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Lord Hacking: My Lords, I should point out to the noble and learned Lord that that is not correct.

Lord Ackner: In that case, my Lords, perhaps I may read out what the brief says:

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Perhaps the noble Lord has not read that brief. Further, the Legal Action Group says:

    "Any general extension of conditional fees should be accompanied by a clear commitment by the government to keep their operation under review and to commission further research into the impact of conditional fees. In addition, the voluntary cap on the success fee of 25 per cent of damages should become statutory".

I do not know whether the group and the Law Society are also to be accused of fighting battles long ago.

Perhaps I may now deal with a few further matters. I begin with the vires of the Lord Chancellor. I am blamed for not immediately replying to an attack on the vires when, three years ago, the noble and learned Lord, in terms, contradicted his predecessor and said that it was well within his predecessor's power. It was because that was based on a forensic issue, where I assume that change in status does not mean a change in law, that I did not come complete with the full argument this evening. However, as my noble and learned friend the Lord Chancellor has himself given the barest of detail to support his proposition, I should point out that, in the debate on 12th June 1995 on conditional fees (at col. 1551 of Hansard), I said:

    "Your Lordships may remember that in the debate on 1st November my noble and learned friend the Lord Chancellor took the point that he is taking today; namely, that he has no power to make the provision to cap. I respectfully submitted that I and a number of my judicial colleagues with whom I informally discussed the matter did not accept that view. I drew attention inter alia to his wide regulation making power in Section 120(3) of the Act which provides: 'Any such regulations ... may contain such incidental, supplemental ... provisions or savings as the person making the regulations ... considers expedient'. In his letter of 24th March 1995 my noble and learned friend Lord Steyn"--

he was the chairman of the Lord Chancellor's advisory committee--

    "informed the Lord Chancellor that the committee did not agree that he had no power to impose such a limit or that to do so would be to attempt to modify his power to set a maximum increase in fees. My noble and learned friend gave his reasons in detail. They were as follows:

    'The committee finds that in the Act no expressed or implied restriction on that power such as to prevent its exercise in order to limit the proportion of damages payable to the legal advisers. The Committee recalls your substitution of the words "requirements" for "information" in an earlier draft of the provision at the Committee stage in the House of Lords. You then explained that "requirements" included, and went further than "information" so as to include, for example, the power to prescribe how conditional fee agreements should define success in the action. The Committee does not agree that a limit on the proportion of damages would modify your power to set a maximum uplift. Permission to increase a fee is logically distinct from any limit on the proportion of a particular source from which that increase may be satisfied. Moreover, the argument has no reasonable limit; it could presumably be said to apply even to your own example of a prescription of the way success in the action is to be defined. Such a definition would undoubtedly affect the amount of fees the legal adviser could recover'".

Those were the submissions that I hoped the noble and learned Lord the Lord Chancellor would meet if he were going to withdraw his previous concurrence of what is there set out. But it is of no great consequence because,

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as the noble Lord, Lord Hooson, said in the earlier debate,

    "If the Lord Chancellor does not have the power, for Heaven's sake he should seek it".

He added,

    "I do not believe that there would be any impediment either in this House or the other place in obtaining power".

With respect, I do not look upon this as a serious answer to the amendment I have suggested.

I deal now with the contingency fee point. The Green Paper from which the conditional fee agreements have come was itself headed "contingency fees". A conditional fee is a contingency fee; the contingency being the success or failure. Without the capping mechanism, the conditional fee can produce a situation which is far more lethal than the American system which is attacked. Under the American system, you cannot obtain more than 40 per cent. of the proceeds of success, but under the conditional fees without a cap you could burn up the entirety of the amount you succeed in recovering by doubling the fees. In fact, the then Lord Chancellor agreed that this was such a case.

I have few other points to make. The noble Lord, Lord Hacking, says that the cap raises problems with regard to a defendant. It raises no such problem at all. It has no relevance to the position of a defendant because, unless he is counter-claiming, there is no fund that he is recovering, and nothing to be the subject matter of a cap. As regards structured settlements, it is not difficult to make an exception in that particular case.

Finally, I deal with the point about the uplift and the insurance to be payable by the unsuccessful defendant. I cannot find any principle upon which this can be justified. If a plaintiff is short of funds and takes up a big loan to bring his ex hypothesi successful action, can he charge the unsuccessful defendant with the interest he has to pay on that loan? That is certainly not the case on any principle of which I am aware, but the situation is comparable. The person who takes out the conditional fee and the insurance is supporting his action in that way.

The noble and learned Lord the Lord Chancellor has given no assurance--although we have requested it--that there will be any immediate research or monitoring of what is taking place. Yet this order is to move conditional fees right across the civil litigation board, a matter which many of those who have spoken say is unsafe. In that situation I think I would be lacking in responsibility, having raised the point, in not asking for the views of the House.

The Lord Chancellor: My Lords, the original Motion was, That the draft order laid before the House on 16th July be approved, since when an amendment to the Motion has been moved to leave out from ("That") to the end and insert ("this House calls on Her Majesty's Government to withdraw the draft Conditional Fee Agreements Order 1998 and re-lay it in amended form so that the maximum amount payable under a

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conditional fee agreement expressed in percentage terms in relation to the amount of any sums which may be recovered shall not exceed 25 per cent."). The Question is, That this amendment be agreed to.

9.4 p.m.

On Question, Whether the amendment shall be agreed to?

Their Lordships divided: Contents, 24; Not-Contents, 55.

Division No. 3


Ackner, L. [Teller.]
Addington, L.
Carlisle, E.
Clement-Jones, L.
Craigavon, V.
Darcy de Knayth, B.
Greenway, L.
Hooson, L.
Hunt of Wirral, L.
Linklater of Butterstone, B.
Mackie of Benshie, L.
Maddock, B.
Mar and Kellie, E.
Meston, L.
Minto, E.
Renton, L.
Selkirk of Douglas, L.
Stair, E.
Steel of Aikwood, L.
Thomas of Gresford, L. [Teller.]
Thomson of Monifieth, L.
Thurso, V.
Tope, L.
Wise, L.


Alli, L.
Archer of Sandwell, L.
Bassam of Brighton, L.
Blackstone, B.
Borrie, L.
Carmichael of Kelvingrove, L.
Carter, L. [Teller.]
Chandos, V.
Cocks of Hartcliffe, L.
Currie of Marylebone, L.
David, B.
Davies of Coity, L.
Davies of Oldham, L.
Dean of Beswick, L.
Desai, L.
Dixon, L.
Donoughue, L.
Dormand of Easington, L.
Evans of Parkside, L.
Falconer of Thoroton, L.
Farrington of Ribbleton, B.
Gordon of Strathblane, L.
Graham of Edmonton, L.
Grenfell, L.
Hacking, L.
Hanworth, V.
Hardie, L.
Hardy of Wath, L.
Haskel, L.
Hayman, B.
Hilton of Eggardon, B.
Hoyle, L.
Hughes of Woodside, L.
Hunt of Kings Heath, L.
Irvine of Lairg, L. [Lord Chancellor.]
Jay of Paddington, B.
Judd, L.
McIntosh of Haringey, L. [Teller.]
Mackenzie of Framwellgate, L.
Monkswell, L.
Pitkeathley, B.
Ponsonby of Shulbrede, L.
Puttnam, L.
Ramsay of Cartvale, B.
Randall of St. Budeaux, L.
Rendell of Babergh, B.
Sewel, L.
Simon, V.
Smith of Gilmorehill, B.
Symons of Vernham Dean, B.
Thomas of Macclesfield, L.
Turner of Camden, B.
Watson of Invergowrie, L.
Whitty, L.
Young of Old Scone, B.

Resolved in the negative, and amendment disagreed to accordingly.

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The Lord Chancellor: The Question is that the original Motion be agreed to.

On Question, Motion agreed to.

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