HL Deb 06 February 1973 vol 338 cc1011-41

5.15 p.m.


My Lords, I beg to move that this Bill be now read a second time. The Bill is in very similar terms to that introduced in the last Session by my noble friend Lord Tangley who piloted it through with his usual skill and ability. It was endorsed by this House, but I am afraid it met an untimely death elsewhere. In introducing this Bill to-day and asking your Lordships to give it a Second Reading, I will not go through all the details once more because it is a collection of oddments, tidying up many matters which needed tidying up, and in a way it is not in good order because it is preparatory to a Consolidation Bill.

If I may, I will pick out the salient points and mention them this evening. The first is in respect of Clause 4. As Master of the Rolls, it is for me to determine the fee which is paid by every solicitor in order to be able to practice—for his practising certificate. Owing to inflation and the falling value of money, the limit which has been put on the fee hitherto is quite out of date. In 1965 there was power to increase the fee up to a maximum of £10. It has been increased to that sum, but it is very desirable that it should he increased further. The fee covers a multitude of activities which the Law Society undertake on behalf of the profession.

As your Lordships will realise, the number of those entering the profession, of those to be educated and taught their law, is increasing greatly. I may say that there are many young ladies entering the profession and they are very useful. The expenses on the education side are increasing greatly. Apart from that, on the professional purposes side the disciplinary committees need strengthening as complaints are made from time to time against individual solicitors. It is important that the profession should be able to expand if need be and not cut down its activities; and it is important that it should be possible for that to be done now. That is why I ask that the limit of £20 be removed and that, as Master of the Rolls, I may determine, with the concurrence of the noble and learned Lord, the Lord Chancellor, and the Lord Chief Justice what is a proper fee. Perhaps I may say that this is not such a burden to the profession as it might appear because, of course, the sum involved may be deducted for the purposes of taxation.

May I now turn to what is a new provision in the Bill. It is the provision whereby arrangements should be made requiring solicitors to insure against liability for negligence, and that proper provision should be made for insurance purposes. Dishonesty on the part of the solicitor is covered by another fund with which I shall deal later. Dishonesty is also dealt with by disciplinary proceedings, but negligence and liability for negligence is dealt with by the ordinary courts of law.

Unfortunately, in all professions people make mistakes, and the courts have to enforce liability for negligence. We have had of late in the courts a series of matters where, for instance, a widow, or an injured person who has suffered an accident and requires compensation, instructs solicitors to carry the case through, but the solicitors are so busy and so short staffed that it gets delayed. In quite a number of cases lately we have felt bound to strike out the actions because they have been so long delayed by the solicitors. So the unfortunate widow or the injured person has not a remedy against the employer or the negligent person. The complaint is really against the solicitor who delayed too long. That unfortunate person gets compensation from the solicitor in every case, I believe, but to cover it the solicitor must he insured against negligence. A large number do insure at the moment; but some do not. It ought to be the same in all professions. Barristers are now having to insure. The provision in Clause 7 is to enable the Law Society to insist as a condition of practising that the solicitor should be insured.

It is a matter of consideration for the moment as to what form the arrangements should take. It is suggested, on the one hand, that there should he an organisation within the Society itself, a kind of mutual insurance. Another suggestion is that there should be a block insurance whereby the Society, on behalf of all solicitors, insures with Lloyds, or one of the great companies. In any event, every solicitor should be insured with a proper company. Plans have not been worked out as to what is best, but what is proposed in Clause 7 is that power should be taken, and arrangements should be made, whereby liability for professional negligence—and that is the main object—should be covered by insurance.

I now turn to two other matters in the Bill in regard to the very rare cases when a solicitor has been guilty of dishonesty, or not keeping proper accounts, or of professional misconduct of some kind or other. To deal with cases of that kind we have at the moment the Disciplinary Committee. As Master of the Rolls, I appoint the members of that Disciplinary Committee. People at large think that that committee is just a committee of the Law Society. They think that the Law Society are prosecutors and judges in the same cause. They are quite wrong: it is a perfectly independent committee. As I say, the members are appointed by the Master of the Rolls. In the old days I used to appear before them, and a better and fairer tribunal I have never known. Now the proposal is that instead of being called a disciplinary committee it should be called a disciplinary tribunal so as to show that it is independent. Then, instead of the members being appointed just from the Council of the Law Society, which is a limited body of 60 or 70 solicitors, the Master of the Rolls should be able to select them from the whole body of solicitors, up to 15. Those provisions will, I hope, improve the tribunal in the eyes of the public at large. That is an important aspect of dealing with discipline.

The other aspect to which I would draw the attention of your Lordships is the Compensation Fund, available in cases—there are very few of them—where solicitors go off with the funds or are dishonest in some way. How is compensation to be afforded? This has always been a compensation fund: not an indemnity fund which has to cover everything in point of law, but a compensation fund in which the compensation is discretionary. That is built up by contributions which have been limited to £10 a head. One of the provisions of the Bill seeks to remove that limitation, again for the same reasons; that is, the differing values of money and to keep the fund solvent. We should have liked, and other people would like, it to be a real indemnity fund, but that cannot be done at present. There might be a claim for £1 million, which the fund could not meet. So while retaining its basis as a Compensation Fund, the first proposal I would put before your Lordships is to remove the limit of £10.

The other important matter on this Compensation Fund is one to which my noble and learned friend Lord Gardiner drew attention last time. He said: "The Law Society may refuse, without giving any rhyme or reason, to make compensation to a person who has lost money through a solicitor's dishonesty." He took the case of Mr. Hinds, who was charged in regard to the burglary at Maples. Mr. Hinds, in order to get defended, put a lot of money into the hands of a solicitor who made off with it, and Mr. Hinds was not defended properly. He never received compensation for the money which the solicitor had. My noble and learned friend Lord Gardiner said on the last occasion: "Reasons ought to be given, so that if compensation is not made the individual should know." After consideration, that is agreed to be the right thing, and in subsection (12) of Clause 11 provision is made for reasons to be given if an application for compensation is rejected. This is very proper. For instance, there was one case where someone wanted compensation because a stepmother had lent some money to her stepson, and it was a question whether it was really in the course of the practice or whether it was a private loan. So, I assure your Lordships that, if reasons are given, it is not only of value to the individuals refused but also, as I see it, to the courts. If the reasons given were unfounded, or if wrong considerations were taken into account or the right considerations were not taken into account, then the decision could he reviewed in a court of law. I hope that that amendment will achieve what my noble and learned friend Lord Gardiner sought.

My Lords, those are the main matters in this Bill, but there are two or three matters which my noble and learned friend the Lord Chancellor raised last time of interest to solicitors. Previously, in order to be a commissioner for oaths they had to pay a fee, and obtain all sorts of certificates, and so on, to qualify. As a small but useful provision, all solicitors will automatically in future be commissioners for oaths without having to go through all those formalities.

There are a number of other small matters. I ought to mention rather an interesting repeal. In the early Acts it was provided that it could be made compulsory for all solicitors to join the Law Society. I am told that that was proposed in 1939, the idea being that there could be a ballot of solicitors after the War to see whether or no more than two-thirds of them would want to make membership compulsory. Power was taken in that respect in Section 75 of the principal Act. But that is completely out of date; no one has ever sought to enforce it, nor do they seek to enforce it now. As a tidying-up matter, it has been proposed amongst the various amendments that that Section 75 should be repealed.

Those are the main matters in this Bill. There are small matters such as the removing of disqualifications on aliens to become solicitors. As long as they pass the examinations they can now be admitted. Various other small tidying-up matters were before your Lordships during the last Session and were all endorsed. I hope for the sake of all concerned that they will be acceptable to your Lordships and also to Members of another place. My Lords, I beg to move.

Moved, That the Bill be now read 2ª.—(Lord Denning.)

5.31 p.m.


My Lords, I am sure that the whole House will he grateful to the noble and learned Lord for reminding us in such clear terms of the provisions of a Bill which Your Lordships have already fully considered. It was before this House in March of last year and passed through all its stages here. Unfortunately, it did not go through the appropriate stages in another place, and therefore met with a rather untimely decease. At this stage I cannot help musing noon what seemed to be the very wise words of the noble and learned Lord the Lord Chancellor, that while it is not for us to criticise the proceedings in another place, this is a Bill that I think all of us very much want to see on the Statute Book. I should like, if I may, to associate myself from this side of your Lordships' House with that wish. I hope that on this occasion the Bill meets with better fortune and finds its place as part of our Statute legislation. After all, if one looks at the substance of what we are debating this afternoon, does it not come to this: Here is a great profession, the proper conduct and well-being of which is fundamental to our liberties and to that principle of the rule of law which is so utterly indispensable to our democracy. Possibly one of the slightly disquieting features of the present scene is the tendency on the part of some persons to think that the law can on occasions be flouted. That I would personally regard as altogether deplorable, and a Bill of this sort which goes to maintain and support the high traditions of our legal professions—I use the word professions with an "s"—is of the utmost importance in the very challenging scene of to-day's events.

The profession has voluntarily, under the terms of this Bill, submitted itself to a most draconian system of control. This is a system, set out in the Schedule, which is not designed to protect the profession but to protect those who may have recourse to it, in order to utilise its services against malpractice in the profession. We should be grateful to the profession for so willingly putting upon itself that heavy and effective system of control, and I hope that is a consideration which may be borne in mind when this Bill proceeds, as I hope after to-day it will, having received a Second Reading in your Lordships' House, to its further stages.

If I may, I should like once more (having done it on a previous occasion) to thank the Law Society for placing in my hands extremely valuable material to enable me to make what I hope I may say is a thorough study of the present Bill. I would not seek, nor did the noble and learned Lord, except in somewhat summary form, to traverse again all the provisions of this Bill, because your Lordships have already considered them. In the few remarks that I propose to make to your Lorclships' House I should like, if I may, to seek to address myself purely to the changes in the terms of the Bill that have been made since it was last before your Lordships. It is "an ill wind that blows nobody any good", and perhaps we may think ourselves fortunate in that since the Bill was last before this House some useful and important changes have been made. I should like to dwell for a moment or so upon those changes and to put one or two questions to the noble and learned Lord who introduced the Bill so very clearly to your Lordships.

First, the old Clause 7 has gone. That was a useful clause which dealt with the position of solicitors as justices of the peace. It has been removed, as I understand it, because it has been transferred to another Bill. It is not dead—on the contrary, it is very much alive—but it has changed its lodging. In place of the old Clause 7 is the new Clause 7, which at present appears in this Bill, and to which the noble and learned Lord made reference—the provision which requires that there shall be, if I may use general terms, a satisfactory and comprehensive system of insurance in operation to cover what in Clause 7 is described as "professional liability of solicitors". I will not trouble your Lordships with details of the four separate schemes which are proposed. I would have no kind of criticism of them at all. It has been my lot on very many occasions in the past to study these policies and to give thought to the position of solicitors against whom claims are brought.

I would, if I may, put to the noble and learned Lord just one question from these Benches. The liability against which the solicitor is called upon in one of the four alternative methods to see that he is properly insured is described baldly as "professional liability". I suppose one could argue that it is a professional liability of a solicitor to pay the rent of the office in which he carries on his practice or to pay the salary of his employees, whom he employs for the purpose of his practice: that is in a sense a professional liability. Obviously that is not intended, I should have thought, to be covered by the terms of Clause 7; and possibly the noble and learned Lord may feel it desirable to give some further thought to those words. They do not appear for the first time in this Bill. I believe they made an earlier appearance in a Bill of 1957. Therefore they are words not of first arrival here and have no doubt been carefully scanned and considered on previous occasions. However, there is the problem I pose: is that language wholly suitable for the purpose for which it is embodied in Clause 7 of this Bill?

A person who resorts to a solicitor and with regard to whose business the solicitor acts negligently in one of the dozens of different ways in which it is awfully difficult sometimes to avoid being negligent with very little blame, but simply because the law is so extremely difficult and complex that it is difficult always to avoid making decisions which on subsequent review could be said to be open to criticism—such a person therefore has a claim against a solicitor in respect of, for example, negligence (and I suppose it would clearly include dishonesty on the part of his servants or his employees) and can say to himself, "I insist on having, and I am sure that if I establish my claim in the courts I shall receive, the full amount of the loss I have sustained through this breach of duty on behalf of my solicitor." That I should have thought was an extremely wise provision. Most solicitors are at this moment insured with reputable insurance companies against that type of negligence. Nevertheless, this over-riding clause which places this general liability on solicitors, and makes proper insurance a condition of their obtaining a practising certificate, is to be greatly welcomed.

My noble and learned friend Lord Gardiner is very anxious about the provision of Clause 11 which deals with compensation funds. When the Bill was last before your Lordships' House my noble and learned friend addressed a very powerful plea to your Lordships that the Compensation Fund should be an indemnity fund. A difficulty in the way of that proposal was stressed by the noble and learned Lord, Lord Denning. It is difficult to conceive of a compensation fund of such magnitude that it could provide adequate relief in the case of an enormous loss. Solicitors deal with matters of the greatest importance, and the advice they give frequently has the result of influencing enormous movements of money one way or the other. There may be serious loss. I always find the arguments of my noble and learned friend extremely convincing, but on this occasion he did not carry me with him.

The provisions of Clause 11 are extremely generously drafted. The claimant must be a person who either has suffered, or is likely to suffer, loss as the result of dishonesty or failure to account. That is generous. The claimant who has suffered loss need not be in a position to be able conclusively to establish beyond all doubt in a court that he has sustained that loss. There is a discretion in the Society to award him compensation out of the funds even if he may not feel inclined to go to the full length of seeking to establish his claim in a court, and seek payment to the full amount of it. It is a compromise situation and I would have thought it to be extremely useful. I believe history has shown it to be extremely useful in helping people who otherwise, if they had to establish that claim, might have felt hesitation about making the attempt. There is great value in a compensation fund in the form in which it is embodied in Clause 11 of the Bill.

The noble and learned Lord reminded us that one of the changes in Clause 11 is the introduction of subsection (12)—in effect a compromise. One of the proposals made in an article read out by my noble and learned friend Lord Gardiner was that at least the Society should be compelled to state what its reasons were if it refused to make a grant out of the Compensation Fund. Subsection (12) now requires them so to do. I had it in mind to ask the noble and learned Lord—and he has almost answered in advance my question—what the legal effect of subsection (12) would be. It has always been said that where there is a discretion vested in a public body, or officer, he must exercise that discretion, and in exercising the discretion take into account that which is relevant to the exercise of his discretion, and must exclude matters which could not reasonably be properly taken into account.

The classic example is given that he must not decide against an applicant because he does not like the colour of the applicant's hair. The result of including subsection (12) in Clause 11 is that if it should appear in the reasons which now have to be given that the Society has taken into account matters which are improper and irrelevant to the exercise of discretion, then if an application were made to the Divisional Court, the Court could order mandamus, and order the Society to address itself to the question of discretion, limiting its consideration to those matters which could properly form the grounds for the exercise of a discretion. I am glad to see the noble and learned Lord nodding his head—I think I have interpreted that correctly.

I do not want to detain your Lordships much longer. The only other major change is the annulment of Section 5 of the Solicitors' Act 1957, to which the noble and learned Lord made reference; namely, the provision, as he said, that solicitors must join the Law Society if, on a ballot, it is shown that two-thirds of the profession are in favour of their so doing. Three-quarters of the profession already belong to the Society, but no ballot has taken place. There is no feeling in the profession that there should be this compulsory membership, and Section 75 of the 1957 Act is, to all intents and purposes, a dead letter. Speaking as one who is outside the profession, I should be perfectly happy and content to accept the profession's view about that. I am ready and content to see that section go.

I would ask the noble and learned Lord to put before the House, if he has this at his disposal, knowledge of the origin of that section. What was the idea behind it? I gather it found its way into legislation as early as 1941, and has lain as a dead letter ever since. Prima facie there does not seem to be a great deal of point in making membership of the Society compulsory. I wondered whether the noble and learned Lord could tell us what motive might have been in the minds of those who originally conjured up and inserted the clause into our legislation. That might assist us to form a more confident view as to the proposal now to annul that section.

One other section deals with costs in the case of an order being made with regard to the employment of a clerk. It slightly enlarges the power of the court to grant costs, but I do not think I need trouble your Lordships by referring to that. Those are the changes. The Bill as it stands is a very good one indeed. I hope that my noble and learned friend Lord Gardiner may feel more content now that we have subsection (12) of Clause 11. I hope that your Lordships may feel not too great a difficulty in giving the Bill a Second Reading to-day.

5.48 p.m.


My Lords, I hesitated to intervene in this debate in the elevated and distinguished company of the other noble Lords on the list of speakers, but, being a solicitor who has been in practice for something like forty years, it might be forgiveable if I made one or two comments. The points I want to make are those that have been made to me by the British Legal Association. I should like to make it plain that I am not speaking here to-night as a spokesman for that Association. They have raised some questions on this Bill which are worthy of consideration and on which the noble and learned Lord, Lord Denning, may be able to give us some reassurance when he comes to reply. Curiously enough, nearly all the points, except two, that I want to refer to are the very matters to which the noble and learned Lord has drawn particular attention. Perhaps I might dispose of two points to which he has not referred. The first concerns Clause 3—and this is not a contentious matter. It is a question whether the wording of this clause, and in particular subsection (3), is the best that can be achieved. This subsection makes it possible for a solicitor to apply to the Law Society for the removal of his name from the roll. It also provides that a solicitor who has had his name removed in that way on application can subsequently apply to the Society to have it reinstated on the roll.

Subsection (3) goes on to provide: An appeal shall lie to the Master of the Rolls against any refusal or neglect by the Society to comply with an application… of either kind. Then it says: On an appeal under this subsection the Master of the Rolls may do various things. He may: (a) confirm the refusal; or (b) direct the Society to comply with the application on payment of the fee by the applicant; or (c) direct the Society not to comply with the application; or (d) make such other order as he may think fit. I am only raising the question as to whether all that is really necessary. Would not the matter be completely and satisfactorily dealt with if that final part of subsection (3) were to read in this way: On an appeal under this subsection the Master of the Rolls may make such order as he may think fit"? I put that forward only as a tidying up of the measure. There may be some objection to it, but if there is no objection I suggest it would be an improvement.

May I turn from that to the next clause, Clause 4? This is the clause which removes the limit of £20 as the fee to be paid on taking out a practising certificate. May I, in referring to that, couple with it another matter which was mentioned by the noble and learned Lord, Lord Denning, and that is that under Schedule 3, Part I, we have the repeal of Section 75 of the principal Act, the provision whereby it might have been possible, after certain procedures had been gone through and after a poll had been held, for it to be compulsory for solicitors to be members of the Law Society. The noble and learned Lord has reminded us that that is now taken away and has been scrapped.

It might appear at first that both these proposals—to remove the limit on the practising certificate fee and the proposal to do away with this useless procedure for having a poll—are unrelated and that they are indeed innocuous. But what has caused a certain amount of—I will not say alarm (that would be to be putting it too high) but concern among some of the people with whom I have been in touch is that in his annual report to the Law Society last year by the treasurer of the Law Society, he disclosed that he was going to suggest for the consideration of the Council of the Society that there should be an adjustment of the practising certificate fee and the average subscription rate to the Society as a member, so that any practising solicitor would be entitled to membership of the Society without further payment of an annual subscription.

What does that mean? As I see it, it means that what is being suggested as a possibility is that the Law Society should fix a certain fee as being the fee payable to them for taking out a practising certificate; everybody, every solicitor, whether a member of the Law Society or not, would of course be obliged to pay that in order to get into practice; and that person would automatically, if he wished, on paying that fee, become a member of the Society. There are some solicitors who do not want to be members of the Law Society, but if this proposal were to be put into effect the result would be that if a solicitor paid the comprehensive fee to obtain a practising certificate but did not want to have the benefits of being a member of the Law Society, he would in fact by paying a subsidy to those people who did want to become members of the Law Society. Alternatively, if the payment of the all-in fee is automatically to include membership of the Law Society, then indeed you are making it compulsory to belong to the Law Society by the back door. I should be very grateful if the noble and learned Lord could give us some reassurance on that flatter because it has been causing some concern.

May I now go on to another of the clauses mentioned by the noble and learned Lord, and that is Clause 7, and in particular Clause 7(2). There has already been some reference to this. After we have arrived at the principle that it is desirable and indeed necessary that all solicitors should be adequately and properly insured against claims for professional negligence, a principle from which nobody will dissent, it strikes me as a little odd that instead of carrying through an enactment to set up some clear scheme for meeting that situation, all that the Bill does in Clause 7(2) is to provide a variety of choices as to the way in which this might be done. That may be all right, and it may be better to leave it flexible in that way, but those with whom I have been consulting have two reservations about the method that has been adopted.

One of the reservations is this: Where the Law Society and the Master of the Rolls proceeded under any of these alternative schemes, might it mean in some cases, particularly under subsection (2)(d), that solicitors might, under the regulations, be required to insure with one particular or a few particular selected institutions? I should have thought that there were obvious objections to that, if only on the grounds that it would be quite wrong that any particular institution should have a monopoly, or a near monopoly of this kind of business. But the second difficulty or concern we have is a little more important. What the noble and learned Lord has already said, for which I am grateful, about the new disciplinary tribunal being a more independent body—independent of the Law Society, that is to say—than the old disciplinary committee, goes some way to meet the point I want to make, but I do not think it goes all the way.

The point I want to make is that if the fund is administered directly by the Law Society—the fund, that is, under paragraph (a)—or even indirectly, when a solicitor is dealing with the fund, having had a claim or a potential claim made against him, may he not be obliged to disclose to the Law Society, in its capacity as the administrator of the fund, matters which may be the concern of the Law Society in so far as they are participants in the disciplinary tribunal? I realise that it is much better that the disciplinary tribunal should not be made up solely of members of the Council of the Law Society; but I do not read in the Bill anything which says that a substantial proportion of the membership of the disciplinary tribunal may not in fact be members of the Council of the Law Society. So they may in one capacity (in their capacity as members of the disciplinary tribunal) get to know of matters which should be confidential between the individual solicitor and his insurance concern. There is quite an important point here: that there should be absolute confidentiality between a solicitor who is confronted with a negligence claim and the people with whom he is insured.

If I may hasten on (I apologise for taking so long) my next point concerns Clause 11, which is the compensation clause, and the matter to which the noble and learned Lord has referred. In subsection (1) we are abandoning the maximum limit of the levy on each solicitor for this Compensation Fund of £10; and for the future there will be no limit. As I understand it, it will be within the authority of the Law Society, with the approval of the Master of the Rolls, to fix such figure as they think fit. It strikes me as a little odd that we should not fix a new figure—a better, higher figure. I recognise the importance of getting rid of the limit of £10 in these inflationary days, but if it was right to fix a limit in the earlier Act why is it wrong to fix any limit now? Perhaps more important than that, might not the Law Society be tempted, if they thought fit, to put a levy at a higher rate than is indeed necessary, and what protection has the individual solicitor against that being done? I apprehend that it may be said, "You need not worry about that because the amount of the levy will be determined upon an actuarial basis". If that is so, I can only ask the noble and learned Lord whether it would not be possible to say so in the Bill and to make it clear that that levy would have to be worked out, not by the Law Society, so to speak, out of the air, but upon an actuarial basis, and there might be something about the procedure by which that was to be done.

My last point concerns something which has not been mentioned so far, namely Clause 20(2). This provides that This Act shall come into operation on such day as the Lord Chancellor may by order made by statutory instrument appoint and different dates may be so appointed for different provisions of this Act. I recognise that this procedure by which it is left to a Minister or to the Lord Chancellor to appoint the date at which different Parts of an Act of Parliament should come into effect is common practice in these days, but I think a not unimportant constitutional point is involved here. Supposing that in the course of the passage of the Bill through this House—and I earnestly hope that it will go through this House—an Amendment should be carried, possibly against the advice of the noble and learned Lord, the Lord Chancellor, and something is done which he considers to be unwise and inappropriate, would it not then be possible for him, if he were so minded, simply not to bring that particular clause or Amendment into effect?

It may be said, of course, that the noble and learned Lord would never dream of doing any such thing, but whether he or any Lord Chancellor would dream of doing it is not really the point: the point is whether the noble and learned Lord, the Lord Chancellor, should be given the power to thwart the declared wishes of Parliament. I suggest that this is a point of some constitutional importance, and indeed it may be a wider point than the point which is raised under this clause in this Bill. My Lords, I apologise for taking up so much of your Lordships' time.

6.5 p.m.


My Lords, I should first like to congratulate the noble and learned Lord on the manner in which he has introduced the Bill this afternoon. We have had long debates before on the substance of the Bill which passed through this House and which did not receive a Second Reading in the other Chamber. Consequently, I think it was appropriate that the matters that were dealt with by the noble and learned Lord, the Master of the Rolls, were, in the main, matters which were different in effect from those which had been contained in the previous Bill.

I should like to say, first, that some points have been raised which seem to me to be very easily answered. For example, the question of bringing into effect the provision that everybody concerned should be a member of the Law Society. This is a provision which was based upon an Act which was passed, I think, in 1939 or 1940. That is over thirty years ago, and it has never been put into effect; nobody has thought of utilising that opportunity of compelling people. As an old member of the Committee which deals with consolidation, I should have thought that it might even come within the province of the Committee itself, when it comes to a question of consolidation, to decide whether that provision was not obsolete, or so unused as to justify the Committee itself deciding that a measure of that description should no longer be on the Statute Book. Indeed, the whole purpose of this Bill is to provide for the consolidating of the Acts which prevail at present, with such modifications as are apparent or should be introduced in order to bring the law up to date so far as the subject matter is concerned.

I think it is most important that people should realise that a Bill of this nature, as has already been stated, is not a Bill to protect the legal profession against any abuses. On the contrary, the Bill itself places heavy responsibilities on the members of the profession, and the members of the profession are quite prepared to accept the onus, because in fact it is only on those—and they are very few compared with the large number of solicitors in practice—who transgress against the law and the practice of the profession. The profession itself is jealous about its standing and its integrity and the regard that people should have for its ability to perform very important work for individuals, irrespective of the amounts involved, because a small amount is just as important to the individual who is concerned, as a large amount.

In my view, every individual who goes to a solicitor, whether he places a few pounds in that solicitor's hands or whether it be millions of pounds, should feel that he can rely on that solicitor. Indeed people do not realise that the profession, deals with many thousands of millions of pounds which are placed in its hands, and placed with a knowledge that the solicitor concerned will safeguard the interests of the client and will see to it that the monies are properly used in accordance with the requirements of the client. In my view it is important that we should emphasise that, because it is not known to the man in the street; it is not known to many people who ought to know better and who are constantly criticising the profession. It should be understood that here is a profession which deals with the interests of individuals and with vast sums of money in the course of its activities and which is prepared to have proper and reasonable precautions introduced into the Statute to protect the profession itself as well as the community against abuse. I therefore welcome this Bill.

Many of the points that have been raised so far were dealt with by the noble and learned Lord in his introductory remarks, including the matters raised by Clauses 7 and 11. I appreciate the points raised by my noble friend Lord Stow Hill, and I suggest to him that the position has already been dealt with reasonably satisfactorily. Consider, for example, the question of compensation. The possibility of fixing a limit has been raised. How could a limit possibly be fixed for a long period? Not only do circumstances change, but so do the calls that are made on the profession for any wrongdoings or defects.

Again, I emphasise that of the 18,000 or more practising solicitors it is rare to find one going astray. We are, however, anxious to protect our clients and I would therefore find it difficult to consider fixing a limit for compensation. I urge my noble friend Lord Foot to accept that discretion must reside in someone. Parliament cannot constantly be approached for fresh provisions to be made. In any event, I believe that everything is safeguarded by the fact that the Master of the Rolls has a say in these matters, and he is not likely to deal lightly with an application for an unreasonable sum.

The question of reasonableness in refusing compensation has already been dealt with. The courts will themselves be fully entitled to go into this matter and I cannot conceive that there could be an unreasonable reason, if I may put it that way, arising from the refusal of compensation, and at this stage I do not think we need worry about this point very much. We can look into it further in Committee.

It should also be made clear that the Disciplinary Committee will now be a Tribunal. I am glad that the name is being changed, because those of us who have had experience of these issues, particularly in another place, know very well that there is misunderstanding about the manner in which the Law Society deals with complaints which come to it. It is important that one should give one's experiences when considering a Bill of this nature. For 30 years I was a Member of the other House and during that time, through all the surgeries, letters and other representations with which one deals, I do not think I received more than one complaint a year, if that, in respect of an action which had been taken by a firm of solicitors and which the client thought was unreasonable or considered that in it there had been negligence.

It is natural that in some cases, particularly when a case has been lost, the person concerned may attribute it directly to his solicitor or barrister and say that he has been negligent. I do not say that this happens in a great many cases, but it is bound to happen in some. Indeed, if two barristers in a case happen to walk away together someone is likely to come to the conclusion that they are "cutting up" the client. This is of course nonsense, but I have had such an experience and I am sure that other noble Lords know this only too well.

If we are setting up a body which will be appointed by the Master of the Rolls himself, I see no reason why anyone should complain. Certainly the Master of the Rolls has no interest in the matter, and I ask my noble friend Lord Foot to accept that there should be no cause for complaint about members of the Council of the Law Society being on this Committee. After all, the members of the Council are elected in a democratic way and the members of the Law Society have some say in these matters—and in most cases they have a considerable say.

I do not propose to deal with any of the other points that have been raised. I assume that in Committee some Amend ments will be proposed and that that will give us an opportunity to deal with ancillary items. I should like the House to give hearty support to this Bill, recognising that it is brought forward for the protection of the public against the very few solicitors who go wrong.

6.18 p.m.


My Lords, when a similar Bill came before your Lordships' House last year, I took the point that I thought that if a payment from the Compensation Fund was refused the Council should give the reasons for their decision. I am therefore grateful to them for Clause 11(12) which accepts that point. I also took two other points. First, I said that I shared the view of the late Lord Mancroft, the father of the present noble Lord, Lord Mancroft, which he expressed in 1940 when this Fund was started, that it should be an indemnity fund, the difference, as your Lordships will appreciate, being that with an indemnity fund the client has a legal right whereas with a compensation fund everything is ex gratia and he has no legal right at all. The only objection that I have heard to this view is that it might be too expensive. What would happen if there was a claim on an indemnity fund for £1 million? This question has regularly been asked, but I should have thought that that could have been met quite easily either by providing a maximum sum which would be paid out in any one case or by the Council insuring against large claims of that kind.

This is, after all, a profession which has a great reputation and I believe that it would be in their interest if they could say, as every New Zealand solicitor can say, "You need never worry about handing over any of your money to a solicitor, because in the highly unlikely event of his making off with it you would have a legal right to be indemnified". If New Zealand solicitors can do that, I do not quite follow why the solicitors of England and Wales cannot do it, and I think I am right in saying that the solicitors of New South Wales are in exactly the same position.


My Lords, would the noble and learned Lord forgive me for interrupting? How does he envisage the position if a limit is put on the amount that is to be paid? How is that limit to be put on? Does that not mean that in fact a person has not been indemnified? He has only been indemnified to an extent which is possible through certain financial funds which may be available.


My Lords, I do not think, with respect, that any ordinary person—I am thinking of the ordinary family person—is going to be very much worried if he is told: "Don't worry about handing your money to a solicitor because if he embezzles it you will be indemnified up to £100,000". It might affect some very rich person, perhaps, but not any ordinary person.

Secondly, I have never been very happy about the degree of discretion. It has been suggested that because the Law Society have a discretion, that means in practice that they can pay although the claim does not strictly fall within the provision. But it is in fact the opposite. There is no right to pay out of the fund. The Council have no right to pay at all unless—and I leave out the words which are immaterial: … the council… are satisfied that a person has suffered… loss in consequence of dishonesty on the part of a solicitor.… So they cannot pay unless they are satisfied about that. It is only at that point that a discretion arises and the discretion is simply a discretion not to pay. They can only pay if they are satisfied that a person has suffered or is likely to suffer loss in consequence of dishonesty on the part of a solicitor … the Society may, if the Council think fit, make to that person a grant. It is simply a discretion not to pay.

I have no intention of putting down any Amendment at the Committee stage of the Bill, or of pressing either of these points any further, because I do not think that that would be fair to the Law Society. I feel that any Member introducing a Private Member's Bill (and particularly perhaps one affecting the Law Society) is in a difficult position in this House. After all, if there is a Private Member's Bill in this House and if the principle of the Bill is accepted at Second Reading, this House then takes a great deal of trouble at the Committee stage to get the Bill right. They have a further opportunity at the Report stage and they give it a Third Reading only if this House thinks that it is a Bill which ought to pass into law. It then goes to the other place where if one honourable) Member says, "Object!", it means that it goes over to another week. That can go on week after week and it has no preference whatever over a Bill sought to be introduced by a Member of the other place at the same time.

May I remind your Lordships of a vivid example? The noble and learned Lord, Lord Denning, will remember that there was a time when his court decided that it was not right that a husband who deserted his wife should turn his wife and children out of the matrimonial home to go and live there with his mistress, taking the deserted wife's equity in the matrimonial home. That view seemed to me obviously right, though I was unsure myself of what its legal basis was. But if the Court of Appeal said so, who was I to say anything to the contrary? After two or three years a case of that kind came before your Lordships' House in its judicial capacity and they said that although it was desirable that the court should have such a power, in fact it had not. They said they could not legislate, but they hoped that Parliament, with all convenient speed, would give the court such a power. My noble friend Lady Summerskill then introduced the Matrimonial Homes Bill which, not having been drafted by a Parliamentary draftsman, was frankly not acceptable. The Law Commission however, as your Lordships may know, have a "red flag" department, as they call it, for dealing quickly with something urgent. So I waved my red flag and said, "You must redraft this and get it through." That we did and a great deal of trouble was taken in this House to get it right. But when on December 9, 1966, it got to the other place, one honourable Member said, "Object!";so it went over to December 16 when the same honourable Member said "Object!". It went over to January 27, 1967, when the same honourable Member said "Object!". He said it again on February 3; he said it again on February 10; he said it again on February 17; he said it again on February 24; he said it again on March 3; he said it again on March 10; and he said it again on March 17. I said to my noble friend "I am afraid we have 'had' it". But, I had reckoned without the forces of nature, because when for the eleventh time the Second Reading was moved on April 7, there was dead silence. The honourable gentleman had caught 'flu.

The question which I venture to ask your Lordships to consider is: is this the sensible way for Parliament to proceed? Is it right, when this House has taken a great deal of trouble to get a Bill right, that it should have no preference over a Bill, as it were just starting, in the other place. It gets there when Private Members' time has finished. But in point of fact, the other place, towards the end of a Session, is much less busy as all the pressure is then on us. Would it not be right that Private Bills from your Lordships' House should have some arrangement under which, albeit a limited number, could be taken in the other place towards the end of a Session? Of course I do not intend to be critical of the other place. Their procedure is entirely a matter for them. I am wondering whether our Procedure Committee should not consider this question and, if they think it right, approach the authorities of the other House.

The Law Society is perhaps particularly vulnerable, because that has always been a Private Member's Bill and they are always open to pressure in the sense that they know that any one Member of the other place can stop their Bills going through. The alternative suggestion which I respectfully make to the noble and learned Lord, the Lord Chancellor, is that if that suggestion proves impracticable, has the time perhaps come when Law Society Bills should be Government Bills? The Law Society cannot put through a Bill—to be practicable—if the Lord Chancellor says, "I cannot possibly agree to Clause 10, and the Government could not allow it to become law." Obviously then the Law Society has to drop it, and in practice Law Society Bills, once the Lord Chancellor has approved of them, are always informally supported by the Government. Having been in office, I appreciate that any suggestion that Government time should be spent on something on which it has not been spent before will not be too favourably received; but if this Bill were to be hung up again in the other place this year and it was impossible to arrange for alternative proceedings in the other place, I should hope that the suggestion which I have made might at least receive the consideration of the noble and learned Lord, the Lord Chancellor. My Lords, having said that, I wish the Bill well and I hope that it will pass.


My Lords, before the noble and learned Lord sits down, may I ask him to make a further suggestion to the Government? With long experience in the other place, I know that if the Government are determined that a Bill shall go through, they have ways and means by which they may be able to persuade anybody who says "Object!" not to object. That has been done on previous occasions. They certainly have the main power in these matters because in most cases of objection I am sure it is not a question of Party politics; it is the Government who see to it that somebody objects.


My Lords, if my noble friend wants me to comment on that, may I say that I can well understand that the Government are able in the other place to bring pressure to bear on their own Members; but, with great respect, I do not see what pressure they can bring to bear on a Member of the Opposition.

6.29 p.m.


My Lords, perhaps I ought to say something about this important Bill, although the noble and learned Lord the Master of the Rolls, while tearing himself away from the exciting serial, viewing films on television and reversing his own judgments, has done the House a very great service by bringing forward this Bill so lucidly this afternoon. I know the House would like me to express our genuine gratitude to him. As he says, the majority of the provisions of this Bill were fully debated in this House last year. I did at that time take the opportunity of paying my own tribute to the solicitors' profession, and I will not repeat it again. But I feel that I ought to add the weight of my own authority, such as it is, as a Member of the Government, behind the support which has been given to this Bill from the Labour Front Bench, as an important measure of law reform: and I would like to echo the plea which the noble Lord, Lord Stow Hill, made when he expressed the hope that it would on this occasion find its way on to the Statute Book.

That leads me, of course, to comment, I hope tactfully, upon the rather delicate matter which has been touched on by several noble Lords, including the noble and learned Lord, Lord Gardiner, the noble Lord, Lord Janner, and the noble and learned Lord, Lord Stow Hill; because its predecessor was in fact blocked by several Members of Parliament, who possess the undoubted right to block Private Members' legislation which has not received an official place in the Government programme or won priority in the House of Commons ballot for Private Members' Bills. So It is with modifications that the Bill comes before your Lordships again this afternoon.

I must say this to the noble Lord, Lord Janner. I accept his view that there is absolutely nothing Party political about this Bill, but it does so happen that every Member who blocked it was a member of his own Party. Therefore, the supposed power of the Government to withdraw the objections, whatever may be true in the abstract, is not true in relation to this Bill. I would earnestly suggest that those Members of his profession who have the pleasure and honour of being members of that Party would quietly suggest to anybody who may be disposed to block it in the other place that they are not really serving either God or Mammon by doing so.


My Lords, would the noble and learned Lord permit me to say that, needless to say, that kind of approach has been made and is being made; but of course all depends on whether you have got a very obstreperous person.


My Lords, as I said, I wanted to approach this ground rather delicately, and so I will not pursue it, except to say this, and to make it absolutely clear that I have said it: that I do not in fact criticise those Members who blocked it last year; I think it would to begin with be a breach of privilege to do so, and if not a breach of privilege a breach of courtesy. But also they can say, and so can the noble and learned Lord, Lord Gardiner, that it may be that one result of their efforts, whether ill or well directed, was to make certain, and I think not unimportant, improvements in the Bill which is now before your Lordships. Therefore, it may be that when they have fully discussed the matter between themselves—I understand they are also discussing it with the Law Society, and I do not want to say anything which may compromise those discussions—they may feel that they have achieved their object and they could now allow the Bill to go through; because I would think that the provisions of the new Clause 7, which have been fully explained by the noble and learned Lord the Master of the Rolls, do constitute an extremely important advance in the protection of the client, quite apart from the other provisions of the Bill.

May I again, in passing, just say this. I have to depend very largely—and the noble and learned Lord, Lord Gardiner, is quite right to mention the subject—for measures of law reform upon Private Members, and I have more than once expressed my gratitude to them for enabling me, through them, to put on the Statute Book valuable measures of law reform which would otherwise not have found their way into the Government programme. Obviously, it is easy for them to be blocked. I do not think it is possible for the Procedure Committee of this House, without a breach of privilege, to raise the matter with the Commons, and it is not always possible for the Lord Chancellor of the day, with the best will in the world, to persuade his colleagues to find Government time for them. I think the best thing that we can do is to bring pressure each upon our own friends —and most of us have friends in another place—not needlessly to hold up valuable pieces of law reform which have been properly processed, either through the Law Commission where that route has been chosen, or through other channels, as has this. Last year, for instance, I not only lost the predecessor of this Bill; I lost a very valuable little Bill for the alteration of the unity rule in married women's domicile, which was blocked by two Members whom I was quite unable to identify, and therefore with whom I was quite unable to reason, and for reasons I was wholly unable to understand. We have it coming forward again, I hope, from the other place this Session, and I trust it will be more successful.

I am not going again through all the several provisions of this Bill. May I just underline the way in which this Bill is required in the public interest and in the interest of the client, and not simply in the interests of the solicitors' profession. The first point is that it greatly strengthens the right of the public against a small minority of defaulting solicitors and dishonest solicitors, not merely by means of the compensation fund, but by enabling the Law Society to take over their papers, freeze their bank accounts and sort out other tangles which would gravely prejudice clients. Clause 16, in connection with that matter, which has not I think so far been mentioned, is absolutely vital to the Director of Public Prosecutions, because, for reasons which I explained more fully last year, it enables information about solicitors' accounts to be passed to the Director in order to expedite, and even render possible, criminal prosecutions for fraud.

The second point I wish to emphasise is the value of Clause 7. I sometimes have—and I have, of course, in the nature of things since I have been Lord Chancellor—a number of complaints from disappointed persons against members of the solicitors' profession. They are rather apt to interpret these as examples of dishonesty, when they manifestly are not. What nearly always is the case is that they arc saying that it is a case of negligence, and they are always a little annoyed, but quite unreasonably, when I have to tell them that this is a question for the courts; that it is not a question for a disciplinary tribunal, not a question for any sort of new kind of Ombudsman, because what the disappointed client wants, if he is right, is damages, and only the courts can award him damages. It is not the same as compensation out of the compensation fund, which is awarded for dishonesty. Now that Clause 7 makes provision for compulsory insurance for negligence, the client who has got a genuine claim against a firm of solicitors for want of care will, when the arrangements take effect, have a reasonable chance, at any rate up to the insurable limit, of complete indemnification. That, I think, is a very great advance.

I am sure the noble and learned Lord, Lord Gardiner, was right in welcoming the provision, which he may have been instrumental in getting in, about giving reasons for refusing a grant from the compensation fund. I am not sure that I absolutely went all the way along with him when he said that, in effect, the discretion given to the Law Society in relation to the compensation fund itself was only a discretion to refuse. It may look like that on paper, and I recognise the force of the purely legal point that the noble and learned Lord was making, but my very strong impression in dealing with the Law Society is that they do in fact allow compensation from the Compensation Fund in a great number of cases where the border between negligence and dishonesty is not very easily drawn and could be drawn very much more rigidly against the client than the Law Society commonly does. I may be wrong about that impression. It is a subjective one, but it is a subjective one that I have received from the receipt of a great number of letters from Members of Parliament, from members of the public, and a good deal of correspondence between my Department and the Law Society.

I think there is only one other point in the Bill that concerns me, and that is the point made towards the end of his speech by the noble Lord, Lord Foot. about the commencement provisions. With the greatest respect to him, I think that the point is a fanciful one. What he was in fact saying was this. Suppose Parliament inserted in this Bill a provision which I had advised Parliament not to insert, I might use the power that I have of bringing the Bill into operation in such a way as, in effect, to veto that provision. With great respect, I think that is rather a fanciful point. It is not only that I do not think that I would do that—and I cannot conceive of any other likely Lord Chancellor who would do it either—it is also that we are responsible to Parliament, and Parliament would get after us very quickly if we did.

The conclusive point is that it is quite obvious that this Bill has to have commencement provisions of some kind. Somebody has to press the button. The button has to be pressed by somebody who is responsible to Parliament and not the Law Society, and that somebody has to be a Minister. Theoretically it is true, I suppose, that in any one of the Bills—and in probably almost every Bill, Government or otherwise, that is passed through Parliament nowadays some of the provisions are brought into effect either by a Minister or by Order in Council (which is virtually, for this purpose, the same thing)—the same kind of objection can be made. There is no particular factor in a Solicitors Bill which makes it different from any of the others. Indeed, I should have thought that as the provisions of the Bill as it stands have all been carefully ironed out between the Law Society and the Lord Chancellor's Department—although I must say that I did not play a very active personal part in the negotiations—it is probably less likely in relation to a Solicitors Bill than in almost any other that I can think of. However, if the noble Lord, Lord Foot, wants to resume the discussion on Committee stage, and can think of a better way of doing it which will not compromise the whole system of commencement provisions in other cases. I certainly do not want to close my mind to putting fetters upon my power, which in any event I shall only exercise upon advice and which I shall endeavour to do in accordance with the wishes of Parliament. I am afraid that I have spoken at a little length. I had better leave the floor to my noble and learned friend the Master of the Rolls to reply to those points which more immediately affect the Law Society.

6.45 p.m.


My Lords, I thank all noble Lords who have given such a welcome to this Bill, and, if I may add it, I thank them for the most valuable suggestions which have been made. May I just reply to my noble and learned friend Lord Stow Hill that in dealing with the provisions for insuring against negligence the matter of professional liability is defined, or expressed, in very wide terms. It is designedly wide, and it is primarily intended to cover negligence. There may be some aspects of dishonesty that come into it. I agree that it is not intended at all that the solicitor should insure in respect of the rent of his offices, or be insured under this scheme for the salary of his clerks. But I trust that that matter can be dealt with in this way: that it is only giving power to make arrangements, and no doubt arrangements with the insurers will be such that professional liability is not too widely extended.

As to the compensation fund and the giving of reasons, as I understand the position, if a body formed under Statute has a decision to make in respect of which reasons are to be given, then according to the latest cases—and particularly one in your Lordships' House as to a Minister, a case known as Padfield—the courts can, either by mandamus or by declaration, inquire into the validity of the decision; and, if the reasons are ill-founded, or if the proper considerations have not been taken into account, the courts can deal with that decision.

The other point made by my noble and learned friend Lord Stow Hill was as to this odd provision whereby in 1939 or 1941 a ballot could be taken to make membership of the Law Society compulsory. As I understand it, it was considered at that time that it might be desirable for the whole profession to come in, not only to what I may call the strictly professional side of the Law Society's operations but also into its almost trade union activities, its social activities. It was considered that it should be like membership of a club. However, that has all gone by the board now and I hope it will be realised that there is no need for that clause. I may say to the noble Lord Lord Foot, on that point that there is no arrière pensée concerning the raising of the practising certificate fee and providing an indirect way for making everybody become members of the Law Society. The Treasurer of the Law Society I believe, mentioned the difficulty of dividing the two funds up: the professional side, which the Law Society proper administer, and the other membership side, which is separate. I hope that my noble friend will take it from me, as Master of the Rolls, that in checking the accounts we see that practising certificate fees are properly confined to legitimate purposes, and that there is no arrière pensée about having an indirect method of compulsory membership.

May I deal with one or two other points which the noble Lord, Lord Foot, made about the provisions as to insurance. It was feared that if the Law Society dealt with that insurance, there might be some question of disclosure of matters which might be matters of privilege, because in arrahgnging insurance the solicitor might have to disclose to the insurers any possible claim against him, and things of that kind. I think I can assure the noble Lord that if any insurance arrangements are made, they will be completely independent of any other side of the Law Society operations. Whether the Law Society do it themselves or whether they insure in a block insurance or the like, it will be completely independent, and there will be no question of any breach of professional privilege or of information being disclosed. May I just add one further word as to the amount of the contribution to the compensation fund. It would be undesirable to put any limit on that, such as £15 instead of £10, because, with the changing values of money, figures so quickly get out of date.

With regard to what my noble and learned friend Lord Gardiner said about the desirability of an indemnity fund, that has been considered and is being considered, but is not perhaps quite applicable at the moment. This Compensation Fund enables the Law Society to deal with urgent cases. It also deals with doubtful cases; and, although my noble and learned friend said, "They have got to be satisfied that there is dishonesty, and so forth" Clause 11 states that if the Council are satisfied that a person is likely to suffer hardship because of a failure to account, then they can make a grant from the Compensation Fund. On the whole, the practice works and, together with the valuable addition of my noble and learned friend's reasons, I hope your Lordships will think that it will satisfy for the time being, although in due course an indemnity fund may be established.

I hope and believe that that covers most of the points. I am most grateful to the noble and learned Lord the Lord Chancellor for explaining the position about the various dates and about bringing into operation the various provisions. I must say that I am most grateful to my noble and learned friend for showing the disadvantages of the power in another place to say, "Object!". I hope that, as a result of those representations, this Bill may not only receive a welcome in your Lordships' House, but may pass in this Session, because owing to the real need for its provisions, it should be passed into operation as soon as may be.

On Question, Bill read 2ª, and committed to a Committee of the Whole House.