LASPO: government suffers two defeats over legal aid for children, tightens referral fee ban

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By Legal Futures

28 March 2012


McNally: practitioners and regulators a clear marker over referral fee ban

The government suffered two more defeats during yesterday’s final House of Lords stage of the Legal Aid, Sentencing and Punishment of Offenders Bill, and also tightened up the ban on referral fees.

Peers backed Baroness Grey-Thompson’s amendment that brings back into the scope of legal aid 6,000 children she said would be removed by the reforms. A similar amendment aimed at vulnerable young people under the age of 24 failed after a vote.

An amendment to retain legal aid for clinical negligence cases brought by children, laid by Conservative Lord Cormack, was passed.

The government brought forward an amendment – which was accepted without a vote – that will prevent the referral fee for an ancillary claim, such as for damage to a car, in addition to a personal injury (PI) claim, from being inflated to include a referral fee for the PI claim.

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Another amendment makes it clear that the payment of referral fees to a third party, whether or not they are regulated, will not avoid the prohibition on the payment of referral fees.

Justice minister Lord McNally said: “This gives both practitioners and regulators a clear marker and removes doubt as to the effect of the clause. We do not wish to place additional burdens on regulators and these amendments will remove the potential for confusion on what is and what is not covered by the ban.”

Both amendments were the result of points raised in earlier debates by Conservative Lord Hunt of Wirral, a partner in defendant insurance firm DAC Beachcroft.

The third reading of the bill saw several more votes and some other c

oncessions. The government agreed to include a power for the Lord Chancellor to add, omit or vary services within the scope of legal aid. However, peers rejected a bid by Lord Pannick QC to introduce a similar power in relation to the end of recoverability in cases funded by conditional fee agreements (CFAs).

Lord McNally said the government’s view is that the current recoverability regime is “wrong in principle” and that it should be ended “across the board without exception”.

He continued: “Funding arrangements need a degree of certainty. Claimants and defendants need to be able to plan and adapt to the new regime. The amendment would only create uncertainty. Will an exception be created? For what and when? Rather than settling the issue of CFAs, as this bill seeks to do, the amendment would open the door to constant campaigning and calls for individual exceptions.”

A vote to exempt international human rights cases from the end of recoverability was lost by 176 to 206, while Lord Prescott’s amendment to do the same for privacy and defamation cases was more heavily defeated. However, Lord McNally indicated that further changes to the costs regime for defamation cases are likely to be included in the Defamation Bill, such as costs protection.

The government accepted an amendment to bring into the scope of legal aid cases in which the victims of human trafficking seek damages either in court or an employment tribunal, as well as providing legal aid to this group for immigration advice. Lord Pannick lost a vote to expand the ‘exceptional circumstances’ category for cases that would otherwise be out of scope of legal aid.

In all the government suffered 11 defeats in the Lords, the highest number for one bill for many years. The House of Commons will consider the amendments on 17 April, when it is expected that the government will try to reverse them all by arguing that the bill is primarily a financial measure, meaning the Lords has no power to stop it.

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