Legal Services Act 2007 (Functions of a Designated Regulator) Order 2008

I join in congratulating the noble Lord on his appointment and I look forward to dealing with him frequently on Ministry of Justice matters. At the same time, I commiserate with him for having to take on board the Legal Services Act 2007, which is a highly contentious Act, particularly in the area in which he is now putting forward this order. I do not suppose that when the noble Lord joined the Labour Party he ever thought that he would be supporting fat cat, international and City lawyers against the high street practitioner, who is no doubt familiar to him from where he comes from, as it is familiar to me having been a high street solicitor in my day. The Law Society’s briefing on this gives the game away. It states: "““The Law Society and the City of London Law Society””—" note that it is the City— "““consider that this restriction””—" the one outlined by the noble Lord— "““will have a specific impact on large and international law firms. Furthermore, with the advent of Legal Disciplinary Practices and in turn Alternative Business Structures, it is likely that firms will wish to innovate with more complex corporate structures. It would be a lost opportunity if law firms were unable to compete as effectively both nationally and globally by virtue of an inadvertent technical error””." So the proposal supported by the Law Society is not supported in the interests of the consumer in the rural areas, the people who may be put out of business by the introduction of alternative business schemes and the legal disciplinary practices envisaged. I share the interest of the noble Lord, Lord Henley, in the Explanatory Memorandum and how full it is. It is full because it contains all kinds of verbiage in order to conceal the precise reason why the order is being brought forward. It includes a revealing extract from Chapter 5 of the Legal Services Bill Full Regulatory Impact Assessment, first published in November 2006, with a supplementary memorandum in 2007. When that was considered in the regulatory impact assessment it was stated: "““There is a risk that the anticipated increase in the level of competition in the legal services market could lead to the withdrawal of some inefficient suppliers of legal services from certain areas of the market””." That is, your high street family solicitor. It goes on, "““In particular, inefficient suppliers on local high streets and in rural areas may be forced to close down under the pressure of greater competition from lower cost providers. This raises the potential risk of reducing consumer choices and could have an adverse effect on access to justice””." That was the argument that the Liberal Democrats put forward during the passage of the Bill. It is all very well permitting large firms to come into the market and provide capital when they are not lawyers so as to put out of business the lawyers who currently provide services. I know that north Wales in particular is an area served by the high street. The local supermarket, the AA or organisations of that sort, which have absolutely nothing to do with the provision of legal services or with law, may come forward and provide capital that the partners in large firms will eagerly grasp. The large firms of 200 or 300 partners will happily sell out a share and take the money from large organisations, but you cannot do that if you are a small local solicitors' office. To say that these are innovations in the legal services market driven by greater competition, leading to new ways of legal services being delivered to consumers in rural areas, is just marketing speak; it has nothing to do with how the legal profession should organise itself. There was an attempt in that regulatory assessment to say that if you bring in outside firms, such as supermarkets or insurance companies, to provide legal services on the side, you will widen the opportunities for more women and people from lower income groups and different ethnic groups. I do not believe that; that is just being—to use a phrase that is over-used—politically correct, by going to these areas and saying that we will do a great deal more for these people. So what is the order all about? It amends an Act of Parliament. Let us realise its significance; it is not just the ordinary type of order, but one that actually changes the Act of Parliament that was passed, despite Liberal Democrat opposition, in 2007. That is its purpose. Why does it want to do that? Because it got it wrong. As the Explanatory Memorandum says, there are too many legally qualified persons required under Section 9A of the amended 1985 Act, which, in dealing with the legal disciplinary practices, still required that outside influences be limited to 25 per cent of the firm. That meant that the existing arrangements under the 1985 Act were being superseded in a way that did not appeal to the large corporate solicitors’ firms to which I have referred. Let us make no mistake about it, this changes an Act of Parliament in favour of the big guns and against the interests of the local solicitor who provides services to people on the ground. I am putting down a marker to see how legal services operate in the next five or 10 years. It may be that the Law Society and the City of London are onside, but I want to see whether the services provided to ordinary people throughout this country, outside the conurbation of London and outside commercial lawyers, will be affected. I believe that they will and that there will ultimately be a reaction against the changes introduced by the 2007 Act and these additional changes to that Act made by this side wind. Of course, today we are considering only the draft order—and we, the Liberal Democrats, will have to consider how we approach the full order when it comes before the House. Again, let me welcome the noble Lord, Lord Patel, into this hornets’ nest, and I hope the buzzing is not too loud to drown out what I am saying.