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We will want to know why the noble and learned Lord the Lord Chancellor says that it is necessary for him to maintain the Government’s grip over appointments, not only initial appointments but the whole appointments system. That approach was rejected by Sir David Clementi but nevertheless appears in the Bill. It flies in the face of the Government’s policies elsewhere in the judicial system for an independent commission to appoint judges and so on. We have a proposal for the Secretary of State to take power to appoint members of the board personally, and that is matched by his power to remove them. The noble and learned Lord referred to the fact that nobody suggests that the Lord Chief Justice appointed by the Prime Minister is not independent. The Lord Chief Justice has the tenure of his office. He cannot be removed by any Minister. He can be removed only by the votes of Parliament. But here is a system where the Lord Chancellor appoints

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and the Lord Chancellor removes. In the Bill he also takes the power to amend at will the objectives and powers of the Legal Services Board. Is that independence? I respectfully suggest to your Lordships that it is not.

It is unclear to what degree the Legal Services Board will seek to interfere with or second guess the front-line regulators—the Law Society and the Bar Council being the prime front-line regulators. Is there to be a light touch or not? In response to the Joint Committee’s report, the Government said that,

A system which has regulations granting the Legal Services Board swingeing powers to give directions to the Bar Council or the Law Society to “take specific regulatory action” and to issue financial penalties may be quite disproportionate to the powers that should be granted to this overarching body. If the Legal Services Board is to consist of lay persons, how are they qualified to give detailed directions on technical regulatory issues?

I move to the issue of complaints. It is an unfortunate fact, as the noble and learned Lords, the Lord Chancellor and Lord Lyell, said, that the Law Society complaints procedure was a failure. I fully accept that the regulatory functions of the Bar Council and the Law Society should be separated from their representative functions. That, indeed, has already been done. However, looking at the body of complaints, I am not impressed by the percentages of those who complain that they have had a poor service. There are certainly unforgivable delays and incompetence, but that is not always the root cause of a complaint.

In disputes between citizens and conflicts between the citizen and the state, there are winners and losers. The winners never complain but the losers may. Sometimes it is the fault of the lawyers for giving bad advice, but much more often—I do not have to say, in a lengthy experience on both sides of the coin, that I have not received a complaint myself; I just make the point—the advice given is based on inaccurate instructions from the client. The successful lawyer challenges and tests his instructions with the client, and in criminal cases he often has to plead with his clients, “For goodness’ sake, tell me the truth”. Often this attitude of having to test what the client says triggers complaints, particularly when the client loses, of arrogance and hostility because the lawyer does not swallow without question everything that the client tells him. The less successful lawyers, on the other hand, are those who accept everything their client tells them without question and then lose.

I accept that complaints of delay and incompetence should nevertheless be dealt with by an independent office of legal complaints. As I say, the Law Society consumer complaints service was not a success. It was therefore surprising to discover that the proposal for the new office is that it be in the same town as the current Law Society consumer complaints

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service. That suggests that what is happening is merely a re-badging of a failing service.

It is also proposed that the service will encompass complaints against barristers. That may be very unsatisfactory for them. The noble and learned Lord suggested that all was not well with the Bar complaints system, but the Legal Services Ombudsman has praised the performance of the Bar Council in its handling of complainants. Let us suppose that one-third of Bar Council complaints—which represent only 3 per cent of all the complaints that are made about lawyers—go to the ombudsman. In her report for 2005-06, the ombudsman said:

So, of the one-third of complaints that go on to the ombudsman, she is satisfied that 88 per cent of them have been properly handled. It is not surprising that, in the same report, she said:

The problem that the Bill is designed to overcome has not been a problem with the complaints-handling of the Bar Council.

The division that the Bill proposes between service and conduct complaints may be quite artificial. Often, certainly for barristers, a complaint of poor service includes a complaint of misconduct but, under the Bill, there will be one body considering the service side of the complaint while the Bar Council will consider the conduct side of the complaint. In trying to improve the Bill, we will seek the possibility of the OLC transferring mixed complaints of conduct and service to the Bar Council for its determination. That would give a certain amount of flexibility to the system to be introduced.

I turn to “alternative business structures”. The Bill allows lawyers and non-lawyers to form legal partnerships, as the noble and learned Lord the Lord Chancellor said. There is undoubtedly a case for a one-stop professional service so that accountants, insurance agents, estate agents or architects may make cost savings in marketing, administration and office expenses. There are certainly benefits for the professionals, but I query whether there are benefits for the consumer of having only one door to go through, but then being directed to various offices inside a single building.

So there are benefits to professionals in cost savings—I have no doubt that that is why the Law Society has expressed such support for the idea—but I have considerable doubt that it is possible to ring-fence legal services within a multidisciplinary organisation so as to preserve that important principle to which I referred at the beginning of my remarks: client confidentiality. Do you, as the Bill seems to suggest, extend legal professional privilege to accountants, estate agents and insurance agents just because they are in partnership with lawyers, provided that they can be brought within the provision of some form of legal advice?

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Similarly, the scope for conflicts of interest—the second principle to which I referred—seems to me to be considerably widened and may cause serious problems. “Alternative business structures” also allows for outside investment in legal partnerships: for a large, multiple firm or organisation such as the AA, an insurance company, a bank, or a supermarket to get involved in providing legal services. Why? People who are afraid to step inside a solicitor's office on the high street are not likely to step with any greater celerity into a lawyer's office that is part of a bank, an insurance company or a supermarket.

No one enjoys going to a lawyer. Let us face it: it is always because there is a problem. Even when you are making a will, you are contemplating your own mortality, which is not a very pleasant thing to do, especially if someone charges you money for the purpose. In the criminal law, some of us have clients who, even though acquitted, say, “I hope I never see you again”. The experience of contact with a lawyer is not necessarily a happy one.

If you bring in outside money, it will enable partners in a large legal firm to sell out to shareholders and realise the value of their stake in the business. The Government can expect support from that quarter. As for the client, the consumer, he will lose out. If there is national marketing by a large concern with special offers to kill off local competition, the high street firm—the sort of firm for which I work happily and, I hope, with some benefit to my community—cannot survive. The large organisations will concentrate on the profitable side of the business. You can forget about legal aid, access to justice and pro bono work. The Tescos and insurance companies of this nation are not interested in working for nothing.

There are other problems. Lawyers, whether in chambers or a solicitor’s office, enjoy the support of their peers and the ability to discuss the problems that they face. The interest of a bank towards its shareholders may therefore conflict easily with the interest of the customer or consumer. I see there are signs of impatience among your Lordships; I have detained you too long.

The Bill is a free-for-all. It enables investors through the market, without any legal training or qualification, to make a profit out of the provision of legal services. That is new Labour, but I oppose that. The case has not been made out.

4.25 pm

The Lord Bishop of Chelmsford: My Lords, as a Bishop entering a debate involving the world of lawyers and their language, I am beginning to understand what it feels like to be a lay person caught up in a theological discussion. I therefore hope that the noble and learned Lord will be patient with me and gently direct me when I get things wrong.

I am speaking in the debate because the Bill gives rise to issues affecting the powers and responsibilities of the Archbishop of Canterbury. I know that the noble and learned Lord has given careful thought to these matters, so I thought it right to put something on the record. The Bill provides for the Master of the

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Faculties, who is responsible for the Faculty Office of the Archbishop of Canterbury—an office that is combined with the Dean of the Arches and Auditor—to continue to regulate the notarial profession. This person is named as an approved regulator. I understand that the Archbishop is content for the Master of the Faculties to come within the terms of the Bill, provided that the office holder continues to exercise the regulatory role that has historically been held by that office.

I further understand that the Government are content not to disturb these historic arrangements, which were established in 1533, for the appointment of the master by the Archbishops of York and Canterbury, with the approval of Her Majesty the Queen. I understand that the Government have established and agreed that the master may continue to be a member of the Church of England in line with the 1533 Act, and that, because of the character of the duties associated with this office, this does not breach the European Convention on Human Rights or the 2006 regulations on employment equality relating to religion or belief.

In 1998, the Society of Scrivener Notaries was admitted as a member of the International Union of Latin Notaries—a non-governmental organisation with associations from 70 countries as its members. Before the society was admitted, the regulatory regime exercised by the Faculty Office was carefully examined. The fact that the regime is independent of government was an important element in securing admission. I gather that there is a real desire that this continues and that the Master of the Faculties continues to regulate it. We might sum this up as, “That which is not broke should not be fixed”; in other words, we have a service that works extremely well and is cost-effective, and we have an agreement with the Archbishop’s office that it falls within the regulation of the new legal board. I simply want the Government to put on record this afternoon that my reading of this is also their reading.

4.29 pm

Lord Bach: My Lords, I declare my interests: I am a non-practising barrister and a former head of chambers. I was also, albeit briefly but enjoyably, a Minister in the Lord Chancellor’s Department. It is a pleasure to be taking part in the Second Reading of this important Bill. Noble Lords will be pleased to hear that my remarks are few and I will try to keep them short. I congratulate the Government on including this Bill in their programme for this Session and on their decision to start it in this House, as it is just the sort of Bill that should start here.

Of course, the Bill deals with very important subjects. In a free society, how legal services are provided and what protection there is for the consumer are obviously significant issues. But this is the sort of Bill that could have slipped through the net. It is to the credit of my noble and learned friend the Secretary of State and his department that they should have succeeded in the battle over what legislation is in and what is out—a constant battle that, so rumour has it, is engaged in throughout

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Whitehall. It is a Bill, too, that was eminently suitable for scrutiny in draft form by a Joint Committee of both Houses.

Some years ago, I had the pleasure of sitting on a committee of this House that looked at the draft Freedom of Information Bill. Unfortunately, it was not a Joint Committee—the other place had its own committee. However, having served on that committee, I am convinced that in the right case Joint Committees looking at draft Bills are a real asset to the difficult task of law making. That was certainly the case in this instance. I am determined not to sound overenthusiastic because one of the main factors, if not the main factor, in making this Joint Committee such a success was the performance of the chairman, the noble Lord, Lord Hunt of Wirral. It is the delightful, constant practice of this House to congratulate noble Lords, but on this occasion I really mean it. So, I am sure, would all members of the committee. The noble Lord led the committee with patience, tact and tolerance. I am sure that the House will understand that all those qualities were needed in order to chair a Joint Committee.

Let me make my position clear. I strongly support the changes that the Bill proposes. I am a Clementi man. Sir David’s analysis seems unanswerable and I am delighted that the Government have adopted his proposals. Three main changes are proposed: the creation of the Legal Services Board; the setting up of an office for legal complaints; and the cautious introduction of alternative business structures. They each have my wholehearted support. These changes are needed so that legal services and how they are delivered are brought into the 21st century. Of course, changes of this importance are bound to be difficult for some. There are those, on the one hand, who will feel that this is a mile too far and others, on the other hand, who, while accepting the broad principles behind the Bill, will feel that there are areas where the Government have just got it plain wrong.

The exacting scrutiny that the Bill will undoubtedly receive in this House will, I hope, calm some fears. All I would ask is that the debate remains proportionate. What do I mean by that? Critics should think carefully before attacking the Bill on the grounds that it threatens or removes the independence of the English legal system. In my view, it does no such thing. For example, the provisions for appointment are subject of course to Nolan principles. It is just going over the top for critics to claim that issues of independence are somehow at the forefront of this Bill. I would say to those who argue in this way, “Criticise the Bill. There are of course improvements that should and must be made to it, but just because you do not like it, do not exaggerate it or attack it for something that is not there”.

I am afraid that the press release that went out with the Joint Committee’s report was guilty of some exaggeration in this way. It did not get the agreement of all members of the committee; it was not practical to seek that. In my view, the press release did not represent the conclusions reached by the Joint

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Committee. Of course, it was picked up by the press, which is what it was for, and I believe that a false impression was gained.

Before completing my speech, I want to say a few words about costs. I have a couple of concerns relating to start-up costs and the potential costs of complaint. On start-up costs, my experience of government invariably leads me—

Lord Campbell of Alloway: My Lords, I am obliged to the noble Lord for giving way. The suggestion that the press release was not objective is not right, in my opinion. It was prepared by those who assisted us, who had no political axe to grind whatever; it was an objective presentation. With respect, I hope that the noble Lord, who is a friend of mine—but not a political friend—will accept that what he has said is not right.

Lord Bach: My Lords, I am grateful to the noble Lord. Let me make it absolutely clear that I am not criticising in any way the staff of the committee, who did a fantastic job in a very short period of time. Whoever formed the draft release does not matter; it had to go through certain senior members of the committee, of course, otherwise it could not have gone out. So my criticism—if there is criticism—is not directed, nor would it ever be, at the staff of this House and another place who, I repeat, did a fantastic job in a very short period of time last summer.

I was saying a word or two about costs. One of my concerns relates to start-up costs and the other to the costs of complaints. On start-up costs, as I think I began to say, all my experience of government leads me to the very firm view that costs are always understated at this stage. It happens with this Government, it happened with previous Governments—it is in the nature of Governments. I fear that the start-up costs may be understated in this case, too. I very much hope that the Government will look yet again at this issue—I know that they have reviewed it—to see whether current forecast costs are realistic.

As to complaints, I have yet to be convinced that it is appropriate for someone who has been unsuccessfully complained against to have to meet the costs of the complainant. That seems on the face of it unfair. I know that there are problems in meeting costs in questions of complaint and I hope that we will be able to clarify the position at a later stage of the Bill’s progress.

But overall, in my view, this is an excellent Bill. I wish it good fortune and I look forward to playing some small part in debating its detailed contents in due course.

4.38 pm

Lord Hunt of Wirral: My Lords, I declare my interests as set out in the register, particularly my role as a partner in Beachcroft LLP, a national commercial firm of solicitors.

I, too, thank the noble and learned Lord the Lord Chancellor on behalf of the Joint Select Committee

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for his generous words. I immediately passed them on to the members, because they did all the hard work. As their chairman, I merely had to hold the ring, so to speak. As just demonstrated by my good friend, if I may refer to him as such, the noble Lord, Lord Bach, that was quite a significant achievement because there was strong feeling on all sides. I thank the noble and learned Lord for his generous praise, which I would also like to pass on to our advisers, particularly our Clerk, and the many witnesses who, at very short notice, virtually dropped everything to assist us. We are very grateful indeed.

The independence of the legal profession was a huge issue for the Select Committee. As my noble friend Lord Campbell of Alloway has pointed out, at the beginning of the report—not in a press release—under the heading,

we said how concerned we were about the level of involvement of the Secretary of State in the regulation of legal services. We continued:

This is an important issue, which we have to get right for various reasons. I recognise that the Government have accepted a number of the Select Committee’s recommendations, for which I thank the noble and learned Lord and his colleagues.

Because of the speed with which we had to deal with the Bill, we will want to raise a number of issues in Committee. I know that many members of the Select Committee will do so. We missed one or two points. The noble and learned Lord may have thought he had got away with one provision in particular: the old Clause 57(6). What is now Clause 68(6) gives the Secretary of State power to bring forward an order which,

What tremendous powers he is seeking.

Lord Falconer of Thoroton: My Lords, I am sure that that provision is governed by Clause 68(1).

Lord Hunt of Wirral: Yes it is, my Lords, but it is still a power to modify any Act of Parliament or enactment, including any future Act. I have drawn this to the attention of the chairman of the Delegated Powers and Regulatory Reform Committee. I congratulate the noble Lord, Lord Goodhart; as I have mentioned to him, I cannot think of anyone better to deal with such an issue. I hope that the committee will carefully consider the extent to which these powers are being sought. We will want to raise these and other points in Committee.

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