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Lord Falconer of Thoroton: My Lords, the effect of paragraph (f) is not that every single other profession must be represented. It is sufficient that there is some knowledge of other professions. Although one may hear evidence, one tends to know rather more about matters of which one has personal knowledge. We are merely saying that when lawyers think about their own profession, there should be representation by somebody who has some knowledge of other professions. It seems to me that that is sensible and preferable to relying upon the giving of evidence to the panel.

On the second point made by the noble Lord, namely, should one make a reference about the provision of legal services outside London, we regard the words,

as covering the whole of England and Wales. It would be inappropriate to have on the panel people who are aware of the provision of legal services if their knowledge did not extend to knowledge of the provision of services, not in every part of England and Wales, but in London, the provinces and the system as a whole.

I hope that that meets the point that was made. We do not intend to return with any other amendments. We are aware of the point. We think it is important and we hope and believe that it is covered. I think that that deals with all the points. We are grateful for the support of the noble Baroness, Lady Wilcox, the progenitor of the amendment and for my noble friend's support.

On Question, amendment agreed to.

7.15 p.m.

Lord Phillips of Sudbury moved Amendment No. 157:

Page 17, line 45, after ("services);") insert--
("( ) the duty of giving such advice as it thinks appropriate to the Lord Chancellor, after consultation with the Civil Justice Council established under the Civil Procedure Act 1997 with a view to ensuring that conditional fee agreements are being implemented fairly and in the interests of justice;").

The noble Lord said: My Lords, if passed, this amendment would insert into Clause 29 an express duty on the part of the legal services consultative panel, in effect, to monitor the effects of conditional fee agreements.

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As the noble and learned Lord, Lord Ackner, said, it was an established principle of our system until very recently that conditional fee agreements--a form of contingency fee agreement--were considered to be contrary to the public interest. One of the classical summations of that principle was made by Lord Esher in a House of Lords case in 1895, where he said that such arrangements were incompatible with the "honour and honesty" of the legal profession.

Before the Lord Chancellor under the previous government introduced a measure of conditional fee arrangements, a considerable investigation into all aspects of conditional fees was carried out by the Bar Council. In 1990 the council produced a long and considered report that came down clearly against the introduction of conditional fees on the basis that they would,

    "promote conflict of interest and a relaxation of ethical standards",
in the profession. At present, there is a working party set up by the Institute of Advanced Legal Studies, on which I serve, which is looking at the ethical aspects of conditional fee arrangements. A considerable amount of work has already been done and it is fair to say that the views of those in that working party are extremely wide and include a considerable level of concern about the potential effects of conditional fees upon the probity of the litigation process.

The two main areas to worry about, as has been said, are, first, conflict of interest and, secondly, malpractice. Conflict of interest is struck down almost every month in the courts in other situations and in an amendment earlier today it was included as one of the matters to be part of the code of conduct--that is to say, a duty to avoid conflict of interest. However, we have some acute conflicts of interest which are simply inescapable in conditional fee litigation.

First, there is an acute conflict between a solicitor and client in setting the amount of the uplift. In those circumstances, most clients will be in the hands of their solicitors, who will have all the knowledge and experience of the law and will be in an overwhelmingly strong position to get their way. The limited amount of research done by the Policy Studies Institute (PSI), at the behest of the Lord Chancellor, indicates that of the 197 cases at which it looked, it thought one-third of them gave signs of an exaggerated uplift on the part of the solicitors' firms involved. One of my colleagues told me only yesterday that it is also quite possible for clients to be inclined to pervert the system by refraining from telling a solicitor, to whom they go for a conditional fee arrangement, crucial facts in relation to the claim in the hope and anticipation of depressing the amount of the uplift.

There are also equal and opposite conflict risks in the course of the litigation process especially concerning how quickly or slowly one strikes a deal with the other side. Given that a solicitor may be on double fees, in certain circumstances if the case is a strong one, an unscrupulous solicitor could string out the litigation, knowing that ultimately he is bound to win and that the longer he strings it out the more the double fee will be worth. In other circumstances, it can work the other

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way. For a solicitor to accept a low offer of settlement from the other side in circumstances where the case is very uncertain, and therefore the risk of going into court is grievous on the part of the solicitor, can work in the direction of encouraging a solicitor of weak character to recommend a settlement to a client that should be refused.

The malpractice side is simple and gloomy. There is a temptation to suppress evidence that is inconvenient to the case, particularly if it arises rather late in the day. There could be a letter, a report or a witness who, after a vast amount of input by the solicitor, would scupper the case if such evidence were revealed to the other side. It puts grave temptation in the way of that solicitor, especially when egged on by the client, to allow the conditional fee arrangement to work as it does.

There is also considerable temptation to fabricate evidence, most particularly oral evidence; to hone, polish and embellish oral testimony in a way that ultimately becomes a perversion of justice. Again, one must realise that the temptation is not all on one side. In that circumstance, the client too has a strong temptation to manipulate the solicitor at the start of the case and to connive with the solicitor en route. That represents a conspiracy by solicitor and client against the public interest and justice as a whole.

It is not as if the era in which we live is one in which solicitors and barristers are unaware of the commerciality of the work that they do. The whole tenor of the development of "lawyering" in the late 20th century is towards an extremely hard-nosed business approach, in which winning has become paramount, to the danger of the judicial and litigious process. I suggest that we are not in a climate where one needs extra incentives for solicitors to do a proper job. An irony of the conditional fee arrangement is that the Government have put it forward as being needed in terms of preventing lawyers spinning out cases improperly and of taking on bad cases when they should not. It is strange that the moral turpitude which they say justifies conditional fee arrangements will be stimulated and given wider scope by those conditional fee arrangements.

Like a number of people both inside and outside this Chamber, I should like to express a great deal of unease about the impact of conditional fees over time. Perhaps I may make it clear that there will be no sudden lapse of probity and honesty within the profession. I am a great admirer of the degree to which high standards are upheld. Equally, it is fruitless to pretend that there will not be pressure on probity and that, as time goes by and does its work, little by little that pressure on probity could lead to a serious collapse in the very high standards which we currently enjoy in this country. It is, in effect, to keep an eye on that and to prevent a sort of dry rot starting in the litigation process that this amendment is directed.

I emphasise that my wish, and the wish of those who have put their name to this amendment--I refer to the noble and learned Lords, Lord Ackner and Lord Archer of Sandwell--is to put on the face of the Bill

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a specific duty on the part of the panel to keep an eye on the development of the conditional fee arrangements and, in so doing, to work with the Civil Justice Council which was established two years ago under the Civil Procedure Act. I hope that the Lord Chancellor will accept that the proposed wording of Clause 29, which seeks to incorporate a new Section 18A into the Courts and Legal Services Act 1990, is not adequate to ensure that that monitoring takes place with sufficient certainty and priority. The wording of what will be new Section 18A(2)(a) does not make it clear that the duty of the consultative panel can extend to anything which is not part of the "programme of work", as it is called, approved by the Lord Chancellor.

I am aware that the next amendment, Amendment No. 158, has been tabled by the Lord Chancellor in an attempt to improve the position somewhat. However, I venture to suggest that it does not. I repeat that the requirement to publish recommendations made by the consultative panel can extend only to those brought forward by it in relation to a programme of work approved by the Lord Chancellor of the day. We are saying that this is a sufficiently important matter that it requires a specific duty to be placed on the face of the Bill. It is on that basis that I beg to move Amendment No. 157.

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