Read a third time.
moved Amendment No. 1:
1: After Clause 11, insert the following new Clause—
Section 10 shall apply mutatis mutandis to representations by approved regulators whether in their regulatory or representative capacity.”
The noble Lord said: My Lords, this amendment is identical to Amendment No. 38 which we tabled in Committee. As noble Lords are aware, the Legal Services Bill establishes, among other institutions, a Consumer Panel, which is entitled both to make representations and to be consulted. Contrary to the structure in the Financial Services Act, however, there is no equivalent practitioners’ panel.
Accordingly in Committee we tabled Amendment No. 38, which was in identical terms to the amendment before your Lordships today. It was clear from our debate in Committee that the Minister accepted this amendment, either in terms or in equivalent terms. I turn to what she said in Hansard:
“I remind noble Lords that we have already accepted Amendment No. 38 in the name of the noble Lord, Lord Kingsland, which required that Clause 10 will apply mutatis mutandis to representations by proposed regulators, whether in the regulatory or representative capacities”.—[Official Report, 21/2/07; col. 1117.]
On Report, however, the Minister was not prepared to honour that undertaking. I am not suggesting that she behaved in any way reprehensibly —I suspect that others gave her very strict riding instructions—but the undertaking is there, and it is unequivocal. Others of your Lordships, such as the noble Lord, Lord Hunt of Wirral, have withdrawn amendments that they might otherwise have pressed to a vote because of that undertaking.
I suggest to the Minister, as I did on Report, that there is a clear convention in your Lordships’ House that having made such a statement, whether she regrets it or not on reflection, the Minister must accept it. I beg to move.
My Lords, I support this amendment, not just for the reasons given by my noble friend, which I wholly accept, but for another reason. I am a Clementi man. The amendment safeguards the freedom of the approved regulators to make representation, which is, to my mind, and I think to Sir David’s mind, of the essence of the type of relationship that should exist, of which there are as yet no words of expression in the Bill. It is essential that representation and consultation should ensue if the regime is to work not only in the interests of the consumer and the legal profession but in the public interest. Where possible, one should seek agreement.
My Lords, I am just a simple Lord. I take words as they come. We have an amendment that clearly states:
“Section 10 shall apply mutatis mutandis to representations by approved regulators whether in their regulatory or representative capacity”.
My noble friend read out the Minister’s words. I remind noble Lords exactly what the Minister said in the terms that my noble friend has just outlined and reflect that this was said in an attempt to dissuade the Committee on its fifth day from moving further amendments. The Minister said:
“I remind noble Lords that we have already accepted Amendment No. 38 in the name of the noble Lord, Lord Kingsland, which required that Clause 10 will apply mutatis mutandis to representations by proposed regulators, whether in the regulatory or representative capacities. That consultation will have more force as a consequence of my acceptance of that principle”.—[Official Report, 21/2/07; col. 1117.]
When we last discussed this amendment, the Minister said, “I only accepted it in principle”. But that principle makes it clear that the Minister has accepted that Clause 10 will apply mutatis mutandis et cetera. Nothing could be simpler.
Something has been going on, because the Minister has always been straightforward. I know of no other Minister who listens more intently to what is said in this place than the noble Baroness. If something has been going on that we are unaware of, let us draw a line under that. My noble friend is rightly seeking to ensure that we can have this important principle enshrined in the Bill. It is easy to do. It is only Amendment No. 1. All the Minister has to say is, “I accept the amendment”.
My Lords, may I suggest what happened? The Minister went back to the Lord Chancellor and said, “I have agreed this on the Floor of the House and given the Government’s word on it”. The Lord Chancellor said, “I don’t care. You are not accepting it. Get me out of it. Resist”. I suggest that that is exactly what happened. Under those circumstances, I feel very sorry for the Minister, because I quite agree with the noble Lord, Lord Hunt. She always listens, she always smiles and she is always good natured. She is smiling now, justifiably. I bet she hates being in this position, because it is very uncomfortable for her. She should stick to her own guns.
My Lords, I am extremely grateful for the measured way in which the noble Lord, Lord Kingsland, has brought back an issue that he feels extremely strongly about. I am enchanted by the concerns that noble Lords have for me, but worried that my powers of persuasion, particularly in the eyes of the noble Earl, Lord Onslow, are clearly not up to much if that were the situation that had arisen. I do not have any regrets about what I did. I will explain what I did and why.
I do not accept the idea that, because of our discussions in Committee, noble Lords felt that they did not need or were unable to bring back amendments. I made it clear in my discussions with noble Lords between Committee and Report that I would not be bringing this amendment forward. I made that clear at Report, so there was always the opportunity to come back at this stage. The noble Lord shakes his head, but I recall that we had a discussion about possibilities in which this issue might be raised. Anyway, if noble Lords had felt that they had been misled, I would have been perfectly happy to see amendments today that addressed the issue. Indeed, we have the noble Lord’s amendment. I am quite sure what the outcome of this debate will be as a consequence.
I will put my position as clearly as I can, because I like my reputation as a listening Minister and I believe that I take away and consider carefully everything that is said to me.
My Lords, I always consult my colleagues. But, most important, I take legal advice and parliamentary counsel advice that goes alongside that. I would be distraught were there any suggestion that I misled the House. I have thought about that a lot.
This is what I believe I did. I accept completely that the noble Lords, Lord Kingsland and Lord Hunt of Wirral, and other noble Lords were seeking to ensure that this Bill was even-handed in its approach to the Consumer Panel and the role of the professions. I think that noble Lords accepted, after our lengthy and helpful debates in Committee, that there was a need to create a Consumer Panel. There was no such body; therefore, for the Consumer Panel to be able either to take judicial review or make proper representations, it needed to be set up properly. The concern that was expressed was whether that shifted the weight of representation away from the professions and the legal services to the point at which the Bill was in a sense up-ended. That we did not wish to do.
I took away Amendment No. 38. I did not accept it on the Floor, but it is reasonable to say that I might not have done that in any event, because I would have had to consult. I took it back and took legal and parliamentary counsel advice on whether the principle behind even-handedness was already in the Bill or not.
I have been back several times and the advice that I have received consistently is that scattered throughout the Bill—and I know that the noble Lord, Lord Campbell of Alloway, has been concerned that it is scattered—is a provision that allows for consultation with the professions. The principal way in which the professions can make representations, by the nature of the organisations that they are, and in which they have traditionally sought to make representations, secures them mutatis mutandis. Therefore, my advice was that, were we to insert anything further, we would be in danger of moving the Bill in the other direction.
What lies between us is simply that the noble Lord, Lord Kingsland, with his experience—and no doubt he will be joined by other noble Lords—does not think that we have achieved what I believe we have achieved. Noble Lords will have to make their decision whether we have or have not done so from what I and the noble Lord have said. That is the joy of being in your Lordships’ House—it is up to noble Lords to determine. From my perspective, I have sought to ensure that what I agreed to do has been achieved, which was to make sure that the measure was even-handed. It is my contention that it has been achieved. That may not satisfy noble Lords, but I believe that I have not misled the House in so doing.
My Lords, I am, as always, most grateful to the Minister for her explanation, the core of which suggested that, having made this initial undertaking on 22 January, which was when the debate on Amendment No. 38 took place, she went away and discussed the matter with her team; and on mature reflection decided that the amendment was not only unnecessary but would push the balance too far in the other direction. In other words, the practitioner would have had a stronger hand to play, once the act was implemented, than the consumer.
The difficulty about that argument is the statement that I read out to your Lordships:
“I remind noble Lords that we have already accepted Amendment No. 38”.—[Official Report, 21/2/07; col. 1117.]
That was said more than a month after the debate on the amendment, which took place on 22 January. The commitment that the Minister gave the Committee about Amendment No. 38 was given at least five weeks after the debate, so quite a long period of reflection had taken place; five weeks after our debate on the amendment, she still felt completely committed to it.
The substance of this issue is secondary to the constitutional convention. What matters is that the undertaking was given unequivocally to your Lordships’ House. I am really disappointed that any Government could resile from such a clear-cut undertaking.
I am not going to press this amendment because I believe that the Government ought to be ashamed of themselves. When they conclude that they are and this Bill has been to the Commons, I am confident that by the time it comes back to the Lords we will find this amendment in it. We do not need to vote on this matter. The convention ought to be strong enough. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 64 [Modification of the Board's functions under section 62(1)(b)]:
2: Clause 64, page 36, line 30, leave out from “of” to “the” in line 31 and insert “giving effect to indemnification arrangements and compensation arrangements”
The noble Baroness said: My Lords, I speak also to Amendments Nos. 4 to 12 and 15 to 31. This group of amendments makes consequential amendments to Schedules 3, 5 and 16 and updates the Law Society’s powers to require information, as I indicated I would do on the last day of Report. I do not propose to go into detail on the consequential amendments, suffice to say that they are necessary in order to make the amendments agreed at previous stages of the Bill work properly. However, I should like to say a little more on the amendments that I committed on Report to table.
Amendments Nos. 20 and 25, for example, are necessary to update the powers of the Law Society to obtain information relevant to an investigation into a solicitor, a recognised body or a manager or employee of a recognised body. Amendment No. 20 allows the Law Society to obtain information from a person who is not connected to the solicitor or firm under investigation. This is necessary in order to close an existing loophole where information relevant to an investigation would be outside the society’s scope if held by a third party. The power may be exercised only through a High Court order.
The amendments also aim to ensure that investigations are not frustrated by providing for it to be an offence to falsify, conceal, destroy or otherwise dispose of a document which a person knows or suspects to be relevant to the investigation; or recklessly or deliberately to provide information which is false or misleading in a material particular.
Amendment No. 22 ensures that these updated powers apply effectively to recognised bodies and their managers, employees and interest holders, and that the powers may also be exercised for the purpose of investigating a body’s continuing suitability to be recognised. I beg to move.
My Lords, we are perfectly content with these amendments. In harping back to Schedule 16, I again welcome the fact that the noble Lord, Lord Evans of Temple Guiting, confirmed last week that all the matters of concern to us in that schedule would be dealt with, if not today by government amendments, then when the Bill crosses over to another place. I see both the noble Baroness and the noble Lord, Lord Evans of Temple Guiting, nodding, so I think that I can take that as a secure commitment on behalf of the Government.
I raise one other matter with the noble Baroness. She may recall that on 8 May we had a debate about an amendment which I tabled concerning the relationship between the regulatory obligations in Part 5 and the obligations that any ABS might have to its shareholders. The noble Baroness will recall that we tabled an amendment which said in clear terms that where there is a conflict between what the shareholders regarded as their obligations under company law and what the regulator regarded as his obligations under Part 5, the obligations of the regulator would be paramount.
At the end of her response, the noble Baroness and I had an exchange about the appropriateness of my insisting on the amendment. The noble Baroness said that she was advised by the Department of Trade and Industry that if the amendment appeared in the Bill, it could produce certain conflictual situations. Thereafter, she undertook to furnish me with the DTI’s advice before Third Reading. She said:
“I am more than happy to set out in writing the concerns of the Department of Trade and Industry … If I set that out in writing, there will be plenty of time before Third Reading for the noble Lord to look at it”.—[Official Report, 8/5/07; col. 1334.]
I have not had that in writing. I recognise that I have not tabled an amendment on the matter now but I should be content if the noble Baroness could give an undertaking to your Lordships’ House that if the matter cannot be settled now, it will be one to which whoever deals with the Bill in another place will direct their minds.
My Lords, I am grateful to the noble Lord. In a letter to him this week, I said that my officials were in touch with officials at the Department of Trade and Industry and that I hoped to be in a position to comment further at Third Reading, but that if that were not possible, I would write to him again on the issue and that I would be happy to ensure that his concern was dealt with. I have just been given a summary of the DTI’s concerns regarding his previous Amendment No. 435. I could read them out, but I am not sure that it would be of benefit to noble Lords.
My Lords, this is an important issue, because we are on the threshold of these alternative business structures. Is it clear in Part 5 that if there is a conflict between what the shareholders want and what the regulator wants, the regulator will always prevail? At Report stage, the noble Baroness for the first time appeared to raise doubts that the DTI had, in turn, raised with her regarding the outcome of any conflict. There would be extremely serious implications for the operation of the ABS system if there were circumstances in which shareholders could override regulators. Indeed, that would undermine the basis on which the Government and the Opposition parties had been dealing with the Bill.
My Lords, I am happy to try to clarify this matter. I am not sure how it fits into what we are doing, but it is important to put it on the record, as the noble Lord said. We were considering an amendment to Clause 169, if noble Lords need to look back at that. That amendment sought to ensure that, in the context of ABS firms, lawyers’ duties to comply with their professional conduct obligations would override any other obligations, including their directors’ duties to shareholders. We have made it clear that an override provision is unnecessary as long as lawyers and licensed bodies have a statutory obligation to comply with their professional conduct rules. Those statutory obligations are contained in Clause 169 and are reinforced by Clause 88. They provide that non-lawyers in licensed alternative business structure companies or firms cannot do anything that causes or substantially contributes to a breach by lawyers or the licensed body of their professional conduct duties. The duties cannot be compromised by other obligations, just as companies and company employees have different kinds of statutory obligations and directors cannot cause breaches of those obligations in the name of their duties to shareholders.
I understand the concern regarding directors’ duties to a company and its shareholders, yet we emphasise that those duties are intended to be cumulative with any other duties to which the director may be subject, not in conflict with them. The duties owed by directors in Part 10 of the 2006 Act do not require directors to break the law and could never form a defence to a breach of another legal obligation. Instead, they must be understood in the context of the wider legal framework. Section 172 of that Act, which requires directors to promote the success of the company for the benefit of the members as a whole, is flexible enough to allow for directors’ duties and the duties arising under other law to operate harmoniously without any need for specific provision in other legislation.
As noble Lords will know, we have just completed a codification of company law, including directors’ duties, in the Companies Act 2006. The DTI is concerned that an override provision in relation to lawyers’ duties, such as that proposed by the noble Lord, would risk creating uncertainty in company law and other law to which companies are subject, because it would be unclear as to how directors’ duties would interact with regulatory obligations in areas other than legal services.
In other words, the Companies Act recognises that in fulfilling their duties to shareholders, directors of companies must have the flexibility to have regard to a wide range of objectives and to act in furtherance of purposes other than the benefit of the company members, where applicable. It may be taken as read that directors are required to comply with other legal obligations. We do not wish to state that explicitly, because we risk negative inferences for other regulatory legislation.
I am content with that explanation, which I am happy to ensure the noble Lord has in writing. I will also ensure that copies are placed in the Library of your Lordships’ House and sent to other noble Lords who have spoken on that amendment and on the Bill. It deals with the fact that there is not an issue of concern; rather, it explains why adding anything further to the Bill could create uncertainty, which I am sure the noble Lord does not want.
My Lords, I shall not take this matter further, other than adding a few words in conclusion. I remain bewildered that, on the one hand, the noble Baroness can say that there is no conflict and that the provisions in the Bill are entirely consistent with the regulator’s hegemony; but that, on the other hand, she is reluctant to say that in the Bill. If the underlying facts confirm the regulator’s hegemony, I see no reason why on Earth that cannot be said in the Bill for the sake of certainty. However, I think that this is now a matter for another place.
On Question, amendment agreed to.
Clause 83 [Licensing rules]:
moved Amendment No. 3:
3: Clause 83, page 48, line 35, at end insert—
“( ) appropriate provision requiring the licensing authority to consider the likely impact of a proposed application on access to justice when determining the application,”
The noble Lord said: My Lords, those of your Lordships who have followed the Bill closely—and I am delighted to see that many are still here after the passage of so much time—will know that we have been engaged in a debate with the Government about access to justice in relation to the licensing provisions under Part 5 of the Bill. Our initial amendment in Committee was softened on Report but we still failed to ensnare the noble Baroness. Despite the period of reflection between Report and Third Reading, we have seen no movement from the Government and so we have retabled our Report amendment.
As your Lordships are well aware, the concerns to which the amendment seeks to respond have preoccupied all your Lordships who have taken an interest in Part 5. Indeed, even the noble Lord, Lord Whitty, at one memorable moment, indicated his support.
Part 5, indisputably, takes us into new territory. We simply do not know what the impact of alternative business structures will be on access to justice, and the amendment seeks to ensure that a proper investigation is conducted into the likely impact. The noble Baroness does not like that because, she asserts, it would give too much weight in the decision-making process to one of the eight objectives to which all the regulators must have regard.
My response to that is twofold. First, all the amendment obliges the licensing authority to do is to conduct a thorough investigation into the access to justice implications of the proposal. The obligation is for the licensor to put itself in the picture as thoroughly as possible before testing the proposal against all eight objectives. Within the scope of the amendment, the licensor is perfectly entitled to investigate in as much detail as it thinks appropriate any of the other seven objectives.
Secondly, even ifI am wrong about my understanding of my own amendment, there is, in my submission, nothing wrong or unprecedented in Governments requiring decision-makers to give particular or significant weight to a relevant consideration, and, in this case, there is a powerful a priori reason for doing so. I beg to move.
My Lords, I wish to speak to Amendment No. 13 which stands in my name and touches on access to justice. Noble Lords will recall that lying behind the proposal is the fear that some of the new business structures will be powerful economic players. I am thinking in particular of larger, better-resourced firms of solicitors, possibly amalgamated with other professions, which will in effect wipe out the small firms of solicitors, operating perhaps in difficult circumstances, in the high street or in rural areas.
We have had evidence from noble Lords about the anxieties on this topic of solicitors in various parts of the country. The noble Lord, Lord Thomas of Gresford, spoke about Wales; the noble Lord, Lord Carlile of Berriew, spoke about Yorkshire and Cumbria; the noble and learned Baroness, Lady Butler-Sloss, spoke about the anxieties in the West Country; and the noble Lord, Lord Whitty, said that he was particularly concerned about rural areas. There is no doubt about this. Perhaps the most compelling evidence came from the former Lord Chief Justice, the noble and learned Lord, Lord Woolf. In his capacity as Lord Chief Justice, he travelled the land and became well aware of anxieties among solicitors throughout the country. The fact that there is such anxiety has not been challenged and we have not had proper evidence of the likely economic outcome.
There has been a new development of which your Lordships should be aware. On 9 May, the day after we previously spoke about the matter, the Ministry of Justice came into life—it sprung fully formed from the helmet—and immediately published a manifesto entitled Justice—a new approach. That is relevant because, throughout, it advocates the fact that in setting up the new department the Government are adopting as one of their principles the importance of access to justice. I will give brief citations from pages 11, 15, 16 and 20.
On page 11, the department states as one of its objectives:
“We will provide access to justice for all: by making help and advice and financial support available at the point of need and at the earliest stage, especially for the most vulnerable”.
On page 15, it states:
“We will promote justice by: ensuring that our justice system is accessible and effective, respected and understood”.
On page 16, under “Provision for Justice”, is the important passage:
“An effective justice system is not just about the courts and the judges; it concerns the extent to which the public has access to that system. Access depends on understanding one’s rights and knowing how to go about enforcing them … Access to justice means making sure that people, and particularly the most vulnerable and disadvantaged in society, are able to get the help, advice and support that they need”.
All this cries out for having local advice centres and local solicitors who can do exactly that. Finally, on page 20, the department says:
“We will work together with communities to give them a greater stake in how justice is delivered in their area, improving the visibility, accessibility and accountability of justice”.
None of that can be compatible with a separate government policy which, if implemented, is likely to have the consequence of wiping out a lot of local solicitors who could give advice. This would appear to be a case in which the Lord Chancellor, wearing his hat as Secretary of State for Justice, wishes to have a unified approach—not one department doing one thing and another bit of the system doing something else. On page 27, the department states:
“Working closely with the other key departments, the Ministry of Justice provides the opportunity to look at the system as a whole; not as a set of constituent parts, but as a consistent, coherent whole”.
The other piece of fresh information that your Lordships should have relates to Germany. We have touched on this subject on two or three earlier occasions. The Joint Committee—I apologise to the House because I should have declared that I was a member of the Joint Committee under the chairmanship of the noble Lord, Lord Hunt of Wirral, I am a member of the legal profession, I was on the Bar Council and I was once chairman of the Bar. The Joint Committee had evidence from the German equivalent of the Bar Council and the Law Society rolled into one. Its evidence brought to our notice that, on the continent, what we were doing would be regarded as unacceptable. It would not be possible for a German lawyer—a Rechtsanwalt—to be a member of one of these new bodies, particularly if it had outside funding.
I raised that point on the previous occasion when we discussed this matter, and the Minister replied:
“Noble Lords talked about the German BRAK. On a recent overseas visit, I heard that the German Parliament is looking to legislate in this direction. The relationship between the reaction of the German BRAK and what is happening in Germany may be relevant to our deliberations, but it looks as if Germany may be heading in the same direction. We will have to find more information because that was new to me, but it appears to be the case”.—[Official Report, 8/5/07; col. 1410.]
I thought the sensible thing to do was to write to BRAK—the Minister has my letter—to ask what is happening and what legislation the German Parliament is looking at. The answer has come back, and there are three relevant points. First, a legal services Bill is before the Bundestag; secondly, there is a controversial clause about adding new professions to the list of three with which lawyers may unite; and thirdly, on the point we have been talking about, the external funding, the relevant paragraph in the letter from Dr Dombek, the president of BRAK—which I immediately copied to the Minister—is:
“Regarding the Alternative Business Structures envisaged by Part 5 of the Legal Services Bill it is our understanding that firms authorised to provide legal services could have shareholders from outside the profession like banks and insurance companies. It is further our understanding that the management of such firms must not necessarily be in the hands of a majority of lawyers. The German draft bill … does not include legislative proposals in this direction. On the contrary, interested parties in Germany have lobbied the government and the political parties to allow third party investments into law firms. However both the Government and the politicians have rejected these proposals as, in their opinion third party investment would be a threat to the independence of the lawyer. Nobody should have the possibility to be able to determine a lawyer’s advice following economic interests. As the BRAK shares these concerns I took the liberty of writing my letter of 26 June 2006 to you and pointing out the difficulties that will arise for Anglo-German law firms in Germany if the firm or the lawyer decides to opt for third party investment”.
On the basis of this information to the House, there is no indication whatever that the German Parliament is moving in a similar manner, and there is evidence that it is thought to be totally unacceptable to move in any such direction.
My Lords, these Benches fully support the amendments moved by the noble Lords, Lord Kingsland and Lord Neill of Bladen. From the very beginning of the Bill, I have expressed my opposition to the alternative business structure, drawing, as I do, upon my experience in a small high street firm of solicitors for some five or six years in my youth and my knowledge of these firms while practising at the Bar ever since.
The Government may try to portray the stance of lawyers who believe in the small firm as reactionary, conservative or in their own private interests. That is not the case. Over the decades there has been strong competition between local firms for business. They compete with each other in terms of cost and fees, in efficiency and in providing a service to the communities from which they spring. All that is undermined by the Government’s approach here that we introduce marketing forces; that price is the only thing that matters; and the fact than there may be conflicts of interests within large concerns, whether insurance companies, motoring services of whatever, which can be ignored.
We do not believe that that is the right approach. The public are better served by lawyers, who are absolutely independent and who stand against the legislation that may be put forward or government departments where people are seeking to secure their rights to social security, and so on. We are very much concerned that alternative business structures will see this service disappear to be replaced by something that is very much less of utility to the people of this country. I am amazed that this comes from a so-called Labour Government. I am reminded they are new Labour. That is even worse. It is astonishing that it should come from that source. Perhaps it is not so astonishing because I have commented on the authoritarian streak of this Government.
The lawyer stands independent of government to protect the citizen. This Bill, with its suggestion of alternative business structures, without any examination of whether it is necessary or appropriate in a particular area, such as my own area in north-east Wales, undermines the principle of access to justice.
My Lords, I rise very briefly to support the principle enshrined in these amendments. I do not disagree with the case put forward by the noble Lord, Lord Thomas of Gresford. Before becoming a judge I had, like him, the immense privilege of being for many years a solicitor, and thereafter a member of the Bar. That gives one some insight into the immense worth of these two independent professions. Their independence is tied up with their integrity, which is tied up with their reputation for competence, which I think is second to none in the world.
It may be a coincidence that in all countries with comparable situations to England and Wales there have as yet been no moves towards the ABS system. The House I am sure is indebted to the noble Lord, Lord Neill, for the information concerning the situation at the Bundestag.
However, the case does not rest of necessity on the argument put forward with such clear articulation by the noble Lord, Lord Thomas of Gresford. I do not dispute that case, but it can be put effectively at a much lower level. It is this: business and professional life are entirely different worlds. There are situations where they coalesce and situations where they compete.
Part 5 creates a massive new experiment. That experiment may have the capacity for good, or it may have the capacity for evil, damage and injury to institutions that we hold dear. No one in this House or elsewhere can foresee exactly where it will lead. The amendment of the noble Lord, Lord Neill, takes the principle much further than that of the noble Lord, Lord Kingsland, but the case for the two amendments is that Parliament can do one of two things. It can allow Part 5 of the legislation to proceed into the unknown by taking this huge and potentially dangerous step, knowing that the day may come when it may have to reconsider most drastically exactly what has been brought about. The other alternative is prudence and a cautious precept—to place the onus where it belongs; on the advocates of this drastic change. Those advocates should indeed prove their case before Part 5 is implemented. The possibilities are enormous. The potential for evil could be very, very great. Prudence demands the acceptance of the principle of these amendments.
My Lords, I shall be brief. I wholly support the amendment of the noble Lord, Lord Neill of Bladen, for all the reasons given. Those reasons have been so very well expressed that it would be quite unnecessary to improve on them. Indeed, I do not think that I could. I also very much support the amendment of my noble friend Lord Kingsland. Within the concept of justice in these circumstances, it must be accepted that a decision must be taken on the proportionate balance of the Clause 1 regulatory objectives considered as a whole. That is the judicial process that has commended itself to your Lordships, as the amendments of my noble friend Lord Kingsland in effect establish a new regime of overarching importance. An amendment to this effect was tabled in my name and supported by my noble friend Lord Hunt of Wirral. It was removed from the Marshalled List on the advice of the Public Bill Office. I have been asked why my amendments were not moved. They could not have been spoken to other than on Third Reading. They would have implemented the new regime proposed by my noble friend Lord Kingsland. I thought that I had better explain why they were put on the list and why they were taken off it.
My Lords, I should explain how strongly I support Amendments Nos. 3 and 13. It was the unanimous view of the Select Committee that amendments should be tabled,
“to ensure that the impact of ABSs on access to justice, particularly in rural areas, informs the decision-making process for licensing an ABS firm”.
That is virtually the amendment that my noble friend Lord Kingsland has tabled. In their response, the Government said that they agreed with the committee, so I have been awaiting an amendment to implement our recommendation. Sadly, it did not arrive on the Marshalled List. The fact that it is here is due wholly to my noble friend, for which I am very grateful.
I also congratulate the noble Lord, Lord Neill of Bladen, on bringing forward an amendment that is the best of all those that he has tabled. It gives us a chance to have an in-depth look at this experiment, which I am sure the House would want us to do.
My Lords, I am prompted to intervene briefly because of the intervention made by the noble Lord, Lord Elystan-Morgan, who suggested that there is an alternative course of action. One of his propositions was that we might, if this proved in practice to be damaging, seek to reverse it by an Act of Parliament. I am bound to say that that would be enormously difficult. If Part 5 goes forward, it will create property rights. It seems to me that, under the provisions of the Human Rights Act, we will find it extraordinarily difficult to embark on a dismantling of this scheme. It is improbable that we could embark on such a course with commensurate ease. The very difficulty of reversing after we have legislated makes it so much more important that we take our time now and exhaust every possible avenue of inquiry into the potential impact of what is being done.
In the light of the extraordinarily wide range of views that have been expressed on this subject right across your Lordships’ House, not once but on a number of occasions, I hope that even at this late hour the Government will stand back from their too certain assertions as to what the consequences will be and recognise that further independent advice would be entirely appropriate.
My Lords, I am grateful for your Lordships’ contributions to this important debate. Noble Lords will know that we have debated at great length in Committee and on Report the value and importance of alternative business structures, noble Lords’ concerns about how effectively they might operate and the safeguards that the Government have built into legislation to enable us to stop alternative business structures, to deny them any life without condition and to make sure that we do this in a cautious and step-by-step manner, as noble Lords would wish.
The noble Lord, Lord Kingsland, has brought back to your Lordships’ House the question about access to justice. I was very grateful to the noble Lord, Lord Neill of Bladen, for reading out parts of the new manifesto of the Ministry of Justice. I endorse wholeheartedly everything that he and the noble Lord, Lord Kingsland, said about the importance of access to justice. I am concerned that in putting forward these propositions we must be mindful of dealing with new alternative business structures in a measured way. I am not, as noble Lords fear, seeking to do anything that takes away from our citizens the right of access to justice.
The noble Lord, Lord Neill of Bladen, referred to what the noble and learned Lord, Lord Woolf, said. It is very important to make sure that local high-quality advice, perhaps from individual practitioners, is preserved. Noble Lords spoke at other stages of our consideration of this legislation about the need to make sure that the breadth of available advice and support was there. The noble Lord, Lord Thomas of Gresford, once again took us to his area of Wales, where his very real concern is that the rural population should not lose out in any way, shape or form.
Therefore, there is nothing between us on this. I could not agree more. The question is how to achieve it. My difficulty—the noble Lord, Lord Kingsland, will not be surprised at this—is the danger of ranking different regulatory objectives, thereby changing the nature of what we set out from the beginning in our discussions on Clause 1; that is, making sure that the regulatory objectives are properly weighed up, properly dealt with and properly accommodated in any process.
I have made it as clear as I possibly can that it would not fulfil the regulatory objectives if what we saw happen was a removal of good-quality advice services to local people. However, I said that it was important to make sure that in weighing up the objectives we look for high quality. I do not think that this is about low costs; it is about right costs and providing high-quality services that are more easily accessible to people in a modern age. As noble Lords are aware, that may mean providing services in different ways.
There is nothing between us, but I cannot accept the amendment because, from our perspective, it does nothing other than rank the regulatory objectives in a way that does not work for us. I shall not go through them again because I have spoken about them at many other stages of your Lordships’ deliberations. We believe that we have the right safeguards in place to ensure that we do not achieve what noble Lords are fearful of. The evil that the noble Lord, Lord Elystan-Morgan, referred to is not what we are seeking to achieve.
With alternative business structures, we are trying to provide opportunities for the legal profession and those who use its services to develop services in new, interesting and exciting ways, not to take away services from our citizens. It would be against everything that I believe in as a member of the new Labour Government if we wanted to do anything other than to provide the highest-quality services. That is very important to us.
With Amendment No. 13, the noble Lord, Lord Neill of Bladen, is trying to do something very important. It would require us to get as much information as possible about alternative business structures before setting off down this path. The trouble is that, unless we do so, we cannot get the information. It is rather a Catch-22 proposition within the noble Lord’s amendment.
I agree wholeheartedly that we need to be cautious and to do this in a measured way. Indeed, everything that we have suggested about the way we are setting it out, the safeguards, the way we would wish to license the professions and so on is designed to do precisely that. Sir David Clementi and the Joint Committee so ably chaired by the noble Lord, Lord Hunt of Wirral, all made these valid points about what we are seeking to do.
We have spoken about examples in Australia. The German example is very interesting and I am very grateful to the noble Lord. I was handed earlier a copy of the German Bill for the noble Lord. The trouble is that it is in German and I am not sure how useful it will be to either the noble Lord or me. The noble Lord’s explanation of what is in the legislation is right. He will know about one of the interesting aspects of what is happening in Germany. In its latest report, the Monopolies Commission, which is a separate, independent advisory board set up under German competition law, dedicated a chapter to the regulation of the professional services in general. It considered four professions, of which legal services was one, and recommended wide-scale reform. It also proposed that non-lawyers be allowed to invest by becoming shareholders in law firms. I am not saying that that suggestion has been accepted by the German Government, but I understand that it will go to the Ministry of Economics, which will respond to it in whatever way it wishes. What is happening in Germany is an interesting development. There is an increasing look across legal services in different countries to see how best to provide them to give high-quality services and to protect the profession.
We agreed on Report that it was important to monitor carefully what happened with alternative business structures and agreed an amendment based on what the noble Lord, Lord Kingsland, recommended, both in Committee and in discussions with me outside the Committee, might be an appropriate thing to do. We agree that it is important to monitor carefully and to come back to Parliament with the result of that monitoring to demonstrate how well it is working.
But we have all the information that there is to be had. As I have indicated, we have spoken with colleagues in other countries; we are watching what the Monopolies Commission is saying and the legislation in Germany; I have referred to Neelie Kroes, the Competition Commissioner for the European Union, who is also very interested in what we are doing on legal services; and, as noble Lords know, I have spoken in Brussels about what we are seeking to do. There is a huge amount of interest.
The noble Lord, Lord Elystan-Morgan, commented that we are doing this first. I agree. This is because that is what we do; we look at what needs to be developed and, following the great tradition of the way in which Britain has always operated, we think forward about what kind of services we provide. We may be in the lead now, but that is because other countries are beginning to contemplate and consider how best to do this.
I take extremely seriously the notes of caution sounded in your Lordships’ House. It is very important that we act in a measured way and do not destroy what is so important about the legal professions: competence, professionalism, independence, local service provision—many individuals provide high-quality services in their locality—and how the City legal firms and the Bar operate. It is not about destroying that; it is about providing new opportunities that will benefit the legal professions and consumers. As I said, we will do that in a measured way.
I must reject the amendment tabled by the noble Lord, Lord Neill of Bladen, because we cannot provide more information, so we simply would not do anything, which is not what I wish to see happen. However, we will ensure that implementation is done in a measured way that enables both Houses of Parliament to see how well it is going. On that basis, I hope that the noble Lord, Lord Kingsland, will withdraw his amendment.
My Lords, I am most grateful to the noble Baroness. She rejected our amendment on the basis that it would rank the objectives in Clause 1. In my submission, that is not so. All the amendment requires the licensor to do is make a proper investigation of the access to justice implications. Once that investigation is complete, it is then appropriate for the licensor to measure whatever conclusions he has preliminarily reached against all eight objectives, including access to justice, not giving special weight to any one. The obligation in our amendment is to investigate, not to distort the weighting system.
Even if I am wrong about that, there are, as I said in my opening remarks, many examples of legislation and government guidance where weights are recorded by public authorities. There is no general principle, like equality under the law, that each ingredient fed into a final policy decision should have equal weight. On the contrary, the rule for Governments is discretion. For both those reasons, I am sad to have to tell the noble Baroness that I do not accept the Government’s position.
The noble Baroness talked about Part 5 leading the way in the international community; but it is clear that, in so far as Germany is part of the international community, the Government’s approach has not resonated there. That comes out very clearly from Dr Dombek’s reply to the noble Lord, Lord Neill of Bladen. The German Parliament rejected the equivalent of Part 5 in Germany because, as Dr Dombek said, it regarded it as,
“a threat to the independence of the lawyer”.
We have not taken that position in our debate here; but I heard with great interest the contribution of the noble Lord, Lord Elystan-Morgan, who, if he did not say so in terms, certainly implied that that would be one of the dangers of implementing Part 5 immediately, without looking at it very carefully beforehand.
The noble Baroness is well aware that I do not accept the reasons why the Government oppose my amendment; therefore, I wish to test the opinion of the House.
Clause 106 [Power to modify application of licensing rules etc to special bodies]:
4: Clause 106, page 58, leave out lines 6 to 8 and insert “the following paragraphs of Schedule 11—”
5: Clause 106, page 58, line 22, leave out “the following paragraphs of Schedule 11”
6: Clause 106, page 58, line 23, at end insert—
“( ) section 83(5)(a) to (f);”
7: Clause 106, page 58, line 24, after “1” insert “of Schedule 11”
8: Clause 106, page 58, line 25, after “4(3)” insert “of that Schedule”
9: Clause 106, page 58, line 26, after “6” insert “of that Schedule”
10: Clause 106, page 58, line 27, after “20” insert “of that Schedule”
11: Clause 106, page 58, line 27, at end insert—
“( ) If the licensing authority’s licensing rules, as they apply in relation to a body to which an order under subsection (3)(a) relates, make provision requiring the body to have—
(a) a Head of Legal Practice approved by the licensing authority, or (b) a Head of Finance and Administration approved by the licensing authority,they must also provide for a review by the licensing authority of any decision by it to refuse or withdraw that approval.”
On Question, amendments agreed to.
Clause 207 [Parliamentary control of orders and regulations]:
12: Clause 207, page 116, line 21, leave out paragraph (c)
On Question, amendment agreed to.
Clause 212 [Commencement]:
13: Clause 212, page 120, line 5, at end insert “provided always that no order may be made by the Lord Chancellor bringing into force Part 5 of this Act and the related Schedules 10 to 14 until after—
(a) consideration by both Houses of Parliament of a comprehensive report to be commissioned by the Lord Chancellor from an independent source analyzing—(i) the advantages or disadvantages (or both) which may be realistically expected to flow from the implementation of Part 5, including the benefits or risks (or both) to consumers;(ii) the potential enhancement or curtailment (or both) of access to justice; and(iii) the threats actual or internationally perceived to the independence of lawyers practising in England and Wales; and(b) the laying of the draft of a statutory instrument designed to bring into force the whole or part of Part 5 and the related Schedules before each House of Parliament and approval thereof by resolution of each House.(3) In this section an “independent source” means a source (such as a research organisation) which is independent of Government, free of connections with any political party and free of connections with any individual or body representing consumer interests or lawyers.”
On Question, amendment agreed to.
Schedule 1 [The Legal Services Board]:
moved Amendment No. 14:
14: Schedule 1, page 121, line 15, at end insert—
“(4) An order made under sub-paragraph (3) is subject to affirmative resolution of both Houses of Parliament.”
The noble Lord said: My Lords, the amendment is to paragraph 1(3) of Schedule 1 to the Bill, which states:
“The Lord Chancellor may by order amend sub-paragraph (1) by substituting for the limit on the maximum number of persons for the time being specified in paragraph (c) of that sub-paragraph a different limit”.
In Committee, I suggested that this was a quite extraordinary provision because it allowed the Secretary of State, now the Lord Chancellor, to expand or contract the size of the Legal Services Board and that the scope for manipulating the size of the board to produce the decisions that the Government wanted was, therefore, very wide. The Minister explained in response that no such cynical motive lay behind the Government’s provision but that on the contrary the reason why it was important that the Lord Chancellor had this power was if, for example, the Legal Services Board took on two or three new areas of regulation that required expertise on the board that was not present. She went on to say:
“The issue that the noble Lord, Lord Kingsland, raises is that the Lord Chancellor may be able to sneak something under the wire by negative procedure. One way in which to address his concerns would be for me to take the matter away to allow us to make it an affirmative rather than negative resolution. That would mean that, if the numbers were to be expanded, it would have to come through a debate in this Chamber and another place, so nothing could be done that would suggest that the Secretary of State was trying to increase the numbers for other reasons”.—[Official Report, 9/1/07; col. 163.]
At Report, not only did we not find an amendment to that effect tabled by the Government but the Minister gave us a number of reasons why an affirmative resolution was not the correct approach. Of those reasons, two were predominant. We were told, first, that an affirmative resolution would take up too much parliamentary time and, secondly, that it was decreasingly the Government’s habit to take this approach.
As the Minister is aware, I took issue with both those suggestions. On the first point, the amount of parliamentary time devoted to affirmative resolutions in your Lordships' House is not very demanding. Secondly, far from the practice of delegated measures of this nature falling out of fashion, Governments—and I do not exclude the previous Conservative Government from this criticism—have increasingly relied on the skeleton Bill as an instrument of legislation. So I was not only unconvinced by the Minister’s reasons but in any case felt that they were wholly beside the point.
Here we are faced with exactly the situation that we were faced with onthe first amendment tabled this afternoon. The Government had given a commitment to your Lordships' House and, in my submission, they should respect the convention and put the undertaking about an affirmative resolution in the Bill. I beg to move.
My Lords, I support my noble friend’s amendment, but again, accepting all the reasons that he has given, for another reason. It is absolutely crucial that the standing of the legal profession should be independent of government and seen to be independent of government. That is strictly related to the merits of this amendment. I do not want to take up the time of the House because surely it is obvious that here we are concerned with a matter of public interest. The service’s exports are worth more than £2 billion a year. The amendment is relevant to quality and the standing of the profession. It would act as a safeguard. Anyone can say, “Oh, it is nothing to do with a Minister of State. This is a matter for Parliament”.
My Lords, we support the principle of this amendment. An important issue of principle is involved of the noble Baroness giving an undertaking, because people act on undertakings that are given from the government Front Bench. It does not help to be told at a later stage, “I have had discussions with ministerial colleagues who are controlling the Bill elsewhere and I am sorry but I cannot carry this through”. Decisions are taken on the basis of undertakings.
Having said that, one of the refreshing aspects of the noble Baroness is that she is prepared to speak out to help the House come to conclusions and to resolve difficulties that the opposition parties have with government legislation. I do not want to discourage her from giving undertakings but I regard her as the agent for the Government whose word should not be distorted in any way by subsequent discussions.
My Lords, I am grateful for the tone in which noble Lords have brought back this amendment. I said that I would take it away. In Committee, I said that it would be a way of giving more confidence to your Lordships’ House. My difficulty is that I was unable to pursue the matter for two reasons. One is that it is my responsibility to look carefully at what the Delegated Powers and Regulatory Reform Committee says. I hope noble Lords will agree that my record is completely exemplary in always doing what the Delegated Powers and Regulatory Reform Committee tells me to do on every Bill that I have ever taken through the House—and I have clocked up quite a few by now.
When I discussed this matter with my noble and learned friend, he was concerned that we should pursue what the Delegated Powers and Regulatory Reform Committee tells us to do. When it suggests that the Government change their mind, we always take that on board. However, the Government are not being asked to change their mind. This powerful committee of your Lordships’ House—I am grateful to see the chairman of the Delegated Powers and Regulatory Reform Committee in his place—does not require us to do that. Therefore, we believe that the Government should not necessarily move.
Having said that, I then talked to officials about whether—
My Lords, I was not trying to suggest that for a second. I take that committee’s reports extremely seriously. If the committee recommends to your Lordships’ House that the Government should change a procedure from negative to affirmative, or whatever, the Government have always responded positively to those recommendations, certainly as regards any legislation that I have ever taken through the House. That is what I was trying to say. The Delegated Powers and Regulatory Reform Committee submits its reports to the House but it is for the House to decide the relevant matter. This afternoon noble Lords may decide to change what the committee has suggested and to vote on this amendment, if they wish. However, I was making the point that the Government always listen carefully to the committee and take its views very seriously. Certainly that is my view as a Minister responsible for a number of Bills on which the Delegated Powers and Regulatory Reform Committee has commented.
I am not in a position to change from the negative to the affirmative procedure. That is not because we are suggesting to your Lordships that the amendment is not important. I stand by what I said that there is no question but that the purpose of this provision is to enable the board to be reviewed and, if need be, made bigger or smaller in the light of its responsibilities.
The noble Lord, Lord Kingsland, talked about skeleton Bills and I know that there is concern in your Lordships’ House that all Governments have a tendency to introduce skeleton Bills. However, the number of amendments to the Solicitors Act that we have dealt with during the passage of this Bill is a good example of why the use of secondary legislation can be positive, because it enables us to respond to the needs of the time. I would commend having the right level of primary legislation and the ability to amend it to reflect circumstances—of which this Bill is a good example—because there will be changes.
We have allowed changes to the structure of the Legal Services Board to allow other aspects of legal services to come in at a later stage—although I accept that noble Lords would have liked some of those changes to have been introduced earlier. While it may be necessary to put expertise on the board, equally it is possible for the board to get smaller.
My Lords, I do not accept that, because my recollection of debates on secondary legislation is that from time to time your Lordships decide that there are issues of great concern to this House and call the Government to account, whether by affirmative or negative procedure. I have laid a number of orders that have used both procedures. It is not the case that an order cannot be debated if it is laid under the negative procedure—far from it.
That is our position. Noble Lords must decide what they wish to do and I leave the matter to the noble Lord, Lord Kingsland.
My Lords, as to the substance of the amendment, the power that the Government have given themselves in the schedule is extremely wide and uncontrolled. The Lord Chancellor is given the power to expand or contract the size of the Legal Services Board. This is another part of the Bill that goes to the heart of the independence of the board.
It is now stated in the Bill that the noble and learned Lord the Lord Chancellor must have the concurrence of the Lord Chief Justice on the appointment and dismissal of the chairman and members of the board. We have not sought that kind of guarantee in relation to paragraph 3 of Schedule 1 because we felt that the reasons given by the noble Baroness for the retention of that power and the commitment toan affirmative resolution were enough. Without the affirmative resolution, the Government are given dangerously uncontrolled power.
However, the core issue is the one to which I referred in Amendment No. 1. The statement was made on the face of the Bill. As a consequence, noble Lords on both the official Opposition and Liberal Democrat Benches did not table amendments to this part of the Bill which they otherwise would have tabled.
Although I shall not press this amendment to a vote, I say again to the noble Baroness: just think of the convention on undertakings given by Ministers on the Floor of the House. When the Bill reaches another place, I suggest that the correct thing to do would be for the Government to put the requirement for an affirmative resolution in the Bill. Constitutionally, that is the only proper way to proceed. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 3 [Exempt persons]:
15: Schedule 3, page 132, line 4, leave out from “any” to end of line 5 and insert “condition subject to which its recognition under that section had effect, or”
On Question, amendment agreed to.
Schedule 5 [Authorised persons]:
16: Schedule 5, page 149, line 31, leave out from “any” to end of line 33 and insert “condition subject to which its recognition has effect, and”
17: Schedule 5, page 152, line 34, at end insert—
“17A (1) During the transitional period, a person (“P”) is an exempt person in relation to the carrying on of an activity (“the relevant activity”) which is a reserved legal activity within sub-paragraph (2), if—
(a) P carries on the relevant activity by virtue of an employee of P (“E”) carrying it on in E’s capacity as such an employee, and(b) E is an authorised member of the Association of Law Costs Draftsmen (within the meaning of paragraph 17(2) of this Schedule).(2) The reserved legal activities mentioned in sub-paragraph (1) are—
(a) the exercise of a right of audience;(b) the conduct of litigation;(c) the administration of oaths. (3) If P is a body, in this paragraph references to an employee of P include references to a manager of P.”
On Question, amendments agreed to.
Schedule 13 [Ownership of licensed bodies]:
18: Schedule 13, page 195, line 17, leave out “or partner”
19: Schedule 13, page 195, line 17, at end insert—
“( ) a partner of A (except, where S or V is a partnership in which A is a partner, another partner in S or V),”
On Question, amendments agreed to.
Schedule 16 [The Law Society, solicitors, recognised bodies and foreign lawyers]:
20: Schedule 16, page 244, line 35, leave out paragraph 40 and insert—
“40 For section 44B (examination of files) substitute—
“44B Provision of information and documents by solicitors etc
(1) The Society may by notice require a person to whom this section applies—
(a) to provide information, or information of a description, specified in the notice, or(b) produce documents, or documents of a description, specified in the notice.(2) This section applies to—
(a) a solicitor;(b) an employee of a solicitor;(c) a recognised body;(d) an employee or manager of, or a person with an interest in shares in, a recognised body.(3) The Society may give a notice under this section only if it is satisfied that it is necessary to do so for the purpose of investigating—
(a) whether there has been professional misconduct by a solicitor;(b) whether a solicitor has failed to comply with any requirements imposed by or by virtue of this Act or any rules made by the Society;(c) whether a recognised body, or any of its managers or employees has failed to comply with any requirement imposed by or by virtue of the Administration of Justice Act 1985 or any rules made by the Society and applicable to the body, manager or employee by virtue of section 9 of that Act;(d) whether there are grounds for making, or making an application to the Tribunal for it to make, an order under section 43(2) with respect to a person who is or was involved in a legal practice (within the meaning of section 43(1A)).(4) A notice under this section—
(a) may specify the time and place at which, and manner and form in which, the information is to be provided or document is to be produced;(b) must specify the period within which the information is to be provided or the document produced;(c) may require the information to be provided or document to be produced to the Society or to a person specified in the notice.(5) The Society may pay to any person such reasonable costs as may be incurred by that person in connection with the provision of any information, or production of any document, by that person pursuant to a notice under this section.
(6) Paragraphs 9(3) and (4) and 13, 15 and 16 of Schedule 1 apply in relation to the powers to obtain information conferred by this section, but for this purpose paragraph 9 of that Schedule has effect as if—
(a) in sub-paragraph (3) for “such documents” there were substituted “information to which a notice given to him under section 44B applies”,(b) in that sub-paragraph for “sub-paragraph (1)” there were substituted “the notice”, and(c) in sub-paragraph (4) for “produce” (in the first place) to the end there were substituted “provide information pursuant to a notice under section 44B to provide the information to any person appointed by the Society at such time and place as may be specified in the order.”(7) Paragraphs 9 (other than sub-paragraphs (1) and (3)), 12, 13, 15 and 16 of Schedule 1 apply in relation to the powers to obtain documents conferred by this section as they apply in relation to the powers conferred by paragraph 9(1) of that Schedule, except that for this purpose—
(a) any reference in paragraph 9 of that Schedule to a person appointed, or to a requirement, under sub-paragraph (1) of that paragraph is to be construed as a reference to a person appointed, or to a requirement to produce documents, under this section,(b) any reference in that paragraph to any such documents as are mentioned in paragraph 9(1) of that Schedule is to be construed as a reference to any documents to which a notice under this section applies,(c) the reference to the solicitor or his firm in paragraph 9(5) of that Schedule, and the reference to the solicitor or personal representative in paragraph 9(7) of that Schedule, are to be construed as references to the person to whom the notice was given under this section, and(d) the reference in paragraph 9(12) of that Schedule to the Society is to be construed as including a reference to a person specified under subsection (4)(c).(8) In this section—
“manager” has the same meaning as in the Legal Services Act 2007 (see section 208 of that Act);
“recognised body” means a body recognised under section 9 of the Administration of Justice Act 1985;
and the reference to a person who has an interest in shares in a recognised body is to be construed in accordance with sections 72 and 109 of the Legal Services Act 2007.44BA Power to require explanation of document or information
(1) The Society may, by notice, require a person to whom a notice is given under section 44B (or a representative of the person) to attend at a time and place specified in the notice to provide an explanation of any information provided or document produced pursuant to the notice.
(2) The Society may pay to any person such reasonable costs as may be incurred by that person in connection with that person’s compliance with a requirement imposed under subsection (1).
(3) Paragraphs 9(3) and (4) and 13, 15 and 16 of Schedule 1 apply in relation to a notice under this section, except that for this purpose paragraph 9 of that Schedule has effect as if—
(a) in sub-paragraph (3) for “having” to “sub-paragraph (1)” there were substituted “refuses, neglects or otherwise fails to comply with a requirement under section 44BA(1)”, and(b) in sub-paragraph (4) for “produce” (in the first place) to the end there were substituted “provide an explanation of any information provided or document produced pursuant to a notice under section 44B (or a representative of such a person) to attend at a time and place specified in the order to provide an explanation of any information so provided or document so produced.” 44BB Provision of information and documents by other persons
(1) The High Court, on the application of the Society, may order a person to whom section 44B does not apply—
(a) to provide information, or information of a description, specified in the notice, or(b) to produce documents, or documents of a description, specified in the notice.(2) The High Court may make an order under this section only if it is satisfied—
(a) that it is likely that the information or document is in the possession or custody of, or under the control of, the person, and(b) that there is reasonable cause to believe that the information or document is likely to be of material significance to an investigation into any of the matters mentioned in section 44B(3)(a) to (d).(3) An order under this section may direct the Society to pay to a person specified in the order such reasonable costs as may be incurred by that person in connection with the provision of any information, or production of any document, by that person pursuant to the order.
(4) Section 44B(4) applies in relation to an order under this section as it applies in relation to a notice under section 44B.
(5) Paragraphs 9(5A) and (7) to (12), 12, 13, 15 and 16 of Schedule 1 apply in relation to an order under this section as they apply in relation to an order under paragraph 9(4) of that Schedule, except that for this purpose—
(a) the reference to the solicitor or personal representative in paragraph 9(7) of that Schedule is to be construed as a reference to the person in respect of whom the order under this section is made, and(b) the reference in paragraph 9(12) of that Schedule to the Society is to be read as including a reference to a person specified under section 44B(4)(c) (as applied by subsection (4) of this section).44BC Information offences
(1) It is an offence for a person who knows or suspects an investigation into any of the matters mentioned in section 44B(3)(a) to (d) is being or is likely to be conducted—
(a) to falsify, conceal, destroy or otherwise dispose of a document which the person knows or suspects is or would be relevant to the investigation, or(b) to cause or permit the falsification, concealment, destruction or disposal of such a document.(2) In proceedings for an offence under subsection (1) it is a defence for the accused to show that the accused had no intention of concealing facts disclosed by the documents from the person conducting the investigation.
(3) It is an offence for a person, in purported compliance with a requirement imposed on the person under section 44B, 44BA or 44BB—
(a) to provide information which the person knows to be false or misleading in a material particular, or(b) recklessly to provide information which is false or misleading in a material particular.(4) A person who is guilty of an offence under subsection (1) or (3) is liable—
(a) on summary conviction, to imprisonment for a term not exceeding 12 months or a fine not exceeding the statutory maximum, or both;(b) on conviction on indictment, to imprisonment for term not exceeding 2 years or a fine, or both.(5) In relation to an offence under subsection (1) or (3) committed before the commencement of section 154(1) of the Criminal Justice Act 2003 the reference in subsection (4)(a) to 12 months is to be read as a reference to 6 months.””
21: Schedule 16, page 256, line 6, leave out “the Compensation Fund” and insert “compensation funds (within the meaning of section 36A)”
22: Schedule 16, page 268, line 41, leave out paragraph 96 and insert—
“96 For paragraph 14 (examination of files) substitute—
Information about suitability for recognition14 (1) The Society may give a notice under this paragraph if it is satisfied that it is necessary to do so for the purpose of investigating whether a recognised body continues to be suitable to be recognised under section 9.
(2) A notice under this paragraph is a notice which requires a person within sub-paragraph (3)—
(a) to provide information, or information of a description, specified in the notice, or(b) to produce documents, or documents of a description, specified in the notice.(3) The persons are—
(a) the recognised body;(b) an employee or manager of the recognised body;(c) a person who has an interest in shares in the recognised body (within the meaning of the Legal Services Act 2007 (see sections 72 and 109 of that Act)).(4) For the purposes of this paragraph, section 44B(4) to (7) of the 1974 Act applies—
(a) in relation to a notice under this paragraph as if it were a notice under section 44B of that Act, and(b) in relation to a person given a notice under this paragraph as if that person were a person given a notice under that section,and references in subsections (6) and (7) of that section to powers conferred by that section are to be read as references to powers conferred by this paragraph.(5) Section 44BA of the 1974 Act (power to require explanation of document or information) applies in relation to a notice under this paragraph and the person to whom such a notice is given as it applies in relation to a notice under section 44B of the 1974 Act and the person to whom such a notice is given.
(6) Subsection (1) of section 44BC of that Act (falsification of documents etc) applies in relation to an investigation of the kind mentioned in sub-paragraph (1) as it applies in relation to the investigations mentioned in that subsection, and subsections (2), (4) and (5) of that section apply accordingly.
(7) Subsection (3) of that section (provision of false information etc) applies in relation to a requirement imposed under this paragraph as it applies in relation to a requirement imposed by section 44B of that Act, and subsections (4) and (5) of that section apply accordingly.””
23: Schedule 16, page 271, line 17, after second “(c)” insert “or (d)”
24: Schedule 16, page 278, line 37, at end insert—
“( ) after sub-paragraph (3)(b) insert—“(ba) the Society has reason to suspect dishonesty on the part of the registered foreign lawyer (“L”) in connection with—(i) the business of any person of whom L is or was an employee, or of any body of which L is or was a manager, or(ii) any business which is or was carried on by L as a sole trader;”,”
On Question, amendments agreed to.
Schedule 22 [Transitional provision]:
25: Schedule 22, page 354, line 43, at end insert—
“ (1) During the transitional period, section 44B of the Solicitors Act 1974 (provision of information and documents by solicitors etc) has effect as if the list of persons in subsection (2) of that section included a legal partnership (within the meaning of paragraph 7 of Schedule 5).
(2) For this purpose “the transitional period” means the period which—
(a) begins with the day on which section 44B of the Solicitors Act 1974 (as substituted by Schedule 16) comes into force, and(b) ends with the day appointed for the coming into force of section 13.”
26: Schedule 22, page 355, line 36, at end insert—
“( ) a person who, by virtue of paragraph 13 of Schedule 5, is an exempt person in relation to the carrying on of an activity which is a notarial activity,”
27: Schedule 22, page 355, line 46, at end insert—
“( ) a person who, by virtue of paragraph 17A of Schedule 5, is an exempt person in relation to the carrying on of an activity which is a reserved legal activity within sub-paragraph (2) of that paragraph.”
On Question, amendments agreed to.
Schedule 23 [Repeals]:
28: Schedule 23, page 358, column 2 leave out line 33
29: Schedule 23, page 360, line 31, column 2 at beginning insert—
30: Schedule 23, page 363, line 23, column 2 after “paragraphs” insert “2,”
31: Schedule 23, page 365, line 32, column 2 at end insert “to 12”
On Question, amendments agreed to.
An amendment (privilege) made.