Legal Services Bill [HL]

moved Amendment No. 157ZA: 157ZA:Clause 201 , page 110, line 27, at end insert ““provided always that no order may be made by the Secretary of State bringing into force Part 5 of this Act and the related Schedules 10 to 14 until after— (a) consideration by both Houses of Parliament of a comprehensive report to be commissioned by the Lord Chancellor from an independent source analysing— (i) the advantages or disadvantages (or both) which may realistically be expected to flow from the implementation of Part 5, including the benefits or risks (or both) to consumers; (ii) the potential enhancement or curtailment (or both) of access to justice; and (iii) the threats actual or internationally perceived to the independence of lawyers practising in England and Wales; and (b) the laying of the draft of a statutory instrument designed to bring into force the whole or part of Part 5 and the related Schedules before each House of Parliament and approval thereof by resolution of each House. ( ) An ““independent source”” means a source (such as a research organisation) which is independent of Government, free of connections with any political party and free of connections with any individual or body representing consumer interests,”” The noble Lord said: I move the amendment because of the anxiety that I have come to feel about how we have been dealing with Part 5. To put it briefly, we do not have material evidence on certain key features in relation to Part 5. On one view, you could say that we are really transferring our legislative role to the Legal Services Board and all the licensing authorities; we are just handing it all over to them. More harshly, you could say that we are taking a leap in the dark without having done the necessary work in this area. What have we made no attempt to investigate? I have three topics to discuss. First, we have done no work to investigate the fragility of the small firms of solicitors—either high street firms about which the noble Lord, Lord Thomas of Gresford, spoke, on more than one occasion in Committee. Many are in rural areas; others are in small towns. In the past two or three years, they have been losing their legal aid work and their financial condition has become more perilous, or so I believe, on the basis of some scanty evidence. What is their position today? Will they be able to continue cross-subsidising work which does not pay by using fees from more lucrative work? That is what they have done for many years. What will happen when the alternative business structures roll into action? What will be the fate of those firms? The answer is that nobody knows and nobody has investigated. I shall cite evidence with which I am familiar that came before the joint committee. I should have said earlier what I have said on every previous occasion; that I was a member of the Joint Committee which looked at the Legal Services Bill before it reached this House. There are certain materials showing the anxiety on the question of the fate of small firms. The second thing that we know next to nothing about is the new entrants who will come into this marketplace. Who will aspire to own law firms? The Joint Committee had very little material about this. We heard from the Co-operative Legal Services, which was launched last year as part of the Co-operative Group. It seemed to show keenness in doing this, but we did not hear, as we might have expected, from people with plenty of money—banks, insurance companies or finance houses. We heard a little about the so-called claims farmers, or claims managers, two of whom had gone to the wall and had brought disrepute to the clan. We had absolutely no feel for the degree of enthusiasm out there today. Who will they be, and what will be the motivations of the wealthy people coming in or the money providers? Will they be coming in to make money? Will that be their motivation? Will it benefit the consumer? Will law firms be bought and sold like football teams so that one tycoon sells to another tycoon, no doubt each demonstrating his fitness and suitability? There is a third matter which we did not go into. We had no time; we complained about that in the committee’s report, to which I have referred on earlier occasions. We got through our work in eight weeks, which was pretty good going from a standing start, knowing nothing about this area. With a team of 12 from both Houses, we managed to produce a report. There were many things that we could not get into in any depth. My third point, therefore, is that we do not have any information about what has been happening in other countries. We had a witness from the Solicitors Sole Practitioners Group who said that the only precedent known to him was New South Wales. That is in volume 2 of the Joint Committee’s report on page 218. He said that in America there had been a persistent refusal to go down that route. The Lord Chief Justice, the noble and learned Lord, Lord Phillips of Worth Matravers, referred to precedents in the plural in oral evidence at question 310 on page 154. We did not investigate that; we have not investigated any of this material. The other aspect is the way in which we will be regarded as a profession in other countries? We have evidence from only one country within the European Union—Germany. An organisation representing well over 100,000 German lawyers is the federal bar regulator. In German, it is abbreviated to BRAK—the Bundes Rechts Anwalts Kammer. They are all represented by this body. It is perfectly clear from their letter that it would be quite out of the question for German lawyers, for whom independence is an absolutely fundamental, basic provision of their life and being, to belong to the organisations—of the most extreme type—being contemplated; a mixture of professions owned by shareholders who do not themselves play any part in the professional work. In Germany, you can be a shareholder, but you are expected to participate; that preserves the professional commitment throughout the firm. You do not have outside shareholders just having an investment in a firm of lawyers. We recommended, in paragraph 330 of the report, that this called for some reconsideration by the Government, because we believed that they were unaware of this provision in German law. Of course, we have not looked at any of the other systems, and so do not know what the position is there. We concluded that we could not form a view on whether the creation of these business structures would reduce or increase the number of access points, but we thought that there was an issue. We were, "““persuaded by some of the evidence suggesting that the reforms may reduce geographical availability””." Of the witnesses we saw, the Master of the Rolls, Sir Anthony Clarke, was not at all clear how it was going to work out in practice, in question 310: "““It is very difficult to see how this suggestion is going to improve access to justice””." The Lord Chief Justice was equally uncertain at question 306. We then had evidence from the Legal Aid Practitioners Group, which consists of some 600 members: the small firms and high-street solicitors. Their view, expressed in paragraph 9 of their memorandum on page 131, was one of grave apprehension about the consequences of introducing this new scheme. The Solicitor Sole Practitioners Group had 100,000 members, and expressed a similar anxiety. I shall refer to one or two observations made in this House, because I know your Lordships will want to proceed quickly this evening. I remind your Lordships, once again, of what the noble and learned Lord, Lord Woolf, said: "““For the reasons given by the noble Lord, Lord Kingsland, which were indicated by the Joint Committee, this is an untried situation. Anyone who has in recent years had the responsibility of travelling around the country in the interests of the ""administration of justice and access to justice knows that there are real problems with the availability of legal services in the country as a whole. That is particularly true in parts of Wales, where I have heard much from high-street solicitors.""““There is no doubt that large businesses could provide legal services in a novel and interesting way. But that could—unintentionally, perhaps—have a devastating effect on those who have traditionally provided services in rural areas in particular. Great care has to be exercised to see that damage does not occur””.—[Official Report, 23/1/07; col. 1057.]" The noble Lord, Lord Thomas of Gresford, spoke about this on the same day, and the problems of Wales in particular. The noble Lord, Lord Whitty, who is unfortunately not here today, said that he was particularly concerned about the effects in rural areas. That does not mean that he wanted to put a break on everything, but he felt real concern about how these arrangements would work out in these vulnerable areas. The noble and learned Baroness, Lady Butler-Sloss, said: "““I spend quite a lot of my time in the West Country, which is a rather less well off area of England where the absence of legal aid is hitting quite hard. The effect of the ABS firm may be quite dramatic in an area such as that””.—[Official Report, 6/2/07; cols. 631-32.]" The noble Baroness, Lady Carnegy of Lour, had a similar concern about her part of Scotland—which is, I suppose, off our territory. It was interesting to hear her say that the arrival of a large alternative business structure ““might wreck the system””. The noble Lord, Lord Carlile of Berriew, who is not in his place, said: "““There is a great deal of nervousness in rural areas—the situation in north Wales and mid-Wales is replicated in North Yorkshire, Cumbria and many rural parts of the country—about the effect of liberalisation of the market””.—[Official Report, 6/2/07; col. 632.]." What is there to put against that? What have the Government come back with? We expressed these anxieties in our report, but they have come back with nothing. On 6 February, the noble Lord, Lord Hunt of Wirral, said: "““I do not believe that the Government have ever responded adequately to the Joint Committee’s concerns””.—[Official Report, 6/2/07; col. 631.]" In a similar vein, the noble Lord, Lord Maclennan of Rogart, said at Second Reading: "““The rural issue has been raised, but I do not think that it has been answered””.—[Official Report, 6/12/06; col. 1202.]" My amendment asks the Government to take away Part 5 and let us have a serious report by a research body that will deal with the various aspects that I have been talking about. This House prides itself on the diligence with which it scrutinises legislation. There is no doubt that a theme in the two-day debates that we will be having next week will be that the House has special skill, zeal and rigour. Here is an example of where we should be applying them. My amendment does not halt the Bill. The Bill goes forward, but there cannot be a commencement order bringing in Part 5 until we have had a report, considered it in both Houses and followed another procedure set up under the Criminal Justice Act, which the noble and learned Lord the Lord Chancellor has in one of his proposals in the amendments we looked at today. There has to be another stage when the draft of the commencement order is brought before the two Houses, considered and approved. Noble Lords may pick up details and criticise my method, but my proposal is that we put a brake on the implementation of Part 5 until we have done some basic work in an important area that goes to the heart of protecting consumers. I beg to move.