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4 Jun 2007 : Column 81

Mr. Vara: I was referring to the Minister’s opening comments. I shall deal with concurrence later, but I recall the Minister saying at the beginning of her speech that the Opposition should not be too worried about the fact that the Lord Chief Justice’s concurrence would not be necessary, because before making any appointments the Lord Chancellor would take consultations from other sources. If that is the case, what is wrong with stating in the Bill that there will be such consultations, and also that there will be concurrence from the Lord Chief Justice?

Mr. Kevan Jones: The legal services ombudsman—who, as was demonstrated by my hon. Friend the Member for Bassetlaw (John Mann), has a great deal of power—is currently appointed by the Lord Chancellor, with no recourse to anyone else. What is the difference between that and what is proposed in the Bill?

Mr. Vara: The hon. Gentleman has raised that question on a number of occasions. He may not have entirely understood this, but the Bill that we want is different from the Bill that we have at present. I am not trying to perpetuate the present system; I am arguing in favour of amending it.

Mr. Jones: Is the hon. Gentleman saying that the current arrangement—under which the Lord Chancellor appoints the legal services ombudsman, as he has done for quite a few years—is wrong?

Mr. Vara: I am here to discuss the Legal Services Bill, which talks of the Lord Chancellor appointing the legal services board. If the hon. Gentleman wishes to make a constructive comment on that, rather than repeating the same point over and over again, I am sure that the House will be appreciative.

The independence of the legal system is a matter of serious concern. If the Lord Chancellor alone appoints the board, many will see that as political interference in the regulation of our legal services. That impacts on the independence of the profession and, from an international perspective, it seriously undermines our reputation as having truly independent legal services. To put matters into perspective, the overseas market for legal services contributes more than £2 billion a year to United Kingdom exports. That is a huge sum and we will put it at risk if the rest of the world feels that the British legal system is no longer independent. Moreover, in an increasingly global market, where there are multi-jurisdictional transactions, UK law is often chosen as the preferred legal basis. That, too, will be threatened if there is a question mark over the independence of our legal system.

Robert Neill: Is not my hon. Friend’s important point reinforced by the precedent set when Hong Kong was returned to China? The then Government took great pains to ensure that there were significant safeguards to protect the independence of the existing Hong Kong judicial system, recognising that the integrity and international reputation of the Hong Kong judicial and legal system was important for Hong Kong’s future economic viability. Does not the same consideration apply here? It is important that we do not risk having even the perception among the many
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international organisations that choose to have their contracts dealt with under English law, that there is political interference.

Mr. Vara: I agree and I am grateful to my hon. Friend for clarifying the point and for making that intervention.

John Mann: Why has it not happened already? On the hon. Gentleman’s logic, we have political interference with the “political”—his word— appointment of the legal services ombudsman.

Mr. Vara: I am arguing about the Legal Services Bill. If the hon. Gentleman wishes to perpetuate the system and to argue that we should have a system that continues with political appointments, that is his call. The House took on board all that he had to say in his contribution, which lasted some 40 minutes. I sympathise with the dilemma of many of his constituents, but it would be more useful if he were to make constructive comments as to how the Bill could be improved or be beneficial to his constituents, rather than giving a history lesson about the legal system that the Bill seeks to modernise.

Mr. Kevan Jones: Are the hon. Gentleman and the hon. Member for Bromley and Chislehurst (Robert Neill) both saying that the Bill should be amended to take into account what, for example, Europe and others feel should be the way in which we regulate our services? If that is the case, I am sure that the former Member for Bromley and Chislehurst will be spinning in his grave.

Mr. Vara: The hon. Gentleman is not following what we are saying.

It is clear that Britain’s legal services should not only be independent of politics but be seen to be independent. To that end, the noble Lords in another place amended the Bill so that the Lord Chief Justice also has a role in the appointment of the board. Specifically, as has been articulated earlier, the Lord Chancellor's appointments should have the concurrence of the Lord Chief Justice. That is not a wrecking amendment. It is anything but. As well as maintaining the independence of the legal system, the amendment reassures the overseas market that the board appointments are not political. Therefore, the amendment helps to safeguard that huge market of billions of pounds from which the UK economy benefits—nothing more, nothing less.

If the Lord Chief Justice alone were to make the appointments, consumers would rightly feel that the legal services were being looked after by their own. In like manner, appointments by the Lord Chancellor alone have an air of political involvement.

John Mann: So the hon. Gentleman does include the legal services ombudsman, then.

Mr. Vara: I refer the hon. Gentleman to my earlier comments. I am here to debate the Legal Services Bill. He may like to take that on board, as he has regularly interrupted many hon. Members who have spoken.


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What the Lords amendment does, by asking that the board appointments have the concurrence of the Lord Chief Justice, is to reach a fair compromise. It tackles the issue of overt political control, but still allows the Lord Chancellor to take the lead in the process.

There is a contradiction in the Government's insistence that the Lord Chancellor should have an unchallenged right to make the appointments. The very first clause of the Bill rightly includes among the regulatory objectives the need for the independence of the legal profession. It is to be applauded that such a sound and clear statement is made so prominently. Why, then, risk undermining that welcome statement by allowing the Lord Chancellor unfettered powers of appointment to the board? Such an approach is in danger of sending out the opposite signal. I urge the Government to retain that sensible amendment.

I now turn to the provisions that allow for alternative business structures. ABSs will allow more flexibility in the market and that will be good for both consumers and the profession itself. I certainly know of many solicitors firms where the finance director is held in high regard by the firm, but he is not made a partner because he is an accountant rather than a solicitor. Allowing for ABSs will, I am sure, enable many such finance directors to become partners, rather than simply be employees of the firm. However, it is important to ensure that any changes made in trying to improve the system do not lead to unintended negative consequences. The debate on ABSs has been going on for years and as firms and practices from a variety of professions seek to cut their overheads, it is only natural that they should consider having multi-disciplinary practices. That is fine in principle, but with it will come new challenges, from which we must not shirk, but which must be closely monitored, in the public interest as well as for the benefit of the consumer.

For example, if there is a high street solicitor who merges with a high street surveyor, a consumer who requires the services of both professions should be free to go to two separate firms if he so wishes, rather than find himself under pressure to use only one firm. Moreover, with a multi-disciplinary practice, there should be vigilance to ensure that no unnecessary burdens are imposed upon a consumer if he wishes to bring a complaint against a firm where he has used the services of several professions within the same firm. For example, if a consumer has used the services of a lawyer, a surveyor and an accountant in the same firm and something goes wrong, the consumer should not suffer if the professionals decide to engage in a buck-passing exercise between themselves.

To conclude, although there are some areas of concern, I support the main thrust of the Bill. It is right that our legal system should modernise, be more transparent and be more flexible—fit for the 21st century global market. The amendments to which I referred earlier do not compromise the principles behind the Bill. Indeed they serve to strengthen the legislation. I hope that the Government will accept them. By doing so, they will not only protect the consumer and the public interest, but safeguard our international standing in the legal world.


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7.28 pm

Mr. Kevan Jones (North Durham) (Lab): May I start by saying that I am not a solicitor or legally qualified, but I have a vested interest to declare: for the six years that I have been a Member of the House, along with my hon. Friend the Member for Bassetlaw (John Mann), I have been defending and trying to get justice for hundreds of poor and weak constituents who have been treated appallingly by the legal profession and who need the measures that are in this Bill to protect them from some of the sharp practices to which he referred.

I will come on to the Law Society in a minute. I congratulate it on cleaning up its act in terms of the legal complaints service. It has improved and is doing a good job in trying to get justice for many of my constituents, but there is still a sense of denial there. I will refer later to the letter from Fiona Woolf and to the view that a minority of solicitors are involved. It is interesting that the majority of hon. Members who have spoken have direct vested interests, being either solicitors or barristers, or connected in some way with the legal profession. The point has been made that a minority of solicitors are involved. I am sorry, but I do not agree. My hon. Friend the Member for Bassetlaw has mentioned the companies in his area that have been involved, and I do not think that there is a single solicitors’ firm in the north-east which has not taken part in the feeding frenzy in respect of miners’ compensation.

I was first alerted to this issue almost five years ago, when an 86-year-old woman came to see me. She walked into my surgery on crutches. She was a miner’s widow; unfortunately, her husband had died some five years earlier. She had been to a firm of solicitors in Newcastle called Mark Gilbert Morse, which had touted for business by putting advertisements in newspapers and targeting vulnerable people such as my constituent. She had been awarded a claim for the injustice that her husband had suffered, and Mark Gilbert Morse had taken 25 per cent. of that compensation—some £8,000—even though every single penny of its costs was being paid for by the Government.

John Mann: Generously.

Mr. Jones: Yes—and very generously in some cases.

As a result, there was an avalanche of complaints not only about Mark Gilbert Morse but other firms as well, which were double-charging and therefore taking from people’s compensation. The highest proportion was 25 per cent. and the lowest was 3 per cent. Those firms were already being paid for all their costs. A succession of firms were doing that. As a Conservative Front Bencher mentioned, Thompsons Solicitors was in league with the Durham National Union of Mineworkers.

As well as the scandal of double-charging, there is the scandal that poor advice was given to our constituents. There was poor advice not only in terms of how solicitor firms were dealing with their cases, but some companies were taking on claims and sausage-machining them, which is my term for doing nothing at all and not contacting their clients for long periods—
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for many years in some instances—while as the cases plodded through the system they were taking their cut. The greedy individuals involved could not be content with the generous fees paid by the Department of Trade and Industry, but they had also to raid the victims’ compensation.

Somebody asked me why I keep going on about this matter. I do so because I feel very angry about how the legal profession has dealt with many of my constituents. I challenge anybody—such as Fiona Woolf, president of the Law Society—to come and meet my constituents, and those of my hon. Friend the Member for Bassetlaw, who have put their faith in lawyers and have been cheated. I know that that is a strong word, but it is the only word that can be used to describe what has happened.

I congratulate the Government on introducing the Bill, and also on having brought forward the Compensation Act 2006, which regulates a different area—that of claims handling. Again however, the claims handling industry could not have exploited many thousands of people without the collusion of the lawyers involved. Let me give an example to illustrate my point. People ask whether the companies I mention are merely back-street companies. No, they are not. They are companies such as Watson Burton, a solicitor firm in Newcastle. It sells itself as a big commercial law firm; it has a big banner at Newcastle airport. It went in league with a claims handling company called P and R Associates, which did nothing at all apart from getting people to fill in an application and then passing it on to Watson Burton. Watson Burton then deducted £325,000 from victims’ compensation and passed it to P and R Associates. I have challenged Watson Burton to explain the contractual relationship between the two companies, and it did not do so. Those companies should pay back that money, but they will not because they are adamant that somehow they were contractually obliged to do what they did. However, what they did not do was tell their clients that they did not have to go through middlemen in the first place.

John Mann: On the subject of Watson Burton, my hon. Friend and I have both got money back for those of our constituents whose cases we know about. Does he not think that there should be powers in the Bill to enable the regulator to force companies such as Watson Burton to pay back everybody?

Mr. Jones: I am about to get on to that important point. I am pleased that the Minister has stated—not only in her opening remarks today, but in other comments—that the consumer must be at the heart of the Bill. I will not accept any crocodile tears from members of the legal profession saying that it will compromise their independence; I will address that point shortly. It must be recognised that most people have very little or nothing at all to do with the legal profession. As my hon. Friend the Member for Bassetlaw has said, the only time that most clients involved in miners’ compensation cases have contact with a solicitor is if they have done something wrong. Many of the clients are elderly and they trust the solicitor. People have said to me, “But I’ve signed that piece of paper. Doesn’t that mean I have to pay the money?” I then have to explain that their solicitor
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should have told them that they should not pay it. That shows how those people have been misled.

An education exercise needs to take place. People should be told what different law firms do and what their rights are. The legal services board should undertake that as part of its remit; it should educate the public about the need to ask questions, and what those questions should be. Many constituents of mine have gone along to firms of solicitors and have not questioned what the solicitors have said.

The key point is that solicitors should act in the best interests of their clients, but it is clear that they are not doing so. I mentioned a good example of that in my Adjournment debate just over a week ago: the Durham NUM and Thompsons Solicitors. Thompsons is due a lot of credit for other work that it has done, but its relationship with Durham NUM has been nothing short of a scandal. Their roles have been mixed up. People go to the Durham NUM and are referred on to Thompsons Solicitors. Thompsons take the case, and a fee of 7.5 per cent. is paid back to the Durham NUM. We ask people why they are paying that 7.5 per cent. We also ask Thompsons why it has not advised its clients that they do not need to pay the money. It replies, “Because we’re acting on behalf of the NUM.” Thompsons should be acting in the best interests of its clients, and in these cases it is not doing so.

The legal services complaints service is doing a good job, but have any solicitors been struck off or been heavily censured? No, they have not, because the current system of self-regulation does not work. My hon. Friend the Member for West Bromwich, West (Mr. Bailey) rightly referred to it as the last vestige of the closed shop. It is interesting that although the Conservatives attacked the closed shop throughout the 1980s—rightly, some would say—they did nothing about this closed shop. Clearly, self-regulation has not worked.

How should we move forward? We need a simple system—a one-stop shop where people who have complaints about the legal profession can go. That one body should be the office for legal complaints. However, it must be independent; it must not have any connection with the legal profession. I have taken account of all tonight’s crocodile tears about political interference, but the Law Society and the professional legal services have brought this on themselves by the cavalier way in which they have dealt with my constituents, and those of many other Members.

During the speech of the hon. Member for North Southwark and Bermondsey (Simon Hughes), I thought at one point that he was going to start crying about the wonderful job that he thought the House of Lords had done on the Bill. I am sorry, but I have to say that this is what the House of Lords has done to the Bill: the vested interests have gutted it; that is clear from the Hansard record. Apart from a few exceptions, there was little resistance to the idea that it is a great attack on the legal profession. I congratulate Lord Bach—who I understand is a barrister by profession—alone. He said clearly that


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The only other person in the other place who comes out of this very well is Lord Whitty, who is chairman of the National Consumer Council. He said something with which I agree totally—that

and that


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