Legal Services Bill [HL]

House of Commons

Session 2006 - 07
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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)
271

(a)
who is disqualified from practising as a solicitor by
reason of one of the facts mentioned in section
41(1)(a), (b) or (c) of the 1974 Act (name struck off
the roll, suspension etc), or
(b)
in respect of whom there is a direction in force
5
under section 47(2)(g) of that Act (prohibition on
restoration to roll).
      (4)
Permission granted for the purposes of sub-paragraph (2)
may be granted for such period and subject to such
conditions as the Society thinks fit.
10
      (5)
A person aggrieved by the refusal of the Society to grant
permission under sub-paragraph (4), or by any conditions
attached by the Society to the grant of any such permission
may appeal to the High Court which may—
(a)
confirm the refusal or the conditions, as the case
15
may be, or
(b)
grant a permission under this paragraph for such
period and subject to such conditions as it thinks
fit.
      (6)
In relation to an appeal under sub-paragraph (5) the High
20
Court may make such order as it thinks fit as to payment
of costs.
      (7)
The decision of the High Court on an appeal under sub-
paragraph (5) is final.”
92
In paragraph 10 of that Schedule (failure to disclose striking off or
25
suspension)—
(a)
the existing paragraph becomes sub-paragraph (1) of that paragraph,
(b)
in that sub-paragraph after “recognised body” insert “(or any
manager or employee of such a body)”, and
(c)
after that sub-paragraph insert—
30
    “(2)
It is an offence for a person (“P”) to whom sub-paragraph
(3) applies—
(a)
to seek or accept from any person an interest in a
recognised body, without previously informing
that person (and, if different, the recognised body)
35
that P is a person to whom that sub-paragraph
applies, or
(b)
to seek or accept a position as a manager of a
recognised body, without previously informing
that body that P is such a person.
40
      (3)
This sub-paragraph applies to a person—
(a)
who is disqualified from practising as a solicitor by
reason of one of the facts mentioned in section
41(1)(a), (b) or (c) of the 1974 Act (name struck off
the roll, suspension etc), or
45
(b)
in respect of whom there is a direction in force
under section 47(2)(g) of that Act (prohibition on
restoration to roll).

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)
272

      (4)
A person guilty of an offence under sub-paragraph (2) is
liable on summary conviction to a fine not exceeding level
3 on the standard scale.
      (5)
Subsection (2) of section 42 of the 1974 Act applies in
relation to an offence under sub-paragraph (2) as it applies
5
in relation to an offence under that section.
      (6)
For the purposes of sub-paragraph (2)(a) a person seeks or
accepts an interest in a recognised body if the person seeks
or accepts an interest which if it were obtained by the
person would result in the person having an interest in
10
shares in that body within the meaning of Part 5 of the
Legal Services Act 2007 (see sections 72 and 109 of that
Act).”
93
Omit paragraph 11 of that Schedule (control of employment of persons
convicted of offences of dishonesty and certain other persons).
15
94
Omit paragraph 12 of that Schedule (offences in connection with orders
under section 43(2) of the 1974 Act).
95
Omit paragraph 13 of that Schedule (redress for inadequate professional
services).
96
For paragraph 14 of that Schedule (examination of files) substitute—
20
“Information about suitability for recognition
14    (1)
The Society may give a notice under this paragraph if it is satisfied
that it is necessary to do so for the purpose of investigating
whether a recognised body continues to be suitable to be
recognised under section 9.
25
      (2)
A notice under this paragraph is a notice which requires a person
within sub-paragraph (3)—
(a)
to provide information, or information of a description,
specified in the notice, or
(b)
to produce documents, or documents of a description,
30
specified in the notice.
      (3)
The persons are—
(a)
the recognised body;
(b)
an employee or manager of the recognised body;
(c)
a person who has an interest in shares in the recognised
35
body (within the meaning of the Legal Services Act 2007
(see sections 72 and 109 of that Act)).
      (4)
For the purposes of this paragraph, section 44B(4) to (7) of the 1974
Act applies—
(a)
in relation to a notice under this paragraph as if it were a
40
notice under section 44B of that Act, and
(b)
in relation to a person given a notice under this paragraph
as if that person were a person given a notice under that
section,

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)
273


and references in subsections (6) and (7) of that section to powers
conferred by that section are to be read as references to powers
conferred by this paragraph.
      (5)
Section 44BA of the 1974 Act (power to require explanation of
document or information) applies in relation to a notice under this
5
paragraph and the person to whom such a notice is given as it
applies in relation to a notice under section 44B of the 1974 Act and
the person to whom such a notice is given.
      (6)
Subsection (1) of section 44BC of that Act (falsification of
documents etc) applies in relation to an investigation of the kind
10
mentioned in sub-paragraph (1) as it applies in relation to the
investigations mentioned in that subsection, and subsections (2),
(4) and (5) of that section apply accordingly.
      (7)
Subsection (3) of that section (provision of false information etc)
applies in relation to a requirement imposed under this paragraph
15
as it applies in relation to a requirement imposed by section 44B of
that Act, and subsections (4) and (5) of that section apply
accordingly.”
97
For paragraph 14A of that Schedule (payment of costs of investigations)
substitute—
20
“Power to charge for costs of investigation
14A   (1)
The Society may make regulations prescribing charges to be paid
to the Society by recognised bodies who are the subject of a
discipline investigation.
      (2)
A discipline investigation is an investigation carried out by the
25
Society into a failure or apprehended failure by a recognised body
to comply with any requirement imposed by or by virtue of this
Act or any rules applicable to it by virtue of section 9.
      (3)
Regulations under this paragraph may—
(a)
make different provision for different cases or purposes;
30
(b)
provide for the whole or part of a charge payable under the
regulations to be repaid in such circumstances as may be
prescribed by the regulations.
      (4)
Any charge which a recognised body is required to pay under
regulations under this paragraph is recoverable by the Society as
35
a debt due to the Society from the recognised body.
      (5)
This paragraph applies in relation to a manager or employee of a
recognised body as it applies in relation to a recognised body.”
98
In paragraph 16 of that Schedule (complaints to Tribunal with respect to
recognised bodies)—
40
(a)
in sub-paragraph (1), in paragraph (a) omit “in the United
Kingdom”,
(b)
in paragraph (b) of that sub-paragraph for “section 34 of the 1974
Act” substitute “any requirement imposed by or by virtue of this
Act”,
45

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)
274

(c)
for paragraph (c) of that sub-paragraph substitute—
“(c)
a complaint that the body has acted in
contravention of section 41 of the 1974 Act or
paragraph 9(2) of this Schedule or of any
conditions subject to which a permission has been
5
granted under section 41 of that Act or that
paragraph of this Schedule; or”, and
(d)
after that sub-paragraph insert—
   “(1A)
The Tribunal shall have jurisdiction to hear and determine
any of the following complaints made to it under this
10
paragraph with respect to a manager or employee of a
recognised body (“the relevant person”)—
(a)
a complaint that the relevant person has been
convicted by any court of a criminal offence which
renders that person unsuitable to be a manager or
15
employee (or both) of a recognised body;
(b)
a complaint that the relevant person has failed to
comply with any requirement imposed by or by
virtue of this Act or any rules applicable to the
relevant person by virtue of section 9 of this Act;
20
(c)
a complaint that the relevant person has acted in
contravention of section 41 of the 1974 Act or
paragraph 9(2) of this Schedule or of any
conditions subject to which a permission has been
granted under that section or for the purposes of
25
paragraph 9(2) of this Schedule;
(d)
a complaint that the relevant person has knowingly
acted in contravention of an order under section
43(2) of the 1974 Act or of any conditions subject to
which a permission has been granted under such
30
an order.”
99
In paragraph 17 of that Schedule (procedure on applications and
complaints)—
(a)
for “(7)” substitute “(9)”,
(b)
in paragraph (a)—
35
(i)
omit “11(1), 15(2) or”,
(ii)
omit “13(3) or”, and
(iii)
after “16(1)” insert “or (1A)”, and
(c)
in paragraph (c) after “body” insert “or, in the case of a complaint as
is mentioned in paragraph 16(1A), to a manager or employee of such
40
a body”.
100
In paragraph 18 of that Schedule (powers of Tribunal with respect to
recognised bodies)—
(a)
in sub-paragraph (1) after “this Schedule” insert “(other than
paragraph 16(1A)”,
45
(b)
in paragraph (b) of that sub-paragraph for “section 34 of the 1974
Act” substitute “any requirement imposed by or by virtue of this
Act”,
(c)
omit paragraph (d) of that sub-paragraph and the “or” immediately
preceding it,
50

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)
275

(d)
in sub-paragraph (2) omit “not exceeding £3,000”, and
(e)
omit sub-paragraphs (3) and (4).
101
After that paragraph insert—
“18A  (1)
Where, on the hearing of any complaint made to it under
paragraph 16(1A) of this Schedule, the Tribunal is satisfied that a
5
manager or employee of a recognised body—
(a)
has been convicted as mentioned in paragraph (a) of
paragraph 16(1A),
(b)
has failed to comply with any requirement imposed by or
by virtue of this Act or any rules applicable to the relevant
10
person by virtue of section 9 of this Act, or
(c)
has acted as mentioned in paragraph (c) or (d) of
paragraph 16(1A),

the Tribunal may, if it thinks fit, make one or more of the orders
referred to in sub-paragraph (2).
15
      (2)
Those orders are—
(a)
an order directing the payment by the relevant person of a
penalty to be forfeited to Her Majesty;
(b)
an order requiring the Society to consider taking such steps
as the Tribunal may specify in relation to the relevant
20
person;
(c)
if the person is not a solicitor, an order which states one or
more of the matters mentioned in sub-paragraph (3);
(d)
an order requiring the Society to refer to an appropriate
regulator any matter relating to the conduct of the relevant
25
person.
      (3)
The matters referred to in sub-paragraph (2)(c) are—
(a)
that as from the specified date—
(i)
no solicitor shall employ or remunerate, in
connection with his practice as a solicitor, the
30
person with respect to whom the order is made,
and
(ii)
no recognised body, or manager or employee of
such a body, shall employ or remunerate that
person, in connection with the business of the
35
recognised body,

except in accordance with a Society permission;
(b)
that as from the specified date no recognised body or
manager or employee of such a body shall, except in
accordance with a Society permission, permit the person
40
with respect to whom the order is made to be a manager of
the body;
(c)
that as from the specified date no recognised body or
manager or employee of such a body shall, except in
accordance with a Society permission, permit the person
45
with respect to whom the order is made to have an interest
in the body.
      (4)
Subsections (1) to (1C), (3) and (4) of section 44 of the 1974 Act
(offences in connection with orders under section 43(2) of that Act)

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)
276

apply in relation to an order under sub-paragraph (2)(c) as they
apply in relation to an order under section 43(2) of that Act, except
that references in those subsections to provision within section
43(2)(a), (b) or (c) of that Act are to be read as references to
provision within sub-paragraph (3)(a), (b) or (c).
5
      (5)
Section 44(2) of the 1974 Act, paragraph 16(1)(d) and (1A)(d) of
this Schedule and paragraph 15(3A) of Schedule 14 to the Courts
and Legal Services Act 1990 apply in relation to an order under
sub-paragraph (2)(c) as they apply in relation to an order under
section 43(2) of the 1974 Act.
10
      (6)
For the purposes of sub-paragraph (2)(d) an “appropriate
regulator” in relation to the relevant person means—
(a)
if the person is an authorised person in relation to a
reserved legal activity for the purposes of the Legal
Services Act 2007, any relevant approved regulator (within
15
the meaning of that Act) in relation to that person, and
(b)
if the person carries on activities which are not reserved
legal activities, any body which regulates the carrying on
of such activities by the person.”
102
In paragraph 20 of that Schedule (powers of Tribunal in respect of legal aid
20
complaints), in sub-paragraph (1)—
(a)
for “an officer” substitute “a manager”,
(b)
for “director” substitute “manager”, and
(c)
for “legal aid work” substitute “providing representation funded by
the Legal Services Commission as part of the Criminal Defence
25
Service”,

and omit sub-paragraph (2).
103
In paragraph 21 of that Schedule (revocation of recognition by reason of
default by director)—
(a)
in sub-paragraph (1), in paragraph (a) for “director” substitute
30
“manager”,
(b)
in paragraph (b) of that sub-paragraph for “director” (in both places)
substitute “manager”,
(c)
in paragraph (c) of that sub-paragraph for “director” (in both places)
substitute “manager”,
35
(d)
in sub-paragraph (3) for “director” (in both places) substitute
“manager”, and
(e)
after that sub-paragraph insert—
    “(4)
The reference in paragraph (c) of sub-paragraph (1) to a
person employed by a recognised body includes a
40
reference to a person who was so employed at the time of
the conduct leading to the making of the order referred to
in that paragraph.”
104
In paragraph 23 (orders as to remuneration for non-contentious business)—
(a)
the existing provision becomes sub-paragraph (1) of that paragraph,
45
(b)
in that sub-paragraph for “regulating (in accordance with paragraph
22)” substitute “prescribing (by virtue of paragraph 22) general
principles to be applied when determining”,

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)
277

(c)
in that sub-paragraph for paragraph (b) substitute—
“(b)
in paragraph (d), the reference to the solicitor were
a reference to any manager or employee of the
recognised body who is an authorised person.”,
and
5
(d)
after that sub-paragraph insert—
    “(2)
In this paragraph “authorised person” means a person
who is an authorised person in relation to an activity
which is a reserved legal activity, within the meaning of
the Legal Services Act 2007 (see section 18 of that Act).”
10
105
For paragraph 24 of that Schedule (effect of contentious business
agreements) substitute—
“24   (1)
This paragraph applies in relation to a contentious business
agreement made between a recognised body and a client.
      (2)
A provision in the agreement that the body shall not be liable for
15
the negligence of any of its managers or employees shall be void if
the client is a natural person who, in entering that agreement, is
acting for purposes which are outside his trade, business or
profession.
      (3)
A provision in the agreement that the body shall be relieved from
20
any responsibility to which it would otherwise be subject in the
course of carrying on its business as a recognised body shall be
void.”
106
In paragraph 25 of that Schedule (effect of supervening incapacity on
contentious business agreements)—
25
(a)
for sub-paragraph (1)(b) substitute—
“(b)
a relevant insolvency event occurs in relation to the
body;”,
(b)
in sub-paragraphs (2) and (3)—
(i)
for “taxation” (in each place) substitute “assessment”, and
30
(ii)
for “taxing officer” (in each place) substitute “costs officer”,
(c)
in sub-paragraph (3) for “any officer” substitute “any manager”, and
(d)
after that sub-paragraph insert—
    “(4)
For the purposes of this paragraph a relevant insolvency
event occurs in relation to a recognised body if—
35
(a)
a resolution for a voluntary winding-up of the
body is passed without a declaration of solvency
under section 89 of the Insolvency Act 1986;
(b)
the body enters administration within the meaning
of paragraph 1(2)(b) of Schedule B1 to that Act;
40
(c)
an administrative receiver within the meaning of
section 251 of that Act is appointed;
(d)
a meeting of creditors is held in relation to the body
under section 95 of that Act (creditors’ meeting
which has the effect of converting a members’
45
voluntary winding up into a creditors’ voluntary
winding up);
(e)
an order for the winding up of the body is made.”