HL Deb 25 October 1990 vol 522 cc1614-8

136A That this House do disagree with the Commons in their Amendment No. 136.

Lord McCluskey

rose to move, That this House do disagree with the Commons in their Amendment No. 136.

The noble and learned Lord said: My Lords, my Motion No. 136A, which I beg to move, is that this House do disagree with the Commons in their Amendment No. 136. It may be a matter of convenience for the House if the noble and learned Lord the Lord Advocate deals with Amendment No. 136 before I address myself to Amendment No. 136A.

Moved, That this House do disagree with the Commons in their Amendment No. 136.—(Lord McCluskey.)

Lord Fraser of Carmyllie

My Lords, if it is for the convenience of the House I shall move that the House do agree with the Commons in their Amendment No. 136.

The purpose of the amendment is to allow an advocate to enter into fee agreements in speculative actions which would provide for an enhanced fee to be paid to him in the event of success. Such enhancement of the fee would compensate the advocate for the risk taken in any speculative action that he will receive no fee at all. Clause 29 already makes parallel provision in relation to solicitors. The maximum level of enhancement by which a fee may be increased in a speculative action will be set by the Lord President in consultation with the dean of faculty in relation to advocates and in consultation with the Council of the Law Society in relation to solicitors. The amendment is seen to remove an inconsistency which would have arisen whereby the solicitor in a speculative action would be able to stipulate the proportion by which his fee should be increased in the event of success while the advocate would be entitled only to his usual fee, with no compensation for the risk that he had run of receiving no fee at all.

The noble and learned Lord, Lord McCluskey, has put his own Motion and, as I understand it, his concern may be one which has certainly been expressed to me by the Dean of the Faculty of Advocates; namely, that the difficulty in relation to such an arrangement for advocates is that whereas a solicitor's fee can be determined by reference to a scale of fees there is not the same opportunity in relation to an advocate. Thus, while the dean of faculty—I choose the example purely at random—might say that it might be enhanced by the amount of 15 per cent., that begs the question: "Fifteen per cent. of what?"

In such circumstances I envisage that it would be 15 per cent. of any fee recovered if a fee were to be settled or agreed before the action was concluded through the court; or alternatively in the event of such a fee being taxed by the auditor. In those circumstances it would be open to the dean of faculty to say that something might be added. It would seem to me that the purpose of introducing this amendment was an attempt to secure an equity between solicitors and advocates in these natters. But if the dean of faculty or the Lord President consider that this is a matter that cannot successfully be achieved, in such circumstances they are not bound to state a figure for the amount of any enhancement and I suppose that they could fix the figure for enhancement at zero.

Moved, That the House do agree with the Commons in their Amendment No. 136.—(Lord Fraser of Carmyllie.)

Lord McCluskey

My Lords, I am delighted to hear that the Dean of the Faculty of Advocates and I think alike on the matter, although I have not discussed it with him. I congratulate the noble and learned Lord upon a valiant defence of an absolutely impossible position.

Amendment No. 136 is pure nonsense. Nobody asked for such provision; nobody wants it; and nobody believes that it will work. The noble and learned Lord the Lord Advocate put his finger on the reason. It makes no difference whether the amount is 15 per cent., 20 per cent. or 50 per cent. One does not know what figure the 15 per cent., 20 per cent. or 50 per cent relates to. When an advocate undertakes a case on a speculative action he does not submit a fee note to the solicitor instructing him until the case is finished. If the case is lost, he submits no fee note. If it is won he submits a fee note. He cannot then say, "My fee is £100. Will you kindly add 20 per cent?". The limit has been prescribed by act of sederunt. The court is empowered to prescribe the percentage limit by act,of sederunt. But the court will realise that it cannot frame such an act of sederunt for the very same reason: one cannot give 20 per cent. of an amount that does not exist.

The Government have thought in terms of playing fields rather than the way in which the courts, the advocates and others conduct their business. Subsection (3) of new Section 61A inserted by Clause 29 is perfectly sensible because in certain circumstances solicitors have judicial fees laid down by the courts. One can therefore have a percentage increase. One can understand that provision. However, in relation to an advocate, it is totally meaningless. The noble and learned Lord the Lord Advocate should have picked the point up and should not have allowed such nonsense to be inserted in the Bill.

Amendment No. 136 begins: An advocate and the person instructing him".

I do not know who that person is. The probability is that in the great majority of cases the instructions will have come from a solicitor. I do not know whether it is considered that the advocate and solicitor will reach such an agreement as is envisaged by these words. I do not know what effect that will have on the client. If the provision relates to the client rather than the person instructing the advocate, that ought to be in the provision. In all respects, the provision is a non-starter. I therefore ask your Lordships not to accept Commons Amendment No. 136.

7.45 p.m.

Lord Fraser of Carmyllie

My Lords, I am not entirely sure I agree that the provision is nonsensical. It is correct that if the action is lost the advocate submits no fee. If he submits a fee in the event of success—the position seems to me more straightforward than the noble and learned Lord suggests—he would say, "My fee is £x. It has been established by the act of sederunt, following consultation with the Dean of the Faculty of Advocates, that because my instructions were given to me on a speculative basis my fee will be increased by 15 per cent."

With respect, I do not think in practice that that is difficult. In a speculative action an award is granted by the court; a decree is granted plus expenses. Those expenses will include the amount of the advocate's fees. I have indicated that in certain circumstances the amount recovered might be taxed. I refer to my example. I hasten to say that I have plucked a figure from the air. It is not as a result of having talked to the Dean of Faculty. I do not wish to give an indication that that was the figure that he had in mind. If one considers the amount taxed and add 15 per cent. to it, I do not believe that the position is as nonsensical as the noble and learned Lord suggests. However, if the provision is not wanted, or is unworkable, doubtless there will be no act of sederunt.

Lord Morton of Shuna

My Lords, I am not quite clear what the noble and learned Lord is saying. Is he stating that in a speculative action the other party, backed by the insurance company or whatever, is to pay a higher rate of expenses? If that is so, I understand it but I totally disagree with the justice of it.

In a speculative case which has settled, the fee for counsel, agreed with the client, does not go for taxation. There is nothing to tax. There is no sense in this provision. There is no set fee for an advocate which can be increased by any percentage. There never is and never has been except in legal aid work, where the Secretary of State fixes the appropriate fees. It is clear that a legal aid case is not a speculative case and therefore has nothing whatever to do with the argument.

Lord McCluskey

My Lords, I do not know whether the noble and learned Lord the Lord Advocate wishes to reply to that point. In doing so he might wish to reply to my supplementary point.

If the case went to taxation—I agree with my noble and learned friend that it would not—the auditor would say, "£x is a proper fee," and the act of sederunt would enable him to say, "You can have a proper fee plus 15 per cent."—in other words an excessive fee. I do not imagine that anyone would wish an act of sederunt to enable counsel to have an excessive fee. The amendment is a nonsense.

Lord Fraser of Carmyllie

My Lords, with great respect, the act of sederunt would not say, "Here is fee A, and in these circumstances you can now have an excessive fee." The provision states that if an advocate undertakes speculative work there will be circumstances in which he recovers nothing. But in certain circumstances, because he is prepared to take the risk that he will receive no fee, if he be successful the act of sederunt provides that the fee shall be increased. There is nothing too extraordinary about the amount of his fee being taxed and a percentage being added to it.

Perhaps I may make this absolutely clear to the noble and learned Lord, Lord Morton. I did not envisage in such circumstances that an accountant could say that the extra percentage might be imposed on the other side. That would be intolerable because those persons would have to endure greater expenses in circumstances over which they had no control.

Many speculative actions may be settled long before they come to court and before reaching a stage where a fee might properly go for taxation. In such circumstances it does not seem to me difficult to develop a practice that when settlement was made it should be made clear that a certain proportion was to be for the payment of expenses. Settlements are sometimes made on the basis of a global figure. Sometimes they are agreed on the basis that such an amount is what the pursuer will receive and that such an amount represents the expenses.

Lord Morton of Shuna

My Lords, perhaps the noble and learned Lord will allow me to intervene because the provision worries me. In Clause 29 (2) one has a situation in which the agent and client can agree the rate of payment for a fee and there can be no taxation thereafter because they have made a written agreement. Is that to apply to a speculative action?

Let us suppose that one is a solicitor acting for a person who suffers injury as a passenger in a motor car collision and is rendered paraplegic. That is the typical speculative action and the person has an absolute certainty of winning. One then agrees that out of the settlement the fee will be such and such. That cannot go to taxation; it is between the solicitor and client. After the settlement is reached the advocate and the solicitor, as his client, agree a fee for whatever they are doing. What is the point of saying that after the settlement is reached—that is the only time one agrees a fee—one will add a notional percentage? Why not just agree the fee, which is the situation under Clause 29(2)?

Lord Fraser of Carmyllie

My Lords, we could go on about this point ad nauseam. The fact of the matter is that if the Dean of the Faculty, the Faculty of Advocates, or the Lord President do not want to do that they can set the figure at zero and there will be no question of enhancement. I am bound to say that practically speaking it will be more than possible to set out an arrangement that allows for a modest percentage increase in certain circumstances of taxation. The provision is included with the best of intentions.

While the Dean of Faculty has talked to me about the matter he did not indicate that he wished to see the provision wholly removed. He was concerned to discover, as was the noble and learned Lord, whether the intention behind the provision was that the fee that might be chargeable to the losing party in the event of loss would be increased. If that were the intention he would have been most concerned and—I hope that I have reassured the noble and learned Lord—so should I. I cannot envisage any circumstances in which that would be permissible.

Lord McCluskey

My Lords, if I need the leave of the House to speak in conclusion, I ask for that. The English judges were most concerned about a similar proposal in their Green Paper in relation to practitioners in England. They wrote to me and asked about the speculative action in Scotland. I wrote a paper about the subject for them and I am now sorry that I did not send a copy to the noble and learned Lord. Had he read my paper I do not believe that this provision would have appeared in the Bill.

I made a study of the matter. I consulted a number of people and I consulted my own experience because I have been involved in many speculative actions. I do not wish to remake the points but, apart from them, the real truth is that no advocate wants any such provision and no advocate has asked for it. The Dean has not asked for it and, from what the Lord Advocate has said, I gather that he does not understand it and does not consider it to be necessary. Therefore, the provision goes into the Bill not because someone wants it, or because it is necessary or because it makes sense but because the Government have included it in a state of confusion. It ought to come out. I commend my Motion No. 136A to the House.

On Question, Motion No. 136A negatived.

On Question, Motion agreed to.