Legal Services Act 2007 (Appeals from Licensing Authority Decisions) (No. 2) Order 2011

Lord Jones Excerpts

Tuesday 15th November 2011 Grand Committee

[The Minister of State, Ministry of Justice (Lord McNally)]

My Lords, for the convenience of the Committee I intend to speak to the two orders together.

On the appeals order, noble Lords may be aware that the licensing regime for alternative business structures contained in the Legal Services Act 2007 became operational on 6 October. In relation to that regime, the Law Society has had its application to become a licensing authority approved by the Legal Services Board. In accordance with the 2007 Act, before the Law Society can be designated as a licensing authority by order of the Lord Chancellor, it is necessary for there to be an appellate body with the power to hear appeals against its decisions made in relation to alternative business structures.

The purpose of this order is to modify the functions of the Solicitors Disciplinary Tribunal—known as the SDT—so that it can perform that function, subject to its designation as a licensing authority. As required by the 2007 Act, this order is made on the recommendation of the Legal Services Board following wide consultation and with the consent of the SDT and the Law Society.

In summary, the order makes provision for the SDT to hear and determine: decisions which are appealable under Part 5 of the 2007 Act and under the Law Society’s own licensing rules; the orders which the SDT may make, where that is not already provided by the Act itself; the orders for costs in relation to those appeals; and onward appeals from the SDT to the High Court. The set-up and operating costs of this SDT appeal mechanism will be funded by the Law Society and met by the licence fee payable by licensed bodies.

The Law Society has elected to use the SDT rather than the First-tier Tribunal as its appellate body because it wanted a consistent approach to appeals by all the firms which it regulates—both alternative business structures and traditional firms—and because the SDT has a wider discretion than the First-tier Tribunal to award costs. During a previous debate in the summer, noble Lords expressed concern about different licensing authorities using different appellate bodies to determine appeals from their licensing decisions. I think that point was made by the noble Baroness, Lady Hayter. I can see merit in using one appellate body for all appeals relating to alternative business structures, and that has also been the Legal Services Board’s preference. However, the structure of the 2007 Act means that the Legal Services Board can only recommend appeal routes to which the prospective licensing authority and the proposed appeal body consent. Therefore, licensing authorities cannot be forced to use a particular appeal route.

The Legal Services Board made its recommendation on the Law Society’s appeal route to the Lord Chancellor in August, and this order has been brought before the Committee at the earliest opportunity. As I have already said, the Legal Services Board originally consulted on a proposal that there should be a single appellate body to hear decisions of all licensing authorities and proposed the First-tier Tribunal for that role. However, the Law Society did not consent to that proposal and elected to use the SDT as its appeal body. The consequences of this decision impacted on the timing of the Law Society’s designation as a licensing authority and were explained to the parties concerned at the time.

Following the Law Society’s decision a new draft order was prepared and, in accordance with the statutory requirement, the consultation on the order was undertaken by the Legal Services Board. That consultation was completed in June and the order was finalised shortly after, but not in time for consideration by this House before the Summer Recess. Without the appeal arrangements being in place, it was not possible to designate the Law Society before the commencement of the alternative business structures regime in October. If approved, the order will provide the individuals and businesses affected by the Law Society’s licensing decisions with an opportunity to challenge these decisions through an independent and impartial appellate body.

I will now turn to the exceptions order. This is the second exceptions order to be laid this year. The purpose of this amendment is to extend the exceptions to the Rehabilitation of Offenders Act 1974 to include non-authorised persons with a restricted interest in alternative business structures—a point originally raised when we last discussed this by—

[Lord Jones]

The Minister has already referred several times to consultation. Perhaps now, or in his summing up, he will give any instances of consultation in Wales and with whom consultations may have been taking place.

--- Later in debate ---

[Lord McNally]

My Lords, I thank the noble Lord, Lord Bach, for that response. He is always very kind about how clear and thorough I am in explaining statutory instruments. He knows as well as I do that it is only because of the hard work of the people who sit behind me. I am very pleased that the noble Baroness, Lady Hayter, and my noble friend Lord Dholakia thanked the Ministry of Justice and the LSB for their work on this. It is exciting. I pay tribute to the previous Government. The alternative business structures will produce changes which, I suspect, will be mainly to the benefit of the consumer in the provision of legal services. What we are trying to do with these orders is to put the last pieces in place to allow them to function.

The noble Lord, Lord Bach, and the noble Baroness, Lady Hayter, both expressed the concerns that were reflected during the last debate—that we have not got a single route here, in that the solicitors have decided to have their separate body. Whether it will cause the problems of a lack of consistency, we will have to see. What I can assure noble Lords is that the LSB will be carrying out further work, and looking at appeal arrangements, and the MoJ will be working closely with the LSB in relation to this. I also understand the question put by the noble Lord, Lord Bach: have we gone too narrow in this extension? As I explained, I do not think we have. However, let us see. The concern expressed last time was that the alternative business structures may allow criminal elements in that would corrupt the new structures. We listened in this Committee and have brought forward extensions, and now think that we have got things right. Again, the LSB will follow the new structures as they go in. So far, only one new alternative business structure has been announced. The Co-op has beaten Tesco; perhaps it should now be called Co-op law rather than Tesco law.

This is an exciting development for which the previous Administration can take credit and which we have been pleased to help bring into being. We will discuss legal services in general in more detail when we get to the Legal Aid, Sentencing and Punishment of Offenders Bill in a short while. However, as the noble Lord, Lord Bach, and I have discussed before, legal services in general are in flux. The ABSs will provide an exciting new dimension to them.

On the question asked by the noble Lord, Lord Jones, I can only draw his attention to the fact that the consultations were carried out by the Legal Services Board for England and Wales and the Law Society of England and Wales. I am sure that both bodies carried out their consultations across the geographic areas of their responsibility. If he can draw to my attention the case for them not doing that, I will be happy to follow it up. However, since they are both bodies that have an England and Wales dimension and were both charged with wide consultation, my understanding is that they will have consulted in Wales.

[Lord Jones]

I am grateful to the Minister for fielding my query. I content myself with the reminder to him: he is the Minister and he will do the work.

[Lord McNally]

I will write to the noble Lord.

[Lord Jones]

I am grateful.

Motion agreed.