Legal Services Bill [HL] - continued          House of Commons

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Clause 148: Information and documents

367.     This clause empowers an ombudsman to require such information and/or documents from parties to a complaint as the ombudsman may specify, before the end of such period (which must be a reasonable period) as the ombudsman may specify, and in such manner or form as the ombudsman may specify (subsections (1) and (2)); provided that the ombudsman considers that the information necessary to determine the complaint (subsection (3)). The ombudsman may take copies of or extracts from a document, and in the absence of a document, may require the person asked to produce it to state to the best of the person's knowledge and belief where it is (subsections (4) and (5)). None of these powers may be used to compel disclosure which could not be compelled in civil proceedings before the High Court (subsection (6)).

Clause 149: Reporting failures to provide information or produce documents

368.     This clause follows the approach and structure of clauses 142 and clause 147. Where the ombudsman considers that an authorised person has failed to co-operate with an ombudsman as required by clause 148, the ombudsman can notify that person's authorising body, which can be required to report to the ombudsman on the actions it takes. If the ombudsman is of the opinion that the authorising body is seriously or persistently failing to enforce its rules of conduct, the ombudsman may report this to the Board (and may do so even if the complaint is subsequently withdrawn).

Clause 150: Enforcement of requirements to provide information or produce documents

369.     This clause applies if a party, other than the authorised person (the defaulter), has failed to co-operate with an ombudsman as required by clause 148. In such a case, the ombudsman may inform the court (which in this case means the High Court - subsection (7)) of the person's failure to comply with the request for information. However (by virtue of subsections (5) and (6)), where the defaulter is an authorised person in relation to a reserved legal activity, the ombudsman must first be satisfied that each relevant authorising body to which a report was made under clause 149 has been given a reasonable opportunity to take action, and that the defaulter has continued to be in default. The High Court may thereupon enquire into the case, and if satisfied that the defaulter has failed without reasonable excuse to comply with the requirement, it may deal with the defaulter (and, in the case of bodies corporate and other legal persons, any directors or similar persons) as if the defaulter were in contempt (subsection (4)).

Clause 151: Reports of investigations

370.     The OLC may publish a report about the investigation, consideration and determination of any particular case if it considers it appropriate. The report may not contain the complainant's name or any other identifying information, unless the complainant consents to the inclusion of that information.

Clause 152: Restricted information

371.     Under this clause, "restricted information" is any information that has been collected during an investigation of a complaint. This clause protects the complainant in that all such information is classed as confidential and, except as listed under clause 153, must not be disclosed except to the extent that it is excluded information. Excluded information is information which was obtained more than 70 years before the date of disclosure, or which is already available to the public, or which is in an appropriately "anonymised" form so that information relating to a particular individual cannot be ascertained from it.

Clause 153: Disclosure of restricted information

372.     This clause makes exceptions to clause 142. First, one restricted person (i.e. the OLC, an ombudsman or a member of the OLC's staff - see subsection (2) of clause 152) may disclose restricted information to another restricted person (subsection (1)). Second, restricted information may be disclosed for the purposes of the investigation in the course of which, or for the purposes of which, it was obtained (subsection (2)); and third, restricted information may be disclosed for a variety of specific and limited purposes listed in subsection (3), with the possibility (subsection (3)(g)) of additional purposes being added by order made by the Lord Chancellor.

373.     The clause also confers on the Lord Chancellor a power to make an order preventing the disclosure of information in circumstances or for purposes prescribed in the order.

Clause 154: Data protection

374.     This clause makes provision amending the Data Protection Act 1998, on similar lines to that made for certain other regulators or ombudsmen, to ensure that Part 6 of the Legal Services Bill is able to operate compatibly with it by exempting personal data processed by the OLC in complaints handling from the subject information provisions where application of those provisions would prejudice the proper discharge of the complaints handling functions. This will ensure that frivolous applications do not impact adversely on the ombudsman scheme.

Clause 155: Protection from defamation claims

375.     This clause makes provision placing OLC proceedings and publications on a par with court proceedings for the purposes of the law of defamation.

Clause 156: Consent requirements for rules

376.     This clause requires the consent of the Board prior to any scheme rules being made or modified by the OLC. It also specifically requires the consent of the Lord Chancellor to rules under clause 136 which impose charges on respondents to complaints. The OLC is required to consult on its proposed rules before seeking the necessary consent: the consultation requirements are in clause 206.

Clause 157: The Board's powers in respect of rules

377.     Under this clause the Board will have the power to direct the OLC to amend any of its rules. The direction may be in general terms or it may require a specific modification. Before making a direction under subsection (1)(b) to make a specific modification, the Board must give the OLC a formal notice that gives details of the proposed modifications, and must publish that notice and take account of any representations made (subsection (2)). In such a case the consultation procedure under clause 206 is disapplied, as is the requirement to obtain the Board's consent (subsection (3)).

Clause 158: Approved regulators not to make provision for redress

     378.     Under the new arrangements, the OLC is to be the single point of entry for all complaints. This is subject to the requirement, in clause 126, that complaints (except in specified circumstances) must, in the first place, be considered under the respondent's internal complaints procedures,

379.     The OLC will investigate complaints and provide redress, but it will report any possible misconduct to the relevant approved regulator, which will take any necessary disciplinary action. There is therefore a clear split between the power to consider redress (OLC), and consideration of disciplinary action (approved regulators). As part of the provision for this split, this clause prohibits approved regulators from including in their regulatory arrangements any provision relating to redress (defined in subsection (4)).

380.     There is one major exception to this general rule, which is that under clause 143 the Board can give a direction allowing an approved regulator to handle complaints of a specified description and order redress. However, unless and until any decision is made to delegate complaints handling to an approved regulator, the OLC alone will handle complaints and provide redress.

381.     In accordance with subsection (5) the prohibition on provision relating to redress does not prevent provision for certain types of arrangements: compensation arrangements, indemnification arrangements and certain regulatory arrangements (as specified in clause 159).

382.     There will be transitional arrangements covering proceedings in respect of complaints that are under way at the date of commencement of the OLC's operations, which are to be made by order under clause 212 (subsections (2) and (3) of this clause).

Clause 159: Regulatory arrangements not prohibited by Section 158

383.     Clause 159 makes clear that clause 158 does not prohibit approved regulators from making provision in their regulatory arrangements requiring, or authorising the approved regulator to require, an authorised person to take certain action of a type described in subsections 1(a) to (f). That action is to investigate whether there are any persons who may have a claim for redress against the relevant authorised person (subsection 1(a)), to report back to the approved regulator on the outcome (subsection 1(b)), to identify any affected persons who may have a claim and notify them that they may have a claim (subsections 1(c) and (d)), provide any affected persons with information about the authorised person's complaints procedures and the ombudsman scheme and ensure that the complaints procedures operate as if the affected person had made a formal complaint (subsections 1(e) and (f)). The intention behind the clause is to ensure that approved regulators are not prevented by clause 158 from making provisions - subject to the Board's approval - requiring authorised persons to take proactive steps in cases where a number of clients may have been affected by the relevant authorised persons' acts or omissions and may have a claim for redress against them.

Clause 162: Extension of Part 6 to claims management services

384.     This clause extends Part 6 of the Bill to bring claims management services within the OLC's complaints handling jurisdiction. Although the provision of regulated claims management services is not designated as a reserved legal activity, this clause brings those persons authorised under Part 2 of the Compensation Act 2006 within the OLC's jurisdiction on the same basis as authorised persons in relation to an activity which is a reserved legal activity.

385.     For the purposes of Part 6, the claims management regulator is treated as an approved regulator, and regulated claims management services are treated as a reserved legal activity. This affects, among other things, the definition of a lay person in Schedule 15, which is to be read as excluding a person authorised under Part 2 of the 2006 Act (so that a person who is or has been authorised under Part 2 of the 2006 Act may not be appointed as Chief Ombudsman).

     PART 7: FURTHER PROVISIONS RELATING TO THE BOARD AND THE OLC

386.     This Part of the Bill makes provision for the funding of the Board and OLC by way of levy on the approved regulators, including requirements for rules to be made by the Board clarifying when the levy is to be made payable, and the amount payable as well as the circumstances in which the levy may be waived.

387.     It also defines the type of guidance that the Board may give. It makes provision allowing the Board to enter into voluntary arrangements for the purpose of improving standards in the provision of legal services, and provision for extending the jurisdiction of the OLC to a further range of complaints. This Part also provides that information obtained by the Board (whether in its capacity as an approved regulator or licensing authority or otherwise) may be used by the Board for any purpose connected to the exercise of its functions.

     Clause 163: Guidance

388.     This provision sets out a non-exhaustive list of matters about which the Board may give guidance. The Board will be able to publish its guidance and offer copies for sale. Following any guidance being issued, the Board may consider the extent to which an approved regulator has complied with such guidance when exercising its regulatory functions.

Clause 164: Voluntary arrangements

389.     This clause allows the Board to enter into voluntary arrangements with any person for the purposes of improving standards and promoting best practice in the legal services sector.

     Clause 165: Power to establish voluntary scheme for resolving complaints

390.     This clause gives the OLC a power, subject to an order made by the Lord Chancellor, to establish a complaints scheme which is separate from the ombudsman scheme under Part 6. A scheme set up under this clause can make provision in relation to complaints about acts or omissions of persons providing legal services who are not authorised persons. Such a scheme is referred to as a "voluntary scheme" and the rules under this clause are referred to as "voluntary scheme rules". The Lord Chancellor's order can limit the kinds of complaint that come within the scheme by reference to the description of the complainant, the respondent, or the legal services to which the complaint relates. The voluntary scheme can provide redress to consumers but cannot be used to discipline respondents. Subsection (8) makes clear that the consent requirements in clauses 156 and 157 apply to voluntary scheme rules in the same way as they apply to scheme rules.

     Clause 166: Procedure for making orders under section 165

391.     This clause sets out the procedure for making an order under clause 165(2). The Lord Chancellor can only make such an order upon recommendation by one of the interested bodies (the OLC, the Board or the Consumer Panel). Following a request from the Lord Chancellor an interested body must consider whether it is appropriate to make a recommendation. Before making a recommendation, an interested body must publish the draft recommendation and invite and consider representations from the public. Upon receipt of a recommendation the Lord Chancellor must consider whether to follow it. If the Lord Chancellor decides not to follow a recommendation the Lord Chancellor must publish reasons for this.

     Clause 167: Operation of voluntary scheme

392.     This clause provides for the way in which the detail of the voluntary scheme is to be provided. Voluntary scheme rules will define the complainants, respondents and complaints that are included within the jurisdiction of the voluntary scheme. Complaints received and determined under the auspices of the voluntary jurisdiction scheme, however, will be dealt with in accordance with standard terms fixed by the OLC with the Board's consent. In particular, standard terms may provide for the payment of a fee to the OLC by persons participating in the scheme and/or awards of costs on the determination of a complaint (including awards in favour of the OLC to provide a contribution to its costs in dealing with the complaint).

Clause 168: Restricted Information

393.     Under this clause, "restricted information" is any information obtained by the Board in the exercise of its functions. A restricted person is the Board (including in its capacity as approved regulator or licensing authority) or a person authorised by the Board to carry out its functions. Restricted information must not be disclosed by a restricted person or by any person who has received the information from a restricted person. Clause 169 provides an exception to this rule. Restricted information does not include "excluded information", namely information which was obtained more than 70 years before the date of disclosure, or which is already available to the public, or which is in an appropriately "anonymised" form so that information relating to a particular individual cannot be ascertained from it.

     Clause 169: Disclosure of restricted information

394.     This clause makes exceptions to clause 168. The first is that a restricted person may disclose restricted information to another restricted person. The second is that restricted information may be disclosed for the purposes of enabling the Board to exercise its functions. Subsection (3) sets out a list of further specific and limited circumstances in which restricted information may be disclosed, with the possibility (subsection (3)(g)) of additional purposes being added by order made by the Lord Chancellor. Such orders may only be made in order to allow disclosure to persons (other than approved regulators) who exercise regulatory functions. The clause also allows the Lord Chancellor to prevent the disclosure of restricted information under clause 168 by order for the purposes prescribed in that order.

     Clause 170: Disclosure of information to the Board

395.     This clause sets out a list of permitted persons and allows for the disclosure of information by them to the Board to enable or assist it in exercising its functions. The clause prohibits the disclosure of information where it contravenes the Data Protection Act 1988, where it is prohibited by Part 1 of the Regulation of Investigatory Powers Act 2000 or, if it is being disclosed on behalf of the Commissioners for Her Majesty's Revenue and Customs, where it has not been authorised by the Commissioners. The clause allows the Lord Chancellor to designate other persons as persons who can disclose information to the Board, where their functions are of a public nature.

Clause 173: Funding

396.     This clause sets out the mechanism by which the Board and the OLC receive funding to meet their expenditure in carrying out their functions. The Lord Chancellor may pay sums to the Board or the OLC to cover their expenditure under or for the purposes of the Bill. The Lord Chancellor may determine the manner in which, and times at which, sums are to be paid and may impose conditions on the payments.

Clause 174: The levy

397.     This clause makes provision for a levy. The purpose of the levy is to cover:

  • expenditure by the Board under or for the purposes of the Bill;

  • expenditure by the OLC under or for the purposes of the Bill; and

  • expenditure of the Lord Chancellor on the establishment of the Board and the OLC.

398.     This expenditure is met in the first instance by sums paid by the Lord Chancellor's grant under clause 173. The levy, which is paid into the Consolidated Fund, recoups this expenditure from the "leviable bodies". The leviable bodies are the approved regulators, the person designated as the regulator in relation to claims management services under the Compensation Act 2006, and such other persons as the Lord Chancellor may prescribe by order (subsection (5)). The Board must be satisfied that the rules concerning the apportionment of the levy are fair and proportionate. To ensure that expenditure is not recovered twice, the expenditure to which the levy relates is the difference between the total of the expenditure of the Board and OLC and the expenditure of the Lord Chancellor (for the establishment of the Board and OLC) and the total of any sums received by the Board and OLC as:

  • application fees;

  • charges for providing statements, guidance, rules;

  • sums received in the Board's capacity as approved regulator;

  • sums received in the Board's capacity as licensing authority;

  • amounts received by the OLC by way of charges paid by respondents;

  • costs paid to the OLC in relation to complaints;

  • amounts paid to the Board in respect of voluntary arrangements; and

  • amounts paid to the Board under paragraph 7(g) of the Schedule to the Compensation Act 2006.

399.     The OLC's leviable expenditure excludes any cost incurred that may reasonably be attributed to the exercise of its functions under clauses 173, 174 and 175.

Clause 175: The levy: supplementary provisions

400.     In addition, the levy rules require the Board to calculate the apportionment of the levy among the bodies which are required to pay it, and to notify those bodies of their liability to pay the levy and of the times it is payable.

401.     In addition, the levy rules require the Board to calculate the apportionment of the levy among approved regulators and to notify approved regulators of their liability to pay the levy within the specified times.

Clause 176: Amounts payable into the Consolidated Fund

402.     All monies received by the Board or the OLC must be paid into the Consolidated Fund. This clause lists the different sources of income of the Board and OLC that must be paid into the Consolidated Fund.

     PART 8: MISCELLANEOUS AND GENERAL PROVISIONS ABOUT LAWYERS

403.     This Part makes provision regarding the Board's relationship with the Solicitors Disciplinary Tribunal. This Part also makes provision regarding the register of trade mark attorneys and the register of patent attorneys. It makes provision about legal professional privilege and amendments to the Immigration and Asylum Act 1999. It furthermore provides for the amendment of legislation relating to the Law Society and the Council for Licensed Conveyancers.

     Clause 177: Duties of regulated persons

404.     Under this clause all authorised persons, and all managers and employees of authorised persons, have a statutory duty to comply with the regulatory arrangements applicable to them. Subsection (3) confirms that regulatory arrangements include those that the Board makes in its capacity as licensing authority.

     Clause 178: The Law Society, solicitors, recognised bodies and foreign lawyers

405.     This clause introduces Schedule 16 which amends the Solicitors Act 1974, the Administration of Justice Act 1985 and the Courts and Legal Services Act 1990 to update the Law Society's regulatory framework and powers. Part 1 of Schedule 16 amends the 1974 Act; Part 2 amends the 1985 Act; and Part 3 amends the 1990 Act. A large number of the amendments are minor consequential changes so that the terminology of the three Acts being amended is consistent with the Bill, along with changes of references to the Council of the Law Society so that they refer to the Law Society, (following on the requirement in clause 27 to maintain arrangements providing for an appropriate separation between the representative and regulatory roles). The notes below do not deal in detail with the paragraphs which solely or mainly make such amendments, but concentrate on those paragraphs making more substantive changes.

406.     As part of the change to a new structure with the Board as oversight regulator, the functions of the Master of the Rolls in respect of the approval of rules and regulations made by the Law Society, and as an appellate authority in relation to certain Law Society decisions, are removed (provision for the necessary amendments to the 1974 Act, among other things, is made by paragraphs 3, 4, 7, 14, 15, 18, 27, 28, 29, 31, 34, 37, 42 and 46). As the relevant rules will fall within the definition of regulatory arrangements, as set out at clause 21 of the Bill, they will have to be approved by the Board under the provision made in Schedule 4; and the route of appeal for decisions presently appealed to the Master of the Rolls will instead be to the High Court.

407.     Paragraph 3 removes the requirement in section 2 of the 1974 Act that the Lord Chancellor and the Master of the Rolls must approve the training regulations made by the Law Society. It also removes references to training "articles" from section 2.

408.     Paragraph 4 amends section 3 of the 1974 Act so as to transfer the Master of the Rolls's functions in respect of the admission of solicitors to the Law Society. Paragraph 7 amends section 8 of the 1974 Act so as to transfer to the High Court the Master of the Rolls's appellate functions in respect of Law Society decisions concerning the restoration of a solicitor's name to the roll.

409.     Paragraphs 8 and 9 substitute new provisions for the existing sections 9 and 10 of the 1974 Act, which deal with applications for and the issuing of practising certificates. The new provisions provide that certificates will only be issued in accordance with regulations made by the Law Society under section 28.

410.     Paragraph 13 replaces section 13 of the 1974 Act with a new provision that provides that the High Court will have jurisdiction in respect of appeals in connection with the issue of practising certificates. Paragraphs 14 and 15 amend sections 13A and 13B of the 1974 Act so as to transfer from the Master of the Rolls to the High Court responsibility for handling appeals against the imposition of conditions on practising certificates and the suspension of practising certificates.

411.     Paragraph 20 amends section 18 of the 1974 Act so as to remove the requirement that the Law Society publish details of the termination of the suspension of a solicitor's practising certificate in the London Gazette on the application of the solicitor in question. Paragraph 28 amends section 28 of the 1974 Act so as to allow the Law Society to make regulations covering a broad range of matters relating to practising certificates.

412.     Paragraph 29 amends section 32 of the 1974 Act so as to allow the Law Society to make rules regarding the fitness to practise of solicitors, and to remove the requirement that rules made regarding the professional practice, conduct and discipline of solicitors be approved by the Master of the Rolls in order to have effect. The Board will take over the Master of the Rolls's function in this regard.

413.     Paragraphs 30 to 32 cover sections 33, 33A and 34 and 36 of the 1974 Act, which deal with matters relating to solicitors' accounts. These provisions have been amended in order to transfer certain rule-making powers from the Law Society Council to the Law Society itself, and to broaden the scope of these powers.

414.     Paragraph 33 makes provision to allow the Law Society to make rules about how its compensation arrangements (including but not limited to the compensation fund) will operate. This removes the current restrictions in the Solicitors Act 1974 so that there is greater flexibility about the circumstances in which grants of compensation may be made, what payments may be used for, and how monies may be collected.

415.     Paragraph 38 amends section 43 of the 1974 Act so as to transfer to the High Court the Master of the Rolls's functions in respect of appeals against decisions of the Law Society prohibiting a solicitor from employing certain persons. Paragraph 38 also widens the range of sanctions that can be imposed where a solicitor acts in contravention of section 41.

416.     Paragraph 39 extends the order-making powers of the Law Society and the Solicitors Disciplinary Tribunal under section 44 of the 1974 Act. The new order-making powers are consequent on the new forms of bodies that the Law Society may recognise under amendments to section 9 of the Administration of Justice Act 1985, found at paragraph 74 of this Schedule. The Law Society and SDT can now order not only that non-solicitors are prohibited from being employed or remunerated by solicitors, registered European lawyers and recognised bodies, but also that they are prohibited from being managers of or from having an interest in recognised bodies. The grounds on which such orders can be made remain the same.

417.     Section 44(1) to (1C) of the Solicitors Act makes it an offence for any person in respect of whom a section 43 order is made, to seek employment or remuneration from a solicitor or recognised body, or to seek or acquire an interest in a recognised body. Section 44(2), together with paragraph 16(1)(d) and new paragraph 16(1A)(d) (see amendment below) of Schedule 2 of the Administration of Justice Act 1985, and together with new paragraph 15(3A) of the Courts and Legal Services Act 1990, allow complaints to be made to the Solicitors Disciplinary Tribunal where a solicitor, registered foreign lawyer, recognised body, or manager or employee or interest-holder in a recognised body breaches the section 43(2) order. A new section 44C provides that the Law Society may charge for the costs of disciplinary investigations.

418.     Paragraph 49 amends section 56 of the 1974 Act so as to require that the committee established under subsection (1) of that provision include members of the Board. Paragraph 49 also makes provision amending the purposes for which orders may be made under section 56.

419.     Section 60 of the 1974 Act provides that a provision of a contentious business agreement is void if it provides that the solicitor is not liable for negligence. Paragraph 51 amends that section so as to disapply this provision if the client entering into the agreement does so for purposes of the client's trade, business or profession. In relation to other clients such provision will continue to be void.

420.     Paragraph 59 amends section 69 of the Solicitors Act 1974 so that solicitors may bill their clients electronically. At present, solicitors may bill clients only in written form.

421.     Paragraph 66 replaces the current section 79 of the 1974 Act with a new provision regarding the ability of the Council of the Law Society to delegate its functions, and for persons whom to the Council has delegated such functions to further delegate to other persons, providing such delegation is in accordance with the provision made in that section. Under the present section 80, the Council is prohibited from delegating certain functions. The new provision removes these restrictions so as to ensure that the Council will be able to delegate its functions as necessary in order to comply with any internal governance rules made by the Board under clause 29.

422.     Paragraphs 69 and 110 to 112 amend Schedule 1 of the 1974 Act and paragraphs 32 to 35 of Schedule 2 of the Administration of Justice Act 1985, in order to modify certain intervention powers of the Law Society. These amendments add to the grounds upon which the Law Society may intervene in solicitors' and recognised bodies' practices: where it is necessary to protect the interests of current, former or potential clients or the beneficiaries of trusts of which the solicitor, the recognised body or one of its managers or employees is or was a trustee. The Law Society's intervention powers have also been extended in certain respects. For example, the Law Society can decide not only to have sums of money vest in it, but also the right to recover the solicitor's or the recognised body's debts. It can also now make rules about what to do with any money received under these powers when beneficiaries cannot be traced, after reasonable steps have been taken. The Law Society's power to compel production and take possession of documents, upon High Court authorisation in certain circumstances, has been extended to include electronic documents and to allow it to take possession of property, including computers, in order to access information. The Law Society's power, also upon High Court authorisation, to have mail redirected has also been extended to include electronic documents and other communications. The Law Society can also apply to the High Court in order to take steps with respect to solicitors' and recognised bodies' websites. The amendments also enable the Law Society to recover their costs of intervention from certain persons where the conduct that led to the intervention was carried on with the consent or connivance of, or was attributable to the neglect of those persons. These amendments also allow for the exercise of certain powers against the managers and employees of recognised bodies, to reflect the fact that these individuals sometimes hold client money, or are trustees in their capacity of managers and employees of recognised bodies. The amendments made to the Council for Licensed Conveyancers' intervention powers (see Schedule 17, paragraphs 1 to 6) are consistent with these changes; and the intervention powers given to licensing authorities in Schedule 14 are also consistent with these updated powers.

423.     Paragraphs 72 to 105 amend the Administration of Justice Act 1985 to extend the Law Society's power to regulate entities. Under section 9 of the Administration of Justice Act 1985, the Law Society has the power to regulate bodies corporate, including LLPs, that it "recognises" as suitable to carry on certain services. This power has now been extended to include other entities through which solicitors practice, such as partnerships and unincorporated bodies, and to allow legal disciplinary practices. The rule-making powers under section 9 have also been enhanced to enable the Society to impose conditions upon a recognition granted to a bodies. A new section 9A has also been added, to set certain requirements for legal disciplinary practices i.e. firms or companies that include solicitors and other legal practitioners or bodies that are "authorised persons" under the provisions of the Bill. These amendments ensure these powers do not include the power to regulate bodies that would be "licensable bodies" under the provisions of the Bill. Section 9A does, however, enable the Law Society to regulate complex corporate structures - for example, recognised bodies in which companies are managers (as defined in this Bill). These amendments also allow the Law Society to apply rules to managers (as defined in this Bill) and employees within them. Amendments are then made to Schedule 2 of the Administration of Justice Act 1985, and to sections 43 to 44 of the 1974 Act (as described above) to reflect the fact that individuals within recognised bodies - whether solicitors or not - are subject to rules and to sanctions for breach of rules. The changes include new order-making powers for the Solicitors Disciplinary Tribunal, new powers to require information from recognised bodies and their managers and employees in order to investigate a body's suitability to remain recognised, and consequential amendments as a result of changes made to the 1974 Act (for example in relation to intervention powers, compensation grants and contentious business agreements).

424.     Paragraph 78 amends section 10 of the Administration of Justice Act 1985, which relates to the offence of pretending to be a recognised body, to cover the different forms of entity which may now be recognised bodies.

425.     Paragraphs 119-132 make amendments to provisions in Schedule 14 to the Courts and Legal Services Act 1990 related to registered foreign lawyers, in order to achieve consistency with provision made elsewhere (for example, reading across, in relation to compensation arrangements, to the new provision introduced into the 1974 Act by paragraph 33).

426.     Paragraph 105 amends paragraph 24 of Schedule 2 to the Administration of Justice Act 1985 to remove the automatic void of any provision within a contentious business agreement that a body shall not be liable for negligence, so long as a person entering into the agreement does so for purposes of their trade, business or profession. Any such provision relating to persons not acting under this capacity will still be automatically void.

Clause 179: The Solicitors Disciplinary Tribunal: approval of rules

427.     This clause is the first of three which make provision in respect of the Solicitors Disciplinary Tribunal, so that the Tribunal's position, as a body statutorily separate from the Law Society but performing functions which are part of the Law Society's regulatory structure, may be properly reflected. The approach is in essence to apply to for the Tribunal certain provisions which apply to approved regulators, with modifications and/or exclusions to reflect the Tribunal's particular role and position. This clause makes provision bringing the Tribunal's rules within the structure of consent requirements for regulatory arrangements, so that there is a degree of monitoring by the Board, but this is kept to the minimum necessary. Accordingly, subsection (1) provides for any alteration of the Tribunal's rules under section 46(9)(b) of the Solicitors Act 1974 to require approval by the Board, unless it is exempt; and subsections (2) to (6) set out the procedures for approval, should an alteration be made.

Clause 180: Board's power to give directions to the Tribunal

428.     This clause applies the Board's power to give directions to an approved regulator under clauses 32 to 34 to the Tribunal. The power is considerably restricted, however, to reflect the fact that the Tribunal is not itself an approved regulator, but is a statutorily independent body which performs functions which form a part of the regulatory structure of the Law Society. The circumstances in which the Board can direct the Tribunal are limited to those in which the Tribunal has failed to perform any of its functions to an adequate standard (or at all). As is the case for directions to approved regulators, under clause 31(4) the Board will not have the power to direct the Tribunal in respect of specific disciplinary cases or proceedings.

Clause 181: Functions of the Tribunal

429.     This clause applies clauses 69 and 70 to the Tribunal with limitations to reflect the Tribunal's particular position and so enables the Lord Chancellor to modify the functions of the Tribunal for certain limited purposes on the recommendation of the Board and with the consent of the Tribunal (and in particular enables amendment of the statutory provisions governing the Tribunal at the Tribunal's request).

 
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Prepared: 18 May 2007