Legal Aid, Sentencing and Punishment of Offenders Bill

Lord Beecham Excerpts

Wednesday 1st February 2012 Lords Chamber

[Lord Thomas of Gresford]

I am sure that my noble friend would agree, however, that protective costs orders are matters of discretion for the judge who hears an application, and that the threshold is extremely high. In his particular case, he obviously advanced matters of considerable public interest that were much wider than only the issues in the litigation that affected his clients. So a protective costs order can be applied for in such cases. However, I was involved in the case following the flooding of houses at Aberfan that occurred as the result of the spoil banks placed there after the disaster. In that sort of case, where individual householders were affected, protective costs orders would not have met that threshold.

[Lord Beecham]

My Lords, at the risk of being accused of unqualified one-way sycophancy, I must again congratulate the noble Lord, Lord Thomas, on the clarity of his presentation of this complex issue. Although I somewhat dissociate myself from the preamble to the substantive part of his speech, I entirely concur with his amendments. At this stage, I should also express my thanks to the learned counsel whose advice has instructed me in a matter about which, hitherto, I knew nothing. Aarhus meant absolutely nothing to me up till now. It seems that I may have shared that failing with Her Majesty's Government. We shall see from the Minister’s reply whether that is a correct inference or not.

The noble Lord referred to the ClientEarth case in which the Aarhus Convention Compliance Committee observed that the cost rules pertaining in the United Kingdom placed it in systemic breach of Article 9.4 of that treaty. The committee concluded that we had not as a country adequately implemented our obligation to ensure that procedures are not prohibitively expensive. Counsel's opinion, to which the noble Lord referred, identified two particular issues. The first is that of uncertainty. The second is the sheer amount of the defendant’s costs that might fall on unsuccessful claimants. The noble Lord referred to the case of Barr and Biffa waste company, which arose from a complaint about odours emanating from a landfill site, where the costs were indeed nearly £3,250,000.

Lord Justice Jackson has much to say about those issues. His remedy is, as the noble Lord pointed out, a move to qualified one-way cost shifting. He gave six reasons for his conclusions, which are germane to the thrust of the amendments. He said:

“This is the simplest and most obvious way to comply with the UK’s obligation under the Aarhus Convention in respect of environmental judicial review cases”.

He continued:

“For the reasons stated by the Court of Appeal on several occasions, it is undesirable to have different costs rules for ... environmental judicial review and... other judicial review cases”.

His third reason was that the requirement for permission,

“is an effective filter to weed out unmeritorious cases. Therefore two way costs shifting is not generally necessary to deter frivolous claims”.

They simply do not arise. His fourth point was that,

“it is not in the public interest that potential claimants should be deterred from bringing properly arguable judicial review proceedings by the very considerable financial risks involved”.

He pointed out that:

“One was costs shifting in judicial review cases has proved satisfactory in Canada”.

His final point, which goes to the issue raised by the noble Lord, Lord Lester is that the protective costs order regime,

“is not effective to protect claimants against excessive costs liability. It is expensive to operate and uncertain in its outcome. In many instances the PCO decision comes too late in the proceedings to be of value”.

So with respect to the noble Lord, the protective costs order regime is not, in the view of Lord Justice Jackson, an answer to the difficulty.

[Lord Lester of Herne Hill]

I hesitate to disagree with the Lord Justice, but I do not understand that point, as one can apply at the very beginning, a very early stage, for a protective costs order—certainly in judicial review proceedings. I do not know why he thinks that it is too expensive or comes too late, because that has not been my experience.

[Lord Beecham]

I cannot answer for Lord Justice Jackson, but that is a subsidiary point. His point is that it is expensive to operate and uncertain in its outcome. Therefore, he regards it as an inadequate protection to the one-way costs shifting which the noble Lord, Lord Thomas, has rightly advanced as the best way to deal with these matters. Lord Justice Jackson’s approach was, as counsel’s opinion, to which the noble Lord and I have both referred, makes clear, endorsed by Lord Justice Sullivan’s working party, which was very clear in stating:

“An unsuccessful Claimant in a claim for judicial review shall not be ordered to pay the costs of any other party other than where the Claimant has acted unreasonably—

to go back to the noble Lord’s earlier point—

“in bringing or conducting the proceedings”.

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

My Lords, I am most grateful to the noble Lord, Lord Thomas, for his usual thorough presentation of these amendments and for sending me this opinion of learned counsel, which, as he rightly said, was delivered only 24 hours ago. Even though, as the noble Lord, Lord Bach, will know, the Ministry of Justice is one of the most efficient and speedy departments in Whitehall, the matter is still in the hands of my advisers, and I am sure that we will take it on board. In passing, I should say that I had to clear another piece of paper the other day about asking the advice of learned counsel, and I saw just how much it costs to ask for such advice, so I thank the noble Lord for such an expensive gift.

I was also interested in the confession of my noble friend Lord Lester about accepting success fees. As the debate has unfolded, it has occurred to me that this is indeed a money Bill, but perhaps not in House of Commons terms. Let me also deal with another canard or slur that has been put across the Chamber from the noble Lord, Lord Beecham: that the Aarhus convention is something new to the Government or to government Ministers. Perhaps I can draw his attention to the fact that on 19 October, we in the Ministry of Justice sent out a consultation paper, entitled Cost Protection for Litigants in Environmental Judicial Review Claims, with the specific aim of enabling the UK to implement its obligations under the Aarhus convention. Yet again, when the facts are known, it is clear that the Government are on the case, on the ball and moving forward, despite the attempts of the Opposition to say otherwise.

[Lord Beecham]

It is said that they are in breach of their obligations under the convention.

[Lord McNally]

As I said, we are consulting. I shall return to the question of getting it right. The problem is that the noble Lord, Lord Beecham, is impetuous in so many ways, whereas this Government are determined to get things right—you can see the advice that I get on getting things right.

On Monday, we spent some time discussing QOCS and we heard the concerns of my noble friends and others that the matter should appear in the Bill. This afternoon, I do not want to repeat the more general arguments on these matters, but we need to get the details and the rules right to ensure that they are tailored properly in respect of the category of proceedings to which they apply. For example, in personal injury cases, it may well be that there should not be an initial financial test. However, the position is likely to be different for defamation, and perhaps for environmental cases too, which typically involve more than one claimant—sometimes many claimants. In such cases the costs involved can impact considerably on the ability of the public bodies that are under challenge to perform their general functions.

As the noble Lord, Lord Thomas, explained in moving his amendment on Monday, he was looking for specific words rather than words like “unreasonable”, which he said had such a broad meaning. Indeed, the noble and learned Baroness, Lady Butler-Sloss, added that the word “unreasonable” was liable to cause serious difficulties of interpretation and yet, as the noble Lord, Lord Thomas, has confessed, the word “unreasonably” is in Amendment 157.

It is precisely for those reasons that we are not yet ready to crystallise in statute, and ring-fence away from development in rules, words which are more properly left to the rules, where they can follow detailed discussions with stakeholders. They can be tailored and nuanced for the particular category of proceedings and, of course, the Lord Chancellor will remain accountable for the policy on these issues which is reflected through the Civil Procedure Rules.

Amendments 141, 147, 148, 149 and 150 deal with the recovery of ATE insurance premiums in respect of environmental claims under the Aarhus convention. Amendment 157 would introduce a new clause to provide for costs protection in the form of qualified one-way costs shifting—QOCS—for claimants in environmental claims and, it would appear, for all judicial review claims, whether concerning environmental issues or not.

The Government are, of course, conscious of their obligations under the Aarhus convention. Put simply, the convention requires us to ensure that parties have access to a procedure to challenge relevant environmental decisions that is, among other things, not prohibitively expensive. How we discharge those obligations has been a matter of debate for some time. It was addressed by Lord Justice Jackson in his report and was considered in a number of cases in the High Court and above. Amendments 141, 147, 148 and 149 seek to allow ATE insurance premiums to be recoverable from the other party in these cases. As I indicated in our debate on Monday, the Government's policy is that ATE insurance premiums should no longer be recoverable except in the particular instance of clinical negligence expert reports. Therefore, we do not favour this or any other extension of ATE premium recoverability.

Amendment 157 seeks to apply QOCS to environmental claims, subject to qualification in respect of unreasonable behaviour. The proposed clause would displace any rules of court in this area and provide for the Lord Chancellor instead to have the power to make regulations to extend QOCS to other areas in future. That seems to be something of a departure from the general principle that in civil proceedings, matters relating to costs are regulated in detail by rules of court. It is not clear why the departure would be beneficial.

As noble Lords are aware, the Government are introducing a regime of QOCS in personal injury cases to help balance the impact of the changes to no-win no-fee conditional fee agreements, and in particular as an alternative to “after the event” insurance. Claimants will continue to be able to take out ATE insurance if they wish, but they will pay the premium, which will be lower than the rolled-up premiums presently never paid by anyone other than a losing defendant. Although Lord Justice Jackson suggested that QOCS might be considered for use in some non-personal injury claims, the Government are not persuaded that the case for this has yet been made.

I noted the dispute between the noble Lord, Lord Beecham, and my noble friend Lord Lester about protective costs orders, which are also part of this consultation. As a matter of principle, the Government’s view is that protective costs orders can provide appropriate costs protection in environmental cases. Environmental organisations and the working group chaired by the then Mr Justice Sullivan, to whom noble Lords referred, expressed a preference for QOCS, having argued, including in a submission before the Aarhus Convention Compliance Committee, that an appropriate PCO regime could provide full compliance with the requirements of the convention. With a PCO, it will be clear from the outset what costs the claimant will have to pay if their claim is unsuccessful, while ensuring that some contribution is made toward the costs of public bodies that have successfully defended the claim. As I said, we have consulted on the issue.

The Ministry of Justice consultation Cost Protection for Litigants in Environmental Judicial Review Claims outlines proposals for a cost-capping scheme for cases that fall within the Aarhus convention. The consultation closed on 18 January and we will announce the way forward in due course.

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[Lord Beecham]

My Lords, this has been a short but interesting debate. I shall not detain the House long. I very much welcome the contributions by my noble friend Lord Davies, the noble Lord, Lord Boswell, and in particular the noble and learned Lord, Lord Mackay. I have some sympathy with my noble friend’s approach; he sees in third-party funding arrangements an alternative source of funding for cases that might not otherwise be advanced because of other changes that are in hand. My problem with that is that in effect he is throwing a lifeline to the Government to pursue that very restriction, and that does not serve the cause of access to justice.

The noble Lord, Lord Boswell, rightly drew attention to the concerns about this matter, and the remarks by the noble and learned Lord, Lord Mackay, clearly constitute a significant degree of support for the case advanced by the noble Lord, Lord Thomas. It is clear that we are potentially seeing a sea change in the way that some litigation will be funded in a way that runs contrary to the traditions of justice in this country. I note that the noble Lord, Lord Thomas, referred to hedge funds, and I think he is right; there is a danger here of legal hedge funds, as it were, being created and a secondary market developing, and who knows whence the funding of those organisations will derive? Experience in the United States is not encouraging, as the noble Lord, Lord Boswell, reminded us. I understand that in America, particularly in divorce cases, huge sums are in play.

The noble Lord, Lord Thomas, has done the House a great service in identifying the issues here and in coming up with a viable framework that could be put in place in order to deal with the potential difficulties. I think that the view of the House, from those noble Lords who have spoken, is that a voluntary code simply will not suffice, however well intended the motivations of those who sought to produce one—and they clearly were well intended. There needs to be a more rigorous structure, and the reference by the noble and learned Lord, Lord Mackay, to the Lord Chancellor making regulations, coupled with the ideas set out in the noble Lord’s amendment, offer a way forward.

If at this stage the Minister cannot give a clear nod to the amendment, and I can understand if he cannot, then I hope at least that further discussions can be held on the matter and an agreed position put forward on Report. We do not want this genie getting out of the bottle, to which it could not be returned, by default. There are issues here of great significance and we hope the amendment will provide the basis for taking matters forward in a way that can be agreed across the House—I think there is a general interest across the House in this—to the advantage of litigants and the cause of justice itself.

[Lord McNally]

My Lords, in 1962—which is now, sadly, 50 years ago—part one of my degree course contained a subsidiary paper on English legal institutions. About the only thing I can remember from that course is the concept of champerty and maintenance. It therefore came as something of a shock to be told that it no longer applied, and indeed had not applied for some time.

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[Lord McNally]

I think I had better get on to the brief.

[Lord Beecham]

Could the noble Lord offer his services to the Office for Budget Responsibility?

[Lord McNally]

My Lords, this has been an interesting and useful debate and I am grateful to my noble friend for outlining the matter with his usual thoroughness. Third-party litigation funding has developed and—to use the phrase deployed by the noble Lord, Lord Boswell—there is a welling up of disquiet about it. The noble Lord, Lord Davies of Stamford, takes what I would describe as the Robin Hood approach to this matter and views it rather optimistically as a way for the rich to help the poor. The noble Lord, Lord Boswell, was a little more sceptical about that scenario and drew on his American experience of how the process works. I think that people are a little worried when investors and investment opportunities are mentioned—the noble Lord, Lord Davies, mentioned that matter—when we are talking about the law.

I was delighted to hear the noble and learned Lord, Lord Mackay of Clashfern, mention Lord Simon of Glaisdale, who I remember speaking from the Cross Benches. You used to see the colour draining from a Minister’s face as he realised that Lord Simon of Glaisdale had thoroughly read and filleted the relevant Bill and knew exactly the contradiction in the government amendment that he was about to dissect. I experience that same feeling of foreboding whenever the noble and learned Lord, Lord Mackay, rises to speak. The noble and learned Lord said that Lord Justice Jackson could not be criticised for his brevity. All I can say to him is that Lord Justice Jackson is not alone among lawyers in that failing. I look at no one in this House in saying that.

Like other noble Lords, however, I take on board the noble and learned Lord’s point about the need to exercise caution in this matter. I think that the noble Lord, Lord Beecham, caught the mood of the House when he referred to the concept of legal hedge funds being established and cases being bundled up as investment opportunities as something that gives rise to rightful concern.

The code of conduct was drawn up with the specific requirement that the matter would be revisited if and when third-party funding expanded. It is a question of whether it has now expanded to a point where the matter should be revisited. As the noble Lord, Lord Thomas, explained, the Civil Justice Council published a voluntary code of conduct for litigation funders on 23 November. It was drawn up with the co-operation of the Association of Litigation Funders.

What I can say is that some serious points have been made during this debate, to which I have listened extremely carefully. My right honourable and learned friend the Lord Chancellor would like further time to reflect on these matters. They are serious, and some serious and worthwhile advice has been given. I see that the noble Lord, Lord Davies, is about to leap to his feet, and perhaps I may say that there was good and useful advice on both sides of the argument. I ask my noble friend to withdraw his amendment so that the Lord Chancellor can reflect on this issue. I shall not sit down if the noble Lord, Lord Davies, wishes to intervene.

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Moved by

[Lord Beecham]

164A: Clause 54, page 39, line 20, at end insert—
“and in either case, the regulated person and the person by or to whom the business is referred, each act in the course of a business carried on for profit”

[Lord Beecham]

My Lords, the amendments in this group refer to referral fees. Recent years have seen an explosion of growth among what might best be described as parasitic commercial organisations—claims management companies and the like—seeking to obtain part of the financial stream that flows when litigation occurs by charging for the referral of clients to lawyers. Paradoxically, it might be thought, some of this is fuelled by the very insurance companies that complain about the compensation culture and the costs of litigation. Clause 54 very properly seeks to prohibit referral fees to and by regulated persons, who will include claims management companies, lawyers, insurers and perhaps others. Perhaps slightly counterintuitively, for the purposes of the legislation a referral fee need not take the form of a payment, but could, for example, be an offer by a lawyer to take on work at a reduced rate or for no fee. However, the potential for abuse of the system is apparent, and the Bill seeks to address it.

The amendments tabled in my name and in the names of other noble Lords seek to improve the wording of the Bill. Perhaps I may briefly outline what they do. Amendment 164A would exempt not-for-profit organisations from the operation of the ban on referral fees. It would take them outside the category of regulated person for the purposes of the ban. Of course, there will be many membership organisations—charities, for example—that will come into that area. I understand that some charities refer people for legal and medical advice and any sums arising from those referrals go back into the work of the charity or the membership organisation. That seems a perfectly reasonable category to take out of the provisions of the Bill.

Amendment 164B is a consequential amendment making it clear that regulated persons would be businesses carried on for profit. It is a corollary of Amendment 164A, as is Amendment 164C, which is another consequential amendment. More substantively, Amendment 166 provides:

“A regulated person is not in breach of this section if … that person is a solicitor; and … the body to which the payment is made for the prescribed legal business is a registered charity that has been granted an exemption by the claims management regulation unit”.

Again, both the person making the payment—the solicitor—and the body receiving it—the charity—would be taken out of the scope of the provision.

We support Amendment 166ZA, tabled by the noble Lord, Lord Pannick. The noble Lord will of course address this matter, but the thrust of the amendment seems to be to except from the ban a referral from one solicitor to another. This can easily arise in the course of practice where a case, either from the outset or it becomes apparent, is somewhat beyond the experience and expertise of a particular firm but a good deal of work may have been done on it and in any event it is not unreasonable for a referral fee to be paid.

Perhaps more significant is Amendment 166ZB, in the names of the noble Lords, Lord Martin of Springburn and Lord Elystan-Morgan, and my noble friend Lord Collins of Highbury, which would take out of scope of the ban the relationship between trade unions and their members. I speak with long experience of these matters because I personally acted—the firm, for which I am now an unpaid consultant, continues to act— for a number of trade unions. The relationship there is not simply the passage of a name of a member but, as your Lordships will no doubt hear, one in which a good deal of administration is required and where the union is performing a service on the part of the member that will ultimately benefit the conduct of the case and therefore the solicitors involved in it. Again, it seems quite reasonable in that instance that a fee might become payable and it is unnecessary to bring that sort of relationship within scope.

Finally, Amendments 169 to 171 to Clause 56 are connected amendments. Instead of allowing the Treasury to make regulations enabling the Financial Services Authority to monitor and enforce compliance, they make this an obligation. Amendment 169 substitutes “shall” for “may” and Amendment 170 requires rather than enables the FSA to take action. Similarly, under Amendment 171 it would become a requirement for the Treasury to make rules outlining circumstances where payments are not to be treated as a referral fee. This echoes the Lord Chancellor’s powers proposed under Clause 55(8).

None of this seeks in any way to detract from the thrust of the Bill’s proposals but rather tailors them to the realities of the issues that the Bill seeks to address and to make better sense of what is in principle a sound proposal that the Opposition support. Accordingly, I beg to move.

[Lord Pannick]

My Lords, Amendment 166ZA in this group is in my name. I am grateful to the noble Lord, Lord Beecham, for expressing support for it.

The amendment would exempt solicitor-to-solicitor referral fees from statutory prohibition. I am puzzled as to why the Government think it is appropriate to impose a statutory prohibition on such referral fees. I am puzzled for two reasons. First, there is a public interest in solicitors having an incentive to transfer a case—with the consent of the client, of course—to another solicitor; for example, if the latter solicitor has greater expertise or if the former solicitor will not be able to deal with the case expeditiously. Secondly, any such referral fees from one solicitor to another are regulated by the SRA, which has ample powers to impose sanctions on either of the solicitors if there were any abuse of proper professional standards to the detriment of the consumer.

I ask the Minister—and it is a genuine inquiry—why, in the light of these factors, it is necessary or appropriate to regulate referral fees paid directly from one solicitor to another.

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[Lord McNally]

It might. Some of them sound like coffee bars rather than trade unions these days, but perhaps that is part of the marketing. Certainly, the case of the trade unions was made very strongly by those who intervened. The service that trade unions provide their members no one gainsays—it is important—but we do not believe that that link between referrals and certain legal firms should be exempted from a general ban on referral fees. There must be those who have worked for trade unions who do not pay referral fees. I do not know. As a layman, I see referral fees as a distortion of the market, but there is nothing to stop trade unions having a good close working relationship with particular law firms. Some have had long-standing relationships. However, I cannot tell the House that we are willing to make an exception.

The noble Lords, Lord Pannick and Lord Clinton-Davis, referred to the payments by solicitors to other solicitors for the transfer of prescribed legal business, and we believe that that argument is rational and sensible. If for any reason a solicitor decides that a piece of business needs to be transferred, perhaps for the geographical reason that the noble Lord, Lord Clinton-Davis, gave or because the solicitor realises that it is beyond the competence of his or her firm, it would be perfectly reasonable to see a transfer. When the transfer is made, the solicitor concerned is able to claim an appropriate amount of money for the work dispersed before the transfer was made. We accept that logic. However the Government’s view is that reasonable payments of this type are not captured by the ban as long as they only cover the work undertaken by a firm in respect of the claim prior to it being transferred to a new firm. If there is a referral fee element to the payment, this would be subject to the referral fee prohibition and is a matter best dealt with by the regulator rather than by legislation.

Although I know that parts of this reply will disappoint noble Lords, we appreciate the widespread support for our ban on referral fees. We believe that this is the best way to lead our proposal to provide the most effective and proportionate way of preventing payment for personal injury claims and squeezing a bad practice out of the industry. We therefore invite noble Lords not to press their amendments.

[Lord Beecham]

My Lords, the noble Lord, Lord Hunt, has signified his support for the Government, but he is the only Member of your Lordships’ House who has done so in respect of these amendments. We have had some powerful speeches from a variety of people with an interest in and experience of litigation of this kind: distinguished lawyers such as the noble Lords, Lord Pannick and Lord Elystan-Morgan; people with direct experience of the shop floor, such as the noble Lord, Lord Martin; people with a lifetime in the trade union movement, assisting members and no doubt helping them to make their legitimate claims for compensation and advice, such as the noble Lords, Lord Collins and Lord Monks; and the noble Lord, Lord Alton, with his extensive experience of the voluntary sector. They have all made a very clear case for exempting trade unions and charities from the restrictions of this Bill.

We agree that there is a problem with the referral of claims and the industry that has grown up around them. That is commercial exploitation, which may well lead to expectations being aroused and cases perhaps being brought that should not be brought. That is why we support the thrust of the Government’s proposals. However, the Government and the noble Lord appear to be comfortable with third-party funding of litigation—subject, as we have heard and discussed in a previous debate, to possible regulation—but not at all comfortable with an arrangement by trade unions or charities for a referral fee for passing instructions, and no doubt assistance as well, to solicitors that they are recommending on behalf of their members. There is an element of quality assurance in that too. I do not understand, in this context, what the evil is that the Government’s proposals on referral fees are supposed to be curing. Who loses by the process that is being advocated in these amendments by those who support them? Where is the loss? There is no loss to the public purse, the insurance industry or defendants. There is no loser. It is not at all analogous to the commercial exploitation about which we spoke.

This curious matter, to which I referred in moving the amendments in the first place and which I will take a little further now, arises under Clause 54(8) , which provides that:

“Payment includes any form of consideration (but does not include the provision of hospitality that is reasonable in the circumstances)”.

You can take somebody for a drink but you cannot provide any other service. Page 47 of the Explanatory Notes says:

“Subsection (8) provides that a referral fee can be any form of consideration (which would include, for example, an offer by a solicitor to take on other work at a reduced rate or for no payment at all), other than normal hospitality”.

As part of my firm’s relationships with trade union clients, I used to offer a free will to a client for whom we acted after being referred to us by a trade union. We would offer free initial advice about other matters not connected with their personal injury claim, such as a matrimonial, employment or even a criminal matter. All of that would be caught by the Bill as it stands and as set out in these Explanatory Notes.

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[Lord Thomas of Gresford]

My Lords, before the noble Lord does what he is going to do with his amendment, I just make one comment. He said that the Minister was on his own. When I was a young solicitor, I would have given my eye teeth to secure some union work. I did some at the Bar, but it was very difficult in a small firm to compete with a large firm, as I am sure the noble Lord will agree. If I thought I had to pay money to the union to get their work, that would have made it considerably worse. The money that is paid to the union by the lawyer is ultimately reflected in the hourly rate that the lawyer charges to his client—it eventually falls on the client, or on another client. It is not just disappearing or being absorbed by the large firm.

[Lord Beecham]

Not all firms are large firms, and it will not surprise Members to know that my firm was not—and is not—a large one. However, we have had that kind of relationship. The profitability of firms conducting litigation of this kind is not high in any event, even without the question of referrals. I do not think that there are the kind of consequences that the noble Lord assumes to be the case. Equally, organisations with members seeking to derive the best service that they can for their members ought to be free to do that. I repeat that I do not think this Bill is at all on the right lines in what it is seeking to do. I again respectfully direct the Minister’s attention to the peculiar circumstances that subsection (8) proposes.

I was going to finish by commending again the amendment tabled by the noble Lord, Lord Pannick, about solicitor-to-solicitor arrangements. He made a very strong case there, and I regret that the Minister seems to have just dismissed it out of hand. Certainly—

[Lord McNally]

I ask the noble Lord to read Hansard tomorrow. We have made it extremely clear that we do not think that the kind of relationship outlined by the noble Lord, Lord Pannick, will be caught by this ban. It will be regulated by the Solicitors Regulation Authority, and I hope my statement from the Dispatch Box will give it some help in carrying out that duty. The Government do not believe that that kind of relationship, where a solicitor transfers business and takes a reasonable charge for the work already done, is covered by this ban.

[Lord Beecham]

I do not think it is necessary to confine the payment to precisely the basis that the noble Lord identifies.

[Lord Phillips of Sudbury]

In the new, highly commercial context within which soliciting is carried on today, and in an era when we have these alternative business structures where we can be owned by virtually anybody, does the noble Lord not think that there is a real risk that some of these new ABSs will, as a matter of business, solicit work if they can then pass it on subject to a substantial referral fee? I can see that in the offing.

[Lord Beecham]

I can see a case for regulating the fees. I am not an enthusiast for alternative business structures as the noble Lord has defined them. But in any event, we are not discussing soliciting as such—despite the noble Lord’s use of the phrase. We are talking ultimately about a system that has been used successfully from the point of view of trade unions, charities and their members, as well as the professions, for some time. The Bill is seeking to intervene because of a different set of circumstances and set of relationships, with different causes and consequences. If there is no movement on this we will have clearly have to return to the matter on Report. In the mean time, I beg leave to withdraw the amendment.

Amendment 164A withdrawn.