Legal Aid, Sentencing and Punishment of Offenders Bill

Lord Hunt of Wirral Excerpts

Wednesday 14th March 2012 Lords Chamber

[Lord Beecham]

My Lords, this amendment deals with referral fees. The Bill provides rules against referral fees and defines the nature of regulated persons, who are effectively prohibited from receiving a payment for referring prescribed legal business to another person. Under Clause 54(4), the legal services in question relate to,

“a claim or potential claim for damages for personal injury or death”,

or where,

“the business is of a description specified in regulations made by the Lord Chancellor”.

I do not know quite what is envisaged by the latter provision, but it is clear that the aim is to inhibit the referral of personal injury claims in return for payment. The regulated person, who for these purposes would presumably be acting on behalf of an injured person, would also be in breach of the subsection if he arranged for another person to provide services to the injured party and was paid or had been paid for making the arrangement.

A number of issues arise from this. The first is that the payment need not necessarily be financial; it could also involve, for example, the provision of another service. It might fall within the scope of the clause—I am not sure whether this was intended—if an organisation referred a client to a solicitor and, as part of their service, the solicitor prepared a will for that client or gave legal advice on another matter that was not related to the personal injury or other category that the Lord Chancellor might specify.

The purpose of Amendment 142E is to make it clear that a person would not be in breach of this subsection if the body to which the payment is made—that is, the person referring the client—is a not-for-profit organisation. There are of course organisations, such as charities and the like, which refer their members or others to solicitors and perhaps other professionals, and receive payment in return. In particular, I understand that a number of medical charities do this. I suppose that at one time organisations such as the Automobile Association, or other motoring organisations that are no longer membership organisations in the traditional sense, might have done likewise. Since they are not-for-profit organisations, it does not seem appropriate that this bar should be in place.

The situation is not analogous to that which the noble Lord, Lord Thomas, dealt with in terms of third-party funding, about which he is absolutely right to be exercised. Therefore, it should not be caught within the prohibition that is envisaged here. It could certainly do considerable harm to organisations and, for that matter, limit the benefit to clients of being referred. As I said, they might be referred on the basis of free advice or advice at a reduced cost, which would presumably appeal to the Government—quite rightly since they are talking about reductions in cost.

Therefore, I hope that the noble Lord will look again at this situation, perhaps with a view to coming back to it at Third Reading if he cannot accede to this measure tonight. There are other amendments before us in this group and there is to be a further amendment which will be taken next Tuesday, so we are not quite in the position of closing the door yet—not before Third Reading in any event. In these circumstances, I beg to move Amendment 142E.

[Lord Hunt of Wirral]

My Lords, in speaking to Amendments 146A and 148A, I wish to say how strongly I support in principle the Government’s proposal to ban referral fees. I declare my interest as a partner in DAC Beachcroft, the international commercial law firm. My amendments are intended simply to clear up some possible loopholes. Having just heard the comments of the noble Lord, Lord Beecham, I caution how important it is to have a blanket ban because any ban that is implemented has to work. However watertight the ban is—my amendments are intended to help the Government achieve that objective—it is critical that we also remove the incentive for referral and profit share by removing the excessive legal costs from the system. There are many vested interests here and a lot of money is at stake—too much money in my view.

At present, solicitors acting for claimants can still afford to pay out more than half of their fees to a third party whose only role is to buy and sell on the details of an injured person. That cannot be right. Amendment 146A would make a minor change to Clause 54(4) by inserting,

“which consist of or include damages”.

I raised in Committee the spectre of the current wording permitting the payment of a referral fee for some non-injury element of an injury claim, completely bypassing the Government’s intentions. I look forward to hearing my noble friend the Minister’s comments on that.

Amendment 148A would insert,

“whether received by the person referring prescribed legal business or not”,

into Clause 54(8). I highlighted in Committee this gap in the drafting which could be exploited simply by the way in which payment is routed. Again, I await my noble friend the Minister’s answer.

Finally, I would also be very interested to hear whether my noble friend can give this House a commitment about just how much of the excess cost can now be taken out of the system altogether, which is, frankly, a more effective remedy than tightening up the drafting.

[Lord Martin of Springburn]

My Lords, I wish to speak to Amendment 146 in my name. In doing so, I declare an interest as I have been a member of the Unite union for a long time. I am not having a go at the media on this matter but, often when trade unions are mentioned in the media, reference is made to trade union leaders. Not much is known about the activities of the lay officials and junior officers of a trade union. Tonight we have spoken about asbestos victims. A trade union would probably be the first port of call for a person who felt that they were suffering from the effects of asbestos inhalation. Apart from the serious matter of asbestos inhalation, your Lordships may be aware that even a National Health Service kitchen can be a very dangerous place for workers. They can fall, be scalded or be cut by the knives that they are using. After any injury such as that or any other injury relating to a person’s work, the first port of call is to the local trade union office, and an investigation is made before the matter is referred to a lawyer. Any of us who has run an office knows that photocopiers, heating, lighting and cleaning all cost money. It means that there should at least be some compensation for the trade union that is prepared to try to help that member before the member goes to a solicitor.