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In drawing up the clauses we consulted the OFT, of course. If all else fails, I can rely on the fact that the Office of Fair Trading is comfortable and happy that we have dealt with these issues appropriately by giving it a clear role in terms of the legislation while seeking to promote competition where appropriate, for the reasons that it has outlined of the potential benefit to the public in general and, obviously, consumers of legal services in particular.

Lord Kingsland: My Lords, I am most grateful to the noble Baroness for responding to both points I raised. I take the second first. I entirely accept that the Government have rightly identified two distinct areas in which competition law should operate, and have provided four distinct authorities. On one hand the LSB deals with anti-competitive practices by the individual authorised person; and on the other hand you have, as far as concerns the regulators, a triumvirate of the OFT, the Secretary of State and the Competition Commission.

I respectfully agree with the noble Baroness that the provisions in the Bill, although highly complex and potentially hugely expensive for this regime, make sense in principle. My concern is about how they will operate in practice; because if you identify anti-competitive behaviour, for example, between authorised persons,

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which you trace back to an anti-competitive provision in the rules of the regulator, how will you sort that out without some liaison between the LSB on one hand and the other three authorities on the other?

That question leads me to ask whether the noble Baroness believes there is sufficient provision in the Bill for guidance to be given on this issue so as to ensure that, operationally, the relative roles of these institutions are clearly understood. This regime is paid for by the authorised persons. Clauses 56 to 60 are intensely complicated and potentially hugely expensive. I believe that the authorised persons have a right to know exactly how the Government see this operating in practice. I recognise that that aspect of my intervention is probably new to the noble Baroness. I do not expect her to answer it today; but it would be extremely reassuring if at Third Reading she could look into the question of liaison a little more thoroughly.

As regards the first question, there are a number of issues on which we are at the moment inclined to seek a Division of your Lordships’ House. This is an important issue, but it is not of such over-riding importance that it falls into that category. In those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Campbell of Alloway moved Amendment No. 4:

“( ) quality of legal services and the standing of the profession”

The noble Lord said: My Lords, I beg to move the amendment; I shall not take very long about it. Surely, it is common ground that it is of crucial consequence that the quality of legal services should be regarded and recorded as such in the regulatory objectives and that the standard be maintained in the interests of both the consumer and the legal profession, whose interests in this context interact and are interwoven, because it goes without saying that bad advice is very expensive and does no one a service.

Albeit—I concede this—that in other respects, regulatory objectives may compete and conflict, such is not the case with the quality of services. That stands on its own. In any decision under the three regulatory bodies set up by statute, quality of services must be taken into account on the balance of the regulatory objectives as a matter of prime importance and of principle.

As to the standing of the legal profession, similar but by no means identical considerations apply—albeit that £2 billion a year is the sum of the export services of our legal profession. That was spoken to at Second Reading by the noble Lords, Lord Neill of Bladen and Lord Brennan, and other noble Lords. I am informed in a letter from the Bar Council that the senior partners of leading City law firms, heads of commercial chambers at the Bar, have most serious concerns about this which they have made very clear. They have been passed to the Chancellor of the Exchequer. It is a matter of principle of generic application to the three regulatory bodies and it is

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also of importance—as I know the Minister accepts—that we must establish public confidence in the new regime. This is an aid to that. I beg to move.

3.30 pm

Lord Hunt of Wirral: My Lords, I declare my interest as a partner in the national commercial law firm, Beachcroft LLP, the holder of a current practising certificate from the Law Society as a solicitor and the other entries in the register.

I thank my noble friend for raising the very important issue of quality. Indeed, Sir David Clementi raised this factor right at the outset in his review of the legal profession when he said that the services must remain of the highest possible quality. I agree with my noble friend Lord Kingsland that Clause 1 is beginning to take shape. It is a considerable improvement on the original Clause 1, and I am very grateful to the Minister for the way in which she has accepted a number of suggestions made by the Joint Select Committee, which I had the honour to chair. However, there is still this nagging doubt about quality. We will, of course, deal with this issue when we discuss some of the later amendments, but we look to the Minister for some reassuring words about the quality of legal services and the standing of the legal profession, so I support the amendment in the name of my noble friend Lord Campbell of Alloway.

Baroness Ashton of Upholland: My Lords, we completely agree about the principle: the question is whether doing what the noble Lord, Lord Campbell of Alloway, has asked would achieve it or enhance what we believe is already in the Bill. However, let me begin with the principle. I agree completely with what the noble Lords, Lord Campbell of Alloway and Lord Hunt of Wirral, said about the standing of the legal profession and the quality of legal services. I have the good fortune, as noble Lords know, of doing work for the department on trade. Indeed, I hope to be in India next week to talk to lawyers all over India about the opportunities that we see between us for the legal professions. I have also had the benefit of receiving delegations from other countries. As noble Lords know, I sit again on the European Union’s Justice and Home Affairs Council in Luxembourg on Thursday. I am therefore absolutely alive to the standing of the legal profession across Europe and the world, and I yield to no one in my recognition, support and promotion of it; so I am absolutely at one with noble Lords—the warm glow is absolutely between us. It is critical that the public, the consumer and the legal profession have a confidence in this new regime that is enhanced all the time and that we set up the new regime properly and appropriately. That has been a key part of all the amendments moved by noble Lords, who have sought at least reassurance if not changes to the legislation; so there is nothing between us on that.

I have considered very carefully what the amendments of the noble Lord, Lord Campbell of Alloway, would do. My difficulty is that we think that our objectives already cover what they propose. We have support for the constitutional principle of the rule of law, the encouragement of an independent, strong, diverse and

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effective legal profession, and promoting and maintaining adherence to the professional principles, which include acting with independence and integrity and maintaining proper standards of work. Clause 4 also states:

That captures, perhaps in more detail, how we can achieve what the noble Lord, Lord Campbell of Alloway, seeks to do. I therefore hope that he feels reassured that I recognise the objective of his amendment, that I have looked carefully to see that we have achieved it, and that I completely and publicly endorse all the statements that have been made about the critical nature of the standing and quality of legal services. Indeed, I pay tribute to all those who currently deliver them.

Lord Campbell of Alloway: My Lords, I am, as always, grateful to the Minister, who speaks with an open mind. I address her with an open mind, and I shall look very carefully at what she has said. However, this is a question of principle of generic application to all three regulatory bodies set up by statute, not just to the board. The Minister may reject that point if she does not like it, but I ask her to consider it. I also ask her with respect to consider whether, from a practical point of view, this should be in Part 1, Clause 1 and not tucked away in a series of provisions that are complex and not so readily understood. This principle should apply generically and, as I see it, should be in Clause 1. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Campbell of Alloway moved Amendment No. 5:

The noble Lord said: My Lords, Amendment No. 5 is not a matter of substantive law. Again, it is a procedural provision of generic application to the decisions of all three regulatory bodies set up by statute in implementation of this Act. I pay tribute to the contribution of the noble Viscount, Lord Bledisloe, who dealt with a disparity in a speech which no one sought to contradict.

This is an overarching provision of principle. The object is to safeguard due and fair administration in accordance with the balance of the regulatory objectives. As a procedural provision, compliance with the amendment would be subject to judicial review. There is no doubt about that. This was established in the landmark decision of the Court of Appeal in the Queen and the Asylum and Immigration Tribunal. It was a complex decision, the official transcript of which exceeds 40 pages, which I have read and is available in the Library. However, the reasoning of the decision that judicial review remains in these circumstances under the aegis of the High Court is well presented in a very short and readable Times law report on 11 April.

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There are three aspects of this amendment. Put simply, the first aspect is the balance of regulatory objectives when making a decision, which I picked up from my noble friend Lord Kingsland who convinced me that that was the right approach. This is the right approach because regulatory objectives compete and conflict. The second aspect is a reasoned decision. It is absolutely essential that the decision, not just of the board but of all regulatory bodies set up by statute, should be reasoned. The third aspect is the giving of notice of a decision to afford objection, which has arisen in other aspects recently; notably, on the defence bill.

Provision for this, which is a reflection of a rudimentary requirement of natural justice, is made only in Schedule 7 and is solely related to directions of the board under Clause 31. However, it is not treated anywhere in the Bill as a principle of general application. These are predominantly lay regulatory bodies. There is nothing unusual in that, but inevitably they will have to deal with matters of law, and this amendment would in all events narrow the scope of contention and judicial review which now retains jurisdiction over the proportionality of a decision. As a matter of general principle, this should be included in Clause 1.

This amendment is in the interests not only of the customer, but also the legal profession in establishing confidence. It would afford due and fair administration and is wholly consistent with the soft touch of the Clementi approach. The need for it became apparent during the debate in Committee. I think I even suggested that we were in a bit of a muddle and that there might be a trigger in the statute to introduce a code of practice, which was not a good idea, but no one had any conclusive suggestions. So an amendment such as this is requisite. I doubt whether it is in the right form because I am not an expert draftsman, but nonetheless in principle I commend it to your Lordships. I beg to move.

Lord Kingsland: My Lords, my noble friend Lord Campbell has been extremely thorough in explaining his amendment so I can be very brief in supporting it. My noble friend has drawn your Lordships’ attention to an important issue. Perhaps the best way to view the amendment is in the context of Clause 3, headed:

Noble Lords will see that some but not all of what my noble friend has drawn to our attention is there.

What is important in what he has said is his reference to the reasoned decision. It should be absolutely clear to all authorised persons likely to be affected by a decision that the basis for any decision made by the LSB in promoting the regulatory objectives is clearly set out in a circulated document which, as a consequence, gives any authorised person the right, if he feels he needs it, to have that decision judicially reviewed. Under the amendment, there is an obligation for the board to produce a reasoned decision, and what is perhaps more important, an obligation for that decision to be circulated in time for an authorised person, if necessary, to take legal advice and, in the last resort, to engage in litigation.

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Lord Hunt of Wirral: My Lords, I rise to support my noble friend Lord Campbell and to thank him for drawing to my attention the important decision of the Court of Appeal made on 21 February last. Having looked through the decision, I hope that the noble Baroness might also read it because my noble friend has highlighted an important point, one that has been reinforced by my noble friend Lord Kingsland. We hope that we shall be given some reassurance on how the Government intend to take this forward.

3.45 pm

Lord Maclennan of Rogart: My Lords, I thank the noble Lord, Lord Campbell of Alloway, for his amendment. I commend what he and others have said in this short debate about the importance of giving notice to those to whom the decisions on regulatory objectives should have been addressed. That is almost a principle of natural justice and it should be spelled out clearly. I have no doubt that the Government may consider the first part of the amendment to be implicit in what has been said about weighing the different regulatory objectives, but I do not think that it is implicit that notice should be given. For that reason alone, I hope that the amendment will commend itself to the Government.

Baroness Ashton of Upholland: My Lords, I am grateful to the noble Lord, Lord Campbell of Alloway, for spelling out so succinctly the issues that he has raised in his amendment. I am not familiar enough with the Court of Appeal decision. I will look with interest at what he has said and I hope that I will get more information on that.

I will try to deal with the points that the noble Lord raised, which were supported by other noble Lords. I agree completely that the board, the approved regulators and the OLC should take a reasoned approach in balancing any impact on the regulatory objectives. It is also important that these bodies operate transparently and are properly accountable. We think that the Bill already achieves what the noble Lord primarily seeks to do with this amendment. In Clause 3, which has been referred to, and Clause 27, the board and the approved regulators must have regard to,

In Clause 113, the OLC must have regard to,

Those principles apply to all regulatory activities wherever these bodies balance those regulatory objectives.

We believe that the principle behind what the noble Lord is seeking is well founded in the Bill. The Bill gives good grounds to those who would wish to challenge the decisions that have been made, because it is laid out extremely clearly. We have added that the board has to produce an annual report. Among other things, the report will deal with the question of how far the board has met the regulatory objectives that were set for it. The Bill also sets out a number of provisions

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dealing with accountability, in particular the extent to which the regulatory bodies have complied with the regulatory objectives.

The noble Lord, Lord Maclennan of Rogart, said, echoing the words of the noble Lord, Lord Campbell of Alloway, that it is a rudimentary requirement of natural justice that the board should give reasons for its administrative decisions. I agree; it should and it must. We do not need to set that out in the Bill, but it will be important, for two reasons. First, as the noble Lord reasonably says, people have to know the basis for the decisions—the reasons why they have been made—in order, if they so wish, to challenge them. Secondly, when decisions have been made, it is important that those affected by them know exactly what they are. I agree with that. It is a principle of natural justice; it is also good practice in regulatory regimes and in the administration of organisations.

Lord Maclennan of Rogart: My Lords, I hesitate to intervene in the middle of what the Minister is saying but, on this point about notice, there seems to be a difference between getting reasons for a decision ex post facto, which may allow challenge, and notice being given to the parties, or to those to whom the regulatory ruling is being offered, prior to the handing down of the decision. Maybe there is ambiguity in the wording of the amendment, but I think that it is important that the prioritisation of the objectives should be made clear to enable any objections to be taken into account before the decision is given.

Baroness Ashton of Upholland: My Lords, the noble Lord has pre-empted me. I was going to come back with a third and final point about making sure that notice is given. The amendment does not quite work; it does not quite do what the noble Lord, Lord Campbell of Alloway, said that he intended it to do. It would mean that there would have to be notice of all decisions, at all times and in all circumstances. These are very particular concerns.

Given the principles behind how regulatory bodies must work, it is right that they should in general give notice that they will be making the decisions and identify the issues that are being raised. As we have discussed many times, there must be dialogue—we have used the word “partnership” before—between the bodies to get the best possible decision. It is our ambition that this be done appropriately. I do not think that we need to spell it out in the Bill.

I hope that what I have said reassures noble Lords and makes it clear that we expect the LSB and the other bodies to behave like good regulatory bodies. They should give notice of the decisions that they are about to make; they should give reasons for their decisions and publicise them as appropriate to those directly affected and those who may be affected in the future; and they should balance and consider the objectives properly. I hope that I have given enough reassurance for the noble Lord to withdraw his amendment on the basis that what I have said will carry weight.

Lord Campbell of Alloway: My Lords, I thank my noble friends Lord Kingsland and Lord Hunt, and the noble Lord, Lord Maclennan of Rogart, and I

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thank the noble Baroness for her response. It has become apparent that the amendment, although right in principle, may have to be redrafted. That comes as no surprise to me, and I shall need a little help. It has had three goes already, and it is very difficult to get it right—I cannot do much better. I shall withdraw it and bring it back at Third Reading.

I would like to make a point for the noble Baroness’s consideration. I am delighted to hear that she accepts the principle of everything that I said. However, I am not in agreement with her confident assertion that it is already reflected in this complex Bill or that, if it is reflected, it is done so in any manner that anybody is likely to be able to find and, if they do, understand. This is a most important matter of principle and, although the amendment may have to be redrafted, it should retain its pride of precedence in Clause 1 as a generic application throughout the Bill. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 1 [The Legal Services Board]:

Lord Evans of Temple Guiting moved Amendment No. 6:

The noble Lord said: This large group of amendments contains necessary technical amendments to the Bill to bring other legislation into line with it, correct certain anomalies and give effect to undertakings made in Committee. The majority give effect to undertakings made by my noble friend in Committee to transfer functions relating to the Secretary of State to the Lord Chancellor.

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