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It would be wrong not to thank also the legal services themselves—the professional bodies who have been constructive in their approach from the beginning. Of course, they had concerns about their
membership and rightly looked to ensure that it was properly protected. They too have recognised the Bill’s importance to the consumers of their services and the enhancement of their profession. I am very grateful to them for that.
Of course, none of this could have happened without Sir David Clementi, whose review triggered the process and laid the firm foundations for this very significant and ground-breaking piece of legislation. I am grateful to him. I am grateful also to the officials in my Department, who I know have been helpful to Members of all parties, in this House and in the other place. They are absolute experts and have been stalwarts during hours of debate, negotiation and amendment. I am exceptionally grateful to every one of them.
Most of all, I am grateful to the consumers, who persuaded us that it was time to introduce legislation that gives them a voice in one of the most important areas of their lives: dealing with the legal profession. I am grateful to them, because without their constant campaigning and persuasion, we might not have got to where we are today.
9.15 pm
Mr. Djanogly: Given the significant time since the inspirational and far-thinking Clementi process and report, and the process of the Bill through Parliament, including the summer recess, it seems as though we have been dealing with this legislation for a very long time. The Commons Committee that considered the Bill was one of the most productive on which I have had the opportunity to serve, not least with regard to the level of participation shown by Members of all parties. As a result, the Bill was given the thorough detailed analysis that it deserved in Committee—but today’s Report has been something of a rush.
The Bill has come a long way since it was first introduced, which is a direct result of the hard work of this place, and of the improvements made to it by Conservative, Liberal Democrat and Cross-Bench peers, led frequently by my noble Friends Lord Kingsland and Lord Hunt of Wirral. On Second Reading, I stated that I was understandably not pleased to hear from the Minister how most of the many improvements made to the Bill in the other place were to be reversed by the Government in Committee. Indeed, the Minister was true to her word, and the Government embarked on a mission to reverse much of the good work in the improvements made to the Bill. However, the Minister listened to many of the arguments put forward in Committee and, thankfully, after the summer recess came forward with a broad range of concessionary amendments for today’s Report, which have led to improvements. After the Bill was moved slightly away from the Clementi recommendations, it is now being returned closer to them, which we welcome.
This is a first-class piece of legislation that should maintain the highest standards of legal practice in Britain in regulation, complaints and the structure of the provision of legal services. The consumer will have a single point of contact, instead of the current confusing situation, and the process will also be a smoother one for the legal profession. The Bill provides
the regulatory structure that will enable British legal services—we should keep in mind that they now constitute 2 per cent. of gross domestic product—to move forward in a modern and adaptable way. The benefits will be felt by consumers and legal practitioners alike.
I particularly recognise the good work that has been done to ensure that the consumer benefits of legal disciplinary practices can be felt before the full ABS licensing regime comes into force, probably in about 2011. Following enactment, a lot of effort will still be required to put in place rules to allow ABS, but the framework will be there. Following consistent pressure from my party, the Law Society, and input from the hon. Member for Stafford (Mr. Kidney), the Bill will enable the Law Society to regulate firms including a minority of non-lawyer partners within the Law Society’s existing regulatory regime. That will benefit the public and the legal profession, as non-lawyers will be able to take a direct interest in the running of law firms. Sir David Clementi and the Joint Committee that considered the draft Legal Services Bill recommended an incremental approach to the introduction of alternative business structures. The Bill will enable that to be the case.
We fully support the concept of the ABS regime, believing that more flexibility in the market will be good for consumers and the profession itself. We believe that in time the provisions will provide for accountants and other professionals to work with lawyers and provide one-stop shops that benefit the high street, while enabling our international firms to compete at the highest global levels, as my hon. Friend the Member for Cities of London and Westminster (Mr. Field) earlier said.
However, we fully expect no resulting compromise on the quality of standards and the integrity of service provision. The Bill has safeguards to ensure that the quality of legal services for consumers will not be jeopardised by alternative business structures, and the effectiveness of that will need to be kept under review. The Opposition parties pushed hard for proper provision to ensure that the possible negative impacts on access to justice of granting ABS licences were taken into account. I am pleased to acknowledge that the Government have listened to us on that point too.
The Bill goes a long way towards achieving the objectives that resulted from Sir David Clementi’s visionary report on legal services and the Joint Committee’s recommendations. I am pleased to have played a part in its passage. However, as it became clear on Report, several issues remain to be tackled in the other place to ensure that we have genuinely seized a once-in-a-generation chance to reform thoroughly and effectively the legal services industry, for the benefit of consumers and legal professionals.
The independence of the legal profession and its regulation from Government is a key constitutional principle, which underpins the rule of law. The independence of the legal services board from Government is crucial to maintaining the profession’s independence in this country. The Government have come a long way, but I question whether they have yet come far enough.
When the Bill was introduced, the Lord Chief Justice had no statutory role and appointments were to be made by the Secretary of State rather than the Lord Chancellor. The Government’s initial agreement to transfer responsibility to the Lord Chancellor, with his specific responsibility for upholding the rule of law, and to entrench that in the Bill, was a welcome but inadequate development. After Report, we still have not got what we wanted on the role that the Lord Chief Justice should play in appointing members of the legal services board. Although I acknowledge the Government’s movement on the subject in the summer, as matters stand, the Lord Chief Justice is only to be consulted. At the very least, we require clear guidance about what such consultation will involve, and the Lord Chief Justice’s views must be publishable. It remains our ideal position that appointments to the LSB should be made by the Lord Chancellor with the concurrence of the Lord Chief Justice. Such a provision would ensure that the most suitable checks on the Lord Chancellor were in place to guarantee the LSB’s independence.
As I said on Report, we must never take the judiciary’s independence for granted. The deep concern that the German regulators showed about the provisions’ potential to erode the independence of the legal profession in this country were telling. Perhaps Germany’s history has made them aware of the importance of an independent judiciary. I hope that the Government can explain their position more fully in another place, but I have still to be convinced of the reasons for going for second best.
I remain confused about the reasons for the Government’s continued insistence on exempting the provision of legal services by trade unions to their members from the ABS licensing regime under part 5. The Bill is designed to protect consumers and ensure that they are consistently provided with an exemplary legal service. Trade union members should be granted the same protection as other consumers. It is especially wrong that the exemption in the Bill applies to any legal services that a trade union may care to provide to its members. There is not even an exemption restricted to legal work, which is ancillary to the trade union’s main purpose of representing its members in relation to their employers. It will thus be possible under the Bill for a trade union to provide a conveyancing service or representation in divorce proceedings while remaining outside the regulatory structure that applies to all lawyers and most other bodies. I will be interested to hear their lordships’ comments on the matter. After all, they have not yet been afforded the opportunity to examine the provision on trade unions, because the amendments were tabled just before the Commons Committee stage. That will make for an interesting debate in the other place.
It is unfortunate that the Government timetable did not allow for the provisions that cover the office for legal complaints to be tackled in detail on Report. However, we are concerned to ensure that the OLC is genuinely new, not simply a rebranding of the system, with staff transferring to new offices but no accompanying new ethos. We will keep an eye on that.
Despite those important issues, I believe that we are close to producing a highly effective Bill, which will benefit consumers and legal professionals. Again, I commend the hard work done in the other place, and the work done by all the members of the Commons Committee in particular. The Minister has been consistently courteous and helpful, as have her Bill team and the Clerks, and that has made the Bill’s progress a positive, productive and, dare I say, enjoyable experience.
I echo the Minister’s thanks to all the organisations whose invaluable help has been received during the Bill’s passage. The result of that hard work by so many people is a Bill that has been significantly improved since its introduction. I am afraid that there is still a small amount of work to be done, but I have every confidence in my noble Friends’ ability to iron out the remaining issues, and every confidence that we shall be left with a first-class regulatory system that will ensure that Britain maintains its place as the foremost provider of legal services in the world.
9.25 pm
Mr. Kidney: I believe that scrutiny and debate of the Bill in this House has been exemplary, and I hope that the other place does not interfere in the arrangements on which we have now settled. We have come a long way since that final report from Sir David Clementi in December 2004. Members will recall that he said at the time that the current system of self-regulation by the providers of legal services—along with the handling of complaints against them by themselves and their inability to set up new structures of business—was flawed. He said that reform of the system was long overdue. Well, this is the reform, and if I am at all impatient now it is because of the timetable: it will take up to three years for these provisions to be implemented.
The reason why we now need independent regulation and an effective system for handling complaints against providers of legal services is that they have shown themselves to be incapable of doing those things for themselves well. They have tolerated poor standards of service, and in some cases self-interest has been placed above the interests of their consumers. That is why we now need to act. I believe that when there is independent regulation and a tough system for complaints, the providers will sharpen up their act and provide better services for consumers.
I want to praise the Minister for constantly focusing on the interests of consumers, and, with the Minister, I want to praise the organisation Which?, which collected its evidence in preparation for the Bill’s passage very carefully and kept Members very well informed and briefed on the relevant issues. I think that it has done much to ensure that the Bill that is now before us is of good quality. I congratulate Which? on reaching its 50th anniversary, and invite all Members to visit its display in the Upper Waiting Hall this week and obtain their free pens.
In my view, alternative business structures are the most exciting element of the reform of legal services. Whether they apply to lawyers providing services in rural areas, providing services in law centres and giving services to communities pro bono, or to lawyers at the
other end of the scale—those involved in international mergers and acquisitions—I believe that the edge we already have in terms of the quality of our legal services at their best will serve us well internationally, as well as nationally and in local communities, if the benefits of those alternative structures can be implemented smoothly and ahead of the competition around the world.
An excellent Minister has been in charge of the Bill’s progress through the House. Even when the leader of my party changed, the Prime Minister of the country changed and many Ministers in many other Departments changed, this Minister stayed with this job. I think that that was absolutely the right decision, not just for consistency—for we were reaching the end of a very complex process—but because of the qualities that she brought to the job. She has been unfailingly considerate throughout, and, as a non-lawyer, has listened to all arguments from all sources. I believe that through the care she has taken to get decisions right, she has managed to reach the right conclusion on each of the crucial issues that have faced us. I congratulate her on her contribution to the process, and wish her well in her future career after the Bill is on the statute book.
9.29 pm
Mr. Heath: It was splendid to have a speech with its own commercial break. The Under-Secretary of State for Justice, the hon. Member for Lewisham, East (Bridget Prentice), expressed quite proper concern that as I had been reshuffled into my present responsibilities immediately before the summer recess, I might have spent the entire summer reading the Legal Services Bill and catching up on the Committee stage. I can reassure her that there were brief moments when nothing could have been further from my mind than the Legal Services Bill.
However, I took the time to read the preceding debates and I pay tribute to all who have been involved in the discussions on this complex Bill. I have the easiest job in the world—coming in at the last stages and taking some credit for a Bill to which I have made very little contribution. The Minister who has had sole charge of the Bill—exceptional, for a Bill of this complexity and length—has done extremely well, and I would add other Committee members to that: my hon. Friends the Members for North Southwark and Bermondsey (Simon Hughes) and for Birmingham, Yardley (John Hemming), as well as the hon. Members for Huntingdon (Mr. Djanogly) and for North-West Norfolk (Mr. Bellingham).
Those who were not referred to earlier but whose contribution I certainly appreciate include the hon. Members for North Durham (Mr. Jones), for Stafford (Mr. Kidney) and for Bassetlaw (John Mann). I feel that Bassetlaw is a worthy successor to “LA Law”, and have been trying to get some currency for the adjective “Bassetlegal “ as a way of describing the complex legal arrangements that appear to prevail in the hon. Gentleman’s constituency. He made an important contribution to the Bill as did all hon. Members and those in another place, including Lord Kingsland, my noble Friend Lord Thomas of Gresford and their colleagues, who will have the opportunity to look at some of the changes that we have made to the Bill.
The Bill is hugely improved. The iterative process of negotiation, listening to contributions from Members on both sides, and the amendments that have been tabled, have improved the Bill considerably. There are still some issues, however. The hon. Member for Huntingdon asked whether the legal services board can be perceived as a creature of Government. It is very important that we maintain the independence of the board, not just from the legal profession but from the Government so that it is not perceived in that way. That is why we must return to the appointments process for the chairman of the board.
I am not convinced that there should be no trade union exemption, but I am certainly convinced that we do not have the right wording in the Bill at the moment to exempt those core activities of both trade unions and—I stress this again, despite what the Minister says—other mutual organisations, to differentiate those core activities from other activities that should properly fall within the scope of the Bill.
I am enormously encouraged by the fact that the Minister accepted my amendments earlier. I do not think that that was down to any charm or persuasiveness on my part. It was down to the perspicacity and wisdom of the Minister in recognising that what I was saying was right—that it cannot possibly be right for somebody to be found to be entirely innocent of any blame yet—this is the important conjunction, in answer to the hon. Member for Stafford—with a robust complaints procedure in place, still have to pay a penalty. That will not now apply and I am delighted by that.
The last concern is access to justice and, again, I welcome the amendments made to the Bill this evening. I still worry whether the proposed legislation will have an adverse effect on communities such as those that I represent, where it is increasingly difficult to access good legal services and where any disturbance in the delicate balance of cross-subsidy that applies at present might lead to greater difficulty—a point that particularly applies to legally aided services in rural areas. That worry will not be assuaged until the Bill has been enacted and is in operation. However, at least it now addresses this issue, as it did not an hour ago.
It is a testament to the good work that has been done, including by the Minister’s Bill team, that a disparate group of what I think we are supposed to call stakeholders—the Law Society, the Bar Council and consumer groups—feel that they have had an opportunity to improve the Bill and that it largely meets their different requirements. If we have satisfied all those expert groups, and have also respected the principles of Sir David Clementi’s original review, it seems to me that we have done a pretty good job.
My final point might well be accepted by the Minister and other Labour Members. It is my firm and unshakeable view that law is too important to be left to the lawyers. It is critical to the well-being of everybody in this country. It is an essential part of the welfare state. We must have a good legal profession—and I think that, largely, we do have a good legal profession, despite what has on occasion been said. Unsung and without great reward, many lawyers across the country are doing a very good job. We must maintain those high standards and ensure that everybody has equality before the law—equality of representation and quality
in representation. If the Bill achieves all those objectives, it will be a very good Bill.
9.36 pm
Mr. Kevan Jones: I welcome the Bill.
The hon. Member for Huntingdon (Mr. Djanogly) accused me of being obsessive, but I prefer the word that my hon. Friend the Member for Bassetlaw (John Mann) applied to me: dedicated. Let me explain why I have become involved in this matter. I have enjoyed fighting the vested interests that have been put up against us, but I first got involved not long after I was first elected, when an 86-year-old miner’s widow came into my surgery on crutches. Her husband had, unfortunately, died the year before, so he had no access to the compensation he was entitled to, and she had been told that 25 per cent. of her compensation was to be taken by Mark Gilbert Morse, a Newcastle-based law firm. It had been paid generously by the Government, but, not satisfied with those legal fees, it had greedily taken—while being able to sleep at night—25 per cent. of the compensation due to an 86-year-old miner’s widow, who, as she described to me, had seen her husband gasp for breath in his last few days before dying. That started me off, and I asked whether that was just a one-off. Sadly, it is not a one-off. If there is one thing that has driven my hon. Friend the Member for Bassetlaw and me, it is the type of constituents we have been dealing with who have been ripped off by law firms that should know better.
The narrative has been put over—certainly by the Law Society and Fiona Woolf—that that is a minority activity involving small firms who do not really understand. That is not the case. Some of them are big firms that claim to be reputable. I shall name one of them again, because it still has not paid the money it has taken: Watson Burton, solicitors in Newcastle. It got in league with a claims handler called P and R Associates and took £325,000 from the compensation of miners in north-east England.
I do not expect the local newspaper to cover this matter, because when I last raised it the principal partner wrote to the paper and I noticed that a lot of adverts for Watson Burton then started appearing in it. Clearly, the local newspapers do not want to upset one of their major sponsors. Recently, however, I found an interesting list. The company concerned is trying to portray itself as a big national company and to reach out to the financial sector. A press release states:
“Watson Burton has been hit by a massive 52 per cent. nosedive in average profit per equity partner for 2006-07...The 41 partner-firm saw its provisional annual PEP tumble to £220,000, down from £460,000 for the equivalent 12-month period last year.”
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