My Lords, I beg to move that the Commons amendments be now considered.

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

commons amendments

[The page and line references are to Bill 108, the Bill as first printed for the Commons.]

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 1. I shall speak also to a considerable number of other government amendments.

As a new entrant into discussion on the Legal Services Bill, I am aware of the very detailed consideration that it received in your Lordships’ House. A number of changes have been made to the Bill, which has now come back to this House, and I should like to acknowledge the work of your Lordships in helping to improve it. I suspect that we shall have one or two disagreements this afternoon, but I start by commending the spirit of the House in seeking to improve the legislation. I am confident that the outcome of today’s deliberations will bring the Bill to a conclusion; none the less, whatever is to befall us, I pay tribute to all noble Lords who have helped to improve it.

This group includes a number of government amendments that were accepted in the other place and are minor and technical changes or relate to areas of policy where I believe there is little between us.

Amendments Nos. 1, 2 and 3 require the board to seek the approval of the Lord Chancellor before making appointments to the Consumer Panel or removing members. These amendments received widespread support in another place and further safeguard the independence of appointments to the panel.

Amendments Nos. 6, 7, 9, 16, 23, 55, 56, 57, 68, 80, 146, 215 to 218, 230, 237, 238, 248, 249, 251, 254, 255, 258, 259 and 261 are of a minor and technical nature. They make technical or consequential drafting changes, further clarify provisions in the Bill or are minor amendments that are consistent with previously agreed policy.

Amendments Nos. 17, 18, 21, 22, 27, 29, 30, 31, 32, 33, 36, 37, 38, 96 to 99, 101 to 145, 172, 175, 176, 183, 219, 220, 222, 227, 240 to 243, 263 and 264 refine the ownership provisions in Part 5 of, and Schedules 16 and 17 to, the Bill in order to provide more clarity on how firms and companies with complex ownership structures fit into the ABS or recognised body regimes, as well as more clarity on whether non-lawyer owners and managers are subject to the fitness-to-own tests.

Amendments Nos. 28, 34 and 35 make necessary amendments to close a loophole in Clause 108, which would have allowed a body to have low-risk status even if it was 90 per cent owned by another licensed body that itself might be 100 per cent non-lawyer owned.

Amendments Nos. 53 and 54 ensure that the board will have sufficient funds to cover any expenditure that it needs to incur as a result of functions that it has under other Acts, by virtue of amendments made to those Acts by the Bill—for example, functions conferred on the board by the Compensation Act 2006. Functions covered by these amendments will necessarily have been approved by Parliament. It is important that we ensure that the board is not left with a funding shortfall.

Amendments Nos. 58 to 67, 234, 244 to 247 and 260 are necessary to update the Bill’s provisions on legal professional privilege to ensure that they take account of the most recent developments in the law of privilege. Together they reflect the fact that legal professional privilege applies not only in legal proceedings but in other contexts, and the fact that it extends not just to communications but also to documents, materials and information.

In line with Treasury guidance, Amendments Nos. 89 and 147 ensure that, should it be necessary, ordinary members of the board and the Office for Legal Complaints can receive a pension, allowance or gratuity. The amendments also allow for ordinary members of the two organisations to be paid compensation, if appropriate. At this stage, we do not intend to make the posts of chair and ordinary board member pensionable. However, it is important that the Bill is not too restrictive, as circumstances may change. I understand that this is normal in relation to a number of public bodies. Amendments Nos. 90 and 148 also allow for the payment of compensation to staff at both organisations for loss of employment.

Amendments Nos. 91 to 95 ensure that exemptions from the requirement to be authorised in order to conduct reserved instrument activities that currently apply to employees working under the supervision of authorised persons are extended to cover partners who conduct reserved activities under the supervision of authorised persons.

Amendments Nos. 150 to 171, 173, 174, 177, 187, 189 to 191, 193 to 202, 225, 226, 228, 229, 232, 233 and 257 extend the regulatory powers of the Law Society to improve its powers over sole practitioners and employees of solicitors. Also, Amendments Nos. 188, 192 and 224 reflect the commitment made in this House to further update the Law Society’s powers so that it is able to rebuke and fine solicitors for less serious professional misconduct cases. Minor and technical changes have also been made through Amendments Nos. 178 to 182, 184 to 186 and 223 to the information powers in Schedule 16.

I hope that taking this large group of amendments together makes sense to the House. I believe that there are no substantive differences between us on these issues. I think the amendments respond effectively to many of the points made in your Lordships’ House and in the other place.

Moved, That the House do agree with the Commons in their Amendment No. 1.—(Lord Hunt of Kings Heath.)

My Lords, we have one or two quibbles with what the Minister has said, but we overwhelmingly accept his judgment on these issues and are content to let the matter rest there.

On Question, Motion agreed to.

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 2 and 3.

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

My Lords, I thank the noble Lord for his kind comments on the first group of amendments. I look forward to similar comments on this group. I beg to move that the House do agree with the Commons in their Amendment No. 4.

Amendments were made in the other place that dealt with the regulatory status of trade unions. In essence, they made clear the position of unions under Clause 15(4). That clause allows the staff of organisations to provide reserved legal services in defined circumstances without the organisation having to be regulated as an entity under the Bill. Those circumstances include situations where the organisation does not provide legal services to the public. Clause 15(6) sets out that for these purposes a trade union’s membership, including people connected to a member or former member, does not count as a section of the public. The result is that the union does not have to be regulated as an entity in order for its staff to provide legal services to members.

There has been considerable debate in the other place and I want to remind the House of a number of important matters to take into account in debating this group. First, reserved services provided by a union will still have to be carried out by qualified lawyers. Secondly, those lawyers will be subject to the regulatory rules of an approved regulator. If a union’s practices require lawyers to work in a way that the regulator believes is not in the best interests of its members, it will be able to change its rules, with LSB agreement, to prevent the lawyers working there. Thirdly, this special treatment is confined to services provided by virtue of membership. Let me make it clear. If a union offers services to others, and/or offers services on a more commercial basis, it will fall outside Clause 15(6); it will need to be regulated as an entity and, because of its ownership structure, will need to be licensed as an ABS.

Finally, many unions do not provide reserved services through their own staff but instead have arrangements with external firms. In those circumstances, the union’s offices may be providing non-reserved services such as advice, but the union will fall outside the exemption in Clause 15 and so no special treatment will be needed. Of course, the external firms providing the contracted services will be fully regulated.

Moved, That the House do agree with the Commons in their Amendment No. 4.—(Lord Hunt of Kings Heath.)

rose to move, as an amendment to the Motion that this House do agree with the Commons in their Amendment No. 4, leave out from “House” to end and insert “do disagree with the Commons in their Amendment No. 4 but do propose Amendment No. 4A in lieu”.

My Lords, we on these Benches have considered the issues raised by the amendment and support it. The noble Lord, Lord Kingsland, has said everything that needs to be said on the topic and I do not propose to add to that.

My Lords, I declare an interest as a non-executive director of a firm providing some legal services to the trade union movement. My anxiety with the amendment tabled by the noble Lord, Lord Kingsland, is that it would narrow the scope of the exemption so that certain specialist services provided by trade unions to members would no longer be covered. I am thinking of, for example, advice in relation to aspects of education law, in relation to union members acting as pension trustees on their pension schemes, in relation to legal disputes that might affect third parties such as other employees within the workplace or students, or in relation to intellectual property or performance rights.

The proposed changes would create legal uncertainty about when the exemption would apply to trade unions. Given that failure to act within the exemption could result in a trade union official committing a criminal offence, we believe that it is essential that the wording of the exemption is clear and does not include such uncertainty. The best way of ensuring that trade unions can continue to provide effective representation in workplaces and specialist legal services to members relating to many different aspects of employment is to provide a broadly defined exemption in the Bill. We believe that the existing wording of Clause 15 should be retained.

My Lords, I agree with the previous speaker. I spent part of my career as a union official and some of it was connected with getting in touch with lawyers on behalf of individual members. I fail to see why the provision of legal services should not be a service that unions can advertise with a view to attracting membership. That has been a standard practice in the trade union movement for many years, and we have been able to help an enormous number of members in a variety of instances with those services. As has already been indicated, we employ lawyers to provide this important service to members. I hope that the House will not agree with the amendment moved by the noble Lord, Lord Kingsland.

My Lords, I shall first respond to the point raised by the noble Lord, Lord Kingsland, who said that this House has not had an opportunity to debate these matters in detail. He is quite right. My understanding is that the former Lord Chancellor, my noble and learned friend Lord Falconer, said at Second Reading that the Government would bring forward amendments in this area. It was hoped that they would be brought forward during the passage of the Bill in your Lordships’ House. As it turned out, many discussions took place and it took time before the necessary amendments could be laid. They missed the opportunity to be debated in your Lordships’ House and were therefore introduced in the other place.

I understand entirely what the noble Lord, Lord Kingsland, is getting at, but there are difficulties in using the terms that he used connected with employment. My noble friend Lord Sawyer put his finger on it. Our worry is that a union wanting to provide reserved legal services might not be certain of the circumstances in which it would be able to do so within the exemption. The problem is that, if it was uncertain, that might lead to its reducing the services that it might offer, which might impact on access to justice, an issue that we will debate shortly. The government amendments have the virtue of certainty in that respect. It would also be worrying if a narrow interpretation connected with employment were to prevent advice being given in the areas that my noble friend Lord Sawyer suggested.

I know that much of the concern in this debate has focused on consumer protection. We think that the amendments offer sufficient protection to union members and will not affect the wider public. Including the provisions will give certainty over a vital trade union function, which is the ability of union officials, many of them lay people, to advise fellow members in the workplace. Those of us with experience of unions would testify that that is one of the most valuable jobs that unions do and contributes to the general well-being of many people. We were concerned that, if unions had to be regulated as entities, many of them would find it difficult to put in place the necessary arrangements in an economic and efficient way, which would militate against their ability to offer those services.

The Joint Committee on the draft Bill discussed the matter in some detail. It said that it was concerned that the Bill as originally drafted could restrict the ability of trade unions to act in their members’ interests. We think that the amendments meet that point without unduly restricting the area in which this may operate, a result that might come about with the noble Lord’s amendment.

My Lords, surely the whole purpose of the Bill is to protect the consumer. Why should not the trade union member, who obtains advice not in relation to his employment but for conveyancing services and so on, have the same regulatory protection that the Government are offering to everybody else? Why should they not be covered by the scheme?

My Lords, there are two points to make about that. First, why should union members be restricted in relation to the kind of services that unions have traditionally offered? Secondly, because of the other regulatory safeguards that are in place, we think that there will be adequate safeguards. There is a balance to be drawn here. We may disagree on that, but the Government believe that this provision is sensible in relation to what can be provided to union members.

My Lords, I do not think that the Minister understands me. Trade union members receiving advice outside the usual employment areas will be getting a less safe service from the legal branch of the union that is advising them on these outside matters. Where do they gain from that? I mean the trade union members; I am not talking about the union, which might have to spend a little money in order to put proper protection in place.

My Lords, of course this concern is about the trade union members, not the trade union organisations. Surely the point is that you have the protections available in relation to the individuals who may be providing that advice. The ability of union members to have access to a wider area of advice than they would under the amendment moved by the noble Lord, Lord Kingsland, is a real advantage to those members. That is why we have gone down this course.

My Lords, is not the balance to which the Minister refers tipped against the interests of the membership in favour of the officials of the trade union movement? Is not that the truth of the problem?

My Lords, I do not think so. Those of us with experience of being trade union members would acknowledge that the advice that such officials can give can be very valuable. It would be a great pity to inhibit that.

My Lords, the noble Lord is of course right that the Select Committee raised concerns about the position of trade unions when his ministerial colleague had not reached a decision. I remind him that we were concerned about the provision of legal services by subsidiary companies wholly owned by trade unions. That is why the necessary exemption surely has to be very carefully drafted.

My Lords, I am sure that that is right. I was praying in aid the noble Lord’s name only on the general principle of seeking to ensure that some of the services currently provided are not inhibited.

I am not sure that we are going to get further on the matter. The Government believe that this is the most appropriate way forward. I look forward to the comments of the noble Lord, Lord Kingsland.

My Lords, I am most grateful to the Minister. I understand his dilemma very well. When I said that this matter had been introduced in another place out of the blue and had not been considered at all by your Lordships’ House, I did not in any way mean to criticise him personally. Indeed, there are often circumstances in the middle of a Bill’s passage in which, because of an event over which one has no control, one has suddenly to introduce an element that was not considered by one or other of the two Houses. I would not want him to think that I was trying to make a party-political point.

Nevertheless, the problem with introducing this at such a late stage is that we cannot have the normal exchange of views—the normal process of iteration—which often brings us, especially in your Lordships’ House, to an amicable conclusion. The difficulty is that this is the one and only time we have to consider this matter.

I have much sympathy with what has been said on all sides of the House. The concern of the noble Lord, Lord Sawyer, about the definition in our amendment in relation to matters connected with the provision of advice on employment is a perfectly sound observation. I cannot be sure exactly what the scope of our amendment will be. Indeed, nobody can be sure of the scope of any of the clauses in the Bill.

I have tried, as accurately as possible, to distinguish those services that legitimately ought to be given by a trade union to its members in the context of employment and the other services, which were extremely well defined by the noble Baroness, Lady Turner of Camden. She reminded us that trade unions have traditionally offered—even advertised—services with a view to attracting members. That is precisely the area at which this amendment is targeted. We think, as the noble Lord, Lord Thomas of Gresford, said, almost in aphorism, that those individuals deserve the same standard of protection as every other consumer in the country. Many of those services are totally unconnected with the employment function that it is the duty of the union to protect.

In those circumstances, I am inclined to ask the opinion of the House, realising that, if we win, the Government will have an opportunity to look at the matter again.

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 5 to 9. I have already spoken to these amendments.

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

My Lords, I beg to move that the House do disagree with the Commons in their Amendments Nos. 10 to 14, but do propose Amendments Nos. 10A, 11A, 11B, 12A, 13A, 14A and 14C in lieu. Perhaps I may point out that there was a mistake and a corrected amendment, Amendment No. 14C, has been tabled in lieu of Amendment No. 14B, which has been removed from the Marshalled List.

These amendments bring us to the important question of the threshold limits on the exercise of broad powers and allow for the board to regulate proportionately and effectively. In this and the next group of amendments we will debate the appropriate style of the overarching regulator. I understand fully that this is very important. One wishes to get the benefits of having an overarching regulator, but in a way that does not cramp the style or micromanage the individual regulatory bodies. Getting the balance right is very important.

We all recognise the importance of a board which, in accordance with Sir David Clementi’s recommendations, is an effective oversight regulator that allows the approved regulators to get on with their jobs but is able to take appropriate action where those regulators fail to do so. Consideration has been given to ensuring that, within that, we have a sensible relationship and that we do not raise the threshold so as to prevent the board from acting or to cause doubt or argument about its ability to act. Equally, we do not want the board trying to micromanage the activities of the regulatory bodies. We believe that this group of amendments provides that essential balance. I beg to move.

Moved, That the House do disagree with the Commons in their Amendments Nos. 10 to 14, but do propose Amendments Nos. 10A, 11A, 11B, 12A, 13A, 14A and 14C in lieu.—(Lord Hunt of Kings Heath.)

My Lords, I thank the Minister for the change that, in particular, Amendment No. 12A introduces. He will be aware that what I take to be the substance of that amendment formed part of one of the amendments which was incorporated in the Bill in your Lordships’ House before it went to another place.

I know that the right honourable gentleman the then Home Secretary considered Amendment No. 12A at the Committee stage in another place but, for some reason I have not yet fathomed, it did not find its way at Report stage into the Bill. The Minister has now rectified that omission by bringing it forward at this stage, and I am extremely grateful to him for doing so.

I should like to be absolutely clear about the text. Paragraph (b) of Amendment No. 12A states,

“that it is appropriate to act under this section in all the circumstances of the case (including in particular the impact of so acting on the other regulatory objectives)”.

In the Bill as it first emerged, it was enough to trigger the involvement of the Legal Services Board for an adverse impact to be experienced simply by one of the eight regulatory objectives. As I understand it, the amendment now states that the Legal Services Board has to conduct a kind of cost-benefit analysis; that is to say, it has to look at the initial adverse impact in the context of any positive impact that might be had on the other seven objectives.

One of the examples mooted in your Lordships’ House during our many debates on this subject was about a measure which had an adverse impact on competition but a correspondingly beneficial effect on access to justice, and it was up to the Legal Services Board to determine whether there was a net benefit. That is my understanding of what we sought to do here. It is also my understanding of what the amendment, which the Minister has kindly presented to your Lordships’ House, achieves. I should like the Minister to confirm that.

My Lords, we, too, are grateful to the Government for considering the debates that we had in this House and in another place and for moving towards the position that we adopted on these Benches. This is a very considerable improvement on the Bill as originally drafted and we support the Government in what they have done.

My Lords, I thought the noble Lord, Lord Kingsland, put it very well; better, in fact, than my speaking note. He is quite right about the approach that is taken and I am grateful for his support.

On Question, Motion agreed to.

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 15.

This group of amendments covers the area we have just discussed—the essential balance between the role of the overarching regulator and the individual bodies. Previous debates on this issue centred on the need to establish the appropriate relationship between the board and the approved regulators, and that gave rise to amendments that covered three main issues. First, the board should consider the “B plus” model of regulation by recognising that the primary responsibility for regulation rested with the approved regulators. Secondly, the board should apply a test that the approved regulator had taken unreasonable action or inaction before it could exercise its powers. Thirdly, the board must seek to resolve matters informally before resorting to the exercise of a power.

While there were technical drafting reasons, as there often are, why the Government could not accept those particular amendments, we agreed with two of the three underlying principles so that the board would be making it clear in the policy statement how it would avoid micromanagement or second-guessing of approved regulators. All agreed, as do I, that that would be highly undesirable.

We were not able to accept the requirement for the board to fetter its discretion to act so that it must be satisfied before it can use any of its powers that the action or inaction of the approved regulator to which the power would be directed is unreasonable. Of course it is sensible that the board should consider the reasonableness of an approved regulator’s actions before exercising its powers. Unreasonable action or stubbornness in refusing to take action when it is clearly called for will raise for the board the question of whether it should act. There may be occasions, however, when an approved regulator might act or refuse to act in a way that the regulator argues is not outside the bounds of what a reasonable regulator might choose to do but the overall effect has, or seriously risks having, a harmful effect on the regulatory objectives. Our concern is that we would not want to prevent the board taking such action in such circumstances.

Moved, That the House do agree with the Commons in their Amendment No. 15.—(Lord Hunt of Kings Heath.)

rose to move, as an amendment to the Motion that this House do agree with the Commons in their Amendment No. 15, at end insert “but do propose Amendment No. 15A as an amendment to Commons Amendment No. 15”.

The noble Lord said: My Lords, I thank the Minister for Amendment No. 15, which, once again, is a considerable improvement on the original text as well as being expressed far more elegantly than before. However, despite his tranquilising observations, I still wish to press Amendment No. 15A.

The noble Lord will no doubt recall from the homework he will have had to do over the summer that all this started with the report of Sir David Clementi. Towards the end of his report Sir David said in terms that,

“the LSB should be a small oversight body”.

In the Government’s response to that, they said that the MSB should intervene only if an approved regulator was “clearly failing”. Yet that philosophy was not reflected in the Bill as it arrived in your Lordships’ House.

Noble Lords will recall that, throughout all the stages in your Lordships’ House, we repeatedly challenged the noble Baroness, Lady Ashton, that the Government put their money where their mouth was; that is, to express in concrete terms in the Bill what they had said in their response to the Clementi report. Unfortunately, we were insufficiently persuasive, so we had by amendment to achieve our objective. We achieved all our objectives by amendment; they have for the most part been reversed in another place. In the case of one of them, we ought to put the words back in the Bill.

One of the amendments would have introduced “significant” to qualify the adverse impact. We thought that one approach would be to require the LSB to intervene only when the adverse impact had been significant. We took into account all those observations made in your Lordships' House, which carried great weight and said that “significant” is a difficult word for the judiciary to interpret. We have therefore left that aside and decided not to reintroduce it, but wish to reintroduce the other amendment, Amendment No. 15A, which would add a paragraph (c) to Amendment No. 15 to,

“ensure that the board exercises its powers only where it considers that the action or inaction of an approved regulator is not an approach which the approved regulator could reasonably have taken”.

We feel completely justified in tabling the amendment, because the Minister will see that the composition of all the approved regulators reflects most accurately the composition of the Legal Services Board. The professions have separated their representative from their regulatory function; a substantial number of individuals on the approved regulatory board is lay; and all the members of the authorised regulators will be selected on the basis of the Nolan principles. So it would be only in rare circumstances that the LSB would be required to second-guess the activities of the approved regulators. Those circumstances are set out in Amendment No. 15A. I draw a great deal of support for my proposal from what the Minister said when addressing the thresholds at Third Reading in another place two days ago. She said that the LSB,

“should not be in the business of micro-managing or second-guessing approved regulators”.—[Official Report, Commons, 15/10/07; col. 655.]

We have tabled the amendment to ensure that the Legal Services Board behaves exactly as the Minister wishes it to do in the way that she expressed it two days ago. I beg to move.

Moved, as an amendment to the Motion that this House do agree with the Commons in their Amendment No. 15, at end insert “but do propose Amendment No. 15A as an amendment to Commons Amendment No. 15”.—(Lord Kingsland.)

My Lords, the noble Lord, Lord Kingsland, has put his points forward with his customary reasonable and succinct style, which is always very effective. He knows, as all of us in this House know, that we are discussing the balance between the roles of the approved regulators and the oversight regulator. I recognise the point that the noble Lord made: in the regulatory aspects of their role changes have been introduced that ensure that there is a large element of laymen and laywomen—independent people—along with the members of the profession concerned, which I am sure is very welcome to the Minister as well as to others.

In the amendment moved by the noble Lord, Lord Kingsland, he is erecting a hurdle too far in imposing on the oversight regulator the obligation of saying that the approved regulator could not reasonably have come to a decision. When it gets down to reasonableness, it is perfectly possible for two bodies of well intentioned people of considerable integrity to come to two different points of view. Given the structure of the Bill as it relates to the oversight regulator, the board, and the approved regulators, it is perfectly reasonable and would be possible in an ultimate and no doubt extreme situation for the oversight regulator to say that even though the approved regulator has behaved reasonably it thinks, exceptionally, that it should be overruled.

My Lords, I rise to support the amendment. There are only two ways in which a body asked to overrule a decision of a lower body can act. It can say either, “Well, I wouldn’t have done that so we will change the decision”, or, “That was not a reasonable decision to make and therefore we will overrule it”. The noble Lord, Lord Borrie, says that in an exceptional situation the body can say that although the decision was reasonable it will overrule it. But if the situation was exceptional and the other body has come to an unacceptable decision, the decision was not in fact reasonable, however much it thought that it was.

The example that the Minister gave is just not a real example. He said that the bodies might have two alternative views and that either might be reasonable—but then he said that the view arrived at would have very adverse consequences. If the view taken is going to have adverse consequences, it was not a reasonable view; if the body has not taken those adverse consequences into account properly, it has not come to a reasonable decision. There are no compromises in the middle. Unless the body is not going simply to say, “That is not what we would have done and therefore we will do something different”, the amendment must be right.

My Lords, having taken part in this discussion at previous stages—a most important part of our general discussion—I could not have heard the argument better expressed than today by my noble friend Lord Kingsland and the noble Lord, Lord Thomas of Gresford, so I have no more to say about that. I wholly accept the way in which it has been put, and I could not have done it as well. However, what concerns me is the intervention of the noble Lord, Lord Borrie. It seems to me incredible to object to the use of the word “reasonably” when the only way that any form of statutory body’s conduct can be controlled is if the High Court thinks that it is unreasonable. I assume that the noble Lord does not wish to have unreasonable conduct controlled. If he does, then I do not understand his argument.

My Lords, this is a very important discussion because, as my noble friend Lord Kingsland pointed out, throughout the Bill Ministers have always made it clear that the Legal Services Board should not intervene unless an approved regulator is acting unreasonably. That is exactly what my noble friend wishes to write into the Bill. We should not forget that we are dealing with an independent body. The Legal Services Board will look to the statute to clarify for its members how it should act. My noble friend Lord Campbell of Alloway is right to point out that if the noble Lord, Lord Borrie, is right in what he says, there is nothing to stop the Legal Services Board substituting its judgment for that of the approved regulator wherever the board takes a different decision. As the noble Viscount pointed out—

My Lords, does the noble Lord agree that it would be difficult for anybody to consider whether the board’s decision was reasonable in substituting its decision for what it regards to be a reasonable decision? Who controls the board?

My Lords, I hope that the House is rapidly getting the impression that we are trying to avert confusion and to make the matter as simple as possible. The noble Viscount is right. The wording of my noble friend’s amendment—even now the noble Lord, Lord Hunt of Kings Heath, may be thinking carefully about whether he can accept it—is exactly what Ministers have always said should happen. It is very important that the new independent body, the Legal Services Board, should be able to look to the statute rather than to what is said by Ministers in debate. It is very important to get this absolutely right in the statute. That is why I so strongly support my noble friend’s amendment.

My Lords, we Lord Hunts are very reasonable people but I am not sure that I can go as far as the noble Lord, Lord Hunt of Wirral, suggested. Of course, I very much understand the importance of this discussion. I cannot disagree with the comments of the noble Lord, Lord Kingsland, on a small oversight body and the other changes that are taking place: the separation of professionals from the disciplinary procedures; the involvement of more lay members; and the Nolan procedures. I agree with all of that and his general philosophy on the relationship between the board and the individual regulators. I have dealt with regulation in the health service, particularly as it affects doctors, and very much understand the arguments around the role of the overarching regulator and the individual bodies, and about making sure that the balance is right.

However, I say to the noble Lord, Lord Kingsland, that our advice is that his amendment would require the board to ensure that before it takes any decision whether to exercise its powers it should apply the Wednesbury test of unreasonableness—the test that gives the decision maker a very wide margin of appreciation; in effect, any decision may validly be taken so long as no error of law or process is made and a reasonable decision maker could have taken it. The problem is that were the board required to pass this test before being able to take any action, it would have to be satisfied that a judicial review of the acts or omissions of the approved would succeed on the grounds that no reasonable approved regulator could have thought that action or inaction appropriate. The problem with that is that it would place a very great inhibitor on action by the board unless and until an approved regulator was near collapse or was brazenly flouting principles of good regulation, by which time serious damage might have been done to the regulatory objectives. That is the point that my noble friend Lord Borrie made. I do not accept that without a “reasonable” test the board would seek to or be able to second-guess approved regulators or impose its own policies where it does not agree with the decisions of approved regulators. I say to the noble Lord, Lord Hunt, that the board will be required—

My Lords, if it was to second-guess, what on earth could be done about it? That is the defect in the argument of the noble Lord.

My Lords, first, the duties under Clause 3 require its regulatory activities to be proportionate, accountable and targeted only at cases in which action is needed. The threshold conditions on the use of board powers ensure that the board can take action only where in all circumstances of the case it is the appropriate action to take and the additional provisions tabled requiring the board to consider the impact of taking action on the other regulatory bodies, which we have just discussed. The other policy statements require the board to respect its oversight role and the principle that matters should be resolved informally.

It is also important to note that, as a public body, it will be required to act in a proportionate manner when any convention rights of the approved regulators are engaged. It will be open to approved regulators judicially to review decisions of the board that are prima facie irrational, unreasonable or disproportionate. The question is whether the balance is right. The Government’s view is that, were we to accept the amendment, the balance would not be right, and the board would be inhibited from any intervention unless it was in dire circumstances. I recognise that it is difficult to get the balance right, but the amendment could have some very negative consequences on the Bill and on the role of the board.

My Lords, the noble Lord said that he agrees with many of the objectives of the noble Lord, Lord Kingsland, but he thinks that the amendment goes a bit too far. Would the sensible thing not be for him formally to make no objection to the amendment for the moment, and for it then to be discussed—the matter has got to come back to us anyway because of the previous vote—to try to find some compromise wording halfway between the two of them?

My Lords, the noble Viscount is very seductive, but the Government believe that we have got the balance right with the amendments that I have moved. Accepting the amendment proposed by the noble Lord, Lord Kingsland, would send us over that balance. I am afraid that, alluring as his offer is, I cannot accept it.

My Lords, I am most grateful to the Minister and to all noble Lords who have engaged in this debate. The arguments of the noble Lord, Lord Borrie, are always beguiling. However, on this occasion, I did not find him as persuasive as I often do. He suggested that there might be a situation in which the position of the front-line regulator was reasonable but it would, nevertheless, be reasonable for the LSB to intervene. I pray in aid in response to that the remarks made by the Minister in the House of Commons—I apologise for repeating myself—who said that the LSB,

“should not be in the business of micro-managing or second-guessing approved regulators”.—[Official Report, Commons, 15/10/07; col. 655.]

If the approved regulator makes a reasonable decision, for the LSB to intervene in those circumstances would be second-guessing its decision; it can be described in no other way. In those circumstances, I think that I am entitled to test the opinion of the House.

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 16 to 18.

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

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 19.

We now turn to the very important matter of access to justice in the ABS context. I understand that this has been debated extensively in both Houses and we all agree that we do not want new business structures to put access to justice at risk.

We are confident that, contrary to some of the concerns expressed, ABS will improve access by making legal services more readily available at lower prices. I understand that that view is not shared by all noble Lords, but we have heeded the weight of feeling expressed on all sides and have introduced amendments that provide additional safeguards for access to justice, while placing it firmly in the context of the other regulatory objectives. The amendments that I speak to in this group will achieve this. They replace amendments that risk giving access to justice priority over other regulatory objectives but still give special attention to access to justice. My understanding is that the amendments received widespread support in the other place and I commend them to the House.

Moved, That the House do agree with the Commons in their Amendment No. 19.—(Lord Hunt of Kings Heath.)

rose to move, as an amendment to the Motion that this House do agree with the Commons in their Amendment No. 19, at end insert “but do propose Amendment No. 19A as an amendment to Commons Amendment No. 19”.

My Lords, is the noble Lord, Lord Neill of Bladen, speaking to this group?

My Lords, I shall be moving Amendment No. 72A, an amendment to Amendment No. 72, which is later in the Marshalled List, on page 9. It has been grouped with the amendment that the noble Lord, Lord Thomas, has spoken to. That is a rather odd grouping, if I am to be allowed to develop the nature of my amendment. In substance, my amendment is aimed at restoring the position in the Bill when it left this House—namely, that Part 5 of the Bill will not be put into operation until there has been a further inquiry and investigation by a committee with a report to both Houses. I would like to develop that at the appropriate moment.

My Lords, there are two alternatives. As I understand it, the amendments are grouped together and the noble Lord may care to develop his arguments now. Alternatively, he can decide to degroup his amendment and we can consider it later. It is very much a matter for the noble Lord.

My Lords, my preference would be to degroup it because of its incongruity with the scope of the amendment of the noble Lord, Lord Thomas. I would like to consider at a later stage the amendment standing in my name.

My Lords, that is very much in the noble Lord’s hands. We must just ensure that we debate it when we reach it. Speaking for myself, I find that it is quite easy to lose track of what we are doing at this stage of a Bill.

To respond to what I take to be the probing amendment of the noble Lord, Lord Thomas, I agree with everything that he said about access to justice. The noble Lord will know that I have responsibility within the Ministry of Justice for legal aid, which can perhaps be described as a friendly challenge at the moment. Clearly, from my point of view, I am concerned to ensure that there is provision throughout the country. I understand the points that he makes about rural areas. I have no doubt that we will have another opportunity to discuss legal aid, but I want the noble Lord to understand that I sympathise with his points.

There is no question but that an integral element of access to justice is the availability of services, not just in theory but in practice. I reassure the noble Lord, Lord Thomas, that the effect on providers is covered by our access to justice amendment. It does not need separate provision. The effect on existing provision will need to be taken into account, for the sake not just of providers but of their clients and the need for access to justice. I am confident that the vast majority of applications will lead to improvement in these areas, improving access to justice as a result. The amendments that we are making to Clause 83 reinforce this by signalling the importance of access to justice in the alternative business structure context. I hope that that reassures the noble Lord.

My Lords, I referred to the service provided by the high-street solicitor to the community. It is the community interest that concerns me most—people who, I recall, look to their local solicitor to provide them with a range of services on the various legal issues that arise in their life. I have those people in mind, but I am reassured by the noble Lord’s words and beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

On Question, Motion agreed to.

My Lords, I beg to move that this House do agree with the Commons in their Amendments Nos. 20 to 38.

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

My Lords, I beg to move that this House do agree with the Commons in their Amendments Nos. 39 to 46. This group of amendments relates to the OLC’s power to make rules on charges payable by respondents. I know that this has been the subject of considerable concern. It is known as the “polluter pays”. I understand noble Lords’ concerns about the original position. While these amendments reverse amendments made in this House, they represent a sensible outcome. They will improve the Bill for blameless respondents to complaints. I hope that the overwhelming majority of honest and competent lawyers will be reassured by these changes. They encompass government amendments and two amendments moved by the honourable Member for Somerton and Frome on Report in the other place. I beg to move.

Moved, That this House do agree with the Commons in their Amendments Nos. 39 to 46.—(Lord Hunt of Kings Heath.)

rose to move, as an amendment to the Motion that this House do agree with the Commons in their Amendments Nos. 39 to 46, leave out “agree” and insert “disagree”.

The noble Lord said: My Lords, this matter can be dealt with exceedingly succinctly. The purpose of my tabling these amendments is to ask the Minister whether he is confident that what I take to be, essentially, Amendment No. 41 on the Marshalled List, which was included in the Commons amendments on Report, provides everything that the Bill as amended by the Lords provided on the polluter pays matter. I want to be confident that that part of the Bill that has come back to us on the polluter pays achieves everything that our successful amendment achieved. I beg to move.

Moved, as an amendment to the Motion that this House do agree with the Commons in their Amendments Nos. 39 to 46, leave out “agree” and insert “disagree”.—(Lord Kingsland.)

My Lords, the answer is yes.

My Lords, I am much obliged. I pay particular tribute to the Minister because, as he is well aware, of all the issues that concerned your Lordships’ House on the Bill, this was perhaps the most important. I wish to pay the Government a handsome compliment. Thank you very much, indeed—in particular, I thank the Minister.

My Lords, would the noble Lord also like to compliment the honourable Member for Somerton and Frome, whose amendment was accepted by the Government and achieved the result that he had sought in this House?

Of course, my Lords. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

On Question, Motion agreed to.

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 47. I shall speak also to Amendment No. 49. These amendments address cross-party concerns expressed both in this House and the other place that certain provisions in Part 6 fail adequately to protect the interests of legal services consumers.

In relation to Amendment No. 47, the Government listened carefully to concerns that the former redress limit would needlessly exclude a significant number of complaints. As a result, the amendment will increase the redress limit from £20,000 to £30,000. As noble Lords will recall, there was debate on the redress limit when the Bill was last in this House. There was also much debate in another place. The amendment will address the arguments made during the Bill’s passage.

At one stage a figure of £100,000 was proposed to the highest level. We have resisted that for three main reasons. First, because £20,000 is higher than any award available under the current legal complaints- handling arrangements; secondly, because the average awards made under the existing arrangements by the Law Society and the Bar Council are around £450; and, thirdly, because the Bill provides for the board, the OLC or the consumer panel to recommend an increase in the limit at any time. The Lord Chancellor does not to have to wait for such recommendation, but is able to ask any of those bodies to consider whether to make such a recommendation.

We know that the ombudsman for estate agents may award up to £25,000. I could not claim that I have absolute scientific evidence to suggest that £30,000 is exactly the right figure. It moves on the original figure, and I hope that noble Lords will agree that this is a sensible outcome.

Amendment No. 49 relates to an ombudsman’s obligation to refer a complaint to the relevant approved regulator when they take the view that the complaint may raise disciplinary issues. While ombudsmen are empowered to deal with redress, approved regulators, such as the Bar Council and the Law Society, will continue to deal with any disciplinary issues.

In circumstances where an ombudsman refers a complaint, this amendment will place a further obligation on ombudsmen to inform the complainant that their complaint has been referred to an approved regulator. Following a referral, an ombudsman will be able to continue to determine the complainant’s eligibility for redress.

The intention here is to enable a complainant to follow the disciplinary action taken against their lawyer. This amendment will provide important reassurance to consumers who may want to know that their lawyer will be appropriately disciplined for professional misconduct.

Moved, That the House do agree with the Commons in their Amendment No. 47.—(Lord Hunt of Kings Heath.)

On Question, Motion agreed to.

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 48.

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

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 49 to 71.

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

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 72.

Moved, That the House do agree with the Commons in their Amendment No. 72.—(Lord Hunt of Kings Heath.)

rose to move, as an amendment to the Motion that this House do agree with the Commons in their Amendment No. 72, leave out “agree” and insert “disagree”.

The noble Lord said: The amendment would restore to the Bill a provision that was agreed here on more than one occasion by votes; namely that Part 5 should not be brought into operation without further examination and report.

I should place it on the record that I was a member of the Joint Committee that considered the Bill. When I heard the Minister say that he was coming fresh to it, I rather envied him. Over the past 18 months, I seem to have done little else but think about the Legal Services Bill. Following the evidence that we managed to put together under the chairmanship of the noble Lord, Lord Hunt of Wirral, on that committee, I took the view that a case had not been made for why the extraordinarily wide provisions in Part 5 were necessary. We are talking about lawyers getting together with all sorts of other professions in various possible permutations of professional organisations. Over and above that, there is the possibility of funding by outside people and ownership by outsiders who would have no legal or other professional qualification whatever. That was an alarming prospect. The amendment would ensure that that did not happen until the matter had been reviewed.

One of the main concerns has been talked about earlier today; the noble Lord, Lord Thomas of Gresford, mentioned it. A good deal of evidence came out in Committee in your Lordships' House of the anxiety about the effect of Part 5 on access to justice. The note that struck a chord with everyone concerned what would happen to a couple of high-street solicitors in a small town if a bigger legal enterprise decided to open a wider partnership that involved all sorts of things in addition to law. No work that we could detect had been done on the social consequences of that policy.

The most potent spokesman for that anxiety was the former Lord Chief Justice, my noble and learned friend Lord Woolf. He said that devastating consequences could follow from the introduction of Part 5 unless people were aware of what they might be. The House heard contributions from other parts of the country. Wales was singled out and the Midlands and the north were mentioned by Members of this House who were able to relate personal conversations that they had had with local solicitors and others reflecting considerable concern about the effect of the Bill if enacted.

Another disturbing aspect came from the foreign legal profession. The German Federal Bar, the BRAK, has a large association that represents about 100,000 members. It wrote to the committee saying, “We put you on notice that no German lawyer would be allowed to have anything to do with a firm that is organised in the way envisaged or made possible by the Bill”, with outside shareholders and so forth. It would be regarded by the German legal profession and German law as totally unprofessional to be associated with any such body. That was in just one country. We made no inquiry into any other countries.

Noble Lords may recall a story. One of our protests in the report, which was made by the chairman, the noble Lord, Lord Hunt, was that we were given only four weeks from start to finish to produce a report. The amount of independent inquiry that we could make was virtually zero—we got together just a few home witnesses.

The amendment that I introduced in the Lords in the spring was voted on with big support from the opposition parties and found a place on the statute book. It called for a delay and a detailed report investigating the access to justice matter and the views of the foreign legal profession, so that we would have some feel for whether we were doing something wholly bizarre, avant-garde or rather good. That amendment was carried by the House. It was struck out at a very early stage in the other place; I did not follow it thereafter, but it did not surface again. We got the Bill back on Tuesday morning and we find that the provision about delay is no longer there. I therefore tabled this amendment to restore the position to where I believe it ought to be.

My Lords, we on these Benches very much support the noble Lord in this amendment. He is not suggesting that alternative business structures should be banned for ever, but that there should be a proper investigation of their efficacy and, in particular, whether they are in the public interest—the consumer interest—that this Bill is supposed to be about. A number of groups will benefit from alternative business structures. I have already referred to it in my earlier remarks on the amendment which I moved. It is in the interests of large, commercial firms of solicitors to have additional capital and arms to their businesses. Since it is very influential, it is no surprise that the Law Society is not objecting to alternative business structures.

It is also in the interests of commercial organisations which are not legal, which can add a legal arm to their activities nationwide. It may be a supermarket, an insurance company or possibly a building society which could have within its organisation an office with a salaried lawyer who is creaming off the best of the business such as he decides to deal with away from solicitors who are providing a wider service. That is the issue.

I am not surprised that this Government are supporting the fat cats of the legal profession, but they might take into consideration the people who are working in the community interest in rural areas who will be badly affected by the Bill. I very much support a wider investigation of the merits of the schemes.

My Lords, I agree with the noble Lords, Lord Neill of Bladen and Lord Thomas of Gresford, that, by a very large margin, the most important factor that ought to be taken into account in relation to Part 5 is the potentially adverse social consequence of its implementation without very close monitoring of the geographical impact of the arrangements. I know that the Government understand that, but I am not confident—I may be after the noble Lord speaks—that they have made sufficient provision for that, although their acceptance of the amendment on access to justice is very important.

The wider picture is equally troublesome. The noble Lord, Lord Neill of Bladen, made an observation about the international consequences of Part 5. He has rightly quoted the serious concerns expressed by the German equivalent of the Law Society. I know, as many others do, that there are also serious concerns about this in the American Bar Association. We face a possibility—to put it no higher—that firms licensed under Part 5 may not be able to sell their services out of the United Kingdom into these countries.

There are particular considerations about outside share ownership and multi-disciplinary partnerships which have been severely under-researched by the Government. For example, the measures to identify who owns or who might own a particular firm of solicitors need to comprise much more sophisticated ways of identification. It may be that the ultimate owner of a legal services firm will be someone against whom that firm is at that moment litigating. It may be the intention of this, as yet, unknown owner to compromise that litigation in the favour of another interest. Is the Minister really confident that the ownership provisions can satisfactorily identify someone who buys a solicitors’ firm with that intention?

What about the manner in which a solicitors’ firm is bought? From reading our newspapers, we know about the private equity industry. Quite often, private equity companies buy other firms, largely by the issue of debt against the assets of the target. Supposing a private equity firm comes along and buys a solicitors’ firm issuing 90 per cent plus of debt to buy the firm. The future performance of that solicitors’ firm will depend enormously on its cash flow. What pressures will the outside shareholder exercise on the lawyers in that firm to make sure that that cash flow is forthcoming to pay off the debt? There seems to be nothing to control the way in which the financial structures of these firms ought to be regulated. For example, should the licensing authority have rules about the debt equity ratio of solicitors’ companies that are bought?

I see no evidence that the Government seriously considered the Enron factor in relation to multi-disciplinary practices or cross-selling by different professions which form part of one firm. I know that the noble Lord will be familiar with the problem; it has been talked about to a considerable degree in the proceedings on this Bill in your Lordships' House and I do not intend to elaborate on it.

To some extent, I am reassured that we have until 1911 before these—

2011!

My Lords, I do apologise. It shows what this Bill has been doing to me for the past 10 months. We have until 211—

2011—it’s not a Roman Government either.

My Lords, allow me to compose myself before I continue. Once the Bill becomes an Act, the matter will be entirely in the hands of the Legal Services Board. From the moment the Bill becomes law, the Government will not be able to intervene. How will they be confident that the Legal Services Board will take these issues seriously, which I think is what lies behind the intervention made by the noble Lord, Lord Neill of Bladen? He wants to be confident that the Legal Services Board will investigate all these matters before 2011.

Although we on these Benches supported the sunrise clause at an earlier stage, we are hesitant about supporting it again this late, provided the Government can give us some real assurance that these issues will be properly confronted and dealt with between now and 2011. Otherwise, the consequences could be dire.

My Lords, I would be glad if the Minister could tell us what the Government know about the situation in other member states—Germany has been referred to—and of course the United States. Are there any legal impediments in those countries to lawyers using this kind of structure?

My Lords, this has been a short but extremely interesting debate and I am grateful to the noble Lord, Lord Neill, for allowing us to discuss the matter. Perhaps I may say that he looks as lively and fresh as ever while bringing this issue back to our attention, and the challenge is for me to assure the House that with the implementation of the Bill, particularly alternative business structures, there will be monitoring and evaluation. There has been an element of a Second Reading debate on the principle of ABS and I shall not go down that path too far, but I should say that the Government do not believe that this is about responding to fat cats who want to make a lot of money; rather it is about ensuring that the public will benefit. We think that there are real advantages in enabling firms to offer a mix of legal and other services. ABS will bring innovation and new ideas to firms, including dealing with some of the challenges described by the noble Lord, Lord Thomas of Gresford, for rural practices. I shall say again that as the Minister responsible for legal aid, I am as concerned as anyone in the House to ensure that there is adequate, good- quality coverage throughout the country. The structures that ABS will bring in will allow for that to happen.

Before I turn to the questions of research and the sunrise clause, we think that the Bill contains safeguards to prevent improper influence by non-lawyer owners and managers as a result of commercial pressures such as debt. Under Clause 90, non-lawyers are expressly prohibited from causing lawyers to breach their professional conduct duties, such as acting in the best interests of their clients, and lawyers are under a statutory duty to comply with professional conduct rules. On certainty over ownership, my advice is that the provisions in the Bill are robust, having been modelled on the provisions that are effective in the financial services sector. On the question of shareholder influence, lawyers’ professional conduct duties are fully protected. As I have said, non-lawyers, shareholders, managers and employers are prohibited from causing breaches of lawyers’ duties, and can be disciplined or even prohibited from future involvement in alternative business structures if they violate the prohibition.

The noble Lord, Lord Neill, asked about the attitude adopted in other countries. I do not have information about whether ABS structures are used in other member states, but the main point to make is that ABS is facilitative. If similar structures are not allowed elsewhere, ABS firms based in this country will need to take account of that when considering whether to expand abroad. If there is a problem, they can set up alternative organisations that comply with local rules. However, on the substantive point, my understanding is that there are no international laws or obligations which make the regulatory framework we are proposing incompatible with them.

Just in time, I understand that legal services providers in New South Wales have been permitted to incorporate and provide legal services to clients either alone or alongside other service providers who may or may not be legal services providers, and other Australian states are apparently following the lead of New South Wales. It is not often that I quote Australia as an example of good practice, but on this occasion I do so.

I can reassure the House that the Legal Services Board has a duty to report annually on how it has met the regulatory objectives, as well as approving and monitoring licensing authorities’ policy statements. Clause 110 adds a specific requirement that the annual report must address the effect of ABS activity on the regulatory objectives. So there will be full scrutiny of the development of alternative business structures. I know that noble Lords will want this matter to be kept under full review, and the statutory provision making it the duty of the Legal Services Board to report annually will ensure that this is done. The noble Lord, Lord Neill, has asked me to say that ABS will be kept under close review, their economic effects monitored, and that there will be reports. I am happy to give an assurance that all that will be undertaken, and I hope that with it, the noble Lord will not press his amendment. To do so would unnecessarily fetter the development of these structures and the services they can offer when the provisions of the Bill come into force. However, I fully accept his challenge on the need to ensure that we keep this issue under review.

My Lords, I thank the Minister for that reply. I have to confess that I am not wholly reassured. On the foreign dimension raised by the noble and learned Lord, Lord Mackay of Clashfern, I read into the Minister’s answer—perhaps too cynically—that there has been a total lack of interest in the situation in other countries. The only example he has been able to come up with is that of New South Wales. It would be odd if the Dutch fully approved of what the Germans disapprove of, or odd that the French are perfectly happy with these proposals and would like to have partnerships of this sort. I feel that his attitude towards this information confirms a lack of diligence in relation to the gravity of the situation, one that has been fully flagged up here over a number of months. At the risk of being recalcitrant, I should like to test the opinion of the House.

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 73. It is the privilege amendment.

Moved, That the House do agree with the Commons in their Amendment No. 73.—(Lord Hunt of Kings Heath.)

On Question, Motion agreed to.

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 74 to 77. I shall speak also to Commons Amendments Nos. 81 to 88.

I now introduce amendments made in the other place which deal with appointments to and dismissals from the Legal Services Board. This is an important question and I have no doubt we will have a good debate. It goes to the heart of the independence of the legal profession and, quite rightly, this part of the Bill has been the subject of a great deal of scrutiny and debate at almost every stage of the Bill’s passage.

I have no doubt whatever that the Lord Chief Justice will add a great deal to the process of appointments. He is a man of the utmost integrity, independence and experience, and these attributes will be invaluable when making appointments to the board.

The Government also wish to highlight the importance of adherence to best practice in making public appointments and the importance of the external oversight and regulation which is exercised by the Commissioner for Public Appointments. This provides an assurance that proper procedures have been followed and that not only will appointments be made transparently and independently but those making such appointments are fully and properly accountable to Parliament. That is why we amended the Bill so that the Lord Chancellor must consult the Lord Chief Justice on appointments and removals. We think that gets the balance right and that we have achieved the best of both worlds: the contribution of the Lord Chief Justice on the one hand and the need to ensure adherence to best practice in making public appointments on the other. We ensure that appointments and dismissals benefit from both of those attributes, and—it is important to stress this—that the code of practice of the Commission for Public Appointments says that public appointments should be made fully by Ministers. That ensures an accountability to Parliament that could not otherwise be replicated if someone other than a Minister had an effective veto on appointments.

I think it will be helpful if at this stage I outline how the Lord Chief Justice is to be consulted. My ministerial colleague, Bridget Prentice, has written to the Lord Chief Justice to consult him on the process we are undertaking for the appointment of the chair of the board. She will write again shortly with respect to other members of the board. The consultation focused on the criteria against which candidates for the position of chair are judged, and the Lord Chief Justice was asked to look at the draft specifications for the chair of the board. He was invited to comment on the process we are undertaking, including the composition of the appointments panel and how we will be carrying out the campaign in line with the OCPA guidance. The Lord Chief Justice was also invited to suggest names of potential candidates the recruitment consultants may wish to contact. I understand he will be discussing that information with the Judicial Executive Board before writing back to my ministerial colleague.

The Government have already given an assurance in the other place that it is entirely a matter for the Lord Chief Justice to decide whether he makes public any disagreement with the Lord Chancellor over the appointment of the chair and members of the board. So far as the Government are concerned, that will not only extend the consultation about the person to be appointed but will also embrace the arrangements for the process leading up to it.

I thought it would be helpful to describe how the Lord Chief Justice is to be consulted. I hope I have identified that this is a serious consultation where the weight of the Lord Chief Justice’s views will be given the consideration it undoubtedly deserves.

Moved, That the House do agree with the Commons in their Amendments Nos. 74 to 77.—(Lord Hunt of Kings Heath.)

rose to move, as an amendment to the Motion that this House do agree with the Commons in their Amendments Nos. 74 to 77, leave out “agree” and insert “disagree”.

The noble Lord said: My Lords, I shall speak to Amendments Nos. 81A to 88A as well as these amendments, since exactly the same point applies to all of them. I was glad to hear the Minister say what importance is attached to the office of the Lord Chief Justice and his view. We want to take that one stage further and restore the matter to where it was agreed in this House earlier this year. We want to see a requirement in the Bill for the concurrence of the Lord Chief Justice in the appointment or removal of top officials such as the head of the LSB. Any law student will know that consultation is not enough—you can consult, and comply with, the decision of Mr Justice Webster in 1986 in a case reported in all the textbooks, but you are free to disregard anything he may say.

As for the suggestion, which I had not really heard on the Floor of the House until today, that the Lord Chief Justice might publicly comment on the rejection of his advice, I find that a most extraordinary situation. You can just imagine that the Lord Chief Justice might happen to have information known to him personally about the character of a person proposed to be elected. Is it seriously supposed that he could write a public document saying, “My reasons for objecting were as follows”? It cannot be done in that way.

My Lords, I believe this matter was raised in another place. The question was asked whether the Lord Chief Justice could make it known that the Lord Chancellor had decided not to accept his advice. The assurance was given that it would be a matter for the Lord Chief Justice’s own judgment. That is all that is meant by that.

My Lords, I have said sufficient on that point. I move that we restore the text in Amendment No. 74 and in the other 10 or 12 passages where the very same point arises, and that we require the concurrence of the Lord Chief Justice in these various appointments and removals from office. I beg to move.

Moved, as an amendment to the Motion that this House do agree with the Commons in their Amendments Nos. 74 to 77, leave out “agree” and insert “disagree”.—(Lord Neill of Bladen.)

My Lords, like the noble Lord, Lord Neill, I am an old lag at this exercise. Along with the noble Lord, Lord Hunt of Wirral, who chaired the draft Bill committee so well, I have been more or less involved with the Bill since that time. In general I find it difficult to disagree with the noble Lord, Lord Neill of Bladen, because he speaks such good sense, but on this issue I hope I have the benefit of consistency of having always argued that what the Government have come up with now—in other words, the consulting of the Lord Chief Justice—is what was proposed by the draft Bill committee after a close vote and recommended by Clementi himself. It also now has the support of the Bar Council and the Law Society, as well as the support of the House of Commons.

At Second Reading in this House—now almost 11 months ago—the noble Lord, Lord Hunt of Wirral, was kind when he said:

“The Legal Services Board must not only be independent, it must be seen to be independent. Sir David Clementi made this one of the key points in his excellent report. I have to say in support of the noble Lord, Lord Bach, that the Select Committee sought to ‘Clementi-ise’ the Bill because we agreed with so much of Sir David’s report, particularly where the Government had departed from the original recommendations”—

which they had, at that time. The noble Lord continued:

“Sir David said: ‘Given the need for independence, and the objective of the rule of law, it seems right that the judiciary should be involved in the appointment ... The proposal of this Review is that the appointment of the Chairman and Chief Executive should be made by the Secretary of State in consultation with a senior member of the judiciary’. The noble Lord, Lord Bach, moved an amendment to the original report which stated that provision should be made for the Secretary of State to make the appointment in consultation with the Lord Chief Justice. That very much follows what Sir David recommended. I hope that the Government will think again on that issue”.—[Official Report, 6/12/06; col. 1180.]

They have thought again on the issue, hence the amendment my noble friend has just moved. The amendment makes a lot of sense, not least for the reason just stated by my noble friend and referred to in the speech of my noble friend Lady Henig at Second Reading, when she talked about the experience she had had in the way current Secretary of State appointments were handled according to Nolan rules and in strict accordance with the Office of the Commissioner for Public Appointments code of practice. That, she argued, should remove any apprehensions about the suitability, qualifications or independence of the chair or members of the new board. Under the proposal Nolan rules would apply, which is an important factor.

These arguments have been well rehearsed, so I will not go into them all over again, but it is important that the House realise that the views of the Bar Council and the Law Society have changed on this issue. I am not arguing for a moment that they are brilliantly excited by the idea of consulting; they both say they would have preferred what this House agreed on Report. However, it is right that the House should know their view, which, in the case of the Bar Council, is:

“The Bar Council … supports amendments which have been tabled by the Government for consideration by the Commons at Report stage as follows:

“(1) Schedule 1: Appointments to the Legal Services Board - to require the Lord Chancellor to consult the Lord Chief Justice about appointments to, and dismissals from, the Legal Services Board (LSB). We shared the preference of the House of Lords for a requirement for the concurrence of the Lord Chief Justice, but the Lords’ amendments were reversed in committee in the Commons. However, provided the views of the Lord Chief Justice are publishable, we believe that the Government’s amendments tabled for Commons’ Report will provide appropriate transparency and accountability in relation to these public appointments and address concerns which have been raised, especially by overseas lawyers … that the board is sufficiently independent of the Executive. Although we believe that consultation in a UK democracy should adequately preserve the independent regulation of the legal profession, we are looking for an assurance from the Government that the Lord Chief Justice’s views will be publicly available to underpin this consultation”.

My noble friend was attempting in his amendment precisely to satisfy what the Bar Council had, after due thought, considered it wanted.

Likewise, the Law Society makes it clear that it,

“preferred the requirement in the Bill as passed by the House of Lords … But we recognise that the Government has come a long way on this issue”.

I stress how far I believe they have come. It continues:

“When the Bill was introduced to Parliament, the Lord Chief Justice had no statutory role at all, and appointments were to be made by the Secretary of State, rather than the Lord Chancellor. The Government’s agreement to transfer responsibility to the Lord Chancellor, with his particular responsibility for upholding the rule of law, and to entrench that in legislation was a welcome development. So too is the acceptance that the Lord Chief Justice should have a formal role, albeit only a consultative one”.

My Lords, will the noble Lord enlighten me—I am genuinely seeking information? He speaks as though, throughout the new system proposed by the other place, the Lord Chief Justice should be consulted. As I read the Marshalled List, the only amendment that would have him consulted is Amendment No. 76, which relates only to the appointment of an ordinary member. Is the noble Lord saying that it states somewhere that he has to be consulted about everything—in which case, I have not seen it—or are the Government saying merely, “Oh, well, of course, we would mean to consult him”?

My Lords, perhaps I may help the House, because the amendment states:

“Before appointing an ordinary member, the Lord Chancellor must consult the Lord Chief Justice”.

That is in Schedule 1, which states:

“In this Schedule a reference to an ‘ordinary member’ is a reference to a member of the Board other than the Chief Executive”.

It would therefore cover the chair.

My Lords, in all the other places where the concurrence of, or some participation by, the Lord Chief Justice has been taken out, he is out completely. The only mention of him in the Bill is in connection with his having to be consulted before an ordinary member is appointed. From all the other places where he had been put in previously, he has been taken out completely. Is that not so?

Not entirely, my Lords, because the amendment to paragraph 7(6) to the schedule states:

“Before removing any ordinary member … under sub-paragraph (1)(b), the Lord Chancellor must consult the Lord Chief Justice”.

I hope that the amendment covers that point.

My Lords, so he is involved only in two small places, but nowhere else.

My Lords, I am delighted that the noble Viscount interrupted me, because I had been going on much too long. The Law Society and the Bar Council have both come round to the same view as the Government, which is that, in this instance, consultation is appropriate. The House should bear that in mind when it decides whether to go against the vote of the House of Commons on this issue.

My Lords, the House has debated this matter on many occasions and very fully. I shall try to be telegraphic in my observations. It seems to me, as it has to many other of your Lordships, that the key to this issue is the relationship between the judiciary and the legal profession.

The independence of the judiciary can be maintained only if the legal profession that appears before it is itself independent. That is true, particularly, in our adversarial system. Judges rely on lawyers being completely honest about the state of the case as they know it. If they did not, the decisions of judges would not be independent. It is equally true that the independence of the legal profession is protected by the judges. Advocates know that they can speak freely in front of judges. Judges protect advocates from Ministers. Many Ministers have attacked members of the legal profession during the past two years—I do not think that the Minister can be in any doubt of that. The legal profession can continue confidently and independently because it has the support of the judiciary.

There is no conflict between the consumer and an independent legal profession. It must be in the interests of the client of a lawyer that that lawyer is independent of the Executive. What is wrong with the Bill is that the person who decides who is to become a member of the Legal Services Board is an elected Minister in another place, subject to the party Whip, who does not need even to be a lawyer—in saying that, I do not cast any aspersions on the right honourable gentleman the Secretary of State for Justice. However, that is a fact. Even on the assumption that he will take his decisions fearlessly, will he be perceived as doing so? That is just as important as the fact on the ground.

Why were the Government so assiduous in making sure that there was a Judicial Appointments Commission to choose judges, which had nothing whatever to do with the Executive, but have taken quite the opposite approach to the selection of members of the Legal Services Board? Surely the logic of the independence of the legal profession and the judiciary must lead one to conclude that one needs a system of selection for members of the Legal Services Board that is equally as objective as that for members of the judiciary.

I am grateful to the Minister for having moved in our direction; but I do not find the detail of what he said about consultation sufficiently convincing to change my view about the way I shall vote tonight if the noble Lord, Lord Neill of Bladen, presses his amendment.

My Lords, we are considering an amendment to paragraph 1(1)(a) of Schedule 1, which states,

“a chairman appointed by the Lord Chancellor with the concurrence of the Lord Chief Justice”.

The amendment removes the concurrence of the Lord Chief Justice completely and there is no provision even for consultation on the topic. The chairman will be appointed without the Lord Chief Justice having any right to be consulted at all. I see the Minister shaking his head. Have I got it wrong?

My Lords, I can only repeat what I said earlier. The amendment to the schedule states:

“Before appointing an ordinary member, the Lord Chancellor must consult the Lord Chief Justice”.

An “ordinary member” refers to all the members, including the chair, other than the paid professional chief executive.

My Lords, it does not include the selection of the chairman.

My Lords, it does, it really does.

My Lords, I do not think that is right. He may well be an ordinary member, but you can appoint an ordinary member and then appoint him as a chairman. It does not require the state of appointing him to be a chairman to have any concurrence at all. You have on the board a very amiable, ordinary member, who is appointed with the concurrence of the Lord Chief Justice. The chairman dies, for example, and the new appointment is made without even the Lord Chief Justice being asked. Is that not right?

My Lords, we seem to have staggered into an interrogative stage of the Bill, which I cannot recognise. We are dealing with Commons amendments. Speeches are in order but series of questions to which various Members of the House including the Minister might feel obliged to answer are not in order. So can we get on with speeches and the Minister replying?

My Lords, I therefore on behalf of these Benches say that we fully support the amendment. I entirely accept everything that the noble Lords, Lord Neill and Lord Kingsland, have said. The noble Lord, Lord Bach, referred to the Bar Council’s position. The Bar Council supports the Government’s consultation provision only if what the Lord Chief Justice says is publishable, but I cannot imagine the circumstances in which it could be publishable. Let us say that the Lord Chief Justice on consultation has said that X should not be appointed and the Government disagree. In those circumstances, the reasons why the Lord Chief Justice came to his conclusion would surely not in the public interest be put into the public domain. I think that the Bar Council has overlooked that point. We give the noble Lord’s amendment the fullest support.

My Lords, I was not intending to intervene in this debate because, as veterans of the debate will know, it got a bit heated the last time. I do not intend to raise the temperature too much but, having seen the support for the amendment tabled by the noble Lord, Lord Neill, I am a bit surprised. I had assumed that the amendment carried in the Commons was a reasonable and workable compromise, as my noble friend Lord Bach explained. If it is not an acceptable compromise, I have to register an alternative point of view. I opposed any specific reference to the Lord Chief Justice on the grounds that to the consumer of legal services that would appear not to be independent. In other words, the independence of the board is at stake here, rather than the independence of the profession. I do not think that any method of appointment is a threat to the independence of the profession.

Therefore, with some unease, I have been prepared to accept the Commons amendment that specifically refers to the Lord Chief Justice being consulted—and I am grateful to the Minister for explaining how that works. If you substitute concurrence, as the Minister implied, you automatically raise the possibility of a veto, which undermines the credibility of the board to the general public and the consumers of the services of the legal profession. If I did not do so at the beginning, I declare my interest as chair of the National Consumer Council.

I am surprised at the noble Lord, Lord Neill, who has done so much to establish the public appointments system as a credible, defensible and independent way in which to get public appointments. In this context—in the one situation in which he and other noble Lords who supported his amendment suggest that the regulation of the legal profession does not apply—we institute a special equivalent role giving concurrence to the Lord Chief Justice. That is not defensible; it would not give any credibility to this approach and it might well undermine credibility in the eyes of those people who want to see the Bill as a way in which to improve legal services and the performance of the profession.

I am sorry to introduce a slightly discordant note on this but, if the Minister is going to reply, he needs to understand that there are those of us who recognise that this is a compromise. It is a compromise from my position and I hope that those who took the equivalent opposite view would recognise that the Commons has presented us with a compromise position, which I believe to be workable.

My Lords, I wish to test the opinion of the House.

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 78.

As noble Lords will know, the Bill, as originally drafted and approved in this House, called for the first chair of the board to be a lay person—someone who has never been a lawyer under the definition in paragraph 2(4) of Schedule 1. The Government’s rationale for that was informed in large part by the observations made by Sir David Clementi in his report. He made it quite clear that the current system is flawed and that consumers cannot have confidence in a system where the same people who represent the views of the legal profession are also regulating the profession. Requiring the first chairman to be lay ensures that the oversight of the new regime is spearheaded by someone who is not tied up with the profession and can take an independent and fresh look at how that regulation should be achieved.

Questions, however, were asked in the other place about why only the first chairman should be subject to this requirement, and there were persuasive arguments about why all chairs of the board should be lay. There has been a lack of consumer confidence in the way that some complaints against lawyers have been handled. I know, as Members of your Lordships' House know, that the great majority of lawyers do a thoroughly good and professional job. They should have nothing to fear from a lay chair, and they will benefit from the enhanced consumer confidence that this brings.

Having considered very carefully the arguments put forward both in the other place and by consumer bodies, and having taken into account the largely neutral views of the legal professions, the Government supported an amendment in the other place that all chairs of the board should be lay. We think that that sends the right signal, but I stress that it does not mean that the views of the profession will be ignored. The Bill provides for a board made up of both professional and lay members to ensure that all sides are represented by the best people for the job. That seems to me exactly the right balance. Professional members can represent up to half the board’s constitution. Having carefully considered the overall balance and having listened to the views of Members in the other place, we think that the provision that the chair should always be lay is right. I beg to move.

Moved, That the House do agree with the Commons in their Amendment No. 78.—(Lord Hunt of Kings Heath.)

My Lords, I am not going to take this issue to the wire, partly because I know that I would not have the support of the Liberal Democrats but also because I see where the Government are coming from. However, I think that before they arrived, they took the wrong turning. The issue is not whether the board ought or ought not to have a lay chairman or a lawyer; the issue is how that person is selected. I entirely agree that if the legal profession played a role in selecting members of the Legal Services Board, there would be a serious question mark against a legislative proposal of that sort. However, to link what we are talking about now with the previous vote, we are suggesting that the judiciary are something quite different from the legal profession; and their involvement, far from being something that would undermine the independence of the board, would cement its independence. The notion that a lay chairman would make the board more independent is misplaced; what would make the board independent is that it is selected by an amalgamation of a Minister and a judge.

My Lords, I hear what my noble friend said but I still seek a little clarification. I shall be brief. I declare an interest; although I have no intention of applying for a position chairing the board, my position may illustrate some of the problems. I qualified for the Bar very many years ago, in 1969. I practised intermittently during the 1970s and ceased when I first chaired a Select Committee in the other place, and I really have had no contact with the Bar, save for social purposes, for over 25 years. The assumption of the amendment in the other place is surely that somehow as a result I am tainted and cannot give an objective position.

Certainly, the populist view against lawyers—although I did find it in the other place—is not something that I found reflected very widely when I was in the other place for 30 years. It is as if, by having qualified at some stage, however long one has remained away from the Bar, one is somehow tainted and cannot expunge from one’s record what was a minor offence many years ago. Like a minor shoplifting offence, it is impossible to erase or expunge and therefore one’s judgment necessarily cannot be objective. I have no personal interest or motive in seeking to chair this body, but I ask my noble friend to go a little along this way. Is it reasonable or is it just a populist revulsion to say that those who for many years have had no contact with the legal profession are still deemed for this purpose to be professional and are therefore excluded from consideration for the chair?

My Lords, I hear what my noble friend says. He certainly put the point with great clarity. I also hear what the noble Lord, Lord Kingsland, says, and I agree with him that in the end what is important is how the board goes about its business. He also said that if the amendment that has just been passed were to stay in the Bill, that in itself would provide more confidence in the independence of the judiciary. I understand that, although I disagree with him, because I believe that the balance that we had on consultation was right.

This was a House of Commons view which is clearly supported by many Members in the other place. The Government would not wish to cast any aspersions whatever on a person who has previously practised the law or is a current practitioner of the law and say that they could not make a fine contribution as the chair. Ultimately, however, the other place has come to a view that, to ensure public confidence, it would wish the chair of the board to be lay always and for all time. There is very little that I can add to that.

On Question, Motion agreed to.

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 79.

Moved, That the House do agree with the Commons in their Amendment No. 79.—(Lord Hunt of Kings Heath.)

rose to move, as an amendment to the Motion that the House do agree with the Commons in their Amendment No. 79, Amendment No. 79A.

The noble Lord said: My Lords, I want to respond to what I think was said in my support, at least I read it as such, by the noble Lord, Lord Anderson, about how long it takes before the taint—I quote him, I do not accept it as a fact—of being a barrister or a solicitor is expunged to convert that professional person into a lay member. I respectfully submit that the period of 10 years that we suggest is quite sufficient.

I was trying to think before we started today about an example of someone who we know very well, who qualified as a solicitor but went on to do other things, and whether that person might be suitable to be a member of the Legal Services Board. My analysis settled on the noble Lord, Lord Jones of Birmingham. I am told that the noble Lord started off his professional career as a solicitor, but left it behind long ago for lusher pastures. Do we not think that the offence of being a lawyer has by now been expunged by the noble Lord, Lord Jones of Birmingham; and that he would be a most suitable candidate, if his name was advanced, to be a member of the Legal Services Board? I beg to move.

Moved, as an amendment to the Motion that the House do agree with the Commons in their Amendment No. 79, Amendment No. 79A.—(Lord Kingsland.)

My Lords, it is very tempting to debate the noble Lord, Lord Jones of Birmingham, particularly as I was not allowed to call myself Lord Hunt of Birmingham, and I never quite discovered how he got away with it. Equally, he was born in Kings Heath, and his final sin is that he supports Aston Villa rather than Birmingham City. Apart from that, he is a jolly good chap. I am sure that if he needed further work, he would have made a very good chair.

I have answered the point already. I understand the noble Lord’s point, which I believe was discussed sympathetically in your Lordships’ House, but Members in another place took a different view. They took the view that because of the importance of the Legal Services Board and the importance of having public confidence in it, it would be better if the lay chair had been lay for all time. That is the matter in a nutshell.

My Lords, the noble Lord knows full well that the lateness of the hour prevents me pressing this matter any further. I beg leave to withdraw the amendment.

Amendment No. 79A, as an amendment to Amendment No. 79, by leave, withdrawn.

On Question, Motion agreed to.

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 80.

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

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 81 to 88.

Moved, That the House do agree with the Commons in their Amendments Nos. 81 to 88.—(Lord Hunt of Kings Heath.)

My Lords, surely the noble Lord is not pressing amendments that have been defeated in principle?

My Lords, I need to move them, and then the noble Lord, Lord Neill, moves Amendments Nos. 81A to 88A, and we will regularise the position. I am advised that that is the best course of action to take.

He is not here.

My Lords, I am sure that another noble Lord can move the amendments on his behalf.

My Lords, on behalf of the noble Lord, Lord Neill of Bladen, I beg to move, as an amendment to the Motion that this House do agree with the Commons in their Amendments Nos. 81 to 88, leave out “agree” and insert “disagree”.

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

On Question, Motion, as amended, agreed to.

89: Page 123, line 35, at end insert-

“ The terms of appointment of the chairman or any other ordinary member may provide for the Board to pay, or make payments towards the provision of, a pension, allowance or gratuity to or in respect of that person.

If the Lord Chancellor thinks there are circumstances that make it right for a person ceasing to hold office as chairman or another ordinary member to receive compensation, the Board may pay that person such compensation as the Lord Chancellor may determine.”

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 89 to 202.

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

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 203 to 214. I shall speak also to Amendments Nos. 221, 231, 235, 250, 252, 253 and 256.

These are amendments to Schedule 16 to allow the Law Society to regulate limited forms of ABSs before Part 5 has been commenced. The amendments attracted much support in the other place and I hope they will prove equally popular in your Lordships’ House. We have worked very closely with the Law Society on these amendments and will continue to work closely with it. I am very grateful to the Law Society for its help in this matter.

We are also working closely with other regulatory bodies such as the Council for Licensed Conveyancers, the Chartered Institute of Patent Agents and the Institute for Trade Mark Attorneys to ensure that they have rules in place for regulating LDPs as soon as is practicable. We fully recognise the benefits to both consumers and the professions of allowing limited forms of ABSs, subject to stringent restrictions and safeguards, to emerge in advance of Part 5. Beyond that, noble Lords had argued for a stepped approach to Part 5. The arguments had great force and these amendments are intended in part as recognition of their force. I beg to move.

Moved, That the House do agree with the Commons in their Amendments Nos. 203 to 214.

On Question, Motion agreed to.

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 215 to 265.

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