Legal Profession: Regulation

Lord Hunt of Kings Heath Excerpts

Monday 3rd December 2012 Lords Chamber

[Lord Hunt of Kings Heath]

My Lords, this has been a very interesting, although short, debate. At the moment we are thinking very much about regulation of the media. Whatever the outcome of the current debate, in most sectors of the economy it is generally accepted that there should be statutory regulation of the affairs being conducted within them—and, where the professions are concerned, by the individuals who practise in that sector. However, there is much less consensus about the right regulatory approach.

The noble Baroness, Lady Deech, said that circumstances had changed considerably in the past decade since the architecture of the 2007 Act was formed—and, indeed, many years after the noble and learned Lord, Lord Mackay, first put his mind to these rather difficult subjects. She was right to say that the economic climate is different, both in the country and for the profession; and she was surely right, too, when she pointed to some of the experiences of regulators in other sectors. She mentioned financial services. I will mention the health service sector, where the existence of the long-standing—almost long-running—inquiry into Mid-Staffordshire has moved on from what happened in the hospital to look at the role of the various regulatory bodies, and at whether collectively they did the right thing or whether there were gaps, shortcomings or tensions between them.

It is absolutely right for us to have this debate and to discuss regulation within the legal profession. I am sure that the Government will welcome the opportunity to state their views and perhaps to reflect on some of the comments that have been made about the need for them to think in the next two or three years about how to take their views forward. I listened with great interest to the comments of the noble Lord, Lord Phillips, on ownership structure in the profession. I readily recognise that there have been huge changes over the past decade. However, in my experience of the National Health Service, doctors in particular as well as other parts of the profession are able to maintain professional standards within a large organisation. I am not persuaded that it is impossible within new ownership structures for there none the less to be a strong ethos that will be very much underpinned by the principles set out in the 2007 Act, and by the regulatory framework that comes from it.

[Lord Phillips of Sudbury]

Does the noble Lord not have concerns that an organisation that buys lots of law firms is likely to be interested only in what it can screw out of them? That is not consistent with any view of professionalism.

[Lord Hunt of Kings Heath]

Of course, in the development of the kind of organisations to which the noble Lord refers, profit will be a core concern. However, one could look to other sectors where people are involved in seeking profit and point to professionals who practise to the highest quality, usually underpinned by regulatory functions. I do not subscribe to the noble Lord’s view that ownership structure per se will change the professional ethos of people working in the sector. I understand his concerns on the matter, but surely he will recognise that even if you are working in a sector where the objective clearly is profit, it is still perfectly possible to act in a responsible and ethical way. Even before the ownership structure changes, it was my understanding—although I am a novice in these matters—that barristers none the less would seek to earn good income if they could.

[Lord Phillips of Sudbury]

I am most grateful to the noble Lord for seeing that I was hovering. Lawyering is a very particular business. It is not like manufacturing tins of beans. It has all sorts of social and ethical issues at the heart of it. Unless you can allow a lawyer to give full vent to his or her social purpose, the position of the lawyer as the gatekeeper to justice is impeded.

[Lord Hunt of Kings Heath]

Having been a Member of your Lordships’ House for 15 years, I now recognise the special characteristic of lawyers, and I rejoice in it. I have only five minutes left and perhaps I ought to press on.

Clearly it is important to ensure that professional regulation works effectively. It should not be overly bureaucratic and it should uphold the independence and integrity of the profession. We should be very proud of the whole legal services profession in this country, the fact that it is recognised globally and that legal services are a huge export for this country. Clearly we should do nothing that undermines the strength of the legal services industry in that regard.

I supported the passage of the Legal Services Bill in 2007. Although the Legal Services Board has come in for some criticism in your Lordships’ House tonight, we should recognise the progress made by the board under the chairmanship of David Edmonds. We should also recognise that the board will be publishing its inaugural assessment of the effectiveness of each of the approved regulators, including the Solicitors Regulation Authority and the Bar Standards Board. It might have been better if this debate had been timed after we had seen the outcome of these arrangements.

The triennial review to which the noble Lord, Lord Gold, referred has suggested that there is a continuing role for both the Legal Services Board and the Office for Legal Complaints. The next review will take place in 2015. The suggestion by the Bar Council and a number of noble Lords for post-legislative scrutiny, which I would always support as a matter of principle, might be better timed to coincide with the next triennial review around the 2015 mark so the two might run concurrently.

I have noted noble Lords’ concerns, and particularly the Bar Council’s concern and criticism of what they describe as mission creep by the Legal Services Board, citing micromanagement, duplication and overlap of regulatory activities and unnecessary cost. These have to be guarded against. I understand the total cost of the LSB start-up and first three years’ running costs of just under £20 million is not insubstantial, although it is modest compared to many other regulatory bodies. The noble Baroness, Lady Deech, commented on examples of where the LSB is considered to have gone overboard, and mentioned equality and diversity data collection. My understanding is that the LSB—as it saw it—gave best practice advice on how that collection could be done anonymously and made it clear that there should be no compulsion on individuals to take part. The consultation was explicit that the reason for going beyond the blanket survey was so that clients and potential employees could see the diversity make-up of individual firms and chambers. I am not going to argue one way or the other, but it is important that we also hear the viewpoint of the Legal Services Board. We have tended to hear from one side.

[Baroness Deech]

My Lords, perhaps I might explain in response to the noble Lord. There is obviously no objection to collecting diversity data across the entire profession of 15,000; the Bar has done it for a while. It was difficult to collect data from chambers where there were perhaps only 10 people. Even if it is anonymous, identifying someone by ethnicity or sexual orientation would of course be very easy. Because a unit is so small, that encourages people not to participate. I am afraid that our practical arguments in that respect were simply rejected, with the outcome, I believe, that rather fewer data are collected than might have been the case if we had been able to organise it ourselves.

[Lord Hunt of Kings Heath]

My Lords, I am sure that the House is very grateful to the noble Baroness for that explanation. As I said, I do not seek to argue one way or the other. However, I suggest that in any debate on these matters, it is important that the views of both bodies are heard by your Lordships’ House.

[Lord Goldsmith]

My Lords, in those circumstances, I wonder why my noble friend does not agree that when you have the sort of comment that has come from a regulator—from the noble Baroness, Lady Deech—saying there is a problem, he does not now support a review to see whether there is a problem or not.

[Lord Hunt of Kings Heath]

I am most grateful to my noble and learned friend for that remarkably helpful intervention. We have just had the triennial review by the Ministry of Justice. Another one will take place in three years’ time. The Bar Council has put forward the proposal that there should be post-legislative scrutiny, and again, I have no doubt that your Lordships’ House will want to give that every consideration, because most noble Lords strongly support the concept of post-legislative scrutiny. The question is when it would be best done. I suggest that it might be best done in parallel with the 2015 triennial review, which would allow a little more time for both these bodies to see if they can meet together and work out a more constructive relationship. That ought to be the outcome of both tonight’s debate and discussions between the two bodies.