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Lord Campbell of Alloway: My Lords, I apologise for intervening, but I was brought up by my noble friend Lord Denham to believe that you never intervened in the gap unless you had had the privilege of hearing the opening speeches. perhaps I am wrong. The last person in the world against whom I would wish to make a point is the noble Earl, but is this in accordance with the procedures of the House?

Earl Russell: My Lords, I believe that the noble and learned Lord on the Woolsack will bear witness that I did hear the opening speeches.

Whenever we are considering any proposal for capping, I view it with a certain amount of anxiety because, as many uncomfortable school memories remind me, caps do not always fit. The effects are rife. When one considers any proposal designed to control expenditure, one must consider what will happen instead. The late Cyril Hare, alias Judge Gordon Clark, once compared the law to a chimney by which all the noxious fumes go out of the house. If you close the chimney, where will the fumes go instead? If we attempt to cap the legal aid budget, even if it is not the noble and learned Lord's intention, there will be cases in which people do not manage to get their cases to court. What will happen instead?

There is a Treasury guideline which says that any Minister contemplating a reduction in public spending--and I think in Treasury theology, prevention of an increase constitutes a saving--must consider the resource implications for other departments. Therefore,

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we need to know the behavioural effects of denying access to the courts. What will those people do instead and what will be the resource implications of those actions? For example, they may take the law into their own hands. They may spread libels and slanders. They may remain ill and on benefit and there will be no compensation recovery. But until that calculation is undertaken and we know those behavioural effects, we cannot know what will be the effect of those proposals.

Also, I feel some misgiving about leaving the Government to be exclusive judges of costs in anything. We have heard about lawyers having an interest, but, equally, the Treasury has an interest. Lawyers at least are competent to judge legal costs; but government are not competent to judge costs in a field where expertise is necessary. In particular, the Treasury seems to be ignorant of the concept of a true cost. It also does not seem to understand that, in a quality market, competition drives costs up and not down. If you are facing a possible sentence of life imprisonment, the market value of the second-best lawyer is nil. Listening to my noble friend Lord Taverne, I wondered whether the effect of these proposals may be to increase public spending and not to control it.

9.20 p.m.

Lord Thomas of Gresford: My Lords, I should, first, declare an interest as a lawyer. I have been in receipt of legal aid fees for as long as I can remember, both as a solicitor and later as counsel. I have also appeared for trade unions. Therefore, I believe that I have some experience in the field.

The rise of legal aid expenditure has been attributed in some parts of your Lordships' House today to rather overblown cases which have been presented to the courts. I regret to say that I do not agree with my noble friend Lord Taverne that there is no incentive to shorten cases in courts. Clearly my noble friend has not appeared in front of the noble and learned Lord, Lord Hoffmann, for some time. I strenuously agree with the noble Viscount, Lord Bledisloe, that it was all different in our youth. Indeed, we went into court, we called our witnesses, we got on with the job and got the judgment. However, these days, as I drag my trolley along the fast track of litigation towards the courts, I am laden down with reports, with photographs, with the bundles of documents and the core bundle, with the skeleton argument, the timetable and everything which is supposed to hasten the proceedings. In fact, that usually causes an adjournment during which the learned judge has to read it all before the case begins.

The true reason for the rise in legal aid expenditure is the relentless increase in legislation--indeed, it affects all parts of our lives--and the problems associated with social deprivation leading to marriage breakdown, difficulties with children and with juveniles, increased crime and bad housing. In addition, there are changes to society which are not necessarily to be deplored, as the noble Lord, Lord Hacking, pointed out. There is also the growth of consumer groups and specialist legal interest groups, together with a growing awareness by the public of rights--rights which are to be exercised and to be exercised by taking proceedings in court. I have no

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doubt that more litigation is to be expected in the light of the Human Rights Bill which is currently going through Parliament.

When the legal aid scheme was first introduced it covered 80 per cent. of the population but in the years that have gone by that percentage has been reduced by half, although the legal aid bill has risen sharply. So reducing eligibility for legal aid does not seem to have done anything towards reducing costs. However, interestingly enough, 40 per cent. of the population of this country still qualifies for legal aid. There has been something of a tendency this evening to describe those people as "the poor". Indeed, removing legal aid from the poor does not sound too big a job because we do not think that there are so many poor people. But, if we say that we will be removing legal aid from 40 per cent. of the population, that suggests that there is a bigger problem than at first appears to be the case.

As I understand it, over the past two years there have been about 32,000 CFAs (conditional fee agreements), as compared with 230,000 legal aid certificates. What does that mean? If in April, 1998, legal aid certificates are to disappear, over the next two years we can expect 230,000 CFAs, each of which runs to 10 pages and is incomprehensible to anyone, and 230,000 additional insurance policies to cover the liability that goes with it.

There is also the possibility of a denial of justice for a significant proportion of those people. If there is to be a 75 per cent. threshold, what does that really mean? You only have to prove your case in a civil court on a balance of probabilities. You must be more likely to be correct than not. If the 75 per cent. is to be the threshold for getting any legal aid, a significant proportion of people who would have succeeded will not receive any legal assistance.

If the result is obvious and if you are 75 per cent. sure you will win, and your opponent is 75 per cent. sure that you will win, there is never a trial, there is a settlement. No one will appear for the defence if he thinks that he has only a one in four chance of success. It is at the beginning of a case when the solicitor sees the client for the first time that he will consider whether there is a 75 per cent. chance of success. On his instructions, and believing everything that his client tells him--as he is bound to do--and on the case as pleaded, he has 100 per cent. surety that he will win, tempered only by experience and by the knowledge that things go wrong in litigation. That appreciation may be very different as the case proceeds and as witness statements emerge from the other side and so on. So when is this 75 per cent. assessment to be made? It is pointless saying at the beginning that the percentage is 75 per cent. The best test is that which we have at the moment for legal aid; namely, is it more likely than not, on the information that you are putting before the Legal Aid Board, that you will succeed? You cannot put it any higher than that. You cannot say on day one, "I have a 75 per cent. chance of succeeding in this case".

Reforms have already taken place in the legal aid scheme. The Bar Council agreed a system of graduated fees in criminal cases that was successfully introduced earlier this year. Its impact on reducing the cost of

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criminal legal aid is yet to be assessed. Neither the Bar Council nor the Law Society has demonstrated that they are resistant to change. Indeed the Bar Council is embracing the idea of the contingency legal aid fund. It is far too easy to jump up and down on lawyers. The noble and learned Lord the Lord Chancellor in his article in the New Statesman on 31st October stated,

    "A heavy impediment is the entrenched interests of the legal professions. Not surprisingly, they are attached to the old regime because it was designed to cater for the idiosyncratic ways they do business and to deliver a healthy income from the taxpayer".
Today the noble and learned Lord has talked of the legal profession expressing doom and gloom at his proposals. This is part of the "anti-lawyer spin" to which the noble Lord, Lord Byron, referred a moment ago. I respectfully remind the noble and learned Lord the Lord Chancellor that even healthier incomes are derived by lawyers instructed by insurance companies, banks, large commercial concerns, and local government organisations, all of whom derive their funds not from mid air but from the ordinary people of this country as consumers of goods and services. The problem is to maintain some kind of relationship between the levels of remuneration of these commercial lawyers and the rest of us who are engaged in the nuts and bolts of society; those of us who are engaged in criminal defence work, marriage breakdown, children cases, and in winning damages for the man who is injured at the workface or in a devastating car accident. The resolution of the toils and tribulations of the "little" man may be far below the whiskers of the fat cats and may be beneath their notice. But the legal profession must attract men and women of talent, dedication and calibre to be the mechanics who keep society going with the tools of their trade in what New Labour would no doubt wish to call the "people's courts".

The first principle has to be that the lawyer's interest is never in conflict with the interests either of justice or of the client. When we talk about a strong and independent Bar that is not some kind of mantra; it means something. It means that barristers will not settle a case at any price in order to make sure that they are paid. It means that barristers will not wilfully mislead the court to win a case. When the noble Lord, Lord Byron, spoke I was reminded of a situation when His Honour Judge Fricker, who is now a noted judge in York--at that time he was a barrister--approached me on the third day of a civil case and produced a letter which he said his client, a local authority, had not disclosed. He said, "I withdraw from this case". And so he did. We won hands down because he did his duty. He would have done it whether or not he was paid. But some counsel may quietly have forgotten about that letter.

The same applies to solicitors. Are they expected to pay experts up front for complicated medical negligent cases? Are they supposed to pay the insurance premiums for their clients under conditional fee agreements? The Gwynedd Law Society consists of practitioners in Anglesey, Caernarvon and Merioneth. At its AGM on 8th November last, it passed a resolution which stated:

    "Extension of conditional fees will degrade Solicitors from being independent financial advisers to mere financial speculators".

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The society, of which no doubt the noble Lord, Lord Cledwyn, is a member--it was his brother who wrote to me--regretted that a Labour Government were to be responsible for scrapping vital parts of the legal aid scheme in a way which will have a serious detrimental effect on firms supplying general legal services outside large centres of population. It is all very well to talk in terms of London. But out in the country where I have practised for most of my life it is a very different scene. There the local society requires support.

I join with my noble friend Lord Goodhart, and the noble and learned Lord, Lord Brightman, in asking for consideration of the CLAF scheme. That is not a no win no fee situation. If that scheme is put into effect solicitors will not be mere financial speculators.

The second principle is that access to justice is the priority, not the curbing of the legal aid budget. The noble and learned Lord, Lord Ackner, pointed out that the Lord Chancellor said last year that there was a considerable underspend on the budget. Therefore it does not look as though the legal aid budget has been bursting at the seams for the past two or three years. The conditional fee system may have its attractions, but it is at an experimental stage. It has been operating for two years; 32,000 policies have been written; many have not yet been settled or come to trial; and there has been no detailed analysis of those which have. We do not know the impact in money terms. We do not know the impact in money claims for example, between two small businesses, or in consumer cases. But, more importantly, how is the insurance aspect to be worked out?

In personal injury cases--they have been operating for two years--the insurance industry worked with the Law Society for over three years to produce Accident Line Protect. The ALP scheme limits the risks to insurers in a number of ways. First, it deals only with solicitors who are members of the Law Society's accident line scheme, and therefore employs someone who is on one of the Law Society panels as a specialist. Further, to avoid any participating solicitor sending only his bad cases, he has to undertake to send all cases. That is well and good, but how are those conditions to be spread over the whole range of proceedings where damages are to be claimed? It is not too difficult to predict a result in mainstream personal injury work whereby all the documents are seen. But what will be the situation when one is dealing with actions against the police or prison officers, or where the defence is funded throughout, or public interest cases where the defendants have access to unlimited funds? Many years ago, I recall appearing on my own in a Divisional Court with Treasury Counsel--he is not in his place today--and about six or 10 civil servants instructing him throughout. He was good enough to thank me for coming; and I am glad to say we won.

I hope that the noble and learned Lord the Lord Chancellor will note that there is an almost united voice from all parts of the House asking for a more gradual approach to reform. We heard that view from the noble Baroness, Lady Mallalieu, the noble Lords, Lord Mishcon, Lord Campbell of Alloway and Lord Byron, and others. The Law Society, the Bar Council and consumer groups all seek greater research into

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conditional fee agreements and the assessment of their success. The noble and learned Lord, Lord Brightman, and the noble Lord, Lord Goodhart, sought a pilot CLAF scheme so that that can be assessed. There is no reason for the noble and learned Lord the Lord Chancellor "to boldly go where no man has gone before". Unless something catastrophic happens, he has perhaps four to four-and-a-half years left in which to deal with this problem; "festina lente" must be the motto. Legal aid in civil cases has a long history of service to the people of this country, and it must not be destroyed without proper thought and without proper schemes in place.

9.35 p.m.

Lord Kingsland: My Lords, the debate has been of an exceedingly, indeed for someone who has to wind up, intimidatingly high standard. I think everybody congratulated the noble and learned Lord the Lord Chancellor on his bold and courageous approach to what seems to all of us to be an intractable problem.

He is absolutely right to set the question of legal aid in the context of the civil justice reforms proposed by the noble and learned Lord, Lord Woolf. Any Chancellor of the Exchequer considering taxation would never dream of doing so without examining the other side of the coin; namely, public expenditure. Equally, any Lord Chancellor considering the financing of legal services has to examine their cost. I was struck by the fact that a great deal was said in the debate about the financing of legal services, but rather less was said about the reforms proposed by the noble and learned Lord, Lord Woolf.

I refer in particular to the fast-track procedure and the fixed cost regime that will accompany it. Sir Peter Middleton expressed some reservations about introducing both at the same time. I wonder whether the noble and learned Lord shares those reservations or whether he thinks that between now and 1999 he can get both on foot.

I wonder, also, whether he shares Sir Peter's reservations about raising the limit for small claims to £5,000. That will inevitably mean that more people will represent themselves in disputes. Is he satisfied that the necessary training is available, and that the necessary resources are available to help people help themselves? Those are important questions. I do not ask the noble and learned Lord to respond to them all now. However, I hope that in the course of the next six months, when he reports to this House, he will be able to keep us abreast of his thinking in this area.

The single most imaginative part of the proposals--and here I share entirely the views of the noble Baroness, Lady Mallalieu--is the proposal relating to a community legal service. Just as preventive medicine makes us a healthier society, so advising people about their rights before they get into deep trouble will make us a less litigious society. As the noble Baroness rightly said, that must be a good thing for a modern liberal democracy.

I also believe that we have, in principle, to endorse the contractual approach that the noble and learned Lord laid out briefly, but rather tellingly, by explaining the

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way in which the state should relate in future to the provision of legal services. If I have a reservation about the way in which that might operate, it is this. Inevitably, in such a contractual relationship, the state will be in a very powerful position and will, perhaps on occasions, give in to the temptation to make unconscionable bargains. I should therefore like to know more about the contractual framework. What kind of rights will the private sector side which participates in such contracts have? What limitations will there be on the state to impose conditions? We have heard a great deal about overpaid lawyers. But at the largest part of the Bar, the criminal Bar, there is a large number of underpaid lawyers. I believe it is extremely important that their interests are properly represented.

If I have one reservation about the noble and learned Lord's overall approach to the subject, it is with regard to what I would describe as his excessive cynicism towards his own profession. Our history is littered with examples of disinterested lawyers who sacrifice their livelihoods to pursue matters of principle. I can see no logical reason why the legal profession should have baser motives than any other profession. Indeed, the noble and learned Lord has himself displayed throughout his distinguished professional career many examples of disinterested behaviour. I heard with great interest the noble Baroness, Lady Dean of Thornton-le-Fylde, describe the role of the noble and learned Lord the Lord Chancellor in employment cases. And, if I may add a lighter touch, he spent five years as shadow Lord Chancellor. I hope he will not be tempted to ascribe baser motives to other members of the profession when he has himself exhibited such laudable ones.

When discussing his relationship to the Treasury, the noble and learned Lord said that his proposals for reform were not Treasury-driven. Anyone who heard the speech of the noble Lord, Lord Byron, must agree that that is so. Of all the areas of legal aid, civil legal aid is the most cost-efficient, particularly in relation to cases which have money remedies. We cannot be sure because we have not seen the accounts, but it has been said--by the noble Lord, Lord Byron, and by others--that that part of the legal aid system washes its own face. If the proposals of the noble and learned Lord the Lord Chancellor were Treasury-driven, he would be looking not at that aspect of civil legal aid but at family law, criminal law and many aspects of disputes between the citizen and the state, such as immigration law. However, the noble and learned Lord has either left those areas completely alone or dealt with them less fundamentally than the area of civil law.

I was particularly struck by the noble and learned Lord's comments about the application of the 75 per cent. principle in disputes between the citizen and the state; I do not disapprove. He talked about differential hurdles; I believe he is absolutely right. Many of the most important welfare decisions, such as decisions on housing and immigration, would never have been taken in our courts had the 75 per cent. principle applied, because they would never have reached the courts.

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I applaud his approach to public law disputes between the citizen and the state and endorse what so many noble Lords and noble and learned Lords have said about it.

However, the principle of access to justice does not discriminate between the incarceration of the individual and the expropriation of his property. Effectively preventing individuals from pursuing money remedies in the courts because they have no means of doing so unless they are supported by public funding is an act of expropriation; they cannot obtain property they are entitled to. I am not sure that making a distinction in terms of access to justice between remedies under public law and remedies under private law is justified.

If the noble and learned Lord applied the 75 per cent. test to his own approach to the proposals that he has outlined, and which he intends to introduce by April 1998, I do not believe that they would pass. It is not that I think that they will not work; it is just that there is not yet sufficient evidence in front of us to prove that they will. I share the views of noble Lords who have said, "Let us give it a little more time to see whether the system will work".

Indeed, I believe there is a very good chance that it will work in straightforward personal injury cases. That is what the noble Lord, Lord Mishcon, and many other noble Lords said. But when it comes to much more complicated medical negligence cases, it will fail disastrously unless the approach suggested by the noble Viscount, Lord Bledisloe, is adopted of starting off with legal aid, and then baling out when it is clear that there is an appropriate chance of success--and the way forward is clear-cut. In those circumstances the Lord Chancellor's proposals could be allowed to come into operation.

I am also influenced by the speeches of the noble and learned Lord, Lord Brightman, the noble Lord, Lord Goodhart, and many other noble and learned Lords in relation to the CLAF proposals. They will sit well alongside both our traditional system and the conditional fee system if some variable formula can be introduced in relation to the proportion of damages that is paid back into the fund. That is a matter that can be worked on. If I am proved wrong, well and good. But it certainly deserves much more thought before we plumb for one system rather than another.

I am sure that all noble Lords will agree with me when I say that we are deeply indebted to the noble and learned Lord the Lord Chancellor for bringing these proposals before us. I am sure that I can say with confidence that we all hope that we will be kept in touch with the development of his thinking over the months ahead.

9.47 p.m.

The Lord Chancellor: My Lords, I am grateful to all noble Lords who contributed to this debate. It has been interesting and profitable and I listened to every word. The Government welcome constructive comments on their proposals. Our minds are open to innovative ideas and new solutions. We claim no monopoly on good ideas. We acknowledge that our proposals for the reform

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of legal aid are controversial in some quarters; they are certainly radical, and the two often go together. We are about looking for radical new solutions to old problems.

Your Lordships will forgive me if I do not at this late hour take an inordinate time to do justice to all the valuable contributions. The noble Lord, Lord Campbell, charges that I propose to dismantle a vital social service and inhibit access to civil justice. That is the opposite of my object. My object is to save and to enlarge access to justice; not to bury it. He attacks a merits test of 75 per cent. I say this. I would not litigate with less prospects of success than 75 per cent. and would probably require a good deal better. I say further that any sensible plaintiff would be well advised to do the same.

Just think of the grief and pain associated with litigation that one loses. I agree with my noble friend Lady Mallalieu that often the best advice is not to litigate. Around 83 per cent. of serious medical negligence cases that fight lose. We heard a great deal about the brain damaged child; but think of the grief and pain of losing 83 per cent. of those cases.

Nor do I see why the state should fund cases which sensible people would not support out of their own funds. Think too, as some noble Lords have addressed--and the noble Baroness, Lady Wilcox, drew attention to it--of the unfairness to a defendant who is sued by a plaintiff with full legal aid and the plaintiff loses. The defendant has succeeded but whistles for his costs. Under our proposals the plaintiff's insurers will have to pay those costs so that major injustice will disappear. The noble Baroness, Lady Oppenheim-Barnes, emphasised that important point. I agree with her. I insist that these steps are not being taken to reduce the cost of legal aid to the Exchequer. They are designed to bring the cost under effective control, not to increase or decrease the legal aid budget in real terms.

The noble Lord, Lord Lester, quoted my description of the legal aid system as, "a highly successful public social service". I said that in my keynote address to the annual conference of the Bar in 1996. I agree with it and I want to make it an even more successful social service. The noble Lord suggested that I had not referred to the ethical dangers perceived by some in relation to conditional fee agreements. In fact, I did refer to them. I spoke of how some saw these as putting the integrity of lawyers and their duty to the court under stress. I said that I rely on the ethics of the legal profession, which are strongly enforced.

Poor people will gain access to conditional fee agreements if they have strong cases. The noble Lord, Lord Lester, said that he tells his clients to proceed only if he thinks that they have even or better than even prospects of success. His modesty is well known and his success rate should have made him more confident. He should have given robuster and stronger advice. I have read far too many opinions by lawyers which are of the "on the one hand" or "on the other hand" variety, when greater precision is what clients deserve.

I entirely agree with the noble and learned Lord, Lord Hoffmann, and disagree, with respect, with the noble and leaned Lord, Lord Simon. I deprecate

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opinions which say that a case is arguable, or reasonably arguable, whatever that means. Lawyers should offer a precise quantification. That is always what I did myself, so no doubt it was bad for business. I told people if I was confident that they would lose their cases. Then no doubt they went off to some lawyer whom they believed to be more sympathetic to their case who told them they would win. Then no doubt they lost and blamed an unsympathetic judge for the outcome.

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