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Legal Services Bill [HL]

4.15 pm

The Parliamentary Under-Secretary of State, Ministry of Justice (Lord Hunt of Kings Heath): My Lords, I beg to move that the Commons amendments be now considered.

Moved accordingly, and, on Question, Motion agreed to.

commons amendments

[The page and line references are to Bill 108, the Bill as first printed for the Commons.]

Lord Hunt of Kings Heath: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 1. I shall speak also to a considerable number of other government amendments.

As a new entrant into discussion on the Legal Services Bill, I am aware of the very detailed consideration that it received in your Lordships’ House. A number of changes have been made to the Bill, which has now come back to this House, and I should like to acknowledge the work of your Lordships in helping to improve it. I suspect that we shall have one or two disagreements this afternoon, but I start by commending the spirit of the House in seeking to improve the legislation. I am confident that the outcome of today’s deliberations will bring the Bill to a conclusion; none the less, whatever is to befall us, I pay tribute to all noble Lords who have helped to improve it.

This group includes a number of government amendments that were accepted in the other place and are minor and technical changes or relate to areas of policy where I believe there is little between us.

Amendments Nos. 1, 2 and 3 require the board to seek the approval of the Lord Chancellor before making appointments to the Consumer Panel or removing members. These amendments received widespread support in another place and further safeguard the independence of appointments to the panel.

Amendments Nos. 6, 7, 9, 16, 23, 55, 56, 57, 68, 80, 146, 215 to 218, 230, 237, 238, 248, 249, 251, 254, 255, 258, 259 and 261 are of a minor and technical nature. They make technical or consequential drafting changes, further clarify provisions in the Bill or are minor amendments that are consistent with previously agreed policy.

Amendments Nos. 17, 18, 21, 22, 27, 29, 30, 31, 32, 33, 36, 37, 38, 96 to 99, 101 to 145, 172, 175, 176, 183, 219, 220, 222, 227, 240 to 243, 263 and 264 refine the ownership provisions in Part 5 of, and Schedules 16 and 17 to, the Bill in order to provide more clarity on how firms and companies with complex ownership structures fit into the ABS or recognised body regimes, as well as more clarity on whether non-lawyer owners and managers are subject to the fitness-to-own tests.



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Amendments Nos. 28, 34 and 35 make necessary amendments to close a loophole in Clause 108, which would have allowed a body to have low-risk status even if it was 90 per cent owned by another licensed body that itself might be 100 per cent non-lawyer owned.

Amendments Nos. 53 and 54 ensure that the board will have sufficient funds to cover any expenditure that it needs to incur as a result of functions that it has under other Acts, by virtue of amendments made to those Acts by the Bill—for example, functions conferred on the board by the Compensation Act 2006. Functions covered by these amendments will necessarily have been approved by Parliament. It is important that we ensure that the board is not left with a funding shortfall.

Amendments Nos. 58 to 67, 234, 244 to 247 and 260 are necessary to update the Bill’s provisions on legal professional privilege to ensure that they take account of the most recent developments in the law of privilege. Together they reflect the fact that legal professional privilege applies not only in legal proceedings but in other contexts, and the fact that it extends not just to communications but also to documents, materials and information.

In line with Treasury guidance, Amendments Nos. 89 and 147 ensure that, should it be necessary, ordinary members of the board and the Office for Legal Complaints can receive a pension, allowance or gratuity. The amendments also allow for ordinary members of the two organisations to be paid compensation, if appropriate. At this stage, we do not intend to make the posts of chair and ordinary board member pensionable. However, it is important that the Bill is not too restrictive, as circumstances may change. I understand that this is normal in relation to a number of public bodies. Amendments Nos. 90 and 148 also allow for the payment of compensation to staff at both organisations for loss of employment.

Amendments Nos. 91 to 95 ensure that exemptions from the requirement to be authorised in order to conduct reserved instrument activities that currently apply to employees working under the supervision of authorised persons are extended to cover partners who conduct reserved activities under the supervision of authorised persons.

Amendments Nos. 150 to 171, 173, 174, 177, 187, 189 to 191, 193 to 202, 225, 226, 228, 229, 232, 233 and 257 extend the regulatory powers of the Law Society to improve its powers over sole practitioners and employees of solicitors. Also, Amendments Nos. 188, 192 and 224 reflect the commitment made in this House to further update the Law Society’s powers so that it is able to rebuke and fine solicitors for less serious professional misconduct cases. Minor and technical changes have also been made through Amendments Nos. 178 to 182, 184 to 186 and 223 to the information powers in Schedule 16.

I hope that taking this large group of amendments together makes sense to the House. I believe that there are no substantive differences between us on these issues. I think the amendments respond effectively to many of the points made in your Lordships’ House and in the other place.



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Moved, That the House do agree with the Commons in their Amendment No. 1.—(Lord Hunt of Kings Heath.)

Lord Kingsland: My Lords, we have one or two quibbles with what the Minister has said, but we overwhelmingly accept his judgment on these issues and are content to let the matter rest there.

On Question, Motion agreed to.

Lord Hunt of Kings Heath: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 2 and 3.

Moved accordingly, and, on Question, Motion agreed to.

(a) their membership or former membership of P, or(b) another person's membership or former membership of P,

Lord Hunt of Kings Heath: My Lords, I thank the noble Lord for his kind comments on the first group of amendments. I look forward to similar comments on this group. I beg to move that the House do agree with the Commons in their Amendment No. 4.

Amendments were made in the other place that dealt with the regulatory status of trade unions. In essence, they made clear the position of unions under Clause 15(4). That clause allows the staff of organisations to provide reserved legal services in defined circumstances without the organisation having to be regulated as an entity under the Bill. Those circumstances include situations where the organisation does not provide legal services to the public. Clause 15(6) sets out that for these purposes a trade union’s membership, including people connected to a member or former member, does not count as a section of the public. The result is that the union does not have to be regulated as an entity in order for its staff to provide legal services to members.

There has been considerable debate in the other place and I want to remind the House of a number of important matters to take into account in debating this group. First, reserved services provided by a union will still have to be carried out by qualified lawyers. Secondly, those lawyers will be subject to the regulatory rules of an approved regulator. If a union’s practices require lawyers to work in a way that the regulator believes is not in the best interests of its members, it will be able to change its rules, with LSB agreement, to prevent the lawyers working there. Thirdly, this special treatment is confined to services

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provided by virtue of membership. Let me make it clear. If a union offers services to others, and/or offers services on a more commercial basis, it will fall outside Clause 15(6); it will need to be regulated as an entity and, because of its ownership structure, will need to be licensed as an ABS.

Finally, many unions do not provide reserved services through their own staff but instead have arrangements with external firms. In those circumstances, the union’s offices may be providing non-reserved services such as advice, but the union will fall outside the exemption in Clause 15 and so no special treatment will be needed. Of course, the external firms providing the contracted services will be fully regulated.

Moved, That the House do agree with the Commons in their Amendment No. 4.—(Lord Hunt of Kings Heath.)

Lord Kingsland rose to move, as an amendment to the Motion that this House do agree with the Commons in their Amendment No. 4, leave out from “House” to end and insert “do disagree with the Commons in their Amendment No. 4 but do propose Amendment No. 4A in lieu”.

(a) the persons are provided with the services by virtue of-(i) their membership or former membership of P, or(ii) another person's membership or former membership of P,(b) the services are provided to the persons in connection with any matter which arises out of the terms and conditions of their employment, their treatment by their employers, their workplace relationships or their workplace or other working conditions, and(c) any such employment, employer or workplace is one in respect of which P represents, or seeks to represent, workers as a trade union.”

The noble Lord said: My Lords, your Lordships have never seen these amendments before; they suddenly featured in Committee in another place. Their aim is to exempt trade unions from the requirement to become licensed as ABS firms in order to provide reserved legal services to their members. In other words, although the individual lawyer would continue to be regulated by whichever regulatory board to which he belonged, the entity itself would not be regulated. This is, as I understand it, contrary to the whole principle of regulation enshrined in the Bill.

The Government’s answer is that the exemption is necessary to avoid advice given by lay union officials being caught by the regulatory scheme. On the assumption that that is desirable, why did the Government not provide simply for that? As it stands, the exemption now embraces any legal services that a trade union may offer its members. For example, it will now be possible under the Bill for a trade union, operating entirely outside the regulatory structure, to provide conveyancing services or representation in divorce proceedings.



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Moreover, there is no statutory restriction, as far as I am aware, on who can be made members of a trade union; so unions could enrol new members solely for the purpose of providing legal services. That is a potentially significant gap in the elaborate regulatory structure deemed by the Government to be in the public interest.

Accordingly, we have tabled an amendment that limits the exemption to the provision by a trade union of legal services ancillary or incidental to its principal function. I beg to move.

Moved, as an amendment to the Motion that this House do agree with the Commons in their Amendment No. 4, leave out from “House” to end and insert “do disagree with the Commons in their Amendment No. 4 but do propose Amendment No. 4A in lieu”.—[Lord Kingsland.]

Lord Thomas of Gresford: My Lords, we on these Benches have considered the issues raised by the amendment and support it. The noble Lord, Lord Kingsland, has said everything that needs to be said on the topic and I do not propose to add to that.

Lord Sawyer: My Lords, I declare an interest as a non-executive director of a firm providing some legal services to the trade union movement. My anxiety with the amendment tabled by the noble Lord, Lord Kingsland, is that it would narrow the scope of the exemption so that certain specialist services provided by trade unions to members would no longer be covered. I am thinking of, for example, advice in relation to aspects of education law, in relation to union members acting as pension trustees on their pension schemes, in relation to legal disputes that might affect third parties such as other employees within the workplace or students, or in relation to intellectual property or performance rights.

The proposed changes would create legal uncertainty about when the exemption would apply to trade unions. Given that failure to act within the exemption could result in a trade union official committing a criminal offence, we believe that it is essential that the wording of the exemption is clear and does not include such uncertainty. The best way of ensuring that trade unions can continue to provide effective representation in workplaces and specialist legal services to members relating to many different aspects of employment is to provide a broadly defined exemption in the Bill. We believe that the existing wording of Clause 15 should be retained.

4.30 pm

Baroness Turner of Camden: My Lords, I agree with the previous speaker. I spent part of my career as a union official and some of it was connected with getting in touch with lawyers on behalf of individual members. I fail to see why the provision of legal services should not be a service that unions can advertise with a view to attracting membership. That has been a standard practice in the trade union movement for many years, and we have been able to help an enormous number of members in a variety of instances with

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those services. As has already been indicated, we employ lawyers to provide this important service to members. I hope that the House will not agree with the amendment moved by the noble Lord, Lord Kingsland.

Lord Hunt of Kings Heath: My Lords, I shall first respond to the point raised by the noble Lord, Lord Kingsland, who said that this House has not had an opportunity to debate these matters in detail. He is quite right. My understanding is that the former Lord Chancellor, my noble and learned friend Lord Falconer, said at Second Reading that the Government would bring forward amendments in this area. It was hoped that they would be brought forward during the passage of the Bill in your Lordships’ House. As it turned out, many discussions took place and it took time before the necessary amendments could be laid. They missed the opportunity to be debated in your Lordships’ House and were therefore introduced in the other place.

I understand entirely what the noble Lord, Lord Kingsland, is getting at, but there are difficulties in using the terms that he used connected with employment. My noble friend Lord Sawyer put his finger on it. Our worry is that a union wanting to provide reserved legal services might not be certain of the circumstances in which it would be able to do so within the exemption. The problem is that, if it was uncertain, that might lead to its reducing the services that it might offer, which might impact on access to justice, an issue that we will debate shortly. The government amendments have the virtue of certainty in that respect. It would also be worrying if a narrow interpretation connected with employment were to prevent advice being given in the areas that my noble friend Lord Sawyer suggested.

I know that much of the concern in this debate has focused on consumer protection. We think that the amendments offer sufficient protection to union members and will not affect the wider public. Including the provisions will give certainty over a vital trade union function, which is the ability of union officials, many of them lay people, to advise fellow members in the workplace. Those of us with experience of unions would testify that that is one of the most valuable jobs that unions do and contributes to the general well-being of many people. We were concerned that, if unions had to be regulated as entities, many of them would find it difficult to put in place the necessary arrangements in an economic and efficient way, which would militate against their ability to offer those services.

The Joint Committee on the draft Bill discussed the matter in some detail. It said that it was concerned that the Bill as originally drafted could restrict the ability of trade unions to act in their members’ interests. We think that the amendments meet that point without unduly restricting the area in which this may operate, a result that might come about with the noble Lord’s amendment.

Lord Thomas of Gresford: My Lords, surely the whole purpose of the Bill is to protect the consumer. Why should not the trade union member, who obtains

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advice not in relation to his employment but for conveyancing services and so on, have the same regulatory protection that the Government are offering to everybody else? Why should they not be covered by the scheme?

Lord Hunt of Kings Heath: My Lords, there are two points to make about that. First, why should union members be restricted in relation to the kind of services that unions have traditionally offered? Secondly, because of the other regulatory safeguards that are in place, we think that there will be adequate safeguards. There is a balance to be drawn here. We may disagree on that, but the Government believe that this provision is sensible in relation to what can be provided to union members.

Lord Thomas of Gresford: My Lords, I do not think that the Minister understands me. Trade union members receiving advice outside the usual employment areas will be getting a less safe service from the legal branch of the union that is advising them on these outside matters. Where do they gain from that? I mean the trade union members; I am not talking about the union, which might have to spend a little money in order to put proper protection in place.

Lord Hunt of Kings Heath: My Lords, of course this concern is about the trade union members, not the trade union organisations. Surely the point is that you have the protections available in relation to the individuals who may be providing that advice. The ability of union members to have access to a wider area of advice than they would under the amendment moved by the noble Lord, Lord Kingsland, is a real advantage to those members. That is why we have gone down this course.

Lord Campbell of Alloway: My Lords, is not the balance to which the Minister refers tipped against the interests of the membership in favour of the officials of the trade union movement? Is not that the truth of the problem?

Lord Hunt of Kings Heath: My Lords, I do not think so. Those of us with experience of being trade union members would acknowledge that the advice that such officials can give can be very valuable. It would be a great pity to inhibit that.

Lord Hunt of Wirral: My Lords, the noble Lord is of course right that the Select Committee raised concerns about the position of trade unions when his ministerial colleague had not reached a decision. I remind him that we were concerned about the provision of legal services by subsidiary companies wholly owned by trade unions. That is why the necessary exemption surely has to be very carefully drafted.

Lord Hunt of Kings Heath: My Lords, I am sure that that is right. I was praying in aid the noble Lord’s name only on the general principle of seeking to ensure that some of the services currently provided are not inhibited.


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