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 1 — The Solicitors Act 1974 (c. 47)
243

(d)
for the making of grants in respect of a compensation claim
before it is finally determined;
(e)
for a grant to be made by way of loan in such circumstances
and on such terms as may be prescribed in, or determined in
accordance with, the rules;
5
(f)
for a grant to be made by way of making good a deficiency in
monies held in trust by the Society under paragraph 6 or 6A
of Schedule 1;
(g)
as to the minimum and maximum grants payable in respect
of a compensation claim (or a claim of a prescribed
10
description);
(h)
for the Society to be subrogated, to such extent as may be
prescribed, to any rights and remedies of a person to whom a
grant is made in relation to the loss in respect of which the
grant is made.
15
(3)
The circumstances which may be prescribed by virtue of subsection
(2)(a) include in particular—
(a)
the nature of the loss;
(b)
in a case within subsection (1)(a) or (b), the nature of the act
or omission.
20
(4)
For the purposes of subsection (2)(f), there is a deficiency if the
monies mentioned in that subsection are insufficient to satisfy the
claims of all persons with a beneficial interest in the monies.
(5)
The Society may prepare and publish guidance as to the criteria it
will apply in deciding whether to make a grant in respect of a
25
compensation claim, or any part of a compensation claim.
(6)
Where the Society decides—
(a)
not to make a grant in respect of a compensation claim or any
part of a compensation claim, or
(b)
to make a grant of less than the amount claimed,
30

it must give reasons for its decision.
(7)
Rules under subsection (1) which are not regulatory arrangements
within the meaning of the Legal Services Act 2007 are to be treated as
such arrangements for the purposes of that Act.
(8)
In this section—
35
“compensation claim” means a claim for the Society to make a
grant of the kind mentioned in subsection (1);
“prescribed” means prescribed in rules under subsection (1).
36A
Compensation funds
(1)
Compensation rules may require or authorise the Society to establish
40
or maintain a fund or funds (“compensation funds”) for the purpose
of making grants in respect of compensation claims.
(2)
Compensation rules may require solicitors, or solicitors of a
description prescribed in the rules, to make contributions to
compensation funds of such amounts, at such times and in such
45
circumstances, as may be prescribed in or determined in accordance
with the rules.

Legal Services Bill [HL]
Schedule 16 — The Law Society, solicitors, recognised bodies and foreign lawyers
Part 1 — The Solicitors Act 1974 (c. 47)
244

(3)
Any amount payable by virtue of such a requirement may be
recovered as a debt due to the Society.
(4)
Subsection (2) does not apply to a solicitor who is a Crown
Prosecutor.
(5)
The Society may invest any money which forms part of a
5
compensation fund in any investments in which trustees may invest
under the general power of investment in section 3 of the Trustee Act
2000 (as restricted by sections 4 and 5 of that Act).
(6)
The Society may insure with authorised insurers, in relation to
compensation funds, for such purposes and on such terms as it
10
considers appropriate.
(7)
The Society may, in such circumstances and subject to such
conditions as may be prescribed in or determined in accordance with
compensation rules—
(a)
borrow for the purposes of a compensation fund;
15
(b)
charge investments which form part of a compensation fund
as security for borrowing by the Society for the purposes of
that fund.
(8)
A compensation fund may be applied by the Society for the purposes
mentioned in subsection (9) (in addition to the making of grants in
20
respect of compensation claims).
(9)
The purposes are—
(a)
payment of premiums on insurance policies effected under
subsection (6);
(b)
repayment of money borrowed by the Society for the
25
purposes of the fund and payment of interest on any money
so borrowed;
(c)
payment of any other costs, charges or expenses incurred by
the Society in establishing, maintaining, protecting
administering or applying the fund;
30
(d)
payment of any costs, charges or expenses incurred by the
Society in exercising its powers under Part 2 of Schedule 1;
(e)
payment of any costs or damages incurred by the Society, its
employees or agents as a result of proceedings against it or
them for any act or omission of its or theirs in good faith and
35
in the exercise or purported exercise of such powers.
(10)
In this section—
“compensation claim” has the same meaning as in section 36;
“compensation fund” has the meaning given by subsection (1);
“compensation rules” means rules under section 36(1).”
40
38
In section 37 (professional indemnity)—
(a)
in subsection (1) for “Council, with the concurrence of the Master of
the Rolls,” substitute “Society”, and
(b)
in subsection (3)(h)—
(i)
for “Council” substitute “Society”,
45
(ii)
for “they consider” substitute “it considers”, and
(iii)
after “being” insert “, or have been,”.

Legal Services Bill [HL]
Schedule 16 — The Law Society, solicitors, recognised bodies and foreign lawyers
Part 1 — The Solicitors Act 1974 (c. 47)
245

39
Omit section 37A (redress for inadequate professional services).
40
Omit section 40 (solicitor not to commence or defend actions while in
prison).
41    (1)
Section 41 (employment by solicitor of person struck off or suspended) is
amended as follows.
5
      (2)
After subsection (1A) insert—
“(1B)
Where—
(a)
a solicitor (“the employed solicitor”) is employed by another
solicitor in accordance with a written permission granted
under this section, and
10
(b)
the employed solicitor is disqualified from practising as a
solicitor by reason of a fact mentioned in subsection (1)(b) or
(c),

section 20(1) does not apply in relation to anything done by the
employed solicitor in the course of that employment.”
15
      (3)
In subsection (3)—
(a)
for “Master of the Rolls who” substitute “High Court which”, and
(b)
in paragraph (b) for “he” substitute “it”.
      (4)
In subsection (4) for “shall” to the end substitute “may—
(a)
order that his name be struck off the roll,
20
(b)
order that he be suspended from practice for such period as
the Tribunal or court thinks fit, or
(c)
make such other order in the matter as it thinks fit.”
      (5)
After that subsection insert—
“(4A)
In relation to an appeal under subsection (3) the High Court may
25
make such order as it thinks fit as to payment of costs.
(4B)
The decision of the High Court on an appeal under subsection (3)
shall be final.”
      (6)
Omit subsection (5).
42    (1)
Section 43 (control of solicitors’ employees and consultants) is amended as
30
follows.
      (2)
For subsections (1), (1A) and (2) substitute—
“(1)
Where a person who is or was involved in a legal practice but is not
a solicitor—
(a)
has been convicted of a criminal offence which is such that in
35
the opinion of the Society it would be undesirable for the
person to be involved in a legal practice in one or more of the
ways mentioned in subsection (1A), or
(b)
has, in the opinion of the Society, occasioned or been a party
to, with or without the connivance of a solicitor, an act or
40
default in relation to a legal practice which involved conduct
on his part of such a nature that in the opinion of the Society
it would be undesirable for him to be involved in a legal
practice in one or more of the ways mentioned in subsection
(1A),
45

Legal Services Bill [HL]
Schedule 16 — The Law Society, solicitors, recognised bodies and foreign lawyers
Part 1 — The Solicitors Act 1974 (c. 47)
246


the Society may either make, or make an application to the Tribunal
for it to make, an order under subsection (2) with respect to that
person.
(1A)
A person is involved in a legal practice for the purposes of this
section if the person—
5
(a)
is employed or remunerated by a solicitor in connection with
the solicitor’s practice;
(b)
is undertaking work in the name of, or under the direction or
supervision of, a solicitor;
(c)
is employed or remunerated by a recognised body;
10
(d)
is employed or remunerated by a manager or employee of a
recognised body in connection with that body’s business;
(e)
is a manager of a recognised body;
(f)
has or intends to acquire an interest in such a body.
(2)
An order made by the Society or the Tribunal under this subsection
15
is an order which states one or more of the following—
(a)
that as from the specified date—
(i)
no solicitor shall employ or remunerate, in connection
with his practice as a solicitor, the person with respect
to whom the order is made,
20
(ii)
no employee of a solicitor shall employ or
remunerate, in connection with the solicitor’s
practice, the person with respect to whom the order is
made,
(iii)
no recognised body shall employ or remunerate that
25
person, and
(iv)
no manager or employee of a recognised body shall
employ or remunerate that person in connection with
the business of that body,

except in accordance with a Society permission;
30
(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 with
respect to whom the order is made to be a manager of the
body;
35
(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 with
respect to whom the order is made to have an interest in the
body.
40
(2A)
The Society may make regulations prescribing charges to be paid to
the Society by persons who are the subject of an investigation by the
Society as to whether there are grounds for the Society—
(a)
to make an order under subsection (2), or
(b)
to make an application to the Tribunal for it to make such an
45
order.
(2B)
Regulations under subsection (2A) may—
(a)
make different provision for different cases or purposes;

Legal Services Bill [HL]
Schedule 16 — The Law Society, solicitors, recognised bodies and foreign lawyers
Part 1 — The Solicitors Act 1974 (c. 47)
247

(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.
(2C)
Any charge which a person is required to pay under regulations
under subsection (2A) is recoverable by the Society as a debt due to
5
the Society from the person.”
      (3)
In subsection (5) omit—
(a)
“by any solicitor”, and
(b)
the words from “but” to the end.
      (4)
After that subsection insert—
10
“(5A)
In this section—
“manager”, in relation to a recognised body, has the same
meaning as it has in relation to a body in the Legal Services
Act 2007 (see section 207 of that Act);
“recognised body” means a body recognised under section 9 of
15
the Administration of Justice Act 1985;
“specified date” means such date as may be specified in the
order;
“Society permission” means permission in writing granted by
the Society for such period and subject to such conditions as
20
the Society may think fit to specify in the permission.
(5B)
A person has an interest in a recognised body for the purposes of this
section if the person has an interest in that body within the meaning
of Part 5 of the Legal Services Act 2007 (see sections 72 and 109 of that
Act).”
25
43
In section 44 (offences in connection with orders under section 43(2))—
(a)
for subsection (1) substitute—
“(1)
It is an offence for a person in respect of whom there is in
force an order under section 43(2) which contains provision
within section 43(2)(a)—
30
(a)
to seek or accept any employment or remuneration
from a solicitor, or an employee of a solicitor, in
connection with the practice carried on by that
solicitor without previously informing the solicitor or
employee of the order;
35
(b)
to seek or accept any employment or remuneration
from a recognised body, or a manager or employee of
a recognised body, in connection with that body’s
business, without previously informing the body, or
manager or employee, of the order.
40
(1A)
It is an offence for a person in respect of whom there is in
force an order under section 43(2) which contains provision
within section 43(2)(b) to seek or accept a position as a
manager of a recognised body, without previously informing
that body of the order.
45
(1B)
It is an offence for a person in respect of whom there is in
force an order under section 43(2) which contains provision
within section 43(2)(c) to seek or accept an interest in a

Legal Services Bill [HL]
Schedule 16 — The Law Society, solicitors, recognised bodies and foreign lawyers
Part 1 — The Solicitors Act 1974 (c. 47)
248

recognised body from any person, without previously
informing that person and (if different) the recognised body
of the order.
(1C)
A person guilty of an offence under subsection (1), (1A) or
(1B) is liable on summary conviction to a fine not exceeding
5
level 3 on the standard scale.”,
(b)
in subsection (2) for “the employment of that person” substitute “the
taking of any action”, and
(c)
after subsection (4) insert—
“(5)
In this section—
10
“manager” has the same meaning as in section 43;
“recognised body” means a body recognised under
section 9 of the Administration of Justice Act 1985;

and for the purposes of subsection (1B) a person seeks or
accepts an interest in a recognised body if the person seeks or
15
accepts an interest which if it were obtained by the person
would result in the person having an interest in that body
within the meaning of Part 5 of the Legal Services Act 2007
(see sections 72 and 109 of that Act).”
44
For section 44B (examination of files) substitute—
20
“44B
Provision of information and documents by solicitors etc
(1)
The Society may by notice require a person to whom this section
applies—
(a)
to provide information, or information of a description,
specified in the notice, or
25
(b)
produce documents, or documents of a description, specified
in the notice.
(2)
This section applies to—
(a)
a solicitor;
(b)
an employee of a solicitor;
30
(c)
a recognised body;
(d)
an employee or manager of, or a person with an interest in, a
recognised body.
(3)
The Society may give a notice under this section only if it is satisfied
that it is necessary to do so for the purpose of investigating—
35
(a)
whether there has been professional misconduct by a
solicitor;
(b)
whether a solicitor, or an employee of a solicitor, has failed to
comply with any requirements imposed by or by virtue of
this Act or any rules made by the Society;
40
(c)
whether a recognised body, or any of its managers or
employees has failed to comply with any requirement
imposed by or by virtue of the Administration of Justice Act
1985 or any rules made by the Society and applicable to the
body, manager or employee by virtue of section 9 of that Act;
45
(d)
whether there are grounds for making, or making an
application to the Tribunal for it to make, an order under

Legal Services Bill [HL]
Schedule 16 — The Law Society, solicitors, recognised bodies and foreign lawyers
Part 1 — The Solicitors Act 1974 (c. 47)
249

section 43(2) with respect to a person who is or was involved
in a legal practice (within the meaning of section 43(1A)).
(4)
A notice under this section—
(a)
may specify the time and place at which, and manner and
form in which, the information is to be provided or document
5
is to be produced;
(b)
must specify the period within which the information is to be
provided or the document produced;
(c)
may require the information to be provided or document to
be produced to the Society or to a person specified in the
10
notice.
(5)
The Society may pay to any person such reasonable costs as may be
incurred by that person in connection with the provision of any
information, or production of any document, by that person
pursuant to a notice under this section.
15
(6)
Paragraphs 9(3) and (4) and 13, 15 and 16 of Schedule 1 apply in
relation to the powers to obtain information conferred by this
section, but for this purpose—
(a)
paragraph 9 of that Schedule has effect as if—
(i)
in sub-paragraph (3) for “such documents” there were
20
substituted “information to which a notice given to
him under section 44B applies”,
(ii)
in that sub-paragraph for “sub-paragraph (1)” there
were substituted “the notice”,
(iii)
in sub-paragraph (4) for “produce” (in the first place)
25
to the end there were substituted “provide
information pursuant to a notice under section 44B to
provide the information to any person appointed by
the Society at such time and place as may be specified
in the order.”, and
30
(b)
the reference to the solicitor or his personal representative in
paragraph 13 of that Schedule is to be construed as a
reference to the person to whom the notice was given under
this section.
(7)
Paragraphs 9 (other than sub-paragraphs (1) and (3)), 12, 13, 15 and
35
16 of Schedule 1 apply in relation to the powers to obtain documents
conferred by this section as they apply in relation to the powers
conferred by paragraph 9(1) of that Schedule, except that for this
purpose—
(a)
any reference in paragraph 9 of that Schedule to a person
40
appointed, or to a requirement, under sub-paragraph (1) of
that paragraph is to be construed as a reference to a person
appointed, or to a requirement to produce documents, under
this section,
(b)
any reference in that paragraph to any such documents as are
45
mentioned in paragraph 9(1) of that Schedule is to be
construed as a reference to any documents to which a notice
under this section applies,
(c)
the references to the solicitor or his firm in paragraph 9(5) and
(6) of that Schedule, and the reference to the solicitor or
50
personal representative in paragraph 9(7) of that Schedule,