Legal Services Act 2007 (Appeals from Licensing Authority Decisions) (General Council of the Bar) Order 2018

Lord Beecham Excerpts

Thursday 1st February 2018 Lords Chamber

[Lord Beecham (Lab)]

My Lords, I approach this matter as a mere happily retired solicitor. I defer to the noble Lord’s long experience in these matters. I certainly share some of his misgivings, particularly in relation to the ludicrous amounts of compensation which might be involved. However, I congratulate the Minister on sticking to her brief and delivering it very effectively. I take some comfort—perhaps she will, too—from the absence, apart from the noble Lord who has spoken and the noble Baroness who has just entered the Chamber, of others who practise at the Bar, or who have practised at the Bar, and many Members of your Lordships’ House are in that position. It suggests that perhaps there is no great concern about these arrangements among those who have served at the Bar. That is some comfort.

However, I am not entirely clear about another aspect of the compensation fund. It is not clear whether that relates, as the noble Lord implied, to moneys handled by the members of the Bar or to compensation for negligence claims—which, I fear, solicitors are from time to time involved in and for which, of course, they are insured. The Minister may be able to clarify that.

On the role of the LSB with regard to the Ministry of Justice, the Explanatory Memorandum says that the compensation fund,

“cannot be implemented unless the LSB grants approval”.

Will the Ministry of Justice have any say in that process or will it be left entirely to the LSB to determine?

However, the thrust of the order—subject to some of the questions which have been raised, particularly by the noble Lord—seems to be in the right direction and ought to give confidence to those involved in the legal system. Perhaps the Minister could indicate whether the MoJ will in due course seek an update on how matters are progressing in, say, two or three years’ time, to see whether things are working satisfactorily or whether it might wish to suggest to the Bar Council that the situation might be reviewed.

[Baroness Vere of Norbiton]

I thank both noble Lords who contributed to the debate today for their questions. It is helpful to consider the issues that have been raised. Of course I completely understand the position of the noble Lord, Lord Thomas, and his concerns, which I hope to be able to allay this afternoon.

He began by talking about the nature of the delegated powers, so to speak, that will be created in due course under these orders. I suppose that to some extent he is right, but of course these powers will not be unique; in many instances barristers and other similar organisations will just be falling into line with what happens with other legal services organisations. The LSB—this relates to comments made by the noble Lord, Lord Beecham, as well—is an independent body from the Ministry of Justice. As with these sorts of bodies, the board members and the chair are appointed by the Lord Chancellor in consultation with the Lord Chief Justice. These are ministerial appointments and, as noble Lords would expect, these public appointments go through the process that is regulated by the Commissioner for Public Appointments.

The Legal Standards Board is of course tasked with looking at the rules and regulations of all the organisations in its field of responsibility. In these circumstances, any rules and regulations that are put in place by the Bar Standards Board will have to go to the LSB for approval, which is very important in making sure that the process is robust. The LSB has strict criteria on what the regulations and rules can set out for all its organisations. This is definitely not a rubber-stamping exercise. For example, in 2014 the LSB rejected a request from the Solicitors Regulation Authority to reduce its professional indemnity insurance limit—so there are still more than adequate safeguards to ensure that the rules are proportionate.

On intervention powers, which, again, the noble Lord, Lord Thomas, raised, under Schedule 14 to the Legal Services Act 2002 the BSB already has intervention powers in its role as a licensing authority that licenses alternative business structures. This order simply gives the BSB the same powers in regulating barristers and barrister entities. I am very keen that we understand that this simply also creates a level playing field as the innovative nature of legal services moves on and the number and type of organisations increase.

The BSB would intervene only in very rare circumstances if it were necessary to protect consumer and public interest—for example, if an entity were about to go bankrupt. The powers include seizing papers and closing down an entity. Of course, there is a right for the person affected to appeal to the High Court. We are very clear that the intervention powers will be used as a last resort, and after other sanctions, where there is an urgent need for protection.

The noble Lord, Lord Thomas, also asked why the BSB is seeking these powers if it is apparently not going to use them. To a certain extent we have to look at the types of organisation that we have at the moment but we also have to future-proof our regulatory regime against what might happen in the future. The regulated legal services market is evolving very rapidly at the moment and we must be prepared for what may come in the future. For example, where there might currently be no need for compensation arrangements, this may change in the future. The draft order enables the BSB to take a proportionate and, importantly, consistent approach to regulation by being able to decide to whom the obligations should apply.

The noble Lord, Lord Thomas, raised a point about fines. The maximum levels of fines may appear to noble Lords to be very high, as indeed they do to me—I cannot conceive of having that much money—but we must understand that some of the alternative business structures in particular will contain significant amounts of capital and may grow quite large, involving not just legal services but other types of businesses. It is important that we have the right incentives to make sure that people do not contravene the rules. The amounts are absolute maximums and it will be for the BSB to consider and consult on what fining regime and fine levels it should have in the future. As with all proposed rules, the fining regime will need to be approved by the Legal Standards Board. This safeguard keeps coming back: the Legal Standards Board has to approve the issues that we are talking about today.