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Judicial System

10 pm

Jeremy Corbyn (Islington, North) (Lab): I wish to present a petition on behalf of Dick Lucien Chitolie, a constituent of mine, and Christine Elaine Hanson.

The petition declares:

To lie upon the Table.
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Law Society (Complaints)

Motion made, and Question proposed, That this House do now adjourn.— [Mr. Ainger.]

10.1 pm

Mr. Nigel Beard (Bexleyheath and Crayford) (Lab): I   welcome Sir David Clementi's final report on legal services in England and Wales and I was pleased to hear of the Lord Chancellor's speech today at the legal services reform conference where he announced the future establishment of a legal services board and an office for legal complaints. Such a large reform and liberalisation of legal services cannot happen overnight and I therefore want to draw attention to structural deficiencies in complaints handling by the Law Society that need to be addressed immediately. The case of my constituents, Mr. and Mrs. John Andrews makes it clear how urgent and necessary that improvement in complaints handling has become. I realise that the Minister will be unable to comment on the specific details of the case, but it shows the background of my general points about the Law Society's performance.

At the beginning of 1995, the late Mrs. Patricia Andrews of Welling in my constituency, realising that she was critically ill with cancer, instructed Ms Gill Scott, a solicitor with a local firm, Woolsey, Morris and Kennedy, to arrange her will. The executors were to be a family friend, Mr. Heaton-Smith and the solicitor, Ms   Scott. The estate was to be passed into trust, primarily for her son, Mr. John Andrews.

Mrs. Patricia Andrews died on 7 June 1995. What followed was three years of delay, poor service, unsatisfactory decision-making and possible misconduct by Ms Scott, all of which resulted in huge financial loss to the estate and years of distress for Mr. Andrews. Ms Scott was finally removed as co-executor by the High Court in March 1998. Sadly, that was not the end of the affair because, some seven years later, the new executors are still trying to recover the financial losses and the estate cannot be released.

This was not a complex probate case. There were some savings, some shares and two properties, one with a disputed mortgage, all to be transferred into a discretionary trust. It is difficult to understand why there were six-month periods of inactivity and why so little had been achieved at the time of Ms Scott's removal as executor.

Ms Scott failed to keep accurate accounts and did not know the estate's value when she was removed. She was guilty of misconduct in transferring £500 from the client account to the office account without first rendering a bill. She broke practice rule 15 in failing to provide a letter containing her charging policy, which might have avoided the dispute over costs at a later stage. In fact, she continually failed to provide cost information and at the time of her removal as executor the administrative costs of handling probate amounted to £10,800, compared with an original oral quote of £900.

Perhaps Ms Scott's most serious error related to one of the properties in the will. The late Mrs. Andrews had transferred a mortgage in the 1980s from an endowment policy to a repayment mortgage, only to find out some 13 years later that the building society had never made the transfer.
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The building society admitted liability and made a generous offer of a £15,000 interest-free mortgage. Both the lay executor, Mr. Heaton-Smith, on the advice of independent solicitors, and Mr. Andrews were happy to settle. However, Ms Scott decided that the estate should litigate. Sadly, the case was lost, resulting in the estate being required to pay both sides' litigation costs and a full mortgage of £22,500. Plainly, there was a conflict of interest, with Ms Scott as executor instructing her own firm to litigate and the resultant income that it gained from the case. As a direct result of Ms Scott's behaviour, the estate was required to pay a total of £40,000 plus interest, rather than the £15,000 interest-free mortgage that had been offered.

Ms Scott did not fulfil her oversight obligations to the   property in question, 56 Colmer road. The tenant repeatedly complained about the state of the property, but Ms Scott procrastinated about funding the repair work. In the end, the estate was forced to sell to pay for the now extensive repairs and associated litigation by the tenant. If only Ms Scott had inspected the property when Mrs. Andrews died and paid for the then minor repairs, that could all have been avoided.

In summary, Ms Scott was intransigent, made a catalogue of mistakes and did not administer the estate properly. As a direct and indirect result of the decisions she took, the cost of handling probate amounted to £35,000 more than it should have done. However, as my summary implies, the total costs were much greater than that. In being forced to sell the house, Mr. Andrews lost the value of the property, he lost future rental earnings and, thus, the investment potential from other buy-to-let properties. A conservative estimate of his loss would be some £500,000. Furthermore, Mr. and Mrs. Andrews could not draw on the residual estate value to aid them when their business and livelihood experienced serious financial difficulties. This affair has had a cataclysmic effect on the Andrews' lives.

I turn now to the handling of the consequent complaint by the Law Society. Mr. Andrews first complained in 1999. Ms Scott immediately submitted a formal bill for taxation proceedings, effectively a stalling tactic as the Law Society refuses to continue an investigation while court proceedings are under way. The second stage began almost two years later in December 2001, when Mr. Andrews came to see me at one of my surgeries. He and I wrote to ask for the file to be reopened, and that is when the endemic pattern of delay at the Law Society became apparent.

First, there was uncertainty over whether the Law Society would investigate. Then the local conciliation officer took three months to submit his formal report. That meant that it was four and a half months before the investigation stage even started. The investigation started in July 2002. It did not conclude until December 2003. It is a disgrace that such a complaint should take 23 months to be concluded, even if one accepts the Law Society's original rejection of the complaint. When the report was published, it was four years and one month after the moment the complaint was first raised.

In 2000, Professor Richard Moorhead of Cardiff university produced a very comprehensive report on complaints handling, commissioned by the Law Society,
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entitled "Willing Blindness?". It did not pull any punches. Professor Moorhead found that persistent and pervasive delay

Although that quote is from 2000, my constituents' experience through to late last year suggests that very little has changed.

Another significant issue for my constituents was the Law Society's artificial distinction between inadequate service and professional misconduct, which Sir David Clementi highlights. The Andrews could ask for misconduct to be investigated, but not inadequate service, as neither Mr. Andrews, the beneficiary, nor Mrs. Andrews, the new executor, were clients of Ms   Scott. That raised the absurd situation whereby, in the eyes of the court, the Andrews are the clients and should pay, but in the eyes of the Law Society, they are   not the clients and therefore can receive no compensation and very little protection.

Mr. Andrews was also frustrated by the lack of transparency. At the moment, no one can ring to find out whether a complaint has been lodged against a specific solicitor. That means that we have no idea whether Mr. Andrews's complaint is an isolated example or whether there is a pattern of mistreating clients in the firm.

To finish with the most serious element, it seems that the major fault of the Law Society in this case is an apparent bias towards the solicitor and a lack of robustness in exacting punishment. Both may be due in part to the training of caseworkers. Mr. Andrews had four different caseworkers and there was a worrying lack of consistency. For example, the first caseworker never told Mr. Andrews that she would not investigate inadequate service on his behalf, whereas the second picked up on that straight away.

"Willing Blindness?" highlighted many such concerns about casework and adjudication panels. It found that

—the combination of inadequate service and professional misconduct—

It also found

Even when the Law Society does find a solicitor guilty, little appears to happen. Ms Scott was found guilty of three complaints, yet she does not appear to have been punished or reprimanded in any way. From April to September 2004, after the rebranding of the consumer complaints service, only 5 per cent. of complaints were upheld with action taken. That tiny level of convictions makes it clear that the scales of justice are firmly tipped against the man in the street.

Which?, formerly the Consumers Association, has repeatedly backed up the conclusions that I have drawn and supports an end to self-regulation. In its 2004 survey
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of solicitors, 71 per cent. of those who responded complained about excessive delays and 59 per cent. about negligence. More than 40 per cent. of those who said that they had received poor service failed to complain, which implies that the problem is even greater than the one in five solicitors who are complained against at present. Those who did complain did not feel   that they had fared much better. The legal ombudsman's annual report backs that up: she was satisfied with the quality of complaint handling by the Law Society in only 53 per cent. of last year's cases.

As I said at the opening of my speech, the large-scale reform suggested by the Clementi report might take years to come about. I appreciate that that is why the Government took the responsible step of activating the legal services complaints commissioner. I am also very heartened by the Law Society's recent decision to set up a separate body for consumer complaints, with a lay majority. That is a positive step and I hope that this debate will inform its work.

Nevertheless, I ask the Minister as a matter of urgency and in combination with the legal services complaints commissioner to bring pressure to bear on the Law Society to make some immediate changes. Those include:   eliminating the artificial distinction between inadequate service and professional misconduct; punishing infringements of practice rule 15 much more rigorously; making the process much more transparent by making both conditions on practising certificates and the complaints history against a firm a matter of public record; giving wider publicity to disciplinary findings; referring sanctioned solicitors to the solicitors disciplinary tribunal if they repeat an offence; and either making the adjudication panel minutes public or always allowing oral hearings.

None of those changes can undo the financial loss and years of depression experienced by Mr. Andrews and his family, the second element of which has certainly been increased by the Law Society's unimpressive performance. The changes could aid some of the 17,000 members of the public who, on past experience, will complain about solicitors in the next year.

Most people come into contact with the law on only a few occasions, and their depth of knowledge of procedure is shallow compared with that of lawyers. Their relationship must perforce depend on trust in a solicitor's competence. For whatever reason in the case of Mr. and Mrs. Andrews, that trust was unjustified. Such cases will inevitably arise, although every step should be taken to ensure that they are rare. The Law Society has a central role in ensuring that trust is justified by giving an objective reprimand to people whose standards of practice and behaviour fall below reasonable expectations of good faith and competence. The overwhelming weight of evidence, as exemplified by Mr. and Mrs. Andrews' case, suggests that the Law Society itself, through bias, obscurity and delay, has fallen below reasonable expectations of good faith and competence. I therefore urge the Minister to ensure that the findings of the Clementi report are implemented speedily and to take steps in the meantime to eliminate the most blatant inadequacies of the Law Society's present arrangements.
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10.16 pm

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