Legal Aid, Sentencing and Punishment of Offenders Bill

Lord Bach Excerpts

Wednesday 14th March 2012 Lords Chamber

[Lord Campbell of Alloway]

My Lords, I will take very little time. I am very concerned about the situation, for all the reasons that were given—and that were put better than I could have put them. I ask only that consideration be given, and an assurance of further consideration, so that this proposal will not simply be cast away in some form of dismissal. That is all I ask for: an assurance that consideration will be given.

[Lord Bach]

My Lords, I am proud to be associated with the amendment in the names of the noble Baroness, Lady Grey-Thompson, and the noble Lords, Lord Newton and Lord Pannick. The amendment is of the greatest importance, and many people outside the House are following it with exceptional interest.

It is perhaps important to remind the House that the mandatory gateway will apply only to those elements of social welfare law that are still in scope—including, of course, for the moment, welfare benefits because of a decision that the House took last week on an amendment moved by the noble Baroness, Lady Doocey. That is a statement of the obvious, because those areas of social welfare law that the Government intend to take out of scope will be quite irrelevant for these purposes. There is no possibility of legal aid in those cases. In effect, the Government are saying that people with those legal problems will have to fend for themselves if they have no money. That is a pretty shocking state of affairs.

We have had a short but powerful debate in this House today—and we had a very powerful one almost three months ago at the end of the first day of Committee, on 20 December 2011. Very powerful speeches were made. I have in mind that of the noble Lord, Lord Shipley, whose final words were:

“There are real dangers that some of those most in need of help will fail to secure it through a mandatory telephone gateway”.—[Official Report, 20/12/11; col. 1764.]

The noble Lord, Lord Phillips of Sudbury, made yet another powerful speech today. The one he made on that occasion was powerful, too. He said:

“If it is mandatory for those seeking assistance to go through a telephone gateway, we will cast adrift a significant minority of our fellow citizens who will never use a telephone gateway for the sorts of problems with which they are confronted”.—[Official Report, 20/12/11; col. 1766.]

The Minister says from a sedentary position that there is no evidence of that. What an unbelievable response. One only has to know from human nature—from living in the real world rather than the world of Whitehall—that that is how people are. It is about time that the Government started taking people as they are rather than as they want them to be. There were powerful speeches also from the Liberal Democrat Benches on that occasion.

I made the point that it was nearly three months ago because we have had no hint of a concession in all that time. We know from a letter that a telephone call will not be free, as was suggested at the time. There will be a cost to the client who has to make the call. It will not be huge, but it will be there—and that is another factor that will apply. It is simply common sense that to have a mandatory gateway for all clients seeking legal advice is absolutely inflexible and will almost certainly lead to a number of people who clearly should be helped receiving no help at all. It will lead to injustice after injustice.

The Bolton CAB is a large CAB which covers all these fields and has a legal aid contract. It runs an advice surgery from time to time. Yesterday it tried an experiment. Every client who came in had their tale told in general terms by way of a tweet, in other words on Twitter, so that one could read each one of these cases during the course of the morning and afternoon while this surgery lasted. One could see from reading these how the world of a busy CAB or law centre or advice centre actually worked in practice. There were 126 clients who sought legal advice on social welfare issues and they covered practically everything that you could think of. I have no doubt that some of those clients were well able to make a telephone call and start proceedings in that particular way, and I am an undisguised fan of telephone advice when it is appropriate. But are the Government really saying, as I suspect they are, that all 126 of those clients would have been able to do this? Are they saying it is not highly advantageous to have face-to-face contact in some cases? And are they really saying that someone who turned up to a CAB should be turned away and told to call a hotline, as will happen unless this amendment is passed? Can you think of a more bureaucratic, fussy and less efficient system and one that is less reflective of the way people actually live their daily lives? I would argue that it is an absurd proposition which is un-British in the sense that it is one-size-fits-all and too dirigiste and inflexible an approach.

Sometimes Governments just get things completely wrong and Parliament has some sort of duty to say so. It actually helps Governments in the long run if they do not charge off in the wrong direction. Here is a short story. I remember when I was a Minister sitting where the Minister is, in the same department, putting forward some foolish, to put it mildly, proposition and then seeing, when the vote was called, many of my own supporters walking past in order to vote in the Opposition’s Lobby and losing the vote for the Government by a large amount. It was the right thing for them to do. Actually, there was so many of them that none of them could be picked out and dealt with later. There is an advantage in numbers sometimes. And they need not even be afraid on this occasion of the noble Lord, the Deputy Chief Whip of the House. Frankly, I would argue that this is one of those instances. If the Government are defeated on this issue and if the Liberal Democrats could just bring themselves for once to vote against the Government, the world would not stop, the Government would not fall, but an enormous mistake might be averted and Parliament would have done the right thing.

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

My Lords, in case my colleagues on the Liberal Democrat Benches missed it, that was a subtle attempt by the noble Lord, Lord Bach, to woo them into the Aye Lobby. All that I can say in this technological age is, just think what the noble Lord, Lord Bassam, will be tweeting about them if they do not do as he suggests.

Throughout this Bill it has been very difficult to reply to a debate, trying to deal with very narrow, specific terms, when the noble Lord, Lord Bach, constantly makes his case in the broadest terms. We are not forcing everybody through a telephone gateway; we are doing a specific and very narrowly drawn test. I ask noble Lords to make their decision on the facts.

We make jokes about this House and its otherworldliness, but we are living in the most communications-savvy generation in our history. I do not just mean teenagers and young people; I mean silver surfers and people right through. They buy on eBay; they use telephones and new technology in a very broad way. It is patronising to assume that people cannot make use of it. Of course, we are aware that there may be exceptions. That is why, when noble Lords come to vote, it would be worth listening carefully to what we actually propose to do and what safeguards we are putting in place, rather than what I would call the broad-brush approach adopted by the noble Lord, Lord Bach.

There will be safeguards. Face-to-face advice will remain an option in the exceptional circumstances when there are callers for whom adaptations cannot be made to ensure that there is an appropriate level of service. Our starting point is that telephone advice is effective and efficient. The Community Legal Advice helpline figures for 2010-11 show that more than half a million calls were made to the service. The 2010 survey of clients who subsequently received advice from the specialist service showed that 90 per cent of clients found the advice given helpful.

The benefits of electronic services generally and the Community Legal Advice helpline service in particular are twofold. The first benefit is access. These services particularly help people with specific needs who find it difficult to get to face-to-face services; for example, those living in remote areas or who have a physical disability. Callers can access the Community Legal Advice helpline service at a time and place convenient to them. The second benefit is quality. Contrary to the assumption that face-to-face advice is always better, specialist telephone advice providers are currently required to meet higher quality standards than their face-to-face counterparts. For both these reasons, the Government believe that the Community Legal Advice helpline should be the mandatory gateway for applying for legal aid.

However, I can confirm today that the Government have listened to concerns and will not proceed with the proposal to include community care as one of the initial areas of law for which clients will be required to use the mandatory single gateway. We acknowledge particular challenges in delivering a quality service to community care clients. The Government have always recognised that this is a complex area of law and said in the impact assessment that around half of clients in this area would require face-to-face meetings with legal representatives even where only legal help is being provided.

We have heard since from stakeholders that individuals’ circumstances can be so unique that face-to-face meetings are frequently required to deal with problems in this area even where only legal help is being provided. We have accepted that the numbers of community care clients requiring face-to-face advice is in fact likely to be more than our original estimates, and we are therefore not proceeding with the proposal to include community care as one of the initial areas of law for which clients will be required to use the mandatory single gateway.

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As for the “after the event” insurance premiums, we have already agreed that one-way costs-shifting will be introduced where there are conditional fee agreements to remove the burden of heavy defendants’ costs. One-way costs-shifting has operated in practice in legal aid cases since the inception of legal aid. I have tabled amendments which follow the amendments that we discussed last time. If one-way costs-shifting is introduced, the exorbitant “after the event” premiums to cover the risk of paying heavy defendants’ costs are removed at a stroke. You do not have to insure against the defendant’s costs because one-way costs-shifting means that the defendant will pay his own, even if he wins, as has happened in legal aid cases. It may be necessary to obtain “after the event” cover for disbursements which might cost in a typical case £3,000 to £5,000.

[Lord Bach]

I must be under a misapprehension. I thought that this group was about the amendments that the noble Lord, Lord Alton, had so succinctly moved and about my own amendments to which I also hope to speak, perhaps even more succinctly in due course. I am listening carefully to the noble Lord, as I always do, but it seems that his amendments are part of the group that begins with his Amendment 132B. I am surprised that the noble Lord has not waited to speak to his group as it appears on the Marshalled List. Perhaps he can explain to the House why he is doing this.

[Lord Thomas of Gresford]

I am very happy to do that. I will speak to it further in due course. Frankly, I am anxious not to make the 31-minute speech that I made when we last discussed this particular issue and to relieve your Lordships of that burden. I am splitting what I intend to say, which I think is necessary to cover the whole field, so that it becomes a little more understandable. I take the noble Lord’s rebuke in good part, but let me repeat that asking for the status quo in mesothelioma cases only is not the way to go forward.

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[Lord Mackay of Clashfern]

My Lords, it is possible to describe other types of illness and the basis for claims in very much the same language as that used by the noble Lord, Lord Walton of Detchant, and the noble Baroness. So far as the first point is concerned, in the system as I introduced it the success fee would be payable by the claimant out of his or her damages.

[Lord Bach]

My Lords, we have had a powerful and emotive debate and I want to be very brief because the House wants to hear from the Minister, who is obviously sympathetic, as was demonstrated by what has been said about his visits made and meetings with noble Lords on this issue. I am proud to support the amendment in the name of the noble Lord, Lord Alton of Liverpool, also supported by the noble Lord, Lord Avebury. I am delighted that the noble Lord, Lord Alton, supports my amendments in this group that deal with other industrial diseases—Amendments 132AB, 132D and 141ZB. In response to the noble Lord, Lord Thomas of Gresford, I say that if he thinks that other diseases are also important to deal with, he should look carefully at the amendments I may move in due course.

I shall cut down appreciably on what I wanted to say. We know that asbestosis is not the only problem, but speeches have been made in this debate by experts who suggest that it is a problem out on its own that should be considered separately, as it will be this evening. It is because asbestosis is not the only problem that I tabled my amendment that deals with other serious industrial diseases. I do not need to go through the types of diseases that I am talking about, but they are the by-products of hard work. All these are inflicted on hard-working people who have spent their lives contributing to our society and economy, often in industries that no longer exist, and in heavy industry, manufacturing and public services. As has been said by many noble Lords, many of these diseases do not manifest themselves for years and are the legacy of coal mining, our proud tradition of manufacturing, steel making and other professions.

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Moved by

[Lord Bach]

132AB: Before Clause 43, insert the following new Clause—
“Exception for industrial disease cases
The changes made by sections 43, 45 and 46 of this Act do not apply in relation to proceedings which include a claim for damages for a disease, condition or illness (whether or not resulting in death) resulting from any breach of duty owed by an employer to an employee.”

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[Lord Bach]

My Lords, I beg to move.

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[Lord Bach]

I am happy to put my name to this amendment with the noble Lord, Lord Thomas of Gresford. I cannot think of anything he said that is not right on this. It seems an open-and-shut case—as it did in Committee, I have to say, when the noble and learned Lord, Lord Mackay of Clashfern, made the first speech in the debate on this subject. I have nothing to add to what the noble Lord, Lord Thomas of Gresford, said: he made the case. If the Government are to reject this, I very much hope that it will come back for final decision at Third Reading.

[Lord McNally]

My Lords, the Government accept that insolvency proceedings are untypical of our reforms to CFAs in an important respect. Across many areas of law—for example, in clinical negligence cases against the NHS—the Government are on the sharp end of our dysfunctional CFA regime as it is the defendants bringing cases against claimants, sometimes speculatively. However, as the noble Lord, Lord Thomas, has said, insolvency stands apart because it is one of the few areas where CFAs sometimes work to the advantage of government departments; for example where an insolvency practitioner recovers moneys for the taxpayer and other creditors. So if these amendments were to be accepted, they would effectively constitute a carve-out for the key place where CFAs can be useful to the Government—this at a time when we are asking everyone else to adjust to a new, more sensible regime.

We debated insolvency proceedings in Committee and I said then that we were considering this issue within government. I can report that we have thought about it carefully, but we do not agree that an amendment along these lines is the right way forward. I do not believe it is acceptable to say that CFA reform is good for everyone else, but is not good for the Government.

[Lord Bach]

I am sorry to interrupt, but it is not so much that this is good for the Government—it is good for the taxpayer. Surely that should be one of the main considerations. If it is good for the Government, that is fine; but if it is the taxpayer who will benefit, because creditors get their money, as it were—the HMRC gets its money by taking advantage of the amendment—I cannot see why the Government are resisting this.

[Lord McNally]

As the noble Lord will know, the interests of the taxpayer and the Government are synonymous, because one is working for the other.

[Lord Bach]

Which one is working for whom?

[Lord McNally]

It is far too late in the evening for such repartee. As I say, we have reached agreement across government, in respect of insolvency proceedings, that new ways will be implemented to deal with these cases without recoverable success fees and insurance premiums. We are working on a programme of implementation and we will set out the details in due course.

As with other areas now subject to a new CFA regime, the effect will be that claims occur at more proportionate cost, as claimants will have a stake in the legal costs being incurred on their behalf. We believe that the exemption proposed by the amendments in respect of insolvency proceedings is unnecessary and would breach the basic rationale of our reform policy. I therefore urge my noble friend to withdraw his amendment.

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[Lord McNally]

My Lords, the government amendments in this group are minor and technical and will ensure that changes to the recoverability of success fees and the insurance element will apply consistently to all conditional fee agreements, including collective CFAs. I wrote to all Peers last week about the amendment. A copy of the letter was placed in the Library of the House. I beg to move.

[Lord Bach]

My Lords, I am not getting to my feet just to be difficult. When the Minister moves government amendments and describes them as technical, usually I sit absolutely still in my place. However, on this occasion I have a couple of questions. If he does not know the answers tonight, he is welcome to write to me and to other noble Lords. Will he confirm that the effect of Amendment 135A will be that a success fee as part of a CFA under which work for the claimant commenced before the Bill’s commencement day will still be recoverable from the defendant on exactly the same basis as it is now?

The second question is similar but concerns collective CFAs. Will the Minister confirm that the effect of the amendment will be that a success fee as part of a collective CFA under which work for an individual claimant commenced before the Bill’s commencement day will still be recoverable from the defendant on the same basis as it is now? I will not object to the amendment being agreed, but I would be grateful if in due course I could have answers to those questions.

[Lord McNally]

My Lords, I am sorely tempted to show that after months of total immersion in the Bill I can leap to the Dispatch Box and give the noble Lord a detailed response. However, as he knows, I did only one paper on English legal institutions in part 1 of my degree. Therefore, I will not pretend that I can give him a definitive answer. However, I firmly promise that a letter will go to him and into the Library of the House in response to those questions.

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[Lord McNally]

My Lords, we have reached the stage of the evening when the noble Lord, Lord Pannick, not only asks the questions but gives the answers as well—cutting out the middleman, which is me.

I take note of his suggestion. As I do with all our deliberations, I will report back to the Lord Chancellor on this. I would have thought that his experience of the willingness of your Lordships to make exceptions, one after another after another, will make him think that giving such flexibility in the Bill will only encourage a constant stream of exceptions coming to his door.

We have thought very hard about this. We think that the architecture is right. We think that by going back to the system as it broadly was under the noble and learned Lord, Lord Mackay, repairs the damage that was done by the previous Administration—with the best of good will. I will report, and I will even tell the Lord Chancellor that it was an idea of the noble Lord, Lord Pannick, which I am sure will produce the appropriate response from the Lord Chancellor.

[Lord Bach]

I think we can almost see the response now.

[Lord McNally]

Amendment 139C, in the name of the noble Lord, Lord Beecham, seeks to amend Clause 45 to require the Lord Chancellor to make regulations to allow the recovery of ATE insurance premiums taken out to cover the risk of paying one’s own disbursements within the relevant pre-action protocol period. As I have already made clear, the Government’s position on ATE insurance is that it should no longer be recoverable from the losing party. Amendment 139C goes against the Government’s reform and we will strongly resist it.

In the same vein, I cannot accept Amendments 136A to 136D, which would retain recoverability of success fees for judicial review, employers’ liability claims, professional negligence and clinical negligence. I have touched on some of these issues before and I do not intend to detain noble Lords further by going into the details of each particular area or trying to assess which litigants should be classed as more deserving than others. As I have said, it would be invidious and unfair to set out exceptions for some claimants and not for others, and we do not intend to do so.

I urge the noble Lord not to press the amendments.

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[Lord Thomas of Gresford]

My Lords, the amendment raises the issue of third party litigation funding. I made a lengthy contribution in Committee which I do not propose to repeat. The basis of the amendment is to bring under government control third party litigation funding. Your Lordships may recall that a voluntary code has been entered into by those who are concerned in third party litigation funding and I suggested in Committee, and I repeat, that it is far better that the Lord Chancellor should take a look at this and bring in something along the lines of what I have suggested in my amendment. I beg to move.

[Lord Bach]

We agree with the amendments in the name of the noble Lord, Lord Thomas of Gresford.

[Lord McNally]

My Lords, I have said before that we are grateful to my noble friend for raising this issue. It is a possible problem and a number of noble and learned Lords and lawyers outside have given warning signals. At the moment we are looking at how voluntary regulation is working in the area. However, my right honourable friend the Lord Chancellor is very aware of the situation and is keeping it under review. We do not think that statutory regulation through this Bill is either the right place or the right time but we welcome the fact that my noble friend has put this issue on the political radar. Both lawyers and legislators will have to follow the matter closely to see whether we will need to return to it at some future date. In the mean time, I ask my noble friend to withdraw the amendment.

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[Lord Thomas of Gresford]

This amendment concerns the third party insurance company, which approaches a prospective claimant and offers to settle without there being adequate medical evidence, without the claimant being informed that he has a right to legal advice and without the offer being in full and final settlement of the cause of action. In Committee, I hesitated to suggest that it should be a criminal offence, and suggested that the best way of dealing with the matter should be that such settlements would be void, which would enable a claimant who subsequently discovered that he was in a far worse condition than he had thought to reopen the matter and to claim damages for the injuries that he received. That is a practice that has crept in. It means that people accept settlements without proper advice or evidence of what is wrong with them and without a proper calculation of their losses. It seems to me that a lot of people are vulnerable to that type of approach. That is one side of the problem. The other side is that it encourages people with no basis for a claim at all to make one and accept a sum of money that means that, over a large range of cases, the insurance company benefits. That is just as bad as that people should be incited to put forward fraudulent claims.

My noble friend’s answer in Committee was that the FSA rules are sufficient to cover the matters of which I complain. That immediately makes me ask who enforces the FSA rules. What control is there over the employee of a third-party insurance company who, quite clandestinely, makes offers of this sort to settle cases that are perfectly valid and which he knows to be valid? So at this stage I put forward the suggestion that it should be a criminal offence for people to engage in this type of behaviour. That may be going a step further. Perhaps my original concept that the alleged settlement obtained should be void was the right way to go. But certainly there is an abuse going on and I expect the Government to do more than to refer to FSA rules when there is no one to enforce them. I beg to move.

[Lord Bach]

The Minister would be well advised to give serious consideration to the amendment proposed by the noble Lord, Lord Thomas of Gresford. This is not one that he moved in Committee—he has moved it for the first time today. The House knows that he has become an expert in this field of litigation over the months that he has spoken to me about it. He may well be right that it is no good the Government taking a position that looks like it may take some time to develop. It is something that needs to be done and thought about pretty promptly. Therefore, as far as we can, we support the amendment.

[Lord McNally]

My Lords, I think it was the noble Lord, Lord Martin, who talked about the proper role of the House of Lords. Although the hour is late, my noble friend Lord Thomas has demonstrated one of the benefits of this House in bringing to the Government’s attention an area where there already is or could be a malpractice that will have to be dealt with. As he explained, this is a practice where an insurer approaches a claimant directly, usually immediately after a road traffic accident, with a view to settling the claim, where an insurer’s own policyholder is at fault in a car accident. As I understand it, claimant representatives refer to this practice as third party capture, whereas defendant representatives call it third party assistance. As I indicated in Committee, I shall continue to refer to this practice as third party contact.

Amendment 142D would make it an offence for an insurer to make such an unsolicited approach to a potential claimant in a personal injury case. The amendment also specifies those requirements which must be met before an insurer may make an offer to settle such a claim. This includes a requirement to obtain adequate medical evidence of injury and to advise the claimant of their right to obtain full legal advice before accepting the offer and making it clear to the claimant that the offer to settle is full and final.

It is unclear what my noble friend means when he says that this practice should be an offence. If he refers to this as being a criminal offence, I do not believe that a criminal sanction is appropriate or proportionate. You would have to prove beyond reasonable doubt that something amounted to an unsolicited approach. As I explained in Committee, the Financial Services Authority regulates the insurance industry and requires insurers to treat their customers fairly at all times and that this covers third party claimants.

Third-party contact does not in itself cause detriment to the consumer and may be to their advantage, as a claim can often be resolved quickly. In addition, this practice can allow insurers to reduce the legal costs associated with handling a claim and this in turn reduces costs for all policyholders. However, I am aware of the concerns around the potential risk of conflict of interest and the need for the claimant to have independent legal advice before any settlement is agreed. This matter was looked at by the FSA in its review of third-party contact during 2009-10 and it did not find conclusive evidence that unrepresented third parties could have achieved higher compensation had they obtained independent legal representation.

Following the FSA’s review, the Association of British Insurers published a code of practice in June 2010. The code contains specific guidance for insurers on contacting claimants. This limits unsolicited contact. For example, and I quote:

“Insurers will not make unsolicited visits to an unrepresented claimant at their current address, including hospitals”.

The code also requires that claimants are informed of their right to seek independent legal advice and other options available for them to resolve their claim.

Most of the issues which this amendment seeks to address in respect of the handling of third-party contact claims are already covered by existing regulation. The FSA rules require that insurers fully inform third party claimants of their legal rights, including to independent legal advice and alternatives to settling directly with the insurer. The Government do not believe it is right or appropriate to introduce further sanctions or regulation in this area, especially when a scheme already exists to monitor insurers’ activities. That said, I can reassure my noble friend that if a serious concern arises in the future in this area—and we will keep it under review—we will not hesitate to take this up with the Treasury and with the FSA.

I am therefore grateful to my noble friend for raising this issue with us, but for the reasons that I have mentioned I hope that he will agree to withdraw the amendment.