Damages-Based Agreements Regulations 2013

Lord McNally Excerpts

Tuesday 5th March 2013 Lords Chamber

Moved by

[Lord McNally]

That the draft regulations and orders laid before the House on 14 and 21 January be approved.

Relevant documents: 16th and 17th Reports from the Joint Committee on Statutory Instruments, considered in Grand Committee on 26 February.

Motions agreed.

Probation Service: Community-sentenced Offenders

Lord McNally Excerpts

Tuesday 5th March 2013 Lords Chamber

[Lord Ramsbotham]

To ask Her Majesty’s Government whether the management of community-sentenced offenders will remain the responsibility of the Probation Service.

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

My Lords, the Transforming Rehabilitation consultation by my department closed on 22 February and we are now considering our response. We have proposed opening up the market for rehabilitation services to a more diverse range of providers, but the public sector will retain ultimate responsibility for public protection and will manage directly those offenders who pose the highest risk of serious harm to the public.

[Lord Ramsbotham]

My Lords, I thank the Minister for that reply. Last week, the Justice Secretary appeared before the Justice Select Committee in another place and said that we have a duty to supervise offenders in a consistent way and that he wanted to make the probation world more independent of Government and the big bureaucratic documents that tell them how to do their job. For 100 years until recently dissolved by its subordination to prisons, the probation service, in partnership with the police and the courts, was responsible for the consistent supervision of community-sentenced offenders independent of such interference. Can the Minister tell the House how the Justice Secretary’s proposed division of responsibility for the supervision of different types of offender between probation and an unknown number of untried private and voluntary sector organisations will better honour his duty of consistency?

[Noble Lords]

Hear, hear!

[Lord McNally]

I hear the growl from the Benches opposite, but it is interesting that we are using the 2007 Act to carry through these reforms of probation, so they are not exactly being original in terms of how we should develop these matters. I do not take fully the point made by the noble Lord about going into the unknown. The fact is, as those noble Lords opposite who have had dealings with these matters will know, that the voluntary and the private sectors have been involved in offender management for a very long time. We are trying, within a very tight budget, to see whether we can reform the probation service and dealings with offenders in order to bring in the best of what works outside. It has been interesting to learn that good ideas on offender management are not constrained simply to the probation service. As I said in my original reply, the public sector has ultimate responsibility for public protection, but we think we can deliver a reorganisation that also makes use of the wide variety of experience and expertise that exists in this area.

[Baroness Smith of Basildon]

My Lords, I have listened carefully to the answers given by the Minister. He will be aware that one of the most important things for the probation service is that there is public confidence in the work that it does. Part of that public confidence comes from the transparency of having information about the work that it does, and understanding what works and what is most effective. In his Answer, he said that the public sector has the ultimate responsibility. Does that mean that all services, even those outsourced to private companies by the Government, will still be subject to freedom of information?

[Lord McNally]

That is one from left field. I will have to check on that and write to the noble Baroness. However, as she knows, my inclinations are that, as far as possible, freedom of information should extend to all work that is conducted by the private sector, or is covered by the contractual agreement between the public and private sectors, which would allow access to information. I understand the point she makes, and will write and make the letter available to the House.

[Baroness Hamwee]

My Lords, the probation service is widely admired for its professionalism and general excellence. What ideas do the Government have to make sure that we not only do not lose those but indeed capitalise on them?

[Lord McNally]

My Lords, at no stage—either at this Dispatch Box, in private meetings or in any other meetings elsewhere—have I ever said anything other than that I am in awe of the work that our probation officers do. It will remain a matter of concern that we get the balance right between our public probation service and the new ideas, initiatives and ways of doing things that we hope this rehabilitation revolution will bring about. I personally hope that one of the outcomes of this rehabilitation revolution will be a probation service that is enhanced in public respect and public confidence. Indeed, I would look to the day when we have a chartered institute for probation, with the same kind of professional status as other professions.

[Lord Elystan-Morgan]

My Lords, the Minister speaks of a new way of doing things. Is it not the case that when legislation was passing through Parliament, we were told that certain bonuses of a financial nature would be paid to those supervising the system, based on success? Will there be an aliquot penalty in the case of failure? In the case of success, what will be the indices of performance in respect of which success will be judged and at what level?

[Lord McNally]

My Lords, part of the exercise is what is roughly called “payment by results” for those that take on these undertakings if they manage to achieve a rehabilitation, which means people not reoffending within a specific time. Part of the problem we face is that nearly half of offenders leaving prison reoffend within one year. We hope that the system will incentivise those providing services to think creatively about rehabilitation. The worst thing for victims and the taxpayer is this revolving door, which successive Administrations are faced with and which, I believe, the rehabilitation proposals we are bringing in give us a real chance of breaking into.

[The Lord Bishop of Leicester]

My Lords, given the proposals—

Freedom of Information Act 2000

Lord McNally Excerpts

Wednesday 27th February 2013 Lords Chamber

[Lord Wills]

To ask Her Majesty’s Government what plans they have to amend the Freedom of Information Act 2000.

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

My Lords, the Government intend to amend the Act to give the Information Commissioner more time to prosecute alleged offences under Section 77 of the Act and introduce a dedicated exemption for prepublication research. Other parts of our response to post-legislative scrutiny will be implemented through secondary legislation codes of practice and guidance.

[Lord Wills]

My Lords, I very much welcome what the Minister has just said about giving the Information Commissioner new powers but I hope he will recognise that suggestions have been made by other Ministers—not this Minister, whose commitment to freedom of information is exemplary—that they will tighten the Act. I hope this Minister will recognise that tightening the Act in the way that has been suggested will damage transparency. He will recall that the previous Government at one point proposed to increase fees for accessing freedom of information requests and then dropped the proposal when they realised the damage that that would do to transparency. Are the Government now downplaying that risk to transparency, and doing so at a time when the Francis report into Mid Staffordshire shows just how dangerous damaging transparency can be?

[Lord McNally]

My Lords, it is true that we are looking at other aspects of the post-legislative scrutiny through secondary legislation. However, I can assure the noble Lord that my commitment, and the Government’s commitment, to transparency and freedom of information, which I see as twin tracks of government policy, remains as steadfast as it has always been. Ideas and information about other aspects of the post-legislative scrutiny fully justified the exercise and I compliment my right honourable friend Sir Alan Beith and his committee for doing an excellent job. It has done much to embed freedom of information in our political culture.

[Lord Dubs]

My Lords, I speak as a committed supporter of the Freedom of Information Act but there seems to be an anomaly. Would it be possible when there is a freedom of information request to know who has made that request?

[Lord McNally]

It is something that was considered by Sir Alan’s committee and recommended as a good idea. It has its attractions, but it also has its downsides. On balance, the Government decided to retain anonymity for freedom of information requests because they felt that not doing so would inhibit people coming forward with such requests.

[Noble Lords]

Oh!

[Lord McNally]

I hear what the House is saying. It was a very tight judgment and a lot of discussion went on in government about it. There certainly was not any sinister desire by the Government to protect information. It was more a decision resulting from a very tight discussion that the idea of anonymity for those making requests was still an important principle to preserve.

[Lord Marks of Henley-on-Thames]

My Lords, the Government have been successful in extending the Freedom of Information Act in line with the coalition agreement by adding to the bodies which are subject to the Act and by providing for electronic data sets to be made available. Can the Minister assure the House that there will be no reversal of this process, and in particular, that there will be no extension of the Government’s power of veto and no further fees, particularly for appeals to information tribunals?

[Lord McNally]

I do not think I can give an absolute assurance on that. We decided to retain the veto following discussions that had gone on since the start of the freedom of information debate about whether, at the very heart of government, a safe space was needed for genuine discussions. At the moment, I am having discussions with colleagues about these ideas and principles and in due course I will inform the House and give it an opportunity to comment on this. It is always an interesting balance. We have faced this problem for a decade or more since we debated these principles in this House. Indeed, we had a very interesting debate a few months ago where a whole clutch of former mandarins gave their opinions about what is called the “chilling effect” of freedom of information. I do not accept that there is such a chilling effect, but I do accept that it is right—as is the proper intention of the post-legislative review of the Act—that we look at how the Act is working and we will come back with recommendations in the areas raised by my noble friend.

[Baroness Uddin]

My Lords, further to the question of my noble friend Lord Dubs, does the Minister not accept that his response and the Government’s current position on freedom of information are flatly contrary to the position of openness and transparency in protecting those who ask the questions and not protecting at any level those who are being asked the questions? Does he not accept that this is totally contrary to the principles and ethos of the Freedom of Information Act?

[Lord McNally]

On the contrary, my Lords. If you are asking questions of power, there is some reassurance in the fact that the system giving you the right to ask those questions allows for anonymity. It certainly is not an abuse of power; it is rather, as the debates have shown over the years, that anonymity gives protection and encouragement to those who want information.

[Lord Lloyd of Berwick]

When the Government receive, as they do from time to time, independent legal advice, is there any reason why that advice should not be made available under the Freedom of Information Act? Should there be an absolute rule against independent legal advice being made available?

[Lord McNally]

Whenever the noble and learned Lord rises to his feet, a certain tingle goes down my spine—doubly so when he is asking about a matter legal. I am not sighted on that entirely and I would feel far safer if I were to take advice and write to him.

Conditional Fee Agreements Order 2013

Lord McNally Excerpts

Tuesday 26th February 2013 Grand Committee

Moved By

[Lord McNally]

That the Grand Committee do report to the House that it has considered the Conditional Fee Agreements Order 2013.

Relevant documents: 17th Report from the Joint Committee on Statutory Instruments.

Motion agreed.

Criminal Legal Aid (Determinations by a Court and Choice of Representative) Regulations 2013

Lord McNally Excerpts

Tuesday 26th February 2013 Grand Committee

Moved By

[Lord McNally]

That the Grand Committee do report to the House that it has considered the Criminal Legal Aid (Determinations by a Court and Choice of Representative) Regulations 2013.

Relevant documents: 16th Report from the Joint Committee on Statutory Instruments.

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

My Lords, I shall speak also to the draft Legal Aid (Information about Financial Resources) Regulations 2013 and the draft Civil Legal Aid (Costs) Regulations 2013.

The draft Criminal Legal Aid (Determinations by a Court and Choice of Representative) Regulations 2013, which are being made under the Legal Aid, Sentencing and Punishment of Offenders Act 2012, replace relevant regulations in the Criminal Defence Service (General) (No.2) Regulations 2001, made under the Access to Justice Act 1999.

The regulations mirror the Access to Justice Act regulations in effect, although there are differences in terminology and structure. For example, the regulations refer to making a determination that an individual qualifies for legal aid, rather than to granting a representation order following a decision that an individual qualifies. This change of terminology is made only to reflect amended wording in the Legal Aid, Sentencing and Punishment of Offenders Act 2012, which I will refer to from here on as LASPO.

Operational practices will not need to be altered in any way as a result of the regulations. The key change is that under the Access to Justice Act 1999, the default position is that a court makes a decision that an individual qualifies for legal aid, unless specified otherwise in regulations. However, due to the rollout of means testing in the magistrates’ court and subsequently the Crown Court, the circumstances in which a court may grant legal aid have been gradually reduced. LASPO reflects this shift, and the default position is that it is for the director of legal aid casework to make a decision that an individual qualifies for legal aid, unless otherwise stated in regulations. The regulations set out the limited circumstances in which a court can make a decision that an individual qualifies for legal aid. That merely codifies current practice.

The regulations also limit the circumstances in which an individual can select a representative of their choice in criminal proceedings, and set out the specified circumstances in which a court can permit an individual to select enhanced representation. The regulations specify the circumstances where the court may permit an individual to select a different provider to the provider selected by a co-defendant.

In relation to advocates, the regulations generally provide that individuals may not select an advocate in proceedings before a magistrates’ court, and set out circumstances where the court may permit an individual to select an advocate in the magistrates’ court. The regulations also provide that individuals may select only a provider and a single junior advocate in proceedings in the Crown Court and above, and set out circumstances where the court may permit an individual to select a Queen’s Counsel or more than one advocate. The provisions have the same effect as the current provisions in relation to choice of representative under the Access to Justice Act.

The draft Legal Aid (Information about Financial Resources) Regulations 2013 make provision in relation to requests for information by the director of legal aid casework to the Department for Work and Pensions, Her Majesty’s Revenue and Customs and relevant Northern Ireland departments to facilitate decisions about an individual’s financial resources for the purpose of legal aid available under Part 1 of LASPO. This could include, for example, a determination that an individual is financially eligible for legal aid, or is liable to make a contribution toward the cost of their representation when in receipt of legal aid.

The draft regulations replace regulations in relation to criminal legal aid under the Access to Justice Act 1999 but they will also extend to civil legal aid, so that information-sharing in relation to both criminal and civil legal aid are on the same statutory basis. This will allow the director, as the authority responsible for granting legal aid, to properly verify information provided by an applicant for legal aid about their financial status.

The regulations provide an information gateway so that a person making a decision on the financial eligibility of someone who is applying for legal aid or is in receipt of it can request certain information to confirm their benefit status with the Department for Work and Pensions or to confirm details of an individual’s employment or whether they are carrying on a business, trade or profession with Her Majesty’s Revenue and Customs or the equivalent departments in Northern Ireland.

Efficient and secure data-sharing between the DWP, HMRC, the relevant Northern Ireland department and the Legal Aid Agency will safeguard taxpayers’ money by limiting the opportunity for fraud and dishonesty and improving the administrative efficiency of the financial eligibility tests for legal aid.

I stress that these arrangements will make no substantial difference to defendants, solicitors or courts in terms of forms or process. There is therefore no risk of any delay to existing court proceedings or any additional burden on defendants or solicitors. Nothing within the new legislative framework dilutes the Government’s obligation to protect an individual’s personal information and maintain confidentiality. Indeed, the primary legislation specifically makes it a criminal offence to disclose the information for any purpose other than to facilitate decisions about an individual’s financial resources for the purposes of legal aid.

Lastly, the draft Civil Legal Aid (Costs) Regulations 2013 make provision about costs orders in civil proceedings in favour of or against a legally aided party and, in certain circumstances, against the Lord Chancellor. They substantially reproduce provisions that currently exist in regulations made under Section 11 of the Access to Justice Act 1999.

These draft regulations bring together the rules on costs into a single set of regulations. The existing rules on costs appear in both the Community Legal Service (Cost Protection) Regulations 2000 and the Community Legal Service (Costs) Regulations 2000. Provisions relating to the statutory charge, which currently appear in the Community Legal Service (Costs) Regulations 2000, will be brought forward separately.

Section 26(1) of LASPO sets out the general principle that costs ordered against a legally aided party to civil proceedings must be reasonable, having regard to all the circumstances including the financial resources and conduct of the parties to the proceedings. This is known as “cost protection” and is a feature of the existing civil legal aid system. It caps the amount of money that a legally aided party may be ordered to pay if they lose their case. The intention of this is to ensure that they are not deterred from resolving their issues through legal action for fear of being personally liable for unaffordably high costs.

The definition of family proceedings in these regulations has been amended to reflect the treatment of family proceedings in the LASPO Act. Under these regulations more types of family cases are subject to the exclusion from cost protection, although those that have been added are very similar to the existing list. We have maintained the position in the current regulations whereby cost protection applies to applications for domestic violence protection orders and public law children cases.

Part 2 of the draft regulations provides that cost protection does not apply to lower forms of civil legal services. Cost protection applies in relation to forms of service that permit the legally aided party to be represented in court proceedings because such a party will have satisfied a more stringent merits test than for lower forms of assistance.

Part 3 of the draft regulations sets out the rules governing costs orders against a legally aided party as well as the grounds on which a costs order might also be made against the Lord Chancellor where he has provided civil legal aid to a party to proceedings.

The draft regulations provide that in limited circumstances a court can order the Lord Chancellor to pay to the non-legally aided party the whole or part of the costs incurred by that party in the proceedings, other than the costs which the legally aided party is required to pay. The draft regulations also make provision about the assessment of resources and procedures in relation to costs orders against the legally aided party and the Lord Chancellor. The final part of the draft regulations sets out the principles to be applied when a costs order or a costs agreement is made in favour of a legally aided party.

Subject to the changes that I have just outlined and some amendments to structure and terminology, these draft regulations substantially replicate the effect of the existing regulations made under the Access to Justice Act 1999. I therefore commend these draft regulations to the Committee and beg to move.

--- Later in debate ---

[Lord Beecham]

I will deal first with the Criminal Legal Aid (Determinations by a Court and Choice of Representative) Regulations 2013. Again, I have a series of questions that arise partly from the drafting and partly from my ignorance. Again, I trust that the Minister will be generous enough to reply, if not today then subsequently.

I begin with Regulation 9, which deals with the withdrawal of determinations by the court and prescribes that the court before which criminal proceedings are listed may withdraw determinations in certain circumstances. I draw attention in particular to Regulation 9(c), where a reason would be that the provider named in the representation order that recorded the original determination declines to continue to represent the individual. The previous two conditions I can quite understand; first, the individual declines to accept the determination terms that he was offered—arguably, that is not unreasonable—and, secondly, the individual requests that the determination is withdrawn, which is also reasonable. However, I do not understand why, if the provider named in the representation order declines to continue to represent the individual, the determination should be withdrawn unless that determination relates specifically to that advocate. If that is the intention, it should perhaps be clearer, but if it is broader than that it would presumably leave the party unrepresented. Perhaps that needs some clarification.

Regulation 11 says:

“The … court may make a determination … only if it has considered an application made in accordance with”,

the subsequent paragraph. To comply with that, the application must,

“be made by the individual seeking the determination”—

that is obviously straightforward—

“be in writing; and … specify what the relevant court is being asked to determine and the grounds upon which it is being asked to do so”.

My question relates to whether that process is covered by legal aid or advice, or whether the individual is simply left to make his own representations. For some defendants, that could potentially be a matter of considerable difficulty. What is the process to facilitate the making of an application by an individual in those circumstances?

Regulation 12 identifies the right to select a provider, except for a number of categories—or, rather, the other way round; it limits the choice except for a number of categories. The first one is that,

“the provider … is employed by the Lord Chancellor to provide criminal legal aid”.

I find it a curious word to use, that the Lord Chancellor purports to “employ” advocates on behalf of a defendant. To me, that has connotations that might be a little invidious, bearing in mind the recent decision of the courts that recorders and part-time judges are deemed to be employed by the Lord Chancellor and therefore are required to be included in the pension scheme. If employment is to be used in this context, might that not also lead to some potential complications in relation to the status of people “employed” by the Lord Chancellor and possibly even lead to them being included in some sort of governmental pension scheme? The wording needs some explanation.

Regulation 13 deals with the position where there are co-defendants. Under these circumstances, the regulations prescribe that,

“the right of an individual … does not include the right to select a provider who is not also instructed by the individual’s co-defendant”—

in other words, to have two advocates as opposed to one—

“unless the … court or the Director determines that … there is a conflict of interest between the individual and that co-defendant; or … there is likely to be a conflict of interest”.

Again, I ask whether there is any process of appeal against such a decision. After all, the question of whether a conflict of interest might exist would not necessarily be straightforward. What is the process for determining in these circumstances whether there is likely to be a conflict?

Curiously, the regulation then goes on to provide that Regulation 13(1), the basic provision about instructing co-defendants,

“does not apply where the provider selected by the individual is an advocate”.

I simply do not understand what that means. This may be a failing on my part, but I do not understand the purpose of that provision.

Finally, I come to Regulation 16 which deals with criminal proceedings before a magistrates’ court. With a limitation to which I will refer in a moment, on proceedings before a magistrates’ court,

“the Act does not include a right to select an advocate”.

I do not know why that should be the case—I do not know whether it is a new or an existing provision—but it would seem to require some explanation. Why should a defendant not have the right to select an advocate?

The proviso in the regulation says:

“The relevant court may determine that the individual can select an advocate”,

on two conditions. The first is that,

“the proceedings relate to an extradition hearing … or an indictable offence”;

and the second that the,

“court determines that because there are circumstances which make the proceedings unusually grave or difficult, representation by an advocate would be desirable”.

One would have thought that in any extradition proceedings, and on most indictable offences, it would be almost a matter of course that the appointment of an advocate would be desirable. What are the circumstances in which it is thought that it would be inappropriate for an advocate to be selected by the defendant? By definition, these look to be significant matters. Again, what is the procedure to appeal any such decision? Supposing the court was to find that, in its view, these proceedings were not,

“unusually grave or difficult”.

That is very largely a subjective judgment. What is the purpose of this and why are the Government going to these lengths to put barriers in the way of a defendant selecting an advocate?

Happily, I have much less to say about the other two sets of regulations. Indeed, I have nothing to say on one set at all. However, in respect of the Civil Legal Aid (Costs) Regulations, there is a point to question. First, I noticed that there was no consultation on these regulations, which is a slight surprise—although it is fair to say that I think no specific question was asked in response to the original consultation. Nevertheless, I would have thought it sensible to have invited comment on the draft regulations.

Finally, we come back to the matter of timing. Paragraph 9 of the Explanatory Memorandum says that guidance is,

“not being prepared specifically on this instrument”,

but that:

“A programme of training and guidance is being prepared by the Legal Services Commission to support the transition to the new arrangements. This will be … available to legal aid providers ahead of the commencement of the Act on 1 April 2013”.

What exactly has happened about this? To what extent has training taken place and has it been in conjunction with the Bar Council and the Law Society? Will the profession—and, for that matter, the courts—be ready as of 1 April 2013 to deal with these matters? What training and support has been given to the courts, especially the magistrates’ courts, to deal with the new regime?

[Lord McNally]

My Lords, again, I am extremely grateful to the noble Lord, Lord Beecham, for what he quite rightly termed a cross-examination. I will try my best to cover the points he raised, along with the same health warning that I gave last time, which is that if I find on reflection that I have not fully covered the point he raised, I will write to him and make that letter available in the Library of the House and to interested parties.

On the withdrawal of a determination under Regulation 9(c), the relationship between a defendant and a solicitor could break down, for example, so legal aid might be withdrawn but that would not leave the party unrepresented. They could apply for transfer to a new firm. Regulation 11(2)(c) applies, for example, where an individual seeks a QC or two advocates, so would already have legal aid for solicitors and a junior advocate to assist. The noble Lord also asked about determinations by a court under Section 16 of the Act and pointed out that there seem to be very limited circumstances in which the court may grant representation.

The framework laid out in the Access to Justice Act 1999 is different from that laid out in the Legal Aid, Sentencing and Punishment of Offenders Act 2012. Under the Access to Justice Act, the default position is that the court can grant representation. However, with the rollout of means tests to magistrates’ courts and later to Crown Court, the circumstances in which the court can grant representation have gradually reduced. The responsibility for granting representation has therefore gradually passed to the Legal Services Commission—although, in practice, Her Majesty’s Courts and Tribunals Service staff make the decision. The Criminal Defence Services (General) (No. 2) Regulations 2001 reflect that position. LASPO reflects that shift, and the default position is that it is for the Director of Legal Aid Casework to decide whether to grant representation. The court may do so only when expressly authorised by regulations. The regulations set out the limited circumstances in which a court may do so—for example, where an urgent determination is required in a case of contempt of court.

The noble Lord, Lord Beecham, queried the use of the term “employed”—people being employed by the Lord Chancellor. That is the same language as in the current regulation, and covers the staff of the Public Defender Service, currently operated by the LSC, who will be employed by the Lord Chancellor under LASPO. Is there a process of appeal for conflicts of interests under the regulations? No, there are no provisions for appeal, but the person concerned could renew the application. As to why there has been no consultation on costs of regulation, as the draft regulations substantially replicate existing cost regulations, there is no need for consultation on the precise terms. The principles are well known, used and understood.

We are confident that the programme of training and guidelines will be rolled out in advance of implementation. On the question of representation in magistrates’ courts, I explained the situation under Regulation 16. The only challenge will be via judicial review. Our experience over the past 10 years is that existing provisions work well. Both LASPO and the current thinking of the Secretary of State and Lord Chancellor indicate a move on representation via legal aid.

The Secretary of State for Justice has asked whether access to criminal legal aid is being given in a way that provides the right balance between the needs of justice and the needs of the public purse. The Ministry of Justice has begun work on how we might find a better balance between costs and the needs of justice, and we will bring forward proposals and changes in due course. In the mean time, though, as I say, these regulations very much reflect present position, with the minor shifts that were involved in LASPO. In those circumstances, I commend them to the Committee.

Motion agreed.

Legal Aid (Information about Financial Resources) Regulations 2013

Lord McNally Excerpts

Tuesday 26th February 2013 Grand Committee

Moved By

[Lord McNally]

That the Grand Committee do report to the House that it has considered the Legal Aid (Information about Financial Resources) Regulations 2013.

Relevant document: 17th Report from the Joint Committee on Statutory Instruments.

Motion agreed.

Civil Legal Aid (Costs) Regulations 2013

Lord McNally Excerpts

Tuesday 26th February 2013 Grand Committee

Moved by

[Lord McNally]

That the Grand Committee do report to the House that it has considered the Civil Legal Aid (Costs) Regulations 2013.

Relevant document: 17th Report from the Joint Committee on Statutory Instruments.

Motion agreed.

Damages-Based Agreements Regulations 2013

Lord McNally Excerpts

Tuesday 26th February 2013 Grand Committee

Moved By

[Lord McNally]

That the Grand Committee do report to the House that it has considered the Damages-Based Agreements Regulations 2013.

Relevant documents: 17th Report from the Joint Committee on Statutory Instruments.

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

My Lords, as regards the draft Conditional Fee Agreements Order 2013 and the draft Damages-Based Agreements Regulations 2013, perhaps I may remind noble Lords that conditional fee agreements, or CFAs, are means of funding litigation that are usually entered into by claimants where the lawyer agrees not to take a fee if the claim fails. If the claim is successful, the lawyer may charge an uplift known as a success fee, in addition to their fee. Under the existing regime, the success fee is recovered from the losing defendant, in addition to the base fee.

The statutory power under which the draft Conditional Fee Agreements Order 2013 is made governs the regulation of CFAs and the recoverability of success fees payable under a CFA. Under Section 44 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012—the LASPO Act—the success fee payable under a CFA is no longer recoverable from the losing party, but will be payable by the successful client subject to a prescribed cap.

Lord Justice Jackson, in his report, Review of Civil Litigation Costs, argued that the current regime had led to excessive costs in civil litigation, with risk-free litigation for claimants and additional costs being paid by defendants. He therefore recommended that recoverability from the losing side should be abolished in all cases, and this has been reflected in the provisions of Section 44 of the LASPO Act.

Lord Justice Jackson also recommended that CFA success fees in personal injury cases should be limited to 25% of damages, excluding damages awarded for future care and loss. The Government accepted this recommendation and agreed that claimants who have been compensated for personal injury should have their damages protected from having too much deducted by their lawyer as a success fee.

The draft order revokes the 2000 CFA order, but replicates its provisions in Articles 2 and 3. Subject to the cap in personal injury cases, the maximum success fee that can be charged remains 100% of the solicitor’s base costs.

Article 4 makes provision for a cap on success fees in personal injury cases only. The aim of the cap is to protect claimants’ damages, specifically those relating to future care and loss, which can run into many thousands of pounds in the most catastrophic injury cases. This cap will apply similarly, although not identically, to lawyers’ fees under damages-based agreements—or DBAs—under the draft Damages-Based Agreements Regulations 2013, to which I will come later.

Article 5 sets the cap. This means that in personal injury claims, the CFA must not provide for a success fee which is greater than 25% of the damages awarded to the claimant, excluding those for future care and loss. In effect, this means that the success fee can be taken only from general damages for pain, suffering and loss of amenity, and damages for past loss.

I know that there has been concern about the 25% cap and some representatives argue that this should be against all heads of damages. However, the Government have said consistently—including on many occasions during the passage of the LASPO Act through Parliament—that there will be a cap on the amount of damages that may be taken as a success fee of 25% of the damages, excluding damages for future care and loss. This follows Lord Justice Jackson’s recommendation and, as I said, is intended to protect claimants’ damages, and specifically those relating to future care and loss.

Article 6 contains a transitional and a saving provision. Essentially, this means that the order will not apply to any CFA entered into before Section 44 of the LASPO Act comes into force on 1 April 2013.

Furthermore, the order will not apply in respect of those proceedings for which implementation of Part 2 is delayed. Those proceedings are personal injury claims in respect of diffuse mesothelioma, privacy and defamation proceedings and proceedings in respect of and relating to insolvency.

I now turn to the draft Damages-Based Agreements Regulations 2013. A damages-based agreement or DBA is a privately funded arrangement between a representative and a client whereby the representative’s agreed fee is contingent on the success of the case, and is determined as a percentage of the compensation received by the client. Until now, DBAs have not been permitted in litigation before the courts, but their use has developed in non-contentious business—that is, work that falls outside the courts, including employment matters. However, Lord Justice Jackson recommended that DBAs should be extended to all areas of civil litigation. He argued that this would provide litigants with a choice of funding methods and the freedom to choose the one that they considered most appropriate for their case.

Section 45 of the LASPO Act therefore permits the use of DBAs in all areas of civil litigation. This section enables the Lord Chancellor to regulate their use and, in particular, to specify the maximum payment that may be made from damages under a DBA in particular proceedings. The draft regulations revoke the 2010 DBA regulations but replicate their provisions in respect of employment matters. The draft regulations prescribe the requirements with which an agreement between a client and a representative must comply in order for it to be an enforceable DBA in both civil proceedings and employment matters.

Under the existing regulations governing DBAs in employment matters, the maximum percentage of damages that a representative may take as a fee is 35%, and that continues. Lord Justice Jackson recommended that the lawyer’s fee under a DBA in personal injury proceedings should not exceed 25% of the claimant’s damages, excluding damages for future care and loss. The Government agree that claimants should have their damages protected from excessive legal fees.

As I mentioned earlier, a similar, although not identical, approach has been taken for CFAs. The Government believe that there should be a cap of 50% of the damages that may be taken as the lawyer’s fee in all cases outside of personal injury and employment matters. This is to protect claimants’ damages, and is based in part on a recommendation by the Civil Justice Council.

In order to be enforceable, a DBA in civil proceedings must meet the requirements specified in these regulations. Regulation 3 requires the DBA to specify the circumstances in which the payment from the claimant’s damages will be payable. It will be for the representative in civil proceedings to consider his likely costs before reaching agreement as regards the payment to be made from the claimant’s damages. The definition of payment excludes expenses—for example, medical reports—but specifically includes counsel’s fees, which would be paid for as a disbursement by the representative.

Regulation 4 sets the cap as I have outlined. Regulations 5, 6, 7 and 8 replicate the provisions from the 2010 regulations for employment matters. These detailed provisions in relation to information and other matters are necessary because employment matters may be undertaken by non-lawyers such as claims managers. On the other hand, civil litigation can be undertaken only by qualified legal representatives, who are subject to regulation by their professional bodies and whose conduct may be subject to challenge through those bodies. It is therefore considered that further regulation at this stage is not required.

In drafting these regulations we have borne in mind the indemnity principle. Put simply, the indemnity principle means that the losing party cannot be ordered to pay more in costs than the successful party has already agreed to pay his representative. The Civil Procedure Rules have been amended to provide that the court may not order the losing defendant to pay a claimant any costs that exceed the agreed payment, and thus breach the indemnity principle.

The claimant will need to pay his lawyer only if the costs recovered are less than the agreed payment. This means that, as well as possibly paying a sum directly from their damages, claimants might also be required to pay an additional sum to their representative to meet these expenses.

Both these instruments are important elements of our reforms.

[The Deputy Chairman of Committees]

My Lords, there is a Division in the Chamber. We will adjourn for 10 minutes.

--- Later in debate ---

[Lord McNally]

My Lords, both these instruments, which are important elements of our reform, come into effect on 1 April 2013. The reforms overall are intended to make civil costs more proportionate. They also include particular provisions to protect claimants and damages, as I have set out. These instruments have been subject to consultation, and we have improved the drafting as a result. I believe they are proportionate and appropriate. I therefore commend the draft instruments to the Committee.

[Lord Phillips of Sudbury]

I have only one simple point to make. It is a question to the Minister regarding the Conditional Fee Agreements Order, particularly the 25% cap, which does not apply to any future losses. In proposing this legislation, the Minister rested his case heavily on proposals made by Lord Justice Jackson in his review. Is the Minister aware of a lecture Lord Justice Jackson gave on 29 February last year? In this lecture, he made a point, which appears in the footnote, stating:

“The Personal Injuries Bar Association (PIBA) and the Bar Council have recently sent to me forceful submissions that the 25% cap should apply to ALL damages, as it did before April 2000. I can see the sense of allowing that dispensation in appropriate cases provided that the success fee is only payable by the client as it was pre-April 2000”.

That seems reasonable and it seems doubly reasonable given that the author of these proposals, Lord Justice Jackson, himself had second thoughts which he expressed in public last year. I am wondering, therefore, why the limitation to past losses survives into this statutory instrument and whether the Minister could take this away and follow the latest thinking of Lord Justice Jackson, which is supported by the Bar Council and, I suspect, the Law Society.

--- Later in debate ---

[Lord Beecham]

I am grateful to the noble Lord for making explicit what was certainly implicit in what he and I were saying. Access to justice is certainly the core argument here. I should perhaps also have declared an interest in that from time to time as we have discussed these matters I have put in time as a now unpaid consultant with the firm of solicitors in which I was formerly a partner.

[Lord McNally]

My Lords, as a non-lawyer—perhaps the only one in the Room—I fully appreciate that the noble Lords’ interventions were about access to justice. As I have told the noble Lord, Lord Beecham, on earlier occasions, my legal qualifications rest on one of nine papers that I did for part one of my degree on English legal institutions. I remember champerty and maintenance from that paper. It came as quite a shock to me to find, in the process of the Bill, that not only was champerty not outlawed, it was now to become legal. But there we are—such is the passage of time.

--- Later in debate ---

[Lord Beecham]

He is actually an older man.

[Lord McNally]

Actually, I knew that. As Harold Wilson said when he retired and Jim Callaghan succeeded him, “I have made way for an older man”.

I take the point made by the noble Lord, Lord Phillips, but let me be blunt. I am always suspicious of Ministers who at any time rest too much on a report, no matter how learned. I do not rest the case for the 25% cap on that being Lord Justice Jackson’s original recommendation, although indeed it was. A sharp-eyed lawyer would say that the noble Lord’s quote about Lord Justice Jackson did not endorse the counterview but simply said that it had merit, which is not the same as advocating that the Government change their policy. Even if it were, this is the Government’s policy. It is the right policy because it protects the future earnings and the future cover for victims in these cases. It remains our policy on that merit, and we are willing to defend it on that basis.

I understand the point made by the noble Lord, Lord Beecham, about speed. I pointed out that very little of what we are doing is entirely new. We fully recognise that at this time there is a need for ability, nimbleness and fleetness of foot in all parts of the legal profession, if we are to take advantage of the changes that are going through. We are not persuaded that the timescales we have set are unreasonable, and we will not be deferred from the course that we have set. We have taken account of reasons for delay regarding mesothelioma and privacy, which I quoted. However, these orders will go through to take account of the fact that LASPO comes into effect on 1 April 2013.

Perhaps I might deal with a number of the specific questions that the noble Lord, Lord Beecham, raised. He was very correct to raise the issue of the American experience in DBAs. I also met the organisation that came over to present its case. I left that meeting with some of his concerns about what this might bring into our legal system. The noble Lord’s description of hedge funds for legal claims is something that we are very conscious of. What we have decided so far is to keep the matter under review. That phrase can often hide weasel words and weasel intent, but we want to see just how much this is going to become a factor in our legal system, while making sure that some of the warning signs that the noble Lord has quite legitimately raised are on the radar of Ministers as well. We will keep this matter closely under review.

The noble Lord raised the issue of VAT on the 25% cap. The 25% cap on success fees is as recommended by Lord Justice Jackson. Including VAT on the success fee on lawyers’ fees within the cap will provide further protection for the claimant’s damages and add certainty for the claimant as to the likely deduction from their damages. This approach is also consistent with the existing cap of 35%, inclusive of VAT, on payments to be made from damages in respect of DBAs in employment matters. The noble Lord also asked about the indemnity principle. DBAs are an alternative method of funding and it would be for solicitors to advise their clients on the most appropriate method of funding according to the circumstances of each case. He also mentioned there being one set of regulations. There is one set of regulations covering both civil litigation and employment cases, as recommended by the Civil Justice Council. We have listened to the concerns of the Law Society and others that there should not be too much regulation in respect of civil litigation in these instruments. This is because failure to comply with the provisions in the instruments would make the agreements unenforceable. As I have said, lawyers are properly regulated in any event.

The noble Lord asked whether the cost of ATE insurance is within or outside the 25% cap. This is an expense and is therefore outside the cap. On why DBA regulations do not contain requirements on termination for civil litigation, as in employment cases, the DBA regulations of 2010 made provisions for employment cases which can be taken forward by non-lawyers. Detailed safeguards need to be built in as a result. Civil litigation can be conducted only by lawyers, who are subject to their own professional regulations.

I think that that covers most of the issues. If not, perhaps I might say to the noble Lord that I welcome the thoroughness with which he has examined these regulations and, as I say, if I have not covered the questions in precisely the detail that I should have done I will make sure that a suitable letter is lodged in the Library of the House. I nevertheless think that the timetable that we have set, the consultation that we have undertaken and the changes that we have made after that consultation, with our having listened to the Bar Council, the Law Society and other interested parties, make the regulations fit for purpose. I therefore recommend them to the Committee.

[Lord Marks of Henley-on-Thames]

My Lords, before my noble friend the Minister sits down, I have one question on the point made by the noble Lord, Lord Beecham, about damage-based agreements for defendants. It is my understanding of the regulations that DBAs are not appropriate for defendants, whereas conditional fee agreements are and always can be available to defendants. DBAs depend upon the damages awarded to the client or monies paid by another party to the party entering into the DBA. Clarification on that from my noble friend may be helpful, but it is certainly my understanding.

[Lord McNally]

I am grateful to my noble friend for that question. I am informed that neither the Act nor the regulations enable defendants to use DBAs, not least because a DBA is enforceable only where the agreement makes provision for the payment of the fee from damages awarded. My noble friend asks an extremely pertinent question and I hope that I have given a clear answer.

[Lord Beecham]

It is a clear answer, but there does not seem to be a particular rationale for excluding defendants from this process. If they secure the retention of a sum of money claimed under the agreement, why should the DBA not be available to them? To confine it to claimants seems too narrow a concept. If the intention of the Government, as it clearly is, is to use the DBA as an alternative method of financing, it should be available to both sides because nobody is being compelled to undertake a DBA. That still requires some further thought.

[Lord McNally]

I will certainly give it further thought, but the question was whether the regulations as presently set out debar the use of DBAs by defendants. The answer is yes. I will reflect and put those further reflections in the letter.

Motion agreed.

Defamation Bill

Lord McNally Excerpts

Monday 25th February 2013 Lords Chamber

My major point is that the two lines at the end of Clause 2 are not necessary and, above all, give an entirely wrong impression to the public of what the clause is trying to do and of the beneficial impact and effect that it could have. I said at the start that the amendment had the support of a wide range of individuals, and, in varying degrees, of two political parties. The only party that has not proclaimed its position is the Liberal Democrats. It may be just my luck that this debate will be replied to by a Liberal Democrat Minister. However, as always, I am an optimist in these things. My noble friend and I are old allies who have fought a number of causes together, and my hope is that the alliance will hold good on this amendment. I beg to move.

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

My Lords, I hope that it will be for the convenience of the House if I intervene now to put the debate in context. I confirm that my noble friend Lord Fowler and I have been close allies in many battles for press freedom over the decades, and I assure him that this reply comes from a government Minister.

My noble friend’s amendment seeks to remove from the amendment of the noble Lord, Lord Puttnam, which was agreed on Report, a section that goes beyond Leveson in requiring the courts to take account of pre-publication advice from the new regulator in considering whether to avoid exemplary damages.

When we debated the main amendment on Report, I was clear that our objective in respect of Leveson must be to achieve a cross-party endorsement of a solution that works in parliamentary and legislative terms, and has general public support. On Report, I promised that a draft royal charter would be published. This has now been published. It illustrates one example of how a recognition body might be constituted to underpin the tough system of self-regulation for the press that Lord Justice Leveson recommended.

The draft charter is under active consideration in the cross-party talks, and it is important that we allow the talks to progress and reach their conclusion. I have made clear my reservations about the amendment of the noble Lord, Lord Puttnam, being shoe-horned into the Defamation Bill. I do not propose to rehearse the arguments today. The Puttnam amendment is now part of the Bill, which should now be returned to the Commons.

The amendment of my noble friend Lord Fowler is welcome in so far as it will remove an element of the Puttnam amendment that went further than Lord Justice Leveson recommended. No one wants to see Leveson implemented more than I do, but the tripartite talks are the key to achieving that objective, not the Bill as now amended. We should continue to allow the parties the space to agree the most appropriate solution within the tripartite talks.

In so much as he is amending a clause that we do not consider to be effective and which pre-empts what I hope will be a successful outcome to those tripartite discussions, the amendment of the noble Lord, Lord Fowler, makes an unacceptable position marginally better. I shall not ask noble Lords to vote against the amendment, although the overall position will remain that we believe the amendment to be unacceptable.

I shall say that again slowly. I am looking at my words. Basically, I am suggesting that the House should pass the amendment and that the Government will not oppose it. The amended Bill will then go to the Commons for consideration and will come back at ping pong for what I suspect will be a lively debate. However, by then the tripartite talks might have succeeded—I sincerely hope they will have—and my Defamation Bill, which I think unamended is perfectly formed, could then be passed by this House. Those are my recommendations.

Amendment 1 agreed.

Charging Orders (Orders for Sale: Financial Thresholds) Regulations 2012

Lord McNally Excerpts

Wednesday 6th February 2013 Lords Chamber

Moved By

[Lord McNally]

That the draft Charging Orders (Orders for Sale: Financial Thresholds) Regulations 2012 laid before the House on 26 November 2012 be approved.

Relevant Document: 13th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 8 January.

Motion agreed.