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Lord Meston moved Amendment No. 215:

Page 16, line 2, leave out from ("proceedings") to end of line 4.

The noble Lord said: The purpose of this amendment is to ensure that no type of family proceedings can be the subject of an enforceable conditional fee agreement. The Bill, as drafted, will permit conditional fee agreements in those family proceedings which consist of a financial matter or a matter concerning property. That proposal has caused concern to the specialist Family Law Bar Association and the Solicitors' Family Law Association, as well as to others, including Relate.

There are several objections to this proposal. First and fundamentally, a conditional fee agreement will require the parties to think in terms of winning and losing, which is now quite contrary to the whole ethos of the specialist legal associations and of current family law and practice. Lawyers are now duty bound, and encouraged by the courts, to limit costs and to limit acrimony by seeking a compromise in financial and property disputes and by avoiding adversarial stances. That applies not just to financial and property matters but also to other aspects of family and matrimonial litigation. Expert mediation will have a formal statutory status when the Family Law Act 1996 comes into full force.

Already there is a successful ancillary relief pilot scheme which places great emphasis on early settlement of property and financial claims, on keeping litigation costs under close control and on ensuring full and frank disclosure of all relevant financial circumstances. Conditional fee agreements will tend to reintroduce a litigious culture to family work, in which lawyers now successfully settle a very high proportion of cases. That high rate of settlement occurs because conscientious lawyers, encouraged by their professional association's guidelines, spend much of their time advising and persuading their clients to put all their cards on the table, face up, and advising their clients to lower their financial expectations.

The second objection is that the nature of the financial and property jurisdiction in this country often makes it difficult to define who has won or lost. Cases are seldom "all or nothing". Usually the courts and lawyers are seeking to achieve a fair apportionment of finite family capital resources and income, both at present and in the foreseeable future. Now those include the reallocation of pension rights in certain cases.

The statutory framework under which we operate gives broad discretion, and requires first consideration to be given to the interests of minor children. Ancillary relief claims are not the same as claims for debt or for compensatory damages. The discretion and wide powers of the court over present and prospective resources mean that there is seldom a precisely predictable result, but rather a bracket of correct outcomes. Thus, a former spouse may "win" in terms of obtaining or retaining capital assets, but at the same time "lose" on the amount of maintenance payable. The party who wants the transfer of the former matrimonial home may not receive it outright but on trust, or subject to a charge back--or on terms that a compensatory lump sum payment is made--or the level of maintenance payable may be limited in duration.

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In reality it is much easier to define who has won or lost a simple dispute over a child, but the Bill, perfectly properly, excludes conditional fee agreements from that type of family proceedings. It does so, presumably, on the basis that CFAs can be inconsistent with the welfare of children who are the subject of the dispute; but, of course, many financial and property disputes between former spouses and partners involve a consideration of the needs of the children of the family.

There is a further concern in that the question arises: at what stage should the conditional fee be fixed or become payable? When divorcing parties first see their lawyers--and, quite often, for some time afterwards--they can be unaware of the extent or value of assets of the other spouse, unaware of the present and potential income available and only vaguely aware of their own or the other party's realistic needs. The necessary initial inquiries which give the basis for informed legal advice, and which enable so many cases to settle without hostile litigation, have to be paid for. It cannot possibly be said that there is a winner or a loser in such a situation.

In passing, I should mention that in The Lawyer magazine of 15th December 1998, in an article about this proposal, a spokesman for the Lord Chancellor's Department was quoted as saying that it "would depend on the view of the client" whether any result was seen as a win or a loss. It is hard to believe that that was a complete or accurate quotation but, if it was, it suggests something which is quite unworkable and has not been thought through.

In most cases, the task of the court and of the lawyers in reaching settlement out of court is to distribute assets and income according to needs, the most important of which are normally housing needs. In most cases, the distribution is of very limited resources and the family can ill afford contested litigation. If a conditional fee is payable, the needs of the party concerned will rise requiring a higher award. In matrimonial litigation at present the court is kept informed of the costs incurred on either side and will always bear in mind the overall impact of costs on the family's finances. Yet the court will not be privy to the conditional fee agreement or the terms of the uplift.

Under the present legal aid scheme the recovery of costs can be achieved by the state by means of the statutory charge, which can be deferred if a home is obtained by the assisted party in family cases. That charged amount bears interest. It is an effective way of postponing the payment of costs, which are not recovered from the other party, while still protecting the interests of the public purse. By contrast, CFAs may well lead to so-called "satellite" litigation between the lawyer and the former client about who has won or lost, and they will almost certainly not allow for deferred payment by charge against a former matrimonial asset. Moreover, the nature of the work and litigation will mean that insurance cover to protect against payment of the other party's costs will be unobtainable. Insurance companies would not touch this kind of litigation with a bargepole.

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Although it will probably be said that the Bill is only permissive and conditional fee agreements will only be optional, there is a fear that legal aid will be withdrawn because conditional fee agreements are theoretically available if the Bill stands as it is presently drafted. In the long term the Family Law Act 1996 with its emphasis on mediation adding to the current attitudes fostered by the courts and the legal professional bodies will reduce the financial costs and emotional damage of family breakdown. In family cases conditional fee agreements have the potential to increase conflict, unhappiness and expense. I beg to move.

Lord Clinton-Davis: I support the amendment which also stands in my name, and the arguments that have been adduced by the noble Lord, Lord Meston. The introduction of the conditional fee into this sphere runs completely counter to the philosophy and the practice which have been prevalent for the past 20 years or even longer to try to allay the bitterness which the adversarial approach previously had encouraged. When these matters were debated during the 1990 Courts and Legal Services Act it was then asserted--I think with conviction--that conditional fees were wholly inappropriate for criminal and family proceedings.

I ask my noble and learned friend what evidence is there of any demand for conditional fees in disputes in the field of matrimonial property? What research has been done to ascertain that? What research has been done into the availability of insurance--that point was made by the noble Lord, Lord Meston--to cover conditional fees in this sector?

Baroness Scotland of Asthal: I too support this amendment. One of the things that all those of us who have practised in family law have come to realise, particularly in the past 20-odd years, as my noble friend has said, is that when one is dealing with family disputes one is dealing with a lose, lose situation. There are no winners. There is no one other than losers. The whole family is damaged by the disintegration that occurs at times of divorce. What lawyers who are properly instructed should aim at is a damage limitation exercise.

Litigants who are regrettably engaged in divorce and family proceedings do not separate in fact because often they have children whom they share and they will remain engaged in that relationship at some level for a long time. I assure the Committee that matrimonial property, fees and the matter of who paid for what continue the bitter wrangle for many, many years. That does much to undermine the rapprochement that is hoped for families, and does much to destroy the integrity of what is left. One has disappointment and anger.

It is also important for us to remember when thinking of these cases that often the litigant involved is not reasonable. Litigants are often angry, disappointed and have gone through a great deal of pain and suffering. Not surprisingly they feel that there are scores that need to be settled--scores that they would wish their advocates to advocate on their behalf. The lawyer in family cases, be he solicitor, barrister or employed person, is in a difficult position because part of the

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lawyer's role is to assuage that feeling of pain, disappointment and anger so as to permit his client to see what is in the long-term best interests of the family. That will not be enhanced by a conditional fee agreement which means that if the other party loses and is persuaded to see that he has lost, the lawyer gains.

I know that this Government are wholly committed to the family, mediation, conciliation and rapprochement so that the pain that comes from divorce can be muted, if not totally expunged. Therefore, I am confident that the Government will bear those factors in mind when considering this amendment; confident that they will put children and families and those who go through the trauma of divorce first; and confident that they will see the wisdom of this amendment and put this part of the Bill to one side.

9.45 p.m.

Lord Sheppard of Liverpool: We have heard today the Government's responses to reasoned debate. I join others in hoping that the noble and learned Lord the Lord Chancellor will also respond to this important point. When I sat on the Bishops Benches a few years ago I recall that, as chairman of our board for social responsibility, I met the noble and learned Lord, Lord Mackay of Clashfern--then the Lord Chancellor--on a number of occasions. I firmly supported throughout his Bill the idea of trying to get these disputes out of the adversarial setting of the law courts and into something where mediation was much more possible.

I do not believe that you can chop up the different parts of family law. I very much hope that the Government, with their firm support for the family, will want to help couples move out of the pain of marriage breakdown with as little bitterness as possible. I believe that this amendment would help that to happen.

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