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

(d)
for the suspension or revocation of any such
recognition, on such grounds and in such
circumstances as may be prescribed by the rules;
(e)
about the effect on the recognition of a partnership or
other unincorporated body (“the existing body”) of
5
any change in the membership of the existing body,
including provision for the existing body’s
recognition to be transferred where the existing body
ceases to exist and another body succeeds to the
whole or substantially the whole of its business;
10
(ea)
for the keeping by the Society of a register containing
the names and places of business of all bodies which
are for the time being recognised under this section,
and such other information relating to those bodies as
may be specified in the rules;
15
(eb)
for information (or information of a specified
description) on such a register to be made available to
the public, including provision about the manner in
which, and times at which, information is to be made
so available;”, and
20
(e)
after paragraph (f) insert—
“(fa)
about the education and training requirements to be
met by managers and employees of recognised
bodies;
(fb)
for rules made under any provision of the 1974 Act to
25
have effect in relation to managers and employees of
recognised bodies with such additions, omissions or
other modifications as appear to the Society to be
necessary or expedient;”.
      (4)
After subsection (2) insert—
30
“(2A)
Where the Society decides to recognise a body under this section it
must grant that recognition subject to one or more conditions if—
(a)
the case is of a kind prescribed for the purposes of this section
by rules made by the Society, and
(b)
the Society considers that it is in the public interest to do so.
35
(2B)
At any time while a body is recognised under this section the Society
may, in such circumstances as may be prescribed, direct that the
body’s recognition is to have effect subject to such conditions as the
Society may think fit.

“Prescribed” means prescribed by rules made by the Society.
40
(2C)
The conditions which may be imposed under subsection (2A) or (2B)
include—
(a)
conditions requiring the body to take specified steps that
will, in the opinion of the Society, be conducive to the
carrying on by the body of an efficient business;
45
(b)
conditions which prohibit the body from taking any specified
steps except with the approval of the Society.

“Specified” means specified in the condition.
(2D)
Rules made by the Society may make provision about when
conditions imposed under this section take effect (including
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)
272

provision conferring power on the Society to direct that a condition
is not to have effect until the conclusion of any appeal in relation to
it).
(2E)
Section 86A of the 1974 Act applies to rules under this section as it
applies to rules under that Act.
5
(2F)
Rules under this section may contain such incidental, supplemental,
transitional or transitory provisions or savings as the Society
considers necessary or expedient.”
      (5)
For subsection (3) substitute—
“(3)
Despite section 24(2) of the 1974 Act, section 20 of that Act
10
(prohibition on unqualified person acting as solicitor) does not apply
to a recognised body; and nothing in section 24(1) of that Act applies
in relation to such a body.”
      (6)
Omit subsection (4).
      (7)
In subsection (5) omit “corporate”.
15
      (8)
In subsection (7) for “Secretary of State” (in both places) substitute “Lord
Chancellor”.
      (9)
In subsection (8)—
(a)
for ““the Council” and “the Society” have” substitute ““the Society”
has”,
20
(b)
after the definition of “the Society” insert—
““legal services body” has the meaning given by section 9A;
“manager”, in relation to a body, has the same meaning as in the
Legal Services Act 2007 (see section 207 of that Act);”,
(c)
omit the definition of “officer”,
25
(d)
in the definition of “recognised body” omit “corporate”, and
(e)
for the definition of “registered European lawyer” substitute—
““relevant legal services” has the meaning given by
section 9A;
“solicitor services” means professional services such as
30
are provided by individuals practising as solicitors or
lawyers of other jurisdictions.”
     (10)
Omit subsection (9).
82
After that section insert—
“9A
Legal services bodies
35
(1)
For the purposes of section 9, a “legal services body” means a body
(corporate or unincorporate) in respect of which—
(a)
the management and control condition, and
(b)
the services condition,

are satisfied.
40
(2)
The management and control condition is satisfied in the case of a
partnership if—
(a)
at least one of the partners is—
(i)
a solicitor,

Legal Services Bill [HL]
Schedule 16 — The Law Society, solicitors, recognised bodies and foreign lawyers
Part 2 — The Administration of Justice Act 1985 (c. 61)
273

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

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

(Lawyer’s Practice) Regulations 2000 (S.I. 2000/1119) who is
registered with the Law Society;
“relevant legal services”, in relation to a legal services body,
means—
(a)
solicitor services, and
5
(b)
where authorised persons, other than solicitors or
registered European lawyers, are managers or
employees of, or have an interest in the body, services
such as are provided by individuals practising as
such authorised persons (whether or not those
10
services involve the carrying on of reserved legal
activities within the meaning of the Legal Services Act
2007);
“solicitor services” has the same meaning as in section 9;

and a person has an interest in a body if the person has an interest in
15
the body within the meaning of Part 5 of the Legal Services Act 2007
(see sections 72 and 109 of that Act).”
83    (1)
Section 10 (penalty for pretending to be a body recognised under section 9)
is amended as follows.
      (2)
In subsection (1) omit “corporate” (in both places).
20
      (3)
In subsection (2) omit “corporate”.
      (4)
For subsection (3) substitute—
“(3)
Where an offence under this section committed by a body corporate
is proved to have been committed with the consent or connivance of
or to be attributable to any neglect on the part of an officer of the
25
body corporate, that officer (as well as the body corporate) is guilty
of the offence and is liable to be proceeded against and punished
accordingly.
(4)
Where the affairs of a body corporate are managed by its members,
subsection (3) applies in relation to the acts and defaults of a member
30
in connection with the member’s functions of management as it
applies to an officer of the body corporate.
(5)
Proceedings for an offence under this section alleged to have been
committed by an unincorporated body are to be brought in the name
of that body (and not in that of any of its members) and, for the
35
purposes of any such proceedings, any rules of court relating to the
service of documents have effect as if that body were a corporation.
(6)
A fine imposed on an unincorporated body on its conviction of an
offence under this section is to be paid out of the funds of that body.
(7)
If an unincorporated body is charged with an offence under this
40
section, section 33 of the Criminal Justice Act 1925 (c. 86) and
Schedule 3 to the Magistrates’ Courts Act 1980 (c. 43) (procedure on
charge of an offence against a corporation) have effect in like manner
as in the case of a corporation so charged.
(8)
Where an offence under this section committed by an
45
unincorporated body (other than a partnership) is proved to have
been committed with the consent or connivance of, or to be
attributable to any neglect on the part of, any officer of the body or

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

any member of its governing body, that officer or member as well as
the unincorporated body is guilty of the offence and liable to be
proceeded against and punished accordingly.
(9)
Where an offence under this section committed by a partnership is
proved to have been committed with the consent or connivance of,
5
or to be attributable to any neglect on the part of, a partner, that
partner as well as the partnership is guilty of the offence and liable
to be proceeded against and punished accordingly.
(10)
In this section “officer”, in relation to a body corporate, means—
(a)
any director, secretary or other similar officer of the body
10
corporate, or
(b)
any person who was purporting to act in any such capacity.”
84    (1)
Section 43 (jurisdiction and powers of Solicitors Disciplinary Tribunal in
relation to complaints against solicitors) is amended as follows.
      (2)
In subsection (2)(a) for “(7) to” substitute “(9) to”.
15
      (3)
After subsection (3) insert—
“(3A)
Nothing in section 157 of the Legal Services Act 2007 (approved
regulators not to make provision for redress) prevents an order being
made under subsection (3).”
      (4)
For subsection (5) substitute—
20
“(5)
An appeal under section 49 of the Solicitors Act 1974 against an order
of the Tribunal under subsection (3) lies only at the instance of the
solicitor with respect to whom the legal aid complaint was made.”
85
In the title of Schedule 2, for “Incorporated practices” substitute “Legal
services practices”.
25
86
In paragraph 1 of that Schedule (interpretation)—
(a)
in sub-paragraph (1) omit “corporate”,
(b)
in sub-paragraph (2) omit—
(i)
paragraph (b) and the “or” immediately preceding it,
(ii)
“corporate”, and
30
(iii)
“or application”,
(c)
after that sub-paragraph insert—
   “(2A)
References in this Schedule to a manager or employee of a
recognised body, in relation to a complaint (other than
such a complaint as is mentioned in paragraph 16(1A)(a)),
35
include references to a person who was such a manager or
employee at the time when the conduct to which the
complaint relates took place.”,
(d)
omit sub-paragraph (3),
(e)
in sub-paragraph (4) omit from “; and for those purposes” to the end,
40
(f)
in sub-paragraph (5) for “sub-paragraphs (3) and (4)” substitute
“sub-paragraphs (4) and (6)”, and
(g)
for sub-paragraph (6) substitute—
    “(6)
In this Schedule—

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

“manager”, in relation to a body, has the same
meaning as in the Legal Services Act 2007 (see
section 207 of that Act);
“registered European lawyer” has the same meaning
as in section 9A;
5
“the 1974 Act” means the Solicitors Act 1974.”
87
For paragraph 2 of that Schedule (appeal against refusal of Council to grant
recognition) substitute—
“Appeal against refusal of Society to grant recognition etc
2     (1)
A body may appeal to the High Court against—
10
(a)
a decision to refuse an application by the body for
recognition under section 9;
(b)
a decision to impose a condition under subsection (2A) of
that section on the body’s recognition under that section;
(c)
a decision to impose a condition under subsection (2B) of
15
that section on the body’s recognition under that section.
      (2)
A recognised body whose recognition is subject to a condition
within section 9(2C)(b) may appeal to the High Court against any
decision by the Society to refuse to approve the taking of any step
for the purposes of that condition.
20
      (3)
Rules made by the Society may make provision, as respects any
application for recognition that is neither granted nor refused by
the Society within such period as may be specified in the rules, for
enabling an appeal to be brought under this paragraph in relation
to the application as if it had been refused by the Society.
25
      (4)
On an appeal under sub-paragraph (1)(a) or (b), the High Court
may—
(a)
affirm the decision of the Society,
(b)
direct the Society to grant the body recognition under
section 9 free from conditions or subject to such conditions
30
as the High Court may think fit,
(c)
direct the Society not to recognise the body,
(d)
if the Society has recognised the body, by order suspend
the recognition, or
(e)
make such other order as the High Court thinks fit.
35
      (5)
On an appeal under sub-paragraph (1)(c), the High Court may—
(a)
affirm the decision of the Society,
(b)
direct that the body’s recognition under section 9 is to have
effect subject to such conditions as the High Court may
think fit,
40
(c)
by order revoke the direction given by the Society under
section 9(2B), or
(d)
make such other order as the High Court thinks fit.
      (6)
On an appeal under sub-paragraph (2), the High Court may—
(a)
affirm the decision of the Society,
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)
277

(b)
direct the Society to approve the taking of one or more
steps for the purposes of a condition within section
9(2C)(b), or
(c)
make such other order as the High Court thinks fit.
      (7)
In relation to an appeal under this paragraph, the High Court may
5
make such order as it thinks fit as to payment of costs.
      (8)
The decision of the High Court on an appeal under this paragraph
is final.”
88
For paragraph 3 of that Schedule (accounts rules) substitute—
“3    (1)
This paragraph applies where rules made under section 32(1) of
10
the 1974 Act are applied—
(a)
to recognised bodies in accordance with section 9(2)(f) of
this Act, or
(b)
to managers or employees of such bodies in accordance
with section 9(2)(fb) of this Act.
15
      (2)
The Society may disclose a report on or information about the
accounts of a recognised body, or a manager or employee of a
recognised body, obtained in pursuance of such rules for use—
(a)
in investigating the possible commission of an offence by
the body or any of its managers or employees, and
20
(b)
in connection with any prosecution of the body or any of
its managers or employees consequent on the
investigation.”
89
In paragraph 4 of that Schedule (interest on clients’ money)—
(a)
in sub-paragraph (1)—
25
(i)
for “section 33(1)(a)” substitute “section 33(1)”, and
(ii)
for the words from “and subject to” to the end substitute “, a
recognised body is not liable to account to any client, other
person or trust for interest received by the recognised body
on money held at a bank or building society in an account
30
which is for money received or held for, or on account of,
clients of the recognised body, other persons or trusts,
generally.”, and
(b)
omit sub-paragraph (2).
90
After that paragraph insert—
35
“4ZA
Where rules made under section 32 of the 1974 Act and containing
any such provision as is referred to in section 33(1) of that Act are
applied to managers or employees of recognised bodies in
accordance with section 9(2)(fb), then, except as provided by the
rules, a manager or employee to whom the rules are applied is not
40
liable to account to any client, other person or trust for interest
received by the manager or employee on money held at a bank or
building society in an account which is for money received or held
for, or on account of, clients of the recognised body, other persons
or trusts, generally.”
45
91
For paragraph 4A of that Schedule (inspection of bank accounts)