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I welcome Sir David Clementi's final report on legal services in England and Wales and I was pleased to hear of the Lord Chancellor's speech today at the legal services reform conference where he announced the future establishment of a legal services board and an office for legal complaints. Such a large reform and liberalisation of legal services cannot happen overnight and I therefore want to draw attention to structural deficiencies in complaints handling by the Law Society that need to be addressed immediately. The case of my constituents, Mr. and Mrs. John Andrews makes it clear how urgent and necessary that improvement in complaints handling has become. I realise that the Minister will be unable to comment on the specific details of the case, but it shows the background of my general points about the Law Society's performance.
At the beginning of 1995, the late Mrs. Patricia Andrews of Welling in my constituency, realising that she was critically ill with cancer, instructed Ms Gill Scott, a solicitor with a local firm, Woolsey, Morris and Kennedy, to arrange her will. The executors were to be a family friend, Mr. Heaton-Smith and the solicitor, Ms Scott. The estate was to be passed into trust, primarily for her son, Mr. John Andrews.
Mrs. Patricia Andrews died on
This was not a complex probate case. There were some savings, some shares and two properties, one with a disputed mortgage, all to be transferred into a discretionary trust. It is difficult to understand why there were six-month periods of inactivity and why so little had been achieved at the time of Ms Scott's removal as executor.
Ms Scott failed to keep accurate accounts and did not know the estate's value when she was removed. She was guilty of misconduct in transferring £500 from the client account to the office account without first rendering a bill. She broke practice rule 15 in failing to provide a letter containing her charging policy, which might have avoided the dispute over costs at a later stage. In fact, she continually failed to provide cost information and at the time of her removal as executor the administrative costs of handling probate amounted to £10,800, compared with an original oral quote of £900.
Perhaps Ms Scott's most serious error related to one of the properties in the will. The late Mrs. Andrews had transferred a mortgage in the 1980s from an endowment policy to a repayment mortgage, only to find out some 13 years later that the building society had never made the transfer.
The building society admitted liability and made a generous offer of a £15,000 interest-free mortgage. Both the lay executor, Mr. Heaton-Smith, on the advice of independent solicitors, and Mr. Andrews were happy to settle. However, Ms Scott decided that the estate should litigate. Sadly, the case was lost, resulting in the estate being required to pay both sides' litigation costs and a full mortgage of £22,500. Plainly, there was a conflict of interest, with Ms Scott as executor instructing her own firm to litigate and the resultant income that it gained from the case. As a direct result of Ms Scott's behaviour, the estate was required to pay a total of £40,000 plus interest, rather than the £15,000 interest-free mortgage that had been offered.
Ms Scott did not fulfil her oversight obligations to the property in question, 56 Colmer road. The tenant repeatedly complained about the state of the property, but Ms Scott procrastinated about funding the repair work. In the end, the estate was forced to sell to pay for the now extensive repairs and associated litigation by the tenant. If only Ms Scott had inspected the property when Mrs. Andrews died and paid for the then minor repairs, that could all have been avoided.
In summary, Ms Scott was intransigent, made a catalogue of mistakes and did not administer the estate properly. As a direct and indirect result of the decisions she took, the cost of handling probate amounted to £35,000 more than it should have done. However, as my summary implies, the total costs were much greater than that. In being forced to sell the house, Mr. Andrews lost the value of the property, he lost future rental earnings and, thus, the investment potential from other buy-to-let properties. A conservative estimate of his loss would be some £500,000. Furthermore, Mr. and Mrs. Andrews could not draw on the residual estate value to aid them when their business and livelihood experienced serious financial difficulties. This affair has had a cataclysmic effect on the Andrews' lives.
I turn now to the handling of the consequent complaint by the Law Society. Mr. Andrews first complained in 1999. Ms Scott immediately submitted a formal bill for taxation proceedings, effectively a stalling tactic as the Law Society refuses to continue an investigation while court proceedings are under way. The second stage began almost two years later in December 2001, when Mr. Andrews came to see me at one of my surgeries. He and I wrote to ask for the file to be reopened, and that is when the endemic pattern of delay at the Law Society became apparent.
First, there was uncertainty over whether the Law Society would investigate. Then the local conciliation officer took three months to submit his formal report. That meant that it was four and a half months before the investigation stage even started. The investigation started in July 2002. It did not conclude until December 2003. It is a disgrace that such a complaint should take 23 months to be concluded, even if one accepts the Law Society's original rejection of the complaint. When the report was published, it was four years and one month after the moment the complaint was first raised.
In 2000, Professor Richard Moorhead of Cardiff university produced a very comprehensive report on complaints handling, commissioned by the Law Society, entitled "Willing Blindness?". It did not pull any punches. Professor Moorhead found that persistent and pervasive delay
"is in many ways the defining characteristic of the organisation".
Although that quote is from 2000, my constituents' experience through to late last year suggests that very little has changed.
Another significant issue for my constituents was the Law Society's artificial distinction between inadequate service and professional misconduct, which Sir David Clementi highlights. The Andrews could ask for misconduct to be investigated, but not inadequate service, as neither Mr. Andrews, the beneficiary, nor Mrs. Andrews, the new executor, were clients of Ms Scott. That raised the absurd situation whereby, in the eyes of the court, the Andrews are the clients and should pay, but in the eyes of the Law Society, they are not the clients and therefore can receive no compensation and very little protection.
Mr. Andrews was also frustrated by the lack of transparency. At the moment, no one can ring to find out whether a complaint has been lodged against a specific solicitor. That means that we have no idea whether Mr. Andrews's complaint is an isolated example or whether there is a pattern of mistreating clients in the firm.
To finish with the most serious element, it seems that the major fault of the Law Society in this case is an apparent bias towards the solicitor and a lack of robustness in exacting punishment. Both may be due in part to the training of caseworkers. Mr. Andrews had four different caseworkers and there was a worrying lack of consistency. For example, the first caseworker never told Mr. Andrews that she would not investigate inadequate service on his behalf, whereas the second picked up on that straight away.
"Willing Blindness?" highlighted many such concerns about casework and adjudication panels. It found that
"For hybrid matters"
—the combination of inadequate service and professional misconduct—
"'spare' solicitor members tended to participate in discussion, regardless of whether they were formally allowed to vote".
It also found
"that caseworkers were simply accepting the solicitors' story in preference to the client's without calling for evidence which clearly existed."
Even when the Law Society does find a solicitor guilty, little appears to happen. Ms Scott was found guilty of three complaints, yet she does not appear to have been punished or reprimanded in any way. From April to September 2004, after the rebranding of the consumer complaints service, only 5 per cent. of complaints were upheld with action taken. That tiny level of convictions makes it clear that the scales of justice are firmly tipped against the man in the street.
Which?, formerly the Consumers Association, has repeatedly backed up the conclusions that I have drawn and supports an end to self-regulation. In its 2004 survey of solicitors, 71 per cent. of those who responded complained about excessive delays and 59 per cent. about negligence. More than 40 per cent. of those who said that they had received poor service failed to complain, which implies that the problem is even greater than the one in five solicitors who are complained against at present. Those who did complain did not feel that they had fared much better. The legal ombudsman's annual report backs that up: she was satisfied with the quality of complaint handling by the Law Society in only 53 per cent. of last year's cases.
As I said at the opening of my speech, the large-scale reform suggested by the Clementi report might take years to come about. I appreciate that that is why the Government took the responsible step of activating the legal services complaints commissioner. I am also very heartened by the Law Society's recent decision to set up a separate body for consumer complaints, with a lay majority. That is a positive step and I hope that this debate will inform its work.
Nevertheless, I ask the Minister as a matter of urgency and in combination with the legal services complaints commissioner to bring pressure to bear on the Law Society to make some immediate changes. Those include: eliminating the artificial distinction between inadequate service and professional misconduct; punishing infringements of practice rule 15 much more rigorously; making the process much more transparent by making both conditions on practising certificates and the complaints history against a firm a matter of public record; giving wider publicity to disciplinary findings; referring sanctioned solicitors to the solicitors disciplinary tribunal if they repeat an offence; and either making the adjudication panel minutes public or always allowing oral hearings.
None of those changes can undo the financial loss and years of depression experienced by Mr. Andrews and his family, the second element of which has certainly been increased by the Law Society's unimpressive performance. The changes could aid some of the 17,000 members of the public who, on past experience, will complain about solicitors in the next year.
Most people come into contact with the law on only a few occasions, and their depth of knowledge of procedure is shallow compared with that of lawyers. Their relationship must perforce depend on trust in a solicitor's competence. For whatever reason in the case of Mr. and Mrs. Andrews, that trust was unjustified. Such cases will inevitably arise, although every step should be taken to ensure that they are rare. The Law Society has a central role in ensuring that trust is justified by giving an objective reprimand to people whose standards of practice and behaviour fall below reasonable expectations of good faith and competence. The overwhelming weight of evidence, as exemplified by Mr. and Mrs. Andrews' case, suggests that the Law Society itself, through bias, obscurity and delay, has fallen below reasonable expectations of good faith and competence. I therefore urge the Minister to ensure that the findings of the Clementi report are implemented speedily and to take steps in the meantime to eliminate the most blatant inadequacies of the Law Society's present arrangements.
I am grateful to my hon. Friend Mr. Beard for raising this issue, and I express my sympathy for his constituents, who have clearly had a distressing experience.
Since I joined the Department for Constitutional Affairs when it was formed in June 2003, my overriding aim has been to promote better public services, including legal services, that are designed to meet the needs of the people who use them. Individuals use and depend on the justice system and legal services as they go about their everyday life. Mr. and Mrs. Andrews, for example, used them to deal with the important legal matters of a will and an estate. People who use legal services are no different from other consumers, and are entitled to expect an excellent service from their provider. At worst, that service should be satisfactory. Most people go to a solicitor in times of tremendous stress—for example, when they are buying a house, when they are going through a divorce or dealing with the necessary paperwork following the death of a family member.
As someone who was previously a lawyer, I know that this is bread-and-butter work for solicitors. For the individuals concerned, however, it is a vital matter that can have a devastating and lasting effect on the rest of their lives. Someone going through the stress of a divorce has enough to contend with. How much worse would the whole experience be if, at the end, they felt let down by their solicitor, whom they trusted to uphold their rights and protect their interests? I do not wish to suggest that the majority of solicitors in England and Wales are failing to provide an excellent service. Legal services in the United Kingdom are among the best in the world, and many countries look to us in these isles for the high standard that our legal community upholds. However, we all recognise that sometimes things do not go smoothly, and there has been a problem with the processing of complaints made against solicitors. That could undermine the esteem in which our solicitors are held.
If things go wrong, consumers are entitled to expect that their complaints will be dealt with fairly and effectively. That is true whether the complaint is about a solicitor delaying sending out papers or is a matter of professional misconduct. To the consumer whose life has been affected, it does not matter whether the profession views the complaint as a minor issue or not. What matters to the consumer is that they are listened to and their concerns taken seriously.
My hon. Friend referred to Sir David Clementi's final report on legal services in England and Wales. One of the key recommendations is the proposal for a single new complaints body. We will create an office for legal complaints that will be led by a board with a lay chair and a lay majority. This body will be simpler for the public to use and understand, and better able to provide quick and fair redress. It will ensure consistent, fair and professional handling of cases for all complainants. A single new complaints body should remove the need to distinguish between inadequate service and professional misconduct. That goes to the heart of my hon. Friend's remarks. It will provide for much greater transparency within the complaints system, so addressing the points that my hon. Friend raised.
I am looking into the amount of compensation for complainants. I agree with the findings of Sir Stephen Lander, the Law Society's independent commissioner, in his 2003 annual report, that the current levels are too low. The Law Society has accepted Sir Stephen's recommendation that the compensation limit when people suffer at the hands of solicitors should be raised to £15,000. I can assure hon. Members that I am keen to implement that as quickly as possible.
Of course, removing complaints handling from the professional bodies will in no way reduce their responsibility to ensure that their members operate to the highest professional and ethical standards at all times. I acknowledge the serious and constant efforts that the professional bodies make in this regard. The office for legal complaints will help. I believe that getting complaints handling right is of critical importance. The solicitor's role as the conduit between the public and the legal system is vital, but it will continue to work effectively only if the Law Society can ensure that its services are carried out to a high standard.
Many people will already be aware of the history of complaints handling by the Law Society. Historically, hon. Members across the House have made representations to the Lord Chancellor's Department because of their concern about the handling of complaints. It was clear that the consumer was being let down. Decisive and immediate action was needed. That is why we took the step of using the powers in the Access to Justice Act 1999 to appoint a Legal Services Complaints Commissioner.
The role of Legal Services Complaints Commissioner has been taken on by Ms Zahida Manzoor, the legal services ombudsman. Ms Manzoor's experience as ombudsman meant that she had the necessary skills to undertake the challenging role of Legal Services Complaints Commissioner. Ms Manzoor's unique knowledge of complaints handling in this field meant that she was able to hit the ground running and speedily engage with the Law Society on how they intend to improve their services.
To ensure that Ms Manzoor is equipped to do the task, we granted her a range of powers. She can require the Law Society to provide information about the handling of complaints; conduct investigations into those complaints; make recommendations on how to improve performance; set stretching targets; require the society to submit a plan showing how it is going to handle complaints, for her approval; and impose a fine if the society fails to meet the agreed plans for improvements in complaints handling.
I have regular meetings with Ms Manzoor and I know that she is already making good use of those powers. She has made recommendations to improve performance and has set performance targets that she believes are reasonable and achievable for the Law Society to meet. The targets represent a package that aims to achieve a balance between timeliness of response, appropriate quality of decision making and customer satisfaction. They are a step towards achieving effective and efficient complaints handling. The Legal Services Complaints Commissioner will keep the targets under close review. Naturally, she will act in the best interests of the consumer, but balance that with the Law Society's capacity to improve.
I am pleased to report that the Law Society's performance is beginning to improve in several areas, but there is still some considerable way to go before it delivers an effective and efficient complaints-handling service. I am sorry that we did not achieve that for Mr. and Mrs. Andrews. The Law Society has demonstrated its commitment by constructively engaging with the commissioner, responding to feedback and assigning resources to ensure delivery of the required improvements. The commissioner will publish her findings on the Law Society's handling of complaints in her first annual report, which is due to be laid before Parliament in July this year. I look forward to learning of the benefits that the collaborative actions of the commissioner and the Law Society will deliver for consumers.
I spoke earlier about Sir David Clementi's report. The Government have broadly accepted his main recommendations concerning the regulation of legal services, complaints and discipline, and new business structures. That will form the basis of a wide-ranging programme of reform that the Government will introduce. Much of that programme will require legislation. Earlier today, my noble Friend the Secretary of State gave a public commitment that we will publish a White Paper on the proposed package of reforms this year. That will set out the proposals in detail as well as plans for their implementation. Furthermore, we will bring forward legislation to put these reforms in place.
I congratulate my hon. Friend on initiating this debate, which raises yet again in this House the sad state of affairs that some of our constituents experience at the hands of lawyers who should provide a much better quality service. In the past 18 months, we have accepted the recommendations of Sir David Clementi and have moved forward in implementing them. We look forward to the day when we no longer have to discuss the, frankly, shoddy service that some of our constituents get from solicitors when they experience a divorce, have a problem with a will or probate or have difficulties when buying a house. In the meantime, I hope that my hon. Friend welcomes the changes that I have outlined.
Question put and agreed to.
Adjourned accordingly at twenty-nine minutes past Ten o'clock.