Clause 1

Legal Services Bill [Lords] – in a Public Bill Committee at 10:30 am on 12th June 2007.

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The regulatory objectives

Photo of Jonathan Djanogly Jonathan Djanogly Shadow Minister (Business, Innovation and Skills), Shadow Solicitor General, Shadow Minister (Justice), Shadow Solicitor General 10:45 am, 12th June 2007

I beg to move amendment No. 217, in clause 1, page 1, line 10, after ‘(e)’ insert ‘subject to objectives (a) to (d),’.

I declare my interest as a solicitor and member of the Law Society. Before I start, may I mirror the comments of the hon. Member for North Southwark and Bermondsey about the new amendment notes? We, too, believe that those are a good idea and innovation and we are grateful to the Clerks for their guidance on how they should be put into practice.

In welcoming my hon. Friends and other hon. Members to the Committee, I would like to make a few brief remarks at the start, because some context is justified, considering how many reports, conducted by so many people, have preceded this Committee. The original Office of Fair Trading report was followed by the visionary Clementi report, then by a White Paper, an excellent report from the Joint Committee on the Draft Legal Services Bill, on which my hon. Friend the Member for Enfield, Southgate served, and a thorough review in the other place, which in many ways moved the Bill back to the original Clementi vision, to the satisfaction of my hon. Friends and myself. We now have a rather long-debated Bill.

Photo of John Mann John Mann PPS (Rt Hon Richard Caborn, Minister of State), Department for Culture, Media & Sport

Within that lengthy and detailed deliberation, what percentage of time was given over to those who do not have a direct, professional interest in the Bill?

Photo of Jonathan Djanogly Jonathan Djanogly Shadow Minister (Business, Innovation and Skills), Shadow Solicitor General, Shadow Minister (Justice), Shadow Solicitor General

No doubt the hon. Gentleman will inform the Committee of the answer later.

At each stage before the Bill came to the House of Commons, it has been moved forwards and refined, whether by the Joint Committee, the Government or the Opposition, and it is in pretty good shape. However, the core Government amendments will regress the Bill. Most of the key Government amendments are wrecking ones, which is an unfortunate state of affairs affecting important issues of principle, some of which are of constitutional importance.

Let me move on to part 1, which contains the key clause dealing with the regulatory objectives of the Bill, and amendment No. 217, which is a probing amendment. We are proposing that the following words be inserted into clause 1(1)(e):

“subject to objectives (a) to (d)”.

That would ensure that the objective of promoting competition is expressly subordinate to the objectives of protecting and promoting the public interest, thereby supporting the constitutional principle of the rule of law, improving access to justice and protecting and promoting the interests of consumers.

Clause 1 sets out the eight regulatory objectives that the Legal Services Board, the approved regulators, and the Office for Legal Complaints will be under a duty to observe when exercising their functions. The Bill does not rank those objectives in order of importance. Although we agree that the regulatory objectives are all-important to the Bill, some are more significant than others: namely,

“protecting and promoting the public interest...supporting the constitutional principle of the rule of law...improving access to justice” and

“protecting and promoting the interests of consumers”.

Those four objectives are the core aims of the Bill, dealing with the foundation issues from which others emerge, which is why we suggest that the specific objective of

“promoting competition in the provision of services”,

such as are provided by authorised persons, be subordinated to the other four, which are far more generic and wide ranging. Indeed, the aim of promoting competition in the provision of services would mean lower prices and better services for consumers. To that extent, it falls under one of the four principal objectives, to which it should be subject, namely that of

“protecting and promoting the interests of consumers”,

as stated in paragraph (d).

Photo of Simon Hughes Simon Hughes Shadow Attorney General, Party Chair, Liberal Democrats

Amendment No. 217 was tabled by my hon. Friend the Member for Birmingham, Yardley and myself, too. I am conscious that we are not breaking new ground—the matter was discussed in the Lords and on Second Reading.

Clause 1 is a statement of regulatory objectives. Although those objectives are central to the Bill, we must ensure that people understand the principles under which lawyers act, and I have made that point privately to the Minister, her officials, colleagues in the Conservative party and others. We ought to ensure that people understand because the Bill is about the set of principles that govern institutions and bodies such as the Legal Services Board, which is dealt with in clause 2. We should write the Bill so that it is clear that the principles govern the institutions that it creates. I shall come back to the point about structure.

The starting point of the Bill is the list of objectives. They are good objectives and it is good that they are clearly set out. People will be pleased to see that the objectives of

“protecting and promoting the public interest...supporting the constitutional principle of the rule of law...improving access to justice...protecting and promoting the interests of consumers...encouraging an independent, strong, diverse and effective legal profession...increasing public understanding of the citizen’s legal rights and duties”

—that is hugely important—and

“promoting and maintaining adherence to the professional principles” are set up in lights, as it were, at the beginning.

The amendment deals with the objective of

“promoting competition in the provision of services within subsection (2)” as stated in paragraph (e). As the hon. Member for Huntingdon said, the amendment would ensure that we get our scale of priorities right. The legal system is a public service, although many practitioners are private, by which I mean barristers and solicitors other than those in the Government’s service or those who are employed by public agencies. Legal service providers are there for two purposes: first, to participate and to ensure that the legal system works well and fairly and, secondly, to represent the people. Those two purposes have to be uppermost in the scale of priorities, beyond the principle set out in paragraph (e).

Of course, the public should be able to choose which solicitors and barristers they use—that is happening increasingly and it is a good thing. However, such choice is not the central, core reason why we have a legal system. People go to legal institutions to seek just and fair answers. It is a bit like the issue of the health service. For me, given my political hinterland, the important thing about the settlement of the post-1945 Attlee Government and the welfare state was that we had a national health service to which everybody had access without having to worry about their finances. Competition among providers of health services to ensure quality of care is not the first principle. We could argue and debate that, but the principle is that everybody should have access to a good-quality health service. The same principle applies to legal services.

Some people in the legal system are directly employed by the public service, including judges, district judges—formerly stipendiary magistrates—and the lay magistracy, whose expenses are paid by the public service. Court staff are public servants, so they are outwith this debate. Other people can become involved in public service when they step into the legal system or do anything involving the courts. Giving advice at the beginning does not necessarily involve the courts, but once they are involved a public service is being supported.

John Mann rose—

Photo of Simon Hughes Simon Hughes Shadow Attorney General, Party Chair, Liberal Democrats

I shall make just one point before taking an intervention from the hon. Gentleman. When people seek legal advice about a dispute with a neighbour, a matrimonial dispute or anything else, they may hope in the first place that the matter never goes to court and can be resolved outside the courts. If people want to make a business contract, the matter may never go to court—that would only happen if it went wrong. I appreciate that lots of things that are not court-related are one step removed from the measure. However, that does not mean that one should not ensure that all those who join the honourable professions within the legal service—there are increasing numbers of them, including people dealing with patents, legal executives and so on—understand that, fundamentally, their duty is to ensure that the rule of law comes first and that access to justice and all the other principles are established. Those things should come first and competition should be subject to them. I support the amendment.

Photo of John Mann John Mann PPS (Rt Hon Richard Caborn, Minister of State), Department for Culture, Media & Sport

The hon. Gentleman said that the key principle behind the Bill is that the general public should know the rules governing the legal profession. However, is there not a second key principle behind the  Bill? The public and the individual should be empowered in any complaint against the legal profession, precisely because of the danger that legal professionals could use their expertise and knowledge to threaten action against the individual. Empowerment is a second vital component of the Bill.

Photo of Simon Hughes Simon Hughes Shadow Attorney General, Party Chair, Liberal Democrats

I accept that. The hon. Gentleman has had experience in his constituency, particularly in fighting the good fight on behalf of people who have suffered as a result of their employment and sought legal redress. He and I have served on Committees together when this issue has been on the agenda and we have sought to give proper compensation to those people, very much belatedly. The Minister has played an honourable part in that and other people were supportive.

The hon. Gentleman is right. He will hear me say, as the Committee goes on, that the public should be entitled to clear access to the service, to understand what is going on and to be sure that, when they go through a door marked “The Lawyers”, they know with whom they are dealing, whether it is a qualified solicitor, a legal executive, a clerk, a trainee or the tea boy, because often they do not and they are left in the dark. Sometimes, people think a person is a solicitor when that is not so. They may not know, when they go to court, whether their barrister has one year or five years’ experience, and sometimes they do not know whether the barrister has done any such work before. People have turned up at court and meet the person representing them for the first time. In turn, that person has never seen the papers until two seconds or two minutes before, has clearly not been briefed and cannot, given the time that they have spent on the case, properly represent that individual. There are huge issues to consider.

If people have a complaint, they need a service that ensures that they have equal status. That is why I support the setting up of an independent body, whereby people can go through one door and all complaints can be dealt with objectively. I will support the hon. Gentleman in some of his amendments, whether probing or otherwise, to ensure that we have independence and that the lay person, though not a lawyer, speaks out strongly. If we fund a legal service, as we should—I am arguing for more funding for legal aid in other contexts because we still need significant increases in funding for the public legal service in England and Wales—we have to ensure that the public, irrespective of their education, means or experience, have proper access to it, so I share the hon. Gentleman’s view.

I am told that we can return to this matter but, as for the amendment and the specific list of interests, I hope none the less that, given his background, the hon. Gentleman will be sympathetic to the proposal. It simply says that the promotion of competition should come after the first four principles: public interest, including the interest of the people whom he and I represent; the constitutional principle of the rule of law, to which we should all sign up; access to justice, which is about the rights of lay people; and protecting and promoting people’s interests as consumers.

I hope that the Committee will support the amendment and that the Minister will be sympathetic  to it. I hope that she realises that this is a more than just a game, and that a second-tier principle should come after the golden principles of the Bill. If we do not have the golden principles right, let us change them. Let us establish the core principles and ensure that it is not competition first and the devil take the hindmost, but guarantee that competition is subject to those four principles. I support the amendment.

Photo of Bob Neill Bob Neill Conservative, Bromley and Chislehurst 11:00 am, 12th June 2007

May I say what a pleasure it is to serve under your chairmanship, Mr. Cook. Noting the birthday of my hon. Friend the Member for Enfield, Southgate, I remind him of the old adage that, as time goes on, old lawyers never die; they just lose their appeal. Having got the bad joke out of the way, I wish to declare my interest as a member of the Bar, although I do not practise. Indeed, I did not renew my practising certificate. I therefore do not consider that I am likely to be prejudiced by anything that is said in Committee.

I support the amendment tabled by my hon. Friend the Member for Huntingdon and the observations made by the hon. Member for North Southwark and Bermondsey. It seems sensible to set out such priorities. It is the right approach. In fairness to the legal profession it sets out what in my experience of some 30 years or more is the way in which the majority of lawyers regard the profession and their responsibilities. Having heard some of the things that were said, perhaps for legitimate reasons, on Second Reading, I regret that it could be suggested that the majority of lawyers are anything other than decent and reputable people who follow such principles in their own career. In the 30 years during which almost exclusively I worked in the criminal courts, either on legal aid or otherwise publicly funded cases prosecuting on behalf of the Crown Prosecution Service, I found that with the people with whom I dealt.

Solicitors, barristers and legal executives—those who do the back-up—take the whole issue of their responsibility to the public interest hugely seriously, as they do their responsibility to lay clients. They see that as the thrust of their profession, rather than the commercial issues of consideration. Of course, they all need to make a living, but that is the how the majority of lawyers regard their profession. If we set out such principles at the beginning of the Bill, it will clearly demonstrate not only what the profession believes to be the case, but what Parliament rightly says should be the case in the public interest. It will make explicit the best practice of our institutions. The amendment would be a constructive start and fit in with the profession’s desire to have constructive independent regulation that engenders public confidence.

Photo of John Mann John Mann PPS (Rt Hon Richard Caborn, Minister of State), Department for Culture, Media & Sport

I did not quite catch the comments of the hon. Member for Huntingdon during the speech of the hon. Member for Bromley and Chislehurst, but is it not precisely to protect the reputation of decent solicitors, barristers, legal executives and others that the Bill must contain clarity and robustness in its procedures and have the ability to take on the minority who bring his profession into disrepute?

Photo of Bob Neill Bob Neill Conservative, Bromley and Chislehurst

I agree with the hon. Gentleman about such principles. I am glad that he recognises that it is a minority who cause problems. That needs to be put firmly on the record. It is exactly because I agree with him that I want the Bill to have a robust and, above all, an independent framework for ensuring public confidence in the profession. I want it to be independent of the profession, as well as independent of the Government. The amendment would be a good start in setting out priorities.

Photo of Bridget Prentice Bridget Prentice Parliamentary Under-Secretary, Ministry of Justice

Let us be clear. We all agree that the majority of lawyers are dedicated and do a very professional job. I do not think that anyone resiles from that. The issue about whether one regulatory objective should take precedence over another has been debated since Clementi published his review in December 2004.

I invite the Committee to reject the amendment. Ensuring effective competition is essential to the new consumer-focused regulatory network. I think that that might be only the first or second time that the word “consumer” has been mentioned in our deliberations. However, it will be repeated ad nauseum throughout because the Bill is about the consumer and protecting the consumer. The promotion of competition encourages innovative and more efficient ways of providing legal services and firms to address the needs of the consumer in the legal sector. Therefore, it is right that we encourage firms to be responsive to consumers’ needs with respect to price, quality and variety. For that reason, the competition objective in clause 1 is consistent with both the public and the consumer interest. I do not agree that it should be seen as of lesser importance than any of the other objectives.

Photo of Simon Hughes Simon Hughes Shadow Attorney General, Party Chair, Liberal Democrats

The Minister may be about to advance some more arguments, but it is not sufficient to say that consumers are important and therefore cannot be a subsidiary qualification. I am sure that she appreciates that. I hope that she will come on to evaluate the importance of the other objectives and answer the obvious criticism made by the hon. Member for Huntingdon, me and others, which is that they are in a different league of value. Therefore, can we have some unpacking of the answer? Just reciting, “Consumers are important and therefore have to take equal priority” is not a sufficient answer.

Photo of Bridget Prentice Bridget Prentice Parliamentary Under-Secretary, Ministry of Justice

I hope that I am going to be able to do that. Those were my introductory remarks. I need to establish in this Committee that the Bill is about consumer interest and ensuring that the consumer is properly protected and valued. Also, competition is a priority on the international stage. I dare say that later on in our deliberations, people will want to comment on the value that the legal profession brings to our economy through its international work. It is not right that the Government relegate its importance whenit comes to this landmark piece of legislation. Competition in professional services is central to the work of the European Commissioner for Competition. I agree that competition has a key part in reform of legal services.

In addition to the benefits of competition itself—and I think that this might address the point madeby the hon. Member for North Southwark and  Bermondsey—the Government are opposed to ranking the objectives in any way. It would be against the recommendations of Sir David Clementi who proposed that the regulator should be able to balance the objectives on a case-by-case basis. The Bill realises that recommendation and establishes a risk-based and proportionate regulatory structure in which the board, approved regulators and the Office for Legal Complaints can look at how each of the objectives applies in any given situation. We have consistently said that the objectives should not be weighted in any way, and we have resisted the call from some in the consumer arena who said that the consumer objective should take preference. I resisted that, despite the fact that I say consistently that the consumer is at the heart of this Bill. We have also resisted similar arguments from the legal profession saying that one or other of the legal objectives should be right at the top.

The Joint Committee suggested that, in the explanatory notes, the objectives should not be listedin order of importance. We agreed with that recommendation and have not listed them in that way. The amendment would be at odds with the principle advanced by the Joint Committee, which is why I cannot agree to it.

Photo of Jonathan Djanogly Jonathan Djanogly Shadow Minister (Business, Innovation and Skills), Shadow Solicitor General, Shadow Minister (Justice), Shadow Solicitor General

May I first deal with the important remarks made by my hon. Friend the Member for Bromley and Chislehurst? He said that what the clause deals with is reflected in the current practice of the vast majority of lawyers. On Second Reading, certain hon. Members—they know who they are—seemed to regard the Bill as a chance to have a go and bash up lawyers. I put it on the record that most lawyers are hard working, reputable and provide a good service.

The hon. Member for Bassetlaw made an important point in asking whether a key objective should be support for the person in the street coming up against a sophisticated lawyer. The answer is yes, but that is covered in paragraph (d):

“protecting and promoting the interests of consumers”.

As that is one of the priority objectives in our amendment, it would not negatively impact on what he wants in that regard.

I was confused by the Minister, who initially said that the Bill is primarily about protecting the consumer interest. However, that is not true. Equal consideration is given in clause 1(1) to all the objectives. The consumer interest is not put ahead of the others. She went on to say that the objectives were to be given equal value. However, the two things that she said conflicted. I did not see where she concluded.

Photo of Stephen Hesford Stephen Hesford PPS (Rt Hon Baroness Amos, President of the Council), Privy Council Office

Is not a central problem with the hon. Gentleman’s amendment, which I hope the Committee will reject, that it is limited to paragraphs (a), (b), (c) and (d), and does not refer to paragraph (h), which is a large percentage of the clause, as hon. Members will see on reading subsection (3), which deals with

“professional principles”?

As a practising barrister for 16 years before I came into this place, I should have thought that since we are talking about what the profession stands for the core principles in the amendment should include  paragraph (h)—if it were a core element as he describes it—but it does not. Is there not some confusion? Is not what he is doing partial? Therefore, what my hon. Friend the Minister said is right.

Photo of Jonathan Djanogly Jonathan Djanogly Shadow Minister (Business, Innovation and Skills), Shadow Solicitor General, Shadow Minister (Justice), Shadow Solicitor General

The hon. Gentleman makes an interesting point, but a different one from the Minister, in saying that another objective should be included in the core ones. We could debate that as a stand-alone issue. However, that is not the point that the Minister was making, which was that the clause should be left as it is and the objectives should be treated equally.

Photo of Simon Hughes Simon Hughes Shadow Attorney General, Party Chair, Liberal Democrats

I want to pick up the point made by the hon. Member for Wirral, West. I think that it is valid to argue that there are two principles in the list of objectives that could be added which are not to do with self-interest. There is the citizens’ rights objective in paragraph (g), which the hon. Gentleman alludes to, and the general adherence to “professional principles” in paragraph (h). I hope that the hon. Member for Huntingdon and his colleagues will meet with me and my colleagues when we come back on Report or later to consider a measure that meets that concern.

Photo of David Burrowes David Burrowes Conservative, Enfield, Southgate

I hear the Minister’s response and her assurance that an explanatory note deals with the competing objectives. In evidence to the Joint Committee, the Solicitor Sole Practitioners Group made the point that the Legal Services Board is being expected to balance seven highly complex regulatory objectives against each other with no guidance from Parliament. That is an approach that has not always worked well in other areas of legal regulation. It is important to prioritise, as is set out in the amendment, to express core principles.

Photo of Jonathan Djanogly Jonathan Djanogly Shadow Minister (Business, Innovation and Skills), Shadow Solicitor General, Shadow Minister (Justice), Shadow Solicitor General

I take the point made by the hon. Member for North Southwark and Bermondsey. It is an area that is worth looking at. However, it is different from our amendment and from what the Minister is saying, but that does not make it an invalid point. I agree with what my hon. Friend the Member for Enfield, Southgate had to say. I was going to conclude on that point. I am not entirely sure whether the Minister accurately understood what the Joint Committee said.

The Joint Committee did not explicitly recommend that the objectives should not be prioritised. It said that, if they are not prioritised, the explanatory notes to the Legal Services Act, as it will be, should be made explicit. The Joint Committee noted that the Government had not ranked the regulatory objectives in order of importance in the draft Bill, but it was concerned that that could create uncertainty and confusion over how the objectives are applied. The amendment would clarify that issue, so I thank my hon. Friend for his intervention.

Photo of Stephen Hesford Stephen Hesford PPS (Rt Hon Baroness Amos, President of the Council), Privy Council Office 11:15 am, 12th June 2007

I have the Joint Committee report in front of me. I sat on the Committee, as did the hon. Member for Enfield, Southgate. Paragraph 5 states:

“If it is not made explicit on the face of the Bill that they”— the issues we are now talking about—

“are not ranked in any particular order, it is inevitable that they will be seen as listed in order of priority. We therefore recommend that the Explanatory Notes to the Legal Services Act should make it explicit that the objectives are not listed in order of priority.”

In other words, the Committee unanimously did not want any kind of priority setting.

Photo of Jonathan Djanogly Jonathan Djanogly Shadow Minister (Business, Innovation and Skills), Shadow Solicitor General, Shadow Minister (Justice), Shadow Solicitor General

All I can say is that I do not think that I said anything different from the hon. Gentleman. It would come down to what was in the explanatory notes. That was my reading of it and I think of my hon. Friend the Member for Enfield, Southgate, who also sat on the Joint Committee.

There is no doubt that this is a point that has been through the hoops. That will be the case for many of the points that will be discussed over the coming weeks. Having heard the debate, I would like to put the amendment to a Division. I will recommend that my hon. Friends vote in favour of it.

Question put, That the amendment be made:—

The Committee divided: Ayes 5, Noes 10.

Division number 1 Nimrod Review — Statement — Clause 1

Aye: 5 MPs

No: 10 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly negatived.

Photo of Frank Cook Frank Cook Labour, Stockton North

It has come to the attention of the Chair that at least one hon. Member is clearly using a device with which to send text messages. The Speaker’s Panel of Chairmen has considered the use of such devices numerous times and, on each occasion to date, has decided against giving permission. I therefore ask all members of the Committee to bear my words in mind, and I ask the particular hon. Member to desist forthwith.

Photo of Jonathan Djanogly Jonathan Djanogly Shadow Minister (Business, Innovation and Skills), Shadow Solicitor General, Shadow Minister (Justice), Shadow Solicitor General

I beg to move amendment No. 207, in clause 1, page 2, line 7, at end insert—

‘(ca) That authorised persons should not act where there is a conflict between the interests of two or more of their clients, or between the authorised person and their client.’.

I propose the amendment on behalf of my hon. Friends. It was suggested by the Law Society and would ensure that the avoidance of conflict of interest is included in the professional principles, the promotion  of which will happen by virtue of the regulatory objective in clause 1(1)(h). At present, the Bill will require the Legal Services Board, the approved regulators and the Office for Legal Complaints to act in a way that is compatible with the regulatory objectives.

The regulatory objectives are set out in clause 1, one of which is

“promoting and maintaining adherence to the professional principles”.

It could be seen as important that the Bill should contain such an objective. It is also important that the new regulatory structure maintains and builds on the strengths of the existing system, while providing a more coherent structure for oversight regulation and ensuring that approved regulators separate their representative from their regulatory functions.

One of the main strengths of the existing regulatory system is the strong ethos of professionalism that it engenders, which is respected by the great majority of lawyers. The professional principles are set out in clause 1(3) and require authorised persons to

“act with independence and integrity...maintain proper standards of work...act in the best interests of their clients...comply with their duties to the court” in respect of the conduct of litigation and advocacy, and keep the affairs of clients confidential.

At present, the principles do not include the need to avoid a conflict of interest. That is a surprising omission. The charter of core principles of the European legal profession adopted by the Council of Bars and Law Societies of Europe—the umbrella organisation for all European legal professional bodies—specifically includes avoidance of conflicts of interest, whether between different clients or between the client and the lawyer. We believe that that is an important principle of practical significance to the legal profession and its regulators. It is not clear why it has been omitted from the Bill, and the amendment is designed to fill the gap.

Several points that came out in our reasoning of why the Lord Chancellor should have to concur with the Lord Chief Justice on appointments to and terminations of the board are relevant. Time and again, we have stressed the importance of maintaining the independence of the legal profession from the Government and the dangers of losing that, whether as a result of an actual or perceived increase in the Government’s interference.

The amendment is another means by which we can demonstrate that the Bill will not destroy the independence of the legal profession and will not be used by the Government as a way in which to intervene and meddle in legal affairs. Such a clear statement made at the beginning of the Bill in the regulatory objectives that will govern it that prohibits an authorised person from acting when there is a conflict of interests will ensure, as well as sending out a clear message to those overseas and at home, that the independence of the legal profession is not threatened by the Bill.

Photo of John Mann John Mann PPS (Rt Hon Richard Caborn, Minister of State), Department for Culture, Media & Sport

This is a phenomenal amendment, and I trust that the hon. Gentleman will consider his tactics, counsel Members and work out how best to proceed to ensure that it is made. If that happened, it would  produce the most phenomenal change to the way in which the solicitors’ profession works.

I shall give one example, but I could give dozens. There might be a firm of solicitors that acts for a claims handler; in other words, the claims handler provides work for the solicitor. A claimant is contracted as the client of the solicitor. However, the solicitor might assist the claims handler, with whom he has a professional relationship, and act in other ways to get moneys out of the claimant, which might later become a matter of dispute. That is a common situation; indeed, most claims handlers act in that way through the direct relationships that I described.

Photo of Kevan Jones Kevan Jones Labour, North Durham

May I give my hon. Friend an example? Watson Burton and P and R Associates in Newcastle acted in exactly the same way as he suggested in his example: £350,000 was taken from miners’ compensation and passed to P and R Associates, and it was not clear in whose best interests Watson Burton was acting but, clearly, it was not the clients’. Would the amendment not outlaw that type of relationship?

Photo of John Mann John Mann PPS (Rt Hon Richard Caborn, Minister of State), Department for Culture, Media & Sport

It clearly would, but it goes much further. The measure would come into play on financial services and the provision of loans, the motor insurance industry and the funding of conditional fee agreements. When there is a contractual relationship—we know scores of examples—the duality of representation comes into play. That argument has repeatedly been used to demonstrate the catch in which individual consumers frequently find themselves when financial institutions have provided financial support in the form of loans, particularly since conditional fee agreements were introduced in 2000. Claims handlers have sometimes gone and sorted out a claim. The measure goes well beyond the miners’ claims that I have been involved with and gets into the heart of a much bigger business.

The hon. Member for Huntingdon may have inadvertently hit upon quite a solution to the problem. It is rather more draconian than any that we on the Labour Back Benches had considered, which is why we did not table an amendment ourselves. We have always taken the view that there needs to be some kind of parity between defending the rights of the consumer and the ability of the legal profession to do its honest business well. We have always considered the matter on the basis that regulation—or self-regulation—that allows the consumer proper redress for complaints is the way forward, as long as it is robust. I still veer toward that principle, because I think that it would protect the good name of the profession better than draconian legislation.

The hon. Gentleman has come up with the most draconian of proposals. It would transform the situation and is therefore worthy of some real consideration. I am a little loth to rush into such a major change to the way in which the profession does its business this morning, but I am interested in what the Minister and the hon. Gentleman have to say, because the measure goes well beyond anything that I might have proposed. I rather warm to the amendment, and I fear that I might have to obey a call of nature if a vote on the matter suddenly arises.

Photo of Kevan Jones Kevan Jones Labour, North Durham

Like my hon. Friend, I read the amendment last night with some intrigue. Has the penny dropped for Conservative Front Benchers that they must fight for consumers’ rather than lawyers’ interests? As my hon. Friend the Member for Bassetlaw eloquently said, the amendment would drive a coach and horses through the activities at least of the claims handling companies, and if it made those organisations disappear, I would not be too sad.

The amendment says that

“authorised persons should not act where there is a conflict between the interests of two or more clients”.

I should like to offer a couple of examples. The first is the case of Watson Burton andP and R Associates, which I just mentioned. P and R Associates isa claims handling company that passed on miners compensation cases to Watson Burton, which then took cases to the scheme. At the end of the case, Watson Burton deducted a fee from the compensation that individuals had received and passed it to P and R Associates. In whose best interests were they acting?

If the amendment were adopted, Watson Burton would not be allowed to act for two parties, because the third person in the parties’ relationship is the client. Watson Burton was clearly not acting in its clients’ best interests in the case that I mentioned, and there was a clear conflict of interest between its relationship withP and R Associates and the best interest of its clients.

I have been trying to think why the Conservatives would propose the amendment. The amendment would demolish trade union legal services, because most referrals to trade unions are passed on either to an in-house firm of solicitors or to a panel of solicitors. Is there not a conflict in that three-way relationship?

My second example, in which there was indeed such a direct conflict, is a situation that involved the Durham National Union of Mineworkers, which took in miners compensation claims and passed them to Thompsons solicitors, which then deducted 7.5 per cent. from the final claim award and passed it back to the NUM. Again, there was a clear conflict of interest between the actual client and the relationship that Thompsons had with the Durham area NUM.

I am not sure whether the hon. Member for Huntingdon realises what he is proposing; but, as my hon. Friend the Member for Bassetlaw has said, it is quite a draconian way forward. I sympathise with much of what is proposed, and I would not like to throw it out altogether. Unlike my reasonable Friend the Member for Bassetlaw, I am not a light-touch regulator in this field. There is a need for strong and hard regulation of the legal profession, because, sorry as I am to say it, I do not accept the rosy picture that has been painted of that profession this morning, given the way in which lawyers have dealt with my constituents in relation to miners compensation.

I warm to the amendment, but I point out to the hon. Member for Huntingdon that I think there are consequences that he has not thought about.

Photo of Simon Hughes Simon Hughes Shadow Attorney General, Party Chair, Liberal Democrats 11:30 am, 12th June 2007

There was speculation on Second Reading about whether one or both of the hon. Members for Bassetlaw and for North Durham would  make it to the Committee, so I am glad to see that their representations fell on happy ears in the Whips Office and that they both arrived as a double act. The double act was to be assured, and if one of them cannot be here for some reason then the case will continue. However, I apologise to the hon. Member for Bassetlaw for calling him the hon. Member for Mansfield on Second Reading; I stand corrected.

I am not troubled by the amendment. Had I been so, I would not have signed up to it and would not have taken my hon. Friend the Member for Birmingham, Yardley along with me. As the hon. Member for Huntingdon said, the principle is an important one. Indeed, as I think he said, it is not an invention of his or of mine, and it is not just an invention of the Law Society or of those who directly advise us; it comes from somewhere else—from the charter of the core principles of the European legal profession, which has been adopted in this country and more widely. That is the umbrella body for all the European legal professional bodies, and I do not know whether that gives it more or less justification, because if one country’s lawyers are not terribly well regarded, the body that represents all the lawyers of all the European countries might be even less well regarded. However, at least it has common support.

The principle is important. Subsection (3), as we know, stresses the importance of acting with independence and integrity. Acting with independence is very important. I remember, as will anyone else who has been a lawyer, that one sometimes has to say to a client, “I’m sorry, I can’t do that”, “I’m sorry, that is inappropriate”, “I’m sorry, that’s unacceptable”, or “I’m sorry, that is not what can be done.” Lawyers are not bought to carry out a client’s wishes but to give advice and act in accordance with that advice. It can be rejected, but lawyers cannot do things that directly conflict with it. Lawyers often pull out of cases because what they know is incompatible with what they have been told.

Subsection (3) also stresses the importance of maintaining a proper standard of work and acting in the best interests of a client. Both are not insignificant—I refer to the case of the brief delivered at the last minute. In England and Wales, the service that barristers give is better than it used to be, as briefs used to be given a moment or two before the case, but there is still a job to do to maintain proper standards of work.

Subsection (3) also mentions the duty to comply with the duties to the court in respect of the conduct of litigation advocacy. Again, that comes up quite often. There is sometimes a duty to share something with the court or with people who represent others in court, or to advise a judge of something. Sometimes that should be done confidentially or permission should be sought.

The last issue stressed in subsection (3) is the requirement to keep the affairs of clients confidential. By definition, that is important and comes up in every affair from the most simple and uncomplicated to the biggest issues of state, such as when the Law Officers, as the lawyers who advise the Government, argued that they should keep their advice confidential when they advise on issues such as whether it is legal to go to war in Iraq. It applies across the gamut.

Under the amendment, people should not act where there is a conflict between two or more of the clients or between the authorised person, as defined in the Bill, and the client. That is important. I remember discovering during an election campaign in which I took part that I was being sued for libel by someone who took exception to a press comment that I had made about them—

Photo of Kevan Jones Kevan Jones Labour, North Durham

I cannot understand that.

Photo of Simon Hughes Simon Hughes Shadow Attorney General, Party Chair, Liberal Democrats

It was an eminent trade unionist, as it happens. I went to the solicitors whom I had used in the past and found very helpful, and they told me that that they would love to help me but they represented that union on that occasion. They did not think that it was appropriate; I understood that and it was completely the right response. I sought advice elsewhere and was guaranteed that independence. No argument could be made by the trade unionists that the company was compromised in representing that union in the past, present or future.

I hope that the Minister will be sympathetic. She clearly has support from the Opposition, and growing excitement and support from Labour Back Benchers. I have not done the figures, but I think that if we rustle up everyone on these Benches, plus two, we should be there. [Interruption.]The Whip says no, but we should manage it if we have two more and keep a few outside the room. The Chief Whip—we never know what might happen next month, but I mean the Whip—is keeping his tally on the scoreboard, which is not as exciting as yesterday’s cricket but none the less of some interest.

My point is that there is a good prospect for the amendment. Two parties have signed up to the proposal. There is warming support from the intelligent consumer lobby among Labour Back Benchers, and so I hope that the Minister will give a positive and enthusiastic response. We are already on page 2, and we are making great progress through the Bill, so it is time for the Minister, who resisted the first amendment, to make her first generous concession of the day, so that all the people who came to watch us will go home thinking that there is real movement in Committee and that Committees are a procedure worth having. I am sure that the Minister will not disappoint—at least, I hope not.

Photo of Bridget Prentice Bridget Prentice Parliamentary Under-Secretary, Ministry of Justice

Will I disappoint or not? My notes tell me that I should resist the amendment, but perhaps there will be some movement. Let us not get too carried away. My hon. Friends describe the amendment as draconian, and it is an interesting concept that the Opposition want to impose a draconian measure on the legal profession.

I must resist the amendment, because a couple of issues need to be teased out. On the face of it, it looks reasonable and sensible because the purpose of the Bill is to protect the consumers of legal services, so that when someone puts a case in the hands of a legal professional, it should be taken as read that the lawyer has a duty not to compromise the client by having conflicting obligations elsewhere. The amendment may look reasonable, but any conflict between an authorised person’s interests and those of a client is already prohibited  under clause 1(3)(c), which requires the authorised person to act in the best interests of their clients. If there were two clients with conflicting interests, it would be impossible for the authorised person to act in the best interests of both. The rules are complicated, and I am reluctant at the moment to put the amendment into the Bill.

I am a little surprised that the Law Society is backing the amendment, because it recently liberalised its rules, which I believe now allow a solicitor or law firm in certain circumstances to act in what might otherwise be a conflicting situation, provided that certain conditions are met. A key proviso is that the client gives informed, written consent. The conduct rules of the Council for Licensed Conveyancers also allow a licensed conveyancer in some situations to act for opposing parties, but again with strict conditions to protect consumers.

At the moment, there is a proper balance between ensuring that consumers’ interests are protected and avoiding disproportionate restrictions. I would not want to introduce a provision that compromised that too much.

Photo of John Mann John Mann PPS (Rt Hon Richard Caborn, Minister of State), Department for Culture, Media & Sport

In terms of unforeseen consequences, has the Minister considered that, if the amendment were part of statute, it would provide a defence for any solicitor who had identified two clients to the individual consumer by definition, because it is in statute? In other words, they would say that, because it is in statute, they are either breaking the law, which would require a legal remedy, or that they are not, otherwise someone would have taken legal action against them. Therefore, the consumer arguing on the best-interest principle, as in the case of Watson Burton and P and R Associates, would be tied down in a legal defence and a circle that they could get out of, purely because it existed in statute, which in itself would be the defence of the solicitor who might not have acted in the best interests of the individual consumer.

Photo of Bridget Prentice Bridget Prentice Parliamentary Under-Secretary, Ministry of Justice

My hon. Friend makes a reasonable and valid point, and it is partly because of his argument and that of my hon. Friend the Member for North Durham, as well as the Opposition spokesmen, that I would like to reflect on the matter. I am worried that the amendment would cast doubt on the validity of a number of existing rules. That would not be welcomed by providers or consumers, particularly when specialised or commercial services are involved. I am not yet entirely convinced that there is a gap, but I am happy to consider the matter further.

Photo of Simon Hughes Simon Hughes Shadow Attorney General, Party Chair, Liberal Democrats

I am encouraged by the Minister’s reply. Her point about the Law Society recently looking at its rules again and amending them is not inconsistent with the principle. To take a simple case, it would be perfectly possible to have a rule that said that someone in a firm could act for people on both sides of a dispute, provided that there were clearly defined walls between the two parties in the firm. I am grateful to the Minister for her sympathetic response, which is not inconsistent with what she said about the changes in the rules.

Photo of Bridget Prentice Bridget Prentice Parliamentary Under-Secretary, Ministry of Justice

The hon. Gentleman is right. A properly run professional firm ought to be able to have that wall, if that were appropriate.

My final point—I make it so that we can further discussions—is that hon. Members should look at the Bill as a whole, and particularly at clause 177, for example, under which all authorised persons will be under a statutory duty to comply with the professional body’s detailed rules on conflicts of interest. When we think about that later, hon. Members should consider whether that might be sufficient, so that we might not need the draconian measure, as my hon. Friend the Member for Bassetlaw described it, that the hon. Member for Huntingdon has proposed.

I agree that it is essential that conflicts of interest are dealt with effectively, and that is why the rules are so important. However, I would ask the hon. Gentleman to withdraw the amendment, so that we can reflect on it further and see whether the amendment or something similar is necessary, or whether we can feel that the Bill covers the concerns that have been raised in other respects.

Photo of Simon Hughes Simon Hughes Shadow Attorney General, Party Chair, Liberal Democrats 11:45 am, 12th June 2007

I have not talked formally to the hon. Member for Huntingdon, but I am sympathetic to the Minister’s suggestion and, likewise, I would be willing to look at what she has said and at the linked parts of the Bill. On that basis, if the hon. Gentleman and his colleagues are willing to do so, I should be happy for the amendment to be withdrawn and for us to return to it on Report.

Photo of Jonathan Djanogly Jonathan Djanogly Shadow Minister (Business, Innovation and Skills), Shadow Solicitor General, Shadow Minister (Justice), Shadow Solicitor General

Praise from the hon. Member for Bassetlaw is praise indeed. I shall enjoy it while it lasts, because I have a feeling that it will not last for long. However, he should accept that we want a balanced Bill that represents all interests. He was rather blunt in his understanding of where conflict exists. The issue is rather more complicated than the position that he and the hon. Member for North Durham described. In real-life practice, the existence of a conflict can be a complicated or a simple issue, depending on the circumstances. As the hon. Member for North Southwark and Bermondsey said, lawyers have to consider such issues on an ongoing basis and sometimes have to make decisions daily.

The Minister referred to the Law Society’s recent changes to conflict rules. New procedures were required, because the existing rules did not cater for the complexity of commercial transactions in the modern age. The Law Society undertook years of consultation and underwent a tortuous process before those changes came into effect. The hon. Gentleman was quite right that that is a separate point from the amendment, but the two are by no means incompatible. The Minister’s response was heartening, but we are not quite there. It would be tempting to gather the votes of the Liberal Democrats and of my hon. Friends, who support the amendment. On the other hand, I was pleased to hear her reassurance that she would consider the matter further, I assume before Report. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Photo of Simon Hughes Simon Hughes Shadow Attorney General, Party Chair, Liberal Democrats

I will not make it my practice to comment in all stand part debates, but I want to make one substantive point. Before doing so, it would be remiss of me not to join everybody else in wishing the hon. Member for Enfield, Southgate a happy birthday. I hope that he realises that he shares his birthday with my esteemed nephew, Daniel Hughes, who is 37 today, and that he believes that to be an extra reason for celebration. I shall tell my nephew that he, too, has an extra reason for celebrating, should he need one—I doubt that he does.

I have made a point about drafting and the layout of the beginning of the Bill. One of my crusades in Parliament is to try to ensure that legislation is more readable for the general public, as opposed to parliamentary counsel and specialists. I am keen that Bills follow the logic of what they say they are going to do and are easily readable, so that one does not need continually to cross-refer back and forth. In a detailed Bill, it is right to put the details in schedules, but, ideally, clause 1, as drafted, should not stand part of the Bill. I will not press the matter to a Division, but I am keen to put something on the record.

The long title of the Bill states that it makes

“provision for the establishment of the Legal Services Board”.

It then cites a list of things that the Bill does. The long title is always a good summary of what a Bill does. It is normally readable and clear, as is true in this case, and there is always a catch-up bit at the end—that is true of a big Bill, at least—saying “and for connected purposes.”

Logically, therefore, the Bill should start with the provisions that establish the Legal Services Board before it deals with the board’s functions. That is what happens in part 2 and clause 2, except that clause 2 proposes the setting up of the Legal Services Board, then cross-refers to schedule 1, which deals with the details of the board. That would be a fine way to do it, but clause 1 starts with the regulatory objectives, and anyone reading it would not be clear about who is governed by those objectives, because that is not addressed. It just says:

“In this Act a reference to ‘the regulatory objectives’ is a reference to the objectives of”.

That is a bit like starting a book with the index. One reads the dust jacket and the front page thinking that one will get into the book, only to find that it says, “This is a book which” and then says what the long title tells us. One then starts to read the book, only to find that chapter one is the index or the explanatory memorandum. That is not how most of us like to start a book. If we want to look for something in the notes, we look at the back of the book.

Things get worse, because clause 1(2) states:

“The services within this subsection”— we therefore have a definition provision first and a definition of a definition next—

“are services such as are provided by”.

We then have a third term that has not yet been explained, because it mentions “authorised persons”. Lo and behold, those persons are not defined until clause 18, which comes under the reasonable heading of “Interpretation”.

That is not the way to grip the lay public. Let us suppose that I were studying my first year of law or doing a first bit of research, or that someone had asked me in my sixth form to talk about whether the legal system in Britain is fit for purpose, or that I were doing a GCSE exam on the legal system. In such circumstances, if somebody said, “There is a great Bill going through Parliament called the Legal Services Bill, which is all about setting up a new system”, I would give up by the end of clause 1.

I know what answer I will receive. I will be told, “This is what the draftsmen think it is tidy to do”, but we are talking about consumer services. The Minister, more than anybody else, has been promoting them, so I ask her to do something before Report. I appreciate that draftspeople are wonderful and important—we all need them and they are all lovely—but they should do what the elected representatives want them to do. They should not drive the elected representatives, because they are the servants.

Clause 1(3) outlines “professional principles”. That is a further definition of the bit of definition in subsection (1). Subsection (4) then qualifies the “authorised persons”, who are not defined untilclause 18, by saying that they are

“authorised persons in relation to activities which are reserved legal activities.”

If hon. Members want to know what “reserved legal activities” are, they have to go elsewhere in the Bill. Then, having got through all the grunge—through the coppice—we get to the clearing of clause 2, which we will come on to in a minute and which says:

“There is to be a body corporate called the Legal Services Board”.

To make a serious point, we should start with that and say, if we think it is so—it is what the Government think—“The most important thing that the Bill does is to set up the Legal Services Board and these are the rules governing it”. We should then say, “The Legal Services Board, and/or the other bodies we are setting up, will be governed by regulatory objectives in relation to their activities.” The clause would then read logically. Then we can get on to other things in the Bill.

I will not make this speech again when the matter comes up later, but I urge the Minister to return to the draftspeople with her officials and get the Bill in shape and in an order that reads logically and is consistent with the long title, making it much more user friendly. I hope that that point can be taken up, because it is seriously made. The bigger the Bill, the more important it is. Otherwise, it will shoot about all over the place. I hope that on Report I will not have to table a provision to delete clause 1.

Photo of Jonathan Djanogly Jonathan Djanogly Shadow Minister (Business, Innovation and Skills), Shadow Solicitor General, Shadow Minister (Justice), Shadow Solicitor General

I could see the Bill team cringing as the hon. Member for North Southwark and Bermondsey spoke. Of course, the Bill went through quite a process before coming to the House and Committee, so I can I understand their reaction. However, I came across an aspect of alternative business structures when I was mugging up on the Bill over the past few days that covered many of the specifics that the hon. Member for North Southwark and Bermondsey mentioned. Rather than dealing with alternative business structures inpart 5, we will have to deal with a large part of the subject in clause 18, because the definitions do notquite work.

Photo of Bridget Prentice Bridget Prentice Parliamentary Under-Secretary, Ministry of Justice

I have a lot of sympathy withwhat the hon. Member for North Southwark and Bermondsey says. I dare not look behind me, because I fear that the Bill team may be cringing at the possibility that the Bill will be reordered. I agree with the hon. Gentleman. I am sure that he has previously campaigned to have things set out in simple, clear terms so that normal people can understand them, use them and have the power that that gives them as a result. I shall think about whether clause 2 in particular should be put at the beginning of the Bill, as it contains a simple, straightforward definition.

The regulatory objectives were put at the beginning of the Bill because of their importance across the whole regulatory framework: they cover the board, the approved regulators and the Office for Legal Complaints, all of which have duties to act in a way that is compatible with the objectives. Those key principles, which underpin the rest of the Bill, were put at the beginning to show their importance. I agree with the generality of what the hon. Gentleman said. Too often, the way in which Bills are written is a minefield for the normal citizen who wants to understand what is happening. I will think again about whether small changes can be made, but we have to be careful not to mess about with clauses all over the place and make the thing topsy turvy.

Clause 1 sets out the eight regulatory objectives that have to be observed by the board, the Office for Legal Complaints and the regulators. The public interest objective was inserted in the other place, and was included to ensure that the board, the OLC and the regulators consider the public interest when discharging their functions. All the objectives have been included following considerable consultation with stakeholders, including consumer groups and the legal profession, and I believe that they are consistent with what Sir David Clementi said in his report.

The clause is important, because it sets out the clear objectives by which all partners in the new framework must abide. The board is subject to parliamentary scrutiny, and the accountability described in the clause creates the yardstick by which the board, the OLC and the regulators can be measured. On that basis, taking into account the plea from the hon. Member for North Southwark and Bermondsey that the Bill should be as clear and straightforward as possible, I propose that clause 1 stand part of the Bill.

Photo of Simon Hughes Simon Hughes Shadow Attorney General, Party Chair, Liberal Democrats

I am grateful for the Minister’s sympathetic reply. I understand the double difficulty of the inherited tradition of those who do the drafting and the fact that the Bill has been the product of pre-legislative and Lords scrutiny. However, it is never too late—better to change it now than end up with a Bill in the wrong order.

May I respond to the Minister’s point, which I understand? If she were troubled about starting the Bill with the Legal Services Board, there would be another way of doing things: to start with the proposition that, from the date of the Bill’s implementation, all the agencies that it refers to would be governed by regulatory principles and objectives. That way, we could come at things generally. Legal services would be  governed by regulatory objectives, which would apply to all the bodies and come from the state. There is not just one way.

In the context of what the Minister and the hon. Member for Huntingdon said about subsequent parts of the Bill, may I ask that we make sure that all the necessary repeals and consolidation are included by the time the Bill is enacted? In that way, if somebody came to look at the law governing the legal professions and legal practice, that would all be in the Act, and we would not still have to shoot across to six other bits of legislation. We have a big Bill, so we might as well make it one that does everything, rather than one that refers to four other Acts that people will still have to dig out.

Photo of Bridget Prentice Bridget Prentice Parliamentary Under-Secretary, Ministry of Justice 12:00 pm, 12th June 2007

I shall certainly take that on board and see whether we can accommodate the hon. Gentleman.

Question put and agreed to.

Clause 1 ordered to stand part of the Bill.