Access to Justice Bill [H.L.]

HL Deb 16 February 1999 vol 597 cc580-619

5.16 p.m.

Consideration of amendments on Report resumed on Clause 13.

Lord Thomas of Gresford moved Amendment No. 98: Page 9, line 29, at end insert ("excpt itself providing advice and assistance").

On Question, amendment agreed to.

The Lord Chancellor moved Amendment No. 99: Page 9, line 29, at end insert— ("(2A) The Lord Chancellor may by order require the Commission to discharge the function in subsection (2) in accordance with the order.").

Lord Brightman

My Lords, I shall not take up more than a moment of your Lordships' time, but I wanted to question whether it is really necessary to add another subsection to Clause 13(2) to achieve that which my noble and learned friend the Lord Chancellor wishes. Clause 13(1) requires the commission to give legal assistance to persons arrested and held in custody. Subsection (2) states how that is to be done. The amendment seeks to add a further subsection (2A), stating: The Lord Chancellor may by order require the Commission to discharge the function in subsection (2) in accordance with the order". My question to my noble and learned friend the Lord Chancellor is whether what he wants could not be achieved simply by adding eight words to line 15 on page 9 which currently reads: The Commission may comply with the duty imposed by subsection (1)", and so forth. Would it not be sufficient simply to say, "The commission may and, if ordered by the Lord Chancellor, shall, comply with the duty"? That would get rid of the proposed subsection. I do not know whether my noble and learned friend is willing to refer this suggestion to his drafting team.

The Lord Chancellor

My Lords, I believe that these amendments have already been debated, but in view of what the noble and learned Lord has just said, I shall study Hansard, refer his point to the draftsman and write to him thereafter.

On Question, amendment agreed to.

Clause 14 [Representation]:

The Lord Chancellor moved Amendment No. 100: Page 9, line 33, leave out from ("3") to end of line 38 and insert ("(which makes provision about the grant of a right to representation in criminal proceedings) has effect; and the Commission shall fund representation to which an individual has been granted a right in accordance with that Schedule.").

On Question, amendment agreed to.

The Lord Chancellor moved Amendment No. 100A: Page 9. line 40, leave out ("(2)") and insert ("(1)").

The noble and learned Lord said: My Lords, Amendments Nos. 100A, 106A and 190A are purely technical and consequential on Amendment No. 100, which has been debated already. Amendment No. 100 places the duty to fund representation in Clause 14(1) instead of its present position in subsection (2). These amendments are necessary to amend the reference to the duty where it appears in the existing Clause 14(3) and (5). I beg to move.

On Question, amendment agreed to.

The Lord Chancellor moved Amendment No. 101: Page 10, line 7, leave out ("or loans").

The noble and learned Lord said: My Lords, during the Committee debate I accepted Amendment No. 154 in the name of the noble Lord, Lord Goodhart. His amendment deleted the reference in Clause 13(2)(e) to loans as a method of funding individuals to enable them to obtain advice and assistance in criminal cases. The mention of loans in the clause, as currently drafted, was an anomaly resulting from common drafting elements in Clause 7 of the Bill relating to the community legal service.

The noble Lord's arguments apply equally to loans to individuals for representation in Clause 14(3)(e). Payment for representation will be required only in the circumstances described in Clause 16(2), which states: (2) Where representation for an individual in respect of criminal proceedings in the Crown Court is funded by the Commission as part of the Criminal Defence Service, the trial judge may, subject to regulations under subsection (3), make an order requiring him to pay some or all of the cost of the representation". Loans for criminal defence services are never appropriate. I beg to move.

On Question, amendment agreed to.

The Deputy Speaker (Lord Brougham and Vaux)

My Lords, if Amendment No. 102 is agreed to, 1 cannot call Amendment No. 103.

Lord Thomas of Gresford moved Amendment No. 102: Page 10, line 9, leave out from beginning to ("or").

On Question, amendment agreed to.

[Amendment No. 103 not moved.]

Lord Thomas of Gresford moved Amendment No. 104: Page 10, line 11, at end insert ("except itself providing representation").

On Question, amendment agreed to.

The Lord Chancellor moved Amendment No. 105: Page 10, line 11, at end insert— ("(3A) The Lord Chancellor—

1. (a)shall by order make provision about the payments which may be made by the Commission in respect of any representation provided by non-contracted private practitioners, and
2. (b)may by order make any other provision requiring the Commission to discharge the function in subsection (3) in accordance with the order.

(3B) For the purposes of subsection (3A)(a) representation is provided by a non-contracted private practitioner if it is provided, otherwise than pursuant to a contract entered into by the Commission, by a person or body which is neither‐

1. (a)a person or body in receipt of grants or loans made by the Commission as part of the Criminal Defence Service, nor
2. (b)the Commission itself or a body established or maintained by the Commission.

(3C) The provision which the Lord Chancellor is required to make by order under subsection (3A)(a) includes provision for reviews of, or appeals against, determinations required for the purposes of the order.").

[Amendment No. 106, as an amendment to Amendment No. 105, not moved.]

On Question, Amendment No. 105 agreed to.

The Lord Chancellor moved Amendment No. 106A: Page 10, line 18, leave out ("(2)") and insert ("(1)").

On Question, amendment agreed to.

The Lord Chancellor moved Amendment No. 107: Page 10, line 18, leave out ("making payments to") arid insert ("funding representation by").

On Question, amendment agreed to.

The Lord Chancellor moved Amendment No. 108: Page 10, line 27, leave out ("only one representative or").

The noble and learned Lord said: My Lords, Amendment No. 108 is grouped with Amendments Nos. 109 to 113. They relate to Clause 14(6) of the Bill, which gives power to make regulations restricting a defendant's free choice of representative in prescribed circumstances.

The issue of choice was debated at some length in Committee on 26th January. Concern centred upon salaried defenders and whether the provisions of Clause 14(6) would be used to restrict choice to salaried defenders only. That is not my intention, and I have tabled Amendment No. 111 to make that clear on the face of the Bill.

I also undertook to consider whether the drafting of subsection (6) could be clarified, and Amendments Nos. 108 to 110 and Amendment No. 113 are the result. It may be helpful to your Lordships if I first set out the intentions behind subsection (6), dealing with these drafting amendments as I go. I will take the five subsections in order of significance, rather than alphabetical order.

The White Paper, Modernising Justice, at paragraphs 6.12 to 6.24 and 6.28 to 6.30, set out the Government's plans for developing and implementing contracts for criminal defence services; the way we expect those contracts to be structured; and the relationship between contracts and the defendant's choice of representative. Our firm view is that contracting, plus a salaried element, offers the best means of providing high quality services for suspects and defendants while securing the best possible value for money.

As I explained in Committee, Clause 14(6)(c) is fundamental to those plans. It will allow the defendant's choice to be limited to any lawyer with a current contract with the legal services commission, plus a salaried defender. The scope of regulations under this subsection will he extended gradually as contracts for various types of work are piloted and rolled out generally. The first contracts will cover advice and assistance at the police station, including a share of the duty solicitor work at the local police stations and magistrates' courts. These will be extended to cover first representation in magistrates' court cases; then the work of litigators in most Crown Court cases; and then perhaps advocacy in those cases. Once contracts provide adequate coverage at each level, regulations under Clause 14(6)(c) will provide that the suspect or defendant may no longer choose a non-contracted representative.

Our intention is to ensure that suspects and defendants generally have a choice between several contracted firms, possibly plus a salaried defender. In the first round of contracting, we intend to guarantee a contract to all firms which meet quality standards. I would expect most to continue to win contracts thereafter if they continue to meet the quality standards and are prepared to participate in the duty solicitor scheme. This is important both to sustain the quality of this important service by ensuring that it does not become the preserve of firms which cannot win more lucrative contracts and as a key part of our plans for providing continuity of representation from the police station to and through the courts.

Separate regulations under Clause 14(6)(c) will provide for a more limited choice in categories of case—for example, fraud trials—which are typically very expensive cases and require special skills, experience and sometimes technology. In these cases, the defendant's choice will be restricted to members of a specialist panel; but this would be a choice between quality-assured lawyers who had demonstrated both the necessary competence and administrative systems to deal with these specialised and weighty cases.

I have already mentioned continuity of representation. Regulations under Clause 14(6)(e) will establish a presumption that, having once chosen a representative, a defendant may not choose to replace that representative with some other, except for good reason. The intention is to reduce delay and the cost involved in instructing a new representative. Regulations under this subsection will define what constitutes an acceptable reason for a change; for example a conflict of interest or a clear breakdown in the lawyer-client relationship. Amendment No. 110 clarifies the drafting of the subsection.

Clause 14(6)(d) deals with the number of representatives that may be chosen in a given case. Again, Amendments Nos. 108 and 109 seek to clarify the drafting. Most cases start at the police station, where the suspect will either choose a named, contracted solicitor, or offer no preference and be advised by the duty solicitor, who on any given day might be a contracted solicitor or a salaried defender. If the case proceeds to trial in the Crown Court, there will be an opportunity to exercise a second choice to select an advocate. The defendant might choose a barrister in private practice, a salaried defender or, if the solicitor-representative was qualified and willing to act in the Crown Court, that solicitor-advocate who might also be a salaried defender. As now, it would be the solicitor's duty to advise the client about the options and instruct the advocate. Initially, the choice of advocate would encompass any barrister willing to act in the case. In due course, if contracts with banisters can be developed successfully, choice may be limited under Clause 14(6)(c) to a barrister subject to such a contract.

Regulations under Clause 14(6)(d) will also prescribe the rare situations in which two advocates would be permitted, for example serious fraud trials. Closely linked to this will be regulations under subsection (6)(b) which will prescribe the limited circumstances in which the defendant will be entitled to select a Queen's Counsel.

Finally, there is Clause 14(6)(a) which provides for regulations, subject to the affirmative approval procedure, which remove the defendant's right to a choice altogether. The example I gave in Committee of the exceptional circumstances in which subsection (6)(a) might be used related to cross-examination of a rape victim on behalf of a defendant who was otherwise representing himself. In this and possibly a few other exceptional circumstances, it may be appropriate to assign an advocate on something like a "dock brief" basis so that a trial can proceed without delay. It will be a random matter whether the advocate who happens to be available at court is a salaried defender, a solicitor advocate or independent barrister. If more than one advocate is available, then the defendant will be able to choose his representative from among those available advocates. The circumstances prescribed under Clause 14(6)(a) will be rare indeed.

Amendment No. 113 which removes Clause 14(7) is consequential upon Amendment No. 107, which was debated earlier. I now turn to Amendment No. 111. This establishes on the face of the Bill that regulations under Clause 14(6) may not provide that a defendant may choose only a salaried defender. That was never my intention under the key Clause 14(6)(c) or under Clause 14(6)(b). The amendment precludes regulations under any part of Clause 14(6) which specifically restrict choice to salaried defenders.

I turn now to Amendment No. 112 proposed by the noble Lords, Lord Thomas of Gresford and Lord Goodhart. If both my Amendment No. 111 and this amendment stand, the new subsection in Clause 14 would read as follows: ( ) Regulations under subsection (6) may not provide that an individual may select only a person employed by the Commission or may not select a non-contracted private practitioner who is accredited to provide services of the kind required". I cannot accept that amendment because it would undermine the approach I have just explained. We are giving people a generous choice but not an absolutely unrestricted choice. The amendment would prevent regulations under Clause 14(6)(c) which gradually limited choice to contracted and salaried providers. Contracting, in the longer term for most or all criminal defence services, is central to the reforms envisaged by this part of the Bill. I firmly believe that contracting represents the most cost-effective mechanism for imposing quality requirements and monitoring standards. Accreditation is just one part of this.

Accreditation relates to personal competence in limited circumstances, but does not address other aspects of quality standards which we would want to see in a contract, such as managerial supervision and internal peer review. But there is more to it than that. Contracting also offers the prospect of sustained and improving value for money, through reduced case-by-case bureaucracy, earlier and more predictable payment and, in time, a limited element of competition. More specifically, it is essential to our plans for ensuring that all firms participate in the duty solicitor scheme; and for providing, wherever possible, continuity of representation throughout the case.

I apologise for the length with which I have dealt with each part of Clause 14(6) but the ability to limit the choice of those needing representation in the ways described is essential to secure quality representation at a reasonable cost. I therefore ask the noble Lords, Lord Thomas of Gresford and Lord Goodhart, to withdraw their amendment. I beg to move.

On Question, amendment agreed to.

5.30 p.m.

The Lord Chancellor moved Amendments Nos. 109 and 110: Page 10, line 28, after ("representatives") insert ("to ac: for him at any one time"). Page 10, line 30, leave out ("if another representative has been") and insert ("in place of a representative").

On Question, amendments agreed to.

The Lord Chancellor moved Amendment No. 111: Page 10, line 31, at end insert-— ("( ) Regulations under subsection (6) may not provide that an individual may select only a person employed by the Commission.").

Lord Thomas of Gresford moved, as an amendment to Amendment No. 111, Amendment No. 112: Line 3, at end insert ("or may not select a non-contracted private practitioner who is accredited to provide services of the kind required.").

The noble Lord said: My Lords, I am grateful to the Lord Chancellor for his explanation of this series of amendments. He said that he could not accept Amendment No. 112 because it would undermine the approach that he has adopted whereby everyone who is supported through the legal services commission and the criminal defence service will either be an employed lawyer—if legislation is passed to that effect—or, alternatively, will be under contract.

One can appreciate the noble and learned Lord's aim as regards solicitors. I can see that although it limits choice in the sense that contracts may not be freely given and it may create a monopoly within a particular town or area, those services should be provided by only one firm. However, as regards the Bar. we are in a difficult and different situation which 1 totally fail to understand. The issue has been raised time and again as to whether it is intended that there should be contracts between a set of chambers, or a group of practitioners within a set of chambers, or an individual practitioner, an individual banister, and the criminal defence service.

The answer that the noble and learned Lord has so far given to this difficult problem, which seems to me to alter the whole way in which the Bar has historically worked, is, "I am sure that barristers are bright enough to work out some way in which this can happen". When changes are proposed, one would like to have a little more guidance. Suppose, for example, I contract with the criminal defence service that in the course of the next year I shall do 12 serious cases, and I am instructed to do six. I do not receive instructions to do the other six; I have only six on the plate. I have agreed to do the 12 cases for a lump sum, but I am not asked to do that. Do I get the lump sum? Do I get the whole amount because that is what I am holding myself out to do? Alternatively, suppose I am given 18 cases and I have contracted on the basis of 12. What happens then? Is there a renegotiation of the contract? Difficulties arise when I and my one colleague hold ourselves out as being prepared to do this 'work and a lump sum is presumably paid jointly to us which we in some way have to find a formula for dividing.

As regards chambers, the position is even more difficult. Let us think of a criminal set of chambers, such as the chambers of the noble Lord, Lord Carlisle of Bucklow, which I believe does little other work. I may be trespassing here but I believe it is a well known set of criminal chambers. Do they contract as one set of chambers for a figure of, say, £2 million and employ some administrative way of dividing out the work? There is no guidance. Until there is some positive suggestion to which we can respond, it seems to me entirely wrong that we should face regulations which state that you are either contracted or you are employed and if you are not, you do not get any work and you do not get paid.

This amendment is set down in a serious vein. Perhaps this is not the moment to divide on this issue but it is certainly a moment to ask for clarification once more on this extremely difficult topic. I beg to move.

Lord Carlisle of Bucklow

My Lords, I support what the noble Lord has said. I hope that the Lord Chancellor will accept that certainly I, and I believe the noble Lord, Lord Thomas, ask these questions in a genuine desire to assist. I remain bewildered to understand how the contracts which the Lord Chancellor says he wishes to see between the commission and members of the Bar will work.

When I raised this matter at the previous Report stage of the Bill, the reply that I received from the noble and learned Lord, Lord Falconer of Thoroton, was really what the noble Lord, Lord Thomas of Gresford, has just said. The noble and learned Lord said, The question of how the legal services commission will contract with the Bar is plainly, to a large extent, in the hands of the Bar.—[Official Report, 11/2/99; col. 396.] With respect, surely the Bar and the House are entitled to know the thinking of the Lord Chancellor on these matters. With the greatest respect to the noble and learned Lord, Lord Falconer, he confused me further when he went on to say: The groupings might be chambers, people within chambers, or other groupings, including, for example. circuits".—[Official Report, 11/2/99; col. 397.] I declare an interest as a member of the Northern Circuit; I am sure that the noble Lord, Lord Thomas of Gresford, will declare an interest as a member of the Welsh Circuit. Is it suggested that the commission can negotiate with, say, the leader of the circuit on behalf of the circuit? Can it negotiate and say that so much work will be done in that area by the Bar in exchange for a lump sum of money? If so, who then decides who does that work?

Unless one totally changes the whole ethos and present situation, the Bar consists of individuals who are in competition with each other. Where you have a group of individuals in competition with each other, who is to dictate? Is it the leader of the circuit who decides who does what case? Alternatively, is it, as at the moment, the right of the individual, through his solicitor, to go to the counsel of his choice, if he is available? This applies equally to chambers. The noble and learned Lord the Lord Chancellor has said that you could contract not with an individual—which is a situation I understand—but with a group of chambers. As the noble Lord, Lord Thomas, has said, how then do they get their work?

Does the Lord Chancellor's Department envisage that in future there should be direct access, or does it come through solicitors? If it comes through solicitors, then, as the noble Lord, Lord Thomas, has said, what happens if the solicitors do not brief the member of the Bar to the extent to which he has contracted to do the work? If it is a contract with a group within the chambers, who decides who should do an individual case in a profession where people are in competition with each other? Is it the group of barristers together?

Finally, and perhaps most worryingly of all, is it intended eventually that the only person who can do the work is the contracted barrister? Perhaps the noble and learned Lord can explain. As I understand it, you have a contract with a solicitor who will do a certain amount of work, which will include his disbursement for paying members of the Bar. If he chooses to go to the chambers of the noble Lord, Lord Thomas of Gresford, or the chambers in which I have my name, will he still be free to choose the barrister he wishes within those chambers, or will he be limited to one of the barristers who has individually contracted with the commission? If it is the second alternative, it seems to me that you are very substantially reducing the choice of the defendant or individual litigant. You are also making it quite impossible for people ever to start in the profession if they have to be an already contracted party before they can do any work of this nature.

I repeat, I am quite prepared to accept that the noble and learned Lord the Lord Chancellor believes that there is a great future in contracting and that it is advisable and sensible for obtaining value for money. I ask these questions because I remain genuinely bewildered about how the system will work when you are dealing with a profession where each individual is in direct competition with the other.

5.45 p.m.

The Lord Chancellor

My Lords, I have to say that on 2nd May 1997 I gave up giving legal advice, whether for reward or otherwise. I do not regard it as any part of my function at this Dispatch Box to give legal advice to those who, if I may say so, are as well equipped to give it to themselves as I am to give it to them.

I want to set the record straight. I am a friend of the Bar and I want the Bar to help itself. But I do not propose to advise the Bar how to help itself. I do not feel that I should be required to give legal advice to—of all people—the Bar of England and Wales, as to how to contract. Many years ago—indeed, in 1978—I had the privilege of being instructed by my predecessor, the late Lord Havers, to represent him in what was then called an industrial tribunal. The issue concerned whether a barrister's clerk was employed or self-employed: if he was employed, was there a contractual relationship between him and each and every member of chambers, or only with the head of chambers, or perhaps with the members of chambers for the time being as a contractual unity?

I agree that these are difficult questions, but there is some learning available on them which I would have thought is quite accessible to the Bar. I want to set the record straight. I have been expressing a concern for the Bar. If contracting proceeds with solicitors only and not directly with the Bar, the Bar will be left perhaps in some state of mercy in the sense that the solicitor will contract for the total provision of services. The solicitor will then sub-contract with individual banisters at terms to be negotiated between the solicitor and the barrister—and the solicitor will hold the whip hand because he has the contract. I have said time and again that the Bar, with all the expertise at its disposal, should be addressing how barristers could contract direct. The doors of my offices are open and my officials will be delighted to discuss this with the Bar.

I would have thought that the Bar is in a unique position to advise itself as to how effectively to contract. The noble Lord, Lord Thomas of Gresford, asked all sorts of questions about whether the contract would be entire or whether the consideration could be apportioned. With the greatest courtesy, he must give himself his own legal advice. The short answer is that the terms of the contract, whatever they may be, will rule.

I believe that contracting is a change for the better, and that those who oppose it perhaps feel that any change for the better is a contradiction in terms.

Lord Thomas of Gresford

My Lords, I do not necessarily oppose contracts with the Bar—if only I could understand how they are to come about. I will look at the leading authority in the industrial tribunal from the 1970s about banisters' clerks to see if I can get any guidance from that.

The Lord Chancellor

My Lords, the noble Lord could look up a basic textbook on contracts.

Lord Thomas of Gresford

My Lords, of course I am a very simple criminal lawyer. That is my problem. The Lord Chancellor will be the head of the organisation which effectively holds the whip hand as the other contracting party—through the criminal defence service, and so on—but when we are looking at it in this embryonic stage we are entitled to look to the Lord Chancellor and ask him how he sees it actually working. What sort of structures can we consider and address to see whether or not they are viable? What should be our attitude? If I were to stand here and put forward some sort of structure, your Lordships would be very quickly bored and say, "Please, do this somewhere else". However, I think that we are entitled to have this kind of information so we know exactly where we are going. The noble Lord, Lord Carlisle of Bucklow, is quite right that there is no aggression in what I am saying. I am not anti-contract or anything else. I just want to know where we are. 1 do not propose to press the amendment to a vote today but I want to have some answers before we come back to it again. For the moment, I beg leave to withdraw the amendment.

Amendment No. 112, as an amendment to Amendment No. 111, by leave, withdrawn.

On Question, Amendment No. 111 agreed to.

The Lord Chancellor moved Amendment No. 113: Page 10, line 32, leave out subsection (7).

On Question, amendment agreed to.

Schedule 3 [Criminal Defence Service: right to representation]:

The Lord Chancellor moved Amendments Nos. 114 to 121:

Page 56, line 9, after second ("of") insert ("any kind of").

Page 56, line 10, leave out from ("to") to end of line 23 and insert ("an individual such as is mentioned in relation to that kind of proceedings in section 12(3).

(2)A right of representation for the purposes of criminal proceedings may also be granted to an individual to enable him to resist an appeal to the Crown Court otherwise than in an official capacity.

(3)In this Schedule "court" includes any body before which criminal proceedings take place.").

Page 57, line 6, leave out from ("of') to ("and") in line 7 and insert ("any one or more of the descriptions of proceedings prescribed under section 12(3)(f), ").

Page 57, leave out lines 8 to 12.

Page 57, line 16, leave out from ("make") to ("such") in line 20.

Page 57, line 31, leave out from ("individual") to ("serious") in line 33 and insert ("would, if any matter arising in the proceedings is decided against him, be likely to lose his liberty or livelihood or suffer").

Page 57, line 35, leave out ("the case") and insert ("any matter arising in the proceedings").

Page 57, line 39, leave out from ("whether") to end of line 41 and insert ("the proceedings may involve the tracing. interviewing or expert cross-examination of witnesses on behalf of the individual, ").

On Question, amendments agreed to.

The Lord Chancellor moved Amendment No. 122:

Before Clause 15, insert the following new clause—

CODE OF CONDUCT

(".—(1) The Commission shall prepare a code of conduct to be observed by employees of the Commission in the provision of services as part of the Criminal Defence Service.

1. (2) The code shall include
1. (a)duties to avoid discrimination,
2. (b)duties to protect the interests of the individuals for whom services are provided,
3. (c)duties to the court,
4. (d)duties to avoid conflicts of interest, and
5. (e)duties of confidentiality.

(3) The Commission may from time to time prepare a revised version of the code. (4) Before preparing or revising the code the Commission shall undertake such consultation as appears to it to be appropriate. (5) After preparing the code or a revised version of the code the Commission shall send a copy to the Lord Chancellor. (6) If he approves it he shall lay it before each House of Parliament. (7) The Commission shall publish—

1. (a)the code as first approved by the Lord Chancellor, and
2. (b)where he approves a revised version, either the revisions or the revised code as appropriate.

(8) The code, and any revised version of the code, shall not come into force until it has been approved by a resolution of each House of Parliament.").

The noble and learned Lord said: My Lords, during the Committee stage on 26th January (at cols. 880 to 892 of Hansard) the noble and learned Lord, Lord Ackner, proposed a new clause to set out a defenders' code. I agreed in principle that it is most important that the criminal defence service, including any salaried defenders engaged by the legal services commission, should uphold the highest standards of the legal profession. I said then, and still maintain, that defendants are entitled to no less. It is certainly no part of our plans that any service provided by salaried defenders should be second rate. I believe that salaried defenders will provide a bench-mark of quality and cost against which other defence lawyers can be judged.

In Committee I undertook to move a government amendment to introduce a code for salaried defenders. I drew the analogy with the code for Crown prosecutors issued by the Director of Public Prosecutions and laid before Parliament as part of his annual report to my right honourable and learned friend the Attorney-General. This amendment will ensure that salaried defenders employed by the legal services commission are subject to a comprehensive code guaranteeing minimum standards of professional behaviour. Other defenders paid by the conunission, such as banisters or solicitors in private practice, would not be bound by the code but will be bound by their own professional rules.

I have set out in an unambiguous way what must be included within the code. The code shall include:

1. "(a) duties to avoid discrimination,
2. (b)duties to protect the interests of the individuals for whom services are provided,
3. (c)duties to the court,
4. (d)duties to avoid conflicts of interest, and
5. (e)duties of confidentiality".

The commission will prepare the code under this guidance. The code will be published and approved by a resolution of each House of Parliament.

I hope that the amendment demonstrates that I intend the highest ethical standards to apply, and to be seen to apply, to lawyers who may be employed by the commission. I beg to move.

Lord Renton

My Lords, I wonder whether the noble and learned Lord the Lord Chancellor would be so good as to give us some idea of the conflicts of interest which are mentioned in subsection (2)(d). Taking subsections (5) and (6) together, may we be quite sure that the code will not come into operation until it has been approved by the Lord Chancellor and by both Houses of Parliament?

The Lord Chancellor

My Lords, as to the noble Lord's second point, that is certainly my intention. As to his first point, which concerns duties to avoid conflicts of interest, the one that most instantly comes to mind is where two defendants are being tried in the same trial and by reason of the nature of their defences there is a conflict between the two and it would be inappropriate therefore for them to be represented by the same salaried defender. That is the best illustration I can offer.

Lord Wigoder

My Lords, I am sure the noble and learned Lord the Lord Chancellor will accept that I rise to speak in no adversarial spirit but simply to ask one or two questions as I am not clear as to what the answers might be.

A code is clearly desirable and necessary. I have no particular comments to make about the code as set out in subsection (2) of the amendment. However, drafting a code is not all that difficult. Indeed, many of us in our time have drafted codes of professional conduct for various legal bodies. The problem arises when one comes to enforcing the code. It is about that matter that I want to ask some questions and I have no ulterior motive in doing so.

I take "duties to avoid conflicts of interest" as an example. With a salaried defender, whose task will it be to detect whether a fellow employee is suspected of a conflict of interest? If someone detects it or suspects that there is one, to whom will he report it? When he reports it, it presumably goes through a chain. To whom will it go? Where does the chain finish? Who will then adjudicate upon the issue as to whether the salaried defender has been in breach of his duty to avoid a conflict of interest? What sanctions will be available against a salaried defender who breaches the code in that or any other way? Is it to be a question of an employer-employee relationship and a matter eventually perhaps of an industrial or employment tribunal if someone is wrongfully dismissed; or is it to go a rather different way; and if so, how will it get there? In other words, will a solicitor salaried defender find that in some way or other the matter will reach the Law Society and it will be for its disciplinary body to deal with the issue? If he is a barrister salaried defender, will it in some way be a matter that will reach the Bar Council or his Inn of Court?

I should be grateful for assistance on these matters. As I say, drafting a code is one thing but making sure that it works is absolutely crucial.

Lord Ackner

My Lords, it will be apparent to your Lordships that, following the chiding I received from my noble and learned friend the Lord Chancellor for having spent too long winning the amendment on the fourth day of Committee, I had descended into a deep sulk. But I feel it is only right to acknowledge my gratitude to my noble and learned friend for having done what he undertook to do in producing this new clause.

I, too, would like to know the answer to the question of enforcement because that was one of the problems which was raised in Committee. But, subject to that inquiry, I repeat my gratitude to my noble and learned friend for carrying out what he undertook to do.

Viscount Colville of Culross

My Lords, I wish to say a few words because the point about enforcement is something that I envisage coming before the courts themselves. It must be of great importance that someone like myself who tries crime all the time should know whom to approach if there should be a breach of the code. There is a duty to the court, but what is the court to do about it? I therefore think that the noble Lord, Lord Wigoder, and the noble and learned Lord, Lord Ackner, have raised a point that should exercise the mind of the noble and learned Lord the Lord Chancellor as indeed it will exercise the minds of the judiciary.

6 p.m.

Lord Borrie

My Lords, I want to raise one small question in the light of the point made by my noble and learned friend the Lord Chancellor that this code, which I am delighted to see following the initiative of the noble and learned Lord, Lord Ackner, will apply to those employed by the commission whereas independent practitioners will be governed by their own professional requirements—presumably the Bar Council and the Law Society.

Is it the understanding of my noble and learned friend that the codes by which the independent practitioners will be governed are "similar" to the statutory code or "identical" with it? If they are only "similar", is not there a risk of discrepancy in treatment between the independent practitioner and he or she who is employed by the commission? For example, in the same case there may be a Queen's Counsel who is an independent practitioner working with a junior who is a member of the criminal defence service.

The Lord Chancellor

My Lords, I am grateful to the noble and learned Lord, Lord Ackner, for welcoming this amendment; after all, it was his idea, though I strongly supported it in principle.

I am asked about who it will bind. Primarily, the duties are duties imposed on employees of the commission—salaried lawyers employed by the commission. The new clause provides, The Commission shall prepare a code of conduct to be observed by employees". I would envisage that compliance with the code would become a term of the contract of employment and would be enforceable in the same way as an employer may enforce any term of a contract of employment.

Some noble Lords drew attention to the fact that a breach of the code might, at the same time, be a breach of the professional rules either of solicitors or barristers depending on whether the employee in question was a solicitor or barrister. Enforceability would be through the contract of employment and very often it might be the case that a breach of the code would amount also to a breach of the individual's professional code.

Today, if a judge feels strongly that there has been some ethical lapse on the part of counsel before him, he is free to draw it to the attention of the head of chambers or the disciplinary body of an Inn of Court for it to consider whether or not to take the initiative. Similarly, a court would be free to communicate its concern or displeasure to the head of the criminal defence service and, likewise, could complain to the Inn of Court or the Law Society according to whether it was a barrister or a solicitor. Those are the best answers that I can give to those questions as at present advised.

On Question, amendment agreed to.

Clause 15 [Regulations about payments to representatives]:

The Lord Chancellor moved Amendment No. 123: Leave out Clause 15.

On Question, amendment agreed to.

Clause 16 [Terms of provision of funded services]:

The Lord Chancellor moved Amendment No. 124: Page 11, line 26, after ("made") insert ("and what that person or body is to do with them").

The noble and learned Lord said: My Lords, 1 hope I can deal briefly with what are technical amendments, relating to moneys received as a result of an order made under Clause 16(2) that an individual for whom services are funded by the Commission as part of the criminal defence service is to pay some or all of the costs of representation.

Clause 17(4) states that any amount received by the commission pursuant to an order under Section 16(2) shall be paid into the Consolidated Fund, which is the Government's principal bank account at the Bank of England.

Amendment No. 124 is necessary so that any persons or bodies other than the commission through which these sums are handled--for example, magistrates' courts or debt collection agencies—can be directed what to do with sums collected pursuant of an order. Regulations will ensure that the sums arrive in the Consolidated Fund in an efficient way, subject to proper financial controls. This might not involve payment being routed through the commission. Amendment No. 125 deletes Clause 17(4) which becomes otiose. I beg to move.

On Question, amendment agreed to.

Clause 17 [Funding]:

The Lord Chancellor moved Amendment No. 125: Page 11, line 38, leave out subsection (4).

On Question, amendment agreed to.

Clause 18 [Foreign law]:

The Lord Chancellor moved Amendment No. 126: Page 11, line 43, at end insert ("unless any such law is relevant for determining any issue relating to the law of England and Wales.").

The noble and learned Lord said: My Lords, in moving Amendment No. 126 I shall speak also to Amendments Nos. 127 and 128, all of which are amendments to Clause 18. The first is designed to ensure that the wording of Clause 18 does not prevent the legal services commission from providing help under both the community legal service and the criminal defence service where there are factual issues of foreign law which arise in proceedings in England and Wales.

In Committee we were fairly inundated with examples of situations where issues of foreign law might arise, and I am grateful to your Lordships for bringing those to our attention. I believe that this amendment provides for those and other similar situations, where we would wish to provide help.

The other two amendments refer to the process by which the Lord Chancellor may make exceptions to the general provisions of this clause. Clause 18 provides, in general, that the legal services commission is restricted to funding services under the community legal service or criminal defence service only in relation to matters of domestic law. However, the commission should be able to fund services in exceptional circumstances where it is necessary to fulfil the United Kingdom's international obligations. For example, the REMO (Reciprocal Enforcement of Maintenance Orders) agreement obliges us to provide legal aid for the enforcement in this country of child maintenance orders made in foreign courts under foreign law. Whereas previously the clause allowed the Lord Chancellor to make exceptions by direction, these amendments provide that exceptions shall be made by order subject to the negative approval procedure. That mirrors the arrangements under the existing Act.

I have always been in agreement with your Lordships on the purpose of this clause; I hope that we can now agree on its wording. I beg to move.

On Question, amendment agreed to.

The Lord Chancellor moved Amendments Nos. 127 and 128: Page 12, line 3, leave out ("directions given by him under section 4") and insert ("order"). Page 12, line 6, leave out ("by the directions") and insert ("in the order").

The noble and learned Lord said: My Lords, with the leave of the House I shall move Amendments Nos. 127 and 128 en bloc. I beg to move.

On Question, amendments agreed to.

Clause 19 [Restriction of disclosure of information]:

The Lord Chancellor moved Amendment No. 129: Page 12, line 31, leave out ("apply to") and insert ("limit the disclosure or).

The noble and learned Lord said: My Lords, I think 1 can be fairly brief in speaking to these amendments, which I promised to bring forward in response to an amendment moved by the noble Lord, Lord Goodhart. in Committee which he kindly agreed to withdraw in the light of my undertaking to reconsider the drafting of Clause 19.

The noble Lord was concerned that the present wording of Clause 19(3)(c), taken with the provisions of Clause 19(1), appeared to suggest that information which was otherwise subject to client/lawyer privilege could be disclosed or be required to be disclosed. As I explained in response to the noble Lord, that was certainly not the intention of the provision. Its purpose was simply to ensure that information given by the client to his lawyer was not subject to the provisions of Clause 19 at all and, therefore, that disclosure could not render the lawyer liable to prosecution under Clause 19(5). It was not intended in any way to breach the privilege from disclosure of information given to a lawyer by his client. I agreed to ask the draftsman to consider the provisions further in order to make their intent clearer.

The group of amendments standing in my name seeks to set out more plainly the intent of the provisions contained in subsection (3). The opening words of subsection (3) of Clause 19 are amended to make clear that the provisions of Clause 19(1) do not limit disclosure of information of the kind described in the subsection. Sub-paragraph (c) is removed from subsection (3). A new section is added at the end of the clause which more plainly sets out that information provided to a lawyer by a client receiving funded services as part of either the community legal service or the Criminal Defence Service is not subject to the provisions of Clause 19. This information, of course, remains subject to privilege and the provisions of Clause 21(1) already ensure that the privilege is not affected by reason of the client being in receipt of funded services.

I hope that with these amendments I have met the concerns of the noble Lord, Lord Goodhart. I beg to move.

Lord Goodhart

My Lords, the noble and learned Lord has indeed succeeded in that purpose. I am most grateful to him for having taken the original draft away and looking at it again. It seems to me that these amendments deal with the problem that I raised in Committee.

On Question, amendment agreed to.

The Lord Chancellor moved Amendments Nos. 130 and 131: Page 12, line 36, leave out from ("Commission") to end of line 40. Page 13, line 2, at end insert— ("(7) Nothing in this section applies to information furnished to a person providing services funded as part of the Community Legal Service or the Criminal Defence Service by or on behalf of an individual seeking or receiving such services.").

On Question, amendments agreed to.

The Lord Chancellor moved Amendment No. 132:

After Clause 21, insert the following new clause

GUIDANCE

(".—(1) The Lord Chancellor may give guidance to the Commission as to the manner in which he considers it should discharge its functions.

(2)The Commission shall take into account any such guidance when considering the manner in which it is to discharge its functions.

(3)Guidance may not be given under this section in relation to individual cases.

(4)The Lord Chancellor shall either—

1. (a)publish, or
2. (b)require the Commission to publish,

any guidance given under this section.").

On Question, amendment agreed to. Clause 23 [Orders and regulations]:

The Lord Chancellor moved Amendment No. 133: Page 14, line 21, after ("power") insert ("of the Lord Chancellor").

On Question, amendment agreed to.

The Lord Chancellor moved Amendment No. 134: Page 14, line 22, at end insert (1A) Before making any remuneration order relating to the payment of remuneration to barristers or solicitors the Lord Chancellor shall consult the General Council of the Bar and the Law Society. (1B) When making any remuneration order the Lord Chancellor shall have regard to—

1. (a) the need to secure the provision of services of the description to which the order relates by a sufficient number of competent persons and bodies,
2. (b) the cost to public funds, and
3. (c)the need to secure value for money.

(1C) In subsections (IA) and (1B) "remuneration order" means an order under section 7(3A), 13(2A) or I4(3A) which relates to the payment by the Commission of remuneration—

1. (a)for the provision of services by persons or bodies in individual cases, or
2. (b)by reference to the provision of services by persons or bodies in specified numbers of cases.").

[Amendment No. 135, as an amendment to Amendment No. 134, not moved.]

On Question, Amendment No. 134 agreed to.

The Lord Chancellor moved Amendments Nos. 136 to 139:

Page 14, line 22, at end insert— ("( ) No directions may be given by the Lord Chancellor to the Commission under this Part in relation to individual cases. ( ) Any directions given by the Lord Chancellor to the Commission under this Part may he varied or revoked. ( ) The Lord Chancellor shall either—

1. (a)publish, or
2. (b)require the Commission to publish, any directions given by him under this Part.").

Page 14, line 23, leave out ("Regulations") and insert ("Orders, regulations and directions of the Lord Chancellor").

Page 14, line 25, after ("2") insert ("or 9 or paragraph 6(3) of Schedule 3").

Page 14, line 26, leave out ("4") and insert ("5").

On Question, amendments agreed to.

Clause 24 [Interpretation]:

The Lord Chancellor moved Amendment No. 140: Page 14, leave out line 36.

On Question, amendment agreed to.

Clause 27 [Conditional fee agreements]:

The Lord Chancellor moved Amendment No. 141: Page 15, line 28, leave out from second ("agreement") to ("or") in line 31 and insert ("with a person providing advocacy or litigation services which provides for his fees and expenses, ").

The noble and learned Lord said: My Lords, this group of amendments makes changes to Clause 27 which I undertook to consider further in response to a number of amendments moved in Committee.

In Committee the noble Lord, Lord Kingsland, moved an amendment with the intent of ensuring that there could be no doubt that a conditional fee agreement made between a barrister and solicitor on behalf of a client was lawful and enforceable. As I explained in Committee, the concern arises because barristers do not usually accept instructions directly from the public. A barrister is instructed by a solicitor on behalf of a member of the public or some other body. The solicitor is considered the professional client and the member of the public or other body the lay client. The concern expressed by the noble Lord, Lord Kingsland, was whether Clause 27(2)(a) adequately encompasses conditional fee agreements made with barristers.

The first and third amendment in this group seek to meet that concern by amending the description of a conditional fee agreement so as to avoid referring to "client". The first amendment in this group changes subsection (2)(a) of Clause 27 so that it will read as follows: (2) For the purposes of this section and section 58A— (a) a conditional fee agreement is an agreement with a person providing advocacy or litigation services which provides for his fees and expenses or any part of them to be payable only in specified circumstances. The revised provision sets out more clearly the firm intention that any lawyer, whether a barrister or solicitor, may offer his services in specified proceedings as provided under Clause 27 and that any agreement made in accordance with Clause 27 and regulations made under it is lawful and enforceable. The third amendment in this group is consequential to the redrafting of Clause 27(2)(a) where the use of the term "client" has now been removed.

The second amendment in this group fulfils the undertaking I gave to the noble Lord, Lord Meston, whom I am pleased to see in his place, to consider the terms of his amendment to ensure that conditional fee agreements may not be allowed in any form of family proceedings. I do not think that I need to say more now than I did in responding to the noble Lord in Committee save to say that it pleased him when I accepted his amendment in principle and hope he will be equally pleased to see that the terms of his amendment have also met with the approval of the parliamentary draftsman.

The fourth amendment in this group reproduces that moved in Committee by the noble Lord, Lord Kingsland. It seeks to increase the discretion given to the Lord Chancellor as to which bodies in addition to the designated judges, the General Council of the Bar and the Law Society he wishes to consult before he makes an order specifying proceedings in which conditional fee agreements may be made. I agree to consider his amendment further because I believe that the provision contained in the proposed Section 58(4) of the Courts and Legal Services Act 1990 inserted by Clause 27 is too restrictive. I am pleased to say to the noble Lord, Lord Kingsland, that I am able to accept the terms of his original amendment too.

I hope that I have managed to meet the concerns of the noble Lords, Lord Goodhart, Lord Meston and Lord Kingsland, with these amendments. I beg to move.

6.15 p.m.

Lord Kingsland

My Lords, I am extremely grateful to the Lord Chancellor for responding to my amendment in the way that he has.

Lord Meston

My Lords, I am likewise grateful to the noble and learned Lord for responding so promptly and completely to the concerns of the family lawyers, who were worried about the terms of the Bill as originally drafted.

Lord Goodhart

My Lords, I, too, am grateful for these amendments.

On Question, amendment agreed to.

Lord Hunt of Wirral moved Amendment No. 142: Page 15, line 45, after ("agreement") insert— ("( ) it must not be used in substitution for before the event legal expenses insurance cover;").

The noble Lord said: My Lords, this amendment concerns the question of conditional fee agreements. It seeks to ensure that they will not take the place of already existing insurance cover for legal expenses.

Conditional fee arrangements are of course "after the event" insurance. However, many people have "before the event" insurance but often do not realise that fact. As my noble friend Lord Renton just pointed out to me, my amendment might have been easier to read had "before the event" been in inverted commas. I should be happy to accept that amendment. I stress that the amendment seeks to ensure that conditional fee agreements must not be used—on the original Marshalled List the word "not" was omitted—in substitution for before the event legal expenses insurance cover.

I very much support the principle of conditional fee agreements, but they must be only one of the options to be considered by a claimant. A claimant's solicitor has to look at the wider picture and to recognise that there is a potential conflict of interest because there will undoubtedly be a situation where a claimant's solicitor will secure additional remuneration if a conditional fee agreement is preferred. Yet, as I understand it from recent figures, there are 17 million before the event legal expenses insurance policies in existence. Often people do not realise that. These policies may be attached to domestic, household, car or even credit card insurance policies. I very much hope that there is some way in which we can ensure that where people already have this cover the claimant's solicitor is put under an obligation to see that it is that cover which is used to make sure that the individual is properly protected rather than a conditional fee agreement.

I speak on behalf of a number of solicitors who specialise in this area of insurance, as I have myself in the past. Their organisation is the Forum of Insurance Lawyers (FOIL), the president of which, Martin Bruffell, who is an active practitioner and a partner in the well-known insurance litigation firm of Berrymans Lace Mawer, is quoted in one of today's legal newspapers as saying: It seems to us that [conditional fee agreements] are being encouraged because it allows lawyers to add an extra sum to their bill if they're successful. That way, they get more money for the same job. We believe it is fraudulent, or even negligent, for a solicitor not to look at all possible funding options before advising a claimant on what route they should take". I know that Martin Bruffell and his officers in FOIL are raising with the Law Society the whole question of a new professional conduct rule which would apply here.

I hope that the noble and learned Lord the Lord Chancellor will not only sympathise with the purpose behind the amendment but will actively seek ways in which my concerns can be addressed. I beg to move.

Lord Kingsland

My Lords, I rise to speak to the other two amendments in this group, Amendments Nos. 143 and 151. I seem to recall that in Committee the noble and learned Lord made a most helpful, constructive and thoughtful response to these amendments. I do not remember that just because it was the only occasion on which the noble and learned Lord responded in that way to one of my amendments. I believe the noble and learned Lord said in reply that he would be interested to receive a letter from the Law Society about the scope of the definition of "non-contentious business". The issue that the noble and learned Lord reflected on in some detail was how one could deal with, for example, a case being heard in an employment tribunal where there is no specific costs regime to which a conditional fee agreement could adhere.

I do not know whether the noble and learned Lord has had a chance to reflect further on this matter or whether he has had any exchanges with the Law Society since then. I readily accept that these amendments may not, in any case, satisfy entirely what he would wish to put in the Bill were he to be satisfied that something was necessary. It is with that series of rather open reflections that I leave the matter with him.

The Lord Chancellor

My Lords, the amendments in this group seek in different ways to provide additional conditions to those contained in the Bill which would have to apply to every conditional fee agreement.

The first amendment, in the name of the noble Lord, Lord Hunt of Wirral, seeks to insert a new subparagraph in the revised Section 58(3) of the Courts and Legal Services Act 1990 contained in Clause 27. Section 58(1) provides that where a conditional fee agreement satisfies all the conditions set out in Section 58 it shall be enforceable. Section 58(3) provides for certain conditions which must apply to all conditional fee agreements. It is in this subsection that the noble Lord wishes to insert a new subparagraph after Section 58(3)(b) which provides that the conditional fee agreement must not be used in substitution for before the event legal expenses insurance cover.

This therefore makes a conditional fee agreement lawful only if it is not used in substitution for, before the event legal expenses insurance cover". From one point of view, it must be a matter entirely for the individual to decide whether he will take advantage of an insurance product he has already purchased or whether for some reason he prefers to engage a solicitor on a basis that the lawyer will share with him the risks of litigation, and be covered specifically by insurance. As at present advised, I tend to think that this is a choice for the individual to make and not one for Parliament to make for him. On the other hand, I accept that the noble Lord has a point and I undertake to write to the president of the Law Society and enquire of him what the Law Society's view is of the duties of a solicitor who is minded to enter into a conditional fee agreement but who knows that his client already has insurance cover under a before the event legal expenses insurance policy.

I doubt that the market for legal expenses insurance is really at risk here, however. I believe that those who are inclined to insure against unspecified potential liabilities will continue to do so. If they had prudently gone to the trouble and expense of doing so, I would be surprised if they did not avail themselves of that which they had purchased when the need for it arose.

I have said, and I say again, that I wish to encourage greater use of legal expenses insurance because it is the cheapest and most prudent way—I am sure the noble Lord will be pleased to hear me say this—to provide for a potential liability for lawyers' bills. I am sure that the marketing skills of the insurance industry, if properly applied, could achieve greater awareness of legal expenses insurance and increase the use of these products.

I have said to the noble Lord that I think he has a substantial point that the Law Society should address and I have given him my undertaking to write to the president of the Law Society. When I hear from the president I shall, with his permission, pass on his views to the noble Lord.

The second two amendments in this group are related. Amendment No. 143 is substantially the same amendment as was moved in Committee by the noble Lord, Lord Kingsland, which seeks to outlaw contingency fees. Amendment No. 151 responds in part to the reply that I gave the noble Lord in Committee when I pointed out that solicitors were allowed to use contingency fees in non-contentious business as defined by the Solicitors Act 1974. This amendment builds on Amendment No. 143 so that contingency fees used by solicitors would no longer be lawful notwithstanding that the Solicitors Act approves of their use. I dealt in some detail in Committee with the amendment to outlaw contingency fees, and I do not believe that it is necessary to repeat what I said then. I have not changed from the view I expressed in Committee when I invited the noble Lord, Lord Kingsland, to withdraw his amendment on that occasion. However, I expressed my concern in Committee about the use of contingency fee agreements in cases before employment tribunals. I have taken up this matter with the Law Society and I am currently considering some preliminary representations that it has made to me on this matter. This is an area in which I continue to take an active interest. I repeat that I do not want to see contingency fees introduced in relation to cases before the courts. I think that there is a crucial difference between arrangements where the lawyer charges his normal fees in the event of success, together with an uplift which is subject to a statutory maximum, and arrangements where the lawyer's direct interest is an agreed percentage of the damages recovered. The two are quite different. That, too, is the view that the courts have taken and continue to take. Contingency fees are at common law unlawful and unenforceable. The Solicitors Act 1974 prevents a solicitor from using a contingency fee in contentious business before the courts. I therefore believe that, employment tribunals apart, the law is sufficiently clear on this point and I am not persuaded of the need to legislate in this area.

But I entirely accept that the situation relating to employment tribunals needs careful thought. The Government, however, are looking at their obligations under EU law and the European Convention on Human Rights before reaching any conclusions. This issue needs to be addressed in that context. As I said in Committee, we cannot simply consider the position of employment tribunals and related issues of costs or publicly-funded support to take cases to those tribunals in a piecemeal fashion. On that basis I invite the noble Lord to withdraw his amendment.

Lord Hunt of Wirral

My Lords, I thank the noble and learned Lord for his undertaking. In those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

6.30 p.m.

[Amendments Nos. 143 and 144 not moved.]

The Lord Chancellor moved Amendments Nos. 145 to 147: Page 16, line 18, leave out from ("proceedings") to end of line 20. Page 16, line 37, leave out ("to his client"). Page 17, line 5, leave out ("authorised bodies (if any)") and insert ("bodies").

On Question, amendments agreed to.

Lord Goodhart moved Amendment No. 148: Page 17, line 9, after ("subject") insert ("to subsections (OA) and (6B) and").

The noble Lord said: My Lords, in moving Amendment No. 148 I should like to speak also to Amendments Nos. 150, 152 and 154 which stand in my name and are part of the same group. These amendments bring back a series of amendments debated at Committee stage. I bring them back because I believe that they are of considerable importance. I am aware that a number of others both in your Lordships' House and elsewhere agree with me on that. The amendments concern the right of a successful party who has been funded by a CFA to recover from the losing party both the top-up that he has agreed to pay to his solicitor or barrister over the normal fees that are payable and the insurance premium that he has purchased to cover the liability to pay the costs of the other side.

The Bill now provides that a costs order may, subject to rules of court, include an order for payment of enhanced fees—the top-up—and the insurance premium. They are dealt with respectively in Clauses 27 and 28. In Committee the noble and learned Lord the Lord Chancellor indicated that there should be a presumption in favour of including in the costs order the top-up and the premium. However, he also said that it was desirable to retain a certain degree of flexibility as is the case with an ordinary costs order where costs normally follow the event but there is power to direct that they should not do so. I believe that the presumption should be the other way and that the premium and the top-up fees should not be added to the costs order unless there is a clear justification for doing so. There are two reasons for this. The first, and I believe more important one, is that such a costs order will be unfair to the losing party. A claimant who has reasonable means and wishes to bring proceedings has a choice. He can accept the normal risk that if he loses he will have to pay his own costs and those of the other side, or he can in effect insure himself against that risk by entering into a CFA with his own legal advisers and by insuring against the risk of having to pay the other side's costs.

One may ask why the losing party should have to pay extra because the claimant has chosen to protect himself against the normal risks of litigation. That may result in the loser paying three sets of costs: his own, the other side's normal costs and what may be up to 100 per cent. by way of top-up, and also the successful party's premium. Not all losing parties are big corporations with deep purses. Not all losing parties have behaved unreasonably in contesting the proceedings. Indeed, the stronger the case of the unsuccessful party the more he will have to pay if he loses because in such circumstances it is likely that the claimant's top-up fee will be larger. The top-up fee is larger in difficult cases than in easy ones.

I believe that here there is a plain and simple principle that if a claimant chooses to litigate and pay to protect himself against the normal risks of litigation the defendant should not be saddled with the costs of that protection. I recognise that the claimant does not always have that choice. The claimant may not be able to afford to take the risk of losing. The claimant may have no real alternative but to enter into a CFA. In such a case it may well be unfair to the claimant to deprive him of part of the damages that he has won in order to pay the top-up or the costs of the premium. These amendments cover that.

The second reason why I believe that losers should not normally be asked to pay the top-up fee and the premium is that it will encourage people who can afford to pay their own costs to go for a CFA instead. The incentive is obvious. If one loses one pays no fees and no costs; if one wins one gets back one's own costs, the top-up and the policy premium. Therefore, it is a case of heads I win and tails you lose. But CFAs have quite serious defects. Among them is the fact that they lead to conflicts of interest between the lawyer and the client. The more money that lawyers have invested in working on a case the greater will be their interest in settling that case even on terms that are unfavourable to the client as long as their costs are recoverable.

Secondly, CFAs will reduce choice because many smaller firms will not want to expose themselves to the additional risks involved in CFAs, and CFA work will go to the big claims firms such as Thompson's which can spread the risk. CFAs have a useful role to play in providing access to justice, but that does not mean that they should be encouraged where access to justice is available without them.

The most serious argument against the amendments is that they will encourage satellite litigation. That is not something I would wish to see. However, I believe that with properly drafted rules there is no reason why satellite litigation should be encouraged. The main issue is likely to be whether a successful party could afford to litigate without recourse to a CFA. Someone wishing to claim recovery of top-up fees would no doubt have to submit a sworn statement of his own assets and liabilities to show that he could not have afforded to risk paying the costs. There is no reason why the accuracy of that statement should be investigated, or why there should be cross-examination on it. Of course if someone deliberately conceals substantial assets, and that fact is subsequently discovered, quite properly he would run the risk of prosecution for perjury. By giving sufficiently careful thought to the drafting of the rules, I believe that it is possible to eliminate most of the risk of satellite litigation arising.

The Bill as drafted is unfair to losing parties and will encourage the use of CFAs when they are not needed and not desirable. I beg to move.

Lord Renton

My Lords, to a great extent I agree with the noble Lord, Lord Goodhart, in his attempt to ensure the costs awarded after conditional fee decisions have been made.

I think it is only right to remind your Lordships that, apart from the circumstances of conditional fee agreements, costs in civil actions have always been at the discretion of the court and the taxing master. It is right that that should be so because there is a multitude of different factors that the court, and rather less the taxing master, are entitled to take into consideration.

I much admire the effort of the noble Lord, Lord Goodhart. However, what I have suggested is summed up in Amendment No. 154 in the new subsection (2) which states: An order may be made under this section only if the court thinks it just in all the circumstances". I repeat: "all the circumstances". That is the great variety to which I referred. I suggest with all humility and respect that instead of accepting the amendments, at Third Reading the noble and learned Lord the Lord Chancellor should have a provision written into new Section 58A which makes it clear that even in conditional fee cases the court will have that full discretion which otherwise prevails.

6.45 p.m.

Lord Hunt of Wirral

My Lords, the noble and learned Lord the Lord Chancellor will know from our debate on conditional fee agreements that I welcome them in principle. I find myself in agreement with the comments of the the noble Lords. Lord Goodhart and Lord Renton.

The noble and learned Lord the Lord Chancellor may recall that I pointed out that for public bodies and public companies facing a number of actions the arrangement in effect asked for them to pay for the cases they had won through payment not only of the success fee but also of the insurance premium in those cases they lose. The noble Lord, Lord Goodhart, has introduced a further element: I share his concern. It is to some extent mitigated by the validity of the arguments adduced by the noble Lord. Lord Renton. Perhaps we should find some way of returning to the court the discretion that the court has always had to intervene in cases where it is just for the court to do so.

I speak to Amendments Nos. 149 and 153 which concern yet one further element which has caused concern to the Forum of Insurance Lawyers. Hitherto, parties to an action have usually known how the claim is funded. At the outset, a notice of civil aid through the legal aid certificate is exhibited to the court, and notice of its existence is served on the other party. I am concerned that we are now dealing with a range of possible funding mechanisms. A person facing a claim will not know how the claim is being funded. My amendments provide that notice is given, in particular where a conditional fee agreement exists.

The funding could be through legal expenses insurance, in some cases through legal aid, conditional fee agreement, trade union assistance, or private means. It could be a range of factors. The sort of person to whom the noble Lord, Lord Goodhart, has referred who faces a claim, needs that information in order to assess his chances of recovering costs. Public bodies, public companies and private individuals need that information. My comments apply to Amendments Nos. 149 and 153.

Lord Clinton-Davis

My Lords, in the course of these debates, it is rare to find myself at variance with the noble Lord, Lord Hunt. However, I have some reservations on this issue, and they are as follows. One would have to give advance notice to the opponent of the level of success fee. Who would benefit from that? It would be the insurers.

My preferred course would be to engage in more consultation on the issue before adopting the course proposed by the noble Lord. The issue may be better dealt with by rules of court or regulations. I hope that my noble and learned friend will respond to that point.

Lord Ackner

My Lords, in many ways we are in an odd position. For many decades, the conditional fee arrangement was unenforceable as it was considered contrary to public policy. All of a sudden a halo has been placed around this form of activity and if one indulges in it one receives a bonus, which is quite contrary to principle.

If conditional fees were not available, and if (as I am sure would be the case) I could not afford the litigation upon which I am about to embark and 1 raise a large loan from my bank in order to fund it, no one would have thought for a moment that if I won the case I could include the interest which I pay on the loan. I suppose the classicist would say that res inter alia acta, it has nothing to do with the essential principles of damages and costs. That is why I resist the suggestion that there should be a presumption in favour of the premium and the uplift being repaid. That is why I put my name to Amendment No. 154, which seems to he supported by the noble Lord, Lord Renton. It provides that the court retains a discretion and, in deciding how to exercise it, has regard to the matters set out in the amendment. Accordingly, I would support that as a way of dealing with the problem.

The Lord Chancellor

My Lords, the amendments bring onto the face of the Bill considerations that the court should have in mind in determining the liability for any success fee and insurance premium that a person using a conditional fee agreement should recover from his opponent.

Amendments Nos. 148 and 150 to Clause 27 impose on the court a number of considerations before it can make the success fee recoverable, including such things as the hardship towards the person liable to pay the costs and the extent to which the case could have been funded without using conditional fees. Amendments Nos. 152 and 154 to Clause 28 impose similar constraints on a court before it can make the insurance premium recoverable.

As I said in Committee, I consider that these matters, to the extent to which they need to be dealt with at all, are matters far better suited to be dealt with in rules of court. I continue to be very concerned that they would, in effect, establish satellite litigation while arguments were made about whether, for example, a person could have afforded to take a case without using conditional fees or an insurance premium and about considerations that had led the court to its conclusion.

I am afraid that there is an issue of principle between myself and the noble Lord, Lord Goodhart. He would like the presumption to be the other way around and to provide that the insurance premium and the success fee should not be added to the defendant's liability unless there were specific justification for doing so. He says that it is unfair to the losing party.

The noble and learned Lord, Lord Ackner, comes to a similar view from a different standpoint. He says that conditional fee agreements used to be stigmatised as unlawful, but all of a sudden a halo has been put around them. Of course, the noble and learned Lord will be the first to know that Parliament sometimes has to step in and remedy the deficiencies of the common law and Parliament is sovereign. The noble and learned Lord asks, "What if there were no conditional fee agreements and I had to go to the bank and be put in funds to bring litigation forward? I would not in the ordinary way recover the interest I had to pay on the loan". Of course he is right. He says that that would be reason to res inter alia acta. Another way of looking at it might be to say, "The problem arises from the impecuniosity of the plaintiff and that should not be visited on the defendant. But it is possible for Parliament to take a different view and that is what we invite Parliament to do. The costs of the insurance premium and the uplift are costs that he had to incur in order to gain access to justice and they are costs incurred as a result of a wrong which has been done to him by the defendant".

For my own part, I do not see it as in any way unfair to defendants who have wronged plaintiffs to be liable for the full costs which the plaintiffs have had to incur in order to secure redress.

I believe that the simpler course would be to allow the normal rules on costs to apply. That is a presumption that costs will follow the event of the judgment, but—and I agree with the noble Lord, Lord Renton—with a discretion to the court to vary this in appropriate circumstances.

Amendments Nos. 149 and 153 in the name of the noble Lord, Lord Hunt, also seek to place provisions in the statute with which I can have sympathy in general terms, but which I believe are more adequately dealt with in rules of court. He seeks to amend the proposed Section 58A(6) so as to prevent the success fee being recoverable unless notice has been given as prescribed by rules of court and to amend Clause 28 in a similar way in respect of the recovery of the insurance premium.

If it assists the noble Lord, I am quite sure that it will be necessary to specify in the rules of court not only that a notice that a conditional fee agreement is being used and backed up by an insurance premium must be given to an opponent, but also when that must be given and when a person using a conditional fee will be required to set out in a notice to his opponent the success fee that is being claimed and the amount of the premium incurred. That is why the provisions of subsection (6) and Clause 28 are expressed so that recovery is subject to rules of court. For those reasons, I do not believe that the additional words he seeks to include are necessary.

I am prepared to consider further the concerns which lie behind the amendments contained in the group when drafting the necessary rules of court. As I have made plain, there is simply a difference of principle and judgment between myself and the noble Lord, Lord Goodhart. I abstain from speaking to Amendment No. 155 because the noble Lord, Lord Kingsland, has not spoken to it in this group. For those reasons, I invite the noble Lord to withdraw the amendment.

Lord Goodhart

My Lords, I am grateful for the support which my amendment has received from other Members of your Lordships' House. In response to the noble Lord, Lord Renton, I would be entirely happy had the noble and learned Lord accepted my amendment to the extent suggested by him and no further. Unfortunately, the noble and learned Lord is not prepared to go even as far as that.

However, the noble and learned Lord the Lord Chancellor has said that Parliament is entitled to impose an obligation on a losing party to pay the top-up fees of the successful party. That is beyond question. It certainly has the power to do so. The real question is whether it is fair to impose such a rule and I must say that nothing the noble and learned Lord has said has induced me to change my view that it is not fair to do so.

Although my views have not changed on this issue and I still believe it to be both serious and important, I do not intend to press it to a Division. I can only hope that the rules will be drafted in a way which gives the courts power to do justice. In my view, justice will involve not requiring a defendant to pay a top-up where, for example, the successful party is clearly a person of considerable wealth who has chosen to go for a CFA rather than run the risk of paying the cost of litigation which he can well afford.

Amendment, by leave, withdrawn.

7 p.m.

[Amendments Nos. 149 to 151 not moved.]

Clause 28 [Recovery of insurance premiums by way of costs]:

[Amendments Nos. 152 to 154 not moved.]

[Amendment No. 155 not moved.]

Clause 29 [Replacement of ACLEC by Consultative Panel]:

The Minister of State, Cabinet Office (Lord Falconer of Thoroton) moved Amendment No. 156: Page 17, line 31, at end insert— ("( ) In appointing persons to the Consultative Panel the Lord Chancellor shall have regard to the desirability of securing that the Consultative Panel includes persons who (between them) have experience in or knowledge of—

1. (a)the provision of legal services;
2. (b)the lay advice sector;
3. (c)civil or criminal proceedings and the working of the courts;
4. (d)legal education and training;
5. (e)the maintenance of the professional standards of persons who provide legal services;
6. (f)the maintenance of standards in professions other than the legal profession;
7. (g)consumer affairs;
8. (h)commercial affairs; and
9. (i)social conditions.").

The noble and learned Lord said: My Lords, this amendment sets out criteria which must be taken into account when appointing members of the legal services consultative panel. It is substantially the same as the amendment on this subject moved by the noble Baroness, Lady Wilcox, in Committee.

As the Lord Chancellor said in that debate, we would expect in appointing members to the panel to have very much in mind the factors suggested by the noble Baroness, and he accepted that that was an omission in the Bill as drafted. We are genuinely grateful to the noble Baroness for her assistance on this point, and indeed her valuable assistance on the similar matter of the composition of the legal services commission. The Lord Chancellor promised the noble Baroness in Committee to move a government amendment to bring about the same effect as her own, and I am grateful for her prior indication that she is happy to accept what is proposed.

The noble Baroness spoke persuasively on that occasion about the need for such criteria, and I need not repeat what she said. She said it very eloquently. I agree that the panel will need a balance of experience and expertise among its membership, including knowledge in consumer affairs, in order to carry out its duties effectively and with due regard to the needs of all users of legal services.

I turn now to the differences, such as they are, between the noble Baroness's amendment and the government amendment. In Committee, I mentioned one flaw I found in her amendment. That was the technicality that one criterion referred to the maintenance of professional standards among banisters and solicitors. Of course, authorised advocates and authorised litigators are not limited to banisters or solicitors. That particular criterion has now been redrafted to refer to, persons who provide legal services". On consideration, it has also been decided that there is another gap that needs to be filled. Therefore I have added another criterion: that it would be desirable for those with experience in, or knowledge of, legal education and training to be represented on the panel. The reason for this is that the panel will have a key role in maintaining and developing standards in the education and training of providers of legal services. It will have an ongoing programme of work to provide recommendations on legal education, as ACLEC does now. The panel will be far better equipped for this task if it includes members with actual experience in or knowledge of this area.

The eagle-eyed will also have spotted a small difference in the first line. This now refers to, the desirability of securing that the Consultative Panel includes persons who (between them) have experience in or knowledge of", the specified areas, rather than, the desirability of appointing persons who have experience in, or knowledge or, those areas. This is a drafting amendment designed to clarify that there is not statutory requirement for all of the members to have knowledge of or experience in all of the specified areas. I beg to move.

Lord Renton

My Lords, I have reason to support the amendment but there are two points on it on which I should be grateful for the attention of the noble and learned Lord. The first concerns why a provision has been included and the second why something has been omitted.

Paragraph (f) refers to: the maintenance of standards in professions other than the legal profession". That is a huge subject. One can think of all the other professions that there are and the different circumstances which prevail in those other professions. I believe that it is asking almost the impossible to appoint someone with such knowledge. I believe that that provision should be left out.

Secondly, in training people in legal education, which is what this is about, we must bear in mind that although our legal profession has to an inevitable extent been centralised upon London, nevertheless, decentralisation has become a great feature of it in the past 50 years. I am glad to say that work which was frequently done in London is now done out on circuit. I cannot think of the exact phraseology, but some knowledge of the work of the profession outside London, out in the provinces--in Wales and so on—is desirable among members of the consultative panel. Perhaps that could be included at Third Reading.

Baroness Wilcox

My Lords, although I have written a letter to say that I agree with this proposed amendment, as I am in my place I wish to support Amendment No. 156. As we have heard, we now have user views represented on the body which is making decisions about meeting legal needs—the legal services commission—and we also have guaranteed user representation on the body advising the Lord Chancellor on the education and conduct of those providing legal services; namely, the consultative panel.

I am indeed grateful to the noble and learned Lord the Lord Chancellor that those three important voices will be heard on the two new bodies created by the legislation. Indeed, that completes my set. I shall not quibble about the technical points and in view of the points made by my noble friend Lord Renton, I must not stay on my feet too long in case someone snatches my points away from me. Therefore, on the two issues with which I am particularly concerned, I commend the amendment to your Lordships.

Lord Clinton-Davis

My Lords, I have a good deal of sympathy for the point made by the noble Lord, Lord Renton. If issues were to arise in relation to the maintenance and standard of other professions, some information or evidence could be garnered in order to satisfy the consultative panel's requirements on that particular issue. But I fail to see why it is necessary to have someone who has experience or expertise of the standards of other professions represented on the consultative panel.

I am delighted for the noble Baroness who has obviously had unique success in these deliberations. Good luck to her.

Lord Falconer of Thoroton

My Lords, perhaps I may deal with the two points raised by the noble Lord, Lord Renton. First, he asked why paragraph (0 is included. He asked why we are saying that people on the consultative panel should have, (between them) experience in or knowledge of … the maintenance of standards in professions other than the legal profession". It seems to us that in judging what should be the standards of the legal profession, it is appropriate to ensure that they are at least as good as the standards in other professions. It seems to us to be right also that one should have regard to how other professions are dealing with the problems which may face our profession. It would be helpful to have a broader perspective. That is why that provision has been included.

Lord Clinton-Davis

My Lords, I understand that it may be necessary to acquire evidence about those matters but it seems to me that the provision is extremely wide. The number of professions involved is immense and certainly it would be virtually impossible to have somebody who would be in a position to speak for the standards of so many professions. Is it not better to leave it, as suggested in my earlier intervention, on the basis of garnering evidence where necessary?

Lord Falconer of Thoroton

My Lords, the effect of paragraph (f) is not that every single other profession must be represented. It is sufficient that there is some knowledge of other professions. Although one may hear evidence, one tends to know rather more about matters of which one has personal knowledge. We are merely saying that when lawyers think about their own profession, there should be representation by somebody who has some knowledge of other professions. It seems to me that that is sensible and preferable to relying upon the giving of evidence to the panel.

On the second point made by the noble Lord, namely, should one make a reference about the provision of legal services outside London, we regard the words, (a) the provision of legal services", as covering the whole of England and Wales. It would be inappropriate to have on the panel people who are aware of the provision of legal services if their knowledge did not extend to knowledge of the provision of services, not in every part of England and Wales, but in London, the provinces and the system as a whole.

I hope that that meets the point that was made. We do not intend to return with any other amendments. We are aware of the point. We think it is important and we hope and believe that it is covered. I think that that deals with all the points. We are grateful for the support of the noble Baroness, Lady Wilcox, the progenitor of the amendment and for my noble friend's support.

On Question, amendment agreed to.

7.15 p.m.

Lord Phillips of Sudbury moved Amendment No. 157: Page 17, line 45, after ("services);") insert— ("( ) the duty of giving such advice as it thinks appropriate to the Lord Chancellor, after consultation with the Civil Justice Council established under the Civil Procedure Act 1997 with a view to ensuring that conditional fee agreements are being implemented fairly and in the interests of justice;").

The noble Lord said: My Lords, if passed, this amendment would insert into Clause 29 an express duty on the part of the legal services consultative panel, in effect, to monitor the effects of conditional fee agreements.

As the noble and learned Lord, Lord Ackner, said, it was an established principle of our system until very recently that conditional fee agreements—a form of contingency fee agreement—were considered to be contrary to the public interest. One of the classical summations of that principle was made by Lord Esher in a House of Lords case in 1895, where he said that such arrangements were incompatible with the "honour and honesty" of the legal profession.

Before the Lord Chancellor under the previous government introduced a measure of conditional fee arrangements, a considerable investigation into all aspects of conditional fees was carried out by the Bar Council. In 1990 the council produced a long and considered report that came down clearly against the introduction of conditional fees on the basis that they would, promote conflict of interest and a relaxation of ethical standards", in the profession. At present, there is a working party set up by the Institute of Advanced Legal Studies, on which I serve, which is looking at the ethical aspects of conditional fee arrangements. A considerable amount of work has already been done and it is fair to say that the views of those in that working party are extremely wide and include a considerable level of concern about the potential effects of conditional fees upon the probity of the litigation process.

The two main areas to worry about, as has been said, are, first, conflict of interest and, secondly, malpractice. Conflict of interest is struck down almost every month in the courts in other situations and in an amendment earlier today it was included as one of the matters to be part of the code of conduct—that is to say, a duty to avoid conflict of interest. However, we have some acute conflicts of interest which are simply inescapable in conditional fee litigation.

First, there is an acute conflict between a solicitor and client in setting the amount of the uplift. In those circumstances, most clients will be in the hands of their solicitors, who will have all the knowledge and experience of the law and will be in an overwhelmingly strong position to get their way. The limited amount of research done by the Policy Studies Institute (PSI), at the behest of the Lord Chancellor, indicates that of the 197 cases at which it looked, it thought one-third of them gave signs of an exaggerated uplift on the part of the solicitors' firms involved. One of my colleagues told me only yesterday that it is also quite possible for clients to be inclined to pervert the system by refraining from telling a solicitor, to whom they go for a conditional fee arrangement, crucial facts in relation to the claim in the hope and anticipation of depressing the amount of the uplift.

There are also equal and opposite conflict risks in the course of the litigation process especially concerning how quickly or slowly one strikes a deal with the other side. Given that a solicitor may be on double fees, in certain circumstances if the case is a strong one, an unscrupulous solicitor could string out the litigation, knowing that ultimately he is bound to win and that the longer he strings it out the more the double fee will be worth. In other circumstances, it can work the other way. For a solicitor to accept a low offer of settlement from the other side in circumstances where the case is very uncertain, and therefore the risk of going into court is grievous on the part of the solicitor, can work in the direction of encouraging a solicitor of weak character to recommend a settlement to a client that should be refused.

The malpractice side is simple and gloomy. There is a temptation to suppress evidence that is inconvenient to the case, particularly if it arises rather late in the day. There could be a letter, a report or a witness who, after a vast amount of input by the solicitor, would scupper the case if such evidence were revealed to the other side. It puts grave temptation in the way of that solicitor, especially when egged on by the client, to allow the conditional fee arrangement to work as it does.

There is also considerable temptation to fabricate evidence, most particularly oral evidence; to hone, polish and embellish oral testimony in a way that ultimately becomes a perversion of justice. Again, one must realise that the temptation is not all on one side. In that circumstance, the client too has a strong temptation to manipulate the solicitor at the start of the case and to connive with the solicitor en route. That represents a conspiracy by solicitor and client against the public interest and justice as a whole.

It is not as if the era in which we live is one in which solicitors and banisters are unaware of the commerciality of the work that they do. The whole tenor of the development of "lawyering" in the late 20th century is towards an extremely hard-nosed business approach, in which winning has become paramount, to the danger of the judicial and litigious process. I suggest that we are not in a climate where one needs extra incentives for solicitors to do a proper job. An irony of the conditional fee arrangement is that the Government have put it forward as being needed in terms of preventing lawyers spinning out cases improperly and of taking on bad cases when they should not. It is strange that the moral turpitude which they say justifies conditional fee arrangements will he stimulated and given wider scope by those conditional fee arrangements.

Like a number of people both inside and outside this Chamber, I should like to express a great deal of unease about the impact of conditional fees over time. Perhaps I may make it clear that there will be no sudden lapse of probity and honesty within the profession. I am a great admirer of the degree to which high standards are upheld. Equally, it is fruitless to pretend that there will not be pressure on probity and that, as time goes by and does its work, little by little that pressure on probity could lead to a serious collapse in the very high standards which we currently enjoy in this country. It is, in effect, to keep an eye on that and to prevent a sort of dry rot starting in the litigation process that this amendment is directed.

I emphasise that my wish, and the wish of those who have put their name to this amendment—I refer to the noble and learned Lords, Lord Ackner and Lord Archer of Sandwell—is to put on the face of the Bill a specific duty on the part of the panel to keep an eye on the development of the conditional fee arrangements and, in so doing, to work with the Civil Justice Council which was established two years ago under the Civil Procedure Act. I hope that the Lord Chancellor will accept that the proposed wording of Clause 29, which seeks to incorporate a new Section 18A into the Courts and Legal Services Act 1990, is not adequate to ensure that that monitoring takes place with sufficient certainty and priority. The wording of what will be new Section 18A(2)(a) does not make it clear that the duty of the consultative panel can extend to anything which is not part of the "programme of work", as it is called, approved by the Lord Chancellor.

I am aware that the next amendment. Amendment No. 158, has been tabled by the Lord Chancellor in an attempt to improve the position somewhat. However, I venture to suggest that it does not. I repeat that the requirement to publish recommendations made by the consultative panel can extend only to those brought forward by it in relation to a programme of work approved by the Lord Chancellor of the day. We are saying that this is a sufficiently important matter that it requires a specific duty to be placed on the face of the Bill. It is on that basis that I beg to move Amendment No. 157.

Lord Clinton-Davis

My Lords, I have expressed in the past, in Committee and earlier on Report, some apprehension about conditional fee agreements, but much more about their availability and about ensuring that access to justice is realised than about some of the considerations which the noble Lord, Lord Phillips, has introduced into the debate. It is true that I have referred to some of those considerations, but I feel that the noble Lord has taken an unduly gloomy view on the issue of probity and the profession. There are some concerns, which I share, that cases may he settled when it is seen to be more in the interests of the lawyer than of the client, but one must not gainsay the fact that at present lawyers give their clients the most careful advice on such issues, particularly with regard to payments into court.

Having said that, I am concerned to ensure that the most careful invigilation and monitoring are undertaken with regard to the way in which CFAs may evolve. They are still at the embryonic stage of their development. It is most important that the question of the availability of adequate insurance is included in that.

I join the noble Lord, Lord Phillips, in seeking to ensure that we arrive at a situation whereby the Lord Chancellor is able fully to appraise the position himself, with the benefit of his advisers. Even more important than that is the fact that we, the public, should have some knowledge so that we can ensure that access to justice is not being inhibited but is being improved as a result of the enhancement of this still new development in the law.

It is clear that anomalies could be thrown up during an investigation and that they will need to be addressed. It is right that Members of both Houses of Parliament should be aware of that. However, it may well be that what my noble and learned friend is suggesting in Amendment No. 158 will cover such issues. I am not entirely satisfied that the wording covers the anxieties which have been raised by the noble Lord, Lord Phillips, and myself. However, I am concerned with the practical consequences as much as, if not more than, with the ethical considerations with regard to monitoring.

Lord Ackner

My Lords, I should have thought that the noble Lord, Lord Phillips, is pushing at an open door here. The Lord Chancellor chided me from some three or four days ago, so he will no doubt forgive me if, in response, I tease him. I know that he will feel that this is grossly out of date, but on 7th April 1989 he addressed his predecessor's suggestion of contingency fees. He said this—it is very short, very impressive and is really the last word on this subject in relation to this amendment: The Green Paper's sole suggestion to improve access is to promote the idea of speculative actions by lawyers on some contingency basis. I regard contingency fees in any shape or form, however diluted, as abhorrent". Then Hansard records noble Lords saying, "Hear, hear!". No doubt encouraged by that support, the noble and learned Lord went on to say: The argument that professional standards are so high that there would be no risks does not impress. Lawyers are ordinary human beings. No lawyer at the front end of litigation should be in the position that the ability to pay next month's mortgage turns on the outcome of the case. Litigation turns on advocates being trusted by the courts and by one another to play fair. Flirting with contingency fees is another gimmick to avoid state responsibility and to secure justice on the cheap. Like so many bargain basement practices, the lawyers would be no exception to the risk that shoddy standards would result".—[Official Report, 7/4/89; col. 1326.] I think that that is deuce to the Lord Chancellor!

7.30 p.m.

The Earl of Dartmouth

My Lords, I had not intended to speak this evening. I had intended only to listen and perhaps to learn a little. However, I was absolutely astonished by the noble Lord's speech on what purports to be a detailed amendment. In fact, that speech was entirely opposed in principle, and at some length, to the whole concept of conditional or contingency fees. I was a parliamentary candidate 25 years ago and I am well aware that the Liberal Democrat Party, of which the noble Lord is a nominee, is extraordinarily blinkered. It is astonishing that someone should make a serious speech on the subject of conditional fees—he accurately described them as contingency fees—without even mentioning the United States, which has a large and important economy. It operates a common law system which is very similar to our own and where contingency fees have successfully operated for a very long time.

I lived and worked in the United States for eight years of my adult working life. The point that the noble Lord and others who think like him should seek to understand is that the great advantage of contingency or conditional fees is that it is possible for anyone to obtain redress from the courts. There was an example last week. A smoker successfully sued one of the biggest and most powerful corporations in the world; namely, Philip Morris. I certainly agree with the judgment that the settlement was much too large. But because there are contingency fees it is possible for anyone in the United States to obtain redress in the courts.

However, in this country there are no contingency fees and the losing side pays the costs. It means that people without legal aid do not have access to the court. That is one of the crying scandals of British justice. I remember a good old joke being told 25 years ago that the British courts are rather like Claridges. It is open to everybody, but one must be able to afford the fees.

I do not wish to make a very long speech, but I wish to make two quick points on what the noble Lord said. He quoted Lord Esher in 1875. The noble Lord is shaking his head, but that is what he said.

Lord Phillips of Sudbury

My Lords, I said 1895.

The Earl of Dartmouth

My Lords, I am sorry and I stand corrected. The noble Lord quoted Lord Esher from 1895. The point is that very powerful mores were operating at that time. There was a very powerful and explicit code of behaviour which meant that people behaved in such a way that the courts rarely had to be used. Therefore, in consequence of that code of behaviour, which no longer exists, we have a system which assumes that most litigation is vexatious. In turn that means that there is a bias against all litigation. That is something which this Bill seeks to put right.

The noble Lord also quoted the 1990 Bar report. He said that it was critical of conditional fees under two heads; first, the relaxation of ethical standards and. secondly, a conflict of interest. I do not know what that Bar report actually said, but I can certainly assure the noble Lord that he did not prove his case under either of those points.

I praise the noble and learned Lord the Lord Chancellor for bringing in conditional fees. To some extent it does something to redress the fundamental problem with the British court system, which is that it is open to very few people unless they are legally aided. This amendment seeks to dilute to the point of destruction the concept of conditional fees. To be fair, the noble Lord, Lord Phillips of Sudbury, made that abundantly clear. I strongly urge that the House does not approve this amendment.

Lord Goodhart

My Lords, before the noble Lord sits down, is he really suggesting that we should copy a legal system in which one can obtain damages of a couple of million dollars or a contingency fee, for spilling a cup of hot coffee over oneself?

The Earl of Dartmouth

My Lords, there are certain excesses in the American legal system. The point is that it is possible for an individual to gain redress against even the most powerful corporation. The case to which the noble Lord referred involved an unemployed housewife who managed to sue McDonald's successfully.

Lord Clinton-Davis

My Lords, will the noble Earl be kind enough to apologise to the Ritz Hotel to which his reference applied and not Claridges?

The Earl of Dartmouth

My Lords, I stand corrected.

The Lord Chancellor

My Lords, when I listened to the noble Lord, Lord Phillips of Sudbury, moving this amendment, I became progressively more depressed. He seems to have a much dimmer view of the ethics of his own profession than I have myself. But towards the end of his speech I was encouraged because he seemed to perk up a little and expressed a more optimistic view about the ethics of his profession.

He made the specific point—I do not know how much truth there is in it—that clients have a tendency to mislead their solicitors under conditional fee agreements in order to secure agreement to a lower uplift. It is possible that clients mislead their solicitors when they try to get legal aid. It may be that solicitors will he even more astute in their own interests to assess the true strength of cases when they are considering whether, and under what terms, to enter into conditional fee agreements than perhaps to protect the Legal Aid Fund.

I welcomed the intervention of the noble Earl, Lord Dartmouth. It is salutatory to remind the House that lying behind all this is the expansion of conditional fee agreements, which signals a colossal expansion of access to justice. I welcome the noble Earl putting that on record again.

I am delighted that the noble and learned Lord, Lord Ackner, has had such affection for my speeches over the years. I had the impression that he must have a complete library of them. I am ready to be quite flattered. I never knew that he cared so much.

He described what I said in 1989. I am minded to invoke what I believe a Victorian judge said when taxed with a previous decision he had made from which he had intellectually parted company in his own mind when sitting in an appellate court. He said something along the lines, "That is how it appeared to me then, but it is not how it appears to me now". If great judges can get away with that, mere Lord Chancellors can as well.

I have no difficulty in accepting the principle that the operation of conditional fee agreements should be kept under review to enable us to know that they are working well and are serving the interests of justice. I am very happy in principle for the panel to give me advice. I doubt that we need this amendment on the face of the Bill. However strong our concerns are today, they will not necessarily be the concerns of tomorrow. In five years' time conditional fees may be of little concern. They may be a familiar part of the geography of our legal system with their operation accepted as part of legal services. That is my view of what will happen.

I do not see any point in imposing a duty in perpetuity on the panel to monitor conditional fee agreements. But I am willing to give a commitment to the noble Lord, Lord Phillips of Sudbury. I shall ask the panel to give advice on the operation of conditional fee arrangements as part of its first year's programme of work. I shall also ask it to consult the Civil Justice Council and to continue to review its work on an appropriate regular basis until we can all be assured that conditional fee agreements are working as well as we intend and in the interests of justice. On that basis I hope that the noble Lord will withdraw his amendment.

Lord Phillips of Sudbury

My Lords, I am disappointed that the noble and learned Lord the Lord Chancellor will not incorporate this amendment because, as I endeavoured to explain, the present wording of Clause 29, in so far as it introduces new Section 18A(2)(a) into the 1990 Act, does not extend to a compulsory duty on the part of the panel to give the advice.

The noble Earl, Lord Dartmouth, made an extremely good speech on a point that I had not made. I was not arguing whether conditional fee arrangements are good or bad. We have them and that is a fact. The only issue is whether we have regard to the potential for their undermining the probity of the litigious process. If he wants to harp on America, I think that would be one's most vivid concern as to what contingency fees or conditional fees can do to the whole process. Over a million contingency fee cases were started in America last year. The level of reward for the lawyers is such that the American Bar Association and the American Trial Lawyers' Association go into rabid overdrive when, as occasionally occurs, an American citizen seeks to bring a referendum to strike down contingency fees, as happened in California two years ago. It is precisely because these conditional fees will prove to be extremely popular with my profession, for whom I repeat I have the highest regard, that I know that there is an acute public interest in the maintenance of the honesty of the litigious process. It is extremely easy for a few rotten apples to become a greater number of rotten apples.

I say again to the noble and learned Lord the Lord Chancellor that I am disappointed. I am mildly comforted by the fact that he will instruct the panel to look at these matters. I would like to think that his prognostication was right. However, I suspect we shall find that conditional fees will grow and grow as a proportion of our total legal workload. Indeed, I hazard a guess now that contingency fees, full and unabated, will be before this House before five years are out. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Farrington of Ribbleton

My Lords, I beg to move that further consideration on Report be now adjourned. In moving this Motion, I suggest that the Report stage begins again not before 8.42 p.m.

Moved accordingly, and, on Question, Motion agreed to.