Legal Services Bill [HL]

moved Amendment No. 149A: 149A:Schedule 16 , page 231, line 30, leave out paragraph 40 and insert— ““40 Section 44B (examination of files) is amended as follows— (a) in subsection (1)— (i) for ““Council are”” substitute ““Society is””, (ii) in paragraph (b) for ““Council”” substitute ““Society””, (iii) omit paragraph (c), and (iv) for ““the solicitor or his firm”” to end substitute ““any person requiring the production or delivery of information in accordance with subsection (2) or apply to the High Court for an order requiring the production or delivery of such information.””; (b) for subsection (2) substitute— ““(2) A notice by the Society or order of the court under subsection (1) may require— (a) the production or delivery to any person appointed by the Society, at a time and place to be fixed by the Society or the court, of all relevant documents in the possession of that person; (b) the attendance of the person to whom notice is given to provide information by answering questions at a time and place to be fixed by the Society or the court. (3) Subject to subsection (4), a notice under subsection (1) may only be given to or an order made against a person who is regulated by the Society or is connected with a person regulated by the Society. (4) A notice or order under subsection (1) may be given to or made against any person if the Society is satisfied that information relevant to an investigation is likely to be in the possession, custody or power of that person and that there are reasonable grounds for believing that information which may be provided by that person is likely to be of substantial value (whether or not by itself) to the investigation. (5) For the purposes of subsection (3) a person is connected with a person regulated by the Society (““A””) if he is or has at any relevant time been— (a) a partner in a partnership of which A is or was a partner; (b) an employee, officer, member, director, agent, shareholder or shareowner of A; (c) remunerated directly or indirectly by A for activity in connection with the provision of legal services; (d) a controller of A; or (e) a member of A’s group.”””” The noble Lord said: Amendments Nos. 149A and 149B relate to the Law Society’s powers to examine files and other documents, even those which are confidential or subject to legal professional privilege. Amendment No. 149B includes a provision that the Law Society may apply to the High Court for an order in the event that a solicitor fails to provide requested information. Amendments Nos. 149A and 149B will bring the Solicitors Regulation Authority’s powers up to date in this area in two important ways. First, they will introduce a new power to require solicitors or other individuals regulated by the Law Society to attend to answer questions. Secondly, those powers would also be extended, with appropriate safeguards, over third parties. These powers are essential if the SRA is to be able to protect, effectively, consumer interests in the regulatory regime, and continue to retain credibility and authority into the future. Other regulators, such as the Financial Services Authority, already have equivalent powers to require regulated persons to attend to answer questions. It is important to extend the power to require information from third parties for a number of reasons. Many wrongdoers whose activities are facilitated by solicitors remove their files from solicitors. Without this power, there would be no way of reaching the information. The same is true of papers with accountants. If a solicitor is in the wrong, files are sometimes moved around between solicitors because the current power to require production of documents only applies to the solicitor under investigation. Another example is solicitors who receive work through non-solicitor businesses which they covertly control, and fail to disclose this to clients who think that they are receiving independent advice. The SRA currently has no direct power to require disclosure of information from the non-solicitor businesses. The third party need not always be nefarious. It is thought that some third parties that wish to provide information do not do so because they feel that they cannot safely do so unless they can demonstrate that they were obliged to, either through fear of the solicitor’s reaction or unease over what legal protection they will maintain. Amendment No. 149B states that the legal professional privilege should not apply in particular circumstances. This is a potentially important new section, which should apply to all lawyers. Were the principle of this amendment to be accepted, we would seek for an equivalent provision for licensing of licensed conveyancers and other lawyers. I beg to move.