Previous Section Back to Table of Contents Lords Hansard Home Page

Lord Hacking: My Lords, will the noble Baroness kindly give way? I am a practising solicitor and I may be able to help her on the issue of interest on client accounts. That interest belongs to the client.

Baroness Kennedy of The Shaws: My Lords, but why can it not be used? It is used in New Zealand and Australia where people pay over money, as do any of us when, for example, we have builders working for us; we pay over a contribution for the work to be done. We never ask that the interest accruing on the money might be paid back to us. I suggest that we should look at ways in which other jurisdictions make use of the money creatively in furtherance of the law.

Noble Lords may ask why rich litigants should contribute in that way to their poorer brothers. I suggest that there are good reasons. The majority of the developments of the legal system occur on legal aid. Many of the beneficiaries are involved in commercial cases. The common law and commercial litigants are able to take advantage of the law as it is developed under legal aid. It is not inappropriate for client accounts to be used in the way that I suggest for the benefit of the law as a whole.

I hope that the noble and learned Lord the Lord Chancellor will do as was suggested in the report of the noble and learned Lord, Lord Woolf; that is, to require judges to hold the reins tighter in the management of cases. Furthermore, it might be worth considering the appointment of an inspector of courts who would be able to control the profession in its use of legal aid. There is too much double manning--of leading counsel with juniors in cases where it is wholly unnecessary. There is a protraction of cases, to which other noble Lords have referred. Perhaps we should even consider a right of action by legal aid boards against lawyers whose

9 Dec 1997 : Column 74

careless advice causes the continuation of funding beyond a certain point. That would certainly sharpen legal acuity.

I submit to this House that priority must be given to access to justice. I am glad that the noble and learned Lord the Lord Chancellor has been creative and has expressed his willingness to listen to those who have ideas to offer. Those opportunities should be seized by everyone to engage in fruitful dialogue because the justice system is essential to the well-being of this nation.

7.3 p.m.

Lord Hacking: My Lords, having listened to every speech in the debate, I reflect that we are living in unusual days. I was only a schoolboy, as was the noble and learned Lord although perhaps a little younger, when the post-war Labour Government introduced their great social reforms of the late 1940s. Of those, undoubtedly the most important were the foundation of the National Health Service and the legal aid scheme. In today's parlance, those important measures provided access to healthcare and to justice for every citizen in the land, from the poorest to the richest. Both are close to celebrating their fiftieth birthdays--the legal aid fund in 1999--and both have been subject to such massive changes that their original forms are hardly recognisable.

I use those bold words because at the heart of the noble and learned Lord's proposal on legal aid is the removal from the legal aid net, subject to consultation, of all money and damages claims from next April. I use those bold words because the noble and learned Lord has described legal aid as becoming a leviathan with a ferocious appetite. That is not a description that one of his predecessors as Lord Chancellor, Lord Jowitt, would have recognised when he introduced the legal aid scheme into your Lordships' House in the 1940s. If it had been my government which introduced such a measure, as opposed to the noble and learned Lord's, there would have been an uproar.

During my early years at the Bar, more than 50 per cent. of my practice was under legal aid. It worked reasonably well: there was access to justice; good co-operation between the legal profession and legal aid; we accepted fees which were usually half the market rates; and no great excesses arose. Certainly, we were not in receipt of the riches to which the noble and learned Lord referred.

At that time, I served on an area legal aid committee in Leicester. I believed it important that I should do so. The committee met once a month and we did not hesitate to return papers to the applicant or his solicitors when we believed that a prima facie case had not been made out or to reject the application for legal aid when there was not sufficient justification.

The question which must be asked--and many questions must be asked about the proposals--is: what has gone wrong? The issues are not in the control of lawyers. There has been an increase in the range of civil claims; for example, in the field of negligence. We have become a more litigious society. Court proceedings--

9 Dec 1997 : Column 75

functioning, I emphasise, under increasing volumes of paper--have not been functioning so well and legal aid has been too easily granted. It is not that the threshold has been too low, but that the test has not been properly applied. Your Lordships may have read about the extraordinary applications made in the past few years to the Legal Aid Board by defendants who claim that bevies of plaintiffs should not have been granted legal aid, in response to which the board withdrew the legal aid certificates.

I believe that our starting point is one of sympathy with the noble and learned Lord the Lord Chancellor over the problem that he faces and his proposals to deal with the shortcomings in the civil justice system and the legal aid scheme. I read with great care the noble and learned Lord's speech to the Law Society on 18th October. I also read with great care the speech made in another place by his Parliamentary Secretary when it held a debate on these proposals on 21st November. I entirely agree with all noble Lords who have spoken that justice should be accessible to everyone, not just to the very rich and the very poor.

I believe that the noble and learned Lord has begun with sound proposals relating both to the civil justice system and to legal aid. As regards the latter, a number of sensible proposals emanate: for instance, contracting for legal services and fixed fees. The noble Lord, Lord Taverne, will take pleasure in that, although I, as a member of the Bar of the State of New York and a practising solicitor, did not take pleasure from some of the noble and learned Lord's remarks.

Other sound proposals were the application of quality standards, monitoring predictions on the opinions of merit, the merits test and that more hard reasoning should support claims. It was good to hear that we have a listening Government and that the noble and learned Lord intends to continue to consult with the professions and other interested parties. Congratulations should be extended to him on his conversion--I do not describe it as a Pauline conversion--as regards the conditional fees scheme, remembering the reservations which he expressed in this House when those proposals were put through by my government.

So far so good, but real concerns have been expressed. Your Lordships have expressed them during the course of the debate; for instance, the merits test of 75 per cent., the difficulties over the funding of disbursements and insurance, particularly in medical negligence cases, and the substitution of legal aid by the conditional fees scheme. I need not enlarge upon the comments made about the merits test of 75 per cent., although the noble and learned Lord received some support from the noble and learned Lord, Lord Hoffmann. However, I wish to enlarge upon the problem of funding disbursements and insurance.

When the Government have been pressed on that aspect, the answer has been given, certainly by the Parliamentary Secretary, that the solicitors can fund those disbursements; they can fund the premiums on the insurance. I have certain personal experience of that. At the moment I am supporting a case being brought by

9 Dec 1997 : Column 76

my son who was grievously injured in a motorcar accident in 1991. Without going into the details--it is a brain injury case--I can tell your Lordships that the cost of the medical reports and the expert witnesses for that car accident have now exceeded £25,000. That litigation is not taking place in England; it is taking place in New South Wales. Just transfer that type of expenditure on to any law firm, whether it be a country, provincial or London law firm and one can work out what the law firm would have to fund if it had 10 or 20 such cases.

The real worry in relation to the substitution of the legal aid fund is not as regards the introduction of the conditional fee scheme but as regards the cutting off of the legal aid fund. Sir Peter Middleton, in his report at paragraph 5.48 stated:

    "My preferred approach, therefore, would be to allow the Legal Aid Board to consider, as part of the merits test for granting legal aid, whether a case was suitable for funding by some form of private arrangement".
Therefore, the crucial question which we should address is not the extension of the legal aid fund but whether, as of 1st April, it should be substituted by the conditional fee scheme.

Those concerns have been expressed in many quarters. I chaired a meeting in your Lordships' House which was addressed by the Law Society, the National Consumer Council, the Consumers' Association, Shelter, the Legal Action Group and the Advice Services Alliance. Out of those, only one represented a legal group and the Bar was not represented. At that meeting, all the concerns expressed in your Lordships' debate were expressed.

Subsequently, I have received representations, as, I know, have other noble Lords, from the National Association of Citizens Advice Bureaux, the Law Centres Federation and Justice. Again, all took up those concerns. I was minded to read from the Justice report but since one of the authors of that report, the noble Lord, Lord Goodhart, is about to address your Lordships, I shall not do so but I hope he will.

The noble Lord is receiving the same representations. When the noble and learned Lord the Lord Chancellor sums up at the end of the debate, we should all like to know what heed he is taking of those representations.

What about other questions? How are the issues relating to disbursements and insurance being addressed? What are the precise arrangements for that agreement with the insurance industry about which the noble and learned Lord expressed pleasure? What form does it take? Is it binding? Are the premiums affordable? What are the experiences which have been gained so far in relation to the conditional fee scheme? Where is the evidence? How does the noble and learned Lord propose to deal with public interest cases? Why are there no proposals for mediation, conciliation or other forms of alternative dispute resolution, although those have been extremely successful and highly recommended by that noble and learned Lord, Lord Woolf? Above all, why is the noble and learned Lord proposing to substitute the legal aid system with the conditional fee scheme rather than following the good advice of Sir Peter Middleton; namely, that before you can receive a grant of legal aid you must satisfy the

9 Dec 1997 : Column 77

Legal Aid Board that alternative funding is not available? Of course, that would require a statutory change because under the present arrangements that is not a test which can be applied.

In posing those questions, these words of the noble and learned Lord at his Law Society speech ring in the ears: "If you act in haste, you repent at leisure". Of course, like his predecessor, the noble and learned Lord the Lord Chancellor must work with the Treasury, but to dismantle the legal aid system to satisfy the Treasury accounts of next year or the year after is an act in haste which we shall all repent.

7.15 p.m.

Lord Goodhart: My Lords, I share the concern expressed by almost all noble Lords who have spoken this evening in relation to the proposals of the noble and learned Lord the Lord Chancellor for the reform of the legal aid system. In particular, I share the concern expressed by many noble Lords as regards the over-hasty substitution of conditional fee agreements (or CFAs) for legal aid in money claims.

CFAs have advantages; they appear to be working in personal injury cases. They are undoubtedly here to stay. I accept that and, to some extent, welcome it because I believe they provide a facility for those who are just above the level of legal aid which has not previously existed.

However, personal injury cases and in particular, motor accident cases have special factors which, as the noble Lord, Lord Mishcon, pointed out, make them particularly suitable for CFAs. First, it is clear that there has been an accident. Secondly, that accident is almost always someone's fault. There may be the occasional accident like a tree falling on top of your car in a high gale which is not due to the fault of any human being, but that is quite exceptional. Thirdly, in motor accident cases which result in personal injury, there will have been a police investigation which will have helped very greatly to establish whose fault it is. The result is that the plaintiff can obtain insurance against liability for the defendant's costs for a fairly modest premium.

In other types of cases, that is much more unlikely to happen. Let us take as an example, as have many other noble Lords this evening, the case of medical negligence. In that case, one must start by asking the question: has there been an accident at all? It is true that the treatment or operation that the patient has undergone may not have worked, but that does not of itself show that there has been anything which could be described as an accident, let alone establish that someone is at personal fault for it.

Therefore, in such cases and other cases of professional negligence in other professions, a much more elaborate preliminary investigation is needed and at the preliminary stage at least, there is much less certainty of success. It is not at all clear in such cases that conditional fee agreements will work; nor is it clear that an acceptable insurance product can be provided in such cases for an acceptable premium. Whatever the insurance companies promise now, we must remember

9 Dec 1997 : Column 78

that their promises in cases of this kind are untested. We wonder what premiums will be charged in a few years' time.

Therefore, I ask the noble and learned Lord the Lord Chancellor to consider trying proposals for a contingency legal aid fund (or CLAF). CLAF is not a new idea. It was first proposed by Justice in our report on motor accident cases in 1966. That proposal was followed up by a report published by Justice in 1978. I was chair of the working party which drafted that report. Another small working group of Justice, of which I am a member, has looked again recently at our proposals and confirmed our support for them, although with a modification to which I shall turn later. CLAF is indeed supported rather strongly by the Bar Council.

So, for the benefit of those who are not familiar with it--and that may include a number of lawyers--what is CLAF and how does it work? The basic idea is that a potential plaintiff with a money claim (and, like CFAs, this will work only where there is a money claim), applies to the fund for help. If the application is accepted, the fund will pay the plaintiff's legal expenses in the same way as legal aid does at present. If the plaintiff loses, the fund will pay the defendant's costs. If the plaintiff wins, or gets damages in an out of court settlement, the defendant will pay to the fund the costs that it has incurred on behalf of the plaintiff. The fund will also be entitled to a deduction from the damages payable to the plaintiff in the same way as a solicitor is entitled to deduct a success fee from damages under a conditional fee agreement.

The original Justice proposal was that the deduction should be a specified proportion of the damages awarded to the plaintiff. At that time there were no CFAs. Our revised proposal, in the light of the existence of CFAs, is that the deduction should be calculated as a percentage of the costs incurred on the plaintiff's behalf in the same way as CFAs. That percentage need not be fixed as the same percentage for all cases, but can be assessed on a case-by-case basis.

Therefore, one might ask why a CLAF rather than a CFA? The latter has the advantage of simplicity. A potential client can go to a solicitor, agree a success fee--I was going to say "negotiate", but it is unlikely that much negotiation will take place--then the solicitor arranges the insurance policy and he can get on with it. That is true enough, but I also suggest to your Lordships that CLAF has significant advantages over CFAs. For example, CLAF has advantages for solicitors. Many solicitors would prefer the certainty of getting their normal fees to the risk of getting no fee at all if they enter into a CFA. That is especially true of smaller firms which will not have enough CFA work on a regular basis, to enable them to know how accurately to calculate the risk, and which do not have regular contact with insurers.

CLAF has advantages for the administration of justice. Lawyers will not be at risk of losing their fees if they lose the case. It removes the risk that, for example, a lawyer may be tempted, as has been suggested, to withhold the disclosure of damaging material which emerges at a late stage in the

9 Dec 1997 : Column 79

proceedings. At the same time, the fund can negotiate fixed-fee contracts to ensure that the problems quite rightly pointed out by the noble and learned Lord, Lord Hoffmann, are held in check. Finally, CLAF has advantages from the point of view of the client. He will not have to pay the up-front costs of preliminary investigations or of an insurance policy which, certainly in medical negligence cases, are not only enough to put off those who currently qualify for legal aid but also many who do not qualify for it.

Will CLAF be more expensive than CFAs? There is no reason why it should be. It is true that there is the cost of administering the fund which would have to be met, but the wider pooling of risk, the greater experience of risk analysis and the absence of need to buy an insurance policy from a profit-making insurance company, should offset that fact. CLAF is, of course, intended to be self-financing. It could be administered by the Legal Aid Board or perhaps contracted out, as the administration of legal aid originally was, to the Law Society or some other organisation. The most that would be required in terms of finance would be a possible short-term loan or guarantee to cover payments that would have to be made out of the fund before the success fees started coming in.

I do not share the fears expressed by the noble and learned Lord the Lord Chancellor in his speech to the Law Society conference; namely, that if CLAF and CFAs are in competition, the latter would necessarily cream off the stronger cases. It is possible that CFAs would become the predominant method of financing certain types of case, in particular road accidents and other straightforward personal injury cases. However, in others, such as medical and other professional negligence cases, I believe that most potential litigants would actually prefer CLAF to a CFA. CLAF is not a panacea. However, I believe that it is an idea well worth trying. Indeed, an experimental scheme in Hong Kong has worked so well that it has been considerably expanded.

In his speech to the Law Society conference in Cardiff, the noble and learned Lord the Lord Chancellor promised to consider CLAF. He repeated that promise today. I ask him to do so and to take the next step; that is, to set up a pilot scheme, perhaps on a regional basis in some part of the country, for an experiment in CLAF to see whether it will work. I believe that he may well be pleasantly surprised by the result of that experiment.

7.25 p.m.

Lord Simon of Glaisdale: My Lords, there has not been one speaker who has addressed your Lordships today--and none, I believe, who is to follow--who has not put access to justice high among the social goods. However, as has been pointed out, that is not alone. There is access to health; there are such fundamental matters as national security, both external and internal; there is our duty to the poorest of our fellow citizens, and so on. Indeed, one could go on almost infinitely.

9 Dec 1997 : Column 80

My noble and learned friend the Lord Chancellor hastened to say in his opening remarks that his scheme was not Treasury driven. I do not believe that it would require an apology if it were. I say that because, unless accounts are kept in the counting house, there will be no bread and butter to eat in the parlour. The figures that have been given show that by 1992 the Legal Aid Fund was utterly out of control. My noble and learned friend Lord Mackay of Clashfern, as Lord Chancellor, brought in measures to curb it. They mainly--I believe almost exclusively--went to the eligibility test. As your Lordships have been reminded, when the legal aid scheme was set up there were two tests. The first was that of eligibility--in other words, you had to show that you need support to have access to legal aid. The second was a merits test. The case had not to be, as my noble and learned friend Lord Hoffmann seemed to think, merely arguable; it had to be the sort of case which was worth presenting to the court and was more likely to succeed than not.

My noble and learned friend Lord Mackay of Clashfern was furiously attacked on that occasion. It was in a debate which took place on 3rd February 1993, initiated by my noble and learned friend the Lord Chancellor who presently sits on the Woolsack. I took note of some of the terms that were used, not all of them by my noble and learned friend. For example, it was said that the proposals "would destroy access to justice"; that they were "a disaster" and, indeed, an "outrage". Reference was also made to the "madness" of the scheme.

It would be naive politics to suppose that the invective of opposition is automatically transposed into the policy of government. In fact, finding that legal aid costs have increased despite the measures of his predecessor, my noble and learned friend on the Woolsack has gone on to further them. As I understand it, the main components are threefold: first, contracting for legal aid services from the professions; secondly, upping the merits test to require a 75 per cent. chance of success; and, thirdly, mopping up by a comprehensive no win, no pay scheme, thereby pushing further the proposals of the noble and learned Lord's predecessor.

As regards the contracting, I wish to ask only one question. Much depends on the terms and particularly the length of the contract. Is it likely to lead to a scheme of public defenders? That would, I think, be regarded very much askance by all who are conversant with the criminal system. That is all I have to say about the first item.

The second item, a 75 per cent. chance of success, eliminates an enormous tranche of those who were previously eligible; all those, in other words, whose chance of success was better than 50:50, whose case was more likely to succeed than to fail. They will have to show instead a 75 per cent. chance of success. I agreed with what was said by the noble Lord, Lord Lester of Herne Hill, and I believe others. I cannot remember ever having quoted a percentage figure. One generally said that there was a good or a reasonable chance of success. One was warned against the rare cases where a client had been told that he was sure to

9 Dec 1997 : Column 81

win and the case was infallibly lost. Therefore, there is an enormous number eliminated from access to justice through legal aid.

When my noble and learned friend's scheme comes into operation, there must be only a few "middle incomes" left who would be eligible. How does my noble and learned friend propose to deal with the vast numbers of "middle incomes" that the Rushcliffe Committee counted on bringing under the legal aid scheme--legal aid which had previously been available only under the forma pauperis' scheme and the Poor Prisoners Defence Act, on which many young counsel cut their teeth, and sometimes no doubt a client was lucky enough to light upon an Erskine, a Clarke or, dare I say it, an Alexander, a Gardiner or a Baroness Mallalieu? I am being invidious as I have missed out the noble Baroness, Lady Kennedy. There was luck in the draw but some were lucky. All those who badly needed it obtained the service. However, my noble and learned friend proposes to deal with all those who are now included--and will be excluded--by a generalised no win, no pay scheme.

The first thing to say is that it reaches only money and property cases. The second is that the cost of insurance has been dealt with and is likely to be far more discouraging than any legal aid contribution that there has been in the past. The third thing is that it is not only those financial and technical matters that should concern your Lordships. We have had examples of no win, no pay. My noble and learned friend says that the scheme so far has not thrown up examples of abuse. However, as has been pointed out, it has been barely tested. Moreover, we know what it has led to in America. There are grave signs that it may go the same way here. An advertisement caught my eye which asked people if they had any complaints about medical treatment or mistreatment in a hospital. They were advised to communicate that with the advertising solicitor.

Moreover, in my time in practice there were one or two who practised no win, no pay, although that was quite unprofessional. I remember one member of the Bar who was habitually instructed by his brother, a solicitor. I am sure that the noble Lord, Lord Mishcon, will immediately recognise the malign pair. They were up to every mischief that could be performed in a court of law. On one occasion counsel was rebuked for telling a jury that the defendant was insured. Counsel said blandly, "I did not know that that was illegal. I thought it was merely a gross breach of professional etiquette". Do we really want that? Are we not in danger of that? Of course, little has gone wrong so far because the members of the legal profession have been brought up in a tradition that discountenanced that sort of behaviour where the financial result to the practitioner depended on his winning the case. But it is a serious temptation to people whose career might be in balance, who perhaps have calls on their finances which they must meet, and so on. It is dangerous.

That process might be acceptable if it were the only way of plugging this enormous gap that has been created by my noble and learned friend and his predecessor and indeed by ordinary economic events--affluence moving

9 Dec 1997 : Column 82

people out of the scope of eligibility. If that were the case we might be prepared to accept it, however reluctantly, but it is not the only expedient.

The noble Lord, Lord Goodhart, whom I am glad to follow, has explained in detail and with great clarity the advantage of the Contingency Legal Aid Fund. I urged it on your Lordships when we were discussing legal aid in the context of the Human Rights Bill. It has now been put forward with great authority and cogency. At one time it was thought by the Royal Commission that it was not viable: there would be too many bad cases and too few good cases. But now we have all those cases ranging from a 50 per cent. to a 75 per cent. chance of success. Many cases are likely to succeed; they will be well worth taking on. It would be an affront to shut those people out from access to justice. Moreover, as the noble Lord, Lord Goodhart, mentioned, the scheme has been tried out in Hong Kong. It was a success and has been expanded there. It has also been practised in two Australian states. There, too, I think that it has been successful.

In summary, I am entirely with my noble and learned friend in his aim to contain the legal aid budget. But I have the deepest trepidation about his main theme; namely, demanding an eligibility test of 75 per cent., and having recourse to plugging the gap from the no win, no pay scheme, with all its disadvantages and dangers. I urge my noble and learned friend to consider seriously the criticisms of the no win, no pay scheme that have been made overwhelmingly today from all parts of the House and instead to consider the scheme propounded by the noble Lord, Lord Goodhart.

7.41 p.m.

Lord Windlesham: My Lords, when I put my name down to take part in the debate, I had intended to make a short speech concentrating on a single aspect of the Government's proposals to curtail, if not to withdraw completely, legal aid from most civil cases. However, your Lordships will be pleased to hear that in the light of the opening speech by the noble and learned Lord on the Woolsack, it will be possible to shorten my remarks even further.

I hope that I am right in understanding that legal aid will continue to be available to eligible applicants charged with criminal offences. But for a few moments I wish to draw the attention of your Lordships to those persons with one foot on either side of the line dividing criminal and civil proceedings.

What will be the situation when prisoners, many of whom are indigent, bring civil actions by way of judicial review seeking remedies for wrongful decisions or policies relating to their detention in custody? We must remember that not all such applicants will have been convicted of a crime. The growth in the remand population means that a substantial proportion are held pending trial, or sentence or awaiting deportation. Civil actions are brought by prisoners on various grounds. Their challenges may include the lawfulness of detention or continued detention after the expiry of the penal term. We must expect a considerable growth area

9 Dec 1997 : Column 83

in that category in the light of the extended sentences which are forecast in the recently published Crime and Disorder Bill.

Litigation may arise also from conditions in custody, prison rules or regulations, or many administrative decisions made by officials. Some of the grounds for complaint will fall within the ambit of the convention rights under the European convention which are due to become part of our domestic law when the Human Rights Bill is enacted, as it will be shortly.

I had intended to raise the funding of civil cases brought by prisoners claiming violations of convention rights after incorporation during the Committee stage of the Human Rights Bill. In the event, I was unable to be present when the amendments on legal aid were finally reached; but I gave notice that I intended to raise the matter again today. Although the noble and learned Lord the Lord Chancellor spoke rapidly in the early part of his speech--he had much ground to cover--I believe I heard him accurately to say that cases brought in the domestic courts under the Human Rights Bill when enacted will be subject to legal aid. If that is so, I am delighted to hear that the Government have avoided what would have been the illogicality of one procedure at Strasbourg--British prisoners, having exhausted their domestic rights, take their case before the Commission and Court of Human Rights at Strasbourg where there is a limited amount of legal aid payable once a case has been found to be admissible--and another procedure, and a less favourable one, in our own courts.

At a later stage, if not when the noble and learned Lord winds up the debate, I hope that it will be possible for the Lord Chancellor to confirm that consistency with the Strasbourg procedures will be maintained by not requiring an unsuccessful applicant to contribute to the costs of the Government against whom he has made a charge of breach of a convention right.

That leaves us with the prison litigant who cannot bring his or her claim within the enumerated convention rights. But in the light of the Lord Chancellor's mildly encouraging comments about public interest cases--

Next Section Back to Table of Contents Lords Hansard Home Page