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Lord Hacking: Hear, hear!

Lord Mishcon: It is pleasing to have the support of the noble Lord, Lord Hacking. Apart from the point about the taxing masters, ought I not to advise the client, "You had better go to another solicitor to argue the case before the taxing master as to whether I have charged correctly because I have an interest in it and there would be a conflict. You must go elsewhere". Will the solicitor who now takes on the case of arguing that I far too pessimistically and wrongly forecast the case be subject to a success rule? If the other solicitor manages to bargain me down and the percentage is lower, does that solicitor collect?

Unfortunately, it is something that one witnesses year after year. The legislation is turning the professions in our country into something different; it is eroding the dignity of the professions and their traditions. Only last Friday The Times carried a headline in regard to the medical profession:

I do not want that to happen to my profession. I do not want to be turned into a bookie.

4.25 p.m.

Lord Taylor of Gosforth: My Lords, I wish to associate myself with all that has been said by the noble and learned Lord, Lord Ackner, and those who agree with him. I am sorry that it causes me to disagree with my noble and learned friend on the Woolsack, with whom I would much rather agree, as I usually do. However, as a matter of principle I am wholly in sympathy with the words that fell from the noble and learned Lord, Lord Rawlinson. It seems to me that the contingency fee is an alien creature

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in our justice system. I would much rather that it had never made its appearance. I believe that it will lead to speculative litigation and that, as has been graphically illustrated by an experienced solicitor a few minutes ago, there is a danger of a conflict of interest and possibly a lowering of standards.

It has been said more than once, and I accept it, that the issue of principle is now to be regarded as water under the bridge. The most important point at issue is that we should ensure that the alien creature is not allowed to run amok. The object of having the alien creature is, so we are told, to improve access to justice. We must ensure that it grants impoverished litigants better access to justice, not simply lawyers better access to fees.

I do not understand how the noble and learned Lord the Lord Chancellor reached the figure of 100 per cent. He began with 10 per cent. and when he was put under pressure he doubled it to 20 per cent. We have all had experience in the law of trying to settle cases and I never went from 10 per cent., to 20 per cent., to 100 per cent. in all the cases I ever sought to negotiate. How the noble and learned Lord reached 100 per cent. is quite mysterious. He told us that 100 per cent. has been the situation in Scotland. There are two points about Scotland. First, in so far as there have been conditional fee agreements there, they have been used minimally and have made hardly any impact on access to justice. If the noble and learned Lord knows that that is the level in Scotland, why did he start with 10 per cent. if he was going to end with 100 per cent.?

In my personal experience, the noble and learned Lord the Lord Chancellor has always shown a canny caution when it comes to money matters. It would be most unfair and improper for anyone to suggest that his caution with regard to money is confined to occasions when money comes from the Treasury, but not to occasions when it is to come from impecunious litigants. That would be unfair. However, it will undoubtedly be from the impecunious litigant that the 100 per cent. would come. I consider that it is outrageous to reach that percentage in what must be the nursery slopes of such a scheme. As has been said, one can increase by starting low. If we start with 20 per cent. or even 30 per cent. or 40 per cent., it would always be possible to increase the amount if solicitors found that it was simply not economic for them to take on that form of work. But we cannot go down from 100 per cent. My guess is that it would be easy for the solicitor in the stronger position with regard to his client to negotiate higher percentages—perhaps not 100 per cent. but higher than would be justified by the risks that have to be taken.

I wish to adopt all the arguments that were so well presented by the noble and learned Lord, Lord Ackner, and the noble Lord, Lord Irving of Lairg. I suggest that the Lord Chancellor should go back and reconsider this matter. He made a virtue of having taken the opinion of the Heads of Division and of having consulted his own advisory committee. But despite the views of both those bodies, he has gone ahead with this figure although they all advised against it. They did so not because of any desire to stifle the scheme, but simply because they are truly anxious about whether the percentage that he has in mind can really be regarded as reasonable. I ask the House to support this amendment not to defeat the whole

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exercise, but to ask the Lord Chancellor to go back and reconsider what would be the appropriate level at which to pitch the uplift.

4.30 p.m.

Lord Peyton of Yeovil: My Lords, if I had come here today absolutely convinced that the proposals put forward by the noble and learned Lord the Lord Chancellor were correct, I am bound to say that over the past hour or so I should have been severely shaken. I cannot conceive of the possibility, having heard the arguments advanced, of my views not being very much shifted. As things are, I did not enter the Chamber in that state of mind. I am opposed to this proposal. The mere fact that Parliament has approved it does not entirely stifle me in the wish I have to express my objection to it. We are still free to do that.

I apologise for intruding for the first time in this debate an element, if not of total unlearning, at least of very small learning. I am perhaps prompted to do so by the fact that I learned such law as I have in a prison camp in Germany, where notions of the common law did not prevail. I had the good fortune to sit at the feet of a very remarkable academic lawyer, the late Professor Hamson. I know of no one who had a greater regard for the structure of the common law than he. He taught it brilliantly. Perhaps I may say to my noble and learned friend on the Woolsack that he accompanied the instruction with a very clear rider that it was more than possible that those eminent and very learned men who sat on the Woolsack could get things very badly wrong. Today, I find myself rather daringly echoing that view.

The noble Lord, Lord Mishcon, is exceedingly persuasive. But I do not think I have ever heard him express himself quite so strongly as he did this afternoon when, in concluding his speech, he said:

    "I do not want to be turned into a bookie".

Those words will stay with me for a very long time.

There is very little that I can contribute by way of experience to what has been said this afternoon. Therefore, I have just two questions. First, I am puzzled by the lack of reference to the position of the defendant. What will he know of the position of the plaintiff? I am not clear about that. It seems to me that he may well be faced with a man of straw who is engaged in a speculative case with the aid of a very bright lawyer, and the defendant will know nothing of that and will have the immense handicap of not knowing that, if he loses, he will face a very heavy bill for his own costs. My second question is a very simple one, but I am not quite sure that there is a very easy answer to it. What is the purpose of an advisory committee? The noble and learned Lord has one. He has the benefit of the advice of men of immense experience and learning, so far as I know. I have a copy here of the letter (which has been widely circulated) that my noble and learned friend wrote on this subject to the chairman of the committee on 19th April. He states:

    "I understand the Committee's views on the percentage uplift, but I do not agree with them".

That is the first rejection. He continues:

    "I remain persuaded that it is right to fix the maximum figure for the percentage uplift at 100%".

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That is the second rejection. He goes on:

    "Similarly, I remain of the view that I do not have the power to impose a limit on the proportion of damages that can be taken by the uplift".

The advisory committee takes a very flat-footed view to the contrary.

On taxation, my noble and learned friend states:

    "I agree that conditional fees will be a new and unusual challenge to the taxation system, but I believe that taxation does have a role to play".

That is the third rejection. He adds:

    "I do not believe that there is any need to hold up the Order and Regulations ... on this account".

There again, the advisory committee had suggested some delay, echoing the point made previously by the noble Lord, Lord Mishcon; namely, none of us knows what the result of all this will be, and therefore let us proceed with caution.

There were other points on which the noble and learned Lord was unable to go along with the advice that he had received. So far as the professional rules are concerned, my noble and learned friend did not agree with the committee as to whether the regulation was ultra vires. He simply states the fact that he does not agree with the analysis and is satisfied that the regulation is intra vires. My noble and learned friend goes on to say that he agrees that monitoring is important, but then appears to have very little enthusiasm for it, being prepared even at this very uncertain stage to rely entirely on sampling.

I am not sure that I know how to express myself. There is a very grave danger that with the system we have—despite what has been said by a very impressive collection of speakers—it is quite possible that when the bells go the opinions expressed will not be reflected in the Division Lobby. I therefore make this plea, very much as a layman, to my noble and learned friend. I do hope that, bearing in mind what he has heard this afternoon, he will be broadminded and have the courage to have second thoughts.

4.40 p.m.

Lord Lowry: My Lords, like some noble Lords I must begin by declaring a bias. I have great misgivings about the whole idea of conditional fees and the rather skeleton scheme which at present we can see for bringing them into effect. But I recognise the need to try to fill the gap between the very poor who, so far at least, are able to resort to legal aid and the seriously rich who may be supposed not to require it. However, I shall put aside my prejudices for today at least and try to concentrate on the matter in hand. I have two anxieties: first, the 100 per cent. uplift which, in ordinary language, might be called the power to charge double what one's services are worth in the event of winning the case; and, secondly, the marked difference which seems to exist between my noble and learned friend on the Woolsack and his advisory committee.

The purpose of the uplift must be to induce lawyers to undertake these cases and reward them suitably overall, if excessively on the individual occasion. I dislike the idea of any uplift. A client should not have to pay and the lawyer should not receive more than the lawyer's services are worth. There again, for the sake of argument, I shall leave that point on one side.

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The proposal started tentatively at 5 per cent. It went to 10 per cent. on paper; then to 20 per cent.; and it is now 100 per cent. I shall try not to repeat what my noble and learned friend the Lord Chief Justice said. Like him, I have tried to settle a few cases but not on the basis described. If we were at an auction and the bidding went from 5 to 10, to 20 and then to 100, that would indeed be a brisk rise in the bidding. The committee was happy with 10 per cent., yet accepted 20 per cent.; but it still strongly disagrees with 100 per cent. I hope I am not being impertinent when I say that if 100 per cent. is the logical and proper figure, why should such a grave miscalculation have crept in at the beginning of these calculations?

The reason for the uplift is the risk of failure. Let us consider the facts for a moment. Most of the cases, as far as I can see, will be plaintiff's cases in personal injury litigation. To those with experience of that kind of litigation it ranks among the most easily predictable in a somewhat unpredictable field. That is especially true if the case is to be tried by a judge without a jury, or so it is thought. Predictability accounts for a high proportion of settlements in this field because both the plaintiff's and the defendant's advisers have a pretty good idea of the value of the case and there are a lot of settlements in this field.

I speak of personal injury cases because that field of litigation offers the best prospect of recovering money out of the damages. As we have already heard—I paraphrase what the noble and learned Lord the Lord Chancellor said on a previous occasion—there is a duty in Scotland and will be a duty here to satisfy oneself that a good case exists before it is taken on. That is a serious duty owed to the client, to the court system and to the opposite party if the lawyer is a conscientious person, as most of them are. One does not want to be starting a bad case for one's client and it is quite wrong to start a bad case against another party—the less acceptable name for that is blackmail.

We have heard that there is a modest premium to insure against having to pay the defendant's costs. That is another indication of the likely outcome of many of these cases. The statistics on which those premiums are based—no doubt that is the way in which the premiums are arrived at—support, not surprisingly, what has been said. What is the real effect of that? It is that the money is taken out of the damages of successful plaintiffs to pay for the mistakes and misfortunes of solicitors who take on bad cases. In other words, legal aid above the statutory legal aid limit is provided by the legal profession which is in turn to be reimbursed by successful litigants out of the damages which they ought to have received. That may be tolerable if the tax on success is 10 per cent. of the costs or even 20 per cent., but not, I venture to say, if it is 100 per cent.

The 100 per cent. uplift assumes a likely failure rate of 50 per cent. It is not a true comparison to say that a 50:50 case deserves to be heard and therefore the 100 per cent. uplift is needed. First, there is something like taking the good with the bad in this field; secondly, one should have regard to the overall likelihood of a practice being successfully conducted and remember that when dealing with personal injury cases the solicitor should

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not—and certainly does not have to—look at cases which are less than 50:50. The majority of cases he will see will have a very much better chance than 50:50. It is hard, if this is a question of a variable scale with a maximum of 100 per cent., for the solicitor to say—however honestly he is behaving and however experienced he is—just what the right tariff is.

The noble Lord, Lord Mishcon, has allowed me to shorten my speech, your Lordships will be pleased to learn, with his good examples of those chances. I shall not go into further detail in that regard therefore except to speculate whether, when he is at odds with his client in front of the taxing master and sends him to another solicitor, that other solicitor will feel that he had better have a 100 per cent. uplift.

We are told, quite correctly, that what is being said is that 100 per cent. will be the maximum and not the norm. But I share the misgivings voiced by the noble Baroness, Lady Mallalieu—who I am pleased to see in her place and from whom I hope we shall hear—and mentioned also by the noble Lord, Lord Irving of Lairg, that there is a great danger that the maximum will become the normal.

What is the machinery of control? We are told that there is no machinery of control except that the 100 per cent. is the maximum. We are also told that at present there is no means of introducing control—something I cannot quite understand. I have read what purport to be the relevant provisions. But I am not going to quibble. My experience of legislation and rule making is that one ought to decide what one wants first and then draft the primary and secondary legislation which will achieve one's object.

If there is no control, imagine the unequal position of the client, worried, ignorant and in a strange environment, and the solicitor who says, "There is no other way to success but to authorise me to take on your case and charge 100 per cent. uplift if you win". That would not arise if we were dealing with taxed fees or if we were dealing with a modest 10 per cent. or even 20 per cent. standard uplift. There would be no bargaining and no question of oppression or deception. As the chances in the case changed from hour to hour, there would be no recrimination, no feeling that this case is now a sitter or that that case could never be won. This is a very serious matter to consider—the question of the maximum figure with everything else left in the air.

Another possibility is to relate the fees to the award of damages. That is a most unattractive alternative but at least it would be clear. We must remember that costs against the defendant are awarded here in the ordinary way whereas that is not true in America, which has been responsible for the entirely different approach of the speculative lawyer in that jurisdiction. They are not necessarily alternatives. What is wrong with combining two limits: a limit on the uplift and a limit on the proportion of the damages which can be resorted to in order to satisfy fees.

So far I have tried to address the practicalities, but I do go a little further. I submit that, in any circumstances, for a professional person to take from the client a fee amounting to twice what those services rendered are worth is not only unacceptable but quite scandalous. I

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have long been aware that hyperbole in an advocate does not assist his case. But I can think of no adjective less emphatic to describe my view of a step like that.

I can be very brief about my second point. There are a great number of loose ends here in what is by any standard of judgment a new and controversial scheme. The advisory committee, comprising a majority of lay people and headed by a most experienced and distinguished chairman, has given clear and strong advice of which, I respectfully suggest, very great account should be taken.

4.53 p.m.

Lord Campbell of Alloway: My Lords, it is a privilege to follow the noble and learned Lord. I agree with everything that he said and in particular with the three points that he made with such total clarity. The 100 per cent. uplift—"unacceptable" and "scandalous". How could it better be put? Disagreement with the advisory committee or the loose ends—again, how could it better be put? How can one go further with this miasma of dissatisfaction and doubt, such as we have heard in this Chamber today? There is then the question of control.

I do not conceal my prejudice in this matter. I am proud to assert it. It was so wonderfully asserted by my noble and learned friend Lord Rawlinson, and even, if I may say so, by the noble and learned Lord the Lord Chief Justice, my noble friend Lord Peyton and the noble Lord—I was about to say my noble friend—Lord Mishcon, in one of the most remarkable speeches that I have ever heard the noble Lord make in your Lordships' House.

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