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Amendments Nos. 86, 87, 312, 318 and 319 ensure that references to registered European lawyers, non-registered European lawyers and other foreign lawyers and practices are consistent with current statutory

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provisions, and do not disrupt the status quo. In particular, Amendments Nos. 318 and 319 amend Clause 108 to ensure that the definitions in Part 5 do not cause a large number of multinational firms to become alternative business structures purely by virtue of being partially owned by foreign lawyers.

A further function of the amendments in this group is to make certain alterations to the detail of the Part 5 licensing regime to ensure that the requirements take account of current practice structures and regulatory practice. More specifically, Amendments Nos. 203 and 261 propose technical changes necessary to take account of the fact that members of firms such as limited liability partnerships are often other firms or bodies and not just individual lawyers, and to ensure that any bodies to which this applies are regulated appropriately.

Amendments Nos. 256, 258, 259, 260 and 274 amend the licensing regime in Schedule 11 to make it clear that licensing authorities will have the flexibility to waive fees in appropriate cases. Amendments Nos. 262 to 273 amend Schedule 11 to provide that licensing rules must make provision for review by the licensing authority of a decision not to approve a person as head of legal practice or head of finance and administration, or to remove a person’s designation in relation to one of those roles. This is consistent with the Government’s policy; for example, provisions elsewhere in Schedule 11 stipulate that licensing rules must make provision for review of certain decisions that could affect the rights of licensed bodies or individuals within them.

Amendment No. 305 makes it clear that the obligation which licensing authorities have to trace the beneficiaries of sums recovered following intervention in a licensed body’s practice is an obligation to take such steps as are reasonable in all the circumstances of the case. This follows a similar amendment made to the intervention powers of the Law Society in Schedule 16 to the Bill, following an amendment tabled in Committee by the noble Lord, Lord Kingsland, which the Government agreed to consider. We are replicating that amendment in Schedule 14 because it is desirable for statutory intervention powers to be consistent where appropriate.

Amendments Nos. 304, 627, 632 and 633 make technical changes to ensure that certain provisions in the Bill can be amended as necessary by secondary legislation in cases where it is necessary to take account of bodies formed under foreign law. I thank the noble Lord, Lord Kingsland, and the Law Society of Scotland for the point raised in Committee in relation to Clause 107, which my noble friend agreed to consider.

Clause 107 enables the Lord Chancellor to modify the provisions of Part 5 in relation to bodies formed outside the law of the UK. The noble Lord queried whether this power should also apply in relation to bodies formed under the law of Scotland or Northern Ireland. The Government have considered this and agree that it would be desirable to extend the power, as the noble Lord suggested. Amendment No. 314 has therefore been tabled to achieve this. I note that the

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noble Lords, Lord Kingsland and Lord Hunt of Wirral, have added their names in support of this amendment, which reassures me that the Government have adequately accomplished the noble Lord’s objectives in this regard.

Amendments Nos. 627, 632 and 633 create a similar power for the Lord Chancellor to modify the current definition of manager, as set out in Clause 197 of the Bill, to ensure that it remains effective for bodies formed under law outside England and Wales. That is similar to the existing power in Clause 107 to modify the provisions of Part 5 that a new clause is required as the definition of manager applies to other parts of the Bill. The power will be subject to the affirmative resolution procedure.

The amendments are technical, and essentially tighten up the existing provisions relating to the authorisation requirements for different types of bodies and individuals, and ensure, in particular, that the arrangements in Part 5 of the Bill provide for effective regulation and control of any firm’s licence. Failure to make these changes would leave a number of uncertainties, inconsistencies and potential loopholes in the legislation, putting at risk both consumers and providers of legal services. The purpose of the amendments is to ensure that the detail of the regulatory framework can operate effectively and consistently. I beg to move.

Lord Kingsland: My Lords, in so far as these amendments, so eloquently introduced by the noble Lord, Lord Evans of Temple Guiting, reflect suggestions that we have made, we are most grateful.

On Question, amendment agreed to.

Lord Evans of Temple Guiting moved Amendments Nos. 51 to 62:



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(a) P carries on the relevant activity by virtue of an employee of P (“E”) carrying it on in E’s capacity as such an employee, and (b) in carrying on the relevant activity, E commits an offence under section 14. (a) on summary conviction, to imprisonment for a term not exceeding 12 months or a fine not exceeding the statutory maximum (or both), and (b) on conviction on indictment, to imprisonment for a term not exceeding 2 years or a fine (or both).

On Question, amendments agreed to.

Schedule 3 [Exempt persons]:

Lord Evans of Temple Guiting moved Amendments Nos. 63 to 70:

(a) where that section applies by virtue of the person holding or exercising an office or appointment, the person carries on the activity for ecclesiastical purposes; (b) where that section applies by virtue of the person performing a public duty or service under government, the person carries on the activity in the course of performing that duty or service.” “Employers etc acting through exempt person (a) a person (“P”) carries on an activity (“the relevant activity”) which is a reserved legal activity, (b) P carries on the relevant activity by virtue of an employee of P (“E”) carrying it on in E’s capacity as such an employee, and (c) E is an exempt person in relation to the relevant activity. (a) carries on the relevant activity at the direction and under the supervision of an authorised person in relation to that activity, and (b) is exempt in relation to that activity by virtue of paragraph 1(7), 3(3) or 4(2).

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On Question, amendments agreed to.

Schedule 4 [Approved regulators]:

Lord Evans of Temple Guiting moved Amendments Nos. 71 to 82:

“The Association of Law Costs Draftsmen

The exercise of a right of audience.

The conduct of litigation.

The administration of oaths.”

On Question, amendments agreed to.

Lord Kingsland moved Amendment No. 83:

The noble Lord said: My Lords, The noble Baroness resisted this amendment in Committee. Her reasons for doing so, I fear, furnish further evidence that the Government are unwilling to reflect the principle to which they say they adhere—trust the approved regulator—on the face of the Bill.

Our amendment reverses the presumption that the approval of the Legal Services Board should be needed before rule changes can come into effect. I do not believe that it would be helpful if I were to rehearse in detail a debate that stretched over seven columns—cols. 952 to 960—of Hansard on 22 January. In its course, apposite contributions were made by the noble and learned Baroness, Lady Butler-Sloss, the noble Viscount, Lord Bledisloe, the noble Lord, Lord Thomas of

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Gresford, and my noble friends Lord Campbell of Alloway and Lord Hunt of Wirral. The Minister made no fewer than 11 interventions in a courageous, but vain, attempt to vitiate their collective wisdom.

I must confess that I remain at a complete loss to understand why the solution we propose would prove, as the noble Baroness asserted, considerably more bureaucratic and costly than that in the Bill. I believe that my view is shared by all noble Lords who participated in the debate. Under our scheme, the approved regulators will consult on all the changes they propose. The Legal Services Board will know what is intended well in advance of implementation. If it wishes to object, our amendment entitles it to do so. It is our amendment that reflects the underlying philosophy that the Government claim to espouse, not the draft provision in the Bill.

It is worth recalling the Government’s words in response to the report of the Joint Committee, which were that the Legal Services Board should exercise its powers only where the approved regulators were “clearly failing”. The Legal Services Board is not there constantly to second-guess the judgment of the approved regulators. It is not its task to comb around looking for trouble. Moreover, it is not as if the approved regulators are composed exclusively of lawyers. Both the Bar and the Law Society regulatory institutions will have a substantial lay component. Of course, if cogent evidence is already available to the Legal Services Board that a particular rule change is likely to give rise to a net negative impact on the eight objectives, it is a different matter.

The philosophy for the Government should be, as I said in Committee, “Trust the approved regulators”. I beg to move.

Lord Carlile of Berriew: My Lords, I think that I am happy to say that I did not participate in the debate in Committee on this topic and that I was not present. However, I have enjoyed reading, with loving attention, every word of that debate. We on these Benches entirely agree with what has just been said by the noble Lord, Lord Kingsland.

However, a practical problem occurs to me. During the debate on Monday, I declared my interest as head of a fairly large set of barristers’ chambers in London. The way the system operates at the moment is that, from time to time, the General Council of the Bar—which was accurately described a few moments ago by the noble Lord, Lord Kingsland—has to react to problems that have arisen. On the whole, it reacts to them quickly. From time to time, I, as a head of chambers, receive an email telling me that there has been a change to the Bar Council’s code of conduct, which is an important document that is frequently cited in court when issues of ethics arise during cases. If a head of chambers is responsible, he or she ensures that the communication from the Bar Council is instantly circulated to all barristers and clerks so that it is known to all the barristers within the collegiate atmosphere that still exists in many sets of chambers. Therefore, within a very short time of a critical incident arising, a change in the code of conduct can be communicated and put into practice. If necessary, it can be done in a

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couple of days. Without the amendment, the legislation would seek the inevitable introduction of a cumbersome, bureaucratic procedure, which will mean that an approved regulator—whose code of conduct so far as I am aware has rarely been criticised—will not be able to sustain that very useful and active discipline. I cannot believe that that is the Government’s purpose, but it is the result of the legislation as it stands.

I ask the Minister to respond to that point as it is causing some perplexity among those of us who practice at the Bar—led, as we have been from time to time with great practical effect, by people such as the noble Lord, Lord Brennan, who, when chairman of the Bar Council, took a leading part in ensuring that the code of conduct was kept up to date in the way I have described.

5 pm

Baroness Ashton of Upholland: My Lords, I am not sure that my twelfth intervention will make a huge amount of difference. For the benefit of noble Lords who have not had the joy of participating in debates or reading Hansard, let me say that we were looking at two things: first, whether you had a situation where the board gets all the changes and then makes a decision on whether it wishes to have certain changes exempt from the process or with minimal review by the board; and, secondly, whether the board at the beginning says, “We don’t want to see the following things” and that only those it wished to see should come forward.

We looked at the matter in great detail. We considered how it would look if we redrafted it, and we had a good think about it. It is a choice we had to make, which I still think is the right one. We sought to say that our principle in setting up this new framework would be that changes should be sent to the board and that the board can say, either in the course of receiving those changes or, indeed, in advance, that it does not wish to receive certain ones, that some can be exempt and that some require merely minimal approval.

The noble Lord, Lord Carlile, made a point about wanting to have the code of practice changes. I note his tribute to my noble friend Lord Brennan, which I share. We would want those done in the same way. We do not want this process to be bureaucratic. The question really came down to whether it is right that the board in advance says, “We don’t need to see any of the following aspects”, or should it receive them and then make a decision later about which it wishes to have exempt. So the question was: did the decision on that rest with the board or the regulator? It is not a question of trust. We hope that this will be one of the ways they will work closely together in partnership.

However, we felt that it was important to leave the matter with the board. It was a choice we made. We do not think that the outcome will be hugely different because we believe that the board will swiftly move to say, “It is quite clear there are areas where we do not need to see the changes that are being made, or where we can deal with them very quickly”.



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