Legal Services Bill [HL]

The noble Lord, Lord Hunt, loves to entice me to do things. I try very hard, as he knows, to resist his enticements, though occasionally I succumb. I do not plan to succumb today on this amendment, but I shall say a little about the approach I have sought to adopt in this part of the Bill. One of the critical concerns when considering regulation and how to make alternative business structures work has been consistency. Consistencyis very important in how Part 5 will work. I had the privilege of meeting the trademark attorneys yesterday and talking to them about their concerns regarding some organisations. I do not dispute for a minute that there are different types of alternative business structure firms, and that some will involve lower or higher risks. We have already had some conversations on the third day in Committee, and no doubt we will have more today, about those issues. However, I do not accept the principle that, even where a majority of lawyers control the firm, there is less influence or less potential for influence from non-lawyers. Noble Lords will know that, in the legal profession as much as elsewhere, even one individual can have a huge impact on any kind of company. In the financial services market, control beyond10 per cent is treated as significant. I do not see why we have to consider legal firms differently in that context. In Part 5 we have provided that any person or body who controls 10 per cent or more has to be individually approved by the licensing authority. We have given flexibility to low-risk bodies—those whose total control by non-lawyers is less than 10 per cent—but we do not exempt them from the regulations in Part 5. It is also important to remind ourselves that inPart 5, whatever the level of influence or control of non-lawyer managers or owners, they can personally be held liable for breaches of professional rules. They are accountable to regulators in the same way as lawyers and, equally, may be disciplined for misconduct. That is an important safeguard in the context of some of the concerns raised in your Lordships’ House and beyond. Above all, we want to ensure consistency—the classic ““level playing field””—and appropriate regulation, hence the ““low risk”” status of companies whose total control by non-lawyers is less than 10 per cent and a clear regulatory framework for those whose non-lawyer control is above 10 per cent. As I recall saying during the passage of the Compensation Act, regulation need not be heavy-handed or seen in a negative way. Quite the opposite; this is a very positive measure, which we hope organisations will embrace. I accept that we need to think carefully about how regulation works and ensure that firms feel able to participate in ensuring its effectiveness. The Law Society and others will be critical players in that, but I do not accept that we should make exemptions or have differences in how it is done. That is not to say that I do not think that the Law Society would make good rules, I hasten to add.