Lawyers complaining about the Legal Aid, Sentencing & Punishment of Offenders Bill have not considered the impact of alternative business structures in changing the way the legal profession works, justice minister Lord McNally said yesterday.
However, the eight-hour debate on the second reading of the bill raised the possibility of a concession over removing clinical negligence from legal aid and of further regulation of third-party litigation funding.
The Lords also heard that research to be published shortly will show the Jackson reforms will cost the public purse more than they will save.
Some 54 peers contributed to the debate – the vast majority opposing the legal aid cuts and Jackson reforms – and Lord McNally wound it up by saying that some of the “distinguished lawyers” who had spoken “do not fully appreciate that their profession is in flux”.
He continued: “The way law is delivered and by whom it is delivered is going to change. I do not think the full impact of alternative business structures and changes in the way chambers and solicitors are organised is fully appreciated yet. They will mean changes, and they may be changes that make a big difference to the way that legal advice is delivered.
“I heard the disparaging of telephone advice, but the world is changing and lots of people receive advice on the net and by telephone. Indeed, I went to the Law Society’s prize-giving for solicitor firms of the year and I was intrigued by how many of the prize winners now have web pages where people can go. You can get lots of advice for free before you press the button to hire them. It is a changing world in some of these things.”
Nonetheless, the Liberal Democrat peer said he took on board the “very strong concerns” voiced about removing clinical negligence from the scope of legal aid. “These issues have been raised with considerable passion and they merit closer scrutiny in committee,” he said.
Winding up for Labour, Lord Bach attacked the “decimation” of social welfare law as the “meanest and most wretched proposal of all”, and directly linked legal aid cuts with the Jackson reforms.
He said: “It is no use Her Majesty’s Government hiding behind Jackson because the whole world knows that they picked and mixed his conclusions as though they were choosing sweets. If there is one thing that Jackson was clear about – he was clear about a lot – it was that his proposals were a package to be taken as a whole or not at all. To many of us, as we have heard today, one of the key findings of Jackson was that there should be no reduction in civil legal aid.”
Lord Woolf had earlier made the same point, adding that on a whole the House could “make favourable use” of Lord Justice Jackson’s recommendations. He also stated with “absolute confidence” that some defendants have not contested cases because of the costs risk under the present regime.
Speaking of his experience as a mediator, he said: “While one was very anxious that justice should be done for claimants, it must also be done for defendants in the same position… In due course we will have to consider whether the proposals made in that regard will get us back to a situation where there is a fair balance between both parties in litigation.”
The Civil Justice Council will tomorrow publish its voluntary code of conduct for third-party litigation funders, but Liberal Democrat peer Lord Thomas indicated that this does not go far enough.
He told peers that he supported the principle that a lawyer ought never to have a financial interest in the outcome of a case. “I shall table amendments to continue that fight against the creeping advance of third-party litigation funding, which used to be called maintenance and champerty, to introduce regulation into a completely unregulated field.”
Lord Collins of Highbury, a Labour peer, said the Jackson reforms will cost the taxpayer rather than save any money. “In a paper shortly to be published by London Economics, Moritz Godel and Dr Gavan Conlon show that while the direct savings attributable to the Jackson proposals are substantial, estimates based on public data suggest that they will be outweighed by direct and indirect costs resulting in a sizeable net loss to the Exchequer of £70.2 million per year. The main sources of loss are tax and the recovery of payments from public bodies resulting from personal injury claims.”
Lord Gold, the former senior partner of City law firm Herbert Smith, supported the Jackson reforms, asking why litigants who enter into conditional fee agreements and take out after-the-event (ATE) insurance should be in a better position than privately paying clients who always have to make up a shortfall in their solicitors’ recovered costs.
He also predicted the bill would not bring down the ATE industry, saying the market is “more resilient than many fear”. Suggesting that ATE insurers make “rather a large” amount of money, “there will be room for the insurers to swallow some of the cost by reducing their premiums and thus reducing the cost that claimants have to contribute from their damages award. It is a question of finding the right balance. I would hope that, with a little pressure, we could move in the right direction”.
Hardly any peers mentioned the introduction of the ban on referral fees in personal injury. The bill will now go into its committee stage, where peers will scrutinise it line by line.