Section 8 — Commission upholds services complaint

Legal Profession and Legal Aid (Scotland) Bill: Stage 3 – in the Scottish Parliament at 9:45 am on 14 December 2006.

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Amendment 21 not moved.

Photo of George Reid George Reid None

Group 6 is on steps which may be taken when services complaint upheld. Amendment 1, in the name of Jackie Baillie, is grouped with amendment 22.

Photo of Jackie Baillie Jackie Baillie Labour

At stage 1, the Justice 2 Committee—rightly in my view—considered that there is no clear rationale or justification for the proposed maximum compensation level of £20,000. Indeed, there was a feeling that the £20,000 figure bore more than a passing resemblance to what had been suggested for England and Wales, but was otherwise conjured out of nowhere in the Scottish context.

I remind Parliament that the proposals in the bill allow for maximum compensation of £20,000, through the proposed Scottish legal complaints commission, for an upheld services complaint that includes any element of negligence. I completely understand the Executive's thinking in wanting to make moderate-value negligence claims available to be dealt with by the commission, rather than only by recourse to the courts. That opens up the system to make it far more accessible to the individual complainer. For that reason, the provision is welcome.

That said, it is worth remembering that the current level of compensation, which was fixed by the Solicitors (Scotland) Act 1980, is £5,000. The figure was uprated a mere 18 months ago from £1,500. In that context, a jump to £20,000 seems quite steep. As I understood the matter from stage 2, the Executive's justification for the figure is that £20,000 is a compromise between the current level of £5,000 and the Financial Ombudsman Service's scheme, under which up to £100,000 may be awarded. I still do not understand the logic that underpins the figure of £20,000, however. It could equally well be £25,000, £30,000 or, for that matter, my more modest proposal—which I commend to the minister—of £15,000. The case for £15,000 is based on information that was provided about claims that have been made against the master policy in recent years. A substantial number of claims are below £5,000—the majority, in fact. By setting the level at £15,000, we would capture virtually all the rest. The figure that I have arrived at is based on real experience of claims that have been made.

At the time of the stage 2 debate here, clause 110 of the draft Legal Services Bill, which was considered at Westminster, also contained the figure of £20,000 for compensation. However, that included consideration of fees and outlays. In effect, the level of compensation could be lower once those had been taken into account. Our position on the Legal Profession and Legal Aid (Scotland) Bill was that it should exclude fees and outlays. Ultimately, the inclusion of the figure could have meant that we would unduly penalise lawyers in Scotland compared with their counterparts in England and Wales.

I understand that the Legal Services Bill is now before the House of Lords for its second reading, and that the position there has changed to reflect the provisions of the Legal Profession and Legal Aid (Scotland) Bill. I have no doubt that the Scottish ministers' influence now extends to the House of Lords. That is welcome in ensuring consistency where it is appropriate, but I stress that the base level of compensation at which we started in Scotland was lower: it was £5,000 and, until about 18 months ago, it was £1,500. In my view, and in that context, £15,000 is more proportionate and will still capture the overwhelming bulk of claims. I look forward to hearing the minister's comments.

I move amendment 1.

Photo of Johann Lamont Johann Lamont Labour

Jackie Baillie should know as well as anyone that nothing is ever "conjured out of nowhere" for legislation here or, I am sure, at the House of Lords. People devote a great deal of time and thought to such matters. The parliamentary process adds to that, which ensures that the legislation that we end up with is as robust as it can be.

Our intention in setting a compensation limit of £20,000 is to provide access to justice for complainers who seek to pursue low-level negligence actions without facing the expense, uncertainty and delay of court actions. We accept that there might be initial anxiety in some parts of the legal profession about the proposed limit of £20,000, but the bill provides a number of safeguards. First, complaints about the service that has been provided by a solicitor may be made only by people who appear to the proposed Scottish legal complaints commission to have been directly affected by the suggested inadequate professional service. Secondly, the bill requires the commission to reject any complaint that it determines to be

"frivolous, vexatious or totally without merit".

Thirdly, the bill requires the commission to assess what is "fair and reasonable" in deciding whether to uphold a service complaint and whether to award compensation and, if so, of what amount. We are confident that the new commission will behave competently and professionally in deciding on compensation.

I emphasise that £20,000 is the maximum that the bill sets for compensation. Jackie Baillie is quite right to point out that the Financial Ombudsman Service may award up to £100,000, but there is no suggestion that that amount has become the norm. We see no reason why maximum awards would be any more common for the legal profession than they are in the financial sector. In its evidence to the Joint Committee on the Draft Legal Services Bill, the Law Society of England and Wales opposed an upper limit on total redress and favoured a cap of £20,000 on compensation only.

Given that Jackie Baillie's research indicates that 90 per cent of master policy settlements fall into the up-to-£15,000 category, with a small number falling into the £15,000 to £20,000 category, I argue that it is equally logical for £20,000 to be the most appropriate maximum limit for capturing most, if not all, the low-level out-of-court negligence settlements.

I emphasise that the £20,000 limit will not be set in concrete for all time. The Legal Profession and Legal Aid (Scotland) Bill provides a power for ministers to vary the limit after consultation, by means of the affirmative resolution procedure, so that the limit can be adjusted in the light of experience. I invite Jackie Baillie to seek to withdraw amendment 1.

Amendment 22 will make a minor adjustment to section 8(2)(e), which enables the commission, on upholding a services complaint, to report any perceived lack of competence in any aspect of the law or legal practice

"to the relevant professional organisation."

That organisation may then decide whether to order the practitioner to undergo further training.

As the body that will have the lead role in legal education, it is ultimately for the professional organisation to decide whether there is a lack of competence that should be remedied through retraining. Section 8(2)(e) should refer to the commission considering that the practitioner "may not"—rather than "does not"—have sufficient competence. I thank Jeremy Purvis for pointing that out at stage 2. I urge members to support amendment 22.

Photo of David Davidson David Davidson Conservative

I lodged a similar amendment to that of Jackie Baillie, but I am happy to support her amendment 1. The Deputy Minister for Justice has said that the ministers of the day will have the power to vary the limit. In the light of the fact that the change from £1,500 to £5,000 took place only 18 months ago, I would have thought that the minister would be encouraging inflation, shall we say, and the expectation of members of the public who are not all lawyers—otherwise, lawyers would not have claims made against them and people would not be using them.

It is very unlikely that claims of more than £15,000 would be made. However, were the minister to support Jackie Baillie's amendment 1, which would make the limit £15,000, she knows that she has the powers, through the affirmative procedure, to lift the level, although she would have to give Parliament evidence that the limit needed to be lifted to £20,000. I very much support Jackie Baillie's amendment 1. I also completely accept the need for direction on training, as proposed by the minister in support of amendment 22.

Photo of John Swinney John Swinney Scottish National Party

Jackie Baillie asked where the proposal for a £20,000 compensation limit came from. The former Deputy Minister for Justice, Hugh Henry, gave us a clue at the Justice 2 Committee on 30 May. In response to a question from Mr Purvis, Mr Henry said:

"If you are asking where the proposal came from, it is not something that originated from us. It first arose during discussions between my officials and representatives of the Law Society."—[Official Report, Justice 2 Committee, 30 May 2006; c 2524.]

The argument that some people have made that, somehow, £20,000 is such an awfully huge amount that it will cause disaster in the legal profession sits rather uncomfortably with the statement that Mr Henry made on the record at the Justice 2 Committee some time ago.

The minister's line of argument in this debate was absolutely compelling. She made it clear that there is a range of issues to be addressed and that the Government is trying to take into account issues of negligence and inadequate professional services and to make the system more accessible for those who become concerned about such matters. The aspirations that the minister set out a moment ago are utterly consistent with what the Government is trying to do in the bill. The proposal in the bill sits comfortably with the aspirations and direction of the bill. The minister's point about Jackie Baillie's research on the range of settlements in this area proves that there is a need for an upper limit.

One of the Scottish Executive officials who spoke to the Justice 2 Committee on 25 April made it absolutely clear, as the minister has reaffirmed today, that

"The figure of £20,000 is a maximum; it is the top of the scale of what the commission can award, so it will be awarded only for the most serious cases".—[Official Report, Justice 2 Committee, 25 April 2006; c2240.]

That is a fair characterisation of the provisions in the bill. I hope that the minister will stand firm on her line of argument.

Photo of Jeremy Purvis Jeremy Purvis Liberal Democrat

The minister will be delighted to have Mr Swinney's robust support. I commend Jackie Baillie on her consistency and modesty in introducing a lower figure. There has been concern about the issue among solicitors. Some people have assumed that, whether the figure is £20,000 or £15,000, that will be the automatic level of compensation. Some solicitors have said that such an amount would put them out of business or that they would choose not to take business in which there was a higher risk of complaints being made against them. It is up to members in all parties to say that that concern is unfounded.

Why set a figure at all? If the determination of the proposed commission is about inadequate professional service and degree of negligence; if we are to have a more robust appeals mechanism; and if there is to be no fine—although the previous Deputy Minister for Justice made a slip of the tongue at stage 2 in suggesting that there would be a fine, but later corrected himself, which highlights the difficulty that we have had with the language that is used—but instead compensation for damage caused by inadequate professional service or negligence, why have a limit at all? If we must have one, there should be a broad window.

We heard at stage 2 that, given the additional recovery of costs, in some cases the figure would go well beyond the £20,000 mark. I agree with the minister on the ability of the proposed commission to make determinations. The intention is to catch as many claims as possible, so why set a level that would cover 90 per cent of them, rather than all of them? If we have a more robust appeals mechanism, there will be safeguards for solicitors, too.

It is also helpful, but not necessary, to have consistency with the system in England and Wales. Given that the limit in the bill provides such consistency, I assume that the Scottish National Party will support it fully.

Photo of Kenny MacAskill Kenny MacAskill Scottish National Party

I am happy to support Jackie Baillie's amendment 1 and I agree with the points that David Davidson made. Such things are always a matter of balance. I accept that it has been difficult for the Executive to decide the figure. A balance has to be struck between the complainer and the complainee, and between the blue-chip firms that have substantial incomes and profit margins per partner and the small firms that are the backbone of the profession and of many communities, which would if we were to undermine them, be a loss to our society as a whole. Should the figure be £20,000, £15,000, £16,000 or £19,000? Such decisions are difficult, but there has been a lot of debate within the profession and many smaller firms feel that £20,000 is too much, so I am minded to accept the points that they have made.

We have to remember that we are talking about compensation for inadequate professional services. Scotland has never gone down the road of imposing punitive damages. If serious errors are made, there are other mechanisms by which those who have suffered loss will be recompensed. We are talking about how we provide recompense in other circumstances. We are not looking to go down the American road whereby as well as compensating someone for their loss there is substantial punishment.

My colleague John Swinney is right that the level was suggested by the Law Society of Scotland, but that is a generic body into which falls a diverse profession. Today we heard about the launch of a Scottish bar association, which shows that although we have a broad profession and the Law Society has done well for its members, there are those who do not feel that they are appropriately represented in some instances. We have to deal with all aspects of the profession and strike the right balance between ensuring that people who suffer loss because of inadequate professional service are protected, and ensuring that we sustain smaller firms that would go out of business if a punitive element of damages were introduced. Such firms are important to our communities.

Photo of Johann Lamont Johann Lamont Labour 10:00, 14 December 2006

To be consistent with the position that I have argued before, I say that the limit is entirely clear and that there are safeguards, given that the figure is a maximum rather than anything else.

Photo of Jackie Baillie Jackie Baillie Labour

The aspiration to ensure access to the resolution of complaints for inadequate professional service and negligence is shared throughout the chamber. The disagreement is about the upper limit of compensation. I am afraid that I have to disagree with Jeremy Purvis, no matter how charming he is—it is okay, I do not mean it—because I believe that there has to be an upper limit. We need to have clarity about what properly should fall to the proposed commission and what properly should fall to the courts. I am happy to withdraw amendment 1 in the light of the minister's comments—in particular, the assurance about ministers' power to review the level. It is important that we listen to the profession and reflect on the experience of the operation of the commission.

I seek leave to withdraw amendment 1.

Photo of George Reid George Reid None

Does any member object to amendment 1 being withdrawn?

Photo of George Reid George Reid None

The question is, that amendment 1 be agreed to. Are we agreed?



Division number 3

For: Aitken, Bill, Baird, Shiona, Ballance, Chris, Ballard, Mark, Brocklebank, Mr Ted, Brownlee, Derek, Davidson, Mr David, Douglas-Hamilton, Lord James, Fabiani, Linda, Fergusson, Alex, Fraser, Murdo, Gallie, Phil, Gibson, Rob, Grahame, Christine, Harper, Robin, Harvie, Patrick, Hyslop, Fiona, Johnstone, Alex, Lochhead, Richard, MacAskill, Mr Kenny, Marwick, Tricia, Mather, Jim, Matheson, Michael, Maxwell, Mr Stewart, McFee, Mr Bruce, McGrigor, Mr Jamie, McLetchie, David, Mitchell, Margaret, Morgan, Alasdair, Neil, Alex, Petrie, Dave, Robison, Shona, Ruskell, Mr Mark, Scott, Eleanor, Scott, John, Stevenson, Stewart, Tosh, Murray, Turner, Dr Jean, Watt, Ms Maureen, Welsh, Mr Andrew, White, Ms Sandra
Against: Adam, Brian, Arbuckle, Mr Andrew, Baillie, Jackie, Baker, Richard, Barrie, Scott, Boyack, Sarah, Butler, Bill, Canavan, Dennis, Chisholm, Malcolm, Craigie, Cathie, Curran, Ms Margaret, Deacon, Susan, Eadie, Helen, Ferguson, Patricia, Finnie, Ross, Fox, Colin, Gillon, Karen, Glen, Marlyn, Godman, Trish, Gordon, Mr Charlie, Gorrie, Donald, Home Robertson, John, Hughes, Janis, Jackson, Dr Sylvia, Jackson, Gordon, Jamieson, Cathy, Jamieson, Margaret, Kerr, Mr Andy, Lamont, Johann, Leckie, Carolyn, Livingstone, Marilyn, Lyon, George, Macdonald, Lewis, Maclean, Kate, Macmillan, Maureen, Martin, Paul, May, Christine, McAveety, Mr Frank, McCabe, Mr Tom, McConnell, Mr Jack, McMahon, Michael, McNeil, Mr Duncan, McNeill, Pauline, McNulty, Des, Muldoon, Bristow, Mulligan, Mrs Mary, Munro, John Farquhar, Murray, Dr Elaine, Oldfather, Irene, Peattie, Cathy, Purvis, Jeremy, Radcliffe, Nora, Robson, Euan, Rumbles, Mike, Scott, Tavish, Smith, Iain, Smith, Margaret, Stephen, Nicol, Stone, Mr Jamie, Swinburne, John, Swinney, Mr John, Wallace, Mr Jim, Whitefield, Karen, Wilson, Allan

Photo of George Reid George Reid None

The result of the division is: For 41, Against 64, Abstentions 0.

Amendment 1 disagreed to.

Amendment 22 moved—[Johann Lamont]—and agreed to.

Photo of George Reid George Reid None

Group 7 is on giving of notice, reasons and so on. Amendment 23, in the name of David Davidson, is grouped with amendments 24, 27 to 29, 33, 77, 92, 93 and 119. I draw to members' attention the pre-emption information that is shown on page 2 of the groupings list.

Photo of David Davidson David Davidson Conservative

Amendment 23 would simply add practicality. Amendment 24 would provide for prior directions to the employing solicitor to be taken into account. Amendment 27 is a drafting amendment. Amendment 28 would provide clarity and ensure that reasons are given in every case for any determination, direction or report. In the modern way of doing things, if people are insured they get full information, which is essential. I cannot support amendment 29, which is in the name of the minister, because it directly opposes my amendment 28.

Amendment 33 is about the proposed commission naming and shaming a practitioner. It would allow the practitioner a reasonable time to take action to protect their reputation by going to appeal or seeking judicial review or an interdict, which would introduce an element of fairness. Any case in which a solicitor's name is impugned must be seen to be dealt with fairly because their reputation is their livelihood.

Amendment 77 is a 21st century amendment, which would allow for e-mail communication. Amendments 92, 93 and 119 concern style.

I move amendment 23.

Photo of Johann Lamont Johann Lamont Labour

Members will be aware of my instinctively consensual approach. Therefore, to support amendments 23, 24, 27, 33 and 77 gives me no pain. We urge members to support the Executive amendments in the group, but we resist amendments 28 and 93.

On amendment 23, our policy is that the professional bodies should decide whether a practitioner is sufficiently competent in any aspect of the law or legal practice. That policy is appropriate because the professional bodies are responsible for admission to the profession and take a close interest in the education and training that their members require.

The function of the proposed commission, as will be clarified by Executive amendment 22, will be to report to the professional body when it suspects that a practitioner may not have sufficient competence in a particular aspect of the law or legal practice. As the professional body must make a decision on such matters, it is not essential to require the commission to copy its report to the employing practitioner in advance of a decision by the professional body. The professional bodies will no doubt judge for themselves whether to inform employing practitioners of decisions on the training needs of their employees but, on balance, we see no difficulty in requiring the commission to send a copy of any report under section 8(2)(e) to the employing practitioner. Therefore, I am content to support amendment 23.

Amendment 24 seeks to ensure that the commission takes into account prior directions that have been given to the employing solicitor and that the commission must, in considering what steps to take under section 8(2), take into account any prior direction that has been given under section 8(2)(d) not only to the practitioner, but to the employing practitioner. I thank David Davidson for lodging the amendment, which I support.

We also support amendment 27, which follows up the logic behind section 8(2A), which we proposed at stage 2. There is a case to be made for the employing practitioner receiving a copy of the documents.

I understand the concern that underlies amendment 28. Currently, section 9(2) provides that reasons need be given only when a determination has been made by a determination committee, which suggests that reasons need not be given when a determination has not been made by a determination committee—for example, if it has been made by the proposed commission or when a direction or report has been given. However, the amendment overlooks the fact that schedule 3 to the bill will require the commission to make rules on when reasons are to be given, expressly in circumstances in which they are not required to be given in the eventual act itself, for determinations, directions, decisions or recommendations under part 1 and in respect of related matters. There is a mandatory rule-making power, so the commission must make rules and consult interested parties before making or varying them. Therefore, I urge David Davidson not to press amendment 28 as it is inappropriate.

Amendment 29 is a small technical amendment that will replace a reference to paragraph 13(1A)(c)(i) of schedule 1 with a reference to paragraph 13(1A)(d)(i) of schedule 1.

Amendment 33 would require the commission to give the practitioner notice of its intention to identify the practitioner in a report. We do not envisage the commission having regular recourse to the sanction of naming and shaming a practitioner against whom it has upheld a services complaint, which is why the bill sets a high threshold for such action—namely that the case is exceptional and that it would be in the public interest, in the opinion of the commission, for the identity of the practitioner to be included in the report. However, it is important to be scrupulously fair to the practitioner while seeking to protect the public. Therefore, I do not oppose practitioners' receiving a four-week period of notice.

I appreciate the thinking behind amendment 77, on the giving of notices by electronic means, and I have no objection to supporting it. Its approach is consistent with the approach that is taken to individuals and may serve to ensure that notices are safely received.

Amendments 92, 93 and 119 will impose a duty on the council of the Law Society to supply reasons in relation to its decisions on complaints of unsatisfactory professional conduct. Amendments 92 and 119 will, respectively, apply to complaints against solicitors and conveyancing and executry practitioners. They follow the pattern that is followed by section 9, which requires a determination committee of the commission to provide reasons only for its determinations, such as on whether to uphold a complaint, and not for its directions, such as requiring a certain amount of compensation to be paid, although the commission will have the power to specify in its rules additional circumstances in which reasons must be given. Amendments 92 and 119 therefore seek to put the council in a similar position to the commission as regards the duty to provide reasons.

Amendment 93 would apply to complaints against solicitors only, but otherwise goes further and would require the council to give reasons for the particular sanction that has been imposed. However, in the case of a censure, the only reason that could be given is that the council is under a duty to censure all solicitors who are found guilty of unsatisfactory professional conduct under proposed new section 42ZA(3)(a) of the Solicitors (Scotland) Act 1980, which will be inserted by section 36 of the bill. In the case of other sanctions, it may be difficult to specify exactly why, for example, a fine of £1,000 has been imposed rather than a fine of £800 or £1,200. The council will have to make judgments about what is broadly appropriate in the circumstances.

Photo of David Davidson David Davidson Conservative

I thank the minister for her consensual approach and will not speak to the amendments that she supports. I support her amendments in the group, except amendment 29. However, I will press amendment 28.

Amendment 23 agreed to.

Amendment 24 moved—[Mr David Davidson]—and agreed to.