NEW CLAUSE (Council to make rules.) (Hansard, 5 May 1933)

§ Mr. HERBERT WILLIAMS

I beg to move, "That the Clause be read a Second time."

I know it is a dangerous thing for an English Member to intervene in proceedings on a Scottish Bill, but this Bill may, to a material extent, affect people who live in England because people who live in England from time to time employ Scottish solicitors. Therefore, though the Bill deals only with the position of Scottish solicitors, nevertheless it is of concern to the whole of the United Kingdom. Some two or three years ago an Act was passed to amend and consolidate the law in regard to solicitors in England. That Act made no provision for dealing with the question of safeguarding the moneys of clients in the hands of solicitors. A great many people have felt for a long time that it is desirable to have some protection in this respect, not merely of the client, but also of the solicitor.

1174 My interest in this aspect of the question was first aroused when I was a Member of Parliament for Reading, by the fact that in 12 months three men who had formerly been honoured and honourable members of the solicitors' profession there, received long periods of penal servitude because they had, practically, mixed their own money with that of their clients. At least that was how it began, but a time came when these men were in difficulties; they had been using their own money and their clients' money indiscriminately—originally, I have no doubt, without the slightest desire to defraud—and when the time of difficulty came they could riot replace money which they had used. They were ultimately charged, I think, with embezzlement, though I am not a legal expert, and I do not know whether that was the exact charge or not. At any rate, these three men of position, one of whom certainly was of great distinction in the public life of the town, suffered as I have described. I have long felt that in some way or other we ought to deal with this problem. This year, the English solicitors, having got the law governing them consolidated and amended, brought forward a further Bill which, next Friday, we hope will pass through its Report and Third Reading stages. That Bill proposes that the moneys of clients shall be dealt with substantially in the way in which I am now proposing that Scottish solicitors should deal with the money of their clients. I have, in fact, lifted this provision from the English Bill, with the necessary modifications to enable it to fit into a Scottish enactment.

My own view is that this provision does not go far enough, and that the only satisfactory solution of the problem is for the profession to establish some form of fidelity guarantee fund to which every solicitor would be compelled to contribute, on a basis bearing some relation to the maximum amount of clients' money in his hands during any period. Out of such a fund sums would be available to compensate those who may be involved in financial loss through defalcations by solicitors. At present the law is satisfied if the solicitor involved in the defalcation is sent to prison, but the poor clients lose their money. In the three cases to which I have referred, a large number of those whom I then represented in 1175 Parliament were involved in grave financial losses. When the English Bill was in Committee I gave notice of an Amendment proposing the establishment of a fidelity guarantee fund, but that Amendment was ruled to be outside the Title of the Bill, and therefore out of Order. It would be improper to attempt to introduce into this Bill something which it was not possible to introduce in the English Bill. It seems desirable that whatever system is adopted it should be uniform as between the northern and the southern parts of Great Britain.

The provision of the proposed New Clause and of the New Clauses which follow it on the Paper and are part of the same scheme, is that the General Council, which in Scotland corresponds to the Council of the Law Society in England, shall have power, with the concurrence of the Lord President—whose functions are similar to those of the Master of the Rolls in England—to make rules as to the way in which solicitors keep the accounts of the moneys of clients at the banks, to give general instructions as to the way in which accounts are to be kept and to take whatever action may be necessary to ensure that the rules are complied with. With regard to penalty, I have not followed the wording of the English Bill, because this Scottish Bill has a Clause dealing with professional misconduct which provides penalties ranging from fines to being struck off the Rolls. Therefore, I merely put in Sub-section (2), which would enable the professional misconduct provision of this Bill to apply. In the case of the English Bill the proposals are obligatory. The words of the English Bill are: The Council of the Law Society, with the concurrence of the Master of the Rolls, shall make rules. The new Clause that I am now moving reads: The General Council, with the concurrence of the Lord President, may make rules. I make it permissive deliberately, because my hon. Friend who is responsible for this Bill told me that he could not say whether those in Scotland would be willing to accept this proposal. I must apologise to him that I gave him so few days' notice of my proposal to put forward these new Clauses, and I wanted to give my Clause a better chance, in that 1176 if it is passed, the General Council will not be compelled to act on it; on the other hand, if it is passed and, after full consideration, they decide that my proposal will be at least a step in advance, they will be free to adopt it. If I had included the word "shall," I might have expected greater resistance to the proposal than I now expect.

There will be those who say that this proposal is not satisfactory and will not be effective, and I have some measure of sympathy with them, because I have already indicated that I would go much further. There will be those who will contend that, from a practical point of view, it will not be very workable, on the ground that there are in country districts solicitors dealing with a large number of people of small means, handling very small sums of money, and that the attempt to introduce rigid rules with regard to these small sums of money which do not raise the danger that I contemplate would make the practice of these gentlemen very difficult. But I have not attempted to prescribe the system. I am merely attempting to give the General Council power to make rules, and they, with their experience of the circumstances of Scottish solicitors with small rural practices, or town practices, dealing with small sums, will, I have not the least doubt, be able to draft rules in a way that will be workable.

If it is contended that such a scheme is not workable, all that I can say is that their professional brethren in England have come to the view that such a scheme is workable, and they have devoted a good deal of time and thought to this problem. Obviously, our friends in Scotland have not yet had that opportunity, but I hope they will take my assurance that, judging from declarations made to me by leading solicitors in this country, those responsible for the conduct of solicitors here are of the opinion that the scheme which I-am now proposing is workable; and, as they have gone into it, naturally I wish to accept their judgment on the matter. I hope the House will give serious consideration to this Clause. There is a grave evil which excites grave disquiet from time to time. If that grave evil can be removed, it will be of enormous advantage to the solicitors' profession, because it will mean that every client will have 1177 greater confidence in solicitors than is now the case, and anything which increases confidence in the long run is beneficial to the business, whether it be that of a trade or a profession.

§ The LORD ADVOCATE

I appreciate, of course, the motive which the hon. Member for South Croydon (Mr. H. Williams) has in moving this Clause, but I must advise the House that it should not be accepted, and I hope the hon. Member, in the circumstances, may not press the matter further. I am not in a position to dispute what he says, that some provision of this kind may be necessary in England. That is a matter regarding which I know nothing, but I accept his word that the position in England requires some kind of statutory control such as is contemplated in this Clause. But, so far as Scotland is concerned, I do not think any purpose whatever would be gained by the General Council, with the concurrence of the Lord President, prescribing rules as to how solicitors are to keep their accounts. The solicitors of Scotland know how to keep their accounts, and no advantage is to result from stereotyping the business method to be followed.

The main argument which the hon. Member has put forward is this: He suggested that rules of this kind would form some kind of safeguard against misappropriation of clients' money. If that were so, I would support a Clause of this kind, but I do not think it would form any safeguard at all. Misappropriation, or what, to use the technical term, we call embezzlement, is never a thoughtless offence; it is a deliberate offence. It is carried out with malice aforethought, to use an English expression, deliberately and in pursuance of an intention to misappropriate money; and merely to put money into an account in the name of a client, instead of the name of the law agent, will not furnish any safeguard at all. After all, the best safeguard in this matter is the honour and integrity of the legal profession. While in Scotland you do get, no doubt, the isolated case of a law agent who departs from the recognised standards of honour and integrity, just as—the hon. Member for Bridgeton (Mr. Maxton) will agree—you get in every 1178 profession and in every walk of life people who depart from the proper and normal standards of conduct, I see no reason why the whole profession should be subjected to rules and regulations that would be ineffective to secure any desirable purpose.

Accordingly, I suggest to the House that this Clause should not be accepted. There was one observation which the hon. Member made with which I entirely agree. If you are to have statutory safeguards against misappropriation of money, the only real safeguard that you can have is some form of fidelity bond or guarantee, and if a proposal of that kind had been put forward, I certainly would be prepared to give it consideration. I do not think you will accomplish anything at all by hampering the profession by rules and regulations. What is wrong to-day in most professions is that there are far too many rules and regulations, and, for my part, I am not in favour of adding to the number. Accordingly, I hope the hon. Member may see his way not to press his new Clause.