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We all accept that the Bill is necessary. It was originally prompted by concerns over the complaints procedures but now we have a far broader Bill. We inevitably have a serious responsibility to ensure that this much larger Bill will not make things worse or have unintended consequences. The crucial matter is how to safeguard and entrench the independence of the legal profession. If we fail, the effects will be felt

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far beyond these shores. If protectionist-minded lawyers elsewhere are able to argue that our profession has become little more than an adjunct of Government, they will be able to force shut the door for our lawyers, which would be highly undesirable.

This is all about balance; it would be quite wrong—indefensible, even—to establish an appointments process so self-evidently lacking in checks and balances. The Legal Services Board must not only be independent, it must be seen to be independent. Sir David Clementi made this one of the key points in his excellent report. I have to say in support of the noble Lord, Lord Bach, that the Select Committee sought to “Clementi-ise” the Bill because we agreed with so much of Sir David’s report, particularly where the Government had departed from the original recommendations. Sir David said:

The noble Lord, Lord Bach, moved an amendment to the original report which stated that provision should be made for the Secretary of State to make the appointment in consultation with the Lord Chief Justice. That very much follows what Sir David recommended. I hope that the Government will think again on that issue.

Another key issue is that the Government are always looking for ways in which they can exercise more power and control. The noble and learned Lord shakes his head. When I had the privilege of serving in government, I found that tendency from time to time, but of course I resisted it; the noble and learned Lord has not done so.

In the draft Bill with which members of the Select Committee were presented, there were 111 references, not to the Lord Chancellor, but to the Secretary of State—any Secretary of State. So the noble and learned Lord can imagine the enthusiasm with which I made the same check in the new Bill, which is not much longer but has been split into two volumes. By how much had he reduced the number of references to power for himself from 111? The result of my word-count—I have since cleared this with all sorts of more technical people—showed that the number of references to the Secretary of State had increased from 111 to 288.

A noble Lord: Good gracious!

Lord Hunt of Wirral: I could not believe it at first. I would love it if the noble Baroness, Lady Ashton, who will make the winding-up speech, explained why the Secretary of State has to take these powers. There is a paradox here. If the Government are seeking to tighten up regulation of the sector, why are they pushing through what looks and smells like a measure which will increase the powers of the Secretary of State to an unparalleled degree? We are talking about not just a government quango but one which will be controlled more tightly by government than any other.

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I hope that the noble and learned Lord, when he gazes back over his opening speech in this debate, will recognise that the word “quality” did not appear often enough. We have the highest-quality legal service in this country and we should entrench it. The vital roles of the Law Society and the Inns of Court in education, training and competence must be maintained, because they have established these exceedingly high standards. Some reassurance on that point would be much appreciated.

Furthermore, it is patently absurd to propose that the Secretary of State should enjoy the untrammelled and direct power of appointing the head of the new Legal Services Board while expecting the industry to fund it in its entirety. There are clear parallels with other bodies such as the Financial Reporting Council, whose running costs are one-third funded by the taxpayer. In paragraphs 35 and 36 of his report, Clementi agrees and reinforces the precedent that I have given by stating:

I hope that the Government will think again on that. It would surely be more sensible, fairer and more balanced for the start-up costs of the Legal Services Board and a proportion of its ongoing costs to be borne by the taxpayer. How else will it be seen to be independent and not merely a creature of the Government or the legal profession?

I am also very concerned about the powers of the Legal Services Board to intervene when the front-line regulator is deemed to have underperformed. Surely the LSB should be a regulator of last resort, no more and no less, and that should be made penny plain in the Bill. Such intervention should be the exception not the rule. I am especially concerned, as was the Select Committee, about the power to impose fines on the front-line regulator. Surely that should apply only when the approved regulator has ignored a direction by the LSB. I would welcome an assurance from the Minister on that point, on which I hope the Government will concede.

Like the noble Lord, I should like the “only the polluter pays” principle to be enshrined within the reconstituted complaints system. The noble and learned Lord will be aware of the Select Committee’s concern about the headlong rush towards alternative business structures. Sir David Clementi made the very good point that there should be a step-by-step approach, and I detected an indication that the noble and learned Lord agreed. No doubt in Committee we shall be able to introduce provisions that would secure what he indicated earlier.

There are widespread worries about conflicts of interest, which will—not may—be created if Ministers press ahead with the ABS reforms. Sir David drew attention to that concern in his report, as did the Joint Select Committee that I chaired, which was unanimous in its report. The provisions in the Bill are very weak and will have to be strengthened considerably, but that will be a matter for Committee stage.

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Like many others in this House and elsewhere, I sincerely hope to be able to support not only the principles behind the Bill but its detailed provisions, but I admit to having serious reservations. I will be greatly assisted by the initiative of the noble Lord, Lord Brennan, who led the formation earlier this week of the new UK All-Party Parliamentary Group for Legal and Constitutional Affairs. I warmly applaud his initiative and have the honour to be one of his qualifying members. I look forward to working with colleagues of all parties and none as we approach Committee stage.

Lord Falconer of Thoroton: My Lords, the noble Lord reminds me of something that I should have declared at the outset. He put in play in the debate the Inns of Court, and I should formally declare that I am a member and bencher of an Inn of Court. I thoroughly endorse what he said about the thoroughly good work that Inns do.

4.53 pm

Lord Neill of Bladen: My Lords, I declare my interest. I am a practising member of the Bar; for some years I was on the Bar Council and I was once chairman of the Bar.

I was also a member of the Joint Committee of both Houses which considered this Bill. It was a very interesting process. There are two things to be said about it. On the first point, the noble Lord, Lord Hunt of Wirral, was a little inaccurate when he gave all the praise to the committee members and not himself. No doubt that was modesty, but he was a fantastic chairman of the committee and managed to lead us down paths of tranquillity, which might have been of a different character but for his benign and skilful influence on the conduct of our affairs.

The second point, which I believe the Government have taken on board, is that the time allowed for the preparation of the report was inadequate. At one time we wondered whether we should carry on, because it was uphill work, since we started from scratch and there were a whole lot of background papers to be read. We had to decide which witnesses we wanted to call; we then had to give them time to prepare, call them and then consider the great body of evidence and the written material coming in. To do all that in eight weeks is very tough going. I respectfully suggest that it really should not happen again. I think that that has been taken on board.

I shall deal with one or two major themes. On the independence theme, I know that to a great extent I am preaching to the converted, but it is important. An aspect arises out of one or two observations that have been made. What we do with this Bill is being watched in other countries to see whether we are doing anything that will destroy the perception of independence of this country’s Bar. Frankly, in other countries jealous eyes are cast on the huge success of our legal profession. If it could be shown that it had ceased to be independent, perhaps road blocks could be put in its path. The president of the Law Society is much exercised by this matter. We should not ignore it.

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The noble and learned Lord, Lord Lyell of Markyate, referred to the importance of having an independent legal profession. It is vitally important that people should be willing to take up difficult cases and have the moral courage to appear in cases where the forces of power are rallied on the other side. Nothing must be done that alters that. I draw attention to two points in that regard. A very good paper was produced. The only matter in which I played any part in the committee concerned my asking whether the Bar Council could produce a paper on the duty owed to the court by advocates. An excellent paper, which appears on page 70 of volume II of our work, was the response to that request. It has two striking elements. I am ashamed to say that I was not aware that the measure was already embodied in a statute of 1999. One of the Law Lords, the noble and learned Lord, Lord Hope of Craighead, who was present earlier but had to leave to attend to other duties, commented on the matter in a very good passage. The relevant statute is the Access to Justice Act 1999, Section 27 of which provides that every duly authorised advocate has a duty to the court to act with independence in the interests of justice. That is already a statutory requirement. While not talking about the Act specifically but referring more generally to Hall v Simons 2000, the noble and learned Lord, Lord Hope, said:

That is an extreme manifestation. You get cases where you come across an authority you previously did not know—a decided case—which is dead against you but your duty is to inform the court. If you come across a highly embarrassing document, every dishonest instinct might tell you to shred it. Your duty is to hand it over, but by so doing you lose the case. The client is not very pleased, but that is your duty. Those are the rules of the game.

I am pleased that the Government have gone a long way to meet us on this. Following one of our recommendations, they have included in the Bill’s general principles, the regulatory objectives, the adjective “independent” in Clause 1(1)(e). Again following one of our recommendations, the duty to the court has been added in Clause 1(3)(d). So far, so good. However, noble Lords would not expect my entire speech to be full of praise. We suggested that the regulatory objectives ought to include a reference to the public interest, with words such as “protecting and promoting the public interest”. That has not been accepted in full, although possibly we will pick up references to the public interest elsewhere. The committee would like to have seen that put squarely on the front of the Bill.

What are the threats to the perception of independence? I identify three, most of which have been identified already. The first is the appointment of the chairman of the Legal Services Board. The Joint Committee, following Sir David, was very keen

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on involving the higher judiciary. There would be no better person now than the Lord Chief Justice. With great respect to the noble and learned Lord the Lord Chancellor, I cannot accept the populist view is that the Lord Chief Justice is regarded by the public as just another lawyer. He happens to be the head of the legal profession, and he would have attained that position only after an impeccable and very successful career as a lawyer and as a man of the greatest possible integrity. In other contexts, we rely and depend on him. So the view that he would be unacceptable as a person who must be consulted is completely wrong and mistaken. I have begun to think that we should have gone a bit further than “consult”. We should perhaps have said, “with the concurrence of” the Lord Chief Justice on the appointment. For my part, I would go further. I do not see why, once the original appointment has been made and you have a reappointment, you should not just have the Lord Chief Justice as the appointing body. He should certainly be involved in the appointment. That is the first possible threat to the perceived independence.

The second thing would be to have a very interventionist Legal Services Board. Sir David Clementi talked about a “light touch”. If I had been a parliamentary draftsman and someone said to me, “Would you mind putting in some words to say that there has got to be a light touch?”, I would not find that very easy to do. We see the direct opposite of the light touch in the power of intervention to give directions, which has already been mentioned. That appears in Clause 31(1)(a). The intervention can take place if the board perceives that there has been a threat to any one of the objectives in the principles set out in Clause 1. As noble Lords know, there are about seven of them, and if we get our way there will eventually be eight. To some extent, they point in different directions. Many possible actions taken by a regulatory authority could be thought to be a threat to one or other of them. That needs to be changed by amendment in Committee to make the trigger for intervention more difficult.

Thirdly, there is the matter that has been mentioned by the noble Lord, Lord Hunt; our recommendation concerned with the frequent use of the term, “the Secretary of State shall have power to do x, y and z”, right through the alphabet. I had not done the arithmetic that the noble Lord has carried out to see that they double the figure. I am a bit surprised, because the Government responded to our criticism by saying:

The stakeholders must have come along with shovels and added a very great deal more in the way of the need for the Secretary of State. That has got to be looked at.

My next area for discussion is complaints. The Bar has had some of these; the figure that it gives is that 3 per cent of complaints against the legal profession come to the Bar. It has a pretty good record with the Legal Services Ombudsman, which has been

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mentioned. The thing to concentrate on is the supposed possible split between complaints that relate to service and those relating to conduct. The Bar’s evidence to us is that 70 per cent are hybrid, with allegations of bad service and bad conduct. It would be absurd to have two different bodies; to have an ombudsman looking at part of it and the Bar conduct regulator people looking at something else. Some flexibility is required, as is a power to hand over to the Bar the combined issue that arises on a case, if it is thought appropriate. For example, how do you classify a case where the client says, “I want you to call X. He’s a star witness; he’ll win the case for us”, and the barrister has his own good reasons for thinking that would be a disaster and refuses to call him? Is that service or conduct? It is only one example; we might be able to come up with the answer to it, but I am sure that I could come back with others that are impossible to clarify as truly one or the other. Flexibility must be brought into the Bill, so that the matter can be transferred to the professionals.

We should watch carefully the dogma that professionals cannot be trusted to judge professionals. As a junior barrister, I used to appear in front of various bodies of professionals on behalf of some miscreant professional, and I constantly failed. It may have been my fault, but they were the toughest bunch. If you appeared in front of a lot of surveyors to try to acquit, in the old days, a chartered surveyor on a charge of advertising, or similarly in front of the Institute of Chartered Accountants, you had a snowball’s chance in hell. It is a complete fallacy that such bodies are not to be trusted; they are very tough.

The “polluter must pay” doctrine cannot be fair or right. It cannot stand up to any outside scrutiny that a man who has a false charge made against him has to pay the costs of the proceedings.

I have a concern on how the costs will add up and escalate. At the moment, we have an estimate of £20 million for set-up and another of £20 million for the annual charge, so you start year 1 at £40 million and have the professions paying under the present scheme without any government contribution. We do not want another Dome—I think I can safely say that; the noble and learned Lord has withdrawn—or another Olympic city, with the estimates being blown through the roof. We must try to exercise control, and the Government ought to contribute largely to set-up costs and annually to the annual costs.

5.07 pm

Lord Borrie: My Lords, this is a considerable Bill. Behind it lies work from not only the Government and the key departments of state, but the Office of Fair Trading, Sir David Clementi, and the Joint Committee under the notable chairmanship of the noble Lord, Lord Hunt of Wirral. I want to concentrate on two matters only: complaints about the conduct or service provided by members of the legal profession, which are dealt with in Parts 6 and 7; and alternative business structures—the possibility of legal services being provided with a mixed discipline team of providers—which are considered in Part 5.

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The Government are rightly committed to setting up an Office for Legal Complaints that comprises an ombudsman scheme, following 20 or 30 years of ombudsman schemes in central government, local government and a number of private sectors. I shall refer to both “clients” and “consumers” for the benefit of the noble Lord, Lord Thomas, but he is not present; I use the words rather interchangeably myself. Clients, consumers and customers would benefit from a clearly identifiable single point of entry for complaints and towards any redress scheme. But in the detail of working out this scheme for the Bill, the Government have been so concerned to create a nice, tidy scheme, with every complaint about solicitors and barristers being not just sent to the OLC but adjudicated on by it, they have ignored the fact, referred to by several noble Lords already—the noble and learned Lord, Lord Lyell, and the noble Lords, Lord Thomas and Lord Neill of Bladen—that it has been the independent, fair-minded opinion of successive legal ombudsmen in recent years that, whereas the Bar has a very high reputation for handling complaints in a fair, just and effective way, over the years, the solicitors’ profession has lamentably failed in that respect. I am not here to cast blame, but to suggest, in line with other noble Lords, that that is a great distinction. I am all in favour of the OLC being a single point of entry for all complaints about legal services, but we should not lose the many advantages that have been provided by the Bar’s handling of complaints, including the free time at present given by members of the Bar in analysing complaints.

The Bar has properly and rapidly separated its representational functions from its regulatory functions, with the latter being the responsibility of the Bar Standards Board, which has a lay chairman whom I have known for many years—Ruth Evans was the director of the National Consumer Council and has a number of other significant achievements behind her. So it is most appropriate that the Government should listen carefully to the Bar’s case that the OLC should delegate to it the handling of complaints against barristers.

I happen to have a little experience that I can contribute to the debate. I am chairman of the Advertising Standards Authority and we have delegated to us from a statutory body, Ofcom, under the Communications Act 2003, its statutory job of adjudicating on complaints about advertisements. That was achieved between ourselves and Ofcom. I note that the chairman of Ofcom has arrived in his seat at a convenient time for me and he will know that there are agreements and concordats between us whereby Ofcom’s statutory duty is delegated to us, only as long as, through accountability or reporting and so on, the job is properly done.

It would seem a great pity to equate treatment of the Bar and the solicitors’ profession just because solicitors are unable at present to show themselves as fit to handle complaints. As the noble Lord, Lord Neill of Bladen, has indicated, a high percentage of complaints against barristers are hybrid, involving

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both matters of discipline that the Bar is given to deal with, and complaints about the service provided by a barrister, which involve claims for compensation.

I am not sure that the Lord Chancellor referred to it, but Clause 154 specifically prevents the Bar and the Bar Standards Board providing any redress or compensation. That clause should disappear from the Bill, because if there is the delegation that I desire, that discretionary power to delegate would have to be followed by the ability in law for the Bar Standards Board, the Bar itself, to award compensation.

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