HC Deb 12 March 1984 vol 56 cc199-208 4.48 am
Mr. Tony Blair (Sedgefield)

The Law Society is the professional body representing over 40,000 solicitors in England and Wales. It is also the body charged directly with supervising and enforcing matters of professional discipline. A member of the public aggrieved at a solicitor's conduct takes his or her case to the Law Society which has a set procedure for dealing with such complaints.

The purpose of the debate is to raise two matters. First, is that procedure working satisfactorily? Secondly, in particular, is it in the public interest for the Law Society to keep its present dual role of representing the interests of solicitors and investigating and adjudicating upon complaints made against them. Those matters have recently become the subject of serious public concern. There has been a series of newspaper articles, radio programmes, and, most recently, a full television documentary by the Granada "World in Action" team.

Persuasive testimony of the popular anxiety of the subject is provided by the flood of letters and calls received by politicians, lawyers and journalists alike who have taken up the matter. I am informed that the "World in Action" programme has been positively inundated. That correspondence has on the whole been severely critical of the present system for dealing with complaints against solicitors. To be fair, one would expect that, but whether or not that criticism is justified, I shall consider later.

It is worth recording the sense of public dissatisfaction as a matter in itself because that dissatisfaction is real. It stems, in substantial part, from the nature of the complaints system, and it is greatly assisted, like it or not, by the image of the legal profession as insular and self-interested. I want to make that clear, because public confidence in the legal profession is as much in the interests of the profession and the lawyers as of members of the public.

In initiating this debate it is no part of my intention to disparage solicitors — quite the opposite. Those who support a different system of handling complaints against solicitors number among them many solicitors who are aware of the present level of disquiet and the damage that it does to their profession.

The present system of investigating and adjudicating upon complaints against solicitors is as follows. The Law Society is charged by Act of Parliament with ensuring that solicitors obey the standards of professional behaviour of the society. The Law Society only investigates charges of professional misconduct. Negligence or incompetence falling short of misconduct are not presently within its jurisdiction. The complaint is dealt with initially by the professional purposes department of the Law Society. That is a department with full-time staff, and I understand that it has a budget of about £1 million. The professional purposes department is under the control of the professional purposes committee, a sub-committee of the Law Society council.

The professional purposes department will first assess whether the complaint is properly one of professional misconduct. If it decided that it is not, it will refuse the complaint, but may give advice to a complainant on other ways of pursuing his or her complaint. If the case is one of professional misconduct, the professional purposes department will see whether the complaint can be resolved through an exchange of correspondence with a complainant and/or a solicitor. If not, it is referred to the professional purposes committee.

The professional purposes committee can, in varying degrees, reprimand a solicitor, attach conditions to the issue of his practising certificate, or, in serous cases, institute proceedings before the solicitors' disciplinary tribunal. That tribunal was set up by Parliament. It is independent and must have at least three members present to be quorate. One of those three must be a lay member. It has power, among other things, to order a solicitor to be struck off the rolls. But it must be emphasised that only about 1 per cent. of cases ever go beyond the professional purposes department and the professional purposes committee to the solicitors' disciplinary tribunal. The vast majority of cases, therefore, stay within the Law Society itself.

There is a further element in the process. Section 45 of the Solicitors Act 1974 set up the office of lay observer. The lay observer is appointed by the Lord Chancellor. His role is to investigate complaints about the treatment by the Law Society of complaints against solicitors. According to his 1982 report, the lay observer is involved in rather less than 3 per cent. of complaints made to the Law Society. It is crucial to note that the lay observer's function is not to inquire into the merits of the original complaint, but merely the treatment of that complaint by the Law Society. It is not a role of primary investigation, therefore, but something more akin to an ombudsman.

That is the present system—criticism of which is not new — but it has been given fresh impetus in recent months. That is, in the main, due to the case of Mr. Glanville Davies and Mr. Leslie Parsons. The Lord Chancellor is not responsible for individual cases and, in any event, the salient points are well known so I shall discuss the case only in outline. It is fantastically complex, and I shll give only an abridged version of events.

Mr. Parsons engaged Mr. Glanville Davies to act for him in an action against a public company called Mather and Platt Ltd. It was a massive and complicated case. The net result was that Mather and Platt Ltd., by way of settlement, agreed to pay to Mr. Parsons £530,000 in damages. On receipt of the money, Mr. Davies paid £430,000 to Mr. Parsons, but kept the rest on account before drawing up a proper bill. Mr. Davies had already received £48,000 on account of fees.

The case was settled on 21 May 1975. A bill from Mr. Davies was not presented until 6 April 1976. It was not itemised, and it came to £150,000, plus VAT. Despite a request to itemise the bill, that did not occur until Mr. Davies was ordered to do so by the court. Mr. Parsons had asked the court to tax his bill.

On 1 September 1977, the itemised bill was lodged with the court. It came to over £197,000. On its first taxation, the bill was cut to £98,000. That was in March 1978. Both Mr. Davies and Mr. Parsons asked for a review of that taxation. On 14 May 1979, the findings of that review were given. The bill was reduced further to £67,000, so a bill that started off at £197,000 ended up as a bill for £67,000. The taxation master described some of the items charged as fictitious and so grossly excessive that they might have been an amusing joke had the matter not been one of such serious and direct concern to Mr. Parsons' pocket. However, the master declined to give costs against Mr. Davies on an indemnity basis. Mr. Parsons therefore appealed to a High Court judge. On 8 November 1982, Mr. Justice McCowan ordered that Mr. Davies should pay the costs on an indemnity basis. In the course of his judgment, he said the Mr. Davies had been guilty, at least, of gross and persistent misconduct. Finally, on 24 October 1983, Mr. Justice Vinelott, again at the instance of Mr. Parsons, made an order striking Mr. Davies off the rolls. He further said that Mr. Davies should pay the costs of the application to strike him off. Mr. Davies had resisted the costs order on the grounds that Mr. Parsons could have obtained an order to strike him off the from the Law Society through the Law Society's complaints procedure. Mr. Justice Vinelott rejected that argument, and said that Mr. Parsons was justified in proceding to the High Court without using the Law Society's internal machinery. He did so because, at crucial stages throughout this sorry affair, Mr. Parsons had indeed attempted to use the Law Society's own machinery to complain about Mr. Davies, only to be told, not once, but frequently, that his complaints were groundless.

Mr. Parsons' first complaints, made through a respected firm of solicitors, Bristows Cooke and Carpmael, were filed in June 1977. The Law Society asked for a synopsis of those complaints, and duly obtained it in March 1978. Included was an allegation of gross overcharging, as found by the first taxation of the Mather and Platt bill. That should in itself have been sufficient for the professional purposes committee to take action, but in November 1978, without further reference to Mr. Parsons, the professional purposes committee dismissed the complaint as "unsubstantiated".

The responsible partner at Bristows immediately went to the president of the Law Society to protest. As a result, he was told that the professional purposes committee would reconsider the matter. Bristows then sent 100 pages of documents and evidence in further support of the complaint. After a delay of several months, on 2 May 1979, the professional purposes committee wrote, saying that it was still of the view that the complaints were not substantiated.

A further related series of complaints about a legal aid bill, reduced on taxation from £16,000 to just over £3,000, was simply dismissed. There is also — again a related matter—an earlier complaint made to the Law Society about Mr. Davies' predecessor as Mr. Parsons adviser, a Mr. Malim. That complaint was received in 1977, but not proceeded with at all. No explanation of that has been given.

In summary, although a taxation master described Mr. Davies' charging as "grossly excessive", a High Court judge described him as guilty, of at least gross and persistent misconduct and another ordered him to be struck off, the professional purposes committee considered that no case of misconduct, gross or slight, was made out.

That is bad enough, but two essential and additional factors stand out. First, in no sense can the Davies affair be described as an error such as can happen in any organisation. It was not a one-off incident. It dragged on over six years, involving many different Law Society council members and officials within the professional purposes department.

The Law Society's own report into the matter, published on 22 February 1984, concluded: We are of the opinion that The Law Society's treatment of Mr. Parsons' complaints both in respect of Mr. Davies and of Malim fell far short of that which he was entitled to expect and he has been seriously wronged over the handling of the complaints. The failures were many and recurring. Whilst we found nothing which casts doubt on the integrity of those concerned with the handling of those complaints we have found administrative failures, mistakes, wrong decisions, errors of judgment, failures in communication, high-handedness and insensitivity on a scale that must have done great harm to The Law Society. The whole episode is a disgrace to The Law Society. We can find few aspects of the complaint that were handled properly and the justification for that conclusion is to be found in this report. Glanville Davies was a Law Society council member throughout the period 1977 to January 1983. He was well known and liked by those council members on the professional purposes committee. When he resigned, shortly after the McCowan judgment, he was given a eulogy by the Law Society council expressing its thanks to him as "a true friend of the Society."

The internal report of the Law Society concluded that though there was no deliberate attempt to cover up for him as a council member, his status may have unconsciously influenced the Law Society's decision. It is that camaraderie, natural in any profession, trade association or trade union, that is a prime source of concern.

A different facet of it is indicated in the case of Miss Peggy Wood. Since judgment in a court case involved with her and connected with her complaint to the Law Society is about to be given, I shall be very circumspect in what I say.

In brief, her complaint arose in these circumstances. I shall, again, greatly concertina the facts. Miss Wood asked a solicitor, Mrs. Hubbard, of Hubbards and company, to arrange a loan for her. Mrs. Hubbard arranged two sets of loans for Miss Wood, one from a company called Mobile Homes Ltd. and another from a Mr. Wills. The security was Miss Wood's property. Both Mr. Wills and Mobile Homes Ltd. were also clients of Hubbard and company. Unknown to Miss Wood, Mobile Homes was also part owned by Mr. Hubbard. At no stage was Miss Wood advised to take independent advice. She defaulted on the loans and was sued by Messrs Hubbard acting for Mobile Homes and later by that firm acting for Wills.

When Miss Wood protested that Hubbards should act for her, she was told that the others were clients of longer standing. Her complaint against Hubbards was made to the Law Society in February 1979. It was dismissed. The Law society said that it did not investigate complaints where the solicitors involved acted for a third party, which was, of course, the case with Hubbard and company after it served the writ on Miss Wood on behalf of Mobile Homes. Moreover, in the litigation of Wills and Wood, now in the Court of Appeal on appeal from the county court, the Law Society, wearing its trade union hat, so to speak, has adopted a fairly high profile.

Two issues in the appeal are whether a solicitor should act for both borrower and lender in a loan transaction and whether there is an obligation in those circumstances to recommend a client to obtain independent advice. I might add, in parentheses, that the county court judge found that such advice in Miss Wood's case would have been against her taking the loans. The Law Society, at its own expense, has instructed Queen's counsel to act for Mr. Wills in the Court of Appeal. There is nothing wrong at all in that. It is simply representing the interests of its members. But I ask, rhetorically, how is Miss Wood, or any other member of the public, to feel confident in the Law Society's objectivity in considering her complaint when, as a professional body representing the profession, it has a keen interest in ensuring that the acts that are complained of are perfectly acceptable.

Mr. Deputy Speaker (Mr. Ernest Armstrong)

Did the hon. Member say that the case was in the Court of Appeal at the moment?

Mr. Blair

That is right, Mr. Deputy Speaker. I have been very careful——

Mr. Deputy Speaker

It is sub judice if it is in the Court of Appeal at the moment. The hon. Gentleman should not refer to it.

Mr. Blair

It is correct that the matter is sub judice. That is why I have been careful only to refer to those matters that are not directly represented by the appeal before the court. I have been careful to keep within the bounds of the sub judice rule.

It is the image that is at least as important as the substance. There are two basic flaws with the present system for dealing with complaints. The first is that the Law Society at one and the same time both represents and defends the professional interests of solicitors and is charged with maintaining discipline in the profession. Those two roles can lead to conflict. They certainly have the appearance of doing so. The absence of an independent element in the investigation of complaints is the single most serious cause of public concern about the way that the Law Society deals with complaints against solicitors. Indeed, it was in recognition of that feeling that the office of lay observer was instituted. I shall say in a moment why that, by itself, has not been enough to allay feeling.

Secondly, there is the absence within the investigatory process of any lay element. The impression is given of lawyers investigating lawyers. Both the lay observer and the solicitors' disciplinary tribunal involve the lay element, but the vast majority of cases are dealt with by the professional purposes committee, both in investigation and adjudication. A constant response to both those criticisms is to point to the lay observer.

Let me say why I think that response is wholly inadequate. It is not just the fact that he is involved in a tiny minority of cases, but that his function is very narrow. He has no power and insufficient resources to investigate and adjudicate on the complaint, save in so far as he needs to perform an inquiry into how the Law Society has handled the complaint. In essence, like an ombudsman, he assesses maladministration of complaints, not the complaints themselves.

That weakness was recognised by the Royal Commission on legal services, which reported in October 1979. It is worth stressing that the report attracted criticism if, from any quarter, from those who thought it too complacent and uncritical of lawyers. It is all the more disappointing, therefore, that certain of its key recommendations in respect of the Law Society's handling of complaints have not been carried out.

The Royal Commission recommended a number of things. The most important were, first, that the Law Society should seek legislation to permit it to deal with complaints about bad professional work, as well as professional misconduct; secondly, that the Law Society should split the investigatory and adjudicatory process and that a special investigation committee, separate from the professional purposes department, should investigate, and the professional purposes committee should adjudicate only. Thirdly, it recommended that both investigation and adjudication should involve an active lay element from panels appointed by the Lord Chancellor. That it was said, would increase public confidence in the profession.

The Law Society has now said that it wishes to implement the first of those recommendations. I say in passing, as it is not strictly relevant, that I hope that when the Law Society does seek legislation allowing it to investigate "bad professional work", it uses that term in the sense in which it is used by the Royal Commission, not the lay observer. The Royal Commission defined bad professional work as including negligence that might give rise to a claim for damages. The lay observer, in his 1982 report, although he says he agrees with the Royal Commission, defines bad professional work as incompetence falling short of actually giving rise to a claim for damages. Obviously the broader definition of the Royal Commission is more desirable.

No very cogent reason has been advanced as to why the Law Society does not intend to implement the other two recommendations of the Royal Commission. In particular, it has not asked for legislation to give effect to the suggestion of an active lay element being involved. Yet, even the Government's response to the Royal Commission, given in November 1983, accepts and endorses this suggestion. Indeed, the Royal Commission's recommendations represent the bottom line of what would be appreciable reforms. Many people—myself included — believe that, sound though those recommendations are, they do not ultimately deal adequately with the root of the problem and remove from the society its dual role of trade union and disciplinary court.

Recognition of this has led the National Consumer Council to propose that the Law Society should set up an independent organisation, a solicitors' complaints bureau, to take over the role performed by the professional purposes department and the professional purposes committee. The bureau would be run by a board of Law Society nominees who would not have day-to-day control of the bureau, but rather would appoint a council with a minority of society nominees to do that. There would be a full-time staff under the control of the council. Unresolved complaints would be put to a complaints panel with a solicitor, lay representative and independent chairman. Such a bureau would not, in strict form, be independent since it would be set up by the society, but in substance it would have a large measure of independence. The same result, in a different way, is achieved by the BMA, the professional body representing doctors, and the General Medical Council.

The National Consumer Council, in making that proposal, was working within the context of the Law Society's present powers and legislation as it stands. But the society has not indicated that it wishes to seek further legislation to allow it to extend its powers of investigation and penalty. The time is thus ripe for consideration whether to include in such legislation a fully independent complaints board — in other words, to take the idea of the National Consumer Council, but to embody it in a truly independent board staffed with solicitors and with substantial Law Society input, but ultimately accountable to lay control. One incidental consequence of this system would be to circumvent the Law Society's problems in dealing with bad professional work in connection with the provisions of indemnity insurance policies.

The counter to that proposal is that the solicitors' profession is and should be self-regulated. I see the force of that argument, although it can be taken too far. The notion of a profession being self-regulating has as much to do with the public interest as with the interests of the profession. The independence of the profession from unwarrantable state interference must be preserved. It is hard to think that a separate body to investigate complaints against the profession in the interests of ordinary citizens should fall within that category. None the less, the National Consumer Council obviously thought there was merit in allowing solicitors to remain a self-regulating profession. There can, therefore, be legitimate argument about the mechanism by which the need for some independence of the disciplinary process of the profession from the body looking after its sectional interests is achieved. It is hard to deny that there is such a need. Satisfying it would be to the benefit not just of the public but of the profession.

All professional people are subject to unjustified complaints. People who are disappointed in litigation especially look to blame others. At present, if someone complains to the Law Society and has his or her complaint dismissed, doubt will always remain that it was a case of lawyers looking after their own. Appearance can be as important as actuality. If this is recognised, something positive will have come out of the muddle of the Glanville Davies case. If not, a golden opportunity will have been lost for solicitors and the public they serve.

5.11 am
The Attorney-General (Sir Michael Havers)

The House is grateful to the hon. Member for Sedgefield (Mr. Blair) for raising this important issue on the procedures for handling complaints against solicitors. As the hon. Gentleman said, there has naturally been a good deal of public worry about the adequacy of those procedures in the light of the Glanville Davies case. I understand why the hon. Gentleman spent so long on a horror story in the history of the Law Society.

It is clearly in the public interest that there should be general confidence in the procedures for dealing with complaints against solicitors, and appropriate disciplinary action, and redress for the client, where circumstances require it. These are primarily matters for the Law Society, but it is right that they should be ventilated in the House because to some extent the points made range beyond the solicitors' profession. They may involve wider considerations relating to the important place of the professions in our affairs and the obligations imposed on them to regulate the conduct and standards of their members in a way that always maintains the widest possible public confidence. The hon. Gentleman carefully set out the procedure for handling complaints against solicitors. The complaints to the Law Society about solicitors may be divided into two categories. The first category comprises complaints of professional misconduct — in broad terms, conduct unbefitting a solicitor, including misuse of money. Mr. Parsons' complaints against Mr. Glanville Davies involved complaints of misconduct. The second category comprises complaints of incompetence or inefficiency in the performance of professional work. That is a common form of complaint.

The second category would be examined by the Law Society only if the action also amounted to misconduct. In these cases, however, a client may be able to pursue a claim through the courts, and the Law Society may accordingly advise him to seek independent legal advice on his rights.

The determination of claims of negligence is naturally a matter for the courts. The Law Society has, however, made arrangements for clients to receive initially free, and independent, advice from a solicitor on a negligence panel, in cases of difficulty, on the issues of whether and how such proceedings might be brought. I emphasise that point, because often it is not sufficiently widely known. Often one hears people saying at surgeries, "It is no good my trying to sue him. I shall never get another solicitor to act for me." These arrangements, by which I mean the panel, have been widely welcomed, but they are not widely enough known. It is an initiative that was taken some time ago by the Law Society and it provides a valuable service to clients. In some cases legal aid may also be available.

The hon. Gentleman's speech dealt in some detail with the Glanville Davies case. It is not part of my duty this morning to defend the Law Society for what happened. The Law Society, particularly with the committee of inquiry of three experienced council members that it set up to investigate the matter, did not seek to cover up what had happened. The Law Society admitted its failures in dealing with those complaints. It is important to bear in mind that neither the lay observer nor the Law Society's committee of inquiry, while extremely critical of the society's performance on other counts, called into question the integrity of those concerned. The latter's report rejected any allegation that there had been a cover-up by the Law Society and acquitted it of deliberate partiality towards Davies.

Nevertheless, as I have said, the Society has acknowledged its failings in this case. It has accepted the findings of the report and acknowledged that the treatment of Mr. Parsons' complains against Mr. Davies fell far short of what he was entitled to expect. Despite the case being exceptionally heavy and complex, it should nevertheless have received correct and timely treatment. The president of the Law Society has written a letter of apology to Mr. Parsons.

The hon. Gentleman has properly pointed out some of the comments in paragraph 43 of the report of the committee of inquiry and it would be worth quoting the rest of what was set out in that paragraph because it refers to what I have just said: We see little purpose in attaching personal blame for those matters which we criticise. The blame must attach to The Law Society for it was to The Law Society that Mr. Parsons directed his complaints. Indeed, it is the cumulative effect of the mistakes, failures and mishandling at different times, whether by the Committees concerned or in the office, that has created such a very serious situation. The lessons are many. The Council should now relate those specific findings to the general procedures (which we have not examined) for investigating complaints. It must be ensured that criticisms of this magnitude can never again be levelled at The Society. There is no question here of the society looking after its own. The report received a great deal of publicity and cannot be described as a report which pulls its punches.

The society is now urgently reviewing its procedures in the light of the findings of the report on its handling of the Glanville Davies case, and has promised a further announcement within two months on the action taken and to be taken in the light of the criticisms. The society has already shown its readiness to consider, as a matter of urgency, the need to increase the staff available to deal with complaints received from members of the public. The size and workload of the profession have increased significantly during the past decade. The Law Society's resources may not have expanded sufficiently to reflect that. The Law Society has also shown its willingness to consider the scope for improvement in the handling of complaints against council members, drawing on outside firms of solicitors in an attempt to avoid any imputation of bias or partiality; and other possible measures are under consideration.

I am sure that the society's response, in particular its recognition of the need to consider the action which can be taken to alleviate public anxiety and to restore confidence in the adequacy and efficiency of its procedures, will be welcomed. The Law Society acted responsibly and honourably in establishing the committee of inquiry to investigate its handling of the case and had the candour to publish the report even though it was highly critical of the society.

The society's committee of inquiry expressed concern that where disciplinary proceedings were not contemplated because of a solicitor's involvement in separate civil proceedings with his client any such disciplinary proceedings could be postponed for a considerable time. That was one of the matters that arose during the case— whether the disciplinary procedures should be adjourned pending the decisions in the courts. The committee recommended that the general principle should be considered carefully by the professional purposes committee as a matter of urgency. I understand that that consideration is now under way.

As the hon. Gentleman said, the Royal Commission on legal services recommended that the Law Society should continue to have responsibility for the operation of complaints and disciplinary procedures, but that within the Law Society the processes of investigation and adjudication of complaints should be separated and that laymen should be involved in those processes. Proposals for change have been made, as has been said, by various associations. This is not a straightforward matter, but I understand that these recommendations, including the scope for wider lay participation, are among the matters currently under active consideration by the Law Society. They have also been the subject of consultation with other interested bodies.

Therefore, I think that it is fair to say that, in the light of the Law Society's existing legislative proposals and its continuing and urgent review of other possible measures, the Government will continue to keep under review the scope for, and possible nature of, any legislation that may be brought forward. As the Government said in their response to the Royal Commission's report: The existence, strength, and vitality of an independent legal profession, and public confidence in it, are fundamental to our freedom under the law. Responsibility for qualifications and admissions, for conduct and for discipline, properly rests with the profession. As I have said, the Government believe that the profession, in recognition of that responsibility, is taking active steps to restore public confidence in its procedures.