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Lord Kingsland: I thank the noble and learned Lord for his response. In the circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Clinton-Davis moved Amendment No. 210:

Page 15, line 30, leave out from ("agreement") to end of line 32.

The noble Lord said: The amendment stands in my name and that of the noble Lord, Lord Kingsland. The agreements which are set out in Section 58(2)(a) are already permitted at common law, as I understand it. Without statutory requirements, many are likely to be in existence before any new statutory provisions might come into force.

I submit that the public interest is to ensure that conditional fee agreements with improved fees comply with specific requirements. There is not the same need to be prescriptive where legal representatives agree to work for less than their normal fee, if unsuccessful, but do not seek to charge more than their normal fee, if successful. I beg to move.

Lord Falconer of Thoroton: Perhaps I may deal with Amendments Nos. 210, 211 and 213 together. The purpose of Amendment No. 210 in the names of the noble Lords, Lord Clinton-Davis and Lord Kingsland, is to remove entirely from the revised Section 58 of the Courts and Legal Services Act 1990 which is proposed by Clause 27(1), Section 58(3)(c). The subsection provides that a conditional fee agreement,

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The purpose of Amendment No. 211 is to insert into Section 58(3) a new paragraph (d) which provides that the agreement,

    "may only be entered into by a person or body supplying advocacy or litigation services who is solvent throughout the currency of the agreement".

Lord Kingsland: I am grateful to the noble and learned Lord for giving way. I should already have intervened to tell him that I shall not move Amendment No. 211.

Lord Falconer of Thoroton: I am grateful for that. I shall therefore deal with Amendments Nos. 210 and 213, which I believe still apply, although Amendment No. 211 may not be moved. I cannot accept the amendments. Part of the purpose of the revised Section 58 is to bring into statute the effect of the decision in Thai Trading v. Taylor which has approved certain conditional agreements as being lawful at common law. Thai Trading does not sanction conditional fee agreements prescribing a costs uplift in the event of success. It sanctions solicitors agreeing with their clients to recover less than their normal fee if they lose. In theory, therefore, they could recover nothing. But if they win, they are able to recover the full costs from the unsuccessful defendant despite the agreement for a reduction with their own clients.

Regulation of those kinds of agreements is therefore at present subject to the common law, overseen by the courts. I believe it is right that, as we are bringing these agreements within the statute law, the Lord Chancellor should be able to regulate the agreements under statute. At some time there may be a need to address issues concerning consumer protection or undesirable practice, and the Lord Chancellor must have the means to do that. The Lord Chancellor has no intention of seeking to prescribe requirements, at least initially, for anything other than conditional fee agreements that provide for enhanced fees. He would wish to see similar provision being made along the lines of the present Conditional Fee Regulations 1995 in relation to those agreements--for example, the circumstances in which the success fee becomes payable must be stated. I am quite sure that those noble Lords who are concerned about consumer protection expect nothing less of the Lord Chancellor.

I am confident that the Lord Chancellor will not need to prescribe requirements for those agreements which do not provide for enhanced fees--a matter with which my noble friend Lord Clinton-Davis dealt. However, if it should prove necessary to set minimum standards it is right that provision is made in the legislation to allow for that to be done. In the light of the remarks of the noble Lord, Lord Kingsland, I do not need to deal with Amendment No. 211 and, in view of what is in the mind of the Lord Chancellor, I ask my noble friend to withdraw his amendment.

Lord Clinton-Davis: I shall certainly consider the words of my noble friend. It may be necessary to return to this issue perhaps in another form. It is important that the law in relation to contingency fees should be clarified; more importantly, steps should be taken to

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prohibit pure contingency fees entirely. I would rather come back perhaps with another amendment to elaborate the point. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 211 not moved.]

Lord Goodhart moved Amendment No. 212:

Page 15, line 32, at end insert--
("( ) A conditional fee agreement of the type described in subsection (2)(a) shall not be unenforceable simply by reason of its being made prior to the coming into force of this Act.").

The noble Lord said: No-win, no-fee agreements without enhanced fees have been common for some time in certain fields not covered by the specific authority of the Courts and Legal Services Act 1990. As a number of Members of the Committee will be aware--certainly including the Lord Chancellor--it was decided by the Court of Appeal a number of months ago in the Thai Trading case that such agreements were lawful and could be enforced. For the benefit of Members of the Committee who are not familiar with that case, there the successful defendant's lawyer acted on a no-win, no-fee basis. The losing party, the plaintiff, was then ordered to pay the costs and argued that it could not be required to pay the defendant's lawyer's fees under the court order because the no-win, no-fee agreement was unlawful and gave the lawyer no right to cover his fees. That argument was rejected and the losing party, the plaintiff, was ordered to pay. But a decision of the Court of Appeal within the past few weeks, Hughes v. Kingston-upon-Hull City Council has suggested, without actually holding, that the Thai Trading case was wrongly decided. If so, clients who have entered into no-win, no-fee agreements and are successful cannot recover their lawyers' fees under the court order and the lawyers who have entered into no-win, no-fee agreements cannot recover from their clients if their client should be paid the costs. The purpose of this amendment therefore is to remove any doubt as to the validity of the Thai Trading decision and legitimate all arrangements entered into in reliance upon it. There are some minor drafting defects in the amendment, but it is obviously a fair one and I hope that the Government will accept it in principle. I beg to move.

Lord Falconer of Thoroton: The purpose of this amendment is to make lawful any agreements of the kind envisaged by what will be Section 58(2)(a) entered into before,

    "the coming into force of this Act".
I am not sure to which Act the noble Lord's amendment refers.

Lord Goodhart: That is one of the drafting defects to which I referred. I believe that the amendment should make reference to "this section".

Lord Falconer of Thoroton: I am grateful to the noble Lord. If this ever came back, obviously that matter would be put right. I am a little surprised that this amendment has been moved because it invites

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Parliament to make retrospective legislation. Whichever Act is intended to be referred to--the noble Lord has made clear what he has in mind by his intervention--agreements that might have been unlawful at the time they were entered into would be legitimised by this amendment. I do not believe that that is a particularly desirable outcome and may well lead to the reopening of cases or situations that have otherwise been treated as settled.

The problem that this amendment seeks to cure is that, since the decision in Thai Trading, to which the noble Lord has referred and which allowed lawyers to agree to charge less than their normal fees if they were unsuccessful on behalf of their clients but to recover their costs if they won, the common law authorises the use of these kinds of fee arrangements. However, as the noble Lord has very frankly said, the common law is subject to development and change by the courts in subsequent cases and it may be that the effect of Thai Trading will change over time. The Hughes case suggests that that is the position.

I do not see that I can do more in this regard than I am doing to make these agreements lawful at statute law. Parliament rightly makes retrospective legislation only exceptionally. I do not believe that this is an appropriate circumstance in which to do so. In effect, the noble Lord seeks to say that all of the Thai Trading-type cases whenever they arose should be treated as lawful when the position may be--I do not know--that the common law will say that they were unlawful. I therefore ask the noble Lord to withdraw his amendment.

Lord Goodhart: I am disappointed by the reply. While I accept that Parliament should not normally legislate on a retrospective basis, there are exceptions to that. One of the exceptions that has been applied on a number of occasions in the past is where an apparently authoritative decision has led people to act in reliance on that decision and it has been subsequently held that, contrary to expectations, the law is different. Further, if the Thai Trading cases are legitimated, it will do no one any harm except those who take improper advantage of a defect in the law. If a party is ordered to pay costs I believe that it is an abuse of rights to be able to avoid paying costs to the successful party's lawyer on the ground that that particular agreement is unenforceable. Since I am sure that Thai Trading, which is very well known in legal circles, will have been assumed by both plaintiffs and defendants to have been correctly decided--as indeed may turn out to be the case--I do not believe that anyone will find himself at an unfair disadvantage if this particular piece of retrospective legislation is passed. However, I do not intend to divide the Committee on this occasion in order to take that point, though I hope that the Government will reconsider the position between now and Report stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 213 not moved.]

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