Legal Services Bill [HL]

I shall try to explain how we believe the system would work. I trust that that will provide comfort if not complete satisfaction to noble Lords. Under the new system, every lawyer will pay something towards running the OLC through the general levy. It is right that they should; it is a new body. Yes, this involves increasing consumer confidence—every practitioner has a genuine interest in that regardless of whether they themselves received complaints. We believe that the existence of the OLC should ensure that clients have greater peace of mind and that there will be benefits from increasing consumer confidence for those involved in the legal profession. That is an important part of what we are seeking to do. I completely accept—this was said to me by the chairman of the Bar—that there are issues with, for example, junior barristers in criminal cases. The noble and learned Baroness indicated that there are also very emotive issues in family cases. People may feel aggrieved on the criminal or the family side with the outcome that is set and may wish to complain because they believe—they may well do so wrongly—that they have not been given the best possible advice and support from the legal profession. That is why we put flexibility in the Bill—to ensure that we design a fair system. One expects that most of the complaints that get as far as the OLC will have some merit; otherwise they should have been provided for in-house and resolved. I can certainly envisage circumstances, as indicated by noble Lords, in which a vexatious complainant simply does not accept the efforts that the legal profession—the lawyer—has gone to in an attempt to resolve the complaint and wants either a second opinion from the OLC or otherwise wishes to pursue it. Where a complaint is frivolous or vexatious, an ombudsman would have the power to dismiss it, without consideration of its merits, under Clause 130(3)(a); that is an important element in the Bill. We also recognise that the system of case fees, if not sufficiently sensitive, might unfairly penalise particular areas of legal work or create a potential disincentive to act on behalf of certain clients. Noble Lords did not mention that this evening but I am sure that it is at the back of their minds. We acknowledge this issue. Again, this is why Clause 133 has been drafted to allow the OLC the flexibility to reduce or waive the charge in particular cases, to set different charges for different stages of proceedings and to provide for charges to be refunded in certain circumstances. Taken together, this gives the OLC considerable flexibility to develop a set of rules that operate in an equitable manner. That is the objective. We hope that the system is capable of avoiding disincentives but there is also the question of incentives. That goes back to the previous amendment about ensuring that the power you have can incentivise. We want complaints to be resolved wherever possible in the first instance through legal firms’ procedures. If the OLC were free of charge to respondents, except where the complaint was upheld, we would be reducing the incentive to try to resolve the complaint in-house because it could simply be batted off to the OLC to be dealt with. That cannot be in anyone’s interests: the cost of the OLC would inevitably rise, and that cost would be passed back to all practitioners through the levy, making the costs higher for those who never receive a complaint; we should not forget them in this arrangement. There is an issue of incentive. There are other difficulties with limiting the application of the case fee to complaints that are upheld. First, I do not want the OLC to be open to the criticism that it has a financial interest in upholding complaints and that ombudsmen are not acting fairly and impartially. That takes us to the European Convention on Human Rights. That may sound far-fetched but it is a criticism to which the OLC might be open and, as noble Lords know, perception is very important. The incentive should be for OLC staff to try to conciliate cases and achieve an outcome that parties can agree to as early in the process as possible. A formal determination by an ombudsman is at the end of that process. We believe that the system that we have set up is the right one. The rules are subject to the consultation procedure in Clause 195. They will be developed taking account of the views of the profession. I remind noble Lords that we have already accepted Amendment No. 38 in the name of the noble Lord, Lord Kingsland, which required that Clause 10 will apply mutatis mutandis to representations by proposed regulators, whether in the regulatory or representative capacities. That consultation will have more force as a consequence of my acceptance of that principle. We recognise the points that have been made but believe that to change the Bill in the proposed way would provide the wrong incentives and disincentives and could open the OLC to the perception that it was behaving inappropriately. I hope that I have persuaded noble Lords that we understand the issues but believe that we can capture this in the Bill as it stands.