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Lord Ackner: I strongly support the amendment. I am concerned that the CFA will ultimately affect the very existence of the Bar. The Bar, as independent practitioners, is not geared to carrying on the business of bookies, which is what the CFAs require them to do. It is the old problem of speculative litigation.

CLAF is not in that situation. One must bear in mind that the Bar is not as yet organised to run the risk of significant parts of its litigation being subject to the risk of no win no pay. One must also bear in mind that whereas the solicitors will get the litigation which is to be speculative at the earliest possible stage and can settle those which are settleable, which is a large part of the personal injury field, those which go to the Bar are

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the difficult cases in which the risk of losing is high. As has been pointed out, the young members of the Bar cannot afford to take that on.

I think one should look, as the Bar Council has, into what are the dangers of CFAs for the ultimate development of the Bar. The only way to cope with the risks is to try and separate them by some form of partnership between members of chambers. When I was Chairman of the Bar we had a committee to consider partnerships at the Bar. It was presided over by the noble and learned Lord, Lord Templeman, as he then was not. It concluded without any difficulty that the result of a partnership at the Bar would be greatly to restrict the availability to solicitors and ultimately to the lay clients of practitioners available to take on cases. All you had to do in a specialist field was to take the top silk out of one set of chambers, the top junior out of the next set of chambers, and a couple of noting briefs out of the third and fourth set of specialist chambers, and you had thereby denied to the rest of the litigating public the rest of the specialist Bar. That was the danger of partnerships.

This need not arise in respect of CLAFS and that is why this needs to be seriously developed. We have the usual cliches in this sort of legislation. The Government recognise that a strong and independent Bar is a vital foundation of liberty and all the rest. Of course it is, but you cannot have a strong and independent Bar unless you have some regard to its development. I do not see, speaking for myself, where a young man gets started at the Bar in 10 years' time. I believe that it will be a species of fusion forced upon the Bar. The judges, when they say, as they often do, at the end of a case, that they are very grateful for the assistance they have received, are really making that observation with great sincerity. Without a strong, diligent and competent Bar, the judiciary would be incapable of making the quality decisions which they now make. The judiciary are dependent upon the quality of the Bar and once we begin to undermine that quality, it will run throughout the entire system.

9.30 p.m.

Lord Falconer of Thoroton: I immediately spotted that the noble and learned Lord, Lord Ackner, was overstating his case when he stated that whenever a judge says that he is grateful for the assistance that the Bar has given in a particular case, he means it with sincerity on every occasion. I know from my own experience as a member of the Bar that that is not and could not be right, though I appreciate that there are very many occasions when it is said with sincerity.

Lord Ackner: The noble and learned Lord says that he knows from his own experience. I think he must be relying on hearsay evidence.

Lord Falconer of Thoroton: No; on the basis of my own dismal performance in front of various judges who have then congratulated me with apparent sincerity upon the performance I gave, which was out of pure politeness.

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The serious issue that divides the government side from the amendment proposed by the noble Lord, Lord Goodhart, is that the amendment of the noble Lord, Lord Goodhart, proposes that a conditional legal aid fund should be compulsory in the sense that the commission should be obliged to set it up and should be obliged to pilot it when it has been set up. On the other hand, the effect of the Bill as it is presently drafted is that there is a reserve power in the legal services commission to set up such a fund and it has been said separately from the Bill that it is thought at the moment unlikely that such a fund would be set up. We on this side do not accept that it could be right for the commission to establish such a scheme. Neither can we accept that a scheme should be piloted, as the proposed clause would allow the commission to do, in order to establish whether a CLAF would be viable.

The Government's priority for using public money is to direct it towards areas where there are no suitable alternatives. Conditional fee agreements provide a suitable alternative in certain areas of the law--in particular, personal injury cases. Conditional fees are already working in this area and increasingly are becoming a common way to fund those cases.

The noble Lord, Lord Goodhart, does not suggest that conditional fee agreements should not be available in personal injury cases or, indeed, in any other sort of case. Therefore, the effect of his proposal is that the CLAF and the conditional fee agreement should subsist side by side. It is our belief that if they exist side by side, the result will be that the strong cases are dealt with by the conditional fee agreements--they would lead to a better return for the clients because the successful client would not need to make any payment into the CLAF--whereas the weaker cases would end up in the CLAF.

The result would be that the CLAF would become the dumping ground for the weak cases and all the strong cases would be dealt with under the CFA. The significance of that would be that the CLAF would not be able to fund itself. That is the present expectation of those on this side of the Committee. If that expectation is correct, it would be wrong to set up a CLAF. If, as we believe to be unlikely, that expectation turns out to be wrong, there is the reserve power in the Bill to set up the CLAF.

With respect to the noble Lord, Lord Goodhart, that is the most sensible way of approaching the problem rather than, as he suggests, by compelling the legal services commission to expend what would be a substantial amount of money to set up the fund. He does not deal in his submissions with where the start-up money--which would run into millions of pounds--would come from or what cases should be deprived of funding to set up the CLAF. We believe it would be wrong to set up a CLAF if our expectations on the conditional fee arrangements are right.

As I said, conditional fees are already working in the area of personal injury. Products exist to provide protection insurance, as I have already explained to the Committee. Many lawyers who already work in this field are experienced in taking cases where they carry

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disbursements or have arrangements to defer payment of expert fees and the like to the end of the case. I see no reason why other lawyers cannot make similar arrangements once public funding ceases to be available for certain categories of case. Given my firm intent that public money should be used where there is no suitable alternative, chancing public money--for that is what it amounts to--to seek to establish the viability of a CLAF is not an appropriate use of public money. It will not help those on whom I wish to focus our intentions and resources.

The noble and learned Lord, Lord Ackner, made an obviously sincere defence of the Bar's decision. It is not a cliche for this Government to say, as we have said repeatedly, that we value and see the importance of an independent, strong Bar. I believe, as the Lord Chancellor and the Attorney General believe, that a strong Bar is a bastion of liberty. But in considering what is the best way to finance litigation, the Bar is not the only consideration. Other considerations apply as well, including what is best for the people who become involved in litigation. In the circumstances, I ask the noble Lord to withdraw his amendment.

Lord Ackner: Before my noble and learned friend sits down, he has said that the CFAs are working. Can he tell the Committee what monitoring exercises have been carried out to ensure that CFAs are working fairly in the sense that litigants are not being taken advantage of in cases which are open and shut--or virtually open and shut--as has been conceded to be the situation in at least 90 per cent. of personal injury cases?

Lord Thomas of Gresford: The issue that the noble and learned Lord has not addressed is this. Risk is at the heart of the problem. If a firm of solicitors has a large volume of cases and enters into a large volume of conditional fee agreements, the risk will be spread within that firm across that large number of cases. Consequently, it can carry the lost causes. It may be that the 5 per cent. or 10 per cent. of the cases that such a firm takes on under conditional fee agreements will fail and, if so, the firm will not get paid for those cases. However, the uplift received on the successful cases will pay for the ones that fail. That is all right within a solicitors' firm that has a large volume of cases. The risk will be spread fairly.

The problem to which the noble and learned Lord, Lord Ackner, referred is that when you are dealing with the Bar, or with a small firm of solicitors, there is no opportunity to spread the risk across the small practice of the individual barrister or solicitor. That is particularly so for the individual barrister who is just starting at the Bar and seeking to make his way. If he loses 50 per cent. of the cases and does not get paid that 50 per cent., his income will be taken up with all his other expenses and he will suffer a loss.

I do not believe that that is a healthy state of affairs; nor do I believe that the legal profession should be treated as a business that should carry the risks of litigation because of the conflicts of interest and all the other arguments that we have heard about on this topic.

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If conditional fee agreements had been in existence for a significant period of time--instead of the two to three years during which they have been effected--the situation might be different. But so many of the cases that have come to fruition--I do not believe that it is a high percentage--have settled. As the noble and learned Lord, Lord Ackner, pointed out, it is not the easy, settleable cases that cause the problem, but the difficult cases. The Bar's difficulty is that barristers get only the difficult cases. The risk is different.

The risk for the Bar differs in two ways. First, each individual barrister cannot spread the risk as widely. Secondly, he is not dealing with readily settleable cases. If we had had five or 10 years' experience of conditional fee agreements, we could forget about legal aid and move to that, but we have not. The CLAF ensures a fair system of remuneration that avoids a conflict of interest between the lawyer and his client, does not make it in the interest of the lawyer to come to a settlement of the case below its true value, and ensures every lawyer is properly paid, win or lose. We are thus back in a satisfactory situation where professional standards and professional ethics are maintained.

I believe that the introduction of this gambling element in relation to barristers and small firms of solicitors is highly undesirable. I note that the noble and learned Lord the Lord Chancellor shakes his head. He has no doubt never been in the position of having a range of cases, half of which he has lost and half won. Others are not quite so fortunate. If we are to maintain a strong and independent Bar, we must avoid conditional fee agreements being the sole method of funding the whole system.

9.45 p.m.

Lord Clinton-Davis: I am not totally persuaded by the noble Lord's argument. I believe that my noble and learned friend Lord Falconer clearly indicated that the Government would carefully monitor the situation. The nature of the monitoring is all important and I believe that it needs to be undertaken with a degree of independence. It is not only the Bar that faces a problem; indeed, the client also does so. With conditional fees the solicitors involved have a financial stake in the outcome of the litigation. Therefore, there is a possibility--and I put it no higher--that some solicitors will feel compelled, especially when they are carrying very heavy overheads, to ensure that there is a settlement. They will preserve that financial interest on their part, which may not necessarily be conducive to the interests of the client.

I urge my noble and learned friend to give Members of the Committee some indication, if not now, then at a later stage of the Bill's proceedings, of how the situation--which, to a large extent, is still a novel one in that it is very new--is developing. Perhaps he can also confirm that there will be no real prejudice caused to clients, which, after all, is the overriding consideration of my noble and learned friends. That being the case, while I am not necessarily asking my noble and learned friend to give an answer here and now

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on that point, I should like to hear that the Government will give it consideration and make an announcement at a later stage.

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