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Lord Lester of Herne Hill: My Lords, I am grateful to the noble Lord for allowing me to intervene. Since he presses upon the House with great force, and in my respectful view with reason, the need to ensure that we have the same advantages in our systems in Strasbourg, is the noble Lord aware that one of the advantages of the Strasbourg system is that an unsuccessful applicant does not have to pay the Government's costs? Therefore, there is no risk as to the other side's costs in those proceedings. That is not the case under our domestic proceedings.

Lord Windlesham: My Lords, I am grateful to the noble Lord for that point. I had thought of making it, but in the interests of brevity I have not done so. I am glad that he has placed it so clearly on record. Therefore there is this remaining sub-group, the status of which will be the subject of a consultation process forecast for the New Year.

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Finally, based on many years' experience, I am well aware, as are others in the House, that prisoners are not the most popular of litigants. But effective redress against the abuse of arbitrary power must not be jeopardised by these reforms. I am mildly encouraged by what the noble and learned Lord the Lord Chancellor said in his opening remarks. I hope that that spirit will be preserved in this instance throughout the consultation procedure and the legislation which will follow it next year.

7.49 p.m.

Baroness Williams of Crosby: My Lords, as one of, I think, only three speakers in the debate who have previously been Members of another place, my experience of the law as a Member of Parliament may be a good deal less favourable than that of a number of people who have spoken who happen to be professionally involved in the law. Indeed I remember, on many occasions, deeply confused constituents coming to me who, in some cases, had paid £50 or £100 which they could not afford in order to have a letter written to a Minister by a solicitor which could have been written by their MP for no more than the cost of a stamp, if that.

I remember repeatedly coming across the extraordinary degree of illiteracy in relation to the law that exists in this country because we teach nothing of it in our schools and little enough in our colleges, and therefore the way in which many of my poorest constituents were open to exploitation. I found the profession deeply divided between those who were all too ready to exploit the ignorance of those I represented (and of myself) as compared with the handful of lawyers who devoted themselves a great deal of the time to some of the most tremendously serious cases I have ever encountered--and still do: cases of women, for example, gaoled by lower courts because they have failed to pay debt, who are then taken out of custody only as a result of a judicial review, usually brought by a lawyer who is paid little or nothing for his services. So I see the profession as profoundly divided. I have considerable sympathy with the phrase used by the noble and learned Lord the Lord Chancellor. He described the present system as, "too expensive and too exclusive". He is right in saying that substantial reforms need to be made.

Perhaps I may draw a momentary comparison with the other service which is publicly funded and which we discussed today, the National Health Service. It is less clear to me that the professional interests of those in the health service have been as predominant in terms of the way in which the money flowing to that service has been used as have the interests of at least some in the legal profession. I apologise for putting it so strongly, but I was reminded time and again of the saying of Anatole France that,

    "The law in its majesty forbids the rich and the poor alike from stealing bread or sleeping under bridges".
That saying rings through my head from that day to this. As the House will appreciate, I have no financial interest in this debate.

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I welcome particularly the remarks of the noble and learned Lord the Lord Chancellor about fixed fee contracts. I am delighted that so many noble Lords and noble Baronesses have recognised the force of that argument. Listening to the noble and learned Lord introducing the debate, I began to wish that he might relent for a short while and regulate rewards in the City, which perhaps require his ministrations even more than the legal profession. I welcome that measure. I welcome, too, the noble and learned Lord's efforts in trying to bring about an extension of the conditional fees, at least in those areas where cases are straightforward and where the matter of conditional fees works satisfactorily.

I wish, however, briefly to raise four concerns, some of which were mentioned by other speakers in the debate. I do not wish to pursue them, but merely to ask the noble and learned Lord whether he will be so kind, in replying, as to address them.

The first, raised by the noble Baroness, Lady Kennedy of The Shaws, and my noble friend Lord Lester, concerns public interest cases. Like the noble Lord, Lord Windlesham, I am conscious of the fact that cases where the chances of victory are certainly not 75 per cent. or are uncertain, may be cases where the public interest is of central importance. The noble Lord referred to the absolute necessity of ensuring that public servants are not above the law. Nobody who has been a Member of Parliament, or for that matter an active member of a non-governmental organisation, can pretend that everything in our police force, our prisons, our Immigration Service and, not least, our treatment of refugees is such as to deserve no legal sanction should their powers be abused. If their powers are abused, every time that happens it is another blow against trust in the democratic system, and rightly so. It is the wretched of the earth who tend to be the victims in such cases, and their public interest must be defended.

I therefore wish to press the noble and learned Lord the Lord Chancellor with regard to public interest cases where it is difficult to make an estimate as to a likely outcome of 75 per cent. or more. In particular, would he be willing, in exceptional cases, to consider the possibility of including not only those who are qualified lawyers but perhaps one or two others drawn from the ranks of Citizens Advice Bureaux and law centres to share in decisions as to the cases that might go ahead? I do not believe that lawyers have an absolute monopoly on wisdom in selecting which cases are of such importance that they should be further considered.

My second consideration--the first being public interest cases and the link to the 75 per cent. test--concerns the issue of "up-front" costs, addressed so eloquently by the noble Lord, Lord Mishcon. Again, I do not wish to delay the House, but ask the noble and learned Lord the Lord Chancellor to say a little more about those cases where the up-front costs of finding independent witnesses and so on are likely to be high before any decision can be made about the likelihood of success.

Thirdly, I wish to turn briefly to the civil justice proposals so admirably advanced by the noble and learned Lord, Lord Woolf, and ask about cases

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involving small claims of under £5,000 where, although the claim itself may be for less than £5,000, much more is at stake for the person involved. The noble Baroness, Lady Kennedy, referred to the case of her mother. Another case that comes to mind is that of tenants seeking repairs from rapacious landlords where the actual cost of the repair may be much lower than £5,000 but for the tenant the likelihood of being able to stay in a house, and the house being livable in, is of central importance to his or her quality of life. Will the noble and learned Lord the Lord Chancellor comment further on up-front costs for those on low incomes?

Penultimately, perhaps he will say something about mediation. I have seen a good deal of the effects of mediation in the United States, particularly in the states of Massachusetts and Maine. I have been very impressed by its effectiveness, particularly in cases, for example, of marital conflict in relation to the division of property, but also in some cases relating to boundaries between gardens and matters of that sort. I noted how large a proportion of the costs that would otherwise be involved was saved by the use of mediation in appropriate cases.

Finally, I turn to the noble and learned Lord's remarks about community law services. I said that as a nation we are relatively legally illiterate. Most of us do not even understand what a plaintiff is; most of us cannot understand legal language; and I have seen many of my constituents totally confused and in awe before a court because they simply do not know what is going on, except that at the end of the day they will probably find themselves behind bars.

The community legal service is therefore of crucial importance. I would like the noble and learned Lord to say more about it, remembering what he also said on the Human Rights Bill with regard to the possibility of assistance and help in respect of learning about human rights as well. Will he address the possibility of making legal expert systems available in public libraries and in the offices of other non-governmental organisations? Such systems sound very swish. They are not; they are often very simple descriptions of people's legal rights, including, not least, their rights to social security. Will he also consider a more radical proposal; namely, making such on-line legal advice services available in prisons?

7.59 p.m.

Baroness Mallalieu: My Lords, I should declare an interest: I owe my living to the Legal Aid Fund as a practising member of the Bar, albeit the criminal Bar, and certainly not one eligible for the list that the noble Lord the Lord Chancellor gave in his opening remarks; and I am also the paid chairman of an independent council of an ombudsman scheme, which is relevant to something I shall say.

I believe that the House will be grateful to the noble Lord the Lord Chancellor for giving it an opportunity to discuss what are, on any view, radical reforms to the legal aid system and the criminal justice system. There has been a great deal of detailed examination by noble Lords from all sides. Perhaps I could go back for a

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moment to the first principles of what civil justice, as I understand it, is all about. The civil justice system surely exists to serve the public. It should be run in their interests and for their benefit, not for the judges, the lawyers, the Lord Chancellor's Department or the Treasury. Its purpose is to ensure that justice is done between our citizens when disputes arise which cannot be resolved in other ways. Our Government bear the ultimate responsibility for ensuring that the system works, and I hope they accept the responsibility for ensuring that, where possible, given their other priorities, public money is available to see that it does work.

Civil justice, after all, underlies good order in our society. If it breaks down or fails, so does public respect for and compliance with the rule of law. A civil justice system can surely be said to be working well only when it fulfils five criteria. First, it should deliver justice of a high quality in which the public has confidence. That, I hope, is a principle which will never be sacrificed in the interests of expediency or cost. Secondly, the system should be as simple as can be devised. It should not be necessary to have to take the hand of a lawyer every time one needs to enter the labyrinth of the law, particularly in its lower reaches. Thirdly, it should be speedy. Wrongs must be righted quickly or their effects magnify. Fourthly, the system must be worth the money. Those who pay for it, whether they are individuals or the public, must get their money's worth. Finally, it must be accessible to all. No one should be excluded by reason of cost.

The noble and learned Lord the Lord Chancellor inherited a system which is open to criticism under each of those five headings. I believe that under some of them it seriously fails the public. The measures which the noble and learned Lord proposes are all intended to restore that system to good health, given the constraints which every government department faces at the present time. Most of the proposals he makes are right on course and will have much of the effect that is desired. About one of them, I, in common with many noble Lords who have spoken this evening, have some reservations, to which I shall refer.

First, I believe that the proposed community legal service should be the starting point for the necessary changes. The court should for most disputes be the port of last resort. "Do not litigate" is usually the best advice that any lawyer can give; too often it is advice which is simply not given. By expanding the work of the citizens advice bureaux and the legal advice agencies, giving active support to alternative forms of dispute resolution, such as ombudsman schemes, financed by their respective industries, and pointing members of the public in the right direction redress can in many cases be provided in a way which is cost-effective, widely accessible and fair and without recourse to the courts at all.

If cases do come before the courts, implementation of the proposals of the noble and learned Lord, Lord Woolf, particularly in relation to small claims jurisdiction, fast-tracking and judicial case management, is particularly welcome as a means of tackling the delay,

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complexity and waste which riddle the present system. Greater predictability about the likely costs should also result--and about time, too.

My main reservation with regard to these proposals centres around the plans of the noble and learned Lord the Lord Chancellor for tackling an area in which the current system is most manifestly deficient--accessibility. As the noble and learned Lord has pointed out in the past, we are failing to produce a system which is affordable to a significant proportion of our people. Ironically it is not the same proportion of our people who were denied access to justice back in the late 1940s when legal aid was introduced by a Labour government. The very poorest are now covered by legal aid. Indeed, I understand that most recipients of legal aid are in receipt of state benefits. The dispossessed are now those who have little--sometimes only a very little--and those on middle incomes.

It is universally accepted that action is necessary. The Lord Chancellor's choices are limited. Legal aid cannot realistically be extended to them, much as many, if not most, would wish it to be; nor can the Government do nothing. Unlike some noble Lords, notably the noble Lord, Lord Campbell of Alloway, and the noble and learned Lord, Lord Ackner, while I retain instinctive reservations about conditional fee agreements, I am not implacably opposed to them. I suppose that those instinctive concerns are because I was brought up in a profession in which to have a direct financial interest in the outcome of a case was regarded as undesirable. I can see that in certain circumstances the interests of a lawyer will not be those of his client; they may indeed be opposed to his client's interests. His interests may not necessarily be the interests of justice either. However, I am bound to say that my views are philosophically incompatible with those of the noble and learned Lord, Lord Hoffmann, who would appear to go much further in his wish to see contingency fees.

The change from a professional ethos to a commercial approach will be an uncomfortable one for many of us within the profession; but, if it needs to be made, it must be made. My discomfort is in part because, as experience in other jurisdictions has shown, this is not necessarily a change which is of benefit either to the public or to the profession. I was glad to hear from the noble and learned Lord the Lord Chancellor at the outset that in his view these conditional fee agreements are working well. But I retain considerable reservations about whether the system could cope with the massive explosion which would undoubtedly and necessarily occur if legal aid were to be terminated for such cases, as he proposes, in April of next year, in just over three months' time.

My main concern was articulated most eloquently by the noble Lord, Lord Mishcon. I am concerned that smaller high street firms, which at present offer the public a choice, will reject complex cases, partly because they will require what I think are known as work-up costs, the preparation of the kind of reports to which he and the noble Lord, Lord Hacking, referred, experts' reports, and so on, particularly if the costs are to be borne by the solicitors themselves. It may be that the noble and learned Lord the Lord Chancellor has had

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promising discussions with the insurance industry. But at the end of the day someone will have to pay the premiums, and many people will not be able to afford even those which are considered reasonable. Larger firms may be prepared to take such risks and loss-leaders; they may not. I am afraid that litigants with a good case who need help may find themselves going from door to door to door, down the high street and beyond, until their cases are taken on, if they can find anyone to take them on, by the least well qualified and least reputable firms. Lawyers' profit margins, and still less insurance companies' profit margins, are not necessarily the same as the interests of justice.

Like other noble Lords, I am pleased and relieved that the Government accept that public interest cases will require special provision. I am also encouraged that the noble and learned Lord the Lord Chancellor accepts that the merit test will in some cases have to be flexibly applied and, who knows, might even be applied so as to allow some of the cases of the noble Lord, Lord Lester, to be treated in such a way. I hope that, in view of all that has been said, particularly by those with great experience in the profession over many years, the Government will not contemplate the hasty removal of the present legal aid provisions in April without first having in place satisfactory insurance provisions to guarantee that the poorest people are not put back into the pre-1949 position.

The noble Lord, Lord Goodhart, spoke of the contingency legal aid fund. I add my voice to the numerous voices which urge the Lord Chancellor to consider that to be an idea well worth trying. If it should prove to be something which, after initial start-up costs, could be self-financing, it would appear to offer an alternative means of ensuring that the litigant with a good cause, whatever his means, has access to the courts. Without such a provision and in the absence of legal aid, I have grave doubts as to whether conditional fee agreements could fill the void that would be left behind. Also, I am troubled by the apparent timetable of April 1998.

I therefore ask my noble and learned friend to assure us that the present system will not disappear before he is quite satisfied that that part of our present population which is least able to pay will not be worse off under the new one. There is universal support for change; it has to come. There is universal support for modernisation of our civil justice system, and I congratulate my noble and learned friend for grasping the nettle and, if I may put it this way, thinking the unthinkable. But before we make these changes, we must be quite sure that they are also improvements.

8.10 p.m.

Lord Brightman: My Lords, I intend to speak quite briefly on one subject only; namely, the legal aid scheme which is known as the contingency legal aid fund--commonly called CLAF. It gave me great satisfaction to hear it supported by the noble Lord, Lord Goodhart, by my noble and learned friend Lord Simon of Glaisdale and by the noble Baroness, Lady Mallalieu.

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As your Lordships will know, the purpose of CLAF is to protect a plaintiff who has a good cause of action against liability for his own costs and liability for the defendant's costs if, contrary to expectations, his action fails. The prospective burden of costs is undoubtedly one of the most frightening features of civil litigation for the ordinary person. It is the factor that is most likely to deter a plaintiff from enforcing his rights, however just his case may seem to be, for almost all litigation contains an element of risk.

A CLAF scheme has three undeniable advantages. First, if properly managed it is self-financing and costs the taxpayer nothing. Secondly, it does not displace other forms of legal aid, but can exist alongside them. Thirdly, it is not subject to any means test because, being self-financing, it needs none.

CLAF works in this way. A central fund is first established. I will mention later how that has been done elsewhere. A plaintiff who wishes to be indemnified against the risk of having to pay his own and the defendant's costs must show that he has a good case which, prima facie, ought to succeed; an arguable case, a case with a mere 50:50 chance of succeeding is not acceptable under a CLAF scheme. CLAF is not intended for speculative litigation. It is for what my noble and learned friend the Lord Chancellor described as a case with a high probability of success.

The percentage of damages recovered by successful plaintiffs payable to CLAF is intended to cover the costs payable by unsuccessful plaintiffs and the administrative costs of running the CLAF scheme. It will be appreciated that CLAF is not designed for the protection of defendants; it is a service for the benefit of plaintiffs. The beauty of CLAF is that it gives legal assistance to deserving plaintiffs without any resort to central funds and without involving lawyers in the outcome of the law suit because they are not affected.

CLAF has been under consideration in this country for a long time. It was first advocated in 1966. It was mooted before the Royal Commission on legal services in 1978--the Benson Commission. It was debated in a consultation paper issued by the Lord Chancellor's Department in 1991 and in the report presented to the Lord Chancellor by Sir Peter Middleton in September of this year. Sir Peter advised that the possibility of establishing a CLAF, "is definitely worth exploring".

A CLAF scheme was set up in Hong Kong in 1984 as an adjunct to legal aid. The initial funding consisted of a loan from the State Lotteries Fund. That loan was fully repaid in 1988. In the first six years the success rate of accepted cases was approximately 95 per cent., which was adequate to cover the liabilities arising out of unsuccessful cases and also the administrative costs. In the year 1994-95, which is the last year for which I have been able to obtain any details, income comfortably exceeded expenses by about £125,000.

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I ought just to say a word about the arguments against CLAF which were outlined in Chapter 6 of the Lord Chancellor's 1991 consultation paper. At paragraph (11) it was said,

    "It might be thought wrong in principle to expect successful litigants to subsidise the unsuccessful".
So it would be if such subsidising were imposed on a successful litigant. But there is nothing wrong in principle in allowing a potential litigant to agree to such an impost, if he thinks fit, in return for the cover against costs that would be afforded by a CLAF scheme.

Paragraph (12) states:

    "It might be thought wrong in principle that successful parties should have to forgo a proportion of their recovery to finance their case".
The CLAF system is merely a type of voluntary insurance. Whereas normal insurance involves paying a fixed premium at the commencement of the period of risk, a CLAF scheme involves paying a variable premium at the termination of the period of risk and then only if the risk insured against does not materialise. The litigant in effect insures against the risk that he will lose his case and be liable for his own and his opponent's costs by promising to pay a premium if and only if he wins. Of course it results in successful litigants financing unsuccessful litigants. But there is nothing wrong in that. Take an ordinary policy of insurance; the insurance company takes money from those who do not have fires in order to compensate those who do have fires. I see nothing wrong in principle in a CLAF taking money from those litigants who win their cases so as enable the CLAF to compensate litigants who lose their cases.

Paragraph (14) states:

    "Litigants with good prospects of success would decline to use the scheme, putting its financial viability in jeopardy".
I do not agree. However good a case may appear to be at the start, litigation--particularly in personal injury cases--involves some element of uncertainty. Few cases are 100 per cent. certain of success. No doubt when the surgeon amputates the wrong leg, negligence and causation present no problem and the only area of dispute will be the quantum of damages. But most cases involve some element of risk and if there is an element of risk prudent persons will wish to insure against that risk. For those reasons I do not accept the generalisation that litigants with good or very good prospects for success will decline to make use of a CLAF scheme.

Paragraph (16) states:

    "Although a CLAF would ultimately be self-financing, some initial funding would be required while it established itself".
That is so. In Hong Kong a loan facility of 1 million Hong Kong dollars was made available from the State Lottery Fund when the scheme was set up, but only £31,000--400,000 Hong Kong dollars--was drawn down; and, the debt was paid off in two-and-a-half years. If cases are accepted with due care and the percentage fees payable by successful litigants are appropriately fixed, I see no reason why a comparable result should not be achieved in this country.

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Paragraph (17) states:

    "It may not be possible for a CLAF to cover all classes of case".
I agree, and suggest that a cautious and selective approach is essential, particularly in the beginning. The scheme can always be widened later, as it has been in Hong Kong.

Lastly, paragraph (20) states:

    "A CLAF imposes little or no discipline on litigants, in terms of weighing prospects against the cost of their case".
I think it would be wise for a CLAF scheme to impose discipline by requiring a plaintiff to pay a small percentage of the costs payable by him to a successful defendant. By this means an applicant for CLAF support would have an incentive to take a realistic view of the prospects of his case. I do not find the arguments against a CLAF scheme in the 1991 consultation paper particularly overwhelming.

I would ask my noble and learned friend the Lord Chancellor to accept the conclusion of Sir Peter Middleton, that:

    "The possibility of establishing a CLAF is definitely worth exploring".
I would submit that the Government should embark on that exploration.

8.21 p.m.

Baroness Oppenheim-Barnes: My Lords, I was fortunate enough to make my maiden speech in your Lordships' House in 1989 in the debate on the reform of the legal profession. I apologised then for my presumption, as I do now, for I am only too well aware of the great wealth of legal expertise and skill in advocacy in your Lordships' House, which, unfortunately, I do not have. My only appearance in court was as a defendant in a speeding case, so I cannot claim any qualification. However, I have the temerity to take part in this debate because my feelings are so strongly engaged.

At the time of the 1989 debate I was chairman of the National Consumer Council. In that debate I referred to what was then our recent publication Ordinary Justice, my main concern being access to justice for those at the lower end of the income scale. Indeed, I particularly welcome today the proposal to raise the limits for small claims court cases. It is interesting to recall that back in 1972, when the then Conservative Government were proposing new ideas on the small claims court in order to make them less daunting for ordinary people, there was uproar from honourable Members in the legal profession on both sides of the House. I am sure that noble Lords will not be surprised to hear that that was the case even then.

At the time of that debate I was concerned mainly that the costs and the delays in going to law made it a daunting experience for many people. Since then, as has been said often in today's debate, legal aid costs have soared, as have legal costs outside legal aid. One must wonder what the connection is. A bonfire has been lit and if noble Lords will excuse the mixed metaphor, at the same time the pendulum has swung far too far against the interests of a very large sector of the public--those on middle incomes, those on lower middle incomes and even those on upper middle incomes--for whom there is virtually no access to justice. They cannot possibly afford to prosecute or

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defend a case in which their opponent is legally aided. Even if they win the case and costs, they are usually landed with the bill for their own costs because their legally aided opponent has no means with which to pay. That is deterring a large section of the community--not litigious people but people who are defending themselves. They may realise that it could be cheaper for them to make an offer than to be landed with costs. That cannot be considered justice.

The Legal Aid Board is fully aware of that when it sanctions legal aid, all too often where the case of its clients is far from strong and where numerous adjournments are used because they will not cost the legally aided party anything but disastrously swell the costs of the other party and the fees of the legal aid lawyers. They go along very happily with these adjournments and anything that will bump up the costs. At the other end of the scale huge sums of legal aid are paid out on behalf of those who have successfully managed to conceal their wealth. I know that the Lord Chancellor has those people in mind just as much as the others.

At this point I should like to emphasise that I do not go as far in my condemnation of the status quo as some people who have said that legal aid is a "gravy train" for unscrupulous lawyers at both end of the scale, that lawyers avail themselves of a blank cheque in legal aid payments and that this has led to a very great increase in legal costs all round. But I do assure your Lordships that one is hearing that kind of criticism more and more frequently these days and some of it is merited.

Many of your Lordships have spoken of particular concerns and anomalies that could arise for certain groups if the proposals go forward unaltered. Many of those examples will, I am sure, be considered by the Lord Chancellor. My chief concern in that category is the effect that the proposals could have on personal injury cases. This point has been raised by noble Lords with great expertise. It is one of the areas that will need careful attention. As for insurance and its cost, it occurs to me that any solicitor defending on a contingency basis a person with no means whatever, and who will not be called upon to pay any costs even if he loses, will not find it beneficial to buy insurance.

A great deal has been said in the debate about ethical questions in relation to contingency fee cases. As someone said, there may be shyster solicitors chasing ambulances and things of that nature. There is not very much difference between that and those lawyers today who use legal aid costs as a blank cheque for their own means. In ethical terms I cannot see that there is a great deal of difference.

A number of noble and learned Lords of great distinction and legal expertise have said, or insinuated often, that the proposals that we are debating are Treasury driven. Maybe they are and maybe they should be. But the principle of giving access to justice, which is now denied to so many by cost, is what we should keep in the forefront of our minds at this time. I believe that the principal purpose of these proposals is right. I congratulate the noble and learned Lord the Lord Chancellor on his courage in bringing these matters forth. I wish him every

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success in future in what I am sure is going to be a long battle, but if he continues in the same vein he will certainly continue to have my support.

8.30 p.m.

Viscount Bledisloe: My Lords, I have to confess that I am yet another lawyer, albeit one who has not for many years derived much benefit from legal aid. It is a fairly shaming confession to have to make in this debate when one contrasts the extreme length of the speeches made by virtually every legally qualified person with the extreme brevity of the speeches made by those few participants who are not legally qualified. Some cynics might think that that has something to do with the high burden of legal costs.

Much less of this debate has concentrated on the reform of civil justice as opposed to the cost of legal aid. I suggest to your Lordships that the high cost of litigation nowadays is very much a product of our search for perfect justice. I very much endorse what the noble and learned Lord, Lord Hoffmann, said, that there has to be a compromise between the demands of perfect justice and the cost. Some savings may mean that there is somewhat less than full discovery or a somewhat less than perfect trial on every available issue.

The legislation and practice of the past 20 or 30 years have all gone in the opposite direction. Whenever anything goes even slightly wrong in legal proceedings the natural step has been to lay down longer and longer procedures to make sure that that particular matter never goes wrong again. We then have a situation where the search for perfect justice is costing more than I suspect it is worth. If we are to strike a balance, we have to recognise that we may have to sacrifice what is thought to be perfect justice, although I have no great conviction that cases nowadays are decided any more rightly than they were when I started at the Bar and they were tried in a much shorter time.

We must also recognise that if costs are to be controlled and limited, there will be cases where a lawyer is not able to take what he deems to be a necessary or desirable step either because the fixed costs have run out or because he can no longer fund it on the contingency basis. Where on earth does that leave him in relation to negligence? Suing a professional is very much a growing trade, and again, as the noble and learned Lord, Lord Hoffmann, said, the fear of being sued for negligence can often drive people, whether doctors, lawyers or whatever, to take steps that may not be strictly necessary. But they must guard themselves.

I ask the noble and learned Lord whether he will contemplate in his scheme giving protection against negligence where a lawyer says, "I would like to do this, but I cannot manage to do so on the limited fees or on a contingency basis". Therefore, he decides not to take that particular step. It is then said that in an ideal world that step should have been taken. I do not believe that lawyers can be expected to practise with limited resources if they are to be blamed for not doing something which would have cost even more.

Turning to the conditional fee agreement scheme, I find it at this stage--as indeed may have been intended--very vague. I am unclear as to how it would

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work in practice in relation to those litigants who are poor or fairly poor. The noble and learned Lord sought to explain that insurance would be available at what he suggested was not too inordinate a cost. He quoted £3,000. It seemed to me fairly surprising to contemplate that many solicitors would be prepared to put that sort of money up front. But when the noble and learned Lord quotes £3,000, I suspect that that is for a case with a high prospect of success, perhaps within the 75 per cent. limit target which he mentioned.

I fully agree with the noble Lord, Lord Lester of Herne Hill, that it is rare that one can possibly say, even in a fairly simple case, "You have as much as a 75 per cent. chance of success". It is even rarer to be able to say that at the very beginning of a case. But if an insurance company is going to quote a premium for defence costs, it will surely want to receive an advice as to the merits of the case. In a case of any complexity one will not be able to give that advice until considerable steps have been taken and may be expert reports have been obtained. So the lawyer is to fund the obtaining of expert reports, taking proofs and statements, with the prospect of then having to pay the insurance fee.

But what happens if the insurance is not available because not enough is thought of the prospects of the case or the insurance premium quoted is more than can be afforded? If the case is then dropped, all the costs incurred have been wholly wasted at the lawyer's expense. I am not clear whether the noble and learned Lord contemplates that it will be open to a plaintiff to go ahead on a contingency fee basis without any insurance, saying to himself, "I am so poor that I do not really mind if an order for costs is made against me because there is nothing for it to be enforced against". Is it going to be allowed that he goes ahead without the insurance, and if the solicitor goes ahead without it, is the solicitor himself at risk of being held personally liable for the costs on the basis that he has an interest in the case? Until one has answers to some of these questions it is difficult to know what one thinks of the scheme.

The difficulty to which I have referred and the other difficulties which have been mentioned today, lead me to wonder whether it would not be more appropriate if for many cases legal aid were available at the beginning of the case and then at some pre-ordained stage laid down by the Legal Aid Board the case could be reconsidered to see whether it should then switch to a conditional fee agreement. If legal aid were available until that stage, and then one did not have to go on and pay anything further and it remained a first charge on recovery, the costs of legal aid for each case would be much smaller. One could then have a much higher limit of eligibility, so one would have relieved the point that at the moment it is only the very poor who can have access to justice by this means.

8.39 p.m.

Viscount Dilhorne: My Lords, I must begin by declaring an interest as a practising barrister--of advanced years perhaps but of a short term in practice. A large percentage of my practice depends on legal aid,

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but I hasten to assure noble Lords that I am far from joining the category of fat feline beneficiaries to which the noble and learned Lord the Lord Chancellor referred in opening the debate. I wish that I could experience being part of that club for even five minutes. However, I am not qualified to comment on that aspect. I have also had practical experience over a number of years in a previous incarnation in the international insurance industry, albeit a few years ago.

The embarkation on a long-overdue reform of the civil justice and legal aid systems is thoroughly welcome and desirable. None of the noble Lords I have heard in this debate disputed the fact that civil justice is too expensive and too exclusive; nor that the legal aid system requires anything other than radical reform. If it is not impertinent of me, I should like to congratulate the noble and learned Lord the Lord Chancellor in the same terms as those used by the noble Lord, Lord Mishcon, on his courage and forthrightness in confronting a dilemma which has not been grasped for years. I sincerely hope that the noble and learned Lord the Lord Chancellor will not find himself metaphorically transported even temporarily from the Woolsack on to the horns of the dilemmas contained in this Bill. I wish him well.

I should like to refer briefly to the report of the noble and learned Lord, Lord Woolf, published in 1996. I think and hope that it will be useful in bringing us back, if necessary, to the purpose that we are trying to achieve, which was clearly expounded by the noble Baroness, Lady Mallalieu. That report was expressly concerned with looking at the civil justice system to make it more possible for all persons in the United Kingdom to achieve justice. Many recommendations were made--all born of careful and meticulous thought, as one would expect from the noble and learned Lord--to increase access to justice, to reduce the cost of litigation and to increase the speed at which justice can be efficiently achieved.

At this stage, I must ask myself whether the proposal to exclude legal aid from money and damages claims will provide a system which gets to the heart of a problem and succeeds in resolving it painlessly, speedily and at reasonable cost. That seems to me to be what we should be trying to achieve. I have every hope that the noble and learned Lord is seeking to achieve those aims.

I shall not speak for long, but I should like to refer to two matters. I refer first to the vexed question of costs from a practical aspect, as I have experienced it. The noble and learned Lord is right in his determination to drive down costs for the benefit of the individual litigant. I suspect that he is also right to look carefully at who the recipients of legal aid are, especially with regard to where assets have been hidden or cannot be touched. There are many aspects to that matter and I hope that the noble and learned Lord will consider how the long hand can reach out and collect some of that money.

A material start to such a campaign is to cut out the waste and duplication. Although that point has been mentioned, I shall go into more detail than hitherto. Waste and duplication are manifest and inherent in the

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present system. From my experience, I do not think that they are the exception. Sadly, it is more often the rule than the exception that legal aid papers arrive on counsel's desk in a state of muddle and disarray. Money is then wasted by either the instructing solicitor putting the papers into order or the barrister doing it. Time ticks on. Time is consumed. When to that there is added, as I have found, the time taken in making on each and every possible occasion interlocutory applications on every small point, the time consumed becomes enormous. What the action was originally about is forgotten in counsel's mind some six months later--and I have had legal aid cases that have gone on for years.

Added to that, there are constructive delays in the system. There is the pure and simple delay when one might say that "Sleeping Beauty inertia" takes over. When inertia is eventually overcome, often some months later, there are further additional costs to the system without any benefit being derived by the funded litigant. I take heart from the noble and learned Lord's proposals that the judiciary will exercise special management in such matters. Counsel is often in a difficult position and cannot do very much about it.

My next point relates to the application of the "merits test". I am not exactly sure where the noble and learned Lord is going on that because a test was laid down in the legal aid guide some three years ago which required to be followed. Under the present scheme, the test places the barrister under a continuing strict duty to bring to the notice of the Legal Aid Board any matter which might affect the assisted person's entitlement to legal aid at whatever stage the proceedings have reached. The sword of Damocles hanging over the barrister's head is that his advice on the merits may be taken into account at a later stage when a wasted costs order is being considered on the grounds of the barrister's non-compliance with the Act. Many legal aid cases which require later consideration can be considered in full detail if the papers are put in properly ordered form to the barrister in the first instance. He usually gets very near the target.

In giving advice on the merits, the barrister has to look at the legal merits test and the reasonableness test, and to address each separately. He has to address all factual issues and set them out in sufficient detail to enable the board to assess their relative strengths and express a clear opinion. Particular attention is required to be drawn where evidence is likely to be contested and where there is any lack or incompleteness of material. Confirmation is required that the proceedings are cost-effective--that is, that the proceedings are likely to be justified by the benefit to the client bearing in mind the statutory charge.

Counsel is then required to estimate by percentage the prospect of success. Various noble Lords have used percentages, but counsel now has to consider the following: (a) is "very good" and is equal to an 80 per cent. or more likelihood of success; (b) is "good" and is equal to between 60 and 80 per cent; (c) is "reasonable" and is equal to between 50 and 60 per cent. The present proposals of the noble and learned Lord are that those cases considered to be "reasonable" by that test over the past three years--that is, those in the 50 to 60 per cent.

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bracket--no longer qualify for legal aid and that 15 per cent. of those considered "good" likewise will not qualify. That really means that only the "very good" (at 80 per cent.) and only the top 5 per cent. of the "good" will now be considered in appropriate cases for legal aid. I have to echo the concern that has been expressed by many noble Lords today that there is a gap--there will be people who cannot get legal aid, particularly on civil matters, and who will not get redress. That point concerns me.

Matters are still at an experimental stage. I hope that the Lord Chancellor will allow there to be some trial or some research project, carefully monitored, to test the operation of these interesting and radical steps. That would certainly be merited. In the meantime, I feel that the considerable savings that I have suggested could be effected should be put into operation. I doubt very much whether the advice on the merits is honoured fully in the observance. It never used to be. One used to look at the papers and say, "On the balance, it seems to be a possible runner". One could never go so far as to put a percentage upon it, but now one has to. One must do a good deal of preparatory work if one is conscientious about it. I hope that the sword of Damocles of wasted cost that hangs over barristers and people who do not do this will act as a motivation to do it properly.

I deal with one other small but important matter. I believe that the noble Baroness, Lady Mallalieu, expressed the view that the aims of justice were not compatible with the aims of insurance underwriters. I hope that I do not attribute to the noble Baroness words that she did not utter. My experience of the insurance market, small though it was--I spent about seven to 10 years in it--and at the Bar dealing with insured cases was that the insurer would probably insure on an excess of loss basis. As soon as the upper limit had been reached, irrespective of the legal merits and where one was going, the plug would heartlessly be pulled out and the litigant would gurgle down the pipe so that the insurance company could preserve its profits. This matter must be looked at in order to prevent any poor unsuspecting litigant from gurgling down the pipe into the main drain. That is what will happen. The insurance underwriter is hard-nosed, objective and, following recent adverse experience, will be careful to draft the contract so that he gets a profit out of it. One is very concerned to look carefully at this and tie up the ends of such a project.

8.52 p.m.

Baroness Dean of Thornton-le-Fylde: My Lords, I welcome this debate this evening. I thank my noble and learned friend the Lord Chancellor for giving us the opportunity of this very wide-ranging debate. In my short time in the House I have noticed that it appears to be the practice of those who are not lawyers to apologise when they have the temerity to take part in debates on the law. This evening I should like to break that mould. My brashness--indeed, boldness--is not borne of arrogance that I know better but out of my experience as a trade union leader. I note that the four non-lawyer Members of this House who have had the temerity to enter this debate are all noble Baronesses who have

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different experiences in life but who have expressed very similar views this evening irrespective of the side of the House on which they sit. On the basis of many years' experience as a trade union officer, I welcome this debate.

It is quite clear from the figures that have been given that--to use an old saying--something has to be done. Something does have to be done. In the newspaper industry Rupert Murdoch once said to me, "Brenda"-- I was a general secretary, and still am--"the music has changed but the dance remains the same". I just wonder how people in the legal profession will change given some of the views that I have heard.

I am encouraged by the fact that we have a Lord Chancellor of great experience. Above all, he does not lack courage on this particular issue. Courage will be the name of the game in the debate ahead of us. I also welcome the way in which, almost in a humble manner, my noble and learned friend said several times during his contribution that consultation would take place, that this debate was taking place now and he wanted to hear what people thought. He said that he would not proceed according to the narrow requirement of consultation but would consult widely. A consultation paper is to be published in the coming year. At a training seminar yesterday his honourable friend in another place said--I am sure that he would not have said it without checking--that the final decision would not be taken until consultation had been completed.

I declare my interest, perhaps retrospectively, but it is a very practical interest. I speak of my involvement in the trade union movement. My concern is that, contrary to the intention to save money or to maintain expenditure--in other words, to bring back control over legal aid expenditure--because of the claim that we cannot have special interest or special cases, there will be a fundamental change from what happens at the moment in regard to personal injuries.

When I was general secretary of a union part of my work involved instructing lawyers. Sometimes I took their advice and sometimes I did not. Sometimes I was pleased that I did not take their advice and at other times I regretted it. But my job was to instruct lawyers to act on behalf of union members who when they paid their contributions were unaware that part of them were an insurance so that if they had an accident on the way to work, from work or at work the union would step in and provide legal assistance for them. There would be no cost to the member, win or lose. We were not the only union that did that.

In the past year the trade union movement supported five times more personal injury cases than the Legal Aid Board: 150,000 cases as opposed to 30,000. When we had legal advice sometimes people had to hear the hard words that a particular case could not be pursued. Ninety six per cent. of personal injury cases pursued by unions succeed. Last year £330 million was recovered in damages, and £179 million was paid back to the Department of Social Security in benefits recouped as a result of legal cases.

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Injuries at work are an area different from most others, with the exception of road traffic injury cases. Here we already have an employer's liability to insure. The people with whom our lawyers deal are not litigants but insurance companies. My experience was that there was a complete denial irrespective of whether the particular case was patently clear to everyone. A company might admit its fault, for example that a safety guard on a machine had been left up perhaps resulting in a dreadful accident. When the insurance company could no longer deny it it would delay. That delay ratchets up the cost. Many a time such cases are settled on the steps of the court. If we place a ceiling on costs my concern is that such activity will grow.

My other anxiety relates to one part of the Woolf Report that I did not welcome. My concern is that the "loser pays all" principle will be set aside. One will have a situation in which the cost limit is reached. Liability has been denied and there is delay. One knows that if one goes on, one will win but the union will be faced with a claim that it may not be able to afford. At the moment this money is recycled. It will cost £25 million if this scheme completely stops. The money is recycled because one pays out the legal fees. If one wins one gets back the costs. Those costs go back into the fund which then helps to fund other cases that are coming through. That is an efficient use of revenue. That is my concern about some of the issues that we have before us.

I have another area of concern. We have on the statute book now protection for people who suffer from industrial deafness. How did that happen? It happened as a result of unions taking up individual no-hope cases. The unions persisted until they were successful. The pneumoconiosis cases gradually became successful, one at a time, over many years.

Today's modern complaint is RSI. As general secretary, I authorised expenditure with regard to household names such as the Financial Times and other newspapers. They related to men and women doing repetitive work in factories. We knew that they were probably no-hope cases, but we gradually built up experience of such cases.

There is at the moment an RSI case in London relating to five employees of the Midland Bank. Behind those five people there are hundreds of cases. The five employees are a test case. The union is funding the case. The employees know that there is no limit. If they lose the case, the union will have to pay the costs; if they win, they will win their costs and so the cases of those hundreds of people will be able to be processed.

Of course taxpayers' money must be used efficiently, but this is not the taxpayers' money. I hope that I do not embarrass my noble and learned friend the Lord Chancellor when I say that in the courts he represented some of the most vulnerable people whom I was proud to represent. He pulled the rabbit out of the hat on many occasions and succeeded for our members. That leads me to believe that he knows that the issues are real. I ask him to consider those matters because I cannot believe that there is an intention to sweep away the commitment which exists, and which will go if there is

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a cap on what one can reclaim. That fixed cap means that unions will be funding cases which they will win but in which the costs will not be met.

The individual union member pays nothing. It is part of being a union member. Many members are surprised when they learn that. Many of them, with all due humility, are terrified of lawyers. They would no more dream of seeing a lawyer than of doing something that they would not normally do. They would not know the name of a lawyer to ring. It is something that the legal profession needs to address.

I thank my noble and learned friend the Lord Chancellor for this debate. There will be a response to the consultation document, but I should greatly welcome it if he can respond this evening to some of the points that I have made.

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