The
Committee consisted of the following
Members:
Chairman:
Mr.
Eric Martlew
Bellingham,
Mr. Henry
(North-West Norfolk)
(Con)
Davidson,
Mr. Ian
(Glasgow, South-West)
(Lab/Co-op)
Hamilton,
Mr. Fabian
(Leeds, North-East)
(Lab)
Heath,
Mr. David
(Somerton and Frome)
(LD)
Hesford,
Stephen
(Wirral, West)
(Lab)
Howarth,
David
(Cambridge)
(LD)
Leigh,
Mr. Edward
(Gainsborough)
(Con)
Lucas,
Ian
(Wrexham) (Lab)
Owen,
Albert
(Ynys Môn)
(Lab)
Prentice,
Bridget
(Parliamentary Under-Secretary of State for
Justice)
Rifkind,
Sir Malcolm
(Kensington and Chelsea)
(Con)
Shepherd,
Mr. Richard
(Aldridge-Brownhills)
(Con)
Sheridan,
Jim
(Paisley and Renfrewshire, North)
(Lab)
Strang,
Dr. Gavin
(Edinburgh, East)
(Lab)
Wicks,
Malcolm
(Croydon, North)
(Lab)
Wright,
Jeremy
(Rugby and Kenilworth)
(Con)
Adrian Jenner, Committee
Clerk
attended the
Committee
Second
Delegated Legislation
Committee
Tuesday 19
May
2009
[Mr.
Eric Martlew in the
Chair]
Draft
Legal Services Act 2007 (Registered European Lawyers) Order
2009
4.35
pm
The
Parliamentary Under-Secretary of State for Justice (Bridget
Prentice): I beg to move,
That the
Committee has considered the draft Legal Services Act 2007 (Registered
European Lawyers) Order
2009.
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 Societys 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 Societys 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
Societys approach to foreign lawyers. The orders achieve that
consistency by applying the Law Societys 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 Societys
register. They also align the Law Societys 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 Societys 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.
4.41
pm
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
Governments 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 statesincluding, 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 Indias 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.
4.47
pm
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
panelI 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.
Question
put and agreed to.
Draft registered
foreign lawyers order
2009
Resolved,
That the
Committee has considered the draft Registered Foreign Lawyers Order
2009.(Bridget
Prentice.)
4.51
pm
Committee
rose.