|Legal Services Bill [HL] - continued||House of Commons|
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PART 9: GENERAL
476. This Part makes provision regarding offences committed by bodies corporate and unincorporated bodies. It makes provision setting out how notices issued pursuant to provision in the Bill are to be given. It sets out the procedure for making orders under the Bill. It specifies the extent of the Bill and makes provision regarding the interpretation of terms used in the Bill.
478. This clause provides that where an offence is committed by a body corporate or an unincorporated body, it will be possible, in certain circumstances, to prosecute both the body and the relevant officers.
479. This clause replicates the provision made in section 22A of the Solicitors Act 1974. It provides local weights and measures authorities with powers to investigate and prosecute persons who carry on reserved instrument activities when not entitled to do so or through an employee or manager who is not entitled to do so.
Clause 200: Protected functions of the Lord Chancellor
480. This clause protects the functions of the Lord Chancellor set out in the Bill and in the other Acts specified, so that those functions may only be carried out by the Lord Chancellor and cannot be transferred to another minister by means of an order under the Ministers of the Crown Act 1975.
Clause 201: Notices and directions
481. This clause makes provision requiring notices and directions given under provision made in the Bill to be given in writing.
482. This clause defines the term "document" for the purposes of the Bill. By virtue of this provision, "document" includes information recorded in any form. If the information is not in a legible form, references to the production of the information are to the production of it in a legible form or a form from which it can readily be produced in a legible form.
483. This clause makes provision about how notices, directions and other documents required to be given to a person under the Bill may be given. Where the notice, direction or document is to be given to a body corporate, a partnership, or some other form of unincorporated body, the clause provides that it may be given to certain individuals connected with the body.
484. This clause provides that where a notice, direction or other document is to be given pursuant to provision made in the Bill, it may be given in an electronic format providing that certain conditions are met.
485. Subsection (3) provides that where the Board, the OLC or an ombudsman is the recipient of a notice, direction or other document, they must agree to the manner of its transmission and the form the document will take if it is to be sent electronically. Subsection (5) provides that, where the Board, the OLC or an ombudsman proposes to transmit a notice, direction or other document to another person electronically, the recipient must agree to the manner of transmission and the form the document will take. Subsection (7) provides that where the Board, the OLC or an ombudsman imposes any requirement regarding the electronic transmission of documents, it must publish that requirement.
486. This clause requires the Board and the OLC to comply with certain consultation requirements before making rules under the Bill. The rule-making body must publish a draft of any rules it proposes. The rule-making body must then consider any representations made. If, following representations, the rules differ from the original draft, it must publish the details of the difference. It must publish any rules it makes and can charge a fee to provide either the draft or final rules.
487. This clause defines the meaning of various words and phrases used in the Bill.
480. This clause states that the Lord Chancellor may by order make supplementary, incidental or consequential provision and any transitory, transitional or saving provision.
488. Schedule 21 contains minor and consequential amendments to other legislation.
489. This clause introduces Schedule 22, which sets out provision made to avoid regulatory gaps during the transitional period between the current and new regulatory systems.
490. Paragraphs 1 to 4 create a transitory power, similar to the power at clause 69, for the Lord Chancellor to modify the functions of "designated regulators", such as the Law Society and Bar Council, and other relevant bodies, such as the Solicitors Disciplinary Tribunal. This power will apply before the Board is established and therefore able to make recommendations under clause 69. These provisions therefore set out different procedures for the making of an order, including the requirement at paragraph 3 that the Lord Chancellor invite the Lord Chief Justice and the Office of Fair Trading to make representations on the draft provisions. Paragraph 2(5) sets out the purposes for which orders may be made. These are similar to the purposes for which orders may be made under clause 69 of the Act. Any orders made will be subject to the affirmative resolution procedure by virtue of clause 207(4)(u).
491. Paragraph 5 makes provision for the ordinary members of the Board to exercise the Board's functions under Schedule 1 and Schedule 15 in advance of the Board's Chief Executive being appointed. For example, the ordinary members of the Board will be able to appoint the OLC without waiting until the Board's Chief Executive has been appointed.
492. Under the provision made in Schedule 17, the membership of the Conveyancing Licensing Council is to be appointed, where at present it is "elected or nominated". Paragraph 6 makes transitional provision to ensure that the Council's membership as "elected or nominated" under the present arrangements will continue to exercise the Council's functions until such time as a new Council is appointed under the new arrangements. Schedule 17 to the Bill repeals the provision in the Administration of Justice Act 1985 that provides for the endorsement of conveyancing licences. Paragraph 7 provides that endorsements of licences made under that provision will continue to have force until the expiry of the licences in question, notwithstanding the repeal of the enabling provision.
493. Paragraph 5 ensures that, during the "pre-commencement period" following enactment but prior to commencement of the principal provisions conferring responsibility on the Board's regulatory oversight, any order made under sections 27, 28, paragraph 4 of Schedule 9 or section 113 of the Courts and Legal Services Act 1990 will continue to have effect. This means that if an application by a professional body under those provisions (for authorisation to grant rights of audience, rights to conduct litigation, rights to carry out probate services or rights to act as a commissioner for oaths) is approved in the pre-commencement period, the authorisation will continue to have effect so that the body in question can be "passported" into the new framework as approved regulator.
494. Paragraph 10 makes provision for the appointment of an Interim Chief Executive of the OLC by the Lord Chancellor, to ensure that the Lord Chancellor has the flexibility necessary to maintain momentum behind the implementation process. Sub-paragraph (2) states that the Lord Chancellor will determine the terms and conditions of the appointment. Sub-paragraphs (5) and (6) provide for the Interim Chief Executive to incur expenditure and do other things in the name of and on behalf of the OLC, including appointing staff and making arrangements for assistance. Sub-paragraphs (7) and (8) require the Interim Chief Executive to comply with supervisory directions made by the Lord Chancellor and subsequently by the Board. Sub-paragraphs (7) and (8) have been included to ensure appropriate lines of accountability between the Interim Chief Executive and the Lord Chancellor in the first instance and then, once appointed, the Board.
495. Subsection (2) provides for clause 196(1) to (3), and clause 197(1) to extend to Scotland only. The repeals of and amendments to provisions of enactments contained in clause 186(4) to (5) and clause 197(2) have the same extent as the relevant enactments.
496. Schedule 4 to the Legal Profession and Legal Aid (Scotland) Act 2007 makes a number of minor amendments and repeals, consequential on its provisions to the Solicitors (Scotland) Act 1980 and the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990. These are mainly concerned with the adjustment of statutory references, and the removal of unnecessary references, as a result of the introduction of the new arrangements for the handling of complaints against lawyers in Scotland following the creation of a Scottish Legal Complaints Commission.
497. Modifications made to the 1980 and 1990 Acts by Schedule 4 of the Scottish Act apply only to the devolved aspects of such provisions and it has been necessary to preserve certain provisions to deal with reserved activities. Schedule 20 repeals such provisions and ensures that these modifications are comprehensive in nature, and extend to reserved aspects of both service and conduct complaints.
498. The Government will be closing down two of the Department's associated offices. The Office of the Legal Services Ombudsman (OLSO) has approximately 30 members of staff and the Office of the Legal Services Complaints Commissioner (OLSCC) has approximately 20 members of staff. Other than the closure of the OLSO and the OLSCC, the Government does not anticipate any significant changes to the Department's staffing requirements.
499. As calculated by PricewaterhouseCoopers ("PwC") in their financial analysis to support the draft Legal Services Bill, the cost of regulating the legal services sector in 2005-06 was estimated to be around £97.4m. 18
18 The PwC report can be viewed at http://www.dca.gov.uk/legalsys/pwc_finanalysis_060524.pdf.
500. Again, as calculated by PwC, of this, approximately £12m was spent by the Government or its agencies:
501. The remainder, of around £85.4m, was spent by the professional bodies who directly regulate providers of reserved legal services (with roughly 88% of this figure, or £75m, incurred by the Law Society).
503. PwC have estimated that the reforms will reduce the cost of public expenditure by around £3m per annum. This is largely due to the closure of the OLSCC and the OLSO. (This estimate is not affected by updates to PwC's assumptions.)
504. Under their base-case scenarios, which are in 2005 prices, PwC calculated annual running costs under the new regulatory framework of around £87.8m, £9.6m less than at present. Within this total, the annual running costs of the Board account for £3.6m and those of the Office for Legal Complaints (OLC) account for £16.8m.
505. The Government has now done further analysis to update PwC's projections and the revised estimates in 2007-08 current prices are that the annual running costs of the Board will be approximately £4m and those of the Office for Legal Complaints will be approximately £19.9m. These revised estimates take into account a 5% year-on-year increase in Law Society complaints, which is based on the Compound Annual Growth Rate for 1977-2006 for Law Society complaints.
506. PwC also estimated transition costs for legal services reform at £26.8m (also in 2005 prices). Again, the Government has done further analysis to update PwC's projections, and the revised estimate in 2007-08 current prices is £32.1m.
507. Government policy remains that those being regulated should bear the cost of regulation and the overall impact on public expenditure should, therefore, be negligible. Of the revised estimate of £32.1m for transition costs, £2.4m will be met through public expenditure.
508. The Regulatory Impact Assessment (RIA) sets out the rationale for reform of the regulation of legal services and also analyses the likely impact of the options considered for implementing these reforms.
509. It states that the creation of the Board will provide independent, streamlined oversight regulation to the legal services profession. The annual running costs for the Board were estimated by PwC at £3.6m. As noted in paragraph 510, the Government has carried out further analysis to update PwC's projections and the annual running costs for the Board are estimated to be £4m in 2007-08 current prices. The revised estimates are not reflected in the RIA because the further analysis was carried out after the RIA was published.
510. The facilitation of Alternative Business Structures (ABS) will permit lawyers and providers of associated non-legal services to work together with external financing. The Small Firms Impact Test also stated that the proposed options would provide greater opportunities for small firms to access equity, diversify, expand and effectively compete in the market.
511. The establishment of the Office for Legal Complaints (OLC) will provide an independent complaint handling system with powers to deal with complaints made against providers which cannot be resolved through in-house measures. It is envisaged that consumer confidence in the complaints handling system will increase and will therefore encourage consumers to file legitimate complaints against inefficient providers. The annual running costs for OLC were estimated by PwC at £16.8m. Following further work by the Government this is now estimated at £19.9m in 2007-08 current prices. PwC estimated the total regulatory reform cost of implementation, including transition costs, to be £26.8m. The revised estimate following further work by the Government is £32.1m. Again, for the reason outlined in paragraph 529, the revised estimates are not reflected in the RIA.
Compatibility with the European Convention on Human Rights
512. Section 19 of the Human Rights Act 1998 requires the Minister in charge of a Bill in either House of Parliament to make a statement about the compatibility of the provisions of the Bill with the Convention rights (as defined by section 1 of that Act).
513. Bridget Prentice MP Parliamentary Under-Secretary of State for Justice, has made the following statement: "In my view the provisions of the Legal Services Bill are compatible with the Convention rights."
514. The Bill raises issues under Article 6 (fair trial), Article 8 (respect for family and private life), Article 10 (freedom of expression), and Article 1 of the First Protocol (protection of property).
515. The Bill is compatible with the Convention rights. The compatibility of the regulatory framework which it establishes in practice will be reliant in some respects on appropriate safeguards being provided in regulations; but the restrictions on the exercise of the principal delegated powers provide an adequate level of Parliamentary scrutiny to ensure that those safeguards are provided. Articles 6 (fair trial), 8 (respect for family and private life), and 10 (freedom of expression), and Article 1 of the First Protocol (protection of property) are likely to be engaged. The following summarises the considerations in relation to each of these.
516. In relation to Article 6, the Board, a regulator or a licensing authority may make a determination which affects a person's civil rights. It would therefore need to be sufficiently independent and impartial. The jurisprudence is summarised in Whitfield and others v UK. The nature and extent to which the Article is engaged, and the procedural and other provisions necessary to ensure compliance with it, will differ according to the matter in issue, and in particular whether this involves investigation of an alleged breach of professional rules with potential disciplinary sanctions, investigation of a complaint of poor professional service, investigation of breach of individuals' duties related to ABS licences, and potential sanctions or prohibitions on shareholding in ABS firms, divestiture of such shareholdings or similar matters. The preconditions for the exercise of powers and Parliamentary scrutiny, the separation of the regulatory functions from the functions of the Lord Chancellor, and the involvement of the High Court in relation to the shareholding provisions, provide sufficient safeguards when combined with the duties of the Board to comply with section 6 of the Human Rights Act.
517. As regards the Office for Legal Complaints and its ombudsmen, the separation and independence of complaints investigation is secured by provision in relation to appointments, tenure, and conditions of office which compare to existing procedures which have either not been criticised in terms of Article 6 or been upheld as complying with it. The availability (to be provided for under scheme rules) of a form of internal review, together with the availability of judicial review, is consistent with a line of authority to the effect that it is not necessary for an appeal to lie to a court where judicial review is possible.
518. In relation to Article 8, the Bill provides powers necessary for the regulators to investigate whether any of the offences have been committed. These include powers of entry and search (and the power to take copies of records found during a search) in clauses 40 to 43 and various powers to apply to the High Court for an order to comply with a direction (see, for example, clauses 42 and 56). The Bill also gives a licensing authority powers to intervene in an ABS practice, including taking possession of money and documents, where it has suspended or revoked its licence (see Schedule 14). These powers in principle engage Article 8, which protects the right to respect for a person's private and family life, home and correspondence. Interferences with Article 8 rights are justified if they pursue legitimate aims and are necessary. In this case it is felt that the powers are necessary to enable the Regulators and licensing authorities to properly carry out their functions. Procedural safeguards have been included.
519. In relation to Article 10, the Bill creates a number of criminal offences (for example, see clauses 14 and 17 and paragraphs 22 and 24 of Schedule 13). The offences are triable in the criminal courts and so in a manner which accords with the rights guaranteed in Article 6. A potential issue was considered in relation to clause 17 which makes it an offence to pretend to be entitled to provide reserved legal activities. Among other things this might affect the right to advertise and as such fall within Article 10, but the objectives behind the creation of the offence are consistent with the limitations on Article 10.
520. In relation to Article 1 of the First Protocol, the right to the peaceful enjoyment of possessions established therein is explicitly subject to the power of the State to interfere with the right in the public interest, subject to the conditions provided by law. The Board's powers of direction and intervention are needed to ensure that the regulatory objectives are upheld and in particular are subject to the requirement in clause 3 that they have regard to the public interest and to the requirement that they must be satisfied that the objective cannot be achieved by less intrusive powers. Similarly, the powers of licensing authorities to prevent persons becoming owners of ABS firms or to obtain orders requiring divestiture of parts of, or all of, their shares in ABS firms, or disqualifying such persons, are subject to the approval requirements set out in paragraph 6 of Schedule 13. This requires consideration of the regulatory objectives, the duties under clause 177 and whether the person under consideration is otherwise fit and proper to hold that interest. Such decisions will be subject to a right of appeal, with a further appeal possible to the High Court, and additionally divestiture of shares will be possible only on application to the High Court.
521. Because the Sewel Convention provides that Westminster will not normally legislate with regard to devolved matters in Scotland without the consent of the Scottish Parliament, if there are amendments relating to such matters which trigger the Convention, the consent of the Scottish Parliament will be sought for them.
522. Clause 212 specifies that certain clauses in the Bill will come in to force on the day that the Bill is passed. The remaining clauses will come into force on such day as the Lord Chancellor appoints by order. Specific preconditions for the making of the first order for commencement of any element of Part 5 of the Bill are provided by subsection clause 212(3): an affirmative resolution of both Houses of Parliament will be required, which must be preceded by the publication of an independent report, commissioned by the Lord Chancellor, on specified issues.
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