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Earl Russell: My Lords, before being so confident about offering a precise quantification, should the noble and learned Lord remember that there are many rich bookies?

The Lord Chancellor: My Lords, I do indeed remember that. But all one should say is that this has not less then a 75 per cent. prospect of success. I personally would not find it a very difficult exercise to say that.

The noble and learned Lord, Lord Ackner, expressed deep disappointment with my attitude to civil legal aid. I have always known that the noble and learned Lord, for whom I have a high regard, and I would not agree on everything all of the time. I accept that the Lord Chancellor should fight his corner for justice. I appreciate that the noble and learned Lord was pressing the betrayal button rather early on in his speech. I am not a handmaid or a manservant of the Treasury. I repeat that the costs of legal aid will neither be reduced nor increased in real terms but will be refocused on the most vulnerable in society.

I am grateful to my noble friend Lord Mishcon for pointing out that it is middle income Britain that is shut out from access to justice by the present rules. That is what my conditional fees proposed extension specifically addresses. None of your Lordships, with the exception of those who have advocated a CLAF, has addressed any specific means of bringing middle-income Britain--the great majority of people in our country--in from the cold. I say to the noble and learned Lord, Lord Simon of Glaisdale, that that is the way in which I intend to bring in middle-income Britain. That will be one hundred times better than the present state of affairs where it is simply excluded.

Lord Campbell of Alloway: My Lords, I am much obliged to the noble and learned Lord for giving way. Why cannot these people be brought in without dismantling the legal aid system? That is what I cannot understand.

The Lord Chancellor: My Lords, there is no money to bring them into the legal aid system. That is the short answer. Legal aid for middle-income Britain must take its place in the queue of other candidates for scarce public resources such as schools and hospitals. I am not persuaded that the country would prefer to spend more money on legal aid for middle-income Britain than more money on schools and hospitals. I welcome the support of the noble Lord, Lord Mishcon, for the proposition that this is probably the only way forward.

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It is said that the gap in the programme is the matter of the other side's costs, the insurance premiums, disbursements and the like. Conditional fee agreements are profitable contracts for solicitors when they win cases. Every other business incurs investigation costs in assessments of the potential for profitable investment in order to decide whether to enter into a contract on the basis that it is likely to prove profitable. It is only lawyers, reared in a legal aid culture, who are paid, win, lose or draw and who want to be exempt from what every other business in the country would regard as an ordinary business cost to be borne by the business to investigate whether a particular contract is worth their commercial interest to enter into.

Lord Ackner: My Lords, I am grateful to my noble and learned friend for allowing me to intervene. He has said repeatedly, "every other business". Is he drawing no distinction between businesses and professions, or are they all to be treated alike?

The Lord Chancellor: My Lords, I draw no distinction between lawyers as a business and other businesses from the standpoint of determining whether it is right that they themselves should bear the cost of investigating whether it is commercially right for them to enter into contracts as part of their business on the footing that they are profitable.

I enjoyed the contribution of the noble Baroness, Lady Wilcox. It is undoubtedly refreshing to have non-lawyers contributing to our arcane discussions about contentious legal issues. I welcome the fact that many noble Baronesses chose to do that. It may be, as the noble Baroness said, that more research is required, and I am ready to consider that. But I remind her that the PSI research to which she referred accepted that many of the potential problems identified before conditional fees were introduced seemed to be successfully addressed. I shall certainly consider and take account of what she said about the need for monitoring. I shall consider carefully her proposal about monitoring damages to see that successful plaintiffs do not end up paying lawyers too much. It may be that a case will be made out for stronger regulations.

The noble Lord, Lord Taverne, spoke in a supportive sense, although not unqualifiedly. He acknowledged that it may be unfortunate that lawyers are paid by the hour on a time basis because then they have an inevitable incentive to spin out cases. I take that to be implicit support, which I welcome, from the noble Lord for the fixed-fee contracting to which we shall be moving. Nothing concentrates the mind more than a fixed fee. Nothing operates more as a disincentive to spinning out costs.

The noble and learned Lord, Lord Hoffmann, detected in the contributions of many of your Lordships a belief that justice is of infinite value and something on which the Treasury's cornucopia should be boundless. I repeat that I am not the handmaid or the manservant of the Treasury by declining to adopt such an impossible brief. I welcome the noble and learned Lord's realism. It makes his support that much more valuable. He says that the key is to give the lawyers a stake in the outcome

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of the case so that costs are not unnecessarily driven up to the potential prejudice of their own pockets. I invite your Lordships to remember that if the lawyer has a stake in the outcome, he has an interest to work hard and effectively for his client to secure his own reward.

I welcome the general support of the noble Baroness, Lady Kennedy. I note her concern that some poor people presently protected by legal aid may fall out of protection. That is certainly not my intention. I note her apprehensions with regard to solicitors who have no fat but who provide a valuable service to the poorest parts of our country. My department is analysing the funding and the matter of insuring against the risks and costs of cases to enable me to be satisfied that lawyers will profitably take on poor people's cases. If I find that that is not possible in some cases, I shall of course consider how taxpayers' money might continue to help to fund such cases. That, too, is my response to the noble Baroness, Lady Williams, who expressed a similar concern.

I welcome the sympathy that the noble Lord, Lord Hacking, expressed for the problems that I have inherited and his specific welcome to my proposals to go over to a system for contracting fixed fees.

The noble Lord, Lord Goodhart, complained of an over-hasty substitution of conditional fee agreements, which, he claimed, were spoken of by almost all of your Lordships. We shall all read Hansard, but I do not regard what the noble Lord said as an accurate summary of our debate today. I have experienced broad support for many parts of my proposals from many quarters of the House.

The noble Lord, Lord Goodhart, supports a contingency legal aid fund. I listened carefully to the reasoned speech of the noble and learned Lord, Lord Brightman, supporting that proposition and I shall consider it with care. I note, too, the support for that proposition from the noble Lord, Lord Thomas of Gresford.

It is true that Sir Peter Middleton said that it is worth exploring CLAF. The noble and learned Lord, Lord Brightman, quoted Sir Peter and I agree with what he said, but I remind your Lordships that in his previous sentence Sir Peter wrote:

    "My preference would be to emphasise the development of conditional fees, because they put the risk on those best able to manage it".
I have to confess that despite having listened to the arguments of those who favour a CLAF, I continue to have the reservations that I expressed in my opening speech. The Bar is still the main proponent, but it is still not ready to put before me the fully worked out scheme that I want and which I undertake to consider with great care when it is put to me. I hope to receive it very soon. But that is down to the Bar and not me.

The main argument in favour of CLAF was that the lawyers would always be paid. That is really the point. To my mind, CLAF does not have the merit of a stake in the outcome, which is the critical feature of conditional fee agreements and is an incentive to greater efficiency.

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The noble Lord, Lord Windlesham, asked me a number of questions. I hope that he will permit me to write to him so that my reply to this debate is not of inordinate length. In my speech I dealt with the question of how to identify and deal with public interest cases. I said that they would include cases under the Human Rights Bill. I also said that cases brought in domestic courts under that Bill would, when that became law, be covered by the present legal aid system. Once the convention is incorporated, cases brought under it before the English courts will fall within the scope of the present legal aid scheme. Therefore, those bringing such cases, including prisoners, will have to meet the criteria that all civil legal aid applications must meet. It is no part of my intention to remove judicial review proceedings from legal aid. I hope that I have been as clear as I possibly can.

In reply to the noble Baroness, Lady Williams, a lesser merits test may well be appropriate for public interest cases. I have noted and will consider her sensible suggestion that the decision as to which cases go forward as meritorious should not necessarily be taken exclusively by lawyers but that people with a broader experience of the world should be included.

I welcome the generous expression of support for my proposals by the noble Baroness, Lady Oppenheim-Barnes. It is particularly welcome coming as it does from a distinguished past Minister of State for Consumer Affairs and chairman of the National Consumer Council. I also welcome the support of the noble Viscount, Lord Bledisloe, for my daring to grasp the nettle. It is a nettle that must be grasped. I also welcome the support of the noble Baroness, Lady Dean. She was kind enough to commend my courage for tackling this issue. She had the courage to survive as the general secretary of SOGAT. In response to her concerns I can inform her that recently I met the general secretary of the TUC, who was accompanied by distinguished trade union leaders. I am considering the representations that they have made to me about personal injury cases, particularly their concerns about a fixed cost regime in the fast track.

I apologise to your Lordships if any unattractive, anti-lawyer spin is being put on these proposals, but there are some truths about the fees earned from legal aid which simply must be told in the public interest. I like to believe that I am not cynical about my profession. I hope that I am neither an optimist nor a pessimist about legal practice but only a realist.

The noble Viscount, Lord Bledisloe, raised some difficult questions on which I shall write to him. I do not attempt to give an authoritative answer this evening. But the very poor litigant may not want insurance because in practice a successful defendant will be unable to recover costs from him. Middle-income plaintiffs would, however, want insurance cover because it would be worth while for successful defendants to pursue them for costs. As to the more technical position of solicitors, I believe that they may be subject to a different risk if they take cases forward for uninsured plaintiffs. I believe--I shall confirm this--that a Court of Appeal judgment is awaited on the question of whether a solicitor may be legally liable to the defendant in these

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circumstances for having maintained the action. I also say to the noble Viscount that I do not rule out the possibility that a green form, or special fund, may be created for cases where the investigation costs would be very high if no other alternatives could genuinely be found.

I welcome especially the fact that the noble Lord, Lord Kingsland, thought it right to congratulate me on boldly tackling this, as he put it, intractable problem. I am grateful to him also for the measure of support that he felt able to give me from the Dispatch Box at which he stands.

The noble Lord, Lord Thomas of Gresford, urges festina lente--hasten slowly. I do not wish to proceed with undue haste, but the Latin tag does not live happily with a state of affairs in which expenditure continues to grow at about 8 per cent. per annum--a rate well above inflation.

We are consulting widely. The contributions made by noble Lords today will help to shape the consultative documents which we shall be issuing. I shall gladly listen to any further views from your Lordships and others when those consultation papers are published.

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