Report (5th Day)

Part of Legal Aid, Sentencing and Punishment of Offenders Bill – in the House of Lords at 3:45 pm on 20th March 2012.

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Photo of Lord McNally Lord McNally Deputy Leader of the House of Lords, The Minister of State, Ministry of Justice, Liberal Democrat Leader in the House of Lords 3:45 pm, 20th March 2012

My Lords, this proposal is not in any way union bashing and I am sorry that it has been caught up like that. I was pleased that when the noble Lord, Lord Beecham, opened the debate he joined with the Government in our general desire to ban referral fees. It is of course right that injured people should be able to pursue claims and under our reforms they will be able to do so. Costs will be more proportionate and the damages they receive will be increased.

However, it is wrong for third parties to be able to profit from referral fees for personal injury cases in this way. I found the intervention of the noble Baroness, Lady Deech, last Wednesday extremely powerful and I recommend noble Lords to reread it. The noble Lord, Lord Beecham, is right: it is not four-square with referral fees but it illustrates the danger of sweetheart relationships in this area. The Law Society were quite right-but rather belatedly so-to deal with a great injustice to miners who had already suffered much in their industry.

On the question of political funding, yes, I understand the difference between union general funds and the political fund and that it is the political fund that goes to the Labour Party. However, again, the noble Baroness, Lady Deech, explained that she was referring to the party itself acting as a referee. Even as I speak, I wonder whether this merry thought has occurred to any other political party. I know political parties look for ways to earn funds and, if this has been thought up by the Labour Party, it is, at the moment, within the law. However, we do not think it is right.

I also welcome the intervention of my noble friend Lord Phillips. I do not always welcome his interventions but this time he has put his finger on it: we are not preventing solicitors taking on a case at reduced rates or for free; nor are we preventing solicitors from making donations to charities or other not-for-profit organisations. Charities representing injured people will still be able to offer advice and recommend the best law firms. However, they should do that in the claimant's best interest, not on the basis of what fee they can get for that claim. The amendment would not only allow an exception for charities and unions but for all not-for-profit organisations. I fully appreciate that trade-union, charity and political-party referral fees can be nice little earners, but that kind of relationship is not in the best interests of the consumer.

I say to the noble Lords, Lord Monks, Lord Brooke of Alverthorpe and Lord Martin, that I am well aware of the record of trade unions in legal advice and the help that they give to their members. I have no doubt of the accuracy of the figure of 50,000 a year given by the noble Lord, Lord Monks. However, I also take the point-which I did not know-that only two trade unions use referral fees. This suggests to me that this is not the universal attack on trade unions that anybody has suggested. We simply say that whether it be political parties, trade unions or charities, it is not healthy or in the consumer's interest to have sweetheart deals between unions, charities or political parties and individual law firms.

The amendment goes further than earlier proposals. Some claims management companies are currently not-for-profit organisations and others could become not-for-profit bodies in order to get around the ban. In Committee, the noble Lord, Lord Bach, tabled an amendment that would have made an exception for charities only. This amendment now makes a wider exception which would exempt unions, political parties and not-for-profit claims management companies as well.

We believe that referral fee arrangements are wrong in principle. Under the cloak of support for charities, the amendment would allow payments for the referral of personal injury cases by a wide range of organisations. This amendment would make a mockery of the ban on referral fees, which the Opposition have claimed to support in principle-and I believe they do support it in principle. I really think-and the more I listen to this debate the more I think it-that for the Opposition to press this amendment is simply wrong-headed. I hope that the noble Lord will withdraw the amendment.