Legal Services Bill [Lords]

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Schedule 2

The reserved legal activities
Question proposed, The this schedule be the Second schedule to the Bill.
Mr. Bellingham: I have one point to make on schedule 2. Paragraph 5(1) mentions “Reserved instrument activities”, about which I made a point when we discussed clause 12 and will writing. Will the Minister elaborate on paragraph 5(1)(c), which states that “reserved instrument activities” means, among other things,
“any other instrument relating to real or personal estate for the purposes of the law of England”?
To what does “other instrument” refer? We were discussing making over property, transfers, contracts and dispositions of property, but will the Minister tell us more about paragraph 5(1)(c)?
Bridget Prentice: I do not know whether the hon. Gentleman was out of the room when I responded to his questions on the matter—it is possible that he missed what said. I explained that a will is a set of instructions as opposed to a disposition. In that sense, it contrasts with gifts or conveyances when dealing with the transfer of property. Real property left in a will would require further formal transfer. We are dealing with similar matters in paragraph 5(1)(c), but I shall write to him with some specific examples so that we can move the debate on.
Mr. Bellingham: I am grateful to the Minister and mortified at my insubordination. I left the room to track down the Conservative Whip.
Schedule 2 agreed to.

Clause 13

Entitlement to carry on a reserved legal activity
Question proposed, That the clause stand part of the Bill.
Simon Hughes: I have one question apart from the observation that, if we lived in a world in which we had the responsibility of tracking down the party Whips, we might be much happier.
Will the Minister address my earlier question andsay whether she is satisfied that the Bill makes it clear when and where people can represent themselves, and therefore the circumstances in which they would not need to operate under a regulatory regime?
Mr. Bellingham: I have a question on clause 13(4), which states:
“Nothing in this section or section 23 affects section 84 ofthe Immigration and Asylum Act 1999...which prohibits the provision of immigration advice and immigration services except by certain persons.”
Section 23 will concern
“transitional protection for non-commercial bodies”.
Why does that mention the Immigration and Asylum Act 1999 and not, for example, the relevant housing, employment or agricultural holdings legislation, which also give certain persons the power and authority to provide advice in certain circumstances? I am bemused why the measure applies to only one piece of legislation.
Bridget Prentice: First, I apologise to the hon. Member for North Southwark and Bermondsey. He is right that an individual acting on his own behalf would not have to be regulated when conducting legal activities.
The reasoning behind clause 13(4) is that, as thehon. Member for North-West Norfolk might remember, there were some horrific examples of dubious characters giving appallingly bad advice to people regarding immigration and asylum. The Government considered those examples and are now trying to ensure that people who give advice are properly qualified to do so. That is why such matters have been specified.
Simon Hughes: I am grateful to the Minister. Does the Bill actually say that, if people want to represent themselves in such activities, they do not have tohave authority? I want to ensure that the Bill is clear. Clause 13 states:
“The question whether a person is entitled to carry on an activity which is a reserved legal activity is to be determined solely in accordance with the provisions of this Act.”
There should be a sentence after that saying that nothing in the Bill will prevent an individual from acting for himself in any of the reserved activities, when the law permits.
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Bridget Prentice: Paragraph 1(6) of schedule 3 covers such matters. It sets out a list of people who are exempt and will deal with the hon. Gentleman’s worry about whether the individual can conduct activity on his own behalf. Paragraph 1(10) might give more details.
Simon Hughes: I am happy to look more carefully at the schedule and to come back to the Minister, if necessary, but whether going to schedule 3 to discover the answer to my question rather than finding it up front under clause 13 is right, I do not know.
Bridget Prentice: The provision “E is an individual” under paragraph 3(3)(a) of schedule 3 might provide the information that the hon. Gentleman needs.
Simon Hughes: I am grateful to the Minister. It seems fine. However, it might have been better to have said up front rather than under the schedule that individuals who do their own thing are exempt from the regulations. It would make matters clear for those who wonder whether they have to go through regulatory control. However, I leave it to the hon. Lady to reflect on the matter.
Question put and agreed to.
Clause 13 ordered to stand part of the Bill.

Clause 14

Offence to carry on a reserved legal activity if not entitled
Question proposed, That the clause stand part of the Bill.
John Mann: I have two observations to make about the clause. The impersonating of a solicitor can lead to an individual being locked up and further increase the pressures on the prison community. Clearly, that is in order but, as for solicitors being disciplined, last year there were 743 matters against 1,094 individuals that had a disciplinary issue recorded against a solicitor and a further 495 matters involved 529 individuals that referred to other bodies, including the Solicitors Disciplinary Tribunal and the Association of Chief Police Officers.
Often, such matters do not need to be put in the public domain. For example, disapprovals, warnings, reprimands and severe reprimands can be kept private and confidential. The public—even the initial complainant who has provided information— need not be, and often is not, informed of that. Does the Minister consider that the issue needs to be looked at further even though the law is more than protecting the solicitor or other legal professional as it rightly does under the clause with appropriate strict measures? I commend her on that. We must also ensure that in a large number of cases—much more than has been suggested in Committee—such matters should be made public.
Simon Hughes: Once the Bill becomes law, does the Minister envisage that she or I, or anybody, would be able to go to a website and check the name of somebody who said that they were John Mann or Simon Hughes, for example, and were competent as a probate solicitor, or whatever? Will there be one place where people can check on an up-to-date, guaranteed-to-be-correct database whether people are approved and regulated? Again, if we are trying to make life easy, we need a list, giving details of who is legitimately carrying out the activities, which can always be relied on, then people would be much less likely to carry on activities illegally and end up in the courts as a result.
Bridget Prentice: I just want to make the Committee aware that the penalties are consistent with those in the Compensation Act 2006 in respect of regulated claims management. Criminal convictions are a matter of public record and in that sense would be available to all. I cannot go as far as the hon. Gentleman has asked me to and guarantee that the relevant information would be available or that people could see on a website whether a person has the right to carry out a reserved legal activity. However, that matter runs parallel with another that he raised earlier, about people being able to know when they walk through the solicitor’s door what individuals do. People can check their solicitor’s credentials by going to the Law Society’s website. It maintains a list of all solicitors that are properly qualified. This part of the Bill extends that provision to cover everyone involved in the new framework.
Simon Hughes: If I want somebody to do some plumbing, I know that the person who comes to do the central heating boiler, or whatever, will need to conform with the CORGI registration scheme, under which plumbers are CORGI-registered. Again, I should like the Minister to reflect on whether the objective should be for people to be able to check at any time whether anybody in the legal services field is, on that date, registered to do the job on the official list. Data systems are never perfect. However, given that the purpose of the Bill is to establish an umbrella in relation to reserved legal activities, with the Legal Services Board regulating all the people involved, the consumer interest must be that people should be able to go to one place and should not have to duck and dive. We are talking about people who are not familiar with the places the professionals inhabit and do not necessarily understand the distinction. Perhaps the Minister could reflect on that, because if we could achieve that it would benefit the whole system.
Bridget Prentice: I am happy to consider a simpler way in which that could be achieved.
Question put and agreed to.
Clause 14 or dered to stand part of the Bill.

Clause 15

Carrying on of a reserved legal activity: employers and employees etc
Bridget Prentice: I beg to move amendment No. 108, in clause 15, page 7, line 15, at end insert—
‘( ) Where P is an independent trade union, persons provided with relevant services by virtue of—
(a) their membership or former membership of P, or
(b) another person’s membership or former membership of P,
do not constitute the public or a section of the public.’.
The Chairman: With this it will be convenient to discuss Government amendments Nos. 109, 110, 138, 115 to 117, 126 to 128, 202 and 205.
Bridget Prentice: The amendments are designed to give effect to the policy that my noble and learned friend Lord Falconer set out on Second Reading in the other place. He said:
“We do not intend the Bill to regulate in any way lay trade union representation, whether whole or part-time in the workplace, nor to place additional burdens on those unions that provide legal advice or representation to their members.”—[Official Report, House of Lords, 6 December 2006; Vol. 687,c. 1167.]
We are doing that because unions are in a different position from most legal services providers. They carry out a great deal of work through officials in the workplace, who are usually elected by colleagues rather than professional union staff and are working at some distance from the union’s head office, and they do it in a specific context.
I need to say this not so much for my colleagueson the Government side of the Committee but for Members of the Opposition who may not be as aware of trade unions and their remit as the rest of us are. Although a union official may give advice, the purpose is not just to help the member. It is part of the wider role of fostering good labour relations. The officialin that situation can advise only members, retired members and family members and no one else. The union does not offer that service to the general public. I want to say that up front because that might be an area in which some of the argument will be fought out. The union is giving advice only to its own members.
One other feature that the Opposition need to remember is that unions are already regulated by the certification process. The work of officials is governed by the union’s rule book, and that is enforced through the certification officer. Therefore, unions that provide legal services do not need the same degree of regulation as bodies that are offering services more widely or commercially.
Mr. Djanogly: For those of us who clearly have so little knowledge of unions, will the Minister explain what a member is in the context of union membership?
Bridget Prentice: A member of a union is someone who pays the union levy, abides by the union rulebook, and works collectively with other members of that union and, sometimes, inter-collectively with colleagues in other unions. It also applies to relations of a particular member and people who have been members of a union but are now retired.
Mr. Burrowes: The Minister is using the principle of not regulating a legal service that applies in a limited way. Is that a definition that she would like to apply to other legal services as well?
Bridget Prentice: I do not think that that applies in other legal services. I am looking specifically at the role of trade unions here and why we are exempting them in this part of the Bill.
Mr. Burrowes: Just to make it clear, the Minister’s description of this type of legal service was on the basis that it was limited and non-commercial. Surely if there was a competing legal service or a new service, the regulation would be applied in a very limited way to its members on a non-commercial basis. Would they also be exempt from regulation in the same way as unions?
Bridget Prentice: It would certainly be the case that if other organisations were providing legal services that were not reserved activities, they would be exempt. If the hon. Gentleman goes back to schedule 3, he will see all the opportunities for exemption there.
Also, regulating a union in such a dispersed set-up would be both impractical and inappropriate. The amendment would remove the requirement for the independent trade unions to be regulated as entities.
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Mr. Bellingham: The Minister mentioned the speech made by the noble Lord Falconer of Thoroton on Second Reading in the other place. I am trying to find the part in the debate where he apparently made those comments about trade unions and about his desire, at that stage, for those Government amendments, but I cannot find it—perhaps he spoke on Third Reading. Can the Minister say why those amendments were not moved in another place? Did they require so much work and effort that the Government had to wait until the Bill appeared here?
The provision will allow employed lawyers to work, for example, for bodies linked to their employers, such as subsidiary companies, for colleagues, or on a pro bono basis, without their employers needing to be treated as providers of legal services. The Bill will enable the work of those employed lawyers to continue as now. However, there are tight restrictions on that exception, which applies only if the provision of legal services to the public is not part of the employer’s business.
To return to the point about other bodies thatmight be non-commercial, the problem would be in identifying that the work that such bodies were doing was absolutely confined to members only. However, if such bodies were working for a section of the public, they would not secure an exemption under the Bill.
Robert Neill: The Minister makes the point about such bodies being limited to advice given to members, but can she help us on how “members” will be defined in that context? I ask that because, in a debate referring to miners’ compensation claims, the hon. Member for North Durham properly highlighted the extraordinary situation of the National Union of Mineworkersin Durham, which had a large number of associate members. It seemed that they were members of the union, but they paid only an access fee, simply for some legal services, and had no voting rights within the union, as far as was ascertainable. How will she ensure that what appears to have been, in effect, a bogus membership arrangement is dealt with? Could unions provide legal services to associate members, such as those in the Durham NUM, without being caught by the provision?
Bridget Prentice: The hon. Gentleman makes a fair point on the issue that my hon. Friend the Member for North Durham has rightly raised in the past. As I have described, members are people who pay the full union levy, their families and retired members. Associate members are not covered by the clause.
Robert Neill: I am sorry to press the Minister, but will she point out the specific wording that gives that important definition? If that will be the case, it is important that it be spelled out unequivocally.
Bridget Prentice: I hope that, during my remarks, I shall be able to spell it out unequivocally for the hon. Gentleman.
Mr. Jones: This is an important point, and I raise it although I support the amendments. The definition of membership is an issue to consider. I accept that the certification officer regulates trade unions, but I say to my hon. Friend the Minister that I got a letter today from the certification officer telling me that the fully paid-up membership of Durham NUM is seven members, even though in its return to the certification officer, it claimed to have 15,000 members.
Bridget Prentice: My hon. Friend makes a good case for the robust way in which the certification officer deals with the matter. That is a good example of why we do not need further regulation of trade unions on the issue.
Mr. Jones: I do not want to labour the point, as I accept the amendments, but it needs pinning down. Unfortunately, the certification officer’s letter to me did not answer my question about what rights the individuals concerned have. I do not think that they are covered by the definition of a member of a trade union, which, as I understand it, means someone who voluntarily joins a union to get its benefits. They joined on associate membership with no rights whatever, so the matter needs clearing up.
Bridget Prentice: I have no doubt that my hon. Friend will pursue this further with the certification officer, because my understanding—I hope that this will answer the question asked by the hon. Member for Bromley and Chislehurst—is that members are defined in the rulebook of the independent trade unions concerned.
John Mann: I refer Members to the Register of Members’ Interests and the occasional use of an office provided for me, not least for this kind of work, by the GMB union for meetings of large numbers of my constituents and others.
Will the Minister give a written note of guidance on the role that the certification officer will need to play in the context of the clause, so that there is no ambiguity for the union member, the certification officer or the general public about how the officer will be expected to ensure consumer rights in respect of reserved legal activities? I accept the Minister’s point that a dualityof systems would constitute over-regulation, so the certification officer needs to be very clear about his remit.
Bridget Prentice: That is a very good suggestion. I am happy to provide that guidance, and I hope that I will do so during the Committee stage, but if not—
3.9 pm
Sitting suspended for a Division in the House.
3.24 pm
On resuming—
Bridget Prentice: I want now to move on to the concerns that certain hon. Members raised on Second Reading and to reassure the Committee that the Government have no intention of leaving union members unprotected or less well protected than others. The important point is that reserved activities will still need to be carried out by authorised persons—in other words, by qualified lawyers. They will still be subject to full regulation by the Law Society or by whichever other approved regulator is appropriate, and they will still be subject to all the rules of the relevant regulator.
John Hemming: As a union member, I am not totally unaware of what unions do. However, it might be interesting for us to hear some examples of the reserved legal activities that unions undertake.
Bridget Prentice: That is a very good point. As far as individual members are concerned, unions do not deal very often with reserved activities. Reserved activities tend most often to be dealt with by the union head office, and most unions use outside law firms, which are clearly regulated already, to deal with them.
John Hemming: What sort of reserved activities is the Minister talking about when she refers to reserved activities that are dealt with through a union head office?
Bridget Prentice: A union could be involved in litigation, or it might have to appear in court. Rightsof audience are a reserved legal activity, and those involved in court appearances must therefore be properly regulated.
John Hemming: I am sorry to labour the point, but to what extent do unions currently employ barristers to go into court?
Mr. Jones: Every day.
John Hemming: Is that quite common? I am trying to get an understanding.
Bridget Prentice: My hon. Friend the Member for North Durham said, from a sedentary position, that it happens every day. I do not know whether that is the case, but I know that it happens fairly regularly. The most obvious example is that of personal injury cases, which involve trade union attendance in court on behalf of members. I am told that the unions use outside firms to conduct that litigation most of the time.
The use of qualified lawyers is already subject to all the rules of the regulators, and any rule change made by those regulators would apply equally to the union lawyers as to everyone else. It would always be open to a trade union to seek to be licensed under the low-risk provisions in part 5 of the Bill, and they mightchoose to do so if they wished to provide services commercially or to a wider section of the public. I suspect that they would not, because it would probably not be in their financial interests to do so. However, a further situation in which they might seek a licence would be if they were not content with the rulesunder which the approved regulators regulated their employed lawyers.
Mr. Jones: Will the Minister give way?
Bridget Prentice: I knew that I would interest my hon. Friend as soon as I made that comment.
Mr. Jones: I should like to my hon. Friend to clarify what she just said about recourse to the Legal Complaints Service. The position that she outlined would apply only if the union employed an outside lawyer, or, as is the case for some unions, if the union employed an in-house lawyer to act for it. Is that not the case?
Bridget Prentice: Yes, but such an in-house lawyer would be regulated by the Law Society, so that the relevant member would have the same redress as anyone else. In any event, union members are not obliged to use the union lawyer and can use other providers.
Mr. Jones: I am sorry for being a bit of a pain this afternoon, but will the Minister explain something—if not now, then later in writing? I understand how the lawyers employed from an outside firm will be regulated, but what about the individuals? Some unions still employ in-house lawyers. Would they be regulated by the Law Society, or would they be exempted by the bar proposed in the amendment?
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Bridget Prentice: No, any lawyer employed who was conducting reserved activities would be regulated by the regulator. I imagine that even an individual lawyer would almost always be regulated by the Law Society, although they could be regulated by one of the other regulators.
Mr. Djanogly: Is the Minister saying that, in such circumstances, the lawyer would in effect be disbarred or whatever, and that the union would get off scot-free?
Bridget Prentice: I am not sure whether I fully understood the hon. Gentleman’s question. Will he expand on it?
Mr. Djanogly: If a union used an in-house lawyer to give legal advice, would it be untouchable in such a situation, because only the lawyer would be subject to regulation?
Bridget Prentice: Only the lawyer would be subject to regulation because the union would not be an entity as defined in the Bill.
John Hemming: I am confused. As I understand it, offering advice is not a regulated legal activity. It is a legal activity, but not regulated. Although there are issues of negligence, about which I shall talk later, I have difficulty in understanding how a union could not have an in-house lawyer who could offer legal advice, whether or not they were an authorised person.
Bridget Prentice: The in-house lawyer could certainly offer legal advice, but in terms of regulated activities they would have to be regulated. That is the point that I have been trying to make.
I move on to the final part of the reason for the amendments—
John Mann: I am not absolutely clear. Let me give two examples, on which the Minister may not like to comment, but I am sure will be prepared to. What about the case of the canteen women, when the NUM and Scargill disgracefully lost—
The Chairman: Order. Can I be certain that this is an intervention and not a speech?
John Mann: Absolutely; I am asking a question of the Minister.
The Chairman: Be brief, please.
John Mann: Thank you, Mr. Cook. This is purely a question for the Minister. I am asking her about the 1,400 claims that Scargill lost for canteen workers. Some 1,400 women had potential claims, but not against the solicitor. The solicitor took the cases forward, but not for those 1,400 because their claims disappeared. To whom would those women complain? A similar case would be one in which, say, an individual was advised by the union that they did not have a case, even though they did.
Bridget Prentice: In that instance, the individuals could have a claim against the union itself through the union mechanism. If a lawyer gives legal advice in the capacity that my hon. Friend mentioned, the complaint could go through the Law Society’s complaints mechanism. The Law Society could even, for example, make its rules more restrictive. That would limit the union’s ability to provide reserved services. There would be two mechanisms—the first through the certification officer and the other through the lawyer following the rules of his or her legal authority—in this case, the Law Society.
John Hemming: Will the Minister give way?
Bridget Prentice: I shall only do so one more time.
John Hemming: Would there be a third mechanism: an action for negligence through the courts?
Bridget Prentice: I made the point earlier that an individual member of a trade union may seek independent legal advice. They may decide to take the matter through the courts either on their own or after receiving further legal advice.
Finally, I wish to emphasise that the measure relates only to independent trade unions as defined in the 1992 legislation. Other trade unions are not dealt with—they will have to be authorised and licensed to provide any reserved legal services, even to their members. I wish to make it absolutely clear that organisations such as that described in early-day motion 847, which mentions the
“launch by the British National Party (BNP) of a trade union front organisation”,
are not defined as independent trade unions. Such organisations would not therefore qualify under the measure, even if they in some sense became a proper organisation.
The amendments will ensure that unions are able to continue to provide valuable services to their members and that members have proper protection. They will not mean that union members receive a lower standard of work than other consumers; on the contrary, this is another opportunity for union members to receive the standards of service that they deserve.
Mr. Djanogly: The Government amendments to clause 15 and other measures winged their way to the Opposition a few days ago from out of the blue. Frankly, they have come as something as a shock to us. Rather than making special provision for unions within the regulatory framework, the amendments go further to explicitly exclude unions from regulation. Is that justified? We say that it is not. The amendments are a clear example of the Labour party kow-towing to its union paymasters, flying in the face of reason, considerations of fairness to the consumer, and frightening recent experiences, not least those highlighted by the hon. Member for North Durham in a recent Adjournment debate in which I also spoke.
I hope that the hon. Member for North Durham will speak on the issue. In the debate on coal health claims on 23 May, he showed how certain trade unions abuse their unregulated position. For the Government to amend the Bill to abolish regulations on trade unions is outrageous.
Let us talk about vested interests. The Conservatives have no objection to the mechanisms by which trade unions and commercial entities may provide legal services, as long as there is proper regulation to protect the public and individual consumers. Under the original Bill, trade unions, like every other non-lawyer body wishing to provide reserved legal services, would have to do so as an alternative business structure firm. The Bill now makes special provisions for trade unions to reflect their constitutions. In particular, it excludes trade unions from the requirement for a head of financial administration or a head of legal practice. That approach arose from the Government’s view that trade unions should be able to provide reserved legal services, rather than having them establish ring-fenced subsidiaries to do so, as commercial providers of legal services are likely to do.
Despite those special provisions for trade unions in the alternative business structure regime, the TUC has apparently been unhappy about the principle of trade union legal services being subject to any regulation. It argues that it would be inappropriate for unions to be regulated by a legal services board, and claims that unions are effectively regulated by the trade union certification officer. The TUC, however, has no difficulty with the proposition that individual lawyers providing services will be regulated as individuals by the relevant approved regulator. I shall return to the matter of the trade union certification officer.
The trade unions point in particular to the possibility that, if they were required to become an ABS under the Bill, advice on potential employment disputes given by lay shop stewards could fall within the ambit of regulation. That is arguable. From their point of view, it is undesirable for such advice to fall within legal services regulation. However, there are two ways in which such advice could be exempted without needing to exempt trade unions from the provisions of the Bill altogether. First, trade unions could provide reserved legal services through a wholly owned ring-fenced entity, which would obviously not include the lay advisers. Secondly, there could be a specific provision in the Bill exempting lay ‘shop floor’ advice from the ambit of regulation.
John Hemming: I am confused, again, about regulated legal services and legal services. A few moments ago, it appeared that advice was not a regulated legal service. If that is so, informal advice from the union convenors would never be regulated, unless it were added as a regulated legal service under clause 24. Therefore, most of the debate about advice is otiose.
Mr. Djanogly: The hon. Gentleman makes an interesting point. I shall be interested to hear the Minister’s views on that. I speculate that such advice would probably be in connection with litigation, but I look forward to the Minister confirming that that is so.
The trade unions pressed for a wider exemption. However, the Government’s intention to concede that only appeared in the Minister’s statement on Second Reading. I put on the record that the Conservative party is thoroughly unimpressed with the Government’s lack of transparency and their lack of consultation on this issue.
I have been told that, in discussions with the Ministry of Justice and the TUC, the Law Society considered the possibility of an exemption for legal work that was ancillary to the trade unions’ collective bargaining role. That would mean that the trade union would not be required to become an ABS to pursue litigation arising out of an employment dispute, an injury at work and so on. Even then, the individual lawyer would, of course, be regulated. However, on advice from the SRA, the Law Society concluded that it is unwise for there to be such an exemption. I shall return to the SRA’s view on that later.
The SRA is, with the Law Society’s support, increasingly moving towards the regulation of the entities through which legal services are provided, rather than just the regulation of individuals. It is difficult to regulate to ensure proper quality of service and client care by regulating individual lawyers alone, rather than the entity through which they provide legal services. The hon. Member for Bassetlaw gave a good example of that. Accordingly, it does not make sense for services provided by trade unions to be exempted from that approach and it certainly cannot be assumed that there are no problems with services provided by trade unions. Some unions’ roles in the miners’ compensation cases has caused particular concern.
The question is to what extent the certification officer can regulate the union. We agree with many, including the Law Society, that any regulation undertaken by the certification officer cannot possibly fill this gap. The certification officer cannot realistically deal with issues about client care or quality of service as they relate to legal services. Indeed, the certification officer does not appear to have been able to help with the issues arising in the miners’ compensation cases. The Minister, in her earlier remarks, failed to deal with that or with the related point made by the hon. Member for Bassetlaw.
John Mann: Does the hon. Gentleman accept that the certification officer could not act in relation to the miners’ compensation claims because the claimants were not members of the union, but ex-members? On that basis, he said that he could not take up the case.
Mr. Djanogly: In the particular circumstance that the hon. Gentleman mentions, I accept that that may be so.
We do not accept that unions do not, in practice, sometimes act as claims handlers. This matter arose in the debate secured by the hon. Member for North Durham, as my hon. Friend the Member for Bromley and Chislehurst mentioned in his earlier intervention.
Mr. Jones: But if unions act as claims handlers, as the Durham National Union of Miners certainly does, they would have to be registered under the new Compensation Act 2006—and I understand that they have gone for regulation under that act.
Mr. Djanogly: Again, I agree that those are particular circumstances in relation to claims handling for which regulation may well be appropriate.
The Government amendment goes far beyond even what was discussed by officials. It will exempt trade unions from the requirement to become an ABS in relation to all services provided to members, former members and relatives of members, provided that those services were part of the membership package, whether or not they were part of the employment relationship.
The Government have emphasised that trade unions will have to provide reserved services through qualified persons. I think that the Minister confirmed that earlier. We assume that those qualified persons will be fully subject to the regulatory requirements of their professional bodies. If that assumption is correct, the SRA or another regulatory body may conclude that the public interest requires lawyers to provide particular reserved services to trade union members only in a regulated environment. In that case the SRA could, as it can now, make rules to that effect. Those rules would, of course, require the approval of the Legal Services Board and could therefore be made only if there were a demonstrable regulatory need for them and the proposed restriction was a proportionate response.
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Having discussed those matters with the Law Society, I then thought that I should approach the SRA, as it has an important part to play and its view is pertinent to the issue. It is important to put its response on record. It asks hon. Members to reject the amendment, which it says
“will have the effect of exempting trade unions from being regulated in the same way as other bodies who provide legal services to the extent that they provide such services to their membership.
The SRA are opposed to any route that would exempt trade unions from Part 5 in relation to reserved legal activities. The SRA’s view is that trade union members deserve the same protection in relation to reserved activities as any other consumer of legal services.”
It states that it opposes an amendment effectively stating that activities are reserved legal activities when done by an in-house solicitor but not when done by a union. The issue, it states, is
“a matter of principle—the principle that the Bill is seeking to achieve for the future, and the principle envisaged by the Clementi Report. This principle is that any organisation providing reserved legal services to the public or a section of the public needs to be properly and proportionately regulated.”
Stephen Hesford: I am listening with care to what the hon. Gentleman is saying. Is he making a point about competition—that the amendments will somehow give trade unions an unfair competitive advantage—or a consumer protection point? If it is the latter, does he have any evidence from union members that they want protection from their own unions? Or is he making both points?
Mr. Djanogly: I had not thought about the competition aspects, but that might be an angle tobe considered. Has the Minister received any representations on that? It might be a relevant issue to discuss. On the hon. Gentleman’s second question, we can take the issue of miners’ compensation. Thousands of so-called members have a serious problem with the way they have been treated, and many of them want their membership subscriptions returned to them by their unions.
The Clementi report considered that the new principle whereby both bodies and individuals are regulated should apply to both new commercial bodies providing reserved legal services and not-for-profit organisations such as law centres and trade unions. It recognised that otherwise, there would be gaps in the regulation intended to protect consumers and the public interest. The SRA has argued that exempting certain providers of reserved services from the consumer protections of regulation should be done only in exceptional circumstances, when there is clear evidence of public interest. To do otherwise would be to place the interests of providers above those of consumers. The example of abuse by trade unions during the coal miners’ compensation scandal shows why exemptions are dangerous.
According to the SRA, the concessions already made in the Bill in relation to the regulation of trade unions and other low-risk bodies will ensure that the regulation is proportionate. It agrees that the concerns of the TUC about the position of lay advisers in the workforce are legitimate. The SRA believes that the non-reserved legal activities of lay advisers can safely be exempted from the ambit of part 5 of the Bill on the proviso that the union organises the activities of such advisers so that they are not subject to the supervision of a solicitor or an authorised person. It assumes that that is currently the case for shop stewards, other local representatives and elected national officials.
The SRA believes that that may be achieved by providing that legal advice—not a reserved legal activity—given by union representatives who are employees and not acting in the capacity of authorised persons or under the supervision of an authorised person should be defined as not being “legal activities” for the purpose of the Bill. It believes that amendments could be made to ensure that such work would be entirely outside the concerns of part 5.
The SRA says that the Government believe that the regulation of the individual lawyers by their respective approved regulators is sufficient. The SRA disagrees with that view. Its powers in relation to the individual solicitors it authorises do not provide full consumer protection. Also, in-house teams include individuals who are regulated by different approved regulators and subject to different rules and protections. The Bill’s main objective is to provide that the same consumer protections and rules benefit those receiving legal services from an organisation. It should not matter whether the service was provided by a solicitor, barrister or licensed conveyancer.
The current situation in which in-house solicitors can do restricted types of work because the organisation is not subject to regulation is very much a second best for consumers. It is the lesser of two evils under the current statutory framework, and we do not believe that it gives appropriate scope for the work of the union solicitor, nor that it gives the right level of protection for the client and the public. Ensuring that a trade union that chooses to provide such reserved legal services through authorised employees is within the part 5 regime would perfect the current imperfect powers of the SRA and other approved regulators.
To give an example, based on experience, the SRA sets out what it hoped would be a rare, but possible, scenario. A trade union provides, through its in-house legal team, litigation and advocacy services relating to occupational disease cases. There is evidence that a union employee has written to members making claims, telling them precisely what to say to medical examiners, apparently whether true or not. It is not clear whether the in-house lawyers providing the litigation and advocacy services were aware of or complicit in the sending of the letters, or whether union officials were aware or whether it was simply the work of one employee. It goes without saying that writing such a letter in the context of litigation goes to the heart of upholding the proper administration of justice and is a serious matter.
If, in the example, the SRA regulated only the in-house solicitor and not the union, and the Bar Council regulated the in-house barrister, then any investigation would have to relate to that individual solicitor and barrister. Problems may arise in seeking information, documents and explanations from other employees or union officials to be able to get a complete picture of who was responsible for what. Any interview with others to help find out what the solicitor’s involvement was would largely voluntary.
If there was evidence that the solicitor was complicit, disciplinary action would be taken against the solicitor, which might result in the solicitor being struck off. That would take the solicitor out of the union, but would not prevent the union from continuing to provide reserved legal services through other authorised persons.
If an in-house barrister was also a member ofthe team, the Bar Standards Board would have to undertake a separate investigation into the conduct of that barrister. No action could be taken by the SRA or the Bar Standards Board against any union official or employee. They could not prevent the union from providing reserved legal activities through authorised employees.
If the SRA, or another licensing authority, regulated both the union’s legal activities and the lawyers, the powers of investigation under the part 5 regime would allow for a full investigation of all involved. There would be rights of access to all documents and rights to interview all employees. That would allow the SRA to determine appropriate responsibility. It could take disciplinary or regulatory action against the lawyers and it could take action in relation to non-lawyer employees and in relation to the union itself. If there were concerns about the union’s fitness to provide reserved legal services, its licence to provide those services could be withdrawn. The current situation is a disgraceful state of affairs and wholly without justification. I shall recommend that my hon. Friends vote against the amendment, with the aim that the Government have a rethink, but this time, I hope, with consultation.
In recent days, a group of concerned regulators has been asking the Minister for clarification on how such an unacceptable set-up would work in practice. I therefore end my comments with an excerpt from a letter that the president of the Law Society sent to the Minister three days ago, on 11 June. I shall not quote the whole letter, but just the key points, which state:
“the Government has proposed an amendment to the Bill which goes far beyond even what was discussed between officials. The Government’s amendment would exempt trade unions froma requirement to become an ABS...As you made clear on2nd Reading, trade unions will have to provide reserved services through qualified persons. As we read the amendments,the qualified persons concerned will remain fully subject to the regulatory requirements of their professional body. So if the SRA...concluded that the public interest required that lawyers should provide particular reserved legal services to trade union members only through a regulated environment, they could—as they can now—make rules to that effect. Any such rules would of course require the approval of the Legal Services Board, and so could only be made if there was a demonstrable regulatory need for them.
As we read the amendments, there is nothing to stop a trade union from becoming an ABS—or from establishing a separate, wholly owned vehicle which would itself become an ABS—in order to provide reserved legal services to members. Accordingly if regulators did conclude that lawyers employed by trade unions should provide particular reserved services to members only through a regulated entity, trade unions would readily be able to adapt to that, and continue to provide whatever legal services they wish to their members.”
Now we are getting down to the nub of the situation. I would appreciate hearing whether the Minister agrees with what the Law Society said.
The Government need to be more transparent about their intentions, which remain opaque. If the intention is that the Bill should entrench trade unions’ ability to provide legal services to their members through lawyers without any need for regulation of the entity through which those services are provided, that would represent an unjustified special treatment of trade unions that would be contrary to the public and consumer interest and difficult to understand on any rational basis. If, however, the intention is simply to leave the questionof the extent to which trade unions’ legal services should be provided through a regulated entity to be determined by the structures established by the Bill, that would less problematic, although we should still like the Government to set out exactly what they propose.
Mr. Jones: Actually, I support the amendment. The hon. Member for Huntingdon has just shown his lack of understanding of how trade unions operate, although he has raised some points that I agree with, and which I should like the Minister to clarify. The way in which trade unions are organised is quite different from how commercial operations are organised. My experience, as someone who used to run legal services for a trade union, but who is not a legally qualified solicitor, is that most of the time, most trade unions employ lawyers and barristers to fight cases in courts and tribunals.
Sometimes, test cases are taken that the individual would not be able to fund without the support of the trade union. I sometimes used to wince when I had to sign cheques for expensive barristers, but on certain occasions they were well worth it, because of the amount of compensation in the test cases that they won and because the precedents set were important. In those cases, although a trade union is employing those solicitors, it will be covered by regulation. The unions are not exempt at all, and I would think that that would be the bulk of their work.
The other side of the matter is something that I do not think that it would be helpful to bring into legislation, and that is the advice given by the trade union in workplaces by lay representatives at internal disciplinary meetings and industrial tribunals. I usedto go to industrial tribunals every week, even thoughI was never legally qualified, unlike some of the esteemed barristers against whom I used to come up. I had a good strike rate, and beat a few of them.
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There is an issue about in-house lawyers, and I need it clarifying in my own mind.
John Hemming: The hon. Gentleman has experience of trade unions, and when he said that they frequently employ barristers I took that to mean that the barristers were employed by the trade unions as employees. He is saying now that the trade unions contract with solicitors who contract with self-employed barristers. There is no contract between the trade union and the barrister, not that that is particularly relevant. However, it is relevant that it would not even fall under regulated legal services because the trade union employees, acting for the trade union, might offer advice but would not conduct litigation or exercise a right of audience. The employees of the trade union would give that work to a firm of solicitors. The hon. Gentleman has more experience of trade union legal services than I do, so will he tell me whether there are any circumstances in which a trade union has an employee who is a barrister who goes to court to represent members of the trade union?
Mr. Jones: I do not speak on behalf of every trade union, but I have never been aware of a barrister who is employed directly by a trade union. What used to happen in the cases on which I used to engage barristers was that we got to know some of them quite well, so we would select them to do specialist work on specialist pieces of law. They were not employees of the union, but were engaged case by case. However, when unions have to deal with certain areas of industrial injury law, certainly, they employ the same barrister on quite a few occasions because they are usually the best for the job.
Another area that needs clarifying is what is defined as membership. The certification of an officer is weak. I do not want to over-regulate the sector, but, for example, people buy into so-called membership of Durham area NUM—they are associate members. They have no rights as a defined member, but pay £20 a year to access a legal service. The hon. Member for Huntingdon will wonder how they get redress, and I have got redress for them so far by going after the solicitors through the legal complaints service, to the great anger of the law firm in question as it has to pay the money out rather than the NUM. At the moment, that is how I can get justice for those members.
Mr. Djanogly: Clearly, that leads to the question of whether it is fair that the solicitors have to pay for the union.
Mr. Jones: The answer is yes, because they should have known better than to enter into such a relationship with the NUM.
The canteen lady case and the Durham NUM case are useful in illustrating that a gap exists. If people have no trade union rights by means of which they can vote people out or have any say, where do they go? I support the exemption, but we need clarity on the meaning of membership.
Things can get a bit fuzzy in the area of the legal services that are provided for family members and in the definition of family members. Some trade unions have a wide definition, whereas others restrict the definition to spouses and immediate family. A related matter is that of the time when someone becomes a member. I am aware of cases in which people have joined a trade union to obtain legal services, even though the legal services started first and the people concerned might have stopped paying. Again, some clarity is needed.
However, union legal services are being extended, and I do not think for one minute that we should diminish the access to justice that they provide—at low cost to the public purse—to many thousands of people every year who otherwise would not have access to justice. The hon. Member for Huntingdon made a point about trade unions gathering steam. I can say from personal experience that, if a trade union gives bad legal advice, there is recourse for the individual to sue the trade union for negligence. In the case of my own union, such an action cost it quite a lot of money on one occasion. There are one or two routes that are open to individuals to obtain redress for bad advice, other than through certification officers.
I urge the Minister none the less to clarify the position on associate members, because that is an issue that could come back to haunt us, and I want to avoid situations in which we leave grey areas or loose ends that could discredit the great work done by the majority of trade unions.
John Hemming: I admit that my confusion remains, because it still appears to me to some extent that the debate on trade unions is about solving a problem that the Bill does not create. If the trade unions offer legal services, they are not regulated, although I agree that, if they offer regulated legal services, there is an issue. We have not identified any of the services that the unions offer.
Mr. Jones: The unions are regulated. The bulk of the work that I used to deal with was representational and was performed by barristers or qualified solicitors, and was therefore regulated. The other large element of work was in industrial injury cases, for which I believe most trade unions do not employ in-house lawyers, but use contracted-out services. There is a whole host of activities that will be regulated by the Bill.
John Hemming: They are regulated, but the important point, and the reason why the people to whom the hon. Gentleman referred could sue the solicitors, was because the clients of those solicitors were the union members rather than the union. The union might pay money and underwrite cases, particularly for test cases, and that is right. The union might underwrite a test case because an individual member might not be able to afford the cost. However, the actual client of the solicitors’ firm would be the union member rather than the union.
Litigation involves signing documents, such as claim forms and so on. The claim form can be signed by a litigant in person or by a solicitor on behalf of his client. I am not aware that a trade union can currently sign a claim form on behalf of a union member. It can sign one on behalf of itself, but not on a member’s behalf, and to that extent the litigation that is initiated by a member is not being conducted by the union. There are issues around case management and claims management, and where the responsibility for that should lie, but that is probably not within the ambit of the Bill.
I have a certain amount of experience of working with trade unions, for instance in employment representation matters involving Unison. Unison might customarily go into internal disputes in which there is a hearing in a city council or some other organisation. That is not regulated. That is not legal advice. It is not a right of audience because it is an internal matter. It may then go to an employment tribunal. That is not a court. There are no rights of audience; people can turn up and do their own thing. There is no difficulty. Because individuals are not exercising a right of audience and the person who initiates the claim at the employment tribunal is, to a great extent, the member of the trade union, it is not a regulated legal service. Such an issue is a legal service, but not a regulated legal service.
We must get something good from the Bill. I entirely agree that the work done at a lower level by convenors, shop stewards and the like in advising people is not something over which we need a complex regulatory process. Let us consider the Middlesbrough case when the trade union was sued for settling on an equal pay claim. That raises an issue about collective bargaining and whether the law and way in which it has evolved has undermined it as a way forward. There are great difficulties with such matters, but they do not fall within the ambit of the Bill.
Mr. Jones: I know that case well. The individual trade union member did not consider that they had received good legal advice from the trade union, and was out to get recourse by suing the trade union.
John Hemming: Yes. In other words, that was advice. It was not a regulated legal service. It was a legal service and thus would not fall within the ambit of the Bill. The reality is that any sensible trade union should have a form of negligence insurance to handle claims against it in respect of the advice that its people give.
The Middlesbrough case was about an equal pay claim, which is a major issue in many urban areas specifically in respect of local authorities. Such cases have many complications, but they involve a legal service that is not regulated, so they would not come under the Bill. If we are trying to solve a problem through the amendments, we must be clear about what the problem is in the first instance. Will writing is not one such example, but the amendments would create a situation in which we could ask the trade union to undertake a conveyancing job. Theoretically, the amendments require that and want matters done through an individual rather than through an organisational agreement.
Mr. Jones: The trade union for which I worked did conveyancing, but we used to give such matters to a qualified law firm that did it on behalf of the member. The law firm would therefore be regulated underthe Bill.
John Hemming: Exactly. If we give the work to a law firm to handle, it would not come under the Bill and the member is the client of the law firm. Organisations, such as the Federation of Small Businesses, have a legal insurance scheme. A certain amount is paid after which it will send people to lawyers for advice. The federation would not be worried by the fact that it would suddenly have to be regulated and authorised because the Bill will not change anything. In essence, a deal is done with various lawyers—insurance-type schemes and the like—the end result of which works reasonably well.
The reality is that trade unions do not offer regulated legal services at present, as defined under the Bill. Regulated legal services are provided by firms of lawyers. Trade unions may pay them as a third-party payment, but they are not providing the legal services themselves.
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Mr. Djanogly: The hon. Gentleman is making a good point, but a trade union can offer regulated services itself. It could well employ an in-house solicitor who would carry out the work effectively in the trade union’s name, but only the in-house solicitor could be regulated.
John Hemming: I thank the hon. Gentleman for his intervention. I am talking about what happens at the moment and those with the most experience of running legal services. As the hon. Member for North Durham said, usually they use a firm of solicitors. No one is saying that such matters should move in-house. We have not identified the problem that we are trying to solve, yet we are generating statute to solve the problem. People may go to the union in the hope that it will pay for some legal services for them, but the union does not, as a rule, provide regulated legal services.
Without question, legal services are provided by many people. They are provided informally by convenors, and there are issues about negligence and being able to sue the union for duff advice and so on. Support is offered at all levels of employment disputes, and that would not fall within the provision. We must consider what problem we are trying to solve and how it is defined in the Bill, before considering amendments.
John Mann: Let me explain the problem as simply as possible. The Opposition’s opposition to the exemption misses the point because they have not fully understood the situation and the key principles, nor has the Law Society. I shall speak about the Law Society’s lengthy advice, not least because the case cited is one that I initiated some time ago, so I know it well.
If a union takes on a case for a group of workers against an employer for industrial injury, it can be handled in two ways. One is to have a lawyer, as defined by everyone and in the Bill, to do the work—forget in-house and external, because that is not the point. A legal professional could handle it. The second way is for someone like me to handle it by putting the case to the employer and negotiating. I would explain that a group of employees have industrial deafness, I would have them medically tested, I would demonstrate causation by the employer, and I would try to negotiate a settlement with the employer. The advantage for the employer is that the legal costs will not be high, and the advantage for the individual members is that they will not run the risk, individually or through their union, of adverse court costs.
The latter way can be sensible and in this country we call it industrial relations. They normally work, but if it is impossible to agree, some cases may go throughthe legal process as test cases, with solicitors and, if necessary, barristers on both sides fighting the case. That is all covered. The issue is that the industrial relations side is not covered, nor should it be.
The amendments seem to be sensible, but on the question of where the individual union member should go, the answer seems to be straightforward. If I negotiate on their behalf, the remedies should be clear, and it would be helpful if the certification officer could quantify them. It would not seem sensible from anyone’s point of view for the Law Society to regulate my industrial relations negotiations—even if I was acting, in essence, in lieu of a solicitor, because that was the sanction under which I negotiated. That is commonplace industrial relations practice.
There is no suggestion that the Law Society should regulate any of that activity, but unions call people different things. The union could give me the title, “law officer”. If one is a solicitor, one is covered, as I understand the Bill; and if one is not, and one is not performing one of the reserved legal activities, which is the key point, the situation is clear. It is importantthat the certification officer is given clear guidance, because the role currently seems rather too woolly. With respect to the hon. Member for Huntingdon, that course would have been the more obvious one to take in order to achieve what he has attempted with the Bill.
Who knows what mood his party leader is in today on those issues, but I fear that the hon. Member for Huntingdon is trying to presume his party’s position on trade unions, and that he oversells the case, because the vast majority of the unions are not and never have been affiliated to the Labour party. Fifteen unions are affiliated, and only two have become unaffiliated inthe past 40 years. However, there are probably 70 or80 other unions in the TUC, and their number is increasing mainly through specialist, professional unions, which have nothing to do with the Labour party either institutionally or in any other way.
John Hemming rose—
Mr. Foster: On a point of order, Mr. Cook, I beg to move that the sitting be now adjourned.
The Chairman: The hon. Gentleman cannot move the Adjournment on an intervention. Has the hon. Member for Bassetlaw finished his speech?
John Mann: I have.
Debate adjourned.—[Mr. Foster.]
Adjourned accordingly at twenty-two minutes past Four o’clock till Tuesday 19 June at half-past Ten o’clock.
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