Legal Services Bill [HL]

My Lords, this has been a short but extremely interesting debate and I am grateful to the noble Lord, Lord Neill, for allowing us to discuss the matter. Perhaps I may say that he looks as lively and fresh as ever while bringing this issue back to our attention, and the challenge is for me to assure the House that with the implementation of the Bill, particularly alternative business structures, there will be monitoring and evaluation. There has been an element of a Second Reading debate on the principle of ABS and I shall not go down that path too far, but I should say that the Government do not believe that this is about responding to fat cats who want to make a lot of money; rather it is about ensuring that the public will benefit. We think that there are real advantages in enabling firms to offer a mix of legal and other services. ABS will bring innovation and new ideas to firms, including dealing with some of the challenges described by the noble Lord, Lord Thomas of Gresford, for rural practices. I shall say again that as the Minister responsible for legal aid, I am as concerned as anyone in the House to ensure that there is adequate, good quality coverage throughout the country. The structures that ABS will bring in will allow for that to happen. Before I turn to the questions of research and the sunrise clause, we think that the Bill contains safeguards to prevent improper influence by non-lawyer owners and managers as a result of commercial pressures such as debt. Under Clause 90, non-lawyers are expressly prohibited from causing lawyers to breach their professional conduct duties, such as acting in the best interests of their clients, and lawyers are under a statutory duty to comply with professional conduct rules. On certainty over ownership, my advice is that the provisions in the Bill are robust, having been modelled on the provisions that are effective in the financial services sector. On the question of shareholder influence, lawyers’ professional conduct duties are fully protected. As I have said, non-lawyers, shareholders, managers and employers are prohibited from causing breaches of lawyers’ duties, and can be disciplined or even prohibited from future involvement in alternative business structures if they violate the prohibition. The noble Lord, Lord Neill, asked about the attitude adopted in other countries. I do not have information about whether ABS structures are used in other member states, but the main point to make is that ABS is facilitative. If similar structures are not allowed elsewhere, ABS firms based in this country will need to take account of that when considering whether to expand abroad. If there is a problem, they can set up alternative organisations that comply with local rules. However, on the substantive point, my understanding is that there are no international laws or obligations which make the regulatory framework we are proposing incompatible with them. Just in time, I understand that legal services providers in New South Wales have been permitted to incorporate and provide legal services to clients either alone or alongside other service providers who may or may not be legal services providers, and other Australian states are apparently following the lead of New South Wales. It is not often that I quote Australia as an example of good practice, but on this occasion I do so. I can reassure the House that the Legal Services Board has a duty to report annually on how it has met the regulatory objectives, as well as approving and monitoring licensing authorities’ policy statements. Clause 110 adds a specific requirement that the annual report must address the effect of ABS activity on the regulatory objectives. So there will be full scrutiny of the development of alternative business structures. I know that noble Lords will want this matter to be kept under full review, and the statutory provision making it the duty of the Legal Services Board to report annually will ensure that this is done. The noble Lord, Lord Neill, has asked me to say that ABS will be kept under close review, their economic effects monitored, and that there will be reports. I am happy to give an assurance that all that will be undertaken, and I hope that with it, the noble Lord will not press his amendment. To do so would unnecessarily fetter the development of these structures and the services they can offer when the provisions of the Bill come into force. However, I fully accept his challenge on the need to ensure that we keep this issue under review.