)
a solicitor,
(ii)
a registered European lawyer, or
(iii)
a qualifying body, and
(b)
the partnership is not a licensable body.
(3)
The management and control condition is satisfied in the case of an
40
unincorporated body (other than a partnership) or a body corporate
which is managed by its members if—
(a)
at least one of the members of the body is—
(i)
a solicitor,

Legal Services Bill [HL]
Schedule 16 — The Law Society, solicitors, recognised bodies and foreign lawyers
Part 2 — The Administration of Justice Act 1985 (c. 61)
265

(ii)
a registered European lawyer, or
(iii)
a qualifying body, and
(b)
the body is not a licensable body.
(4)
The management and control condition is satisfied in the case of any
other body corporate if—
5
(a)
at least one of the persons within subsection (5) is—
(i)
a solicitor,
(ii)
a registered European lawyer, or
(iii)
a qualifying body, and
(b)
the body is not a licensable body.
10
(5)
Those persons are—
(a)
the directors of the body, and
(b)
the persons who have an interest in the body.
(6)
The services condition is satisfied in relation to a body if the body is
carrying on a business consisting of—
15
(a)
solicitor services, or
(b)
solicitor services and other relevant legal services.
(7)
For the purposes of this section—
“authorised person” means an authorised person in relation to
an activity which is a reserved legal activity (within the
20
meaning of the Legal Services Act 2007), other than a body
which holds a licence under Part 5 of that Act (or which, but
for the operation of Part 2 of Schedule 5 to that Act (rights
during transitional period), would be required to be licensed
under Part 5 of that Act);
25
“licensable body” has the same meaning as in the Legal Services
Act 2007 (see sections 72 and 109 of that Act);
“manager”, in relation to a body, has the meaning given by
section 9;
“qualifying body” means a body in respect of which—
30
(a)
the management and control condition is satisfied by
virtue of—
(i)
subsection (2)(a)(i) or (ii) and (b),
(ii)
subsection (3)(a)(i) or (ii) and (b), or
(iii)
subsection (4)(a)(i) or (ii) and (b), and
35
(b)
the services condition is satisfied;
“registered European lawyer” means a registered European
lawyer within the meaning of the European Communities
(Lawyer’s Practice) Regulations 2000 (S.I. 2000/1119) who is
registered with the Law Society;
40
“relevant legal services”, in relation to a legal services body,
means—
(a)
solicitor services, and
(b)
where authorised persons, other than solicitors or
registered European lawyers, are managers of, or
45
have an interest in the body, services such as are
provided by individuals practising as such
authorised persons (whether or not those services

Legal Services Bill [HL]
Schedule 16 — The Law Society, solicitors, recognised bodies and foreign lawyers
Part 2 — The Administration of Justice Act 1985 (c. 61)
266

involve the carrying on of reserved legal activities
within the meaning of the Legal Services Act 2007);
“solicitor services” has the same meaning as in section 9;

and a person has an interest in a body if the person has an interest in
shares in the body within the meaning of Part 5 of the Legal Services
5
Act 2007 (see sections 72 and 109 of that Act).
78    (1)
Section 10 (penalty for pretending to be a body recognised under section 9)
is amended as follows.
      (2)
In subsection (1) omit “corporate” (in both places).
      (3)
In subsection (2) omit “corporate”.
10
      (4)
For subsection (3) substitute—
“(3)
Where an offence under this section committed by a body corporate
is proved to have been committed with the consent or connivance of
or to be attributable to any neglect on the part of an officer of the
body corporate, that officer (as well as the body corporate) is guilty
15
of the offence and is liable to be proceeded against and punished
accordingly.
(4)
Where the affairs of a body corporate are managed by its members,
subsection (3) applies in relation to the acts and defaults of a member
in connection with the member’s functions of management as it
20
applies to an officer of the body corporate.
(5)
Proceedings for an offence under this section alleged to have been
committed by an unincorporated body are to be brought in the name
of that body (and not in that of any of its members) and, for the
purposes of any such proceedings, any rules of court relating to the
25
service of documents have effect as if that body were a corporation.
(6)
A fine imposed on an unincorporated body on its conviction of an
offence under this section is to be paid out of the funds of that body.
(7)
If an unincorporated body is charged with an offence under this
section, section 33 of the Criminal Justice Act 1925 (c. 86) and
30
Schedule 3 to the Magistrates’ Courts Act 1980 (c. 43) (procedure on
charge of an offence against a corporation) have effect in like manner
as in the case of a corporation so charged.
(8)
Where an offence under this section committed by an
unincorporated body (other than a partnership) is proved to have
35
been committed with the consent or connivance of, or to be
attributable to any neglect on the part of, any officer of the body or
any member of its governing body, that officer or member as well as
the unincorporated body is guilty of the offence and liable to be
proceeded against and punished accordingly.
40
(9)
Where an offence under this section committed by a partnership is
proved to have been committed with the consent or connivance of,
or to be attributable to any neglect on the part of, a partner, that
partner as well as the partnership is guilty of the offence and liable
to be proceeded against and punished accordingly.
45
(10)
In this section “officer”, in relation to a body corporate, means—

Legal Services Bill [HL]
Schedule 16 — The Law Society, solicitors, recognised bodies and foreign lawyers
Part 2 — The Administration of Justice Act 1985 (c. 61)
267

(a)
any director, secretary or other similar officer of the body
corporate, or
(b)
any person who was purporting to act in any such capacity.”
79    (1)
Section 43 (jurisdiction and powers of Solicitors Disciplinary Tribunal in
relation to complaints against solicitors) is amended as follows.
5
      (2)
In subsection (2)(a) for “(7) to” substitute “(9) to”.
      (3)
After subsection (3) insert—
“(3A)
Nothing in section 158 of the Legal Services Act 2007 (approved
regulators not to make provision for redress) prevents an order being
made under subsection (3).”
10
      (4)
For subsection (5) substitute—
“(5)
An appeal under section 49 of the Solicitors Act 1974 against an order
of the Tribunal under subsection (3) lies only at the instance of the
solicitor with respect to whom the legal aid complaint was made.”
80
In the title of Schedule 2, for “Incorporated practices” substitute “Legal
15
services practices”.
81
In paragraph 1 of that Schedule (interpretation)—
(a)
in sub-paragraph (1) omit “corporate”,
(b)
in sub-paragraph (2) omit—
(i)
paragraph (b) and the “or” immediately preceding it,
20
(ii)
“corporate”, and
(iii)
“or application”,
(c)
after that sub-paragraph insert—
   “(2A)
References in this Schedule to a manager or employee of a
recognised body, in relation to a complaint (other than
25
such a complaint as is mentioned in paragraph 16(1A)(a)),
include references to a person who was such a manager or
employee at the time when the conduct to which the
complaint relates took place.”,
(d)
omit sub-paragraph (3),
30
(e)
in sub-paragraph (4) omit from “; and for those purposes” to the end,
(f)
in sub-paragraph (5) for “sub-paragraphs (3) and (4)” substitute
“sub-paragraphs (4) and (6)”, and
(g)
for sub-paragraph (6) substitute—
    “(6)
In this Schedule—
35
“manager”, in relation to a body, has the same
meaning as in the Legal Services Act 2007 (see
section 208 of that Act);
“registered European lawyer” has the same meaning
as in section 9A;
40
“the 1974 Act” means the Solicitors Act 1974.”
82
For paragraph 2 of that Schedule (appeal against refusal of Council to grant

Legal Services Bill [HL]
Schedule 16 — The Law Society, solicitors, recognised bodies and foreign lawyers
Part 2 — The Administration of Justice Act 1985 (c. 61)
268

recognition) substitute—
“Appeal against refusal of Society to grant recognition etc
2     (1)
A body may appeal to the High Court against—
(a)
a decision to refuse an application by the body for
recognition under section 9;
5
(b)
a decision to impose a condition under subsection (2A) of
that section on the body’s recognition under that section;
(c)
a decision to impose a condition under subsection (2B) of
that section on the body’s recognition under that section.
      (2)
A recognised body whose recognition is subject to a condition
10
within section 9(2C)(b) may appeal to the High Court against any
decision by the Society to refuse to approve the taking of any step
for the purposes of that condition.
      (3)
Rules made by the Society may make provision, as respects any
application for recognition that is neither granted nor refused by
15
the Society within such period as may be specified in the rules, for
enabling an appeal to be brought under this paragraph in relation
to the application as if it had been refused by the Society.
      (4)
On an appeal under sub-paragraph (1)(a) or (b), the High Court
may—
20
(a)
affirm the decision of the Society,
(b)
direct the Society to grant the body recognition under
section 9 free from conditions or subject to such conditions
as the High Court may think fit,
(c)
direct the Society not to recognise the body,
25
(d)
if the Society has recognised the body, by order suspend
the recognition, or
(e)
make such other order as the High Court thinks fit.
      (5)
On an appeal under sub-paragraph (1)(c), the High Court may—
(a)
affirm the decision of the Society,
30
(b)
direct that the body’s recognition under section 9 is to have
effect subject to such conditions as the High Court may
think fit,
(c)
by order revoke the direction given by the Society under
section 9(2B), or
35
(d)
make such other order as the High Court thinks fit.
      (6)
On an appeal under sub-paragraph (2), the High Court may—
(a)
affirm the decision of the Society,
(b)
direct the Society to approve the taking of one or more
steps for the purposes of a condition within section
40
9(2C)(b), or
(c)
make such other order as the High Court thinks fit.
      (7)
In relation to an appeal under this paragraph, the High Court may
make such order as it thinks fit as to payment of costs.
      (8)
The decision of the High Court on an appeal under this paragraph
45
is final.”

Legal Services Bill [HL]
Schedule 16 — The Law Society, solicitors, recognised bodies and foreign lawyers
Part 2 — The Administration of Justice Act 1985 (c. 61)
269

83
For paragraph 3 of that Schedule (accounts rules) substitute—
“3    (1)
This paragraph applies where rules made under section 32(1) of
the 1974 Act are applied—
(a)
to recognised bodies in accordance with section 9(2)(f) of
this Act, or
5
(b)
to managers or employees of such bodies in accordance
with section 9(2)(fb) of this Act.
      (2)
The Society may disclose a report on or information about the
accounts of a recognised body, or a manager or employee of a
recognised body, obtained in pursuance of such rules for use—
10
(a)
in investigating the possible commission of an offence by
the body or any of its managers or employees, and
(b)
in connection with any prosecution of the body or any of
its managers or employees consequent on the
investigation.”
15
84
In paragraph 4 of that Schedule (interest on clients’ money)—
(a)
in sub-paragraph (1)—
(i)
for “section 33(1)(a)” substitute “section 33(1)”, and
(ii)
for the words from “and subject to” to the end substitute “, a
recognised body is not liable to account to any client, other
20
person or trust for interest received by the recognised body
on money held at a bank or building society in an account
which is for money received or held for, or on account of,
clients of the recognised body, other persons or trusts,
generally.”, and
25
(b)
omit sub-paragraph (2).
85
After that paragraph insert—
“4ZA
Where rules made under section 32 of the 1974 Act and containing
any such provision as is referred to in section 33(1) of that Act are
applied to managers or employees of recognised bodies in
30
accordance with section 9(2)(fb), then, except as provided by the
rules, a manager or employee to whom the rules are applied is not
liable to account to any client, other person or trust for interest
received by the manager or employee on money held at a bank or
building society in an account which is for money received or held
35
for, or on account of, clients of the recognised body, other persons
or trusts, generally.”
86
For paragraph 4A of that Schedule (inspection of bank accounts)
substitute—
“4A   (1)
This paragraph applies where rules made under section 33A(1) of
40
the 1974 Act are applied—
(a)
to recognised bodies in accordance with section 9(2)(f) of
this Act, or
(b)
to managers or employees of such bodies in accordance
with section 9(2)(fb) of this Act.
45
      (2)
The Society may disclose information about the accounts of a
recognised body, or a manager or employee of a recognised body,
obtained in pursuance of such rules for use—

Legal Services Bill [HL]
Schedule 16 — The Law Society, solicitors, recognised bodies and foreign lawyers
Part 2 — The Administration of Justice Act 1985 (c. 61)
270

(a)
in investigating the possible commission of an offence by
the body or any of its managers or employees, and
(b)
in connection with any prosecution of the body or any of
its managers or employees consequent on the
investigation.”
5
87
For paragraph 5 of that Schedule (accountants’ reports) substitute—
“5
Where rules made under section 34 of the 1974 Act are applied to
recognised bodies in accordance with section 9(2)(f), section 34(9)
and (10) of that Act apply in relation to a recognised body as they
apply in relation to a solicitor.”
10
88
After that paragraph insert—
“5A
Where rules made under section 34 of the 1974 Act are applied to
managers or employees of recognised bodies in accordance with
section 9(2)(fb), section 34(9) and (10) of that Act apply in relation
to a manager or employee to which the rules are applied as they
15
apply in relation to a solicitor.”
89
For paragraph 6 of that Schedule (compensation fund) substitute—
“6    (1)
Section 36 of the 1974 Act applies in relation to recognised bodies
as if for paragraphs (a) and (b) of subsection (1) there were
substituted—
20
“(a)
an act or omission of a recognised body or former recognised
body;
(b)
an act or omission of a manager or employee, or former
manager or employee, of a recognised body or former
recognised body;”.
25
      (2)
Section 36A(2) and (3) of the 1974 Act applies in relation to
recognised bodies as it applies in relation to solicitors.”
90
In paragraph 7 of that Schedule (solicitor who is justice of the peace not to
act in certain proceedings) for “an officer” (in both places) substitute “a
manager”.
30
91
In paragraph 9 of that Schedule (restriction on employment of person struck
off roll or suspended)—
(a)
the existing provision becomes sub-paragraph (1) and in that sub-
paragraph after “recognised body” insert “(and any manager or
employee of it)”, and
35
(b)
after that sub-paragraph insert—
    “(2)
No recognised body (or manager or employee of such a
body) may, except in accordance with a written permission
granted by the Society under this paragraph, permit a
person to whom sub-paragraph (3) applies to—
40
(a)
be a manager of the body, or
(b)
have an interest in the body.
      (3)
This sub-paragraph applies to a person who to the
knowledge of the recognised body (or, as the case may be,
the manager or employee) is a person—
45