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Lord Mackay of Clashfern: The arguments of the noble Lord, Lord Meston, the noble Baroness, Lady Scotland, and the noble Lord, Lord Sheppard, were, in very general terms, the arguments that persuaded me in 1990 that it would not be appropriate to have conditional fee arrangements in relation to family disputes of any kind. Many of your Lordships have sought to persuade me from time to time that some of my decisions in 1990 were wrong, but I still feel a certain degree of affection for quite a number of them, including this one. I will be interested to hear what my noble and learned successor has to say about it.

As the noble Baroness said, people are often in a state of unreason as a result of matrimonial disputes. It may be possible to devise conditional fee arrangements which, in a sense, help to modify that enthusiasm. One of the consequences of the legal aid scheme is that many people in matrimonial disputes have not expected the charge on the matrimonial property, notwithstanding that it was carefully explained to them. Often at the stage of divorce and arguing over the property, one or both of the parties are quite unreasonable and great amounts of money are spent on the legal aid fund. Although they had been told, it had not dawned on them that all that money is coming out of their property and

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they find out later that the matrimonial home is being drained away by the fees of the lawyers they have instructed to fight the matter out to the bitter end. I suppose it is just conceivable that conditional fee arrangements could be helpful in trying to bring that kind of dispute under control.

For my part, until persuaded to the contrary, I remain of the view that the whole ethos of family law, on which the Family Law Act was predicated--I understand the Act is to come into force more fully in the year 2000--was the idea of trying to remove disputes and encouraging settlement, primarily in the interests of the children of the marriage, but also in the interests of the spouses. My present feeling is that the arguments used against this change have a lot of force, but I wait to hear the persuasive eloquence of my noble and learned successor on this important matter.

Lord Phillips of Sudbury: I am sure that many noble Lords have been lobbied, as I have, on this part of the Bill. I would be surprised if any noble Lord had received other than the single plaintive message that I have received from many quarters. It is, "Do not allow this provision to pass". Perhaps I may refer to the survey carried out by Suffolk and North Essex Law Society of its member firms. On the question of contingency fee arrangements--I should properly say conditional fee arrangements--there was, again, a unanimous voice that this class of case is simply not appropriate for conditional fees.

I would make only one other point. Under Clause 9 of the Bill, which sets out the criteria according to which the commission is to fund services, the only class of case that is given special treatment, in subsection (3), is family disputes. Subsection (3) states:

    "That the criteria set out in the code shall reflect the principle that in many family disputes mediation will be more appropriate than court proceedings".
It seems to be entirely consistent with that special insight that this amendment should be passed.

The Lord Chancellor: The Government are committed to encouraging the parties involved in family proceedings to resolve disputes in such a way as to reduce conflict and distress and to promote as good a continuing relationship between them for the future as is possible in the circumstances, not least in the interests of the children. The Government are committed, as I have said many times, to the use of mediation in family disputes in order to achieve that end.

The purpose of Clause 27 is no more than that, in cases where there are disputes about property and finance, and nothing else, and where the parties decide that mediation is not appropriate, conditional fees would provide a further alternative means of funding the case. Conditional fees could have the merit that they would allow people who would otherwise be unable to meet that cost to pursue their cases. This could benefit people, particularly those just outside the range of eligibility for legal aid, in taking their cases forward. It certainly was not intended that the use of conditional fee agreements in the manner proposed would undermine the conciliatory approach to family proceedings encouraged

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by the Family Law Act but rather that it should allow an alternative means of funding cases in circumstances where court proceedings could not be avoided. So the removal of the statutory bar on the use of conditional fee agreements in this limited type of family dispute was thought to facilitate the conduct of cases and benefit many people, particularly those just outside the range of eligibility for legal aid.

However, the Government have listened carefully to the views put to us about this proposal. We accept in particular--the noble Lord, Lord Meston, made the point very well--the practical difficulties associated with defining what constitutes a win in these cases. We also accept that this provision could be seen to be encouraging lawyer-driven litigation in marital disputes when the Government's overriding objective is to reduce bitterness and acrimony between the parties. So we have been listening very carefully to representations on this subject made by family specialists and others and we have decided to accept the amendment in principle. We will therefore bring forward an amendment on Report. I invite the noble Lord, Lord Meston, who I see is well pleased with the outcome, to withdraw the amendment.

Lord Meston: I am grateful to the noble and learned Lord and to all those who have spoken. Perhaps I may single out the noble Baroness, Lady Scotland, for her clear and powerful statement of the modern approach to family litigation as she practises it and as I, too, endeavour to practise it. If any outsider now thinks that modern practitioners of family law are cynically concerned to encourage friction and hostility for their own ends, he or she need go no further than to read the words of the noble Baroness. The noble Baroness of course spoiled my argument. I endeavoured to say that there are no winners or losers. When one is against her, she is always the winner.

On the basis indicated by the noble and learned Lord the Lord Chancellor I am happy to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Kingsland moved Amendment No. 216:

Page 16, line 29, at end insert ("and such proceedings shall be specified proceedings notwithstanding that they are concluded without the commencement of court proceedings").

The noble Lord said: The purpose of this amendment is to incorporate in primary legislation the provision in the conditional fee agreements order 1995 which makes it clear that proceedings need not necessarily have been commenced.

Most conditional fee agreements are signed before it is known whether it will be necessary to commence any type of proceedings. The amendment would make it clear that a conditional fee agreement could be used where a case was to be concluded by negotiation or mediation. I do not think I need say anything further. I beg to move.

Lord Falconer of Thoroton: This amendment would amend the new proposed Section 58A of the Courts and

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Legal Services Act 1990 inserted by Clause 27 of the Bill. It seeks to amend Section 58A(4), which presently reads,

    "In section 58(4) "proceedings" includes any sort of proceedings for resolving disputes (and not just proceedings in a court)",
By inserting at the end of that section the words,

    "and such proceedings shall be specified proceedings notwithstanding that they are concluded without the commencement of court proceedings".

I understand this amendment to be intended to give effect to the decision of the Vice-Chancellor in the case of Bevan Ashford v. Geoff Yeandle (Contractors) Ltd. in which the Vice-Chancellor decided that where an alternative means of resolving a dispute to court proceedings was used in proceedings where conditional fees were permitted, any agreement between the lawyer and the client to work on a conditional basis was lawful and enforceable. The problem arose in that case because of the narrow definition of proceedings in the Courts and Legal Services Act 1990 which defines "proceedings" in Section 119 as, "proceedings in any Court". The intention of this clause is to do no more than to give statutory effect to that decision.

I should at this point say that the Lord Chancellor's officials have received representations from the Law Society among others about whether the wording of Section 58A(4) may go further than the limited extent I have just described. I am urgently considering the points put to me and it may be that the Lord Chancellor will need to come back at Report stage with amendments of his own to this subsection.

The amendment that the noble Lord seeks would insert words which currently appear in Article 3(2) of the Conditional Fees Order 1998 and bring them into the statute. These words are used to ensure that simply because a dispute is settled before proceedings are commenced in the court the conditional fee agreement, provided it is in relation to a proceeding specified by order, is valid and enforceable. Without that it might be open to a client to dispute that a valid agreement existed.

In principle the Lord Chancellor has no objection to the inclusion of the words suggested. However, perhaps we could have an opportunity to consider the detailed terms of the amendment before bringing forward an appropriate amendment. In those circumstances I ask the noble Lord to withdraw his amendment.

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