Legal Services Bill [HL]

My Lords, I am grateful. I am only sorry for the noble Lord, Lord Neill of Bladen, that the late hour means that his words fall on few ears. I am sure that noble Lords will none the less read our debate with interest. I agree with the sentiments expressed by noble Lords: this is an important debate on Part 5. I agree that we should proceed cautiously with the development of alternative business structures. My principal concern is with doing more research, as the amendment requires, and the value that that would bring to our deliberations. Building on the excellent work of Sir David Clementi and working with stakeholders, we have obviously thought about and carefully reviewed the ABS proposals. That work was of course informed by the work of the Joint Committee on the draft Bill, chaired—““so ably”” it says in my notes, but I agree—as noble Lords will know, by the noble Lord, Lord Hunt of Wirral. The debates on this matter have been both informed and occasionally lengthy, but none the less important. The difficulty with further research is that, in a sense, it takes us into a slight Catch-22. I have provided the noble Lord, Lord Neill of Bladen, with information about the different approaches overseas. He rightly talks about New South Wales, where they have been looking at alternative business structures. We are interested in developments in other jurisdictions. He talked about the firm floated on the stock exchange there. There was recent publicity about the Australian firm Slater & Gordon, saying that it plans to be one of the world’s first law firms to float on the stock exchange; the first was actually in 2004. Monitoring the effect of this sort of change on the Australian market and consumers is important, but I stress that what happens in one country is unlikely to exactly map across to another. The different safeguards make comparisons difficult, and services offered by firms in one jurisdiction may differ from other jurisdictions and ABS firms here. Although it is important to be aware of developments in other countries, that is not how to drive the development of alternative business structures in England and Wales. That does not mean that the noble Lord’s concern should not be addressed. Indeed, the amendments accepted by your Lordships’ House on the second day of Report, 18 April, are important: the requirement for licensing authorities to publish policy statements, setting out how they would satisfy their Clause 24 objectives—including, importantly, access to justice when granting ABS licences. Government amendments introduced a duty for the board’s annual report to deal with how the activities of a licensing authority and licensed bodies have affected the regulatory objectives, again including access to justice. That is the right approach to monitoring. Placing the duty on the Legal Services Board avoids fragmentation and maintains a central oversight of the regime’s impact by the LSB. There is no disagreement between us over the need to recognise and minimise risks. However, I remain concerned that requiring more research at this stage adds little. It seems attractive to look at other jurisdictions where ABS has been allowed but, as I have indicated, the potential for learning from them is limited. Noble Lords talked about the German BRAK. On a recent overseas visit, I heard that the German Parliament is looking to legislate in this direction. The relationship between the reaction of the German BRAK and what is happening in Germany may be relevant to our deliberations, but it looks as if Germany may be heading in the same direction. We will have to find more information because that was new to me, but it appears to be the case. To draw conclusions about the factors covered in the amendment would be difficult because there is not an ABS in operation. Parliament would find it difficult to draw any conclusion or take a decision to commence Part 5, because there would not be any evidence. It is a Catch-22; unless we work on alternative business structures we cannot ascertain how successful they have been, and without that how can Parliament make a decision on research that cannot possibly exist? The difficulty that I have is that we have given the noble Lord, Lord Neill of Bladen, all the information that we have. We will proceed with caution; that is absolutely right and proper. We intend to monitor effectively; we have tabled amendments to that effect based on what the noble Lord, Lord Kingsland, said in Committee on the importance of thinking about monitoring. I accept all the concerns about rural communities. ABS licences can have conditions within them that could make sure that those seeking advice on childcare proceedings or those in rural communities can be well protected. I endorse that approach. That is why I endorse the need for information on how all the regulatory objectives have been met including, importantly, access to justice. The safeguards that we have in the Bill recognise the risks and concerns. We are confident that we can get ABS development at the right pace and in the right direction. I know that the licensing authority will take into account the concerns raised, and will have to have regard to policy statements. As I have already said, your Lordships’ House has agreed that the LSB should be under a duty to report annually on how ABS licensing affects regulatory objectives. With respect to the noble Lord, Lord Neill of Bladen, that will be more effective than the amendment. It will be based on what is happening on the ground rather than a theoretical set of assumptions on alternative business structures which do not exist. We will achieve what he wants, which is to make sure to do this in a measured and constructive way, but we need to begin the process in order to ascertain that. The safeguards that we have accepted within the Bill will make sure that noble Lords’ concerns will be met. On that basis, I hope that he will withdraw his amendment.