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15 Oct 2007 : Column 651

(c) the services condition is satisfied.

(6) For the purposes of this section the following are legally qualified—

(a) an authorised person who is an individual;

(b) a registered foreign lawyer (within the meaning of section 89 of the Courts and Legal Services Act 1990 (c. 41));

(c) a person entitled to pursue professional activities under a professional title to which the Directive applies in a state to which the Directive applies (other than the title of barrister or solicitor in England and Wales);

(d) an authorised person which is a body in respect of which—

(i) the services condition is satisfied, and

(ii) the management and control condition would be satisfied if the references in subsection (2) to persons who are legally qualified were to persons who are legally qualified by virtue of paragraphs (a) to (c);

(e) a body which provides professional services such as are provided by individuals who are authorised persons or lawyers of other jurisdictions, and in respect of which the management and control condition would be satisfied if the references in subsection (2) to persons who are legally qualified were to persons who are legally qualified by virtue of paragraphs (a) to (c).

(7) For the purposes of this section, the services condition is satisfied in relation to a body if the body provides only services which may be provided by a recognised body (having regard to rules under section 9(1A) and (1C)).

(8) For the purposes of this section—

“authorised person” has the same meaning as in section 9;

“the Directive” means Directive 98/5/EC of the European Parliament and the Council, to facilitate practice of the profession of lawyer on a permanent basis in a Member State other than that in which the qualification was obtained;

“manager”, in relation to a body, has the meaning given by section 9;

“recognised body” has the same meaning as in section 9;

“registered European lawyer” has the same meaning as in section 9;

“shares” has the same meaning as for the purposes of Part 5 of the Legal Services Act 2007 (see sections 72 and 109 of that Act);

“specified” means specified in rules made by the Society;

and a person has an interest in a body if the person has an interest in the body for the purposes of section 9.”’.

No. 122, page 277, line 31, after ‘of’ insert ‘—

(a) ’.

No. 123, page 277, line 33, after ‘generally’ insert ‘, or

(b) that client, person or trust separately’.

No. 124, page 277, line 44, after first ‘of’ insert ‘—

(a) ’.

No. 125, page 277, line 45, after ‘generally’ insert ‘, or

(b) that client, person or trust, separately’.

No. 126, page 280, line 38, at end insert ‘, or

( ) a manager of a recognised body who is not legally qualified (within the meaning of section 9A) continues to be suitable to be a manager of a recognised body.’.

No. 127, page 289, line 45, leave out sub-paragraph (3).

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No. 128, page 291, line 16, at end insert ‘, and

( ) in paragraph (a), after “revoked” insert “in accordance with rules under that section or”.’

No. 129, page 292, line 13, at end insert ‘and

( ) after that sub-paragraph insert—

“(4) This paragraph does not apply to a recognised body which holds a licence under Part 5 of the Legal Services Act 2007 (alternative business structures).”’.

No. 130, page 292, line 22, at end insert —

‘( ) in subsection (4), for paragraphs (a) to (d) substitute “to make different provision with respect to registered foreign lawyers to the provision made with respect to solicitors.”,’.

No. 131, page 293, line 9, at end insert ‘and—

(ii) for paragraphs (a) and (b) substitute “for members of that profession to be managers of recognised bodies.”,’.— [Bridget Prentice.]

Schedule 21

minor and consequential amendments

Amendment made: No. 142, page 355, line 44, at end insert ‘and,

(b) in subsection (6), for “counsel or a solicitor” substitute “a person who, for the purposes of the Legal Services Act 2007, is an authorised person in relation to an activity which constitutes the exercise of a right of audience (within the meaning of that Act)”.’.— [Bridget Prentice.]

Schedule 22

transitional and transitory provision

Amendments made: No. 132, page 371, line 10, leave out ‘, 32’.

No. 133, page 371, line 26, leave out ‘(other than a licensable body)’.

No. 134, page 371, line 30, leave out paragraph (i) and insert—

‘(i) a person who (having regard to section 15) carries on notarial activities through an employee or manager of the person who is within paragraph (h),’.

No. 135, page 371, line 36, leave out ‘, other than a licensable body’.

No. 136, page 371, line 40, leave out ‘, other than a licensable body’.

No. 137, page 371, line 43, leave out paragraph (o) and insert—

‘(o) a person who (having regard to section 15) carries on an activity which is a reserved legal activity within paragraph 18(2) of Schedule 5 through an employee or manager of the person who is within paragraph (n).’.

No. 138, page 371, line 45, at end insert—

( ) After the end of the transitional period, any reference in section 9, 9A or 32A of, or Schedule 2 or 6 to, the Administration of Justice Act 1985 (c. 61) to an authorised person includes a person who is an exempt person—

(a) by virtue of paragraph 13 of Schedule 5, in relation to the carrying on of an activity which is a notarial activity, or

(b) by virtue of paragraph 18 of that Schedule, in relation to the carrying on of an activity which is a reserved legal activity within sub-paragraph (2) of that paragraph.’.

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No. 139, page 372, line 2, at end insert—

‘15A (1) During the transitional period (within the meaning of paragraph 15), the Law Society may make rules to which this sub-paragraph applies only with the concurrence of the Lord Chancellor (as well as the Master of the Rolls).

(2) Sub-paragraph (1) applies to —

(a) rules made under section 9 of the Administration of Justice Act 1985 (c. 61) by virtue of subsections (1A), (1C), (2A), (2B) or (2D) of that section or section 9A of that Act, and

(b) any other rules made under section 9 of that Act, in so far as they apply in relation to bodies which have one or more managers who are not legally qualified (within the meaning of section 9A of that Act), or managers or employees of such bodies.

15B (1) During the relevant period, the legal professional privilege provisions apply to a body which—

(a) is recognised under section 9 of the 1985 Act, and

(b) has one or more managers who are not legally qualified (within the meaning of section 9A of that Act),

as if the body were a licensed body.

(2) Sub-paragraph (1) applies whether or not the legal professional privilege provisions have been brought into force for other purposes.

(3) The relevant period is the period which—

(a) begins when section 9A of the 1985 Act comes into force, and

(b) ends when paragraph 7 of Schedule 5 ceases to apply in relation to the body.

(4) The legal professional privilege provisions are—

(a) paragraph 36(4) of Schedule 2 to the 1985 Act (as inserted by Schedule 16 to this Act), and

(b) section 190(3) to (7) of this Act.

(5) During the transitional period (within the meaning of paragraph 15), section 190(5)(h) (as it applies by virtue of this paragraph) applies as if for “an authorised person in relation to an activity which is a reserved legal activity” there were substituted “within paragraph 15(1) of Schedule 22”.

(6) “The 1985 Act” means the Administration of Justice Act 1985.’.— [Bridget Prentice.]

Schedule 23


Amendments made: No. 143, page 377, leave out lines 27 and 28 and insert ‘, “corporate”.’.

No. 140, page 378, line 25, leave out ‘(1)(b) and’.

No. 141, page 383, line 16, leave out ‘Schedule 3’ and insert ‘Schedules 3 and 5’.— [Bridget Prentice.]

Order for Third Reading read.

9.1 pm

Bridget Prentice: I beg to move, That the Bill be now read the Third time.

After many hours of debate in Committee and on the Floor of the House, everyone who has paid any attention to the Bill will realise how strongly I feel about putting the consumer at the heart of the legal system. One of the reasons for that, as we have heard in our debates, is that for far too long focus has been too much on the needs and interests of the suppliers.

From the debate this evening, in Committee and well before that, dating back to the Office of Fair Trading report, our consultation, and following that, Sir David
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Clementi’s independent review, the White Paper in 2005 and the draft Bill 2006, we can see that we became aware that consumers had lost confidence in a system in which they perceived, rightly or wrongly, that lawyers were responsible for judging their own. We know of the potentially unduly restrictive rules of the legal profession, which Sir David Clementi described as an

regulatory maze. That was unacceptable.

The Government are committed to delivering a better deal for the consumer. We needed to restore consumer confidence and address the issues at a fundamental level. The Bill does that by sweeping away decades of piecemeal reform and putting in place a robust new regulatory system. Part 1 sets out the objectives and principles that will apply to the legal services board, the approved regulators and the office for legal complaints.

Part 2 makes provision for a new independent oversight regulator. For a long time we have argued that appointments to the board should be made by Ministers alone. We argued that that was necessary because we wanted to retain the oversight of the Commissioner for Public Appointments and an appropriate level of accountability. We have listened to views in the House and elsewhere, which is why we have agreed that the Lord Chancellor should consult the Lord Chief Justice before those appointments are made. The board will have a lay chair, and I am grateful to my hon. Friends the Members for Bassetlaw (John Mann) and for North Durham (Mr. Jones), whose amendment the House accepted today, which will ensure that consumers will always have confidence that the board is independent of the profession which it is regulating.

Part 3 sets out the legal activities that will come under the regulatory control of the board, such as the provision of advocacy and litigation services, and it will ensure that suitable offences apply where someone carries out reserved legal activities when they are not entitled to do so. It also makes important exemptions to the offence provisions to ensure that certain bodies—not-for-profit organisations and trade unions—can continue to provide their legal services to millions of people without needing to alter their existing structures.

Part 4 sets out the arrangements under which the board will regulate approved regulators such as the Law Society and the Bar Council, and requires those approved regulators to separate their regulatory and representative functions.

Although day-to-day regulation should, rightly, remain with the professions, the board will have a range of powers over them. We have debated at length the thresholds for the exercise of those powers, and I hope that the Bill provides reassurance to such bodies. It is clear that the board must be able to exercise appropriate powers when the acts or omissions of an approved regulator damage the regulatory objectives. I do not want to include anything in the Bill that could restrain the board from doing that; it is vital that it should be effective in fully protecting the consumer interest. Through clause 3, the thresholds themselves
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and clause 49, the Bill sets out clear requirements that ensure that the board will act appropriately; it should not be in the business of micro-managing or second-guessing approved regulators.

Part 5 allows for a framework of alternative business structures, which will provide a means of increasing competition and consumer choice. By becoming licensed bodies, firms will be permitted to have different types of lawyers and non-lawyers working together to provide a range of legal and other services. Such firms will also have access to external investment.

The House should be excited by what we are doing in the Bill and by the benefits that the ABS provisions can bring to consumers and providers alike. Further unnecessary and costly research might bring about a delay in implementation, and I do not want that. We now need to address the issues that concern consumers. The correct way forward is surely for a person in Lewisham high street to be able to go into an office and get the proper financial, legal, conveyancing and other advice that they need as a result of something in their personal life, and we should all persuade anyone with any doubts. Of course, there have to be important and robust safeguards. They include, for example, the requirement for there to be heads of legal practice and of finance and administration, and the “fit and proper” test for any external investor.

We have listened to the concerns raised by hon. Members and I hope that we have made the appropriate changes that will help licensing authorities give special attention to the regulatory objectives, including access to justice—an issue raised tonight and in Committee. The Bill now strikes the right balance. It ensures that the regulatory objectives remain in balance while addressing the concerns raised by right hon. and hon. Members.

On Report, I brought forward amendments to allow the Law Society to regulate limited forms of alternative business structures in advance of the commencement of part 5. In doing that, I do not expect us to delay part 5. I hope, however, that we have adopted a stepped approach that will allow for the introduction of an ABS regime with lawyer-led legal-disciplinary practices, rather than the potentially complex ownership structures of multidisciplinary practices. As the hon. Member for Huntingdon (Mr. Djanogly) said, that is in line with Sir David Clementi’s approach. It is a natural progression for the ABS regime to take shape with the simpler structures developing first.

Part 6 provides for the establishment of a new and independent office for legal complaints, which will provide quick and fair redress and require that every authorised person has internal complaints-handling arrangements. As I said, I have accepted the amendment tabled by the hon. Member for Somerton and Frome (Mr. Heath) on that issue. I congratulate him on coming to terms with a long and complex Bill at relatively short notice. I hope that he did not spend the whole summer reading through the Bill and the earlier debates in Hansard.

We have talked for many hours about the delegation of complaints back to the legal professions. I believe that if we had done that, we would have defeated the whole purpose of this part of the Bill; it certainly
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would have flown in the face of the deepest concerns of consumers. I am pleased that by working together, those in this House, and the stakeholders, have welcomed the amendments that we have introduced this evening.

There are a couple of other areas that may not have received as much air time but are important. On the level of redress, I hope that I have been able to provide the reassurance that the office for legal complaints will have the ability to examine the level of redress, which has been raised by my hon. Friends, on a regular basis and when it thinks it appropriate or necessary.

Part 7 sets out further provisions relating to the board and the OLC. Parts 8 and 9 provide for amendments to existing legislation to align it with the provisions in the Bill, including amendments to the Solicitors Act 1974, the Administration of Justice Act 1985 and the Courts and Legal Services Act 1990. That is in order to update the Law Society’s regulatory framework and powers, including provision to allow it to regulate the limited forms of ABS that I mentioned earlier.

I hope that our debates on Second Reading, in Committee and today have clarified any outstanding concerns. I am pleased that we now have a Bill that will truly restore consumer confidence in the provision of legal services through a modern, flexible, transparent and independent system of regulation—one that will act in consumers’ interests and enable lawyers to provide services in new and innovative ways.

I should like to thank the hon. Member for Macclesfield (Sir Nicholas Winterton) and my hon. Friend the Member for Stockton, North (Frank Cook), who between them so ably chaired the Public Bill Committee. I also thank members of the Committee from across the House who have contributed to a thorough and useful examination of this important and long overdue Bill. I particularly thank the hon. Members for North-East Hertfordshire (Mr. Heald), for North-West Norfolk (Mr. Bellingham), for Huntingdon, for Somerton and Frome, and for North Southwark and Bermondsey (Simon Hughes), all of whom made constructive comments throughout the course of our debates. I could not say anything other than a very heartfelt thanks to my hon. Friends from the Back Benches who have, in Committee and here, not only supported me throughout the Bill’s passage but moved constructive amendments that have made it even better for the consumer. I am very grateful to them for that.

I am in debt to the organisations that have worked so closely with us to develop the Bill into a piece of legislation that will meet the concerns of a wide range of people, not only the consumers of legal services but providers. Particular thanks should go to Citizens Advice, the Federation of Small Businesses, the National Consumer Council, the Office of Fair Trading and Which? and the members of those organisations who have worked so hard throughout the Bill’s development and passage to help us to deliver it as a consumer-focused measure through the Government’s consumer advisory panel.

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