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The Office for Legal Complaints deals with individual complaints. It is not entirely clear that it will have a specific role in advising how to amend procedures that have given rise to complaints or in advising about professional best practice. Is that intended to be part of the mandate of the Office for Legal Complaints? If it is not, there must be some kind of interface between the Office for Legal Complaints and the Legal Services Board to determine where that responsibility lies, because in that way we will improve our systems to enable a diminution in the total number of causes for complaint.

I raise one question that may be thought to be of less importance than some others. What is to happen to the reports of the inquiry on particular complaints? Are they to be published? There are cost implications of doing that, but there are transparency virtues in publication, not simply because of naming and shaming but because publication could assist in determining what practices are acceptable and what are not. That merits examination in Committee, if not resolution this evening.

Proposals on alternative business structures have been driven very largely by competition considerations. I pay tribute to the noble Lord, Lord Borrie, whom I have known for some time, and his successors at the Office of Fair Trading, who have recognised that the one-stop shop argument is on the face of it attractive and that there are some sections of our community for which and parts of our country in which access to legal advice is not readily obtainable. However, unsurprisingly, I share the views of my noble friend Lord Thomas that these proposals will not necessarily deal with all the problems that arise on access and provision. I cite my own example of representing in another place a very sparsely populated rural constituency where there were important relationships between lawyers and clients. I wonder how such practitioners will be affected by the Tescos of this world. The rural issue has been raised, but I do not think that it has been answered.

I hope, too, that the Minister may have something more to say on the potential conflicts of interest between the legal service providers and the shareholders, for example. Many of these questions seem to point to the necessity not of a headlong rush

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towards the establishment of these alternative business structures but of the cautious approach that I think the noble and learned Lord the Lord Chancellor was adumbrating.

Finally, is it intended that, in the regulation of these business structures, the rules should be applicable to sectors or to individual applicants? The licensing is of individuals, but if the regulatory system is in place for a sector, would it be automatic that a licence would be given if the criteria were observed? That is very important because we should not nod through structures that would be legally acceptable on the face of it but not apt for particular individual proposals.

6.29 pm

Lord Kingsland: My Lords, I begin by associating myself entirely with all noble Lords who underlined the importance of the work that the Joint Committee has done. We could not have had anything like as well informed a debate as we have had today without the work that that committee engaged in during a very short and demanding period. I also congratulate my noble friend Lord Hunt of Wirral on his outstanding chairmanship, which was recognised by noble Lords on all sides of your Lordships' House.

Part 1 is very short, containing only one clause with four subsections. It sets out the regulatory objectives in paragraphs (a) to (g) of Clause 1(1). But apart from the statement of what they are, we learn nothing further about them in the rest of the Bill. Yet they are crucial to the operation of the Bill because these duties are the duties which the Legal Services Board has to address in its regulatory role. I suggest to the noble Baroness that, in order properly to define the role of the LSB, we need a lot more detail in Part 1 than we have.

Three or four years ago I had the dubious honour of leading for the opposition on the Financial Services and Markets Act. Looking at the equivalent passages in that Act, one sees a much more detailed framework. The duties are set out in Section 2, but each duty in Sections 3, 4, 5 and 6 is given about half a page, in which Parliament explains in some detail exactly how it interprets those duties. It goes on to define the functions of the FSA and what it should have regard to in undertaking those functions.

None of that is in this Bill. There is a real concern across the board that there will be a temptation—I put it that way—for the regulator to make up his own law as he goes along. I suggest that, between now and the Committee stage, the noble Baroness might like to glance at the Financial Services and Markets Act and compare it with Part 1 of this Bill.

I give one example. Clause 1(1)(b) refers to “improving access to justice”. That is the only instruction the Legal Services Board has on that very important area. Many noble Lords talked today about alternative business structures. The noble Baroness, Lady Henig, was rather optimistic about the ability of alternative business structures to deliver better access to justice. I listened very carefully to her and I thought that her optimism was commendable. But there is, by contrast, another view; that

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alternative business structures will effectively cherry pick in the legal area, going only to those areas which are most profitable.

How will the Legal Services Board approach the question of improving access to justice? For example, will it have a universal service obligation rather like regulators in the world of the Post Office, the provision of gas supplies or electricity? Will it take the view that there is a minimum requirement for the provision of legal services in all parts of the United Kingdom? What about the very large number of people who are not very well off and have housing, social security, education or family problems? How will the Legal Services Board address those problems in the context of the access to justice requirement? I think that I have made my point. In Committee we ought to look very carefully at how we can unpack these duties in such a way that we and, indeed, the Legal Services Board, understand much better how it should interpret its duties throughout the Bill.

The second point I want to make is about independence. I think that almost every speaker mentioned this issue. It seems to me that there are two aspects to this question of independence. The first one is the relationship between the noble and learned Lord the Lord Chancellor and the Legal Services Board. The second is the relationship between the Legal Services Board and the authorised bodies, the authorised regulators.

On the first relationship, I must say that I listened with considerable surprise to the arguments of the noble and learned Lord the Lord Chancellor about the importance of his having the kind of powers he has in the Bill in relation to appointments and dismissal. I recall that in 2004, during those long months when we discussed the Constitutional Reform Bill, the noble and learned Lord the Lord Chancellor said that while there was no evidence at all in our constitution of impropriety concerning the Lords of Appeal in Ordinary, or the noble and learned Lord himself in exercising his functions of judicial selection, there might be a perception that there is. As a result of that perception, dramatic changes were made, which included the noble and learned Lord's selfless decision to cease to make judicial appointments and hand them over to the Judicial Appointments Board.

As I understood it, the principle behind all this was that of separation of powers; the importance of the political element being completely divorced from the judicial element. In my respectful submission to the noble and learned Lord, he is advancing completely the opposite philosophy in relation to the independence of the legal profession. I say that with great respect to the noble and learned Lord. He gets so many things right, the law of averages must dictate that he occasionally gets something wrong. I hope that during the Christmas break the noble and learned Lord will reflect on this matter. It must be perfectly clear to him from the speeches made on all sides of the House that there is deep concern about the issue of independence. In my submission that is legitimate concern. It is also a concern that goes

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beyond our national borders because it involves international perceptions about the provision of our legal services.

There is the second question of the Legal Services Board and the seven regulators. The noble Baroness, Lady Butler-Sloss, made an extremely good analysis of Clause 30. Essentially, what lay behind her intervention was the notion that the ability of the LSB to intervene is made too easy by the Bill. That is precisely why the noble Baroness suggested that the word “substantial” should be interposed. It would be very easy indeed for the LSB to claim that one of the objectives in paragraphs (a) to (g) was threatened in some way and use that as a basis for intervention. I suggest that some sort of guarantee ought to be put in the Bill to make sure that the threshold condition for intervention by the LSB is raised and that it is more difficult for it to intervene. Otherwise, we will find that a wide range of decisions that are taken, as it were on the shop floor, are interfered with by the Legal Services Board. That is the second part of the independence argument.

The third point that I want to make is about appeals. This has not been touched on this afternoon. As your Lordships know, the LSB has a large number of instruments at its disposal—set out in Clauses 30 to 45—to discipline the front-line authorities. The only one that provides an appeals structure in the Bill—at Clause 38(2)—relates to financial penalties. An appeal is admissible only if what the Legal Services Board has done is not within the power of the board. The scope of the appeal is not clear. Would it entail giving the full range of judicial review options to the litigator; or is it intended to be narrower than judicial review? If it is narrower than judicial review, is judicial review also available under Clause 38(2)?

I note that Clause 38(7) has the expression,

That is an ouster clause. I thought that, after the experience of the asylum Bill in 2004, the Government had at last decided to abandon ouster clauses; but it seems to me that there is an ouster clause in the Bill. What about the exercise of the powers in Clauses 30 to 45, other than those involving financial penalties, where there is no provision for appeal at all? Can we assume that, in those cases, judicial review will always be available?

On the question of the OLC, the noble Lord, Lord Brennan, among others, made the point that in 70 per cent of cases it is very difficult to distinguish between service and conduct; and that many of the issues raised by complaints involve an amalgam of both. The noble Lord, Lord Neill of Bladen, made that point most eloquently as well. There is a real difficulty in trying to divide up conduct and service, especially since neither is defined in the Bill. The result is that we may find that a single complaint is, in the end, dealt with both by the OLC and by the frontline regulator. This is a problem that needs managing; it is not a political problem between the Opposition and the Government. It is a problem about the way in which the system works. In Committee, we will have to think very carefully about finding a way around

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this problem. In my submission, it would help if the power of the OLC to delegate to the frontline authorities was made much clearer in the Bill, and if the Bill made it much easier for the OLC to delegate.

I have already talked about alternative business structures in relation to Clause 1, and the way in which the access to justice obligation might bear on decisions by the Legal Services Board to approve, or otherwise, a proposal. There are, in fact, a lot of other difficulties about alternative business structures. Many noble Lords have already mentioned the international dimension and the issue of legal privilege. There are also, as I am sure the noble Lord, Lord Borrie, would acknowledge, some important competition issues; for example, the issue of cross-subsidisation. You might get a very powerful ABS deciding to try to drive a legal firm out of a particular market by predatory pricing; by subsidising from profitable legal activities in the other part of a firm a particular section of a firm that would sell its legal services below cost to gain a competitive advantage and probably drive several of its competitors out of the market. Those are the sort of problems that will need very careful handling by the Legal Services Board if we are not to have a whole range of competition problems, which seem to me so far to have been unforeseen.

Then there is the question of Chinese walls. Let us suppose that an ABS is instructed on two separate matters by the same client—a client who on the one hand wants to raise money but on the other hand wants to take over another company. Clearly, the information gained in those two separate areas has got to be kept separate. How will that be done? There are a range of technical issues on ABSs which we have not yet begun to confront.

I share the view of all noble Lords who have expressed concerns about the principle of polluter pays. I simply do not believe that it is acceptable under Clause 133 that someone against whom a compliant has been lodged, had it investigated and is found to have behaved faultlessly, is vulnerable to having to contribute financially to the whole process. In my submission, it is more than valueless; it is a corrupt principle. It should not be in the Bill.

Having said all that, I would not want the noble Baroness to get the impression that there are not many things in the Bill that we welcome. As an Opposition, we shall seek to table amendments and argue our corner in the most constructive manner that we can.

6.46 pm

The Parliamentary Under-Secretary of State, Department for Constitutional Affairs (Baroness Ashton of Upholland): My Lords, I am very grateful to the noble Lord, Lord Kingsland, not only for giving me his advice which, as he probably knows, I am often very prone to take, but for his words as he ended his contribution. He echoed much that has been said in your Lordships’ House this evening about the Bill. It is obvious that there are particular issues that we will need to discuss in Committee, and I very much look forward to doing so. In general, there is much to

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welcome in the Bill. I declare my interest that I am not a lawyer. I was delighted that the noble Baroness, Lady Butler-Sloss, joined us this evening, not least because, with my noble friend Lady Henig, we are starting to have more women involved in our debates; and what women we are.

I add my thanks to those of my noble and learned friend the Secretary of State and Lord Chancellor to all those who have brought this Bill to fruition in your Lordships’ House. I would single out many people, not least the noble Lord, Lord Hunt of Wirral, and his colleagues—as many others have done—for their work on the pre-legislative scrutiny. I hear what they are saying about the timetable, but in a sense they have proved that the timetable was perfect, because their work was extraordinary.

I am fascinated by the new word “Clementi-ise”, which I fear may become a symbol of this Bill in the future. Noble Lords have also talked with great passion about aspects of the backdrop to the Bill. The noble Lord, Lord Thomas of Gresford, talked about integrity, independence and the importance of challenging organs of the state. The noble and learned Lord, Lord Lyell of Markyate, talked about a strong, diverse and effective legal profession. Those are all sentiments with which I can agree. I also agree with the noble Lord, Lord Thomas of Gresford, that working in partnership is an important principle in the Bill, and we will look at that more carefully in the coming weeks.

I am grateful to the noble Lord, Lord Hunt of Wirral, for bringing to my attention—both this morning when we met and in correspondence this afternoon—the additional role of my noble friend Lord Brennan in the new group that is being set up. Noble Lords will be pleased to know that we now have an All-Party Group on Legal and Constitutional Affairs. I gather that my noble friend Lord Brennan is to chair that group; I am delighted that he is doing so. No doubt my noble and learned friend the Secretary of State and Lord Chancellor and I will be summoned before it at some point, with luck, and we very much look forward to the opportunity that will afford us.

It is also extraordinarily helpful in these debates that, when we are inevitably thinking about the legal professions and have before us many people involved in the legal and judicial world, we also have my noble friends Lord Whitty and Lord Lofthouse to remind us of the consumer interest. My noble friend Lord Lofthouse does so passionately and based on his long experience and my noble friend Lord Whitty does so with passion and in his extraordinary new guise.

Four issues have dominated the debate—independence, cost, the complaints system, and alternative business structures—but I will not forget the right reverend Prelate’s desire for me to say something on the issues that he raised; I will do so. Without trying to address all the detailed points—I fear that it would be completely impossible in the time available—I reiterate, as I always do, that I will address all the points that I fail to address this evening in correspondence before Committee.



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I will start by thinking about what is at the front of the Bill. I take the point raised by the noble Lord, Lord Kingsland—that it is important to look at previous legislation, and with his help I shall certainly do that. I shall also consider the points about public interest in the front of the Bill raised by the noble Baroness, Lady Butler-Sloss, and about proportionality raised by the noble Lord, Lord Maclennan of Rogart. Noble Lords will know that, in Clause 3(3)(a), we have tried to address the issue in the context of the work of the board. We think that that is appropriate, as opposed to using Clause 1 as noble Lords have suggested. Because we have talked about accountability, proportionality, consistency and so on, we think that that is a way to tackle the issues that noble Lords have raised. However, I would be grateful to discuss whether they think that we have captured that appropriately. The principles of regulation that the noble Lord, Lord Maclennan, raised were important, of course. I think that my noble and learned friend said, “We will have a think about it”, when I asked him about it; we will certainly do so. We think that we have positioned the matter correctly but, as you know, I am always open to discussions about what we might do.

No doubt we will spend a huge amount of our glorious days in Committee on independence, and I want to make a few basic points about it. The first is that the appointment of the chairman of the Legal Services Board is important, and it is important that it be done appropriately. I have five and a half years’ experience as a Minister in the way in which the Commissioner for Public Appointments and the code have been established and developed. The noble Lord, Lord Hunt of Wirral, was involved in such issues in earlier days, in his life in government. He was kind enough to have a preliminary conversation with me about that this morning, and I am sure that we will have more. I think that we have the best practice available in making appointments. To be frank, I do not understand why we should move away from that. The basis on which the Lord Chancellor and Secretary of State will operate is a well trodden road and has served us well so far.

Noble Lords asked about putting more detail in the Bill. The difficulty and danger with that is that best practice is inevitably a moving feast; what is best practice today may develop over time. I would not wish us to run the risk of being inconsistent with current best practice. The Bill gives specific instances in the limited number of circumstances where the Secretary of State could remove the chairman or a board member, which demonstrates that the provision would be used appropriately. No doubt we will discuss that in greater detail, but I wanted to set out clearly the position from which we start.

I cannot resist the Secretary of State’s 288 powers. The noble Lord, Lord Hunt of Wirral, was kind enough to mention them to me earlier, so we have had a look at them. I hope that he will not mind me saying so, but there is no doubt that we are not equating the 288 references to 288 separate powers. Clause 61 is one power with six references. Clause 136 has eight references but one power. I am not sure whether we examined whether the powers had changed—perhaps

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we will—but one of the arguments put to us is about making sure that we clarify where the Secretary of State will do things, and we have sought to do that. I know that the noble Lord would not wish your Lordships to go away with the assumption that everything had increased; the references have increased, which is a positive move because it gives greater clarity.

I shall turn to the consultation and the role of the Lord Chief Justice, an important and sometimes recurring theme when we look at the relationships between our most senior holder of a judicial office and government and Parliament. My noble friend Lady Henig talked about consultation being an important part of what anyone should do when making appointments. No doubt my noble and learned friend will wish to consult a number of people when doing so, depending on the appointment and candidate. That is appropriate. However, I agree with my noble friend that we should not put that in the Bill. The reason is twofold; again, I am sure that we will debate it at great length. First, however eminent and important the Lord Chief Justice is—I agree that he is both—the provision is about trying to develop consumer confidence and make people believe that we have tackled the issue effectively. To simply have a consultation with the head, if you like, of the judiciary and legal professions does not feel right to me. The argument could be—I have certainly debated it in the past few days—that you balance that with consultation of consumer groups. Then you quickly get into the area that I find deeply difficult. Noble Lords who remember me from my days—

Lord Lyell of Markyate: My Lords, I am a little unhappy with the expression about the Lord Chief Justice being the head of the legal professions. I understood that it had been written instead by the Lord Chancellor that he was a highly distinguished lawyer, which indeed he is. I do not think that it is quite accurate. Perhaps the noble Baroness will reflect on that.

Baroness Ashton of Upholland: My Lords, as I said it I knew that someone was about to leap up and correct me, because the noble and learned Lord is entirely right. I apologise to the Lord Chief Justice for giving him an additional burden to the one that he already carries.


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