§ 3.2 p.m.
§ Order of the Day for the Second Reading read.
§ LORD COHEN
My Lords, I count myself fortunate that, on the first occasion that it falls to my lot to address your Lordships on something other than a Report of the Appellate Committee, it should be on a Bill which I hope is uncontroversial and the clauses of which are, I think, apt to accomplish its purpose. I am privileged to move the Second Reading of this Bill. The principal Act was passed in 1932. Since then, there have been eight or nine amending Acts, and your Lordships may consider that it is perhaps unfortunate that anyone who wants to get a clear picture of the law governing the solicitors' profession should have to look at so many Acts in order to get a complete picture. The Law Society share that view and it is their intention, if Parliament should pass the Bill now before it, that a consolidating Bill should be introduced at the earliest possible moment for your Lordships' consideration. I hope, however, that your Lordships will not consider it necessary to postpone the coming into force of the Bill now before you until after the passing of the Consolidation Bill to which I have referred.
Clause 1 is perhaps the most important clause in the Bill—certainly it is the most urgent. The Solicitors Act, 1941, contained provisions setting up a Compensation Fund to enable the Law Society to compensate and relieve any person suffering in consequence of the dishonesty of what I may call, colloquially, a defaulting solicitor. The fund has been built up by requiring from solicitors an annual contribution of £5, payable on taking out the practising certificate. With certain exceptions, to which I will refer in due course, that contribution is payable by every 639 solicitor. When the 1941 Act was introduced it was thought that the maximum sum of £5 would be amply sufficient to cover the object in view; and, in fact, so far the fund has met all the claims upon it. But it has been impossible to build up any reserve, and I am told that unless something is done there is a grave danger that, by the end of the present year, the fund will be in deficit. For this reason, it is proposed to increase the maximum annual contribution to the sum of £10.
I remember reading in The Times last autumn, when the proposal was first before the public, some correspondence critical of what was proposed, but it has received the support of all the provincial law societies. The proposal has been within the knowledge of the profession since the annual meeting of the Law Society last July, and the Society have received only ten letters dealing with the proposal, of which only eight were critical. When the 1941 Act was passed, the principle on which the foundation of the fund was based—that it is right that the profession should recognise an obligation to protect the public from the defalcations of its very few black sheep—was approved by an overwhelming majority of the profession, and I cannot doubt but that it will commend itself to your Lordships. It would be disastrous if the fund were to prove inadequate to carry out its object, but I can assure your Lordships that the Council of the Law Society will watch the position most closely and will not continue to enforce the maximum contribution longer than is necessary to ensure that the fund remains adequate.
It has been suggested that the burden of this increase will fall most heavily on the members of the profession with small practices, and that large firms will benefit most from it. The first part of this suggestion has, of course, a substratum of truth; but it must not be exaggerated. In the first place, no contribution is payable on the taking out of the first three practising certificates, and the full contribution is not exacted until six practising certificates have been taken out. Moreover, for once we may pleasantly remember the incidence of income tax, and the contribution is a legitimate expense for the purpose of calculating liability to tax. The result, if my mathematics are correct, is that the real burden on the solicitor is not an extra £5, but an extra £2 17s. 6d. The 640 second part of the comment is based on a fallacy, for experience has shown that the larger the firm, the larger its business, the less the risk.
The next most important provision of the Bill is Clause 2. Part II of the principal Act regulates admission to the solicitors' profession in considerable detail, dealing in particular with the articles of clerkship, into which every candidate for entrance has to enter, and with the examinations which he has to pass in order to qualify. In the result, an Act of Parliament is required to make an alteration in respect of a number of matters, some of which are of trifling importance. Thus in 1936 it required an Act of Parliament to increase from 5s. to 20s. the fee payable on the registration of the articles. Again, in 1941 it was found necessary to include in the amending Bill a power enabling the Council of the Law Society to decide for itself how often in each year the preliminary examinations should be held. I know of no other comparable profession which is subjected to anything like that measure of Parliamentary control. I am happy to say that at any rate the other branch of the profession is not, and I would add that the chartered accountants are governed by a Royal Charter of 1948, which gives wide powers to the Institute to regulate by by-law all these detailed matters. The by-laws require not Parliamentary sanction but only the sanction of the Privy Council.
Clauses 2 and 18 of the Bill are intended to relieve Parliament of the necessity of dealing with this kind of matter in future. Clause 18 is the repealing clause. Clause 2 (1) provides as follows:No person shall be admitted as a solicitor unless he has satisfied the Society that he has complied with such requirements as the Society may by regulations, made with the concurrence of the Lord Chancellor, the Lord Chief Justice, and the Master of the Rolls, prescribe with respect to—I venture to think that the requirement of the concurrence of the Lord Chancellor, the Lord Chief Justice and the Master of the Rolls ensures that the regulations to be adopted will set up a 641 standard at least as high as that in force by the existing provisions and will ensure that the public are adequately served by a competent solicitors' profession. Since I have mentioned the Master of the Rolls, I might remind your Lordships that his office has many responsibilities in connection with the solicitors' profession. He has been consulted on the provisions of the Bill and I am sure your Lordships will be glad to know that his support of it will be indicated not merely by his presence here to-day, which we all welcome, but by observations which he will in due course make.
and unless the Society are also satisfied as to that person's moral fitness to be an officer of the Supreme Court.
- (a) service under articles of clerkship;
- (b) attendance at a course of legal education; and
- (c) the passing of examinations,
I should perhaps add that the clause contains provisos preserving certain statutory protections, the first intended to assist clerks, innocent themselves, of solicitors who have been suspended from practice, and the second facilitating admission to the profession of certain colonial solicitors and of persons who have served as assistants to justices' clerks. Unlike the other provisions of the Bill, the clause will become operative only when regulations under it have been duly approved. The majority of the other clauses of the Bill are of minor importance. Clause 3 imposes on the Law Society direct duties which it has hitherto performed on behalf of the Registrar. The Law Society has, for all practical purposes, been the Registrar, This Bill, if passed, will clarify the position. Subsection (2) of Clause 4 enables the Master of the Rolls to delegate to any High Court Judge certain of his functions relating to the admission of solicitors. The object of this clause is to ensure that the admission of any newly qualified solicitors shall not be delayed if the Master of the Rolls is abroad for any reason or (we, hope this will not occur) is incapacitated for any length of time. Subsection (2) of the same clause enables a solicitor of certain overseas courts who has served for not less than three years as clerk to a solicitor in England, subject to complying with certain conditions, to obtain admission on similar conditions to those which would be applicable if he had practised for three years as a solicitor overseas.
Clause 5 deals with practising certificates and the procedure for issuing them. The changes are mainly a matter of simplification. I will not waste your Lordships' time by going into details. Clause 6 contains drafting Amendments defining in plain terms the duration of a practising 642 certificate. Subsection (1) of Clause 7 provides that, if a solicitor is suspended from practice for a period which expires before the expiry of his current practising certificate, the suspension shall remain in force unless it is revoked either by the Law Society or, on appeal, by the Master of the Rolls. Subsections (2) and (3) contain consequential Amendments.
Clause 8 makes certain modifications in procedure intended to facilitate the working of the Disciplinary Committee. I need refer only to the provisos to subsection (2) and to subsection (5). The first of those provisions enables two members of the Committee, or of a division of the Committee, to form a quorum if the parties to the application or the complaint agree to that course. At present the quorum is three. The other provision increases the period within which proceedings may be commenced against a solicitor who offends or commits the offence of what is called pretending to be a solicitor. At present, proceedings must be commenced within six months. It is proposed that that period shall be extended to two years, thus bringing the provision as regards this offence into line with analogous offences which are dealt with in Sections 47 and 49 of the principal Act.
Clause 9 is of more importance. It gives the Law Society power, where a solicitor is removed from or struck off the roll or is suspended from practice, to make certain orders as to the property under the control of such solicitor. The object of this provision is, of course, the protection of the client. It has been found in practice that considerable inconvenience, if not actual hardship and pecuniary loss, has been occasioned to clients by reason of their inability promptly to obtain possession of papers and money held by a solicitor on their behalf, in cases not covered by the Act of 1941. The First Schedule to that Act conferred the necessary powers where the Council had reasonable grounds for believing that the solicitor had been guilty of such dishonesty as had been mentioned in Section 2 of that Act. This clause will enable the same powers to be exercised in other cases where in practice it is thought likely to be necessary. Turning to Clause 10 I would say that subsections (1) and (2) are intended to clear up doubts as to the procedure on 643 an application to the Disciplinary Committee to remove from or strike off the roll the name of a solicitor, or to replace a name on the roll. Subsection (3) will enable the Council to require a fee in all cases of replacement on the roll and not in the limited class of cases in which they can at present do it—namely, under Section 51 of the principal Act.
Clause 11 is of more importance. It amends Section 16 of the Act of 1941. Subsection (1) (a) enables proceedings to be taken before the Disciplinary Committee in respect of a solicitor's clerk who is not himself a solicitor but who has been guilty of certain criminal offences in respect of money or property. Under the existing law that can be done only where the money or property belongs to or is held or controlled by his employer on behalf of a client of that employer. The Law Society feel, and I think rightly, that the power should be widened and that, even if the offence is committed against somebody else's property, none the less the committing of it may render it unsuitable that that person should be employed in a position of trust in a solicitor's office. The amending clause will give the necessary power. It will ensure that the clerk shall not escape the consequences of the section—and this is an important provision—merely because, although convicted of the offence, he has been given the benefit of the First Offenders Act, has been placed on probation and has not been subjected to a penalty. It may be right that the clerk should have the benefit of the First Offenders Act provision but the offence may be of such a character still as to render him unsuitable for the particular employment of a clerk in a solicitor's office. Your Lordships will appreciate that it does not necessarily follow, because the Law Society have that power, that it will be enforced in every case.
Clause 12 enables the Law Society to discharge articles of clerkship in five classes of cases, four of them where the articles have been entered into in contravention of a statutory condition and the fifth where the Council of the Law Society is satisfied after inquiry that the articled clerk is morally unfit to be an officer of the Supreme Court. Clause 13 amends the existing law as to the remuneration of solicitors. Subsection (1) 644 deals with disbursements. Under the existing law no disbursements not actually made before the delivery of the bill of costs are allowed unless the bill states that they have not been made and sets them out under a separate heading, in which case they can be allowed if actually made before the commencement of the proceedings in which the taxation takes place and if they were made in discharge of an antecedent liability of the solicitor, properly incurred on the client's behalf.
It sometimes involves hardship on the solicitor, if he has paid the disbursements, the disbursements being of a kind which are allowable, and the only fault has been, for instance, that it has not been put under a separate heading. It is thought that the client would be amply protected by the amending clause, which contains the following safeguards: first, the liability must have been properly incurred on behalf of a client; secondly, the costs in question must be described in the bill as not then paid; thirdly, if the bill is ordered to be taxed, the costs shall not be allowed unless they are paid before the completion of the taxation. Subsection (2) authorises the delivery of gross sum bills of costs in contentious matters, just as they have been allowed for some time, at any rate since 1919, in non-contentious matters not governed by a special scale. This subsection is based on the recommendation of the Committee over which the Master of the Rolls presided. I will leave it to him to expound the reasons for that change, only saying that I respectfully agree with the recommendation of his Committee.
I turn to subsection (3). Under the existing law, on the taxation of a bill as between solicitor and client, if one-sixth of the bill is taxed off the solicitor has to pay the client's cost of the taxation as well as his own. It is proposed that if, in the case of non-contentious business, no less than one-half of the bill before taxation consists of costs for which no scale is provided, that penalty shall be imposed on the solicitor only if one-fifth is taxed off instead of one-sixth. The remuneration Order now in force is the Order of 1953. It introduced a new method of computing costs and laid down certain factors which were to guide the taxing masters in allowing costs in cases for which no scale was fixed. Solicitors have felt that a greater margin of error should be allowed in the 645 computation of the effect of those factors than is given by the sixth rule, and this view was shared by the Statutory Committee appointed ender Section 56 of the principal Act to deal with solicitors' remuneration in non-contentious matters. That Committee consisted of the Lord Chancellor, the Lard Chief Justice, the Master of the Rolls, the President of the Law Society, a provincial solicitor and, in certain matters, the Chief Land Registrar. It was advised, however, that, despite its views, it could not give effect to them because the one-sixth fraction was fixed by Section 56 (5). My Lords, I do not weary your Lordships with argument for I feel that the recommendation of so powerful a Committee does not reed any further words of mine to commend it to you.
Subsection (4) clarifies the definition of contentious and non-contentious business. Clause 14 varies Section 72 of the principal Act. That Act enabled solicitors who had formerly been barristers to count as part of the qualifying time for holding certain offices the period during which they had been barristers. The Law Society feel, I think rightly, that while this provision in principle is correct, they should not he allowed to count time during which, though barristers, they were not in practice; and it is therefore proposed to limit the privilege to the time actually spent in practice in Chambers. I understand that the Bar Council think that, as drafted, tie clause may impose some hardship on those who practise in the Colonies but not in this country. I can assure the Bar Council that in Committee the Law Society would welcome any Amendments which would protect such barristers, provided that the principle on which the Amendment is based, as I have stated it to your Lordships, is maintained. Clause 15 enlarges the powers of the Council of the Law Society to co-opt on to its committees solicitors who are not actually members of the Council. My Lords, I do not think I need mention any other detailed provisions of the Bill. I have already detained your Lordships far too long, and I beg to move that the Bill be now read a second time.
§ Moved, That the Bill be now read 2a.—(Lord Cohen.)
§ 3.26 p.m.
§ LORD SILKIN
My Lords, I am sure the whole House will wish to congratulate the noble and learned Lord, Lord Cohen, 646 on having made his maiden speech in this House. It is a matter for argument as to whether indeed it is a maiden speech, because the noble and learned Lord has quite often spoken in this House, though not necessarily in the sort of capacity in which he has spoken to-day. It is therefore not surprising that he should have made his speech with the confidence, clarity and definiteness that he did. The last time I had the privilege of congratulating a noble Lord on having made his maiden speech was on the occasion when the noble and learned Viscount who sits on the Woolsack made his maiden speech. On that occasion, he was introduced and at once moved the Second Reading of the Housing Bill in a somewhat necessarily long, clear and concise speech. That was, of course, an important Bill, which was of interest to the whole community. I am sure that the noble aid learned Lord, Lord Cohen, will not suggest that this Bill is of equal interest in so wide a field, but it is nevertheless of interest to an important section of the community on whose activities I believe the commercial interests of the country and the interests of justice depend. It is therefore right that a Bill of this kind should receive the close scrutiny of Parliament. I hope that the noble and learned Lord will not mind if I subject this Bill to a certain amount of scrutiny.
On the whole, I think that the Bill is right, and I do not propose to criticise the general principles on which it has been drawn. I was glad to hear that it is the intention of the Law Society that in due course a consolidation measure shall be introduced. The various Solicitors Acts go back many years. To-day, it is exceedingly difficult, without a great deal of research, to ascertain whether any particular Bill or any particular portion of it is still in force, and it would be a great convenience, both to the profession and even more to the general public, to have the whole of the legislation relating to solicitors incorporated in one measure.
The noble and learned Lord, Lord Cohen, quite rightly said that the most important provision in the Bill is Clause 1, relating to the Compensation Fund. I certainly accept the need for a Compensation Fund, and do not in any way desire to discuss the principle. Nor do I wish to quarrel with the suggestion which he made, that the payment which was originally laid down in the 1941 Act, and which 647 was of necessity a guess in the dark, has been found to-day to be inadequate and in need of an increase. Last of all, I should not challenge the fact, even though I happen to be a member of that profession that there are a number of "black sheep" in the solicitors' profession. I believe I can truthfully say that in relation to the total the number of "black sheep" is no higher among solicitors, although they are very much more publicised, than in many other professions which I shall not name.
My criticism on this part of the Bill is of the way in which it is proposed to levy this Compensation Fund. With certain exceptions outlined by the noble and learned Lord—young solicitors or persons who have been in practice only a short time—a uniform rate of £5 a year is proposed. Nobody would wish to make heavy weather of a contribution of £5 a year, even though one might have thought it inequitable that a flat rate should be levied on all solicitors. It is proposed to take powers to increase the amount to £10 a year, and there is no reason to assume that it will not be increased to that figure. The noble and learned Lord pointed out that the additional £5 would inflict no particular hardship on anybody, particularly if the taxation factor is taken into account. It would be more correct, however, to take account of the total figure of £10. I will not pretend that even £10 a year, payable by a solicitor to this Compensation Fund, is ruinous, for it would be ridiculous to do so; but solicitors have to pay other fees, also. There is the annual certificate costing in the neighbourhood of £8 a year. Here another £10 a year is proposed. There must be very few professions (I am not sure whether or not the noble and learned Lord's own profession is one of them) where any annual contribution is required as a condition of being able to practise.
The noble and learned Lord referred to the suggestion that a levy might have been put on the profession on the basis of annual turnover. I thought he was rather sweeping in suggesting that firms with a large annual turnover are less likely to make default in payment than those with small annual turnover. After all, if a firm receiving large sums of money on behalf of its clients makes default, the consequences are likely to be much more serious and to impose a much 648 heavier burden on the Fund than would arise from the default of a smaller man. Without necessarily going to the length of pleading hardship on the small man, it appears grossly unfair to require the same fee of £10 a year from a man who may receive no money at all from his clients in the course of his work. It may not be necessary for him to receive clients' money. He may be a clerk engaged in work where clients' money is not involved; or he may be a man with a very small turnover. It seems unfair to demand from such a person the same amount as is demanded from a firm of solicitors with a turnover running into hundreds of thousands, possibly millions, of pounds—when I say "turnover," I mean, of course, money received on behalf of clients.
I view this matter from the ground of equity, of which the noble and learned Lord knows more than I do. It seems to me that it would be much more equitable that people entrusted with larger sums of money should make a greater contribution to this fund than people who are entrusted with small sums. If the matter were dealt with on that basis it would be unnecessary to make the assumption, which I think the noble and learned Lord has made without conclusive evidence, that people entrusted with larger sums of money are necessarily more honest and reliable than those entrusted with small sums.
I would at once admit that in the interests of simplicity of administration, the present scheme is far better than any other that could be devised. It is much simpler to say to a solicitor, "You pay £10 a year, whoever and whatever you are," than to attempt to assess his contribution in accordance with any kind of principle, but I see no great difficulty in assessing the contribution that a solicitor is required to make in accordance with the amount of money entrusted to him. After all, it is the law that every solicitor receiving money on behalf of clients must pay it into a separate account. He must not keep in that account any money which is not strictly clients' money. It would be quite simple, therefore, to get from the bank a certificate of the amount of money paid into the clients' account in the course of the year and to assess the solicitor's 649 amount. That would be perfectly equitable. It would get over the difficulty in regard to the contributions of young solicitors, for the assessment would be on the firm and the firm would have to pay.
I suggest to your Lordships that this method is one deserving of further consideration. I would not seek to reject the Bill on this ground, even though it is the most important provision in it, but I believe the Law Society have been too ready to take the easy line, administratively, without taking the question of equity fully into account. I hope the point will receive further consideration. Perhaps I should say that I am not unduly impressed by the fact that only eight solicitors have written letters. Solicitors are very keen on writing letters when they get paid for them, but I do not know whether a solicitor would feel it worth the postage to write a letter to the Law Society once that Society has appeared to have made up its mind. I do not want to enter into controversial internal questions. I will say only that the Society's machinery for informing itself of the views of members of the profession is not always as comprehensive as it might be.
I would turn now to one or two other clauses which could, perhaps, be dealt with by way of Amendment on Committee stage; but I am rather anxious not to have to put down Amendments to the Bill if that can be avoided. In so far as I do not refer to any particular clause I am in complete agreement with it. Your Lordships will remember that Clause 2 provides for the replacement of statutory provisions: by regulations. While none of us really likes regulations, all of us who have had any experience of administration are forced to resort to them. In opposition we make violent speeches, eloquent or otherwise, against them, but we employ them fairly freely when we come to introduce our own legislation. In the present instance, I agree that there is a case for repealing the meticulous restrictions upon solicitors, and for enabling the more elastic provision of regulations to be substituted, but I do not feel at all happy about the machinery for getting approval of these regulations.
In connection with the regulations with which we in this House are familiar, there is, first of all, a Statute which enables 650 regulations to be made and, as we have recently discovered in the ease of heroin, Ministers cannot go beyond the powers comprised in the Act. If they seek to make regulations beyond that, they may find the noble and learned Earl, Lord Jowitt, standing up and raising a question. 'That is one safeguard. The other safeguard is that either these regulations have to he approved by Parliament by Affirmative Resolution, or Parliament can disapprove of them by means of the Negative Resolution procedure. At any rate, it is possible for these regulations to come before Parliament and to be fully ventilated and discussed.
What is proposed here in Clause 2, however, is something quite different. It is proposed that all statutory provisions should go and that in their place regulations should be made. Those regulations need not be approved by anyone other than the Lord Chancellor, the Lord Chief Justice and the Master of the Rolls. Far be it from me to say that those three eminent jurists do not constitute a reasonable protection against manifestly unjust regulations—and, of course, there is the further safeguard that they have to be unanimous. What happens if they are not unanimous I do not know: I imagine that the regulations will not be passed. But I am concerned with the members of the public. These regulations will affect the public and affect the profession. None of these three eminent jurists is a member of the solicitors' profession, and the three of them will be faced with the draft regulations prepared by the Law Society with which they will be asked to concur. And there will be no voice critical of those regulations, no opportunity for anyone even to know of their existence. And once the regulations are approved, once they are concurred in by the three eminent jurists, there will be no opportunity for anyone to ask that they should be reconsidered.
Nor will there be any opportunity for anyone to make representations to the three noble and learned Lords before they concur. That is a travesty of the machinery which exists in this House for making regulations, yet that is what we are asked to substitute for the provisions that already exist in an Act of Parliament. I recognise the great convenience to the Law Society of having the flexibility and elasticity of regulations. I do not wish 651 anything I say to be regarded as opposition, but I feel that something more ought to go into the Bill by way of protection to the public, something designed to afford the public and the solicitors a full opportunity of making their views known before the regulations actually come into operation.
The next clause I want to refer to is Clause 13, which deals with remuneration of solicitors, and provides for the delivery of lump sum bills of costs even in contentious matters, in which at present that is not possible. I think that is all to the good. I believe that the ordinary member of the public does not understand the principles upon which a bill of costs is made up and he is inclined to jeer at the idea of paying 3s. 6d. for a letter, 6s. 8d. for an interview (I think those charges have now been increased by 50 per cent.), so much per seventy-two words for perusing a document, and so on. It is rather an archaic way of assessing the value of one's services, and I welcome any method designed to enable delivery of comprehensive bills—lump sum bills. The clause itself, however, is somewhat obscure, I feel. It is certainly not clear to me what are the rights of a person to whom such a bill is delivered.
In the first place, he has a month in which to say that he would like a detailed bill, but apparently he has another chance if, at the end of three months, an action is brought in respect of the bill. He can again say that he wants a detailed bill within a month, and that he wants the bill taxed; and the judge in such a case is to order that the bill shall be taxed. It seems to me that that matter is not very clear. I imagine that it would be difficult for a taxation officer to tax a bill unless he were given details. All I ask is that this particular provision in Clause 13 should be looked at again to see that it really is clear and that any obscurities which there may be in it are removed at the next stage of the Bill. I do not want to weary the House by going into details, but to me, as one who has been a practitioner for many years, both this clause and the rights of the client seem somewhat obscure. My own view of what this provision should be is that when delivery of a lump sum bill is made the client should be informed in terms that he has the right within a certain period (I do not mind what the 652 period is) to ask for a detailed bill, and that at the expiration of that period he should have no further right to demand it again if proceedings are taken. At present he appears to have the opportunity of two "bites." I suggest that, as a condition of giving him one "bite," it ought to be made clear to him what his rights are at the time when the bill is delivered.
Lastly—and this is only a small matter —I have a point on Clause 15, which concerns committees of the Council. Since the Law Society have thought it necessary to ask for a change in the law on this point, I should like to know why this provision has been found to be necessary. Clause 15 (1) (aa) states thatif more than one-third of the members of any committee are not members of the Council, no resolution of that committee shall be duly passed unless a majority of the members of the Council present shall have voted in favour of it.People who are not members of the Council of the Law Society are asked to serve on these committees. Possibly a large number may be asked to go on a committee because there are not sufficient numbers of the Council to man such a committee. Yet the Bill says here that, whatever their views may be, their votes will not count; that there must be a majority on the committee of members of the Council. That is rather humiliating to those who have been asked to serve on the committee. I do not know whether there are any precedents for it; I cannot think of any, and I should have thought it wholly unnecessary. If the Law Society really are timid about the voices of those whom they ask to serve on a committee, the remedy is to see that not more than one-third of the committee are co-opted members. These are the only points I wish to raise on the Bill. I hope that it will not be inferred from my comments that I am opposed to its general principle, but I thought it right, as one who has had some experience in these matters, to voice these criticisms, which I am sure will be considered before the next stage of the Bill.
§ 3.52 p.m.
§ LORD EVERSHED
My Lords, I hope that your Lordships will not think it presumptuous of me to address the House so soon after my introduction. Your Lordships will allow me, I know, on this occasion a strong feeling of diffidence, but there is a special connection between the 653 profession of solicitors and the Master of the Rolls—a connection not, indeed, attributable to the roll of solicitors, to which alone the Master of the Rolls has the right and duty to admit, but to the Rolls which form part of his official title. It is a statutory connection first established, I think, by Parliament in the year 1843. I should like to say to your Lordships that my own association with the Council of the Law Society during nearly six years as Master of the Rolls has given me a high respect for the zealous care with which the Society seeks to maintain the honour and to uphold and improve the standards of the profession, and also for the keen sense of responsibility towards the general public whom the profession serves. I think it right, too, that I should acknowledge, as the noble and learned Lord, Lord Cohen, told your Lordships, that in the ordinary course of my duties I was informed it advance of the proposed provisions of this Bill and expressed my personal approval of them, so far as they relate to my office.
These general observations, I think, are not irrelevant to this Bill. Hitherto, Parliament has thought it right to keep in its hands a rigid control of the exact requirements for admission as a solicitor. The solicitors' profession, like other institutions perhaps, has acquired gravity and responsibility with the 112 years that have elapsed since 1843; and it is my submission that the time has now come when these detailed matters concerning admission to the roll of solicitors, and in like manner the matters of detail concerning the applications for, and the forms of, practising certificates, ought properly to be left to the governance of a responsible profession. If the noble Lord, Lord Silkin, will allow me to say so, I am a little surprised that he, as a solicitor, has apparently so little confidence in the counsels of his own profession in this matter. As your Lordships have been told, the necessary regulations—and may I observe that in these days of National Service there is often the requirement of a certain flexibility in matters of articles and such like—have to be approved by what I may call the august triumvirate which has been referred to and which, as your Lordships see, has a kind of censorship concerning many aspects of the solicitor's profession and also a certain amount of experience of such matters. From personal knowledge I can say that the approval of the 654 three of us is not to be regarded as a "rubber-stamping" activity.
May I turn now to Clause 1 of the Bill, clearly the most significant of all the clauses. The clause, I apprehend, really involves two distinct questions: first, whether it is right that there should be a Compensation Fund at all, and, second, if so, how should the incidence of it be borne. The first question, I submit, admits of only one answer; and I think the noble Lord, Lord Silkin, is of the same opinion. If we as a nation pride ourselves upon our administration of the law, it is essential that the public generally should have confidence in the security as well as in the Integrity of the professions which administer the law. In this respect, after all, we are doing no other than has been done in the case of the comparable societies in Australia, South Africa, New Zealand, and indeed Scotland, as well as in many other countries. I should like to assure your Lordships that the reason for introducing this clause is not that those who have been called by the noble and learned Lord, Lord Cohen, the "black sheep" of the profession have increased or are increasing; indeed, I am happy to be able to tell your Lordships that the tendency is the other way. In a profession which numbers some 17,500 persons, the "black sheep" together constitute not more than a fraction of one-tenth of 1 per cent., although, perhaps due to the fall in the value of money, it is a fact that the amount of the depredations of these few bad men is apt to be large. In fact it has now been realised that the sums are too large to make the fund actuarily solvent in certainty at the present rate of compensation. Therefore, if the principle of a Compensation Fund is accepted, I suggest that it must be obvious arid right that the fund should be capable of performing the function for which it has been created.
There remains, however, the second question, which is perhaps more difficult: how should the obligation be spread? I agree with the noble Lord, Lord Silkin, that, ideally at any rate, there is a justice—indeed, an equity, if I may say so—in relating in some way the contributions to the ability of members of the profession to pay, so that those who make most out of the profession should contribute most to secure its 655 honour. But there are, I suggest, powerful, nay, compelling, arguments the other way. Of these so-called "black sheep" it is the fact that a high proportion are men who carry on business on their own—what are sometimes called sole partners; and it is also a fact that of the sole partners a high proportion are what one might call small men. It follows from that general proposition that there is at least a justice in relating the contribution to what is shown to be the greater risk. But the generalisation I have made, like other generalizations, is not, of course, universally true. I can myself think of men of my acquaintance, sole partners, who could not by any sensible use of language be called small men; and I can think also of two or more members of a firm to all of whom the appellation of small men might without injustice be applied.
If, therefore, the just rule is to relate the contributions to capacity, it will, so far as I can see, be necessary to have a full, close investigation of the earnings of every firm of solicitors in the country—and not on one occasion only, for earnings vary quite largely from one year to another. Now, my Lords, solicitors, like other members of the community, do not as a rule particularly like investigations into their earnings, and I am not quite sure that a proposal to relate the contributions to capacity would not also involve a consideration of outside private means. But unless the result were not to produce more injustices than it avoided, it would be necessary that the investigations should be of the closest and most thorough character; and the result would be, inevitably, an administrative task of such magnitude that the cost of the investigation itself would almost at once require an increase in the amount of contributions. A solicitor who was saved a few shillings as the result of such an investigation would find that his savings were offset by an increase in the contributions he was called upon to make. I therefore submit to your Lordships that, so long, at any rate, as the scale of contribution cannot exceed £10 per annum, less tax, and is payable only by solicitors with practising certificates who have already held six earlier practising certificates, administrative simplicity produces not only the most economical but also the most sensible and the most just result.
§ LORD SILKIN
I hope the noble and learned Lord will not mind me interrupting him in a maiden speech, but this is rather an unusual type of maiden speech, and I do not think he has quite grasped the proposal I made. I was not proposing a payment based on ability to pay, nor on earnings, but on the actual amount of clients' money received each year. The solicitor would be required to make a simple statement, certified by the bank, as to how much clients' money he had paid into his account in the course of the year, regardless of his profit.
§ LORD EVERSHED
I am sorry if I did not fully apprehend what was in the noble Lord's mind. I can see that an investigation limited to the amount of clients' money received might be simpler, but I would again observe that the amounts would be liable to vary considerably from one year to another; and in any case, an investigation of such a matter is necessarily expensive, to some extent. However, I will not pursue the matter further, having at any rate put to your Lordships some grounds which will, I hope, commend the measure to your Lordships as it stands.
I will detain your Lordships by reference to only one more clause—namely Clause 13, subsection (2) of which is designed, as your Lordships know, to enable a solicitor in contentious matters, as he was allowed to do twenty years ago in non-contentious matters, to deliver to his own client a lump sum bill for the costs of the work or services he has performed. I refer to this subsection partly because the noble Lord, Lord Silkin, mentioned it and partly because, in introducing this matter, the noble and learned Lord, Lord Cohen mentioned my name in connection with it, though in my capacity not as Master of Rolls but as Chairman of the Committee on Supreme Court Practice and Procedure. It is a fact that that Committee of twenty-four members—not all of them lawyers, and including among their number a Member of your Lordships' House, not a lawyer, but as wise as a lawyer—unanimously recommended this proposed change as just, both to the solicitor and to the client alike.
I would observe to your Lordships that the so-called Appendix M to the Rules of the Supreme Court contains in some 657 204 small detailed items a list of the charges which a solicitor can properly make to his own client in litigation. But I would observe also that in an ordinary law suit the amount of the costs covered by Appendix M would not in any case be greater than about 15 per cent. of the whole bill, the remainder being made up of disbursements and what is called the solicitor's instructions for brief, a discretionary item altogether outside the scope of Appendix M. It was the view of my Committee that the proposed change was just to the solicitor, because it relieved him of the somewhat derogatory task in every case of contriving—and I use the language of the Report—by reference to a number of mechanical jobs to fit his Bill into the straitjacket of Appendix M";and it was just to the client because it encouraged the solicitor to turn his attention much more to the quality of the services which he rendered than to the quantity of small jobs for which he might justifiably charge.
The proposal in the Bill, as I understand it, is that in the case of delivery of a lump sum bill the client shall have two distinct and successive rights. He may require, at any time within three months, provided that the writ or summons for payment has not earlier been issued, a detailed bill; and in that event the gross sum bill has no effect. But even after the three months have passed, if the solicitor sues for the lump sum, then within a month thereafter the court may, if it thinks that the client should be thus protected, require that the bill delivered should be taxed, though taxed as a gross sum. Perhaps I might add this comment. Upon this matter of solicitors' costs my Committee considered that we were not able to accept the view that an altogether different standard of charging might take the place of the present—for example, by reference to the time spent, as in the chartered accountants' profession, by principals or clerks on the clients' behalf. As your Lordships know, litigation has to follow defined steps prescribed by rules of court, and to such a proceeding it was the view of my Committee that methods of charging appropriate to chartered accountants or other professions would not be appropriate. I beg to support the Second Reading of the Bill.
§ 4.11 p.m.
§ THE LORD CHANCELLOR
My Lords, it is my first pleasant duty, and I am sure that I exorcise it on behalf of all your Lordships, to congratulate the noble and learned Lord, Lord Evershed, on the speech with which he has first addressed your Lordships. If your Lordships will forgive a brief personal intension, I may say that it is a particular pleasure to myself. Some years ago the noble Lord and I were undergraduates at the same college at the same time, and I hope your Lordships will think it is not unsuitable that I should convey your Lordships' congratulations this afternoon. I would also add that we do not merely congratulate the noble and learned Lord, but hope that the House will often have the advantage of hearing him again on, the variety of subjects upon which, with his experience and knowledge, he is so clearly entitled to speak.
I hope your Lordships will think it right that I should say a short word giving the views of Her Majesty's Government towards the Bill. We welcome the Bill as making useful amendments to the law relating to solicitors and, in particular, for the fact that when, as I hope it will, this Bill reaches the Statute Book, it will be much easier to consolidate the various Acts of Parliament relating to solicitors, which I think everyone will agree are now in a tangled state. I hesitate to come too closely into the discussion of Clause 1 with which the two noble Lords who preceded me have engaged themselves. As I understand it, there is no dispute at all upon two points: first, that the Compensation Fund should exist; and secondly, that at the present moment, by some method, it: should be increased so that there is no doubt that it will meet those very rare cases—I repeat with strength, very rare cases— when it is necessary to deal with solicitors who have fallen by the wayside. I am sure that we shall listen with interest to the development by the noble Lord, Lord Silkin, of the ideas which he has adumbrated this afternoon.
I want to say a word on the general legislative problem that the noble Lord, Lord Silkin, has raised with regard to the regulation-making powers under Clause 2. I agree with his general pronouncement that the question of subsidiary legislation is one that usually concerns an Opposition more closely than a Government. I think 659 that is a thrust which is perfectly justified. But I should put this to him on, I think, the broad and most serious aspect of this problem. Everyone agrees that it would be impossible to run a modern community and to provide for the various matters which have to be the subject of legislation if powers of regulation were not used. One has to grade the kinds of regulations and use the Parliamentary procedure which is appropriate to each one of them. What I should suggest to the noble Lord for his consideration—I put it no higher than that at the moment—is that in this field it would be useful to differentiate between regulations which really and fundamentally are concerned with domestic matters. I know the noble Lord knows the difficulty of drawing a line in every case, but as the general criterion, if they are really domestic matters, then, with all diffidence, I suggest that the judgment and criticism of the noble and learned Lords, the Lord Chief Justice, the Master of the Rolls, and myself, would be a sufficient protection. But I would say at once to the noble Lord, Lord Silkin, that that does not mean that I am not prepared to look at the Solicitors Act. 1932, and consider whether there are certain regulating powers which have a wider purview. It might well be that for them the procedure of making a statutory instrument with the appropriate Parliamentary protection was well worthy of our consideration.
As I have said already, it is hoped that there will be a Consolidation Bill with the improvements that modern Consolidation Bills contain. I think this is a subject we might look into with profit, as we are considering the framing of that Bill and I do not rule out any case where there is that wider outlook in the regulations from requiring the consideration which the noble Lord suggested. I say equally, on the other side, that it would be again endangering the Parliamentary machine by overwork if one related Parliamentary procedures to purely domestic matters.
I am not going to follow noble Lords who have already spoken in dealing with Clause 13 and the question of the lump sum bill, but to say only that, broadly, I approve of the proposals which the clause puts forward. I reserve for consideration at Committee stage the definition of "contentious matters." I 660 am not sure that it quite covers the various forms of arbitration which exist to-day. As I say, I should like to have another look at that matter, and we can consider it, if necessary, at a later stage in the Bill. Broadly, I should like to congratulate the Law Society on the good sense of the proposals that they have put forward. It is an unusual pleasure in one's speech to congratulate my noble and learned friend Lord Cohen on the maiden speech with which he introduced the Bill, and to say how fortunate the Law Society were in securing an advocate to put it forward so attractively to the House. There is only one other matter. I understand that the noble Lord, Lord Milner of Leeds, may be speaking. I hope that he will not think it discourteous on the part of one who has known him for many years if I do not hear the whole of his speech. It is only public duty that will call me away. I shall read it most carefully and consider every point that he has to make.
§ 4.20 p.m.
§ LORD DOUGLAS OF BARLOCH
My Lords, I do not want to detain your Lordships long, but there are one or two things I should like to say about this Bill. First of all, the Law Society are to be congratulated upon having such eminent sponsors of it. The Master of the Rolls appears to be a sponsor as well as the noble and learned Lord, Lord Cohen, and I might almost put the Lord Chancellor in that category also. Strange to say, they are not members of the solicitors' branch of the legal profession. Perhaps their commendation carries all the more weight upon that account. On the other hand, barristers do not always understand the intricacies of the other side of this profession. For example, I think the Master of the Rolls did not quite appreciate the point which my noble friend Lord Silkin was making. Whether it be agreed with or disagreed with, it was, in fact, a very simple proposition, for the reason that every solicitor is obliged by law to have his clients' account audited by a chartered accountant: therefore the facts, if it were necessary to certify them, could be certified automatically. However, I do not want to pursue that point, which is more of a Committee point.
I should like to emphasise that this Bill deals only with a small fraction and a 661 small aspect of the solicitors' profession. Unfortunately, it is calculated to give the impression that neglect of duty or misappropriation of clients' monies is quite a common event. That subject has occupied the major part of the discussion this afternoon. But that is to put matters in an entirely wrong perspective. I venture to say that the standard of honesty in the profession is at least as high as that in any other. Our standing is steadily rising every year because of an improving standard of qualification, of training, of education and of the whole environment in which a solicitor conducts his business.
The other qualification which I should like to make is that it is not fair to suggest that members of the public are ill-advised to consult firms of solicitors in which there is only a small number of partners or which are carried on by one solicitor aim e. There are a large number of such firms of solicitors in this country, and the number who have been guilty of defalcation is a small proportion of them. To suggest that the public, when they want to seek legal advice, should go to firms which are carrying on a large business with a large number of partners is unfair to those who are conducting respectable businesses, in many cases with a high degree of skill and professional attainment, although they do not happen to be members of large firms. Those points deserve to be stressed in order that the public should not get a wrong impression with regard to this matter or an exaggerated idea that they run greater risks in consulting a member of this profession than they do in consulting members of other professions.
More than that: there are very few professions in this country which have taken up the public-spirited, indeed the almost quixotic, view which this profession has of establishing a fund for the purpose of compensating those who by misfortune may have suffered. Very few professions indeed adopt that standard of conduct. It speaks highly for the public spirit of the Law Society and the members of the profession that they should undertake this burden entirely gratuitously, because, although it is statutory, it was introduced at the instigation of the Law Society and not of anybody else. 'They deserve credit for that and for the way in which this business has generally been handled.
§ 4.27 p.m.
§ LORD MILNER OF LEEDS
My Lords, may I say how much I agree with almost all that my noble friend Lord Douglas of Barloch has said. In particular, I hope I may be permitted to say—I believe I am the only member of the Council of the Law Society in either House—how much indebted the Society and the profession are to the noble and learned Lord, Lord Cohen, for introducing this Bill, and also to the noble and learned Lord, Lord Evershed, for supporting, it to-day on this rather notable occasion of his Introduction. I hope that, without impertinence, I may be permitted to pay another tribute to the noble and learned Lord, Lord Evershed, and to thank him, on behalf of both the profession and the public, for the great care and consideration with which he has carried out his many important duties affecting the profession of a solicitor. I know that the Law Society in particular have at all times had the advantage of and have appreciated his great wisdom and advice and have very willingly accepted his decisions, with the full knowledge that they are in the public interest and have been arrived at only after mature consideration.
My Lords, I need not keep your Lordships long, but there are one or two points to which I should like to refer. All those who have spoken, with the possible exception of my noble fiend Lord Silkin, are in favour of the Bill. Perhaps I may say a word or two in reply to my noble friend. The noble Lord, Lord Silkin, made one or two statements which were not strictly accurate. He said that the Council of the Law Society had taken this matter too easily, or something of that sort, implying that the profession had not been consulted. On the point which he pressed more particularly—the basis on which the proposed increased fee should be levied—I can assure him that that very point was considered at great length by the Council of the Law Society. After consultation—in which, I may say, the whole of the profession, or at any rate almost the whole, took part or had the opportunity of taking part—the original proposal was approved by, I think, the largest meeting that the profession ever held; and the proposal to adjust the amount to be paid to the Compensation Fund was considered with great care.
663 For a number of the reasons which have been advanced by the noble and learned Lords, Lord Cohen and Lord Evershed, and other reasons, it was decided that the flat rate (if it can be called a flat rate) was far and away the better approach. Obviously, there is no relation between the amount of money going through a solicitor's clients' account and the possibility, shall we say, of defalcation. It may well be that a one-man business or quite a small business may at one time or in one place have a much larger sum going through the clients' account than has a large firm. There is no relation between the two factors, and it would be quite impracticable in my view, notwithstanding the point made by my noble friend, Lord Douglas of Bar-loch, to base the contribution to the Compensation Fund on the amount going through a solicitor's clients' account. I have served on various committees of the Law Society Council and there have been cases where monies have not been paid by solicitors or their clerks or servants through the clients' account, and therefore the amount going through the clients' account might not be at all an appropriate criterion on which to fix the contribution to the fund.
Then, my noble friend seemed to think that on that and other points the machinery of the Law Society was not, I think he said, comprehensive enough to enable the profession to be fully consulted. I am sure that on consideration my noble friend will agree that that is not really the case. There are full opportunities for consultation, and of course every area in the country is represented on the Council of the Law Society. Meetings of that Council are held every fortnight; there are frequent meetings of the provincial law societies with the Law Society Council and the President and officials there is an annual conference, and so on. My noble friend is quite in error in supposing that there are not ample opportunities for representation and there is really no substance in the suggestion.
In the view of the Council, having taken into account all the factors which have been mentioned and which I need not repeat to your Lordships, it is necessary to have this increased contribution, mainly because it is most desirable to 664 have a reserve. The fund has no reserve at present. Supposing that one or two large claims came along, a difficult situation would arise. The fund is not administered merely as an insurance; it is administered with a view to upholding the honour and reputation of the profession, and those who administer it look at it from that point of view. I hope, therefore, that I may have disposed of the one or two points which were raised by my noble friend Lord Silkin in connection with Clause 1.
Then, with regard to the regulations clause, Clause 2, again I was a little surprised that my noble friend should raise that point, because, from my experience in another place when he was the Minister of Town and Country Planning I imagine that no man made more regulations than he did, although I think he would have been happier had more of them not had to be submitted for the approval of Parliament. But here we are dealing with quite a different position. These regulations deal with articles of clerkship and with attendances at courses on legal education, which include examinations and so forth, and the only proposal here is that those regulations, or regulations affecting those matters only, in the main, should be made after submission to the Lord Chancellor, the Lord Chief Justice and the Master of the Rolls. That triumvirate at present has duties of that nature to carry out under the existing legislation; but there the general rule is that when there is any difference of opinion, the view of two out of the three prevails. This Bill provides that the concurrence of all three is necessary, and therefore there is a much greater safeguard. If my noble friend will think a moment, those regulations do not really affect the public; they all affect the domestic apparatus of the Law Society and its members and those who are aspiring to be solicitors. For all those reasons I hope the House will eventually approve that provision.
Thirdly, my noble friend spoke about the rights of a client in connection with what solicitors call a lump sum bill. The Bill at present before your Lordships gives additional protection to a client. At present, it is quite true that if I deliver a lump sum bill I cannot sue on it, until I have delivered a detailed bill; but then the client has only one month, except in special circumstances, to object and to 665 tax. The provisions contained in Clause 13 of this Bill provide for three months during which a client may object to such a bill and require it to be detailed. Furthermore, if a solicitor sues on that bill, as my noble friend pointed out, the client has an additional bite, in that he his a further month's time—two bites in all, whereas at present he has only one bite. Therefore, the advantage is clearly with the client.
On the fourth and last point which my noble friend raised, your Lordships will remember that he complained that when gentlemen are co-opted on to a committee, this Bill provides not, as he said, that the votes of these co-opted members should not be counted, but thatif more than one-third of the members of any committee are not members of the Council, no resolution of that committee shall be duly passed until a majority of the members of the Council present shall have voted in favour of it.That seems to me a most reasonable provision. It would be absurd if co-opted members on a committee of the Law Society who were co-opted because of their special knowledge, perhaps in some special branch of the law, were able to carry decisions against the votes of members of the Council. Clearly, the decision should in the last resort remain with the elected members of the Council. My Lords, I hope that I have dealt, though I am afraid rather shortly and inadequately, with a number of points which have been raised, and that your Lordships will feel it right to give this Bill an unopposed Second Reading.
§ 4.38 p.m.
§ LORD COHEN
My Lords, the points that have been raised by the noble Lord, Lord Silkin, have been dealt with so adequately by the Master of the Rolls, the Lord Chancellor and Lord Milner of Leeds, that I do not think it would be right if I were to delay the House by a further exposition of the subject at this stage. I would only say that the various suggestions that have been made will be carefully considered, but I cannot pledge myself that they will necessarily be adopted.
I would add only one word. Lord Douglas of Barloch attributed—I do not know whether it was to me; I think it was to my noble and learned friend Lord Evershed—the remark that we had recommended that people should consult 666 large firms rather than sole solicitors. I am quite sure that nothing could have been further from our intention than to interfere in any way between the client and the solicitor of his choice. Our sole object was to point out that, in considering the suggestion that Lord Silkin had made as to the method of calculating the actual contribution, it was perhaps worth bearing in mind where in fact the few—as he said, the very few—cases of defaulting solicitors had mostly been found. We quite recognise that in many cases the client will prefer the sole solicitor who can conduct his work on his own and with whom the client is intimate, rather than the large firm where there is not the same aspect of intimacy. My Lords, with those few words, I commend the Bill to your Lordships.
§ On Question, Bill read 2a; and committed to a Committee of the Whole House.