Legal Services Bill [HL]

I am grateful to both noble Lords who have spoken. Perhaps I may begin by talking about the role of trade unions under Clause 103. We do not think that the requirements relating to Clause 103 would be appropriate. First, there is the issue of ownership: trade unions are not owned except by their members, and so different issues apply. They also generally provide services only to their members and ex-members and sometimes to members’ families. They are regulated under specific industrial relations legislation and their lawyers are regulated by individual regulators such as the Law Society. In some cases, they are highly dispersed organisations. They rely heavily on non-lawyer advisers in the workplace to carry on the frontline role of advising their members. We believe that all those features make some of the licensing provisions unnecessary or unworkable. Clause 103 removes the Part 5 requirement to designate a head of legal practice and a head of finance and administration, and it removes the ownership requirement—the fitness-to-own test—set out in Schedule 13. That is why trade unions are treated differently in this context. I should be very happy to get further information from my colleagues if that would be of benefit to noble Lords. I turn to the specific issues raised with regard to what we could describe as the second potential category of low-risk bodies. As we have made clear—noble Lords have discussed this today and on previous occasions—a body must have less than 10 per cent management and ownership by non-lawyers if it is to qualify as a low-risk body. The amendment would effectively raise that level to 25 per cent where the non-lawyer managers and owners were members of a recognised professional body. That would include professionals such as chartered surveyors and accountants, as well as professional firms regulated by the relevant institutes. So, in the context of the amendment, a partnership with a quarter of partners who were other professionals, or indeed a legal practice that was24 per cent owned by an accounting firm, would be a low-risk body. We do not think that this change would be appropriate. Practices within this category are a type of multi-disciplinary practice, albeit a majority lawyer-controlled one, and perhaps should not be so readily judged ““low-risk”” as practices with genuinely de minimis levels of non-lawyer control. We would move away from risk-based regulation into the possibility of regulatory loopholes. I wholeheartedly endorse the potential for lawyers to form practices with other professionals, with the benefits that that might bring for them and for the consumers whom they serve. But we need effective safeguards to ensure that legal professional principles and ethical practices are maintained. The head of legal practice and the head of finance and administration and the teststhat Part 5 creates for external owners are key to this. Taking practices with significant levels of non-lawyer control outside the scope of those safeguards would go against the recommendations of Sir David Clementi and could leave them open to the types of risk that Part 5 seeks carefully to mitigate. I understand the basis on which the noble Lord moved the amendment and the basis on which it has been supported, but we think that there are differences in the de minimis risk of 10 per cent and below, moving up to a much higher level of ownership. An important point is that we do not want this regulation to be heavy-handed. That would not be the basis on which we would operate. Therefore, noble Lords need to think of this issue in the context of ensuring that we act effectively and properly to safeguard not only the consumer but especially the legal practitioners. Therefore, I hope that the noble Lord will withdraw his amendment.