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Lord Goodhart: My Lords, one of the amendments in this group is tabled in the name of the noble Lord, Lord Clinton-Davis. He has not spoken to it and I do not know whether he intends to, but it raises another similar and important point with which, perhaps, I may deal briefly; that is, the question of disbursements.

If you need an expert witness, a doctor's report or something of that kind, if there is a contract and that price is to come out of solicitor's contracted payment due from the community legal service, the effect will be that inevitably the solicitor will be under considerable pressures from his partners to opt for the cheapest expert that he can find because there is no advantage to him in opting for anyone else. However, it may well be in the interests of the client to opt for an expert who is more reliable, better qualified and more experienced. In that

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case, it seems to me that there is a strong case for having a separate payment of not only advocacy fees but also disbursements, as is proposed in Amendment No. 47.

Lord Clinton-Davis: My Lords, I do have an amendment grouped with Amendment No. 40. It is a matter which I raised both on Second Reading and in Committee. It is extremely important that one should take proper account of what is likely to be a disadvantage not simply for the solicitor but also for the client whom the solicitor serves. My noble and learned friend has pointed out repeatedly that those clients are the principal targets for his concern.

A problem may arise because a lawyer may come under additional pressure; for example, because he needs to raise additional overdraft facilities. That is in addition to other pressures which assail so many firms. Even the largest firms operate with overdraft facilities of various kinds and sizes. Lawyers who are operating in the neighbourhood law service field, or high street firms, are particularly vulnerable to that specific form of economic pressure. They then find that they are impelled to cut back on what would ordinarily be described as necessary disbursements. They may even try to put pressure on a client to settle a case which should ordinarily be contested.

I know that my noble and learned friend really discounts that argument on the basis of the Thompson argument; that is, the argument that trade union firms can surmount such difficulties with a fair amount of ease. It is true that many of them do. However, I have gone to a lot of trouble to make inquiries of solicitors serving trade union clients and they tell me that the practice is variable. It is by no means the uniform position which the Thompson's news release would lead us to suppose. I have shown my noble and learned friend the letters that I have received from four leading firms in the field. It is a fairly narrow group of firms which practise in the field. Those letters describe the likely plight of the smaller, even medium-sized, firms which practise in an area in which disbursements are extremely crucial, as is the judgment as to whether to incur them at all. If those pressures exist, then there will be a temptation not to incur them.

My noble and learned friend argues also that the repayment of disbursements should wait until the end of a case and that experts' fees can be managed properly by firms of solicitors so that they do not have to pay them until the conclusion of the case. With respect, I say that that is being out of touch and will not be so in regard to many experts, and certainly not those who are involved in a recurrent type of case. Perhaps the ordinary orthopaedic surgeon is prepared more readily to wait some time before he is paid. It depends on the solicitor, where those people reside, where they carry on their practice, and on very many extraneous factors. It also depends, of course, on the solicitor being able to raise the funds ultimately to pay him, and that may be before the end of the case.

There is then that type of specialist advice which is extremely unusual; for example, a PI case in which someone has suffered brain damage. The consultant whom the solicitor consults will be consulted only on a

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very rare basis. He may not, and in most cases will not, wait for the payment of his fees. Alternatively, other forms of expert evidence may be required in order to carry out a proper investigation into a case. I suggest that what will happen is that many experts, particularly those who demand higher fees for simply carrying out an examination and then submitting a report, will say, "What's in it for us? Why should we bear the costs that are involved in examining whether or not a case exists?".

My noble and learned friend may dismiss that, but it is not right that the trial should be disadvantaged by a judgment that is forced upon a firm of solicitors who cannot enjoy the benefits of the Thompsons of this world. It is an embarrassingly difficult problem for some large firms practising in this field as well. It is not quite as straightforward as my noble and learned friend suggested in earlier debates.

I believe that there should be provision, perhaps in compelling circumstances, where the authority concerned has a discretion as to whether fees of this kind should be allowed. Of course, it would be the duty of the solicitor to establish that those disbursements are reasonably incurred and the question of the costs of advocacy in the court has already been dealt with.

I hope that my noble and learned friend will consult rather more than the Lord Chancellor's Department has so far done because serious injustice may arise. It is not ultimately that it is a form of great economic support for the solicitors who practise in this field; I want to see that justice is done to a vulnerable client.

Lord Falconer of Thoroton: My Lords, this group of amendments includes amendments relating both to direct payments to advocates--solicitor or barrister--and in relation to the payment of disbursements. It includes also a number of amendments tabled by the Lord Chancellor which deal to some extent with those issues. Perhaps I may deal with the amendments of the Lord Chancellor first because it is only in that context that one can go on to look at the amendments tabled by noble Lords.

The Bill gives the commission power in Clauses 7(3), 13(2) and 14(3) to secure the provision of services by making direct payments. In relation to the first two clauses this power is intended as a reserve power to be used in exceptional cases. It is the Lord Chancellor's firm intent that in general the provision of services will be through contracts. However, in relation to Clause 14 the position is different. Here there is an entitlement that the public receive representation and it is likely, in the medium term, that the principal means of securing services will be to make direct payments under remuneration schemes similar to the ones presently provided in regulations under the current Act. The Lord Chancellor undertook in Committee to consider further what provisions should be made in the Bill, in relation to the circumstances where direct payment is made, as to the manner in which the Lord Chancellor might set remuneration rates, the factors he should take into account, and the consultation he should be required to undertake before he sets rates.

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Separately, as the Lord Chancellor mentioned when speaking to the first group of amendments considered today, he has provided a power to make orders about the way in which the commission shall discharge its functions under Clauses 7(3) and 13(2). This group of amendments considers how remuneration provisions should be provided within the structure of the Bill and the provisions relating to the making of orders.

The first amendment in this group standing in the Lord Chancellor's name amends Clause 14 by inserting three new subsections. As I said, Clause 14 creates an entitlement to representation and that, unlike the provisions in Clauses 7(3) and 13(2), it is likely that the provision of services by direct payment will continue to be the principal means of funding the provisions of representation in criminal cases. Even in the longer term, when we would expect services to be provided increasingly through contracts, direct payments will continue to be a significant means of securing provision of services.

Proposed subsection (3A), therefore, creates a duty on the Lord Chancellor, by order, to make provision about the payments which may be made by the commission in respect of representation funded under Clause 14. I should perhaps make clear that the words "making provision about payments" are intended to encompass not only the rates that are to be paid but also the mechanism by which the rates may be applied to arrive at a final sum of remuneration, and the court, person or other body that may carry out any determination of the final sum of remuneration.

Under the proposed subsection (3A)(b) the order may also make provision requiring the commission to discharge a function in subsection (3) in accordance with the order. This provision mirrors similar provisions which I have already mentioned were contained in the group of amendments that the Lord Chancellor moved earlier today relating to the making of orders by him. New subsection (3B) provides a definition of when representation is provided otherwise than through a contract, so that there can be no doubt about when the remuneration rates apply.

Finally, new subsection (3C) requires the Lord Chancellor to ensure that any order makes provision for reviews of, or appeals against, determinations required for the purposes of the order. The changes made by the inclusion of the new subsections required a consequential amendment to Clause 14(5), which is the second amendment in this group standing in the Lord Chancellor's name, to more accurately reflect the function being performed by the commission. As a result of the inclusion of the new subsections in Clause 14, Clause 15 is no longer necessary. All of the powers which are contained in Clause 15 are now contained in the provisions of the proposed Clause 14(3A)(a). Consequently, the third government amendment in this group seeks to remove Clause 15 from the Bill.

The final government amendment in this group is perhaps the one which interests the profession the most, for it provides for the factors that the Lord Chancellor shall consider in making a remuneration order, and the extent that he is required to consult before he makes a

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remuneration order. The new Clause 23(1A) provides a duty on the Lord Chancellor to consult the General Council of the Bar and the Law Society before he makes a remuneration order. This continues the duty contained in the present Act to consult those bodies before making remuneration regulations.

The new subsection (1B) sets out three factors to which the Lord Chancellor shall have regard in making a remuneration order. First, the Lord Chancellor must have regard to the extent to which the rates he is setting will ensure that he is able to secure the provision of a sufficient number of competent persons or bodies to provide the services required. The Lord Chancellor will also have to have regard to the cost to public funds. We have repeatedly told your Lordships that public funding of legal services has to operate within a controlled budget. It could not be otherwise than that, when setting remuneration rates, the Lord Chancellor must have regard to the consequential effect on the cost to public funds of any rates he decides to set.

Finally, the Lord Chancellor will have to have regard to value for money. This last factor places the same duty on the Lord Chancellor that is placed on the commission in relation to the community legal service and the criminal defence service by Clauses 6(5) and 17(3). It describes the act of balancing both quality and price in an attempt to achieve the optimum balance of the two.

The new subsection (1C) provides the definition of what the term "remuneration order" means, by making it clear that it is an order made under the provisions of the three new subsections that I have already mentioned: namely 7(3A), 13(2A) and 14(3A).

In moving these amendments, the Lord Chancellor sought to meet the concerns of the noble Lords, Lord Kingsland, Lord Goodhart, Lord Phillips and the noble and learned Lord, Lord Lloyd, who wished to see, on the face of the Bill, the manner in which the Lord Chancellor would determine remuneration rates in those cases where payment is made directly to service providers, and otherwise than through a contract.

That brings me to the three amendments in this group standing in the names of the noble Lords, Lord Kingsland, Lord Goodhart, Lord Hunt, Lord Phillips and my noble friend Lord Clinton-Davis. We are not able to accept these amendments because we believe that they are unnecessary and place an undesirable restriction in the Bill on the way in which services may be purchased by the commission.

They are unnecessary because there are ample powers for the Lord Chancellor to make provision of the kind sought if that were ever to prove necessary. Amendment No. 40, in particular, seeks to secure for the Bar a permanent privileged position. In Committee the Lord Chancellor said repeatedly that he fully understood the concerns of the Bar that they do not wish the fees of barristers to be treated simply as a disbursement to be taken from the contract price agreed with the solicitor. He said, too, that he is ready to contract with the Bar if it can organise itself to make that a practical proposition. To some extent, the ball is in the Bar's court. It should start addressing the issues to place itself in a position to contract for work with the community legal service.

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I repeat the position. We understand the Bar's concerns. We would prefer to be able to contract with the Bar so that barristers can be paid directly. We do not favour, as a general rule, a position in which the barrister's fees are simply whatever the solicitor who holds the contract is prepared to allow. I do not believe that that would be healthy for the relationship between the two halves of the profession.

Finally, my noble friend Lord Clinton-Davis referred to disbursements to be paid to experts. He said that the noble and learned Lord the Lord Chancellor had not taken those concerns sufficiently seriously. I do not think that is right. There is a power in the Bill for the legal services commission to make such payments. I refer to Clause 7(3)(b). That power is already in the legislation and there is no appropriate basis for amendments which seek to restate it. In the light of what I have said, I hope that the noble Lords, Lord Kingsland and Lord Goodhart, will not press their amendment and I commend my noble and learned friend's amendment to the House.

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