CLAUSE I.—(Council to make rules). (Hansard, 12 May 1933)

§ The SOLICITOR-GENERAL (Sir Boyd Merriman)
I beg to move, in page 1, line 6, to leave out from the word "Society" to the word "shall," in line 7.
This, and several succeeding Amendments, are purely drafting Amendments. Probably it will be for the convenience of the House if I read, once and for all, the Clause as it will appear when the Amendments are added to it: The Council of the Law Society shall make rules—

(a) as to the opening and keeping by solicitors of accounts at banks for clients' moneys; and

(b) as to the keeping by solicitors of accounts containing particulars and information as to moneys received, held or paid by them, for or on account of their clients; and

(c) empowering the Council to take such action as may be necessary to enable them to ascertain whether or not the rules are being complied with and may, if they see fit, make rules for regulating in respect of any other matter the professional practice, conduct, and discipline of solicitors.

Provided that rules made under this section shall not come into operation until they have been approved by the Master of the Rolls. Clause 2, when amended, will read: (1) If a solicitor fails to comply with any of the rules made under the preceding Section, any person may make a complaint in respect of that failure to the, disciplinary committee. The remaining Sub-section of Clause 2 is unaffected.

§ Mr. THORP
I beg to move, in page 1, line 14, to leave out paragraph (c).
As I understood when this Bill was before the House and before Committee on a previous occasion, it is designed simply and solely to ensure that solicitors shall keep money to which they are beneficially entitled in one account, and money to which they are not beneficially entitled in another account. That 1845 is the be-all and end-all of this Bill, as I understand it was put forward by the hon. Member for Skipton (Mr. Bird). As I read paragraph (c), it goes a very great deal further than that object, which in itself commends my sympathy and support. Paragraph (c) empowers the Council to take such action as may be necessary to enable them to ascertain whether or not the rules are being complied with, and, if they see fit, to make rules for regulating in respect of any other matter of professional practice, conduct and discipline of solicitors. I am not prepared to say that those final words making rules for regulating in respect of any other matter of professional practice, conduct and discipline might not be regarded as ejusdem generic with the preceding words. In my submission they are extremely wide, and the Society might make such extensive rules under them that there might be some trouble and difficulty in the future as to whether the rules were made simply and solely for the purpose of ensuring those two different accounts.
I submit to the House that a, rather big principle is involved. Are Societies, no matter what they be, professional or trading organisations, or trade unions, to be given the power to control their members, to make any rules they like in wide terms, to govern the practice, conduct and discipline of those members? Is the Society to be able to say that solicitors' offices shall be open at a certain time in the morning and closed at a certain time in the afternoon?—because that would came under these words. Are they to have the right to say, for example, what vacations shall be given to solicitors' clerks, and the right to make rules as to what amount of pay and what salaries and so forth shall be paid to those clerks, because those words are quite wide enough? Those words go right outside the main purpose of the Bill. I am glad to find that I am not alone in that opinion. The hon. Member for South Croydon (Mr. H. Williams) proposed that a, similar Clause should be put into the Bill with regard to Scotland but, the hon. and learned Gentleman the Lord Advocate said: 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. 1846 I presume that he was speaking as a representative of the Government. He went on: 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, hut I do not think it would form any safeguard at all. These are not my words, but they are what the Lord Advocate said speaking presumably on behalf of the Government. He said: Misappropriation, or what, to use the technical term, we call embezzlement, is never a thoughtless offence; it is a deliberate offence. These presumably are the official views of the Government. He went on: 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. These are the views of the Lord Advocate. With all respect to him, I do not agree with him. The first step that the average solicitor takes with regard to misappropriation of money is an unconscious step. He first of all confuses money to which he is himself entitled with money to which his client is entitled, and that slope is an extremely slippery slope. At the same time, the Lord Advocate finished his observations with some words which are, I think, of general application, and are also of great importance. He said: 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."—[OFFICIAL REPORT. 5th May, 1933; cols. 1177–8; Vol. 277.] The point I wish to make with regard to these words is that they are far too wide for the laudable object which the Bill has in view. I speak with some knowledge of these matters, because, for some years before I was called to the Bar, I was in a solicitor's office, my father was an attorney of the Court of King's Bench, as was my grandfather before him, and my brother is a solicitor to-day. There is only one rule for solicitors to adopt, and they nearly always do it. That is to have their own money in one bank in one 1847 account, and their clients' money in another bank in another account. That is a counsel of perfection, but then no such question as setting off debts due from the solicitor to the, bank can possibly give rise to any discussion. A case came into my hands some years ago in which there were three accounts at the bank. One of them, called "No. 1," contained the solicitor's own money; another, called "No. 2," contained his firm's money; and the third, called "No. 3," contained his client's money. The first and second of these accounts were slightly overdrawn. He paid some money of his clients into his third account, and the bank held that money against the overdraft on the other two accounts. If the clients' money had been in a separate bank—which, as I have said, is a counsel of perfection—no such thing would have arisen.
In my opinion the House should hesitate a very long time before it places upon the Statute Book this precedent of authorising the Law Society to empower people—I do not know who they are going to be—to go through the books, presumably, of solicitors. The information in the hands of solicitors is very often not their information, but the information of their clients; very often it is particularly confidential information; and, while I have no doubt that the greatest care will he exercised by the Council of the Law Society to see that information which they acquire under these powers is not abused in any way, it might easily happen that some person might acquire information, under the aegis of this Clause, as to the confidential accounts of a particular person who has handed over his accounts to his solicitors to keep. In these circumstances, I submit that paragraph (c) should not be allowed to pass.

§ Mr. RHYS DAVIES
I beg to second the Amendment.
I do so, not because I entirely agree with what the hon. and learned Gentleman has said, but in order to draw from the Solicitor-General and the promoters of the Bill one or two facts in connection with this paragraph. The hon. and learned Member for Nelson and Colne (Mr. Thorp) says he disagrees with the Lord Advocate, but I am venturing to disagree with all the solicitors and barristers 1848 in the House this morning, although in the main I think that this is a very useful Bill. I hesitate to intervene, because I know very little about the law, but I found in Committee upstairs that all my failings in regard to knowledge of the law were equalled by the lawyers' ignorance of accounts, and therefore I think I have some right to speak on this matter.
I am torn between two opinions on the points raised by the hon. and learned Member for Nelson and Colne. I should have thought that the legal profession would, in their own councils, have taken this matter in hand long ago, without bringing it to Parliament. If I may say so, in the case of nearly every well-governed trade union and friendly society the work which its members do for the society is checked, and the agents have to account for all they do on behalf of the society. The real issue raised by this Amendment appears to be that the Law Society, having failed to govern its own affairs and check its own members, now appeals to Parliament to give it authority to do so. The hon. and learned Gentleman shakes his head, but surely that is what the words of the Bill mean, whatever is intended.

§ Sir JOHN WITHERS
I think it will be found that the Law Society, however willing they might be, could not do this without statutory power.

§ Mr. DAVIES
Then nearly every lawyer must be an anarchist, otherwise they would have met together in conference long ago and would have decided what rules they ought to adopt to govern their profession, and the decisions of their conference ought to he binding upon all the members. I should like to know what the Law Society will do when it gets this power. Will it appoint accountants to go to the office of each solicitor to see that the law in this connection is carried out? I think that that is a proper question to ask. It would be quite new to give authority to any organisation or association to appoint any person to walk into the offices of its members in order to see whether they are carrying out the law. Such persons would in effect be detectives under another name.
With regard to the question of accounts, I think that the hon. and learned Member for Nelson and Colne 1849 cancelled himself out when he was speaking about the methods to be employed. He said that the counsel of perfection was that the client's account should be in one bank and the solicitor's own personal account in another bank. But, supposing that there is only one bank in the district, he will be in a difficulty. More than that, I am sure, from my own experience of accounts, that, however many accounts a man may have, unless he is honest he will get over the difficulty and still do the wrong thing. There is, however, a very strong case for the Measure on the other point, that, if solicitors knew that the law compelled them to keep separate accounts, that in itself would be an incentive to them to keep separate accounts, which I think it is the main purpose of the Measure to secure.
I may perhaps be allowed to say, without any offence, that I have often wondered why the legal profession, and especially those of its members with very large businesses—some of them, I understand, employ 40 or 50 people in their offices—have never devised a proper system of accountancy in their offices. [HON. MEMBERS: "Oh"] I shall be very glad to learn that they have. Hon. Gentlemen are smiling at what I say, as though we are to believe that all is well in the legal profession with regard to accountancy, but, if the suggestion behind their smiles means anything at all, this Bill is unnecessary. I think that the Bill is necessary, but I am torn between two opinions as to how to vote in the event of this Amendment being pressed to a Division. I think, however, that we are entitled to information as to what the Law Society intend to do if they get the powers which will be conferred by the paragraph to which the hon. and learned Gentleman now objects.

Mr. BIRD
I am grateful to my hon. and learned Friend for making a Third Reading speech in favour of the Bill. I regret very much that he has deserted the underpaid and now gone to the academic branch of the profession. If he had considered the Amendment that he was proposing, he would have found that the Law Society is taking power to make rules, and, if there is no power in the Act to see that they are obeyed, the rules that are made, and of course only made after 1850 approval of the Master of the Rolls, would have no effect at all. In regard to the point raised by the hon. Member opposite, in the majority of solicitors' offices accounts are kept and are kept well, and in the majority of offices audited, and in the majority of solicitors' offices a solicitor's account is already kept. As far as the rules to be made under this Clause are concerned, there is no intention, I believe, of making it compulsory to have auditors. In fact, I have been told that it would be an impossibility to get all the accounts audited at the same time, because that would almost be necessary when certificates were going to be applied for in the ordinary way at the end of the year. The fears of my hon. and learned Friend are unfounded, and his protection, surely, is that any rules to be made under this Clause must have the approval of the Master of the Rolls.

§ Mr. THORP
Why is it necessary to take power to make rules in such extraordinarily wide terms as this to effect the main object of the Bill? Under these wide terms, the Law Society might make rules as to which side of their heads solicitors should part their hair, which has nothing to do with the Act at all.

Mr. BIRD
If the Law Society made such a rule, I think they would not be able to put it into operation, as far as I am concerned. I think my hon. and learned Friend has the same sort of fear about other rules that he has about that.