The Parliamentary Under-Secretary of State for Justice (Bridget Prentice): I beg to move,

The Chairman: With this it will be convenient to consider the draft Registered Foreign Lawyers Order 2009.

Bridget Prentice: It is a delight to serve under your chairmanship, Mr. Martlew. Both orders update the regulatory framework for foreign lawyers by extending and increasing the powers of the Law Society and the Solicitors Regulation Authority over solicitors in two categories of foreign lawyers: registered European lawyer and registered foreign lawyer. Registered European lawyers, as I am sure hon. Members are aware, are those covered by the establishment directive who have qualified in another European Union state and seek to practise in the United Kingdom on a permanent basis. Registered foreign lawyers are legal professionals qualified in another jurisdiction not covered by the establishment directive.

Many rules applicable to solicitors, such as their code of conduct, are already applied to both registered foreign and registered European lawyers. The orders will update and extend the application of such rules, reflecting the amendments introduced by the Legal Services Act 2007. The orders reflect the changes made to the regulation of legal professionals, in particular solicitors in England and Wales, as a result of the Act, and bring a consistency of approach to the Law Society’s regulation of lawyers registered with it.

David Howarth (Cambridge) (LD): I thank the Minister for giving way. Just to be clear, is it the intention that the regimes for European lawyers and foreign lawyers should be basically the same? I ask because the formats of the two regulations are different, and it is difficult to compare one with the other. There are some anomalies, on the face of it, that might not be anomalies if one looks at the detail. I draw her attention to paragraph 3(2)(g) of the draft Registered Foreign Lawyers Order 2009, which concerns the inspection of practice bank accounts. I cannot find any equivalent in the draft Legal Services Act 2007 (Registered European Lawyers) Order 2009. Is that just a result of how the orders are drafted, or is there some intention to have different regimes for the two sorts of lawyer?

Bridget Prentice: In relation to registered foreign lawyers, the previous order was exceptionally limited. The changes are quite radical. Under the 2007 Act, registered foreign lawyers could act as managers in bodies not regulated by the Law Society, so it seemed essential that the Law Society should have the appropriate regulatory powers over registered foreign lawyers where the practice in which they operate is authorised by a different regulator. We are bringing registered foreign lawyers more in line with European lawyers.

The Act, in particular schedule 16, introduces a number of changes to how solicitors in England and Wales practise and are regulated. The Government have already begun to commence the provisions in the Act. For example, on 31 March 2009, we introduced legal disciplinary practices, which allow lawyers and non-lawyers to form practices providing legal services.

Registered European and registered foreign lawyers are both entitled to benefit from the new structures by collaborating with other lawyers and non-lawyers in a legal practice. However, it is essential that targeted, proportionate and consumer-focused regulation goes hand in hand with the reforms. Further reforms are due to be introduced in July to the Law Society’s regime of practising certificates, its powers of investigation and the routes of appeal available to solicitors against decisions of the Law Society, among others.

In introducing the reforms, there is a need for consistency with the Law Society’s approach to foreign lawyers. The orders achieve that consistency by applying the Law Society’s powers to rebuke or fine solicitors to registered foreign and European lawyers. That will enable the Law Society to impose a fine of up to £2,000 on such individuals for minor incidents of misconduct or failures to comply with Law Society rules. They also apply the powers used in investigating the conduct of solicitors to investigations of the conduct of registered foreign and European lawyers, and extend to them the offences that may be committed during the course of an investigation.

The orders align the powers and jurisdiction of the Solicitors Disciplinary Tribunal in respect of solicitors with those for registered foreign or European lawyers, and prohibit the unauthorised employment of foreign and European lawyers who have been struck off the Law Society’s register. They also align the Law Society’s powers to impose conditions and to suspend solicitors’ practising certificates in relation to the registration of foreign and European lawyers.

Additionally, the new regime of sole solicitor endorsement will now apply to registered European lawyers. That creates a separate application regime and approval process for solicitors seeking to act as sole practitioners, in acknowledgement of the greater responsibility that accompanies those positions. The regime is not applied to registered foreign lawyers, who may not practise as sole practitioners.

Finally, the orders acknowledge the transfer of appellate functions from the Master of the Rolls to the High Court which, again, is consistent with the approach of the 2007 Act. The instruments amend other legislative instruments to ensure consistency with regard to appeal routes and grounds.

I propose that the orders come into force on 1 July 2009 to coincide with the other amendments to the Law Society’s powers of investigation. It will be the fifth commencement order under the Act. The orders form one part of the process of realising the benefits of the 2007 Act, which apply to both consumers and the legal sector. To maximise those benefits, it is essential that a balance is struck between reforming the legal market and ensuring proportionate and effective regulation. I am confident that the orders address that balance and place consumer confidence and protection at the heart of the reforms, and I commend them to the Committee.

Mr. Henry Bellingham (North-West Norfolk) (Con): It is a pleasure to serve under your chairmanship, Mr. Martlew. I should like first of all to declare an interest as a barrister, albeit a non-practising one at the moment. I thank the Minister for her succinct explanation of the orders.

We spent many hours on the Legal Services Act 2007. The Opposition supported its broad principles, although we had to disagree with the Government on a number of issues. However, this was not one of those issues, so we are supportive of the thrust of the orders.

One of the key measures in the 2007 Act was updating the oversight of the legal profession to allow it to move forward, for example, by bringing in outside capital and outside ownership of firms, and paving the way for alternative business structures. That reflects the Government’s view, which the Opposition support 100 per cent., of our legal services as a world-class sector. Indeed, London is a world-class legal services centre: many companies want to come to London to arbitrate commercial and shipping disputes; international celebrities come to London to sort out their divorces; and many businesses want to deal with their problems in London. That is why it is so important that we have a modern legal services system with a framework that can oversee it.

Allowing foreign and European lawyers to come here to practise is very important, as is having a regime that everyone can easily understand. However, it is also important that they are properly regulated and assessed, and I should like to ask the Minister a couple of questions on that. First, the Solicitors Regulation Authority has disciplinary powers and powers of investigation into alleged misconduct. Its role is quite clear from the orders. However, will the Minister tell us more about the interface between the SRA and the Legal Services Board? The latter is in the process of coming into existence, and will set up a number of key divisions that will look at different areas of legal services. It will be helpful to hear what the Minister has to say on the question of how the board will deal with overseas and European lawyers coming into this country.

It is also important that we have full reciprocity. It goes without saying that one order updates a Council of Ministers decision that was voted on by the House a while ago. It was the European Communities (Recognition of Professional Qualifications) Regulations 2007, S.I. 2007/2781. There is no problem in total reciprocity with EU member states—including, I imagine, the accession countries. Will the Minister confirm that latter point? However, I wonder what will happen with our other major trading partners.

I understand that it is easy for UK-qualified lawyers to practise in America, and in some of those countries that have a history of common law such as Hong Kong, Canada and so on, but it is proving difficult for them to practise in India. Until recently, there was a distinct lack of progress in the bilateral discussions between our Government and the Indian Government in opening up India’s legal services to UK-qualified lawyers. Will the Minister comment on those two points?

I understand that the consumer advisory panel played an important part in the build-up to the Legal Services Act 2007. On a number of occasions, the Minister told the Committee considering that legislation how important the panel was. Is the panel still in existence, and if so is it advising the Minister and the Government on the implementation of the Act? Was the panel involved in either of the orders before the Committee today? If so, what was its input?

Those few short questions and requests for extra information apart, the Opposition support the orders and wish the Minister well in implementing them.

Bridget Prentice: First, I shall answer the hon. Member for Cambridge. Section 3(7)(c)(i) of the registered European Lawyers order is the provision that applies section 33A of the Solicitors Act 1974, as amended, in respect of bank accounts.

I can tell the hon. Member for North-West Norfolk that the orders were made at the request of the Solicitors Regulation Authority. It believes that the provisions will affect about 2,000 practitioners. We consulted stakeholders, including other interested Departments, and particularly the Department for Innovation, Universities and Skills.

The hon. Gentleman makes a good point about the importance of British lawyers being able to work in other markets. He will know that we have had fruitful discussions with the Bar Association of India and the bar associations in some of the Indian regions about opening their markets. They spoke to me about reciprocity, but I said that I would like reciprocity for us, too. The difficulty is getting into the higher courts in India, rather than the other way around. However, progress is being made. It is slow, and may have been slowed slightly more by the fact that India has just been through an election, but I hope that we can take up those conversations again. We worked closely not only with the Law Society and the Bar Council, but with the CBI and others, and they were all most helpful in trying to ensure that we can open the Indian market.

The regulation of registered European and foreign lawyers will initially be a matter for the SRA. However, the Legal Services Commission will have to ensure that all regulators regulate their members properly. That will include European and foreign lawyers.

I hope that I have answered the questions and concerns rightly raised by the hon. Member for North-West Norfolk.

Mr. Bellingham: I mentioned the consumer advisory panel—I know that the Minister is keen on it.

Bridget Prentice: The hon. Gentleman knows me too well. He spent a long time on the Committee that considered the Legal Services Act, so he is beginning to understand my thinking. Yes, the consumer advisory panel is important to us. The orders were initiated by the SRA, and it is through the authority that we consulted stakeholders and others, including other Departments. I will have to look into the issue of the consumer advisory panel and I will make sure that I inform the Committee of my findings. However, I am grateful to the hon. Gentleman and the hon. Member for Cambridge for their support for the orders.

Committee rose.