Motion to Approve
With the leave of the House, I shall speak also to the draft Conditional Fee Agreements (Amendment) Order 2010.
The Damages-Based Agreements Regulations 2010 prescribe the regulatory requirements for these agreements in employment matters. The Conditional Fee Agreements (Amendment) Order 2010 seeks to reduce the success fee in some “publication proceedings” to 10 per cent of the base costs. Both of these seek to make changes in limited circumstances to protect the public interest. I will deal with the two instruments separately.
The Damages-Based Agreements Regulations are made under Section 58AA of the Courts and Legal Services Act 1990 and prescribe certain requirements for damages-based agreements relating to employment matters. Section 58AA was inserted by Section 154 of the Coroners and Justice Act 2009.
A damages-based agreement is a type of contingency or “no win, no fee” agreement, under which a representative agrees to act for a client in return for a percentage of any damages recovered by the client. If damages are not awarded, the representative is not paid. These agreements are of course different from conditional fee agreements, or CFAs. CFAs are typically used in court proceedings, and allow for an uplift or success fee on top of the representative’s normal fee.
I emphasise that damages-based agreements are not permitted in court proceedings or litigation and that the regulations will not change this. They are, however, commonly used by solicitors and claims managers in proceedings before the employment tribunal. The Courts and Legal Services Act 1990, as amended, controls the use of damages-based agreements to claims that are capable of being heard by the employment tribunal. As I say, these agreements are commonly used in employment tribunal cases. We are concerned that many claimants do not understand these fee arrangements, which sometimes include unfair terms. The Government therefore believe that it was necessary to regulate damages-based agreements in employment tribunals to ensure that claimants are protected from unfair agreements. Noble Lords will recall that Section 154 of the Coroners and Justice Act 2009 gave the Lord Chancellor the power to regulate these agreements. This is the first set of regulations made under that power.
The regulations specify for the first time certain requirements with which the agreements must comply in order to be enforceable damages-based agreements. The key emphasis is on the provision of clear and transparent information for the client before the agreement is signed. The regulations require that a—
Perhaps I can answer the noble and learned Lord a little later.
The regulations require that a representative, usually a solicitor or a claims manager, must, first, inform the client about alternative means of resolving the case or financing the proceedings, such as legal expenses insurance or though trade union membership. Importantly, the representative must inform the client about the services offered by ACAS before the agreement is signed. Secondly, the representative must give an estimate of all costs and expenses for which the claimant may be liable. Thirdly, the representative must also explain to the claimant why he or she thinks that the percentage fee they are charging is reasonable.
The regulations also prescribe that the payment to the representative cannot be more than 35 per cent of the claimant’s damages, including VAT. This will protect claimants from unscrupulous representatives who may seek to take an unjustified proportion of their damages in fees. The legislation requires us to prescribe a cap. We originally consulted on a 25 per cent cap, excluding VAT. However, we listened to concerns expressed by those responding to the consultation and increased the cap to 35 per cent. This is inclusive of VAT, but excludes expenses such as counsels’ fees. Although the cap is the prescribed maximum, there is a risk that the cap could become the norm, a risk that we have seen realised in CFAs where, in some cases, 100 per cent has become the norm; I will turn to that later. The higher the cap, therefore, the greater the risk of detriment to individuals who use damages-based agreements. We therefore believe that 35 per cent sets a fair level in respect of damages-based agreements in employment tribunals.
Finally, the regulations set out some conditions to be complied with if the agreement is terminated. I should first make it clear that the provisions relating to termination are without prejudice to any right of either party under the general law of contract to terminate the agreement. I am aware that there have been some concerns about the conditions relating to termination; for example, the Law Society considers that the provision does not go far enough in protecting representatives. The Bar Council, on the other hand, considers that there should be no restrictions on the client’s right to terminate at all. What we have attempted to do in these regulations is to take the middle ground between the two opposing views.
DBAs are different from ordinary retention agreements between lawyers and clients. The client is agreeing to pay a percentage of their damages if the claim is successful. Therefore, it is only right that the representative should be entitled to that percentage if the claim is successful.
DBAs are founded on the premise that if the representative upholds their end of the bargain and the claim is successful, he or she is entitled to receive the agreed percentage of the damages. I reiterate the point I made earlier: these provisions are without prejudice to any right of either party under the general law of contract to terminate the agreement.
We are grateful for the consideration given to these regulations by the Merits Committee. We have carefully considered the points raised in the committee’s report, published on 18 March. My right honourable friend the Lord Chancellor and I discussed the committee’s concerns at a meeting with the chairman, the noble Lord, Lord Rosser, and the noble and learned Lord, Lord Scott of Foscote, who is a distinguished member of the committee. We have taken on board their concerns in revising Regulation 6(5). I strongly believe that these regulations are necessary and proportionate in achieving their objective, which is to put in place specific statutory protection for claimants using these agreements in employment tribunals. As I have said, we have tried to balance carefully the views raised in consultation and believe that the regulations represent the best way forward.
The House will know very well that on 14 January Sir Rupert Jackson delivered his wide-ranging report, Review of Civil Litigation Costs. Among 109 formal recommendations, he recommends that contingency fees are permitted in civil litigation with appropriate regulation. However, I emphasise that fresh primary legislation would be required, should the Government decide to implement that recommendation. The Government are actively considering Sir Rupert’s recommendations, and will set out the way forward in due course. I assure the House that any proposals on extending the use of contingency fees to litigation would be subject to full public consultation and legislative scrutiny by Parliament.
Before leaving this regulation, I will respond to the noble and learned Lord as best I can. DBAs, as I understand it and am advised, cannot be used on appeal in either employment appeal tribunals or the Court of Appeal. I understand that legal aid is available for representation on appeal.
I turn now, briefly, to the Conditional Fee Agreements Order 2010, which is made under Section 58(4) of the Courts and Legal Services Act 1990. The order amends the Conditional Fee Agreements Order 2000 to set a new maximum success fee percentage of 10 per cent for CFAs relating to some publication proceedings. Publication proceedings for the purposes of this order are within the meaning of Rule 44.12B of the Civil Procedure Rules 1998. The definition covers defamation, malicious falsehood or breach of confidence involving publication to the public at large. For ease, I shall refer to them as defamation proceedings.
As noble Lords know, conditional fee agreements, or CFAs, allow lawyers to take on a case on a no-win no-fee basis. If the case is lost the lawyer does not get paid. However, if the case is successful the lawyer can charge his normal base costs as well as an additional uplift or success fee. The success fee is currently recoverable in full from the losing side. The Conditional Fee Agreements Order 2000 prescribes the maximum success fee that lawyers can charge at 100 per cent in all categories of case. That 100 per cent maximum was intended to allow lawyers to cover the costs of those cases which were lost with a success fee from those which were won. However, the Government have been concerned about high legal costs in defamation cases. These high legal costs are exacerbated by 100 per cent success fees, which may have a harmful effect on freedom of expression. This affects the media, in particular those with limited budgets, such as the local media and publishers, but also scientific and academic debate. Specific concerns have been expressed to the Government by members of the scientific community and others that the current law on libel, including the high costs involved, is having a harmful effect on freedom of expression in the context of scientific and academic debate. Noble Lords will be aware of the announcement of the reform of the law of libel by my right honourable friend the Lord Chancellor on Tuesday this week. This change should be seen in that broader context.
Previous attempts to control success fees in defamation cases have proved unsuccessful, even though there is widespread and urgent concern about their impact. In January this year the Government therefore consulted on a specific proposal to reduce the success fees to 10 per cent in defamation cases. Some of the respondents to the consultation who disagreed with our specific proposal accepted that 100 per cent recoverable success fees should not continue.
While the Minister has been interrupted, I want to raise another matter which would assist me. I regret to say I do not know the answer to this, but I was under the impression that the success fee was capable of being taxed down if the taxing master thought it was excessive. Is my impression right or wrong? Because that would seem to be a solution if it is correct.
If the noble and learned Lord does not know the answer to his question, I certainly do not. I will take some advice on that and come back to him.
I have mentioned the Jackson report published earlier this year. It is a remarkable and substantial report. I think we can all agree on that. He recommends complete abolition of the recoverability of success fees and after-the-event insurance in all cases where CFAs are used. As I said earlier, we are actively considering the report and will set out the way forward in due course. The Culture, Media and Sport Committee in its recent report, Press Standards, Privacy and Libel, suggests that the recoverability of success fees be limited to 10 per cent in defamation cases. The Government will respond to the Committee’s report shortly.
I hope the Minister will forgive me for interrupting again. My understanding is that that recommendation did not limit the success fee; it simply suggested that that was the maximum that could be recovered from the other side. Any balance that was agreed, assuming taxation on the costs would allow it, would come from the opposing party. That is my understanding of what the committee said.
Again, if the noble and learned Lord will forgive me, I will find out and come back with an answer to his point.
There is a substantial body of opinion that 100 per cent recoverable success fees should not continue in defamation cases. Reducing the maximum success fee to 10 per cent through this order is an interim measure so that the specific concerns around high costs in defamation cases can be addressed urgently while the Government consider other options for longer-term reform. Of course, I am aware of the concerns raised by the Merits Committee.
Defamation-related proceedings form a discrete category of case where special considerations apply. They are relatively few in number and of relatively high cost compared with other types of civil proceedings. We regret that, despite several consultations by the department, an investigation by a parliamentary committee, and widespread public debate on this subject over the past five years, comprehensive data were not forthcoming. It is true that certain respondents provided some data against the 10 per cent proposal, but we believe that was partial and did not undermine the case for reform. Based on the available evidence, including that presented during the consultation on this order, it was judged that a maximum success fee of 10 per cent is appropriate. We believe it provides an effective interim solution to an urgent problem.
Regarding the questions that I have been asked—as to the 10 per cent, our consultation paper referred to the data presented to Sir Rupert. The 10 per cent proposal was made against the background of the sample used in the Jackson review. The sample was of 154 cases, none of which was won by the defendant. Although CFAs can be and are used by defendants, this rarely happens. The evidence suggests that few defendants win cases, and that increases the risks for defendant lawyers when taking on a defendant CFA.
On the question of the noble and learned Lord, Lord Woolf, success fees certainly can be taxed down on assessment, but the process of doing that is costly and extremely time-consuming. The noble and learned Lord, Lord Scott, asked—
Perhaps I may first answer the question of the noble and learned Lord, Lord Scott, and then of course I will take an intervention.
Why cannot we implement the recommendation of the Culture, Media and Sport Committee’s recommendation on limiting recoverability of success fees to 10 per cent? The committee’s report acknowledges that significant problems with costs in libel cases need to be addressed. The committee agrees that 100 per cent success fees under CFAs are unjustified in defamation cases. It recommends capping recoverability of success fees, which would require changes to the civil procedure rule. These changes would require more time. The Conditional Fee Agreements (Amendment) Order provides an interim solution to deal with the high cost in defamation cases while we consider the Jackson recommendations and the committee’s proposals, both of which deal with the issue of recoverability.
If the noble Lord, Lord Thomas, will forgive me, I shall try to answer any question that he has later.
The noble Lord, Lord Martin of Springburn, has tabled an amendment to the Motion expressing regret that the Conditional Fee Agreements (Amendment) Order 2010 has been laid,
“without allowing sufficient time for consultation with all of the professional and legal bodies concerned and in the light of the benefits of no win, no fee arrangements for those on modest and low incomes”.
I of course look forward to hearing the noble Lord speak to his amendment. I mention two points at this stage. First, we have consulted, as we are required to by statute, with the senior judiciary, the Law Society, the Bar Council and others. We have consulted them on the policy as well as on the detail of the order. We have taken careful consideration of the responses received. More than half of those were from lawyers, their representatives and the judiciary. In addition, there have been previous consultations on this issue—the Jackson review and the investigation by the Select Committee that I have referred to.
The second point to make at this stage is that we are of course mindful of the benefits of conditional fee agreements for access to justice, but we have to consider the disbenefits, too. CFAs will remain available for defamation cases; thereby, lawyers will still be able to use them in deserving cases. We are considering the way forward for the longer term in the light of the Jackson report.
That is all that I would like to say at this stage. I beg to move.
My Lords, I am speaking to the amendment which is still to be moved. I thank the Table Office for its help. Also, the Government Whips Office has been very helpful and kind to me as a new Member here in the Lords.
I stress that I have not lobbied any Member of this House prior to this debate. I put down my Motion of regret because I feel very strongly indeed about the 10 per cent. If there had been a reduction to 50 per cent, I would not have lodged a regret Motion; 50 per cent would be more realistic and I would not be complaining.
As the Minister said, the success fee compensates for the cases that are lost. We should not allow the situation to remain at 10 per cent. I note that the Minister has said that this is an interim measure and that there will be consultation, and I hope that that consultation is with companies such as Carter-Ruck and Simons Muirhead & Burton—the people who are at the front line of this service. Without a no-win no-fee facility, only the exceptionally rich can afford to risk losing six-figure sums in going to court. That would be wrong. That would be unjust. The Minister is quite right to say that the defendant can also have a no-win no-fee arrangement, but the fact is that fewer people do that than the other way around.
Whether a person in public life is a politician or an entertainer, the target story does not commence at eight in the morning when they open a newspaper and see that there is a case that they should take to court. It is usually at about 10 o’clock on a Friday night or even later, when a Sunday newspaper wants to carry a story and does not contact the individual until very late at night when it is difficult for them to seek advice. To the credit of the no-win no-fee lawyers, when advice is needed they rise to the occasion by making themselves available out of hours and on a 24-hour basis.
I have an interest to declare in that, when I took out an action, I asked a no-win no-fee lawyer to take it up on my behalf. It was 10 o’clock on a Friday night, which made it so difficult. I was the Speaker of the House of Commons, all the officials were away and I was at my home in Glasgow when I got word that these people were going to say something that was very libellous against me. As I say, to the credit of the company that I approached, I was able to get a partner on a mobile phone who was taking his son to a football game on a Saturday afternoon, and then he was on the case.
I do not want to dwell on the problem that I had, but these are the problems that people will have. Many noble Lords will know the types of stories that appeared in the various newspapers that attacked me in the nine years I was Speaker. The newspapers could not even get right the district in Glasgow that I came from. I have not set foot in the Gorbals for about 30 years, but to them I was Gorbals Mick because to them that was the poorest area of Glasgow, so “Let’s tag him with that”. They could not even get right the geography of the city of Glasgow, or they would have known that Springburn is a far cry from the Gorbals. In the nine years of bile that was poured on to me, this was the only case in which I ever took any action. For every case that is taken on a no-win no-fee basis, there are dozens in which the individuals let it go, and I include myself in that category.
One of the beauties of being at Glasgow airport is that you get to meet some showbiz personalities. They have spoken about this and said to me, “Michael, I could take them to court”—in their case, they sometimes have the resources—but they say, “Am I going to spend my life sitting in a courtroom when I have a profession to follow?”.
When the media are feeling sorry for themselves, let them remember that for every case that goes as far as them being presented with a success fee, many have been let go. No one should kid themselves: small local radio stations or local newspapers do not give anyone any trouble. We can all list the national papers that specialise in this type of attack on individuals. If they want to save funds and do not want to have to pay a success fee, they should get the facts right. When I went to the Times, I was not looking for funds from anyone, I was looking for an apology. It took seven weeks of toing and froing, e-mails and meetings, of saying “We will not give you an apology, but we will give you an interview” before the Times finally agreed to a very small apology and to pay the costs.
If the journalists had come to me beforehand, they could have saved themselves costs and saved me the embarrassment of what they had to print. In terms of responsible journalism, I would welcome an order from the Lord Chancellor stating that the Government will get legislation through that insists on responsible journalism. Journalists and their editors should decline to get involved in the tactic known as doorstepping. That is where there are two journalists, one of whom goes to the back door while the other goes to the front door, who batter the letterbox and put their finger on the doorbell. The people inside the house are terrified. They think there is an emergency. There are legally qualified Peers in their places. I think that if a neighbour behaved in that way, it would be considered a breach of the peace. This is a tactic that journalists get involved in if you are not prepared to give them a quote. They send people to your door to do that.
What right has anyone to do this? If I am the target, why should other members of my family be terrified in their own home? They are not in public life, they are not in politics, they are not party members, some of them are children, yet they were subjected to this terror. If that was happening in eastern Europe, the same newspapers would be attacking it.
The same goes for photographers. They park a photographer outside your house because you will not give them a quote. Why is it that when people are in public life or in the media, there are dozens of photographs of them? Why do they park a photographer outside your house for no other reason than to intimidate you and make you feel like a prisoner in your own home because you will not do what they tell you. That is the type of thing that they should refrain from. If they are concerned about money, photographers do not sit outside the house for nothing. Some of them are freelance and very expensive, so why do they do it? Then they come to tell the Lord Chancellor that they are losing money through these no-win no-fee lawyers. They may be losing money in that way but they are prepared to spend money in this way to intimidate people.
We are now getting to the stage where journalists are not even interested in coming to the subject of their stories to get a quote. Only a few weeks ago, there was talk here on the Floor of the House about the Press Complaints Commission. I went to a no-win no-fee lawyer only once; I hope that I never have to again. I went to the Press Complaints Commission once as well, and got a satisfactory conclusion. When I was a Member of this House, the Telegraph published three articles in January stating that I had done something secretly in the House of Commons when I was the Speaker. If the journalists had come to me, I would have been able to show them Hansard to show that the matter that they were talking about was promoted not by me, but by the Leader of the House and the chairman of the Standards and Privileges Committee, and was supported by the Liberal Democrats, who went on record as saying that they welcomed it. The articles blamed me. I put on record my thanks to the Press Complaints Commission. When I raised the matter, I asked that the articles be taken off the online system. I did not ask for an apology—I did not want one; I just wanted the libellous articles taken offline. Lo and behold, they were taken offline and I was given an apology.
The media complain that they are hurt by no-win no-fee, but when a complaint is put to the Press Complaints Commission there is a clear implication that there is no desire to get any funds, legal fees or anything. We are talking about a private individual going to the Press Complaints Commission and saying, “Can you deal with this?”. In my case, the issue was resolved. My point is that, every time that the Press Complaints Commission takes something up, there is no 10 per cent involved—no success fee. Very rarely is anyone interested in funds, so the media do not do badly. As I say, there is the tip of the iceberg—the case that goes to a lawyer—but many cases do not go at all. The cases that go to the Press Complaints Commission cost the media organisation absolutely nothing.
The Minister mentioned that the 10 per cent was an interim measure. It would be good if he could assure me that the no-win no-fee companies got consultation with him after the election—that he is prepared to meet them in a delegation. The Law Society has been in touch with me and stated that it supports my amendment. The service is an excellent one. I digress when I say that the no-win no-fee facility has been marvellous for the men and women in my previous constituency now suffering the effects of asbestosis and pneumoconiosis. I know that it is a different subject, but they are at the lowest ebb because of an illness that took something like 30 years to get through the system. Their family—their wife and children—are worried. They go to a lawyer and he says, “I’m working this out so that it won’t cost you anything”.
It is the same if people’s characters are attacked. As I said, for people in public life, such as myself, the response is, “If you don’t like the heat, you shouldn’t be in the kitchen”. However, many men and women are not involved in entertainment or public life, but somewhere along the line someone says something about them and they feel that they should get justice. This system would give them justice. I would greatly appreciate it if the Minister could give an assurance that meetings will take place with experts in this field.
My Lords, I know that the Minister was hoping for a relatively brief debate. We originally scheduled this business for the Moses Room but, because of various concerns, it was, quite rightly, shifted to the Chamber. He will probably understand that the debate is not going to be as brief as he originally hoped, but I shall try to keep my own remarks short and try to be helpful by saying that we have no intention of opposing the regulations and order. However, we want to ask a number of questions, the first and principal one being: why now and why the rush? In an earlier debate, my noble friend Lord Freud commented to the Minister that we seem to have seen a great rush of regulations coming before this House in these weeks running up to a general election. One has to be somewhat suspicious about the Government’s motives when we see that and particularly when we see these two statutory instruments.
The Minister, like all Members of the House, will know of the vast number of concerns that have been expressed about these instruments. We have all been lobbied by the Bar Council and the Law Society. I imagine that many noble Lords have received briefing from individual members of the Bar, from other individuals and from individual law firms, and late on a Thursday afternoon we are seeing a slightly more crowded Chamber than we are used to. I am sure that the Minister has not faced quite so many noble and learned Lords at this time on a Thursday afternoon in recent years. We have also had the comments of the Merits Committee.
The real question that we want to put to the noble Lord is: in the light of the Jackson report, which has been referred to, why do the Government want to deal with these particular items? It is not even as though they are picking one bit out of Jackson, because this was not recommended in that report. Why do they want to deal with them at this stage and so quickly?
The noble Lord himself referred to the Merits of Statutory Instruments Committee. He said that he and his right honourable friend the Secretary of State and Lord Chancellor had had a meeting with the chairman of that committee, the noble Lord, Lord Rosser, and the noble and learned Lord, Lord Scott of Foscote. He said that they had discussed these matters with them. He was then rather coy about the result of those discussions, but perhaps he will let us know what it was when he comes to reply. We are told in the 14th report of that committee that the regulations and the order are both drawn to the special attention of the House on the grounds that they may imperfectly achieve their policy objectives. I do not think that I need to quote the further conclusions, but in paragraphs 8 and 10 in relation to the regulations and paragraph 17 in relation to the order further comments were made by the committee about these instruments. Although the noble Lord will have to wait some time before he does this, because I think that there will be many other comments, I should be very grateful for a response on that.
I turn, almost at random, to one of the groups that lobbied us. The Bar Council sent me quite a detailed letter about what was going on. It stresses that the Jackson report was part of the consultation and that the Government rather ignored its recommendations in the case of the order, in that they reduced the amount of consultation to a matter of just a few weeks, again in complete contradiction of the code of practice on consultation, which recommends something somewhat longer. Again, I quote from one of the Secretary of State’s comments in response to the consultation. He said that,
“it is vital to the maintenance of press standards that access to justice for those who have been defamed is preserved”.
As the Bar Council makes clear, that is a quotation from the Commons Select Committee on Culture, Media and Sport, published on 24 February this year, which the noble Lord referred to.
The committee disagreed with the ministry’s proposal that the maximum level of success be capped at 10 per cent regardless of whether it is recovered from the losing party or from the client. It saw no reason why any balance should not be agreed between solicitor and client. That is not an option that the ministry appears to have considered. I put to the Minister a point made by the noble Lord, Lord Martin of Springburn: where does this figure of 10 per cent come from? It might be, and I do not know, that 10 per cent is the right figure. It might be that 100 per cent was the wrong figure. As the noble Lord, Lord Martin, put it: is there another figure that we should consider? Is the haste with which we are dealing with these matters somewhat unnecessary? Would it not have been better to have had a longer period of consultation and to have dealt with these matters in the proper manner? I do not want to take up too much time of the House, because the Minister—
I am grateful to the noble Lord, but some of us have listened to his speech with mounting confusion, given the importance of the Conservative Party in this and our desire to know its future intentions. The shadow Attorney-General is highly respected in defamation proceedings, so will the noble Lord tell us whether the Conservative Party is in favour of the reduction to 10 per cent, whether it is against the reduction or whether it simply has not been able to make up its mind?
As I said, and I think I made it perfectly clear, we were not going to oppose this order. We are saying that we do not know whether 10 per cent is the right or the wrong figure. If the noble Lord had waited for the next paragraph of what I was going to say, I would have addressed the crucial question of what happens post 6 May. As the noble Lord is aware, on 6 May there is quite likely to be an election. We have been discussing this for some time. If we win that election, I can give an assurance that the one thing that we will do is conduct a full and comprehensive review of all aspects of the Jackson report, after which we will consult properly on it and come forward with the right proposals. I know that the noble Lord’s party has a different policy in relation to orders in this House. We will not be opposing this order in this House. It would not be right to do so. However, we will look at all these matters and then come forward with conclusions.
Our questions are really about why the Government are doing this now. What is the concern and why is there this mad rush? The noble Lord, Lord Carlile, ought to be suspicious of a Government who are rushing just one part—not even a recommendation of the Jackson report—through at this stage with such undue haste. I hope that that answers the noble Lord and I hope that he will be satisfied that I cannot give him the answer that he requires at this moment. He really needs to repeat the question that I am putting to the Minister: why are the Government doing this at this stage and with such speed? Some of us have every right to be suspicious. I hope that the Minister will be able to address some of those questions when he responds, but I think that he will find that there will be many other questions put to him in the course of this debate.
My Lords, unlike the noble Lord, Lord Martin, the profession I follow means that I have spent much of my life sitting in a court. I declare an interest in that I am working on a matter subject to a conditional fee agreement, but not in the field of libel.
The Liberal Democrats have been, and are, at the forefront of the campaign for a reform of the law and procedures relating to defamation. The crippling costs associated with libel cases in the United Kingdom—which are said in one study to be 140 times higher than in some mainland European countries—are a prime example of where reform is needed.
How has this come about? We on these Benches have always expressed grave reservations about conditional fee agreements in principle. The assessment of the risks is in the hands of the solicitor concerned—he determines the uplift—and, as we have heard from the Minister, 100 per cent was supposed to be the limit but has become the norm, particularly in libel cases. In July 1998, I initiated a debate in this House on the order that was then introduced and pointed out that the limit on the uplift, the success fee, had grown from an initial 5 per cent, to 20 per cent and then to 100 per cent. The Lord Chancellor, the noble and learned Lord, Lord Irvine, was not then prepared to introduce a cap to that uplift which could in some way be tied to the damages that were recovered. At that time, we thought that was a sensible way of going forward.
On the Access to Justice Bill, in which both I and my noble friend Lord Goodhart were involved from these Benches, I said:
“I do not believe that it is a healthy state of affairs; nor do I believe that the legal profession should be treated as a business that should carry the risks of litigation because of the obvious conflicts of interest”.—[Official Report, 21/1/99; col. 788.]
Those conflicts are bound to arise when the lawyer does not get paid unless he is successful. Since then, large firms with bulk cases have been able to carry the risk but, in order to get those bulk cases, a wholly new industry has emerged—that of claims farmers, who obtain instructions without ever meeting a client and sell them on to firms of solicitors who are prepared to do things in bulk. Costs have escalated and distorted what the Government hoped would be a route to increasing access to justice, although at that time in 1998 we thought it was a potential for harm.
One of the consequences has been an undoubted chilling on press freedom. The evidence given to the Culture, Media and Sports Committee on 5 May last by the editor of Private Eye is worth quoting. He looked at it from the point of view of a defendant and said:
“If someone comes and says, ‘We are suing you, and not only that, we have a CFA, which means that we can just make it up. It will be any figure that comes into our head, double it, double it again, and you pay all of it’, that makes you think twice about running a piece”.
Similarly, evidence given to that committee on behalf of regional newspapers pointed out that regional newspapers cannot risk defamation actions at all.
The solution that the Government have hit upon is utterly unthinking. It is not the recommendation of the Culture, Media and Sport Select Committee. As has been asked, where did the 10 per cent come from? It makes it impossible for the ordinary citizen to protect his reputation or defend himself against unmeritorious claims. That uplift—the cap of 10 per cent—really takes us back to the old days, when legal aid was not available in defamation cases and the libel courts were the playground of the rich or the extremely poor, who had nothing to lose by bringing actions of that sort.
As the noble Lord, Lord Henley, has mentioned, we have received many submissions from various people. I refer to a letter sent from Dominic Crossley of Collyer Bristow, solicitors for claimants in libel cases, in which he says:
“It is my view as a practitioner in this field (although not one that relies heavily upon CFA’s) that the proposal to reduce uplift on costs from 100% to 10% will have a detrimental effect upon access to justice in media cases and only the wealthy will be able to sue for libel. The proposal is being rushed through without proper consultation or the possibility of alternatives to 10% or 100% being properly considered. Personally I think a simple alternative is very easily achievable”.
On the other side of the coin, Mr David Price of David Price Solicitors & Advocates gave written evidence to the Culture, Media and Sport Select Committee in which he said:
“I hope that any reforms to CFA will not hinder representation to defendants … it is commercially very risky to do defendant work. If your reforms”—
he means the Government’s reforms—
“make it both risky and unremunerative the result is likely that we will have to stop acting for defendants which will mean that many will have no access to justice (no doubt legal aid is out of the question) and in some cases will go bankrupt even though what they have said is true/comment or privileged, just because they cannot afford to fight”.
He made this further point:
“Most of our defendant clients are not the very poor. They are ordinary people who find themselves dragged into a defamation claim over something that they have said or written, which may well be substantially true or privileged. They may have some equity in their home but in practical terms cannot justify the huge expense of funding the defence of a High Court defamation or privacy claim”.
So both claimants and defendants are hit by this artificial reduction of the success fee down to 10 per cent. It means that people will not have access to justice, again, as in the old days, unless they also have access to very large funds.
Why have the Government picked up the one tiny part of reform that actually benefits most of the big media corporations? Why have they done that, and at this time? Freedom of speech we will defend, but freedom of speech can sometimes be lazy journalism, as what we have heard from the noble Lord, Lord Martin, indicates: telephones ring late at night on a Friday to prevent any injunction from the courts or advice being obtained, and sometimes those telephones do not ring at all. Lazy journalism is defended by the media as free speech. That is not right.
Why were there four weeks’ consultation only, and not the three months that normal government procedures require? Why was there a refusal to give time to the Law Society and the Bar Council to make further representations and give stronger views to the Government? Why was there no consideration of alternatives? These failures, this rush, were reflected in the response of the Merits of Statutory Instruments Committee, which said in paragraph 17 of its report:
“We regret that insufficient time has been allowed to produce a solution based on more robust evidence or on which there is broad agreement, and that might seem more likely to achieve the policy objective without the potential side effects discussed in the correspondence”.
Why has this been done? We are entitled to a response from the Government.
As I have said, Liberal Democrats want wholesale reform. We want, for example, to prevent large companies suing private individuals for libel unless damage is proved, together with malice or recklessness. We want a single-publication rule, as opposed to the multi-publication rule that exists, based on a 19th-century case involving the Duke of Brunswick and a 17 year-old paper that his agent saw. We want to protect free speech by providing a statutory defence for responsible journalism, together with a widening of the defence of fair comment, and we do not want libel tourism to continue. The Lord Chancellor promised on 23 March active consideration of some of these issues. I would be glad to hear that position reiterated today by the Minister.
We are very much in sympathy with the amendment moved by the noble Lord, Lord Martin. We on these Benches have found in the past few weeks that regret amendments carry very little weight, but if we were to have put down a fatal amendment, we would be going back to the status quo, which is worse than this very small step that the Government are taking to deal with these abuses.
A 35 per cent cap is proposed for the damages-based agreement. Will that be the cap when the Government are involved? Is it right that the Government should put a cap on damages-based agreements in employment cases, when they are so very often the subject of the case? Your Lordships will realise that we on these Benches think that this proposal is ill timed and ill considered, and that the Government should withdraw it and not put it to the vote tonight.
My Lords, I declare an interest which causes in me a sense of déjà-vu. I was responsible for the Access to Justice report which led to the rules which now govern civil procedure in this jurisdiction. At the same time as that report was being implemented, the then Government decided to reduce legal aid. As a consequence, they had to find some alternative method of giving access to the courts, because it was clear that, without legal aid of the sort that had hitherto been available, access would be greatly reduced, which would have made a mockery of the purpose of the report which the Government were implementing and for which I was responsible. That report bore the title, Access to Justice, and its object was to assist people to litigate in the courts. It was clear that they had greater rights as individual citizens than they had hitherto, but that those rights were probably of less value than they should be if the citizen was not in a position to exercise them in the courts. Conditional fee agreements were therefore introduced.
However, then it was found that conditional fee agreements by themselves were not working, because the terms on which they were being used were too big a deterrent for the citizen to take advantage of them. Consequently, the insurance industry was mobilised to provide a product which would link up with the conditional fee agreement and protect the citizen in a way which would otherwise not have been the case; but even that action was not sufficient.
Therefore the decision was taken to make the party who lost the proceedings, in the case of a citizen who had a conditional fee arrangement, pay the uplift of the conditional fee agreement and, in addition, the insurance premiums. That changed the balance between the parties in a way which was unsatisfactory, although that was not appreciated at the time, because it gave the claimant a position which was out of balance in regard to the position of the defendant. That applied to litigation generally.
I do not believe for one moment that the Government wanted to get to the position where the situation between the claimant and the defendant was out of balance in the way that I have indicated. However, the pressure of circumstances caused the Government of the day to make recommendations, which were subsequently reduced into law, which had unintended consequences.
That brings me to these two sets of regulations. On the information which is available to me, it is clear that not enough research or consultation has taken place to see the consequences of what is proposed. Furthermore, it seems to me that there is a very real danger that, although the Government are supportive of the admirable report prepared by Lord Justice Jackson, the Government will undermine his report rather in the same way as my report was undermined. Although the general opinion a decade later is that the recommendations I made have benefited civil procedure, it is undoubtedly the fact that one of their objects has not been achieved: the control of costs. The process, as has already been indicated in this debate, is now far too expensive. Nevertheless, the Jackson report indicates that there are ways of combating that. In particular, what is required is management of cases so that the costs that are now being incurred are not incurred. That is the proposition to which we should be paying attention.
Although it may be said this is a provisional action which is being taken, I would urge the Government, based on my experience, not to go down the road that they are proposing to go down at this stage until the matter has been considered properly. I would suggest very respectfully to them that they are putting the cart before the horse in introducing these two measures before they come to their conclusions on the Jackson report. That is the way to reform properly; to reform in a way in which the results can be constructive.
From the Jackson report, I shall give an example on defamation. It is a weighty report, but it is one of considerable value. On page 406, at paragraph 3(1.1) to (3.3), the report refers to the defamation cost management pilot, which is to find ways in which to have a consensus between both sides of the profession and others involved in this area as to how defamation proceedings can be conducted without incurring costs on the scale on which they are now being incurred. It refers to the pilots taking place in defamation proceedings in London and Manchester for a 12-month period commencing October 2009. It concludes by saying:
“At the time of writing no feedback is available from the defamation pilot. However, it is anticipated that data from the pilot will become available during 2010. I am told by a defamation solicitor, who happens to be experienced in costs budgeting, that it takes him about an hour to prepare an estimate of costs”.
It then goes on to deal with that aspect, and I do not need to trouble the House with that. However, I refer to it as a sort of possibility that would change the position with regard to costs.
I am certainly not happy with the position with regard to costs in defamation proceedings at the moment, but I question whether the dangers of reducing the uplift from 100 per cent to a maximum of 10 per cent could not have very damaging effects on the other party to litigation in addition to the media, which has an interest that needs protecting by the courts. I am very grateful for the Motion to amend, which I would support because, in advancing that Motion, the noble Lord made it clear that the personal consequences of not being able to bring proceedings, which could be the result of a 10 per cent cap, can be very serious indeed to the citizen—more serious, if I may say so, than the harm that would be caused to the press. We want not to rush into amendments of a sort now proposed but to carry out the research properly that needs to be done before we seek to change the law in this way.
We have heard from the Opposition that, if there is a change of government, they will look at the position afresh. Are these regulations going to be brought into effect for the period that will elapse between a possible change of government and today? That is surely not the way that we should go about reform. There is a need for a change of culture. One thing that is clear is that change in the legal profession and system is always achieved most successfully when there is co-operation between those involved. From what I am aware, it is clear that the main players in the legal profession are happy to enter into negotiations to find a way through. It may be that these regulations have acted as a catalyst; if that be so, they have served their purpose. Perhaps the right thing to do now is to explore further the possibility of finding a more satisfactory conclusion or a less risky one than is now proposed.
I have focused primarily, so far, on the conditional fees, but I would also say that great caution needs to be exercised with regard to the other regulations as well. They are introducing into our system contingency fees, which of course Members of the House are aware have very different features from conditional fee agreements. I am particularly nervous about those being introduced into the employment field, because in the employment field, very properly, the right to representation before tribunals is wider than that of the legal profession itself. That means that there will be others who can recover up to one-third of the amount of damages which are awarded in an employment case, depriving the citizen of the damages he is entitled to as the consequence of the regulations in regard to the conduct of proceedings.
My Lords, like my noble and learned friend Lord Woolf, I start by declaring some interests. I was so-called Head of Civil Justice. I say “so-called” because the noble and learned Lord, Lord Woolf, was really the Head of Civil Justice at the time of the implementation of his reforms and I attended many meetings with him with the officials of the Government of the day, discussing the issue of costs. As my noble and learned friend Lord Woolf has said, the success of his reforms was always going to be to some extent conditional on appropriate arrangements being made for costs in the civil justice system. I am also a Member of the Merits Committee, which has made a report on these two particular instruments, and as your Lordships have heard, I accompanied the Chairman of the Merits Committee, the noble Lord, Lord Rosser, to the meeting with the Minister and the Secretary of State to which reference has been made.
In order to deal with the question raised by the noble Lord, Lord Thomas of Gresford, the reason I was at that meeting was because I had taken some drafting points on the termination provisions in the damages-based agreement. It had seemed to me that they had not properly covered the questions of what remedies there would be for ordinary breaches of contract. An amendment had been made and the instrument was relaid because of it, but the view I took was that it did not go far enough and the main function of the meeting, I think, was to discuss further amendments to the rule which were then made, so it took the form in which it now stands.
I do not recall anything at that meeting which really impinged on the issues that arise in connection with the conditional fee agreement order that is now before the House. The reason for that was that the Secretary of State made it quite clear that what we were discussing were drafting issues on, in particular—
My Lords, I am not wishing to stifle debate, but can I politely draw attention to the time? The House usually rises at 7 pm. I realise that this is an issue of great interest, but can I ask noble Lords to try to be as brief as possible in making their sharp comments?
My Lords, this could have been tabled so we could have had more time. It was obviously something that was going to generate a lot of discussion, which is why it was moved from the Moses Room where it was originally going to be held— particularly after the comments made. I think it is quite wrong for the Government Chief Whip to start trying to stifle debate at this stage.
I will say no more about the meeting I had with the Minister. I think I have given the gist of it.
Both these instruments raise different, discrete points, but they have one important factor in common: they both raise questions about access to justice. Access to justice in the civil justice system is critical. Of what use is a justice system if it is not available to the citizens whose rights are to be protected or who are to be defended against allegations that they have broken other people’s rights? That is all that the instruments have in common, but it justifies dealing with them together. For my part, though, having made those remarks about access to justice, I shall take them separately.
The damages-based agreement, as your Lordships have been told, is the first statutory recognition given to contingency fee agreements where the fees of the lawyers appearing for the claimants come out of the damages that are recovered in the action as a percentage. The successful claimant therefore bears the cost of his successful litigation; the costs are not thrown on to the other side. If the case fails, it is a no-win, no-fee arrangement, but the reward for the lawyers of the successful claimant comes out of the damages that the claimant succeeds, with their assistance, in having recovered. That is a quite different approach from that of conditional fee agreements, where the burden of the fees that are recovered by the lawyers for the successful party falls on to the shoulders of, and have to be found by, the unsuccessful defendants.
The damages-based agreement, as the noble and learned Lord, Lord Woolf, has already said, introduces a means of funding the very narrow type of action—namely, damages actions in front of an employment tribunal—in a way that standing authority holds to be contrary to public policy. Public policy can change, but it is a strong step to take to introduce this by means of a statutory instrument. I am not suggesting that it is ultra vires; authority for it was given in the amendment introduced late in the day in the Coroners and Justice Act 2009. I am not in a position to say how much debate there was about that introduction but the amendment was made very late, and this is the first attempt to use it. It deserves to have considerable attention paid to it.
I would call this an interesting experiment to see whether an alternative means of funding civil claims can be found by the contingency fee route. The discussions that I had with the Minister about the termination provisions were the only points that I raised about the instruments, and I apologise to him for now raising others that had not occurred to me at the time when I met him. I hope that he will forgive me, but there are difficulties that arise in connection with appeals.
As I understand from what the Minister said earlier, if there are to be appeals, and there may well be, the funding of the appeal, as far as the successful claimant before the tribunal is concerned, will have to be found by some means other than the agreement itself. It has been suggested that a conditional fee agreement could be obtained for the purpose of the appeals. That makes two different systems of funding the litigation at different stages: the contingency fee, with the fee coming out of the damages and calculated with reference to the amount of the damages for the initial hearing, and the conditional fee agreement route for the appeals.
The calculation of the fee to be paid to the successful lawyers for the trial before the tribunal is expressed in terms of the amount that is actually recovered by the claimant. The amount that the claimant recovers may have to take into account any cost to him of the appeals that he may find himself responding to. If he has lost, of course, he will not have recovered any damages. However, if he appeals and succeeds in getting damages from an appeal court, how does the damages-based agreement then operate? He will have obtained damages not from the tribunal but on appeal. If he succeeds in front of the tribunal and the damages are reduced by the appeal court and he is ordered to pay some costs, what then? Does that also reduce the 100 per cent on which the percentage recovery for the lawyer is to be calculated?
These questions need to be examined with some care. The regulations themselves say nothing about them. It would be left to those who have to construe the instrument as it stands, unless some amendment is made, to determine the correct answers. There is also the possibility, if damages were reduced and costs were awarded against the respondent, of the court ordering a set-off of the costs against the damages, and the question of the solicitor’s lien against damages recovered in an action. All of these matters bear upon how the machinery for calculation and payment of the contingent fee, based upon a percentage of the amount recovered by the client, will work.
Two final points of technical detail have not been covered. Is there any reason why, just as the success fee of conditional fee agreements can be subjected to the scrutiny of a taxing master and taxed down if the amount is thought to be excessive, the percentage agreed in a damages-based agreement cannot similarly be subjected to that scrutiny? It seems logical that there should be the same process of checking the justification for the percentage being charged, whether in a conditional fee agreement success fee or a damages-based agreement percentage of damages.
Finally, has any thought been given to how VAT is charged in a case where the fee comes out of the damages? I had not given it any thought until today. Is VAT to be charged and added to the amount accounted for by the lawyer, or is it to be assessed in some other manner? These are technical questions which I leave with the Minister.
I turn to the much more difficult question of the Conditional Fee Agreements Order. Your Lordships have heard of inadequate consultation; so there was. Your Lordships have heard questions raised about where the 10 per cent as the maximum success fee—it is important to note that it is the maximum—comes from. It appears, from the papers that we have seen, to be arbitrary. The Government’s consultation paper, issued on 19 January this year, accepted that,
“to enable claimant lawyers to balance risk: to cover the costs of cases that failed with an uplift or success fee on those that won”,
there was to be a balance.
The justification for the 100 per cent uplift was that cases that arrived at trial could be taken to be 50/50—as likely to win as lose. Otherwise why was the other side fighting it? Consequently, the lawyer who litigated under conditional fee agreements would lose as many as he won, and should therefore get twice his normal fee to compensate him for getting nothing on those that he lost. That is the justification for the 100 per cent uplift. If that mathematics is carried through, the 10 per cent uplift—the maximum uplift that is proposed under the order—would require the lawyers who worked on that basis to succeed in nine out every 10 cases that they took. That record of success would be remarkable for any practising barrister. There are some in the House today. I wonder whether they have ever got near to achieving such a thing as nine successful cases out of 10. Anything less and their books will not balance at the end of the practising year. I spent a little time doing the maths. Assuming the lawyers concerned take 10 cases a year that fall within the requisite publication category, they would need somewhere between a 40 and 50 per cent uplift to make a profit if their success rate was between 60 and 70 per cent. That is a pretty high success rate and it would require a 40 or 50 per cent uplift.
Ten per cent is, with respect, a ridiculous rate. It would deny access to justice to a whole range of people who will not be able to afford to litigate. It would be a denial of the whole purpose of the civil justice system, which is to discourage self-help. It would also be apt to promote a deserved disrespect for the law. The noble Lord, Lord Martin, has tabled a Motion of Regret, which I would support. I say also—echoing others—that this is an instrument which ought to be withdrawn and rethought with proper evidence and full consultation.
My Lords, my admiration for the noble and learned Lord, Lord Woolf, and his magisterial work in promoting access to justice over the years has been uplifted by at least 100 per cent for every year that I have had the privilege of knowing him. However, I much regret that on this occasion I cannot agree with the conclusion that he has arrived at and the views expressed by other noble Lords and noble and learned Lords in relation to this matter. I will briefly—I emphasise “briefly”—explain why I cannot support the amendment in the name of the noble Lord, Lord Martin.
I must declare an interest. I represent Mirror Group Newspapers in the European Court of Human Rights. It has a claim that raises the issue of whether the very large sum in costs, including a substantial uplift, that it was required to pay the model Naomi Campbell, after a case involving an infringement of her privacy rights, is a breach of its freedom of expression. That is a pending case.
I suggest to noble Lords that the Government are seeking to address a substantial unfairness in the legal system. Where the claimant has a conditional fee agreement and after-the-event insurance, he or she is at no risk as to costs. By contrast, the defendant is at risk of paying inflated costs. In many such cases, therefore, the defendant is under unreasonable pressure to settle the case to the advantage of the claimant. It is true that this is a problem generally, across the legal system. It has been addressed by Sir Rupert Jackson and I understand that the Government are still considering it.
However, a particular and urgent problem needs to be addressed in the context of libel and breach of confidence law. It is an urgent problem because the consequence of the cost regime today is that it is deterring defendants from exercising their freedom of expression. That is a fundamental right for them and a fundamental condition of a free society in which those who are governed are given information about those who govern us, information that people in power, let us be blunt about it, and influential people would much prefer to keep confidential, even if—indeed, often especially if—it touches on matters of public interest. The Government—and I associate myself with them—place a higher value on freedom of expression than does the noble Lord, Lord Martin of Springburn.
The inevitable consequence of these success fees today is that newspapers and magazines shy away from publishing information about the rich and powerful to the detriment of the rest of us. The 100 per cent success fee is a deterrent, whether the journalism is lazy or dedicated. The justification for the success fee of up to 100 per cent, as has been explained, was that it would enable otherwise impecunious claimants to bring proceedings to vindicate their reputation on a conditional fee basis and to compensate lawyers, as the noble and learned Lord, Lord Scott of Foscote, has explained, for the unsuccessful cases in which they act on such a basis. It is a swings and roundabouts approach.
This rationale, in my experience, has been undermined by two factors that have not yet been mentioned. First, a very large number of the claims in which these success fees are secured have been brought by claimants who were perfectly capable of paying their lawyers a proper professional fee. There is no restriction on these success fees to the impecunious.
The second problem is that not all but many lawyers operating in the field of libel and confidence choose very carefully the cases in which they act on a conditional fee basis. They tend to act—and who can blame them?—in the cases that they perceive to be winnable, including cases from claimants who are not wealthy. The lawyers are not concerned about that; they are concerned with whether these cases are winnable. That is the answer to the point made by the noble and learned Lord, Lord Scott of Foscote, that the lawyers would have to win nine out of 10 cases. Yes, but they select very carefully the cases in which they are prepared to act on a conditional fee basis. The very fact that there is a potential 100 per cent uplift helps to ensure that the cases are successful because in a large proportion of these cases the defendants, knowing that there is a great risk of having to pay such high costs, are prepared to offer settlements to claimants at a level higher than the case would otherwise deserve.
I accept that there needs to be further reform of CFAs in the light of the Jackson report and that careful consideration needs to be given. For my part, I do not see that as a reason for objecting to this specific and positive stance in the context of libel.
Would the noble Lord, whose knowledge about these matters I respect greatly, be good enough to indicate whether he can say with total confidence that the careful selection of cases, which already takes place when the lawyers have been getting a 100 per cent uplift, will mean that, if the same care is taken in selecting cases where the uplift is only 10 per cent, the number of claimants who have a reasonable prospect of success from getting legal representation will not be substantially reduced?
I strongly suspect that it will make no difference at all, because the lawyers are understandably anxious to do the work and they will continue to do the work by and large in those cases where they think that they have good prospects of success on a conditional fee basis. If the case is interesting, they may, as many lawyers do, be prepared to do it on a no-fee basis, as the noble and learned Lord knows.
The other point that has been made with considerable force is: why 10 per cent? Why not 20 per cent or 50 per cent? As I understand it, the 10 per cent reflects a judgment that only a small uplift is appropriate in the context of freedom of expression, for all the reasons that I have given. I, for my part, am comforted by the Government’s assurance at paragraph 12 of the Explanatory Memorandum to the conditional fee agreements order, which has been repeated by the Minister, that the order will be reviewed after 12 months in the light of experience. For those reasons, with regret, I cannot support the amendment tabled by the noble Lord, Lord Martin. I support the Government.
Why does the noble Lord not accept that the real problem here is defective libel law, which makes it much too easy for claimants to get an unjustified verdict in their favour, rather than making it possible for people with limited means to bring action impossible against someone who may have libelled them?
I strongly support all the points that the noble Lord, Lord Thomas of Gresford, made about the current deficiencies in the substance and procedure of the law of libel. I very much hope that those matters will be reformed, but the harsh reality is that they are not going to be reformed in the short term; we will have to wait at least months for that to occur. In the mean time, there is an urgent and serious problem about freedom of expression that, for the reasons that I sought to give, needs to be addressed—and it needs to be addressed in the context of the instruments that we are discussing.
My Lords, I am not of course seeking to address your Lordships’ House on the merits of these issues, on which I would be wholly ignorant. I was fortunate enough to be a member of the old Statutory Instruments Committee in the days when it merely considered vires. It is one of the advantages of the big changes that have been made that your Lordships’ House can now consider merits. That is a big advance.
It has been a great privilege for all of us in this House to hear the noble and learned Lords and other noble Lords who have spoken with such knowledge on the amendment and on the two orders. It is particularly useful also that we have been able to hear the noble Lord, Lord Martin of Springburn, because his point was extremely important. One’s overall conclusion on listening to these matters is that they are as difficult as they are clearly important.
Why are the Government so fidgety, to put it mildly, about the time that we are taking to discuss these important issues? The Government Chief Whip is so fidgety that he has had to leave the Chamber. The noble Lord, Lord Thomas of Gresford, put it quite clearly; it is pretty appalling to consider such orders in three weeks when the normal procedure is to have three months to consider them. What possible reason is there to do so? Given how complicated these issues are and the fact that these great experts do not yet fully agree on the correct solution, how wise it is of my noble friend Lord Henley to have made it clear that the Conservative Party has not yet made up its mind what the right solution is.
Finally, we have in this country government by Parliament, not fiat by the Government. That is a very important difference. The Government have a choice; either they give Parliament proper time to consider the measures that are put before it, or they do not put the measures before it at all. Actually, there is no great political constraint. After all, if the Government have so much legislation that they wish to get through, depending as they must on proper parliamentary scrutiny, the Prime Minister still has the option of a 3 June election. That may be the option that he will wish to take.
My Lords, I thank everyone who has spoken in this debate. I defend my noble friend the Chief Whip. All he was doing was reminding the House that we normally rise at around 7 pm on a Thursday. I do not think he was doing anything more than that. Indeed, I think that what he said has had some, perhaps rather minor, effect on the length of this debate. However, let us let us move on to the issues. I will try to be as quick as I possibly can, while trying to do justice to the comments and the questions that have been raised.
We do not believe that these two proposals undermine the Jackson report or our consideration of it for longer-term reform. We are some way off—this could be true of the party opposite if it comes to power—from deciding which of the Jackson recommendations to support, which not to support and whether the report should be taken as a whole, as Sir Rupert himself believes it should. That will take any Government some time to decide. Decisions will be reached, and then time will have to be found for primary legislation. Not waiting for Godot, but waiting for Jackson really is not, I am afraid, an option in some of these cases. Why is it not an option? Frankly, in the case of both these orders, there is an urgency to do something about the problems with the current situation.
With the greatest respect, it is quite wrong to say that the DBAs were introduced by the legislation that we passed last year. They existed already and were being used in employment tribunals. The problem with them was that claimants were being badly treated in some cases, I am afraid to say, by lawyers or by claim managers who took them to the cleaners because there was no regulation on the arrangements reached. That is why Parliament passed the relevant section of the Coroners and Justice Act last year. I had the pleasure of talking to the noble and learned Lord, Lord Woolf, and other noble and learned Lords who were concerned about the phrasing of the Bill, as it was then, and I hope that we satisfied them to some extent.
This is not the precursor of contingency fees. Sir Rupert Jackson is in favour of broader contingency fees, but that is a different issue that will have to be decided by the Government and legislated on if the Government decide to support it. This deals with a specific problem in employment tribunals. By passing that Bill, making it an Act, and putting these first regulations in place, we hope to regularise the position and make it impossible for claimants to be badly treated by lawyers in these cases.
Paragraph 3.11 of the impact assessment states:
“The introduction of a maximum cap may result in some claimants with particularly complex claims being unable to find a representative to act for them under a DBA, as the restriction on their fee means the representative is unwilling to take their case on given the risks involved. This suggests that in some cases, access to justice may be restricted, which represents a cost to claimants”.
What does the Minister say about that criticism in his own impact assessment?
In every instance there are advantages and disadvantages. The fact remains that this was an unregulated market. For example, do we think that a figure of more than 35 per cent is an appropriate percentage of someone’s damages? There has been quite a lot of consultation on these regulations, and the figure that we have come to is 35 per cent. I am prepared to suggest that that is an appropriate figure, taking a broad view, in this field. We have to do something. We cannot let the present position continue.
As far as the CFA is concerned, the truth is that, as has been said this evening, the 100 per cent success fee has meant that it has been impossible for defendants, not always the richest and largest, to be able to defend a case of defamation against them, whether they are justified or not. The quotation from the editor of Private Eye that the noble Lord, Lord Thomas, used is pretty good as far as that is concerned. How can a magazine like that defend itself when it should defend itself against untrue allegations? If the press, the media, scientists or academics cannot defend themselves in cases of this kind because of the costs—and everyone agrees that the costs are ridiculously high at present—that is a considerable injustice.
The noble Lord, Lord Thomas of Gresford, made the case for reform of libel law in the system that we adopt. Everyone agrees that the libel law system needs to be changed. My right honourable friend the Lord Chancellor has this week announced that that will happen. If the party opposite wins the election, we hope that it too will look at the libel law. However, that will take a little time, and in the mean time we have to make some decisions to make sure that the present position does not continue.
I am most grateful to the noble Lord, Lord Martin of Springburn, for the way in which he put his amendment. I hope I can give him some satisfaction. If the order that we are debating, which has not yet been formally moved, passes, we will review it after 12 months. We will, of course, be prepared to meet lawyers who act in this field. I can do better than he wants: it does not have to be after the general election, it can be before it, if that is what he would like. No doubt, if there is a change of Government, it can be after the general election too. Meeting those lawyers is not a problem.
For the noble Lord, of course I can do better than that. Although there may well be an election fairly soon—I do not know—Ministers continue to be Ministers until the results are known, as I understand it. There is therefore time for us to meet, if that is what he would like. He may think that that would be better after the election; no doubt he can discuss that with those to whom he has been talking. I can give him those promises; I hope that they help. I know how strongly he feels about the issue; he graphically explained why. I have to say that the Government—any Government would say the same—have to be incredibly careful about curtailing press freedom in any way. I might well share some of his views about how some of the press conduct themselves, but I have to resist—we all do—the temptation sometimes to say, “Gosh, I wish they weren’t allowed to do this or that”. Saying that is extremely serious for any Government; we are wary of laws to curtail any press freedom at all.
I say to the House—that is the proper way of doing it, but I hope that the noble Lord takes note—that of course I am prepared to make the concessions to his argument of review after 12 months and consultation. The CFA order is an interim order; it is not the solution to the problem of libel law in this country, but it is the best thing to do at this stage. Why the hurry? First, there is a crisis in both these fields. Secondly, there is an upcoming general election and we feel that we would have to try to deal with a crisis straight away rather than wait, as we would have to otherwise once purdah began. Let me be blunt about that—those are the reasons why these matters come before the House today.
I could answer many questions, but I invite the noble Lord not to move his amendment. I hope that what I have had to say in my brief response is sufficient to persuade the House to accept the statutory instruments, if it comes to voting on whether they go through. They are yet to be discussed in another place and there is urgency about this. We think that they are the right statutory instruments and I hope that the House will support them.