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Lord Lester of Herne Hill: My Lords, I am grateful to the noble and learned Lord for giving way. Does he accept that there is a serious problem for the poor living in slums and areas of deprivation obtaining access to lawyers and being able to assess whether or not conditional fee agreements are in their interests? Does he accept that as regards the poor there are serious concerns about these proposals?

Lord Hoffmann: My Lords, I hope that in those areas the poor will be given assistance perhaps by citizens advice bureaux and so forth to enable them to make an informed choice among the conditional fee agreements that are offered. That is the only way in which some kind of transparency can be introduced into the market as between lawyers offering their services.

I come to the question of certifying those cases which have a high prospect of success for the purposes of legal aid. I applaud this proposal. It is not enough that a case should be, as the lawyers say, arguable or have a realistic prospect of success. There are few cases that are not arguable to a barrister and solicitors who will be instructed if legal aid is granted. Is 75 per cent. too high? There is no logical figure.

Lord Simon of Glaisdale: My Lords, perhaps my noble and learned friend will allow me to intervene. Is it not a question of whether a case is more likely to succeed than not, rather than that it is arguable?

Lord Hoffmann: My Lords, as I understand it the present criterion is that the case is more likely to

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succeed than not. But there is no logical threshold. Wherever one puts the threshold it is designed to prefer cases with better prospects over those with worse ones. Where one puts the figure depends on how much money is available. If there is plenty of money one can afford 40 per cent. or 50 per cent. The Lord Chancellor must be entitled to say that the resources at his disposal require 75 per cent. Critics say that means that cases that might have been successful under the previous system will now not be fought. That is quite right. That is the inevitable consequences. However, that is inherent in any system. Your Lordships would be wrong to compare the proposals of the Lord Chancellor with an idealised system in which everyone got his desserts. The question is whether it is likely to be better than what we have now, and in my view it certainly is.

Lord Ackner: My Lords, before my noble and learned friend sits down, does he agree that there is a very marked difference between the English and American systems? This relates to the suggestion, following the proposal of Sir Peter Middleton, of a contingency fee where a percentage of the damages is taken. In America, juries realise that that is the system and they lay off for it; in other words, if the damages are x they add on y knowing that that represents what the lawyer should get. Here the damages will continue to be calculated as to what is fair compensation. If one takes the case of a child who has been badly injured, the figures will be worked out so that the child can be compensated with regard to future care and so on. All that money is calculated on the basis of the child's need. If one has a contingency arrangement 30 or 40 per cent. of that will go to the lawyer. Therefore the child or any other injured party will be substantially uncompensated. That can change only if the judges here lay off for the contingency figure, which from a forensic point of view would in my view be most unjust vis a vis the defendant.

Lord Hoffmann: My Lords, my noble and learned friend Lord Ackner is quite right. Figures for damages awarded by juries in America are vastly inflated. Indeed, that is probably one of the temptations to unethical practices which exist in the United States. It would be difficult to resist behaving unethically if the temptation was to win a case which would result in one gaining 40 per cent. of $200 million. As a result of these proposals those children who receive damages--I include in that any other litigant--will get less because they have to pay part of the damages to their lawyers. On the other hand, those people who previously could not go to law at all will get something. There are winners and losers.

6.45 p.m.

Baroness Kennedy of The Shaws: My Lords, I begin by welcoming the important and principled start of the Lord Chancellor in reforming legal aid. He is absolutely right in identifying the escalation of costs to the public purse. It is a source of shame among many of us in the legal profession that there are individual lawyers earning £200,000, £300,000, £400,000 and even £500,000 per annum out of the legal aid fund. It is nothing short of a

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scandal that remuneration paid for by the taxpayer should reach such levels. Undoubtedly, changes must be made. I am delighted that the Lord Chancellor has repeated his willingness to enter into constructive dialogue with the legal profession and any interested parties in pursuit of reform.

The noble and learned Lord, Lord Hoffmann, reminds us that legal aid was invented by the post-war Attlee government. It was not created so that lawyers could make money out of human misery; it was about servicing need. That great Labour government understood all about social exclusion. It knew that our legal system was like the Ritz. It was of the highest quality and was open to all as long as they could pay. The principle at the heart of the system which was then created was the belief that access to justice had to be available to all and that it was one of a decent society's objectives. The post-war government believed with a passion that the poor were just as entitled as the rich to legal remedies and something had to be done to give meaning to that belief.

When I was a small child my mother, a doughty working-class woman in Glasgow, was struck by a falling slate. It fell from the roof of a tenement building on which men were working. Her head was split open, her eye was damaged and she was out of action for several weeks. I remember well that concerned neighbours advised her to see a solicitor. But the concept of legal aid was still very new and even she, the doughty woman that she was, was fearful of stepping into a lawyer's office. She was worried that it would involve an outlay of money, which was all too sparse.

Those who are not well off do not go willingly to law even today. They are afraid of the legal system because they do not believe that it belongs to them. The challenge of ensuring that the law is not the privilege of the rich remains with us. We should be as clear now as the Attlee government were then that making the law available to all is one of the measures of a just society. The Lord Chancellor will be as concerned as that government to ensure that the principles of access to justice for all should inform whatever changes take place.

The noble Lord, Lord Lester, referred to fat cats. I speak as perhaps one of the leanest lawyer-cats in this House. I have spent the whole of my professional life doing legal aid work--and not of the overpaid fraud trial variety. I believe that I speak from a position of knowledge when I say that there are many solicitors and barristers who are deeply committed to representing those who have the least voice in our society. They are not lawyers who make very much money but they believe in liberty and justice--lawyers who seek to expand the frontiers of the law in a changing world. They are lawyers who act for poor litigants in actions against public authorities where their rights have been wickedly abused.

Those lawyers will be greatly reassured by the commitment to them and the work that they do of my noble and learned friend the Lord Chancellor. Those lawyers are probably not in the least self-interested or self-serving when they express their anxieties about a

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new form of legal aid. They ask that the noble and learned Lord consider, in the Government's review, the maintenance of legal aid for poor litigants who want to find out whether they have a case. That is the exploratory funding to which some other speakers have referred. The opinion of an expert is sometimes necessary before it is possible to evaluate whether someone has a good case. That was mentioned by my noble friend Lord Mishcon.

Noble Lords may feel that lawyers should be prepared to invest money in the potential return referred to in the Lord Chancellor's opening speech. However, there are lawyers whose firms are run wholly on legal aid and who are in communities such as those described by the noble Lord, Lord Lester. They may be in slum areas. There are lawyers whose commitment is real and where there is no slack in the system that they operate. Their profits are marginal. Those tight margins would not allow them to put forward the sums of money which may seem meagre but which would be considerable for them. So we must be concerned. I know that the Lord Chancellor will be concerned to ensure that such firms of solicitors are protected and that there is legal provision for the type of client that I have described.

Noble Lords will be aware that the public funding of dentistry is supposed still to exist. Yet it is hard for us to find a dentist who still performs under the NHS. There are good reasons for that. Many would say it is because of the way the cuts have taken place. It would be terrible to see that happen in relation to legal provision.

Among the lawyers of whom I speak there is also concern that a poor client might have a reasonable case but that damages would not be at a level which would make the case a commercial proposition for the lawyer. The sums involved may be only £5,000, £10,000 or £20,000. The rewards for the lawyers would not be enough to justify the risk of taking on such cases. So, for example, it may not be worth a solicitor taking on the case of someone like my mother with her head injury because the compensation may not be great enough for him or her. It would have been significant for my mother.

The market does not work well for the poorest in our society. I was recently involved in a review of the availability of further education. Market principles have been introduced into the running of colleges. What has happened is that the colleges pursue the obvious student--the student who is likely to succeed easily. Many of the students who are fearful of continuing education, who find it harder to get in and who have problems about staying in are those that the colleges do not feel worth pursuing because of the resources involved in keeping those students on board. I ask my noble and learned friend to consider ways in which people might fall through any new system and to seek to prevent that happening.

I am especially pleased that my noble and learned friend recognises the importance of ensuring that public interest cases are funded properly. It is crucial that

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public servants do not abuse the law, hold themselves above it and cock a snook at the citizens. It is clearly in the public interest that officials should be accountable.

In the set of chambers in which I work, a significant number of actions over the years have been taken against police officers, prison officers, immigration officers and other officials for abuse of their power. Knowing that remedies may be sought in the courts is one of the ways of keeping certain kinds of policemen honest, I am afraid.

The problem I raise with the House is not that the plaintiffs in cases alleging police assault are invariably lying. They are often people with previous convictions. They may often be people with mental illness or drug problems. They are not people who will be readily insured. I ask that that is taken into consideration when the Lord Chancellor considers reform.

Those are not people who are readily believed. It would be difficult for lawyers taking on such cases to say that they fulfilled the 75 per cent. chance of success criterion. Yet those people can often be telling the truth about having been beaten up in police custody. They would never be accepted on a conditional fee basis. There is a famous case of which most criminal lawyers are aware. It is known about in the civil courts also. It is the case of a man with previous convictions called Treadaway. He was taken in by the West Midlands police, whose behaviour became somewhat notorious, as the House will be aware, in cases throughout the 1970s and 1980s. He was taken into custody in an inquiry about an armed robbery. He was subjected to what became known as the "bagging" procedure. A plastic bag was put over his head until he was on the point of losing consciousness. He ended up confessing to a crime. He was convicted. He sought to take legal action against the officers in the case.

That case was successful. It was tested to a high level by Mr. Justice McKinnon. Those police officers were found by him to have behaved appallingly against a man with a criminal background by forcing him to confess to a crime which, on balance, it could not be accepted had been committed. The conviction was overturned ultimately in the Court of Appeal. That case pointed out how vulnerable people in police custody can be. It is crucial that legal aid be maintained for such cases--cases against public officials and arms of the state where people might be abusing power.

The black community is worried because a number of the most prominent cases in recent years relating to police assault have involved young black men being arrested unfairly, manhandled and assaulted by police officers. If legal aid were not available in such cases, the public interest would not be served.

I am sure that I share with many members of the legal profession a welcome for the idea of a public interest fund; for example, for test cases, although I hope that legal aid will be maintained for the kind of cases that I have described. However a public interest fund might be invaluable for taking on test cases of public significance, such as cases involving informed consent or the sterilisation of the mentally ill. It is important for the medical profession to know what are the rules. Clarification of the law is always to the public benefit.

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If my noble and learned friend the Lord Chancellor is seeking new ways of finding money for the Legal Aid Fund, which would keep the Treasury happy, I shall make a number of suggestions. The idea arose in the past but it has not been considered recently. Solicitors' client accounts earn interest. When people pay money to a solicitor during the preparation of a case that money goes into an account. It creates interest, which could make a sizeable contribution to the Legal Aid Fund. In New Zealand and Australia the interest on solicitors' client accounts is used for the furtherance and development of the law.

I have a friend who is a judge in New Zealand. He was in this country recently and he explained to me that that money was used for conferences to advance a legal issue. There is a precedent for such a use of that interest in that the Bank of England is funded by the interest on deposits made by commercial banks. That is one of the reasons why the wine is so good if one goes to a dinner or another function at the Bank of England. Will the noble and learned Lord consider whether the interest on solicitors' client accounts can be used as I suggest; that is, to supplement the Legal Aid Fund and to ensure that it is maintained at a level which will satisfy the anxieties expressed by committed lawyers?

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