Legal Services Bill [HL]

moved AmendmentNo. 202: 202: Clause 70, leave out Clause 70 The noble Lord said: My Lords, AmendmentNo. 202 stands in my name and that of my noble friend Lord Maclennan of Rogart. I shall also speak to the other amendments in this group. Once again, I shall not rehearse everything that was said at an earlier stage; there was a robust debate between my noble friend Lord Thomas of Gresford and the government Front Bench on that occasion. However, as we have decided to move these amendments again, I shall explain why. These clauses seek to introduce the so-called alternative business structure, but they achieve two aims that are adverse to the Government’s intention in the Bill. First, they will stifle competition where those who espouse competition very strongly—such as ourselves and the noble Lord, Lord Whitty, who I am pleased to see in his place—believe the need for competitive services is greater than anywhere; that is, for people of poorer means and people who live in areas where the provision of legal services is not substantial, such as rural areas. Secondly, the introduction of alternative business structures will directly contradict regulatoryobjective (e) in Clause 1(1); namely the encouragement of, "““an independent, strong, diverse and effective legal profession?." I urge the noble Baroness to reread every single word of that objective, including ““independent?, ““diverse? and ““legal profession?. The danger of these structures is that for those who may need them most, who sometimes have the greatest difficulty in enforcing their legal rights or in interpreting their legal obligations, there will be much less of a legal profession available. Alternative business structures have considerable attractions. It would be foolish to ignore them. But for whom do they have those attractions? They certainly have attractions for large corporate vehicles, which will wish to invest in using legal disputes as a way of bringing customers into their businesses for other purposes. Supermarket businesses, insurance companies—for example, the car insurance sector—banks and others can readily be foreseen as participants in this market. It is not that they even have to regard legal practice as a profit centre; all they will wish to do is to regard it as a customer centre from which they can earn profits, possibly in connection with legal disputes but certainly in connection with other services they can provide. For those living in rural areas it raises the spectre of the destruction of a system that, though not perfect in all its features, has worked pretty well for an extremely long time. In the sort of area in mid-Wales that I used to represent in another place there are, and always have been, small firms of solicitors in market towns, some of them combining together but always providing a choice. One of the things they are able to do with more complex disputes is to say to their clients, ““Well, if we do not have the expertise, we will go to someone who does?. Those like me and my noble friend Lord Thomas of Gresford—who by coincidence was in the same barristers’ chambers in Chester as myself for a number of years—were of course the beneficiaries of that system. That system provides competition at all levels and an expert service which is surprisingly economical when the fees are examined, as they rarely are by some of the greatest cynics. The Bar and, indeed, solicitors are the original consultancy professions. They were there long before this Government and their predecessor turned to consultancy for almost everything. What will happen in rural areas is exactly what has happened to the retail sector—the evidence is there. When I first become the Member of Parliament for Montgomeryshire, in the market town of Newtown there were butchers, greengrocers, an excellent cheese shop and an old-established ironmonger. Within a few years a large supermarket chain moved in. The cheese shop closed down 14 days after the supermarket opened. It lost both its custom and its staff to the supermarket. The ironmonger closed not much later, and the best of the greengrocers survived for not much longer. That is what happens when you allow the corporate sector to take over the kind of local services that has served the public well for a long time. Alternative business structures are attractive to barristers and solicitors because they know they can move into a large corporate vehicle where they will be cushioned from that often most unwelcome of creatures, the lay client. In normal everyday practice the lay client who comes through the door often has a rankling feeling of injustice; they complain, and they harangue sometimes. The small practitioner puts up with it, deals with them and usually finds a way of satisfying them, even if it is to say, as honest practitioners often do, ““I am sorry, there is absolutely nothing I can do for you?. They will be replaced with call centres. The lawyers will be attracted by the idea that they will deal only with the most important issues placed before them. They will be able to make policy decisions which will brush aside small housing cases, cheap divorces, small crime, small personal injury claims and so on. The public will be driven to ringing up call centres, which will offer unqualified persons giving poor-quality advice. There is the clearest evidence that that is what the market will produce because it has already done so in many other sectors. The experiment with alternative business structures, unless it is extremely carefully piloted and market-tested, is therefore unlikely to do anything but damage. It may be said, ““Oh, well of course in rural areas there are the citizens advice bureaux?, but citizens advice bureaux, although they are very good organisations, depend almost entirely on the voluntarily given expertise of those very lawyers who will disappear from local communities if alternative business structures are allowed to take hold. Alternative business structures are attractive to lawyers for other reasons. If you take the analogy of another fee-earning industry, the advertising industry, decades ago advertising agents ran, rather like barristers and firms of solicitors, small collegiate structures with a few people earning fees. Then they got the idea of going to the market, and, suddenly, we have multi-billion-pound companies that produce capital advantages for their senior partners and players. Exactly the same would happen to the legal profession. I can see enormous advantages for those of us in the profession in turning our barristers’ chambers or firms into corporate vehicles. We might even take over the supermarkets in due course as a result of the capital we would raise in the market. Rather like undertakers, we are certain to have business as the years pass because legal disputes always occur. I cannot see how that would aid the competition, much as many lawyers would like to turn their modest share in their office or their barristers’ chambers into a few million pounds worth of shares. It cannot be in the public interest to do so. Along with, for example, the Legal Action Group, which certainly has legal consumers’ interests at heart, the Legal Aid Practitioners Group and the Solicitor Sole Practitioners Group, we have taken the view that these provisions are anti-competitive and likely to destroy a significant part of the profession if not extremely carefully controlled, hence our opposition to them. I beg to move.