Legal Services Bill [HL]

moved Amendment No. 108ZA: 108ZA: Clause 71, page 40, line 38, at end insert— ““( ) A body is not a ““licensable body”” if it is regulated under section 9(A) of the Administration of Justice Act 1985 (c. 61).”” The noble Lord said: The aim of this amendment, together with Amendments Nos. 150A, 150B and 150C, is to enable legal disciplinary practices, that do not have external ownership, do not seek to provide multidisciplinary services and offer only the services that an ordinary firm of solicitors can provide, tobe regulated under the Law Society’s mainstream regulatory amendments. We emphasise that even if these amendments were accepted, multidisciplinary practices and firms in which there was external capital investment would still be regulated under Part 5; that is, under those provisions which deal with alternative business structures. These amendments develop the approach of those discussed right at the end of the third day of Committee: to permit those who play a significant part in running a firm, such as the finance director, to be recognised with the status of a partner even though they are not qualified lawyers. Under the Bill, it will be possible to make non-lawyers partners in solicitors’ firms, but the price of doing so is that those firms will be regulated under Part 5. In our submission, that is bound to cause a substantial but unnecessary regulatory burden. Sir David Clementi’s report identified the additional challenges for regulation that would arise from either external ownership or the provision of multidisciplinary services, and we have no argument with that. But in dealing exclusively with practices that have neither of these characteristics, Sir David makes no sharp distinction between firms all of whose partners are solicitors and those with some legally qualified partners and some who are non-lawyers. In his report he said: "““Legal disciplinary practices (LDPs) are law practices which permit lawyers from different professional bodies, for example solicitors and barristers, to work together on an equal footing to provide legal services to third parties. They may permit others … to be Managers, but these others are there to enhance the services of the law practice, not to provide other services to the public””." Sir David concluded that the majority of the partners should be lawyers. These amendments, therefore, are designed to secure precisely that. The Law Society would establish a register for permitted non-lawyer partners and set requirements for eligibility on the register. The requirements would include a character and suitability test so that individuals who could not, by virtue of previous misconduct, become solicitors would not be permitted to become non-lawyer partners. Moreover, potential partners would have to demonstrate familiarity with the Law Society’s principles of professional conduct, as all managers and partners of a firm share a responsibility for ensuring that the firm complies with its regulatory responsibilities. In our view, this would respond to the hesitations expressed by the Minister at a rather late hour. There is no reason to assume that the Law Society’s regulations would be any less rigorous than those under Part 5. This approach is wholly consistent with our view, shared by Sir David Clementi, that the ABS arrangements should be introduced incrementally. These follow on from the previous set of amendments. In our submission, they contain the necessary guarantees that the Government are seeking and ought to be accepted. I beg to move.