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Lord Bach: My Lords, I thank the noble Lords from the two Front Benches who have spoken and made their comments on these important regulations. I shall do my best to answer their questions. Indeed, that may be easier with the questions asked by the noble Lord, Lord Goodhart, not because they were easier questions as such--they certainly were not--but because he was good enough to give me some notice of what he was going to ask I have been able to make some inquiries concerning them.

I deal with his points not necessarily in the order in which he raised them. It is important to deal, first, with the issue of timing. It is our intention that the Funding Code should come into operation on 1st April and we point out that the changes were originally announced

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a long time ago--October 1997. Since then, every element of the new system has been subject to extensive consultation--a point accepted by the noble Lord, Lord Kingsland. We believe the profession has had every opportunity to prepare for change.

The Funding Code was subject to two rounds of consultation last year. Every firm that bid for a contract was sent a draft of the code in October last year and invited to comment. The final draft which contains relatively few changes together with the related guidance has been available on the board's website since early February. A full list of the changes to the code since October will be sent to every legal aid account holder next week, together with copies of all the new regulations that will take effect on 1st April.

There was an initial period for consultation to January, but the formal consultation period on the guidance ran to the 28th of last month. The guidance will be amended as required after the first two months of the scheme. I hope that that goes some way towards alleviating the fears of both noble Lords and of practitioners that those concerned will be put in difficulty by the timing involved.

Perhaps I may deal, first, with some of the points raised by the noble Lord, Lord Goodhart. I shall begin with the easiest one. The noble Lord asked why French as well as English is used. I am told--and I merely pass the information on to the noble Lord--that this is a treaty obligation. I understand the reason for this is that English and French are the two languages recognised by the Strasbourg convention on the transmission of legal aid applications.

The noble Lord asked about the 60 per cent "prospect of success" and questioned whether that signified moderate or good. As all of us who have practised know--even at the criminal Bar--estimating prospects is not a precise science, especially not at the criminal Bar. It is not possible to distinguish a 60 per cent case from a 59 per cent case or indeed a 61 per cent case. The bands based on the existing approach to estimating prospects of success, which are set out in the Bar Council's Guidelines on Legal Aid Opinions, reflect a broader judgment than that. A 50 to 60 per cent, or moderate case, will be a difficult case with arguments either way but one which, on balance, is more likely to win than not. However, a good case, with a 60 to 80 per cent chance of success at trial is one that will usually obtain a satisfactory settlement well before that stage.

I turn now to the noble Lord's point about "overwhelming importance" and whether that should include loss of livelihood. This criterion is intended for wholly exceptional cases. The effect is to apply the other criteria to them less stringently; for example, funding would be refused only if the prospects of success were poor. Unfortunately, loss of livelihood is a very broad term and could apply to any case where a person lost his job or business as a result of, say, injury or contractual dispute. Where such cases are within scope, it is right that the normal criteria for prospects and cost benefit should apply.

The "overwhelming importance" criterion is not relevant to child residence cases because the concept is not used in section 11.11 of the code. That already

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provides that private law children cases may be funded, provided that the prospects of success are not poor. We believe that it would be quite wrong to provide funding for legal representation in residence and contact cases that are clearly more likely than not to lose. Adversarial proceedings are best avoided in children's cases in any event. Children need stability and certainty in their lives, not repeated and probably pointless legal disputes between their parents.

There is no "prospects of success" criterion for funding for general family health or family mediation. In the context of private children cases, "prospects of success" means the prospect of securing what the client would regard as a significant improvement in arrangements for the children.

A good question is: what happens if the prospects of success change during the case? As the noble Lord, Lord Goodhart, said, criterion 14.2 provides for funding to be withdrawn if the criteria for grant are no longer satisfied. Funding would almost always be withdrawn if prospects fell below the minimum level to justify a grant. If prospects fell into a lower band so that the cost-benefit criterion was no longer satisfied, funding would normally be withdrawn as well. However, the guidance provides for two exceptions under paragraph 13.8.3:

    "The Commission has discretion to delay discharge of the certificate for a limited period to allow a settlement to be negotiated ... and discretion to continue funding, if it is in the interests of the Community Legal Service Fund to do so".

That would apply where substantial costs had already been committed to a case that was approaching its conclusions. The limited prospects of winning and recovering those costs might then outweigh the certainty of losing them if the case was abandoned.

I move on now to the example given by the noble Lord, Lord Goodhart, about the teacher. The criteria for judicial review also refer to significant human rights issues. That might well apply in the case of the teacher to whom the noble Lord referred and have a similar effect of classifying the case as one of "overwhelming importance".

I have done my best to deal with the points that were helpfully raised by the noble Lord, Lord Goodhart, and I now turn to those raised by the noble Lord, Lord Kingsland. As regards budgetary constraints, I can tell the noble Lord that there is a special budget that applies only to section 6 of the code--the high-cost cases--and not for other types of case. As I understand it, the question does not arise as far as concerns sections 7 to 13 of the code. I am conscious that I have taken much of your Lordships' time. I hope that my answers are satisfactory to some extent. I commend the draft regulations to the House.

On Question, Motion agreed to.

Funding Code

9.13 p.m.

Lord Bach: My Lords, I beg to move the third Motion standing in my name on the Order Paper.

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Moved, That the draft code laid before the House on 28th February be approved.--(Lord Bach.)

On Question, Motion agreed to.

Conditional Fee Agreements Order 2000

Lord Bach: My Lords, I beg to move the fourth Motion standing in my name on the Order Paper.

This instrument, together with negative procedure regulations that are shortly to be laid before the House and rules of court will give effect to Parliament's intention to increase access to justice through making it easier and more affordable to use conditional fee agreements.

Many tens of thousands of people have already benefited from being able to take claims using conditional fee agreements. Many more people will benefit once provisions of the Access to Justice Act 1999 are implemented in April this year. These provisions will allow success fees payable under conditional fee agreements and insurance premiums against the risk of legal costs to be recovered from a losing opponent, rather than from the claimant's own compensation for the wrong or loss that has been suffered.

Section 27 of the Access to Justice Act 1999 substituted the existing Section 58 of the Courts and Legal Services Act 1990 with two new sections. The new Section 58 set out the conditions that were to be satisfied to create an enforceable conditional fee agreement. Read together with the new Section 58A it provides that all proceedings may be the subject of an enforceable conditional fee agreement, except specified family proceedings and criminal proceedings other than those under Section 82 of the Environmental Protection Act 1990. Under the new Section 58(4) the Lord Chancellor may specify the proceedings for which a conditional fee agreement can provide for a success fee. Article 3 of this order provides that success fees may be agreed for any civil proceedings.

So conditional fees will be available in all civil cases. The new provisions for recovery will make their use attractive in cases not involving money. Claimants in these cases cannot rely currently on the prospect of recovering damages to meet the success fee and any insurance premium against the risk of costs. From 1st April it will be easier for them to use conditional fee agreements. Defendants will benefit similarly by being able to use conditional fees. If they are successful, their success fee will be recoverable from the claimant.

The new Section 58A(1) allows the use of conditional fee agreements in proceedings under Section 82 of the Environmental Protection Act 1990. Section 82 allows people aggrieved by a statutory nuisance to seek an order for that nuisance to be put right. These cases concern, for example, the failure of a landlord to maintain rented housing in a habitable condition. In the light of representations from housing support groups, the Government have decided that

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conditional fee agreements can be made in these cases, but a success fee will not be available. Article 3 of the order therefore makes this exception.

Under the new Section 58(4) the Lord Chancellor also sets the maximum success fee applicable to conditional fee agreements. In consultation last autumn he took the opportunity to ask whether the current limit of 100 per cent for the success fee continued to be appropriate. Opinion among respondents was mixed. Some, including insurers and some solicitors firms, felt that no maximum was needed as assessment by the courts would weed out success fees set at an unreasonable level. Others believed, particularly in respect of personal injury cases, that the 100 per cent limit should be retained to protect unworldly clients.

The Law Society and the Bar believed that for proceedings which might be heard in the Commercial Court and the technology and construction courts a limit of 100 per cent was neither needed nor desirable. The same would also be true, it was argued, of some shipping cases in the Admiralty Court. Clients in proceedings heard in these courts tended to be sophisticated users of litigation services who did not need the protection afforded by the 100 per cent limit.

The Lord Chancellor has, for the time being, decided that the maximum success fee should continue to be 100 per cent for all claims. Article 4 of the order retains this maximum for all agreements where there are success fees. The Lord Chancellor wishes to see how the new scheme for conditional fee agreements is developing before deciding on whether to make any

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changes. He wishes to expand the role of his department as sponsor of the legal sector, especially in the international sphere and will keep under continuous review what is best in partnership with the providers and users of legal services. In the meantime a higher limit will not be set.

Article 2 of the order revokes the Conditional Fee Agreements Order 1998.

This instrument is central to the new scheme for conditional fees. I commend it to the House.

Moved, That the draft order laid before the House on 21st February be approved [11th Report from the Joint Committee].--(Lord Bach.)

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