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Lord Phillips of Sudbury: I should like to support the amendment and to add two points to the debate. First, if Clause 28 is passed as it stands, it could have a significant impact on the risk to which members of the public may be put, who, under present circumstances, may be able to obtain legal aid in the normal way.

The second point that I would add is that I was a non-executive director of one of these legal costs insurance companies for eight years. I had discussions with that and another such company only recently. I fear that the hopes of the Government in relation to the availability of suitable costs insurance may well not be realised. I believe that the premium rates to which the noble Lord, Lord Clinton-Davis, referred may already be out of date. Indeed, there is serious concern within the small group of companies which provide such insurance that there is some selection against them. Moreover, I also fear that the after-the-event insurance, which is what we are principally concerned with here, may not be effectively available in terms of cost. Therefore, I strongly support the amendment.

4 p.m.

Lord Ackner: I, too, should like to express my support for the amendment. However, I think it would probably be helpful to get on record what the noble and learned Lord the Lord Chief Justice said at the Barnett Lecture which he gave on Thursday 11th June 1998. Towards the end of that lecture he said:

The Lord Chancellor: Conditional fee agreements are good for the public. They will bring into access to justice the millions who are not eligible for legal aid and cannot afford to litigate because they cannot run the risk of losing and having to pay the other side's legal costs. Conditional fee agreements will also be good for the business of lawyers. When lawyers recover from the shock of the new, I believe that they will come to recognise that the extension of conditional fee agreements is a major boost to legal business for litigators. Lawyers in a changing world are not free from

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the need to adapt. They must recognise that they can no longer live in the world of traditional legal aid where lawyers are paid--win, lose or draw.

The proposed amendments would have the effect of introducing a schedule of entitlements in respect of personal injury cases into the Bill. I cannot accept them for two main reasons. First, the community legal service fund will operate within a controlled budget, and resources will be allocated according to priorities, in the areas of greatest need. There is no place in such a scheme for a set of entitlements such as those proposed by my noble friend and the noble Lord, Lord Kingsland.

Secondly, the exclusion of personal injury cases from the scope of public funding is not only important in releasing funds for priority cases, but it is also based on the fact--and I do not propose to go over the detail that I gave earlier in Committee in this respect--that there is a viable alternative method of funding; namely, conditional fee agreements. I give way to the noble and learned Lord.

Lord Simon of Glaisdale: Is there not, in addition, a further alternative? I refer to the one that will shortly be proposed by the noble Lord, Lord Goodhart; namely, the contingency legal aid fund. It is not just one alternative to which my noble and learned friend is so attached.

The Lord Chancellor: We shall debate the possibility of a contingency legal aid fund in due course and in its proper place in our proceedings. However, we are of the clear view that a contingency legal aid fund would attract only the weak cases because the strong cases would proceed by conditional fee agreements carried forward by the profession. We believe that a contingency legal aid fund would be doomed to failure. However, lest we are wrong about that, we are taking reserve powers which would enable us, if need be, to establish such a fund. In the meantime, we are proceeding in the way that I have indicated.

Nevertheless, I desire to say this to lawyers, be they barristers or solicitors. Every other business incurs costs and runs risks in order to earn profits. Litigation will be very profitable for the lawyer under a conditional fee agreement when he wins. I do not begin to accept that lawyers, among all businesses, should be excluded from running risks and incurring costs in order to earn profits. Lawyers must come to terms with the real world and not that of conventional legal aid where lawyers are paid whether they win, lose or draw. I give way to the noble Lord.

Lord Goodhart: Is the noble and learned Lord the Lord Chancellor suggesting, for example, that doctors should be paid on a no cure, no payment basis?

The Lord Chancellor: Certainly not. We are proposing a means of funding litigation which is an alternative to the public purse and which will expand access to justice, thereby releasing moneys to follow other desirable purposes. However, I will have the

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flexibility through my direction-making powers in Clause 4 and Clause 7(7) to allow the funding of personal injury cases in some circumstances.

I shall not repeat the detail of what has already been said, but it is clear that, if need be, I shall be in a position to achieve some of the objectives set out in the amendments. By keeping the cases specified by the noble Lord and my noble friend off the face of the Bill, I will have greater flexibility to respond to changing needs and circumstances in the future. I shall certainly take their suggestions into account as I develop policy and, if any need is demonstrated, I shall consider whether to restore particular categories of case to legal aid. I predict that the prophets of doom are wrong and that conditional fee agreements will prove to be a triumphant success. I therefore invite my noble friend and the noble Lord to withdraw their amendment.

However, although it was not germane to the specific argument on these amendments, perhaps I should respond to the point made by the noble Lord, Lord Kingsland. On the footing that the amendment were accepted, he asked whether the commission could still refuse to provide legal aid. In response, I invite the noble Lord to consider Clause 9(2)(d) of the Bill.

Lord Clinton-Davis: I thank my noble and learned friend for at least some of the arguments that he has adduced and, in particular, for drawing attention once again to the power that he will have to utilise directions in certain specific instances. However, the position remains very vague and, notwithstanding my noble and learned friend's usual powerful advocacy, my doubts are not put wholly at rest.

My noble and learned friend said on the first day of the Committee stage that he was satisfied that the kind of concerns that we have mentioned again today were unfounded. He said,

    "It is my view that the majority of personal injury cases do not warrant public funding in the future because there is a viable alternative in the private sector; namely, conditional fee agreements".--[Official Report, 19/1/99; col. 568.]
But what constitutes a majority? A majority is 51 per cent. I assume that my noble and learned friend asserts that he is talking about a substantial majority, but I do not know upon what basis this has been properly assessed. It remains imprecise. If there is a real risk that a substantial minority of cases will be prejudiced as a result of this situation, it remains a cause for great anxiety.

I do not agree with the totality of the argument that my noble and learned friend adduces when he acquaints lawyers' practices with the general run of businesses. Lawyers' practices, certainly in the City and the West End, are run as businesses--there can be no doubt about that at all--but they are vastly different in character and in the work that they undertake from the kind of practices to which I have alluded. There are no vast profits being made by the overwhelming majority of that category of firm. I believe that they are doing a superb job in protecting the interests of the public and making access to justice a reality. Of course there are many things that go wrong, but I believe that the public have confused the high-blown cases that one reads about--mostly criminal cases involving substantial fraud--with

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the ordinary day-to-day routine business that is undertaken in a solicitor's practice of the kind I have mentioned.

I am most grateful to those who have spoken in this debate. It is important that my noble and learned friend should respond to the point made by the noble and learned Lord, Lord Ackner, in citing a speech he made some time in June 1998--I did not catch the exact date--which does not altogether sit satisfactorily alongside the remarks that my noble and learned friend has made.

Lord Ackner: I intervene, first, to correct what the noble Lord has said and, secondly, to strengthen it. I was not quoting from a speech I made, I was quoting from a speech made by my noble and learned friend the Lord Chief Justice.

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