Legal Services Bill [HL]

My Lords, exactly. As the noble Lord, Lord Carlile, said, that is the end of the flattery—but it was, none the less, heartfelt. The noble Lord, Lord Hunt, eloquently returned to an issue that we looked at in Committee. The question is the Law Society’s ability to regulate practices with up to 25 per cent non-lawyer control without the need for those practices to be licensed under Part 5, and he has set out why he thinks that this is important. Amendments Nos. 311A, 311B, 311C and 632A, tabled with the support of the Institute of Chartered Accountants in England and Wales, would make similar provision for bodies with 25 per cent non-lawyer professionals, albeit that they would be low-risk bodies under the alternative business structure framework, rather than exempt from the framework. The amendments would also provide that firms with non-lawyer partners or members who do not provide services to clients should not require those licences. I hope that by this stage in our deliberations noble Lords will accept that I support the creation of practices that have non-lawyers as managers, or which combine the expertise of different professionals in the provision of services. I welcome very much both the Law Society and the Institute of Chartered Accountants facilitating and regulating such practices. I have said on many occasions that increased opportunities to leverage non-lawyer expertise into the legal services market is certain to create advantages both for consumers and for providers. What I cannot accept is exemption from Part 5 altogether for regulated practices within the proposed boundaries, which would go against a key principle of the Legal Services Bill and our proposals for alternative business structures. Our policy is to create, as far as is possible, a level playing field between regulators, offering all the potential to become licensing authorities. We could risk the opposite outcome. I know that that is not the intention of the noble Lord, but I do not wish to endorse a provision that gives one regulator a potential competitive advantage, first, by virtue of reaching part of the alternative business structure market before other regulators and, secondly, by avoiding the additional statutory requirements that would otherwise apply to these practices. I also do not want to endorse a proposal that gives a competitive advantage to non-lawyers who are regulated professionals, particularly given the concerns that conflicts between professional rules may be one of the most complex challenges for those involved in alternative business structures. So I am opposed in principle to exemptions and carve-outs from the Part 5 regime. Certain forms of exemption may, arguably, facilitate an incremental approach in the short term; in the longer term, however, we run the risk of creating loopholes and possible confusion. We have tried in the Bill to make a clear, principled distinction between two types of practice. A body either has non-lawyers in positions of control or it does not. Consequently, it is either a licensable body or it is not. As I have stated, in the framework we have already provided for flexibility as far as low-risk bodies and other special bodies are concerned, but we have set 10 per cent as a maximum level on the basis that we think that control above that level becomes too significant to benefit from lesser scrutiny. In principle, the Government’s policy is that bodies with non-lawyer ownership or management should be subject to the safeguards of Part 5. Therefore, if we were to make an exception for Law Society practices, such practices could emerge without any need for the Legal Services Board to designate the Law Society as a licensing authority. It would not be required to fulfil the relevant obligations. That is not to say that the Law Society would or could not create similar safeguards, but we would have no guarantees in statute. We would run the risk of exposing consumers to inconsistent levels of regulatory protection and we would not have, at least for several years, any board of supervision. I have similar objections to any exemption for bodies with non-lawyer partners, client-facing or otherwise. I hope that the noble Lords will agree that it is crucial that we get this right from the outset. The incremental approach suggested by the noble Lord, Lord Hunt of Wirral, would be of little value if it could not be monitored and supervised by the board and if it proceeded with none of the safeguards that we have identified as essential to support alternative business structures. With the greatest respect to the noble Lord, I do not think that what he suggests quite fulfils the objectives set out by Sir David Clementi.