§ Order for Second Reading read.
§ Sir JOHN WITHERS
I beg to move, "That the Bill be now read a Second time."
In the absence of my hon. Friend the Member for East Lewisham (Sir A. Pownall), I have been asked to move the Second Reading of this Bill. Before I come to the details of the Bill, I hope the House will allow me to make a few preliminary remarks to show the state of the case which has led up to the present necessity for the Bill. The number of solicitors on the roll is about 15,000. These solicitors, as the House knows, have considerable privileges in the conduct of legal business, and, in consideration of that fact, they pay to the State a very considerable amount of money. They pay on admission about £100, and for the licence to practice they pay, in the case of a London solicitor, £9 a year, and in the case of a country solicitor a smaller sum.
There is no body of men which has compulsory powers over the solicitors. There is a voluntary body, the Law Society, to which people can belong or not as they like. One of the committees of that body has been endowed by Parliament with statutory powers to suspend or remove solicitors from the roll for bad conduct, but there is no body in existence at the present time that has power to make rules for effectively binding the profession in the conduct of its business. Accordingly, it is necesssary for powers to be got from Parliament to enable rules to be made to bind the profession generally, and these rules must either be made by Parliament itself or powers must be delegated to some other body or number of persons who can make them.
These solicitors, in the course of their business, receive during the year immense amounts of money. Every transaction in land, practically, passes through their hands, and a very large number of other matters, so that the amount in the aggregate which passes through the banking accounts of solicitors throughout the 516 country is very large indeed. They receive rents, tithe, quit rents, and so on, and undertake numerous other matters for clients. This duty they perform, with very few exceptions indeed, with magnificent honesty and skill. Every year there are a few who behave dishonestly and rob their clients, but the numbers are small as a rule, and the amounts are not great. From time to time, however, curiously enough, there appear to be epidemic outbursts which seem to involve more solicitors, and, accordingly, that brings up the average to very considerable figures.
In 1905 there was an epidemic of this kind. The matter was taken up by the public in the Press and by the members of the profession. It was considered under three heads—firstly, the causes which led to this state of things; secondly, whether there were any means of preventing it; and, thirdly, whether there were any means of curing it. In this matter a number of solicitors banded themselves together under the leadership of my right hon. and gallant Friend the Member for Ripon (Major Hills). I am sorry to say that he has not been able to come here to-day. With regard to the causes, we were of opinion that the general origin of frauds in this respect was lax book-keeping and the mixing of clients' moneys with the solicitor's own moneys, which caused him to be optimistic, so to say, as regards his finances at any particular time, and which led him, at first without any criminal intent, to misapply his clients' moneys, the result being that, as this money had to he made good, the defalcations became more serious, and finally led to a catastrophe.
The question of prevention was considered. Only one preventive idea was put forward, and that was proper bookkeeping and the keeping of the solicitor's money and the client's money in two separate banking accounts. It seems very simple to state that that was considered to be a preventive measure, but it was the only one which was considered possible at the time. With regard to the question of cure, it was seen that a cure could be effected by creating an indemnity fund which would make good all the defalcations which occurred. This idea has since been taken up by the Dominion 517 of New Zealand, and there is now in operation in New Zealand an Act of Parliament which compels the solicitors of New Zealand to maintain an indemnity fund sufficient to make good any possible defalcations of the body of solicitors in that Dominion.
With regard to causes, no general agreement was come to. With regard to the matter of prevention—the two accounts of the solicitor—there was a great deal of difference of opinion. People said, and quite rightly, that keeping clients' money in a separate account would not prevent the solicitor stealing it. That is quite true, and is a very sound criticism as far as it goes; but, when you come to think of it, no preventive action of any kind can be complete. If you cross a cheque, that does not prevent its being stolen, but it makes it very difficult to negotiate. The Road Traffic Act will, we hope, do away with accidents to a very appreciable degree, but it will not prevent a man who gets drunk or behaves recklessly from driving on the wrong side of the street and killing a number of people. Preventive legislation cannot be complete. With regard to the cure—the matter of indemnity—objection was taken that it would be a great hardship on the honest people, which is perfectly true; and it was also stated that, so far from discouraging people from doing wrong, it would encourage them to do wrong, because they would know that their victims were going to be provided for if they stole from them. Accordingly, it was very fully discussed and nothing was done.
I wish the House clearly to understand that I do not in any way suggest that this doing nothing was due to the apathy of the profession. Nothing of the kind. The profession is really anxious to do what is right, but it is so habitually critical that it cannot collectively agree to put forward any effective, positive scheme As every one of these 15,000 solicitors has his own opinion on the matter, and no scheme is perfect, it is very difficult now to get anything positive put forward. The matter, therefore, rested.
In recent years, unfortunately, there has been another unforeseen epidemic. The public, naturally, became very 518 excited. My hon. Friend the Member for Windsor (Mr. A. Somerville) introduced a Bill. The House every day had various questions addressed to Ministers asking what was to be done. The matter was serious, and something had to be done. It was, accordingly, taken up by the Law Society and the provincial societies, and, after certain domestic events which are of no public interest, in the result there are two Bills now before Parliament. This is one, and the other is the Bill introduced by the hon. Member for Watford (Sir D. Herbert), which is down for Second Reading on 20th February. It is a pity that these two Bills could not have been before the House at the same time, but, unfortunately, owing to the operation of the Ballot, it will not be done. Subject to the approval of the House, I propose to ask that this Bill should be sent to a Select Committee. I and my friends will support the Second Reading of the Bill of the hon. Member for Watford and a Motion that it shall also be sent, if the House approves, to the same Committee, with a view to both being considered together and the best being done in the interests of everyone.
With regard to this Bill, I propose not to deal with technicalities but simply to run through it shortly. The first Clause orders that a solicitor, when he receives money on behalf of a client, shall, unless the client orders him definitely in writing to do otherwise, pay the money into a separate account in his name which is to be earmarked as a clients' account. This account shall only have clients' money in it and such sum as is necessary to maintain a balance such as banks require to keep the account open. The second Clause provides that no money shall be drawn out by the solicitor from this account except for the proper purposes of a client. The third Clause provides that the solicitor shall always have in the clients' account sufficient money to provide the balance due to all his clients at any particular date. The fourth Clause provides that the solicitor shall keep proper books of account to show the transactions above mentioned.
The fifth is a very important Clause. It provides that the bank where this clients' account is kept shall have notice that it is a clients' account and shall not 519 be entitled to set off against the money in it any moneys which may be due to them on the personal account of the solicitor. In order to carry that out, Clause 6 provides that the solicitor shall produce to the Law Society for the previous year, on taking out his certificate, a certificate from an accountant showing that he has kept proper books, that he has complied with the provisions of the Act, and that he has sufficient moneys in hand to meet the demands of his clients at the particular date. The Law Society shall require this certificate in order to give him a, certificate of practice. There are Clauses to protect the solicitor from oppression by enabling him to apply to the Discipline Committee of the Law Society to dispense, under special circumstances, with the accountant's certificate and, if necessary, that he can go to the High Court. Clause 8 is an important one, because, of course, banks must be protected from any unwitting breach of the Act, and the Clause has been put in to protect them. If they think it is not sufficiently wide, I should hope it would be made quite clear in Committee that the banks are not to be responsible unless they are active participants in any fraud that is done. That is shortly the effect of the Bill.
There are many objections with which I should like to deal. First of all, I have had a number of communications to the effect that the whole scheme is impossible and, at the same time, I have had a number of communications saying that the Bill is absolutely unnecessary, as all reasonable firms already adopt this system. I leave those two arguments to cancel each other out. The second objection is that the Bill makes rules which ought to be made by the profession itself. But the profession has no power. No one has power to bind the profession generally. If rules have to be made to bind the profession generally, they must be made by Parliament, or by some body of persons to whom such power to make rules is delegated. The third objection is that the Bill will not prevent fraud. Of course, it will not, but it will make it much more difficult. A solicitor will think twice before he draws deliberately a sum of money from his clients' account for his own purposes whereas he could, in the event of carelessness, draw a cheque on a mixed account without knowing exactly 520 what was done. I have noticed with interest in recent prosecutions in cases of this kind that the judges have asked the prisoner whether he has, in fact, kept separate banking accounts for his own and his clients' money, and they, therefore, realise that it is an essential precaution.
The next suggestion is that proper and full audits are impossible. The answer to that is that, so far as this Bill is concerned, it is not an audit. It is the certificate of an accountant that, so far as the books show, the rules made under the Bill have been observed. If it is felt on further consideration that a certificate of this kind is onerous or difficult to obtain, I should certainly be willing, and I hope the House would be willing, to consider in Committee a suggestion that the statutory declaration of the solicitor to the effect that he has carried out the requirements of the Bill and has money sufficient in hand at a particular date to meet the clients' balances would be accepted as an alternative. The last objection which has been made is that this Bill should not apply to a solicitor in the employ of a company or body who is not allowed to practice privately. I agree with that view in regard to a solicitor who has not been receiving generally clients' money on account, and, therefore, there ought to be provision made in Committee for that case.
This is not a, perfect Bill; of course, it is not. I do not pretend that it is perfect, but it is a banâ fide attempt by members of the profession to do what they can to regularise the position. The other Bill presented by my hon. Friend the hon. Member for Watford is likewise a bonâ fide Bill put forward from another point of view with the same object. I sincerely ask the House to believe that the profession is actuated by the very best motives in putting these Bills forward, and that it will give Second Readings to both Bills and send them to a Select Committee.
§ Sir JOHN FERGUSON
I beg to second the Motion.
I shall refer to the matter in as few words as possible, giving particular reference to what I regard as the banking point of view. I have given the question of solicitors' accounts the very closest consideration over a long period of years, before I had the privilege of attending 521 this House. Since coming here I have endeavoured to put questions on this point in order to elucidate a satisfactory arrangement. This Bill is only putting on a proper business basis certain methods of dealing with solicitors' bank accounts which are long overdue, and which I may say, as an old banker, have not been entirely satisfactory in the past. Solicitors must not think for one moment that there is any question of reflection on their honour in this Bill. Every profession, as we know from experience, has black sheep within its numbers. The Bill is brought forward with the intention of removing that disability and protecting members of a very honourable profession from the attacks which are always made upon them after some little accident has happened to the accounts of a solicitor.
We know perfectly well what happens immediately after a solicitor's accounts have been found to be in grave disorder. Probably the person interested and many of the relatives visit the bank, and they lay their story before the bank manager. What is the consequence? I have found, times without number, in my experience, that immediately after such an accident occurs the persons interested, particularly in the case of ladies, ask the solicitor to show them their securities, and probably also any title deeds which are in his possession. They take those title deeds and securities away from the solicitor and place them in the custody of the bank. That is a matter which ought to be rectified, if possible, in this Bill. It is a most unfortunate thing that a very honourable body of men should at any time have that aspersion generally cast upon them.
With regard to the first Clause, one of the distinct conditions of the Bill is that clients' money must be credited and earmarked without delay. The words "without delay" are most important, because —I again speak from my experience—the approximate cause of the ultimate injury has been the delay of the solicitor in placing the money in the bank. It says that it should be a bank of good repute. I need not tell hon. Members that there is no bank in England at the present moment, as far as I know, that is not of good repute.
§ Sir J. FERGUSON
This Bill does not apply to Scotland. There is not a single bank to which you could point as being anything but of good repute. Perhaps the word "good" has been put in advisedly. I think that perhaps a bank of kind repute would appeal to many outside. It says in Sub-section (2):It shall be the duty of every practising solicitor to notify to the bank, at which he keeps a client's account, the fact that the said account is a client's account.Certain city solicitors who have spoken to me and who have thousands of clients' accounts have been worried because their first impression was that a separate account for each client should be kept in the solicitor's name. That is not so, and that removes, perhaps, the only source of criticism which I have heard.
Paragraph (d) of Sub-section (3) says:An amount of such solicitor's own money not exceeding the amount of any minimum balance which the bank may require to be kept in such client's account.I fancy that this must be regarded as a bank's remuneration provision. I think I see in this Clause the hand of that good man, the banker's man. If a client's account is a very good account and has in it a large number of suitable balances, I think you will find that the banks may forgo any question of a margin to provide them with remuneration. Subsection (2) of Clause 2 provides that:Every cheque drawn on a client's account of a practising solicitor shall bear on its face a clear indication that it is drawn on a client's account.That is the bank's authority to debit that account, and, if the bank disregarded that authority, it might land itself in very serious responsibility and trouble. That matter is taken care of in this Subsection. Clause 5, in my opinion, is perhaps one of the most important Clauses in the Bill. It is a Clause which is thoroughly and particularly understood by the banks. In the event of trouble, the banks cannot apply a credit balance in reduction of or in extinction of a debit balance if one of the accounts is overdrawn. There is an understanding among the banks if there are two accounts, one debtor and one creditor, both standing in the same name, that what is called compensating interest may be allowed if the balances are in a position that the bank can without notice to 523 its customer apply the one in extinction of the other. That cannot be done under this Clause.
In Sub-section (2) of Clause 6 it is provided that the solicitor shall produce to the Law Society a certificate which shall state that the qualified accountant has examined the books of account kept by the practising solicitor. This and other points have been dealt with very fully by my hon. Friend, and I do not propose to touch upon them at all.
Solicitors ought to welcome this Bill, just as all the bankers in England would welcome it. It has been drawn, I am sure, in the best interests of both parties, and the draftsmen cannot possibly have had anything else in mind except the protection of those who wish to do business and who wish that the business conducted may not have loopholes to enable any mistakes to be made by either party.
§ Mr. MACPHERSON
After the two able and eloquent speeches which have been delivered by my two hon. Friends who have preceded me, I do not propose to discuss the Bill. I rise to reinforce what was said by my hon. Friend the hon. Member for Cambridge University (Sir J. Withers), with, I understand, the concurrence of my hon. Friend the Member for Watford (Sir D. Herbert) that this Bill and the Bill to be introduced on the 20th February should be given a Second Reading, and that both should be sent to a Select Committee. I would invite my learned Friend the Solicitor-General to take an early opportunity of intervening in the Debate and explaining the attitude of the Government. Incidentally, I feel sure that I am expressing the feelings of every Member in all quarters of the House when I offer the learned Solicitor-General a most hearty welcome. He bears an honoured name which is always remembered in this House and in another place, and I feel sure that having won his spurs in one arena the House will give him further opportunity of winning his spurs in this arena.
It is quite clear that this Bill has the entire approval of the profession as a whole, and I understand that the Bill introduced by my hon. Friend the Member for Watford has also the approval of the Law Society. That being so, it 524 is quite clear that there is unanimity in the profession that something should be done and that the House would be wise to send the two Bills to a Select Committee, so that carefully chosen Members of this House may get the best part out of both Bills. The hon. Member for Cambridge University said that there were about 15,000 members in his profession, a very ancient and honourable profession, jealous of itself and of its members and anxious to do the best for the profession and for the country as a whole. He said that almost every member of that profession had his own individual judgment. Therefore, I can think of nothing better than that a Select Committee of this House should assist the 15,000 members of that profession by selecting from both Bills what may be regarded as the very best parts. I strongly support the Bill, indeed I am one of its backers. If the Government take a satisfactory attitude in regard to the Bill, I hope that the House will give it an early Second Reading and that it will be sent to a Select Committee.
§ Mr. RHYS DAVIES
I rise with some hesitation to speak on this Bill owing to my limited knowledge, but I have no hesitation in backing its main principles. I speak as a layman who has never been a client of any solicitor. I am hoping to retain that reputation throughout my life, because I understand that it is a very costly business to fall into the hands of the legal profession. I support the Bill because I was astonished to learn that it is possible to find members of this very honourable profession who do not keep any decent set of accounts. I always thought that solicitors, by the very nature of their profession, would enter up a separate ledger account for each client who handed over money to their keeping. It is with the intention of asking Parliament and the profession to see that a proper system of accounts may be instituted in the offices of members of the legal profession, that I support the Measure. I always thought that it was a rule, indeed the law, in regard to handling other people's money that there should be a proper system of accounts.
As a trade union official I am compelled by law to keep a proper system of accounts, and our books are subject in law to audit as well. We cannot do anything without being scruti- 525 nised and audited at every turn. Someone has criticised the Bill by saying that it will do nothing to prevent fraud. I have been keeping accounts for a large number of years and have been responsible for a considerable sum of money on behalf of the members of my society, but it does not matter what system you institute, the thief will get over you somehow. There are, however, means of reducing the possibility of theft very considerably by a proper system of accountancy. I support the Bill for these and other reasons. It is astonishing to note the implicit faith that people have in members of the legal profession, and I want that faith to continue. It is bad for the law itself that any solicitor should mishandle the money of his clients. Although, as I have said, I have never personally been a client of the legal profession I know a number of people who have entrusted their estates to solicitors, and I have never heard any complaints. I have been astonished at the faith placed in the legal profession, especially in the rural districts, and I want, as I said, to do everything I can to prevent that faith from being in the least disturbed.
The Law Society—I do not know whether they could do it as a result of this Bill—might institute an accountancy department to provide members of the legal profession with competent men who would go round to the offices and put the accounts in order. I should imagine that it would be worth while the Law Society appointing professional auditors for this purpose. I think I a [...]right in saying that, on the whole, we on this side of the House represent the clients, while on the other side of the House the bankers and the lawyers are represented.
When a crash does come, when carelessness causes a solicitor to mishandle money, it is usually the poorest clients who suffer most, and I am anxious to guard against that. On these grounds, I have great pleasure in backing the Bill and in supporting the Second Reading to-day.
§ Sir DENNIS HERBERT
I thank my hon. Friend the Member for Cambridge University (Sir J. Withers) for the way in which he has referred to the other Bill which stands in my name and for the suggestion he has made, according to the 526 arrangement which he and I have previously come to, that, if the House approves, both Bills should be sent to a Select Committee. Of course, it is my intention to support the Second Reading of my hon. Friend's Bill. At the same time I want to say that while my Bill may not be superior to the present Measure it contains certain provisions which this Bill does not, and a Select Committee with both Bills before them will be able to get the best out of both and make a report to the House which will enable us to pass into law a satisfactory Measure.
I want to point out some of the difficulties in dealing with this matter which the ordinary layman does not understand. Solicitors are in an entirely different position as a profession to such professions as chartered accountants, and while the Law Society have privileges they are undoubtedly hampered in the management of the affairs of the profession by numerous Acts of Parliament and being officers of the Court. That is why it has been far more difficult for the Law Society to look after the interests and behaviour generally of solicitors than it is for such a body as the Institute of Chartered Accountants. One of the difficulties is that the Law Society is commonly but erroneously supposed to include all the members of the profession. It does not. Membership of the Law Society is not compulsory. The Law Society and the Statutory Discipline Committee of the Law Society have been granted great powers by Act of Parliament for dealing with the affairs of the profession, but they are obliged to admit, or take their part in admitting, to the profession men who qualify themselves according to the Act of Parliament without being able to compel them to become members of the Law Society, and without having any real power to regulate their behaviour generally. One of the provisions of my Bill, which I hope Parliament will approve, is that every man who is admitted as a solicitor, and who practices as a solicitor, shall of necessity be a member of the Law Society, and also that instead of the great but very restricted powers which are now vested in the Statutory Discipline Committee they should have full powers to deal generally with the pro- 527 fessional conduct of members of the profession.
Another very important matter with which my Bill deals is the question of compensation. It is a truism to say that you cannot make everybody honest by Act of Parliament or render fraud impossible, but much may be done to make fraud less likely and more difficult. The question of compensation when fraud does occur is very difficult. There are roughly two classes into which these cases may be divided. There are, first, the cases of failure or fraud of very large firms acting for wealthy clients, the losses in those cases being often very large when failure comes. But those cases are very few indeed, and they attract a great deal of attention by reason of their magnitude. The other class of case, which is far more numerous, is the failure of what we may call the small man in the profession, the man who in some cases it is most unfortunate was ever allowed to become a member of the profession; but we have not been able to stop it. A man ought not to be practising as a solicitor unless he has a sufficient amount of capital to justify him in doing so without having to use his client's money as his working capital.
It is the failure of the small man acting for poor clients which really causes great hardship, and no one knows better than the Council of the Law Society, of whom I am one, of the very hard cases which do happen, of people who have saved £100 or £200, their life's savings, who lose it through the failure of some dishonest solicitor. Let me distinguish between the two classes of cases. In nine cases out of 10, in perhaps 99 cases out of 100, where the rich man loses large sums of money it is generally the fault of the client himself. In most of these cases we find that he has neglected his own business and left his money, or control of his property, in the hands of his solicitors in a way in which no reasonable man should. A rich man is generally an educated man of some experience, and he ought to know better. There are cases in which a wealthy client has to trust his solicitor with large sums of money, and, if there is failure and fraud, it is hard on the profession that they should have 528 to make it up. I suggest that in cases where a rich man has to trust his solicitor with very large sums of money he should cover himself by his own insurance by some arrangement with the solicitor.
In the smaller cases that is not practicable, but it may be possible for the profession itself to establish a fund, in the nature of a charitable fund, out of which relief could be given by the profession in those hard cases where poor people suffer from their own ignorance and lose sums of money through the failure of the solicitor. My Bill contains these further provisions and that is why I prefer it to the present Measure. At any rate, the House will agree that if a Select Committee is going into these matters it should go into every proposal brought before Parliament for dealing with the matter.
§ Mr. CARTER
Would the hon. Gentleman explain Clause 7 of the Bill? Does it mean that every year the solicitor has to give a certificate to the Law Society? I cannot follow the Clause.
§ Sir D. HERBERT
Every solicitor who is practising has to take out what is known as a practising certificate, and the Bill proposes that before he can get that certificate he shall have to produce a certificate that his accounts are in proper order.
§ Mr. CARTER
Then every year he has to produce that certificate to the Law Society in order that he may practise or belong to that Society? We say that it is a trade union and that you are asking the solicitor to produce a certificate every year in order that he might belong to the organisation.
§ Sir D. HERBERT
I am not sure that I quite follow the hon. Member. But I would point out that there is one great difference between this profession and a trade union. Members of this profession are officers of the court, and are bound by a number of Acts of Parliament in numerous ways in which trade unions are not. You cannot really compare the two. A solicitor, having passed the necessary examinations and qualified as a solicitor, has to obtain every year a certificate which authorises him to carry on business, and incidentally has to pay for it pretty heavily. The money goes to the Government and not to the profession.
529 It is now suggested that before that certificate, allowing him to practise, can be issued to him, he shall be obliged to produce a certificate to show that he has been carrying on his business properly and that his accounts are in proper order.
Let me refer to the speech of the hon. Member for Westhoughton (Mr. Rhys Davies). It is, of course, the rarest thing possible for a solicitor not to keep accounts. What we want to do is to make sure that he shall keep sufficient and proper accounts. There are great difficulties about this. One difficulty is that a solicitor's accounts relating to his clients' affairs are often of the most extraordinarily confidential nature. One of the things that the Law Society is anxious about, one of the powers it is anxious to obtain, is a power to make regulations which shall force all practising solicitors to keep proper accounts and enable the Law Society, as the guardians of the honour of the profession, to make all necessary regulations in order to see that that is done. That is one of the things which the Law Society has no power to do at the present time. We are asking, therefore, for powers to make rules generally for the proper carrying on of their profession by the members of the profession.
I know that the whole House is in sympathy with the objects which the hon. Member for Cambridge University (Sir J. Withers) and I have in common. I support the Second Reading of this Bill with the wish that its proposals may be considered by a Select Committee. The Select Committee will be able to take evidence, and consider also, I hope, the further proposals embodied in the Bill that stands in my name—a Bill which has been approved by the Law Society and by the profession as a whole. I must make one reference to the practical procedure here. At one time I had hoped that it might be possible to ask the House to give a formal Second Reading to-day to the other Bill, but owing to our methods of procedure that is not practicable, as the other Bill is on the Order Paper for a future date. But if we follow the usual procedure of setting up a Select Committee, it is not likely that that Select Committee will be able to do more than get itself set up and 530 arrange generally the line which it should pursue before the time comes when the second Bill will be before the House for Second Reading. Therefore, there is no practical difficulty in the way of both Bills going before the same Select Committee if the present Bill is given a Second Beading to-day. I hope that after to-day's Debate the other Bill, when it comes along, will be given a Second Reading without any further discussion.
§ Mr. ARTHUR MICHAEL SAMUEL
I understand that the learned Solicitor-General will probably follow me in order to indicate the views of the Government on this important Bill. I would like, on behalf of those who sit on the Opposition benches, to say a word of welcome to him, and to add that I am sure he will play a very useful part in the work of the House. His reply will be his maiden speech. It is curiously fitting, if he should follow me, that I should refer to his maiden speech, for I made my maiden effort in politics following his father, 23 years ago in the Stretford Division of Lancashire. I am neither a banker nor a solicitor, but I have been a grateful client over many years, not in litigation, but as a trustee for dead friends; I feel much gratitude for the help that I have received from members of this honourable and indispensable profession. I welcome the Bill, and I do not think I have known of many Bills as widely supported as this Bill has been. It is supported by every section of the House, it is backed by Members of all parties. The House is conscious that public opinion demands that Parliament should assist the profession in its work for the public and in its imperious determination to see that the public is protected. Hon. Gentlemen must remember that solicitors are not employed mainly in matters of court work and of litigation. I should say their main work for the public has nothing to do with strife. Indeed, in most cases our family solicitors are like our family doctors, they are the confidential men of business to all sections. Much of their work is concerned with the affairs of women and minors and trustees and executors and so forth, confidential work of a character which has nothing whatever to do with litigation or strife. In many cases they look after securities and investments and the buying and selling of stocks and shares, and the collec- 531 tion and distribution of incomes for families and for dead as well as living persons. The solicitor performs duties which are indispensable in the case of trading firms as well as private families in this country.
I hope that the Solicitor-General will advise the House to give the Bill a Second Reading. I do not think that I quite agree with the argument of my hon. Friend the Member for Watford (Sir D. Herbert), in which he suggested that where a rich man was robbed there ought not to be very much pity or protection for him, in that he ought to have taken steps to look after himself. I do not share that view. I think that where a man of means has been robbed he is entitled to protection or indemnity such as this Bill might give, just as much as a poor person who has been robbed of £500. As to his other objection that many solicitors carry on work which is of a very confidential nature, and that it is not quite proper that the accountants in a district should look into these confidential matters, lest by some indiscretion or mistake something should leak out—that is up to a point a valid objection. On the other hand, the Law Society can easily nominate independent firms or persons under their own control who are duly qualified accountants and to whom local solicitors can apply and those qualified accountants nominated by the Law Society can go down and make the necessary examination of accounts and give the necessary certificate about which the hon. Member for South West St. Pancras (Mr. Carter) seemed to be in some doubt. I take it that the certificate about which he was asking is a certificate to say that the accounts were in order. As I say, an outside accountant nominated by the Law Society could give the necessary certificate to a local solicitor who properly wished to keep things confidential, this would enable solicitors to proceed without the slightest fear, or chance of disclosure.
§ Mr. SAMUEL
This is a point which can be further gone into if the Bill goes to a Committee. What the Bill seeks to do is to see that clients accounts are in order and are so certified—
§ Sir D. HERBERT
I am sure that my hon. Friend does not wish to misunderstand or to misrepresent what I said. I do not want him to think that I am not anxious to protect the rich man as well as the poor man in these circumstances. The only difference which I made was this, and I said so expressly, that I did not think it fair that when a rich client, largely, perhaps, because of his own carelessness, lost a considerable sum of money, the burden of repayment should fall on the profession generally. I want the rich client as well as the poor client to have every protection and any protection that is given must apply to all together. Therefore my hon. Friend will understand that the only difference which I made between them was this—that with regard to the question of compensation the profession is quite ready, as a matter of ordinary charity, to compensate and to help in hard cases but we think that the rich man, if he is obliged to run a risk, should make his own arrangements for insurance.
§ Mr. SAMUEL
I am bound to say that I do not take that view. I do not think that it is a matter of charity. Take the case of a man engaged in looking after public duties such as my duties in this House. Supposing a friend of mine dies and I am entrusted with his affairs which may include very valuable possessions. It would be necessary for me as trustee for my dead friend to entrust the conduct of what might be a very large estate to a firm of solicitors. That is the usual course. It happens in thousands of cases. Surely I am entitled to the same protection in relation to this large estate as another man would receive in relation to an estate involving only £500. I think that the word charity ought not to be brought into such a matter.
Though I would not be in order in referring to it in detail, I may make a passing reference to the Bill which I understand is to be introduced by my hon. Friend the Member for Watford, and which I shall support whole-heartedly. I would have welcomed indeed some provision of a fund for compensation or indemnity in event of fraud even in this Bill which is before us. I hope that if this Bill, and the Bill to be introduced by the hon. Member for Watford, are to go to a Select Committee, the question of a suitable fund to provide compensa- 533 tion or indemnity will be investigated by the Select Committee. Any other points suggested in both Bill will be, no doubt, carefully considered, so that we may eventually have a Measure which will perhaps operate so effectively as to reduce the necessity for a compensation fund. Clauses may be put in embodying other safeguards which have not yet been thought out, rendering it less likely that losses will fall upon the public. I hope that the Solicitor-General, in indicating the course which the Government proposes to take, will also indicate that, should this Bill receive a Second Reading, he is prepared at once to set up a Select Committee so that we may lose no time. If the Bill of the hon. Member for Watford also receives a Second Beading in the course of a week or two from now there will then be no delay in getting a Select Committee to work to deal with the two Bills.
When I look through the Clauses of the Bill now before the House the only thing I can say is that I think it sums up the intention of the promoters to put on solicitors responsibilities which the law already imposes on ordinary trustees of a deceased estate. The rules, and indeed the duties, imposed on every private trustee are no more and no less in essence than those set forth in the Clauses of the Bill. Every executor or trustee has to make personal arrangements in carrying out his duties and conducting affairs so as to protect others from loss. This Bill makes similar rules for solicitors. I am in favour of the Bill, and I will not detain the House further than to express my hope that the Solicitor-General will advise the House to give it a Second Reading.
§ The SOLICITOR GENERAL (Sir Stafford Cripps)
I rise with very great diffidence, Mr. Speaker, to address you for the first time since I have been privileged to be returned to this House. I am very conscious of the high traditions of this House, and I am also conscious of my own shortcomings. From my earliest days my memory has been filled with stories of the great statesmen who have sat on these benches and of the renowned Debates which have taken place here, stories recorded to me even in my earliest infancy by my father, who was for so many years a Member of this 534 House. I ask the House, if I should, unwittingly and through inexperience, offend against its Rules, to extend to me the kindly consideration that is always extended here to the newcomer. May I also thank the right hon. and learned Gentleman the Member for Ross and Cromarty (Mr. Macpherson) and the hon. Gentleman the Member for Farnham (Mr. A. M. Samuel) for the kind personal references which they have made to me to-day?
The Bill now before the House is one which in the opinion of the Government ought to be given a Second Reading in order, as has already been suggested, that it may be sent to a Select Committee, and in order that the technical questions raised by it may there be fully discussed and threshed out, together with the suggestions which will be brought forward in the second Bill which comes up shortly for a Second Reading. The Government feel that the best hope of an agreed solution lies in both lots of suggestions going before a Select Committee and there being thoroughly discussed.
The Government welcome greatly the desire that this great and honourable profession should meet the criticism which has been levelled at it, during the last few years especially. It should, however, be borne in mind, I think, that this great profession has throughout its history, and more especially since the year 1888, when it was given definite disciplinary powers, done all that it could to minimise and curtail those unfortunate cases of fraud and dishonesty which must inevitably occur from time to time in any profession or amongst any set of men. The Law Society has been most rigorous in the enforcement of its disciplinary powers, and has taken every opportunity open to it to obtain punishment, and also to remove from the ranks of practitioners those who have been found guilty of dishonest dealings. The fuller jurisdiction which was given to the discipline committee of the Law Society by the Act of 1919 has always been wisely exercised, and I think that when it is realised that, for instance, during the last 12-monthly period there have been only 12 appeals from the decisions of that committee and that in 11 cases those appeals have failed, and in one case only 535 has there been a revision of the sentence, it will be seen that the Law Society has a very fine record as regards discipline. One must also realise, when dealing with this question—and I am sure the House does realise—that the evil at which the present Bill aims is an evil of rare occurrence.
Although the name of the office which I hold might lead some to believe that I was in some way associated with the solicitors' profession, the House, of course, will appreciate that I have no connection with it. I have, on the other hand, been privileged to have a great many opportunities, during the course of my professional career, of coming into contact with a very large number of members of the solicitors' profession, and I should like to pay here my tribute to the integrity of that profession. The cases of fraud and dishonesty are very few and far between, and the amount of clients' money which is lost through those cases of fraud and dishonesty is negligible, when compared with the vast sums that are handled daily by the profession. However, I am sure it is wise for the profession to take some such steps as those proposed in the present Bill, not only to reduce the possibility of the commission of such offences, but also to minimise the suffering and hardship which may follow in their wake. Such steps should make the commission of acts of fraud and dishonesty even more rare than they are at the present time, and, I am sure, should serve to reassure the public, who have been perhaps somewhat unduly alarmed by the more than ample reports of such cases that appear from time to time in the Press.
Whether the measures proposed in this Bill are those which should be agreed by the profession and the public to be the most effective, or whether they should be modified or combined with the other proposals in the second Bill, is, I think, a matter which can more fitly be discussed and decided by a Select Committee of this House, and the Government hope that from that Select Committee there may emerge an agreed Measure which can be passed through the House. I can assure the hon. Member for Farnham (Mr. A. M. Samuel) that the Government will be anxious that the Select 536 Committee should be set up so as to be in a position to deal with the matter as soon as the second Bill gets its Second Reading. It is for that reason that the Government ask the House to give this Bill a Second Reading.
§ Sir DONALD MACLEAN
Before the House passes to what must needs be the Second Reading of this Bill, I should like, as a Member of this House as well as a member of the profession concerned in this Bill, to tender to the Solicitor-General our congratulations on his first appearance in this House as a representative of the Government in the conduct of a Bill. He has, if I may say so, approached this august Assembly with.due humility. It is the right way, because whatever may be the imperfections of the present Members of this House, or of any future House, there is a personality which presides over this great Mother of Parliaments which is the creation of men who have passed far beyond the accidents of constituencies and of time, and to respond to that spirit, as the Solicitor-General has already done, is indicative of what, I am sure, will be not only a merely successful but a worthy succession in the great office he at present holds.
I should like, as a member of the profession and of the Law Society, in which my hon. Friend the Member for Watford (Sir D. Herbert) is a colleague, to thank the House as a whole for the reception which has been given to this Bill. I was very much interested in the speech of my hon. Friend the Member for Westhoughton (Mr. R. Davies). He congratulated himself that he had never had any reason to consult any solicitor. Well, I tremble for his safety. The self-congratulations of many a man on never having had to consult a doctor have often been the prelude to a dangerous if not fatal illness; but, at the same time, I thank him very much for the reference which he made, as a layman, to the remarkable confidence which, particularly in the country districts, is reposed in the profession to which I belong. Undoubtedly, there are in this profession black sheep, as there are in others, but, taking it as a whole, it is not unworthy of the great trust which is from time to time reposed in it, by the poorest as well as by the richest in the land.
537 My right hon. and learned Friend the Member for Ross and Cromarty (Mr. Macpherson), who is sitting beside me on this bench, expressed the hope, or indeed the belief, that the Bill which is now before the House is one which has the unanimous approval of the whole profession.
§ Sir D. MACLEAN
Anyway, I wish that were so, because if lawyers did happen to agree upon any one thing, their unanimity would indeed be wonderful. But the Debates here in the House to-day will have rendered a very great service in welding together, in the profession itself, a very large amount of common agreement that something must be done, and that it can safely trust this House not only to do justice to the profession itself, but to protect the interests of the nation at large.
§ Question put, and agreed to.
§ Bill read a Second time.
§ Ordered, "That the Bill be committed to a Select Committee."—[Sir R. Gower.]