Solicitors

HC Deb 04 April 2001 vol 366 cc84-104WH

11 am

Mr. George Stevenson (Stoke-on-Trent, South)

I am enormously grateful for the opportunity to initiate this debate. I hope that other hon. Members will want to contribute to a discussion that I believe to be of great significance.

Some would argue that self-regulation by solicitors has its place and that it can work, but I seriously doubt that. The Law Society is a bastion of self-regulation. It could be called a trade association in the widest sense of that term. It has had numerous opportunities to change the way in which it operates, but there is increasingly clear evidence that its attempts have not been successful.

When I knew that I had secured this debate, I thought about my constituents and wondered whether there was any other profession with which they came into more frequent contact than solicitors. I thought of doctors, MPs and others, but concluded that solicitors are the main interface between the public and the law—the first and in many cases the only point of contact between constituents and the law. It is therefore crucial not only that the service offered by solicitors is of the highest possible quality, but that people know that if there is cause for complaint and dissatisfaction, there is a credible mechanism for investigating those concerns.

The current mechanism bothers me and I know that it bothers my hon. Friend the Minister. He wrote to me on 14 September last year, saying: I would like to make it clear that the government still has considerable concerns about the operation at the Office for the Supervision of Solicitors (OSS) and wider concerns about the role of the Law Society as regulator of the legal profession. I was very grateful for the letter and the time that the Minister gave to it. His statement indicates that there is concern not only among the public and MPs, but at ministerial level.

What have the Government done to address those concerns? A number of initiatives have been taken and we await their outcome. The first is the targets set by Ministers for the Law Society and the Office for the Supervision of Solicitors to get their act together and improve performance. One might have thought that the strong message contained in the target setting—to which I know that the Minister is fully committed—would have hit the mark and that we might have seen some action, but I fear that that is not the case. The targets were set in July 1999, but the picture that emerges in respect of some of them is not encouraging.

One target set was that the percentage of cases in which the legal services ombudsman was satisfied with the handling of complaints by the OSS should not decrease by more than 1 per cent. from its then level of 64 per cent; however, within six months, the satisfaction level had fallen to 53 per cent. Another target stated that monthly progress reports were to be published, which was essential to demonstrate to the public and Parliament that the project was moving ahead according to plan. Those reports may have been published, but I have not had sight of one. Perhaps other hon. Members have seen them; if they have, I would be grateful for their advice, as it appears that that target has not been achieved either. Another target set was that 90 per cent. of cases should be dealt with within three months of receipt of the case, and 100 per cent. within five months. According to my information, the outcome is "not known". The evidence for the OSS meeting the targets that were set is not encouraging. It appears that in some cases the targets were ignored and that in others they were not met.

The Parliamentary Secretary, Lord Chancellor's Department (Mr. David Lock)

It might assist my hon. Friend if I confirm that the monthly reports were received by my Department. To précis: the numerical target of 6,000 cases which the Law Society was due to achieve by the end of December 2000 was the only target that was met.

Mr. Stevenson

On the basis of the information that I have received, that is subject to debate. That target may have been set and the Law Society might argue that it has met it, but I am advised that that takes no account of new cases. It simply refers to the backlog, and new cases are coming in at an increased rate. Although my hon. Friend's intervention was helpful, it must be put into context. I remain—like him, I am sure—far from satisfied that the Law Society has taken the targets seriously. That must be of enormous concern to him.

Mr. John Burnett (Torridge and West Devon)

Albeit that the number of new cases registered is not necessarily a good guide, because some might be frivolous and some not, it is a guide none the less, so it is interesting to hear the hon. Gentleman say that new complaints are being registered at an increasing rate. Does he know the rate at which they are increasing? That would be of great interest in this debate.

Mr. Stevenson

I have checked with the Library and I hope that I can find the figure in my pile of papers. According to my reading of the information that I received from the Library, there is a rising trend.

In the light of the concerns expressed, what has the Law Society decided to do? Toward the end of last year, it published a consultation document entitled, "A new Law Society for a changing profession". We all live in hope of a new Law Society. I responded to the document as, I am sure, did many of my colleagues, and I have the reply I received in front of me. As a non-lawyer—which is neither a good nor a bad thing—it was necessarily from a layperson's viewpoint that I commented on the document. After all, we are worried about the effect on the public and the service and what our constituents think about the legal profession and self-regulation.

The most cursory glance at the document, albeit from a layperson's perspective, convinced me that most of it relates to the interests of the profession. I could quote from the document, but I do not want to waste valuable time justifying a fair comment. Suffice it to say that little of the document relates to the public interest—indeed, the public interest is not reflected in the document. That is a cause of serious anxiety.

The first section of the document, headed "The reform proposals", states that the council of the Law Society resolved that the Society should set itself the goal of becoming a model regulator as well as measurably improving its performance as a representative body. That sets the tenor and theme of the document. Given that the Law Society has so far miserably failed to achieve the targets that Ministers have set, we cannot have great confidence in its ability to achieve either of the objectives it has set itself.

The document is administrative. One of the two main proposals it contains is that the council should be increased from 75 to 120 members. That is fine—it might do the trick; on the other hand, we might end up with more people not doing what they should be doing. The proposal is not encouraging. The other main proposal is to appoint a lay commissioner to deal with cases involving what is described as "minor misconduct" and complaints. That might be a step in the right direction, but I am not convinced.

The document is designed to underpin the present self-regulatory system, which many of us believe has failed. It proposes cosmetic or administrative changes to the system that will have no effect other than to perpetuate a system that deals almost entirely with the interests of society members and has little to do with the interests of the public. Let me give two examples of why I am convinced of that. The first is slightly historical, and I hope that you, Mr. Cook, will indulge me a little.

In the mid to late-1980s, the Law Society and British Coal—now the Coal Authority—were engaged in a secret process. I say that the process was secret because, as far as I am aware having done a lot of research into the matter, they consulted no one. In 1989, the Law Society and the then British Coal decided to change the format and content of responses to mine searches in house and property conveyancing. The change related to standardising such responses for the convenience of solicitors. The argument was that the change was designed to make the matter easier for the public to understand, but I doubt that. They agreed to change the rules in 1989, but they did not advise any society members—solicitors—who were conveyancing properties until two years later, in 1991.

In the meantime, my constituents were buying and selling houses on the basis of the old formula. In 1991 they went to bed on a Sunday night and their house was worth X, but because of the changed formula, when they woke up Monday morning and tried to sell their house, they found that their property had been devalued—in some cases by two thirds. That happened in my constituency, in that of my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Fisher) and in other constituencies in north Staffordshire.

It is obvious that the Law Society acted to make the life of its members easier. It took no account of the effect that such a change would have on the thousands of people who had bought their houses in good faith, or of the notorious unreliability of the Coal Authority's records. It was interested only in standardising the system and making the life of solicitors easier. What happened has a contemporary relevance. I am delighted to say that, 12 years later, after the most horrendous battle in which many of us were involved, some of my constituents have won compensation at the High Court. They had to take their battle there. We will wait to see if the Coal Authority appeals.

Why did the Law Society, which purports to protect the public interest, become engaged in such an exercise and turn a blind eye to the devastating effect that it had on people? Twelve years later, recompense has been achieved, but it is interesting to note which organisation was taken to court and will have to cough up the money: it is not the Law Society, which has ridden away into the sunset, but the Coal Authority that will have to pay. Only one partner in that infamous partnership has been taken to task. The Law Society remains Teflon-coated.

I was grateful to the Minister for giving up his time to discuss with me the horrendous case of my constituent, Mr. Paul Tams. He was going through a particularly messy divorce and was involved with two firms of solicitors. The first one was the hors d'oeuvre, the second one was the main meal. The hors d'oeuvre was unpalatable, but the main meal was indigestible. The hors d'oeuvre was the solicitor A who, according to my constituent, Mr. Tams, was not satisfactory. My constituent consulted me and I made representations to the OSS, which investigated the master, and the Law Society. They did not want to know. The matter was referred to the legal services ombudsman, who found that there had been faults and told the OSS to undertake a further investigation because he was not happy with the results of the first. The OSS tool away the matter andsurprise—surprise—reached the same conclusion. Why should we be surprised by that, given that the reason the case was referred back to it was that the OSS had not done the job right in the first place? When the legal services ombudsman is not satisfied with the way in which complaints are handled, an adjudicator independent of the Office for the Supervision of Solicitors should undertake a further investigation.

Now for the indigestible main course. My constituent, Mr. Tams, lost the case that he was pursuing and was saddled with the most enormous costs. Solicitors firm B—the other firm that was involved—was referred to the legal services ombudsman after my constituent consulted me. After investigating the case, the legal services ombudsman concluded that the firm had been "incompetent and inefficient". I wrote to the Law Society and the OSS to ask what they would do in the light of that judgment.

The reaction to the devastating judgment of the legal services ombudsman was that the trenches filled up, the battens were dropped and defence of the profession became paramount. The response fell into two categories. First, amazingly, the OSS accepted that firm B had been incompetent and inefficient—one cannot use stronger terms than that—but said that it could not take action against the firm because the code of conduct for the practice of solicitors had not been breached.

How can a firm be deemed Incompetent and inefficient, yet be protected by the code of conduct set down by the Law Society? What must a firm be deemed to be before it breaks the code of conduct—murderers? Must we do DNA testing? What must a firm do before there is a breach of the inviolate code of conduct, which is there to protect solicitors, not the public? I do not have the answer to that, but I hope that the Minister does.

Again, I challenged that answer vigorously on behalf of my constituent—other hon. Members would have done no less. I received another reason why action could not be taken, which was that firm B had acted on behalf of my constituent's ex-wife, not him, and that the client, not a third party, must make the complaint. There may be reasons for that, which I do not understand, but it makes not one iota of difference to the fact that firm B was deemed to be incompetent and inefficient and my constituent suffered.

The hatches were battened down, the guns were put out and the trenches were filled with Law Society interests. If you try to take those trenches, Mr. Deputy Speaker, you will have a battle on your hands. I have been a trade unionist all my life, but I have never seen such an effective body as the Law Society. I take my hat off to it. If we had been as effective in my trade union days, Baroness Thatcher, when she was Prime Minister, would not have touched us with a bargepole. I do not blame any Government for not taking on the Law Society—it is highly effective at doing what it does best, which is protecting the interests of its own members.

The matter has been going on for some time. I have had the pleasure of meeting my right hon. Friend the Member for Ashfield (Mr. Hoon) when he was the Parliamentary Secretary, Lord Chancellor's Department; I also had the pleasure of discussing the matter with my hon. Friend the Member for Leicester, East (Mr. Vaz) when he held that position. All my right hon. and hon. Friends agree with the Law Society, and I have the correspondence to prove it. If solicitors are incompetent and inefficient but have not broken the code of practice, nothing can be done. If a firm acts on behalf of someone other than the third party, but the third party suffers as a consequence of its incompetence, nothing can be done. I want my hon. Friend the Parliamentary Secretary to know that I am disappointed, especially as the Government, through the office that he now holds, agree with such damaging nonsense. That cannot be justified under any circumstances.

The Ministers agree with that incredible situation, as does the legal services ombudsman. I also have in my possession letters from that office. It is, supposedly, the guardian of the public interest—its longstop, its last resort—and it found firm B to be incompetent and inefficient, yet it agrees with the Law Society's statement that nothing can be done because the code of conduct has not been breached. That is incredible.

Mr. Burnett

The hon. Gentleman has presented a powerful argument. Was no sanction, such as a fine or a rebuke, levied against the firm by the OSS? Did the injured party instigate proceedings against the law firm?

Mr. Stevenson

The answer to the first question is no. I have the documentation to prove that: I have letters from the OSS that baldly state that the case is closed and that it is not prepared to pursue the matter further. Those letters express incredible insensitivity and arrogance—and there must be more fine words that could be used to describe that attitude.

The answer to the second question is also no: those involved simply washed their hands of the matter. It is neither acceptable nor in the public interest that Ministers, the Law Society and the OSS agree that nothing can be done because the code of practice was not breached.

Self-regulation worries me, although it might have a role to play. The public interest is what matters, not the interests of lawyers and solicitors, yet the current system does not take account of the public interest, and I doubt whether that will be changed by the marginal alterations proposed by the Law Society. There is a truckload of evidence to support my contention that that self-regulatory body prioritises the interests of its members, rather than those of the public. I call on my hon. Friend the Minister at least to consider removing the activities of the OSS from that self-regulatory body and entrusting them to an independent body. If that were done, the vital task of restoring public confidence in the legal profession could begin.

11.28 am

Mr. Austin Mitchell (Great Grimsby)

I rise with trepidation, as I am surrounded by many solicitors whose aim is to articulate their vested interests. However, this is a consumer matter: Members of Parliament represent the consumers and want to protect their interests. Those interests are not protected by the present structure—indeed, they are probably endangered, as practices increase in size and production-line law becomes more common owing to the pressure of costs.

The public need the law more than ever before. They need it to protect a wide range of their interests, including employment and matrimonial rights and disputes, but the law is pricing its services beyond the range of most people. The law is now needed by people who are not familiar with the middle-class tradition of a long-standing connection with "my solicitor". They need the protection of an independent system of regulation to protect their rights and to ensure that they can access legal services with confidence.

I am aware that that is a difficult matter, because few people are satisfied after a legal action, but that is the reason why regulation must be independent. An independent regulator would be able to judge whether a legal failure was the result of the inadequacy of the case or the incompetent performance of solicitors. That task cannot be performed by a self-regulatory framework managed by vested interests. The Mafia cannot regulate the Mafia; it is logically impossible and it does not happen in respect of the police or other sections of the regulatory world. That system of the Mafia regulating the Mafia has failed in the law, it is continuing to fail and it ought to be abolished. Otherwise people will be unable have confidence in the sector. The saga is a long-running one.

I congratulate my hon. Friend on securing this important debate. He dealt powerfully with the case against self-regulation in its present form. I remember having lots of disputes with the Solicitors Complaints Bureau which, when I referred matters to it, always came back with the same answer: it always suggested hiring another solicitor to sue the first solicitor and throwing good money after bad.

I recall a dispute in my constituency over a few yards of land on a transfer. The first firm of solicitors dealt with the matter totally incompetently, advised suing everyone involved but did not take the obvious route of referring to the Land Registry to discover what was in the deeds. That firm was censured by the Solicitors Complaints Bureau, which recommended the client to sue it. Another firm was hired, although it is difficult to get firms to sue each other in a small community such as Grimsby, because they do not like to break the freemasonry. However, the client sued the firm. When that proved equally unsuccessful, the Solicitors Complaints Bureau recommended hiring a third firm of solicitors to sue the second firm.

Such ludicrous developments were typical of the regime and still are. They produced pressure for change and a drive for independent regulation, which began in the 1980s. That movement was backed by our Prime Minister when he was first elected to Parliament; he said that there should be independent regulation. I recall debating the Courts and Legal Services Act 1990, which took us towards that goal—that was in the days when I could get on Standing Committees dealing with subjects in which I had an interest. That Act created the legal services ombudsman to carry out independent scrutiny and the complaints escalated.

In 1996, the Law Society opted for a respray. The Solicitors Complaints Bureau became the Office for the Supervision of Solicitors and asked for patience for three years in which to get its act together and make the service effective. The director left before those three years were up—the first of a series of directors to leave. It must be one of the most invidious jobs in the country, seeing as people parachute out of it at such an extraordinary rate. The Law Society demanded 18 months more to get its act straight. In that it is unlike the people whom its members represent in court, few of whom ask for 18 months more on their sentence.

The Lord Chancellor set targets that were, presumably, agreed with the Law Society, which told us that enough investment was in place to do the job and reach the targets. We set off again happily, hoping that something would be done, although I do not think that much was. As the Minister wrote to hon. Members in November 1999. solicitors were told: If that does not happen, the Government will use the powers in the Access to Justice Act 1999 to enforce a proper complaints system for solicitors through the legal services ombudsman. That did not happen.

I worry, as the Minister worries, that the Lord Chancellor's Department is in collusion with the Law Society to enable the society to avoid the consequences of its incompetence: and to protect it from the necessary action that has to follow. I pay tribute to the current Parliamentary Secretary, my hon. Friend the Member for Wyre Forest (Mr. Lock), who has been accommodating, frank and open with hon. Members in providing us with information. However, the whole Department does not share his views and always puts the performance of the Office for the Supervision of Solicitors in the best light.

It was clear that the Law Society had not met and could not meet its targets. They were therefore diluted, although the Lord Chancellor warned the Law Society that it was on its last chance and that he could not be clearer than that. Let us examine the process of dilution. The Law Society report summarily halved the annual number of complaints without any justification. The legal services ombudsman did not comment on that, but continued to quote the original, higher number of complaints for six months before suddenly quoting the adjusted lower figure.

The Lord Chancellor told the Select Committee on Home Affairs that client or consumer satisfaction was a basic consideration, but consumers or clients were rigorously excluded. In November 2000, and again in February this year, leaks from the legal services ombudsman showed that the ombudsman had been inundated with complaints about the Office for the Supervision of Solicitors. There were complaints about handling procedures, and the Lord Chancellor's targets set deadlines varying from immediately to 18 months, but none of those targets was met. A diluted target was then accepted by the Lord Chancellor. Under the original target, the number of complaints with whose handling the ombudsman was satisfied should not have decreased by more than 1 per cent., but within six months, the satisfaction level had fallen from 64 per cent. to 53 per cent. A new target has now been agreed.

It was originally claimed that the number of unresolved cases on the books of t he Office for the Supervision of Solicitors should be reduced to 6,000 by 31 December 2000. My hon. Friend the Minister told us that that target was reached. It was proclaimed in an amendment to my early-day motion by the hon. Member for Stafford (Mr. Kidney) and the Law Society, with overwhelming support from a small group of five people whose views I respect. Have the targets been achieved? The number of unsatisfactorily handled complaints should surely be added to the 6,000 unresolved targets, so there are really 13,000 unresolved cases. In the light of that, the target becomes laughable. Under the original target, 90 per cert. of cases should have been dealt with within three months of receipt and 100 per cent. within five months. We do not know yet whether that happened—we have no been told—but a new, lower target has been decided and allocated by the Law Society. The society has failed to reach its targets, failed to fulfil the assurances given to the public and failed to satisfy the Lord Chancellor's requirements. There is clearly no satisfaction.

A large number of hon. Members wish to speak, some of whom wish to defend the vested interests of the profession, so I shall conclude by saying that this is a matter of basics. The system is failing: it was not adequate in the first place, and it cannot command confidence because people cannot see that justice is being done by a body that is financed and run by the Law Society but adjudicates on the decisions of solicitors. That cannot command satisfaction. Clearly, the Law Society has tried, and I give credit to the present president of the Law Society—it certainly had problems with the last chief executive. However it cannot stem the rising tide of complaints that reflect a rising tide of dissatisfaction. Radio and television programmes featuring the profession show the hostility and dissatisfaction of people dealing with solicitors. People are simply not happy. It is our job to protect consumers and to ensure that their interests are protected. A self-regulatory framework cannot satisfy them, because it is not seen to be fair.

The Law Society appears unable to be efficient because complaints never have a high enough priority in the organisation. Indeed, I wonder whether it can afford to provide the proper machinery to adjudicate complaints. The system cannot give compensation or real satisfaction to customers, which is what they are out to get. As my hon. Friend the Member for Stoke-on- Trent, South graphically showed, it does not deal effectively with the firms against which complaints are made. No sanctions operate, and consumers receive no compensation.

Sadly, we have to conclude that the Lord Chancellor's Department cannot regulate effectively on the matter, because it has taken on the role of protecting the vested interests rather than acted as the representative of Parliament and consumers to ensure that the profession lives up to requirements. I am sad to see a steady turnaround in what I hoped would be a reforming Lord Chancellor's Department that would drastically change the structures of the profession and regulation. It now has its own problems and is fighting a rearguard action against the proposed Ministry of Justice, but I give it no sympathy or support in that struggle. It is about time that the Department showed its value by protecting consumers. We cannot have a Lord Chancellor's Department behaving like "King Log", blocking the path to reform.

There is no way out except independent regulation. It may have to be financed partly by the Law Society and partly from public funds, but the regulation framework must be independent, include non-solicitors and the consumer interest and have the power to impose fines and sanctions and to grant compensation to people who have not received a satisfactory service. The Government have, rightly, chosen that path after years of Tory attempts to have self-regulation in everything—indeed, I thought at one time that they would produce a self-regulating society with no public authorities regulating at all. The Government have introduced independent regulation in financial services with a power to act effectively. For other consumer matters, we already had trading standards officers to introduce independent intervention and regulation. For administrative matters, we have an ombudsman, who is not powerful enough, but is fulfilling a satisfactory role. On food matters, we have the Food Standards Agency to provide independent regulation. We cannot make progress in an increasingly important area, in which consumers are so exposed to professional ramps, self-congratulation and self-service, without effective and independent regulation of complaints against solicitors—and the Bar.

11.43 am

Mr. David Kidney (Stafford)

I congratulate my hon. Friend the Member for Stoke-on-Trent, South (Mr. Stevenson) on securing the debate. I have informed both him and the Minister that I must leave a little early for another appointment and I will, unfortunately, miss the Minister's speech.

It is a little unfair to depict me as coming here to defend self-interest. The interest that I declare is that for 20 years I was a solicitor in private practice. I gave up as soon as I was elected to Parliament, because that was important to me. I stopped holding a practising certificate, which allows people to act as lawyers, but I have kept my name on the roll of solicitors, which simply means that I receive a weekly magazine called the Gazette from the Law Society. That is the extent of my interest.

I share my hon. Friend's concern that when people go to lawyers, they should receive a good quality of service. If they do not, there should be a simple process whereby they can have redress for what has gone wrong. That is absolutely right. The wider issue, which is what we have debated so far, is whether self-regulation can ever work. That is a valuable debate to have, but I take a slightly different view from the one that has so far been expressed. First, in fairness to lawyers—this may be one of the few things that is said in fairness to them today—it is true that good lawyers act as public interest guardians every day in the work that they do in a society that prides itself on due process of law. It is important to place that fact on the record.

There is much questioning in today's society about whether self-regulation can work. That debate does not focus solely on the legal profession; because of some notable failures of self-regulation, the medical profession has recently come under a great deal of pressure and faced calls for change. On the other hand, there is traffic in the other direction, such as the general teaching councils that were set up by this Parliament. I offer two thoughts about self-regulation. First, self-regulation can work if it adapts to new consumer attitudes and demands. Secondly, if self-regulation does not work, Government can regulate more, but that would not necessarily exempt the regulatory system from the need to meet consumer expectations.

When I was a solicitor, I did not have much to do with the Law Society or the Office for the Supervision of Solicitors or its predecessor, the Solicitors Complaints Bureau. I do not know whether people will think that my lack of dealings with the former is a merit, but I certainly hope that they will think that as far as the latter is concerned. It is true that I now have many more dealings with the Law Society, because it recognises me as someone who is sympathetic to its cause. I accept that; nevertheless, I am a critical friend. For example, when the Access to Justice Act 1999 went through Parliament, I served on the Standing Committee. By Committee stage, no provision had been made in the Bill for statutory regulation. I suggested to my right hon. Friend the Member for Ashfield (Mr. Hoon), who was then a Parliamentary Secretary in the Lord Chancellor's Department, that there should be such a provision as a reserve power to hang over the heads of lawyers. I do not know whether I was the only voice or one of many; nevertheless, the Bill was changed, and there is now such provision.

Mr. Stevenson

As a friendly critic of the Law Society, when my hon. Friend was practising, would he have expected action to be taken against him and his firm by the Law Society if he and his firm were deemed to be inefficient and incompetent?

Mr. Kidney

Yes, absolutely. There should be a simple and effective system for lawyers practising today. My hon. Friend has listed the ways in which he thinks the system is deficient at present, but that does not necessarily mean that we have to move to statutory regulation.

The Lord Chancellor used the provision that hangs over the head of the Law Society to achieve certain changes. Whatever people might say about the Office for the Supervision of Solicitors, it is true that the Law Society doubled its budget to £10 million and employed another 155 staff to deal with complaints. The number of complaints fell—the actual figures are disputed—from about 17,000 to about 6,000 by the end of last year. Similarly, the time taken to deal with complaints has decreased. However, turnaround times and quality must still be improved and that is why the Lord Chancellor imposed new performance targets. He continues to hold a reserve power of statutory regulation over the head of the Law Society if it does not comply with his targets.

In the meantime legal self-regulation is changing for the better. I am happy about the present leadership's emphasis on lawyers providing a quality service and dealing with complaints in-house. I am happy that lay members are now involved in the work of the Office for the Supervision of Solicitors. I am happy that the Lord Chancellor's Department has imposed performance targets and that there is independent scrutiny by the legal services ombudsman. My hon. Friend the Member for Stoke-on-Trent, South said that more changes are proposed. I am pleased about the possible appointment of a lay commissioner, a complaints redress scheme, the increase to £5,000 for compensation awards, the power to reduce bills and require remedial action, greater use of mediation and conciliation, and guilty lawyers paying part of the cost of regulation, which is similar to the so-called "polluter pays" principle.

I am happy to see that the Gazette, which I still read four years later, has increased its emphasis on good practice by lawyers. A recent issue includes good practice guidenotes for lawyers to follow and an article by Janet Paraskeva, the present chief executive of the Law Society, entitled "Ten steps to success". I would be happy to show the article to my hon. Friend so that he can see the many references to the public interest and consumers. That is a reassuring development. Change is coming, even though my hon. Friend can point to a time when it was not.

Finally, it is vital that the quality of service and the outcomes are right. If they are not, the Law Society has blown it, and I would expect—as everyone else would—the Lord Chancellor to use his reserve power and introduce the statutory scheme for regulation.

11.49 am

Mr. Mark Fisher (Stoke-on-Trent, Central)

Like others, I congratulate my hon. Friend the Member for Stoke-on-Trent, South (Mr. Stevenson) on initiating a debate that has wide implications for our constituents. He made a powerful case, as a highly experienced trade unionist with the Transport and General Workers Union, for the effectiveness of the Law Society as a trade union body representing its members. I agree, and have experienced many of the things that he and other hon. Members have described. In my experience the oft—suggested solution—that solicitors take up cases against other solicitors—is a fantasy. I have had enormous difficulties in Stoke-on-Trent getting any solicitor to take up a case on behalf of a constituent against another solicitor. That is a genuine difficulty.

The problems arising from the self-regulating nature of the Law Society are not solely to do with discipline. I would like to raise a different concern about how effectively the Law Society responds to the problems of my constituents, and what pressure, as the representative trade union body, it is putting on the Government on certain issues. My key concern is access to legal advice and representation for my constituents and others in cities like Stoke-on-Trent. In particular, I am concerned about access to legal representation on basic matters of everyday concern to my constituents—housing, education, social services, debt, welfare rights and immigration. Those are matters of enormous importance but, at the moment, representation is hard to get in some cases. I want to know from the Minister the extent to which the Law Society it concerned about the problem, what pressure it is putting on the Minister and what its solutions are.

I commend the Government on the introduction of legal aid contracting, of which I am a strong supporter. However, in Stoke-on-Trent, a city of 275,000 people and the 11th biggest in the country, there is no solicitor with an education contract—indeed, there is no solicitor in the whole of Staffordshire with an education contract. There is one solicitor with a contract for debt, one solicitor for welfare rights, one for mental health and two for immigration in a city that has a large Kashmiri population. What are my constituents to do?

Has the Minister received representations from the Law Society on those matters? Does the society share our concerns? One solution that it might recommend to the Minister—I would be interested to know whether it has done so—is to increase the number of tolerances. However, that is not ideal, because it raises the question of quality thresholds. As I understand it, the Legal Services Commission is trying—correctly in my view—to close down tolerances, because there is no way of ensuring quality if tolerances spread. There are solicitors in my constituency who take up that sort of work and have as few as 10 tolerances a year that they can take outside their contract. One solicitor said that he could do 10 in a week, such is the demand in areas such as education.

Stoke-on-Trent has a strong, forceful and good local education authority. It operates—I suspect with the approval of the Government—a tough policy on those who disrupt education, and the exclusion rate in Stoke-on-Trent is one of the highest in the country. However, even if young people are disrupting education, they and their parents have a right to representation and, as there are no solicitors with education con tracts in the city, that presents a real problem. There appears to be no solution. What is the Law Society saying to the Minister about it and what is it doing about it? What is it offering on behalf of the profession? Does it as I fear it may, support the initiative of the eight big London firms that have set up their own law school in London to cream off the talent for commercial law? That is not the way to go, as I hope that the Minister will agree. It will create problems rather than solve them.

Is the Law Society pressing for better rates of pay? That would provide only a partial solution to the shortages of contracts. I was amazed to find that caseworkers in Stoke-on-Trent start their legal careers representing my constituents on £14,000 a year, and that a fully qualified solicitor in Stoke earns on average about £18,000 a year. No wonder it is difficult to recruit people. When there is no contract, it is almost impossible to persuade the commission that a firm has the experience to get the work and qualify for a contract.

The Law Society may be pressing the Minister and his representatives for a system of fully salaried solicitors, perhaps modelled on the immigration expansion package. That idea has some virtues. However, it is unclear whether the Law Society is exercising itself at all. It has a duty to defend not only solicitors, but the whole legal profession, and it must be a powerful voice on behalf of solicitors' clients as well. Many of the concerns raised by my hon. Friend the Member for Stoke-on-Trent, South about how the Law Society protects itself from criticism would appear in a different light if it took a positive and imaginative approach to improving the quality of legal representation on crucial social issues such as education, social services, debt, welfare rights, immigration and so on.

In a nutshell, cities such as Stoke-on-Trent do not have enough suppliers. That is a problem, as my constituents are often desperate. There are no easy solutions. I gather from the papers that Mr. Steve Orchard, the chief executive of the Legal Services Commission, is pressing the Government hard on such issues, as I hope the Minister will confirm. Is the Law Society doing so? It has questions to answer on self-regulation and discipline and it must be much more energetic about legal representation for some of the poorest and most needy members of our society.

11.57 am

Mr. John Burnett (Torridge and west Devon)

I, too, congratulate the hon. Member for Stoke-on-Trent, South (Mr. Stevenson) on securing this important debate. I should declare the fact that I am a solicitor, but one who ceased to practise shortly after being elected to the House, like the hon. Member for Stafford (Mr. Kidney). I am definitely not an apologist for either branch of the legal profession. I want to ask the Minister one or two questions on some specific matters.

Will the Minister confirm whether the lay members of the Law Society's supervision committee—it supervises the Office for the Supervision of Solicitors—are in the majority, as I believe they are? I am also anxious to know who chooses the lay members.

The ability to transfer a case from the OSS to the legal services ombudsman is fairly narrow. I understand that a case or complaint has to exhaust the OSS process before the ombudsman can consider whether her organisation should deal with it if it is referred to her. Does the Minister know whether there is a rising trend of cases being examined by the ombudsman? As I said in an intervention, cases referred to the OSS can be frivolous, but cases referred to the ombudsman are unlikely to be frivolous or vexatious. The statistics would be interesting.

Mr. stevenson

Does the hon. Gentleman accept that those statistics may or may not support an opinion? An increasing number of my constituents are losing faith in the ability of self-regulation to protect their interests, but they refuse to make a complaint. The statistics might show only the tip of the iceberg.

Mr. Burnett

I am extremely grateful to the hon. Gentleman for that intervention. I shall return to it later.

The legal services ombudsman refers cases back to the OSS and has minor powers to fine. Is the Minister satisfied not only that the legal services ombudsman has sufficient powers to impose fines in individual cases but that the ombudsman has adequate powers in relation to the OSS and to the appropriate committee of the Bar Council?

Although the debate is about the Office for the Supervision of Solicitors, I should not like to let it pass without referring to the make-up and effectiveness of the supervisory committees of other professions—I know that the hon. Member for Great Grimsby (Mr. Mitchell) is interested in that subject. En passant, I cite the Institute of Chartered Accountants in England and Wales, the Royal Institution of Chartered Surveyors and the Royal Institute of British Architects. Do the Government believe that it is time to have an independent adjudicator to look at the conduct and costs of all the professions? Are they satisfied that those professions that are not independently regulated should be the ultimate judges in their own causes? Do the Government believe that the clients of the professions—should have recourse to an independent adjudication process? This country has many excellent professionals, and I believe in self-regulation. Nevertheless, should not consumers ultimately have recourse to independent adjudication, particularly in such vital matters as conduct and costs?

12.2 pm

Mr. Edward Garnier (Harborough)

I am grateful for the opportunity to contribute briefly to the debate. I congratulate the hon. Member for Stoke-on-Trent, South (Mr. Stevenson) on having raised a matter that is of considerable importance not only to him as a constituency Member of Parliament, but to all who are interested in the conduct of the provision of public services in the law. He made his case cogently and powerfully, as always, and I listened to him with great care. It is indisputable that he is no fan of self-regulation. That view is shared by the hon. Member for Great Grimsby (Mr. Mitchell). He and I have often debated on the Floor of the House the questions that we are discussing today—and the wider issues connected with the public funding of legal services—and I have read his contributions on the subject in the newspapers.

The hon. Member for Stoke-on-Trent, Central (Mr. Fisher), too, is not a fan of self-regulation for the Law Society, although, from the tone of his remarks if not their substance, he seems more prepared to see both sides of the coin. Among the many interesting points that he raised was that of the funding of what I might call public service lawyers, important not only in his urban constituency but in the constituency of Great Grimsby, the Minister's constituency of Wyre Forest in the west midlands, and in Stafford, represented by the hon. Member for Stafford (Mr. Kidney).

Indeed, even in my constituency, which is largely rural, there is much concern about the effect of the Government's reform of publicly funded legal services on the number of solicitors who are prepared to do the work. I believe that one dispute between the Lord Chancellor's Department and members of the Law Society who do criminal work has now been resolved, but there is a continuing dispute involving barristers who do publicly funded family work. However, I understand that the Minister or one of his colleagues has laid a statutory instrument before the House to deal with arrangements for the funding of those services, which comes into force on 1 May.

A raft of issues as hidden beneath the surface of the debate, which although not strictly germane to the subject raised by the hon. Member for Stoke-on-Trent, South, should not be brushed aside.

Mr. Lock

If the hon. and learned Gentleman is so concerned about the funding of lawyers, why do the Conservative part's proposals include the removal of £236 million from debt welfare benefits, in addition to the other proposals mentioned by my hon. Friend the Member for Stoke on-Trent, Central (Mr. Fisher), and the removal of £300 million from family law, thus excluding all those services from public funding?

Mr. Garnier

I lad hoped that we would be able to conduct this morning's discussions in a less contentious spirit than that adopted by the young Minister. We are not proposing to do those things, and that is probably where we should leave that Aunt Sally. I know that the Minister is keen or Aunt Sally. He likes to take her out from her old people's home most afternoons—

Mr. Mitchell

It makes a change from Prudence.

Mr. Garnier

Yes, but given the last Budget, even Prudence seems o have been put away in some oubliette. However, I am being diverted.

The hon. Member for Stoke-on-Trent, South quoted a list of complaints about the performance of the OSS in meeting the targets agreed between the Law Society and the Government Department with responsibility for that aspect of public policy. He also referred to the effect of the agreement between the National Coal Board—now the Coal Authority—and the Law Society on house values in his constituency. Those are important matters in any event, but especially for his constituents who are affected by them. I congratulate him on raising those issues in the Chamber this morning.

The hon. Gentleman also mentioned the case of one of his constituents. Mr. Tams, who has had a singularly unsatisfactory relationship with at least two firms of solicitors and seems to have been treated badly, both by those firms and by the profession. The hon. Gentleman is right to complain about how the matter has been handled, because it must have been frustrating not only for his constituent, but for him as a Member of Parliament who has his constituent's interests firmly in mind. As a member of the Bar and of the Opposition, I am not in a position to give him an answer, but I am sure that the Minister will be able to help.

Mr. Stevenson

I realise that time is pressing, but I want to make it clear that I am not complaining merely as a constituency Member of Parliament. How can a firm of solicitor; that has been deemed to be incompetent and inefficient be protected by the code of practice laid down by the Law Society from the consequences of that charge?

Mr. Garnier

The short answer is that I do not know. If a firm of solicitors has been incompetent, it should not have been protected by the code of practice. I expect that the Minister will be able to provide the hon. Gentleman with the answer he seeks.

The hon. Member for Great Grimsby said that he was surrounded by solicitors. He is not: there are only two in the Chamber, as well as two members of the Bar—the Minister and myself. If there are any other solicitors present, in addition to the hon. Members for Torridge and West Devon (Mr. Burnett) and for Stafford, they are keeping quiet about it. We put up our hands and hang our heads in shame if we dare to confess the hideous offence of being a lawyer.

Perhaps I may say, in parenthesis, that one of the sad aspects of this Parliament is that it has been a lawyer-bashing Parliament. That is a pity, because publicly funded lawyers do a tremendous amount of work for their clients and are not richly rewarded for it, as the hon. Member for Stoke-on-Trent, Central was good enough to say. He mentioned incomes of about £18,000 a year. It is because they are so ill remunerated that so few law students now want to enter that branch of work, and those who have been doing it are giving it up, which is regrettable. I trust that measures can be put in hand to encourage people to continue with such work.

The hon. Member for Stafford described himself as a critical friend of the Law Society. I would go further and describe him as a critical friend of the Government. That is a compliment, not an insult.

Mr. Fisher

Do not wreck his career.

Mr. Garnier

I am sure that the hon. Member for Stafford is capable of looking after his political career inside the House as well as his career outside it. Whichever he chooses, I am sure that he will do very well. He needs neither my plaudits nor the encouragement of the hon. Member for Stoke-on-Trent, Central to make a name for himself. I listened with great interest to his remarks today and to what he said in debates when the Access to Justice Act 1999 was in Committee. He made good points it that time, and today, and I congratulate him on what he said.

The hon. Member for Torridge and West Devon is, as I have pointed out, the other solicitor present today. He asked who appoints the lay membership of the new commission. The Minister will give him a definite answer, but my understanding is that the Master of the Rolls makes those appointments. However, I might be wrong. Who am I, as a mere member of the Bar, to say what goes on in the Law Society?

I note the interesting point that the hon. Gentleman made about a general disciplinary body to regulate or control the professions, be those architecture, accountancy or law. I do not want to comment except to say that it would be quite a difficult operation. However, he has raised an important matter.

Mr. Burnett

It is not a matter of controlling the professions, which I would strongly deprecate—I believe in the essential independence of the professions—but of a final recourse, a possibility of independent adjudication for individuals on matters such as conduct and costs.

Mr. Garnier

I am grateful for that clarification. No doubt we shall see more of it in the Liberal Democrat manifesto.

I am not a spokesman for or member of the Law Society, although I take an interest, both as the shadow Attorney-General and as a lawyer, in its activities and performance. Several hon. Members have given examples of Law Society members failing to meet the high standards expected of them. However, most solicitors, of whom there are about 80,000 practising in England and Wales, do a good job to a high standard. If that were not so, they would not be used. People would find other ways to deal with their legal or other disputes. I hope that we shall not fall into the trap of using one or two bad examples, perfectly properly mentioned by the hon. Member for Stoke-on-Trent, South, to criticise all lawyers.

Mr. Mitchell

I accept that the profession maintains high standards and that most solicitors—even barristers—are devoted to service and the pursuit of their clients' interests. The problem is that the public do not know that without some independent machinery of regulation and review to tell them what failures and successes have occurred.

Mr. Garnier

I am sure that that is right, but the Government will face the problem of expenditure. My suspicion is that the Government are critical of some of the things that the Law Society has done to improve its performance, but do not want to take on the financial burdens of running the show. I understand from a Law Society briefing that its programme to improve OSS service levels has entailed considerable extra expenditure. It is committed to ensuring that the OSS continues to be properly funded. An additional £10 million was spent between August 1999 and December 2000 on staff and facilities. The OSS's 2001 budget is about £10 million—nearly double the sum allocated in 1999 before the additional resources were agreed.

The Chancellor of the Exchequer and his girlfriend Prudence are keeping a close eye on all public expenditure. The Lord Chancellor's Department is not the highest spending Ministry, but I fear that Prudence would be worried if it took on yet further expenditure. I congratulate the Lord Chancellor's Department on recouping£2 million through charitable ticket sales for tours of the Lord Chancellor's official residence. However, I am not sure that Prudence, let alone the Chancellor of the Exchequer, would look kindly upon the Parliamentary Secretary's suggestion that the Department should spend an additional £10 million a year to run the OSS.

I look forward to hearing what the junior Minister has to say in response to the debate.

12.16 pm

The Parliamentary Secretary, Lord Chancellor's Department (Mr. David Lock)

I, too, congratulate my hon. Friend the Member for Stoke-on-Trent, South (Mr. Stevenson) on securing the debate. It has been highly intelligent and interesting, and a number of points of view have been forcibly expressed.

I must identify the core problem at the outset. Complaints to the Office for the Supervision of Solicitors are running at a high rate: approximately one complaint for every five solicitors is made each year. Complaints are supposed to come to the OSS only if the firm's internal complaint system has considered them and has failed to resolve them; sole practitioners are an exception. I endorse the observation that the vast majority of solicitors are diligent and hard-working; in the public sector, they certainly deliver a high quality of service for a modest return. None the less, the clients of many solicitors are unhappy with the service that they receive and that is a significant problem.

It is in the nature of litigation that one side wins and the other loses, but quite often neither side believes that they have lost. It is therefore inevitable that people will sometimes receive less than they expected from the legal process. It is also inevitable that some will feel, rightly or wrongly, that their lawyers have let them down. The core problem that the Law Society must address is the number of complaints. It is important that the way in which services are provided, the expectations that are raised—or not raised—and the nature of what lawyers do should be explained. Everything that lawyers do should have a customer or client focus. Whatever we say about the ability of the legal profession to handle a proper complaints system, the remedy is to deliver a better service and thereby reduce the number of complaints.

I shall attempt to respond in detail to the points raised by hon. Members, but if I do not have the opportunity to do so in the short time left to me, I shall write to them. My hon. Friend the Member for Stoke-on-Trent, South diligently pursued his constituent's concerns in respect of the conduct of two firms of solicitors. I cannot comment on or intervene in individual cases. The Government's role is to act as the ultimate regulator. We have repeatedly made it clear to the Law Society and the Bar that self-regulation of the legal profession is a privilege, not a right. It is a privilege to be operated in the public interest, not in the interests of the people for whom it is regulating. As my hon. Friend said, the people who matter are the clients, not the suppliers.

The Office for the Supervision of Solicitors has power to investigate complaints made by clients in respect of their solicitors' conduct or service. It also has power to investigate complaints about the conduct of solicitors, but not complaints about efficiency made by non-clients. There is an inherent problem, which I must explain. I understand the depth of my hon. Friend's concern, but must point out that although lawyers are under obligations to act in accordance with the code of conduct, what the solicitor does to promote one client's interest is frequently adverse to the interests of the other parties to litigation. However, what goes on between a solicitor and a client is confidential.

Solicitors are under an obligation to work within the code of conduct, but can a non-client—another party to litigation—go behind the relationship between a solicitor and a client and question the efficiency, the business decisions or the competence of a solicitor in those circumstances? It is important that, if a non-client loses and subsequently becomes liable for costs, he should pay only the costs that are reasonably and properly incurred. However, a core problem arises if the complaints system is used by non-clients to open up the confidence between a solicitor and his client and to question the judgments and the decisions that are made, which, while they may be not good business decisions, were none the less proper in that they were not in breach of the code of conduct.

Mr. Stevenson

I understand what the Minister is saying. but the Office of the Legal Services Ombudsman accepted the complaint about company B. You know which solicitor I am talking about—

Mr. Deputy Speaker (Mr. Nicholas Winterton)

Order. The Minister may know, but I do not.

Mr. Stevenson

I am sorry, Mr. Deputy Speaker. The code of conduct protected the firm of solicitors from any further action because it was deemed not to have been in breach of the code.

Mr. Lock

I am reluctant to go into the details of individual cases, but I assure my hon. Friend that the legal services ombudsman's job is primarily to determine whether the OSS has discharged its duties. It is possible, as in the case to which my hon. Friend referred, for the legal services ombudsman to respond to a complaint by telling the OSS that it has not investigated the case properly and in sufficient detail and that it must repeat its investigation and show either that the solicitor was in breach of his duties or that he was not. In the case to which my hon. Friend refers, that is precisely what the legal services ombudsman did. The ombudsman held the OSS at fault in respect of the thoroughness of it first investigation, but accepted that the second investigation had been carried out properly and that there was no breach of duty. To go further than that would be to intervene in the client-solicitor relationship.

My hon. Friend the Member for Great Grimsby (Mr. Mitchell) expressed his well-known views forcibly and with good humour, as always. He has been a long-standing critic of the Law Society and of self-regulation. I appreciate the points that he makes and I know his views. We have differed on the appropriateness of maintaining self-regulation in respect of complaints, but he knows that the Government's determination to have a proper complaints procedure has led to our taking reserve powers. The exercise of those powers will be considered when the LSO's report is published in July this year. At that point, the question of whether the OSS is meeting the current targets will be primary in our consideration of whether to invoke the reserve powers.

On the statistics quoted, the figure of 6,000 for December 2000 was supposed to have been a combination of the cases that were unresolved with the OSS at that time plus the cases that had been returned from the legal services ombudsman and therefore required further determination. It should therefore have been the sum of all the live cases. If my hon. Friend the Member for Great Grimsby thinks that that is not right, and that the true figure was higher, I invite him to write to me and I shall take the matter up.

I acknowledge that the Law Society failed to meet in December the other targets to which it had signed up in July 1999. It is also true that, although considerable investment has been made and the culture of the OSS has improved, since fresh targets were set at the turn of the year, the response to many of the key targets can only be described as disappointing. We are watching closely, and we will have to make difficult decisions.

As far as I am aware, the Law Society has not made strenuous representations to the Government to promote the interests of lawyers working in the areas to which my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Fisher) referred and to encourage us to increase capacity. In many of those areas—welfare benefits, debt and so on—the provision of cost-effective services does not necessarily entail services that are provided by a lawyer. It must be remembered that lawyers are not the only people who provide legal services—citizens advice bureaux, law centres and welfare rights units provide excellent services to his and my constituents in respect of we fare benefits, for example. They are often far more cost-effective and efficient than lawyers in dealing with such matters because they deal with them day in, day out. In addition, the issues involved often fall outside the expertise of the high street solicitor.

My hon. Friend is right to say that it is important that we maintain quality, and I am grateful for his comments about that. I appreciate his point about education, but we cannot fund every legal need in every circumstance. The powers in the Access to Justice Act give us, for the first time, the ability to prioritise between different legal needs. That exercise is being conducted locally through community legal service partnerships, which are identifying the primary legal needs each area. Those needs will vary.

Mr. Fisher

My hon. Friend makes a powerful point about citizens advice bureaux. Stoke-on-Trent is lucky to have one of the most effective and powerful CABs in the country. Surely he would agree, however, that even the best CAB cannot pursue the detailed legal representation that is necessary in many such cases. Only a firm with a contract—and one with the expertise to meet the quality threshold, which, through the commission, the Government introduced—is likely to pursue the case properly on behalf of a needy constituent.

Mr. Lock

I agree entirely that to ensure quality provision we must maintain the footprint of contracted solicitors and those in the not-for-profit sector.

The hon. Member for Torridge and West Devon (Mr. Burnett) asked about lay members of the supervision committee. I understand that they were previously a minority, but the ratio is now approximately 50:50. In answer to the question of who chooses members, I believe that it is the Master of the Rolls. If I am wrong I shall write to him, but I think that the hon. and learned Member for Harborough (Mr. Garnier) was right about that. The hon. Member for Torridge and West Devon also asked about references to the LSO, and I shall write to him with precise details of case numbers. The LSO is not, of course, within the purview of this debate.

The hon. Gentleman referred to the importance of lay membership and the reform of the Law Society. One of the proposals that arose at the Law Society's general council meeting was resolution No. 2, which was a proposal to amend the rules of the Law Society to include 5 per cent. lay membership of the council. On 28 February, the council carried the proposal to have only 5 per cent. by only 37 votes to 25, and, lacking a two-thirds majority, therefore removed a lay element from the council of the Law Society. The entrenched view that only solicitors on the council of the Law Society have a proper view—

Mr. Deputy Speaker

Order. Time is up.