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The Lord Chancellor: My Lords, let me attempt to deal with two specific questions before addressing the amendments. My noble and learned friend Lord Archer of Sandwell suggested that the net cost to the Exchequer of personal injury cases was about £2 million a year. In fact, it is about £40 million a year. But rather than go into detail now, I will undertake to write to him.

Lord Archer of Sandwell: My Lords, will my noble and learned friend forgive me. To set the record straight, I never said any such thing. It may be that I was muttering into my beard, but I never mentioned £2 million. I do not think that I gave that figure at all.

The Lord Chancellor: My Lords, if I misheard the noble and learned Lord, I apologise. But, just to ensure that I did not, I will read Hansard tomorrow with great diligence.

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The noble Lord, Lord Carlisle, asked about the green form in relation to a conditional fee agreement. I am not going to attempt an authoritative answer now--I undertake to write to him--but let me say shortly what I believe the answer to be. The noble Lord realises that the green form is only available to give very basic advice to very poor people. My understanding--and I will be corrected subsequently if I am wrong--is that if the advice was to the effect "You do not have a case", then there would be no charge. If the advice was "Yes, you do have a case. Would you like a conditional fee agreement?", then I think that the cost of the advice would be subsumed within the conditional fee agreement and a green form charge would be inappropriate. I am always anxious about giving immediate replies and I will therefore write to the noble Lord authoritatively. If I am wrong I will be the first to acknowledge it in my letter.

Lord Clinton-Davis: My Lords, I am grateful to my noble and learned friend. This is not really a matter of private correspondence between my noble and learned friend and the noble Lord, Lord Carlisle; it is matter of great importance to the legal profession. If my noble and learned friend reconsiders his view, or departs from it in any material way, the legal profession as a whole--and especially that part of it which practises in the green form area--will want to know. An exchange of letters would not achieve that.

The Lord Chancellor: My Lords, I will certainly ensure that the noble Lord, Lord Clinton-Davis is on the mailing list. But even adding his name will not ensure that the world knows. I shall think about some means of ensuring that the world is informed. Perhaps I shall write to the Law Society as well.

I am grateful to the noble Lord, Lord Clinton-Davis, for saying that we must not be too sensitive about our differences in the issues which engage us. Parliament is a place in which hard knocks are given and received in good spirit. The contributions of my noble and learned friend Lord Archer of Sandwell and my noble friend Lord Clinton-Davis have been so frequent from the Benches behind me that it demonstrates that on this subject our party is a broad church. I have noticed that the Liberal Democratic party is also quite a broad church on these issues--perhaps three broad churches.

These amendments are designed to keep some personal injury cases, which would be excluded by Schedule 2, within the scope of public funding, and to bring some cases involving property, companies and partnerships into scope. Amendment No. 50 would effectively mean that for every personal injury case the commission would have to satisfy itself that in each and every case adequate arrangements could be made to fund the case in some other way. Amendments Nos. 49 and 53 would have much the same effect. Amendments Nos. 51 and 52 seek to ensure that, before exclusions can be made under Schedule 2 to the provision of help in bringing or defending personal injury actions, the Lord Chancellor will have to satisfy himself that alternative forms of funding do exist throughout

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England and Wales. Amendment No. 68 is intended to put on the face of the Bill the circumstances in which cases could return to scope for funding.

I believe that these exceptions are better dealt with by way of directions. I shall explain my reasons in a moment. Amendment No. 58 would restore personal injury to the scope of publicly funded help. Amendment No. 56 would allow the Lord Chancellor to direct that funding should be given to an individual case that otherwise would be excluded. Amendments Nos. 59, 61 and 62 would allow help to be provided to individuals with disputes relating to the negligent damage of property, or involved in company or partnership disputes in certain circumstances. So I am speaking to all of the amendments in this group--Amendment Nos. 49 to 53, 56, 58, 59, 61, 62 and 68.

I shall begin by addressing the general issue of personal injury cases. I said in Committee that the majority of personal injury cases were, in my considered judgment, suitable for funding through conditional fee agreements. Perhaps I may give some more detail on how I have arrived at that conclusion. In 1996-97 there were 83,852 personal injury cases funded by legal aid. Of those, 11,868 were clinical negligence cases, which will remain within scope. That leaves 71,984 cases. Of those cases, 89 per cent. cost 6,000 or less; 84 per cent. cost 5,000 or less; and 81 per cent. cost 4,000 or less. These figures are total costs for the case. They include all disbursement costs, including counsels' fees. So, with all costs included, the vast majority of cases cost less than 4,000. Simply from the costs involved, it is possible to see that these cases did not require exceptionally large amounts of work or expenditure from the solicitors; nor were the costs of any investigations required particularly high.

We do know that taking a conditional fee in these types of case is profitable for lawyers. So, if the overall costs do not amount to more than 4,000 or 5,000 in most cases, I do not think it is unreasonable that solicitors should be asked to bear any risk involved. Every business incurs costs with a view to profit and runs risks. Why not lawyers as well? These cases, provided they have merit, are exactly the type of case which should be able to attract a conditional fee agreement. If a case is without merit, it may not be able to do so. But it would also be completely wrong for public funding to support cases of insufficient merit.

I know that there are those who argue that the financial arrangements in many solicitors' firms are such that they will be unable to support the increased overdrafts that might result and it is said that they will therefore be unwilling to enter into conditional fee agreements. I am not convinced. We know that some solicitors' firms already bear the up-front costs of disbursements, charging clients only after the case has finished. If those firms can organise their financial affairs in that way, it is not unreasonable to expect other firms to do the same.

I am also aware of the concern of some that conditional fee agreements will not be available in particular parts of the country. I do not accept that. First, since these agreements are unquestionably

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profitable when properly managed, it is hard to believe that no solicitor in an area would be prepared to take them on. But, secondly, even if that is the case, one of the important parts of the community legal service will be the development of information about the availability of assistance and better referral systems. If a specialist adviser is not available in the home town of the client, there should be little problem in putting the individual in touch with a lawyer who will want to help.

In contrast, if either the Bill or directions under it are used to make exceptions for individual areas, that would act as a disincentive to conditional fee agreements ever developing and there would be a continuing drain on limited resources that could be better spent elsewhere. The lesson is that lawyers, too, have to learn to adapt.

I return now to Amendments Nos. 50, 68, 49 and 53. If the majority of cases were suitable for funding elsewhere, then all that is achieved by forcing the commission to consider them individually is to take up a great deal of time and money of all involved in considering the application. I want to say this again: we must ensure that the limited public money available is properly directed to provide help to those people who need help and cannot afford to pay for it themselves and we must ensure that, where there are alternative means of funding, they are used.

The removal of the majority of personal injury cases from the scope of legal aid is one of the principal methods of securing funding for other needy areas of law where conditional fee agreements may not be suitable. So I am not in favour of the return to scope of personal injury in general cases. On that basis, I would not accept Amendment No. 58.

Amendments Nos. 51 and 52 are linked with that, because they would prevent personal injury being returned to Schedule 2 until such time as the Lord Chancellor was satisfied that alternative funding arrangements existed throughout the country. I have spoken about the need to ensure that CFAs develop throughout the country, and I have little doubt that they will.

I intend to make directions so that public funding will be available in exceptional cases of high cost and complexity and I say in particular to the noble Lord, Lord Goodhart, that exceptional cases of high cost and complexity are not confined to criminal negligence cases--that is to say, cases where the costs of any initial investigation required to evaluate the strength of the case are very high or where there is a wider public interest--in that, although the costs and chances of success are disproportionate to the likely damages and therefore do not make the case naturally suitable for a conditional fee, nonetheless legal aid might be available for a case where there were wider benefits to society in having the case determined.

As the market develops and solicitors become more confident about which cases they can handle on a conditional fee basis, I would expect to be able to pull back such cases from public funding. Directions given by me will be more amenable to change than something set out on the face of an Act: as the market changes,

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the directions can change to reflect the new needs and priorities of society. Also there is the important point that by setting out factors on the fact of the Act there is a danger that they will act as a disincentive to developing alternative methods of funding.

Amendment No. 56, in the name of my noble and learned friend, Lord Archer of Sandwell, would allow the Lord Chancellor to direct that funding should be given in an individual case. In my view, however, it goes too far, in that it would allow a Lord Chancellor to do this regardless of the considerations motivating him and even if the commission did not believe it met the relevant conditions of the funding code or commanded the necessary priority. I hope that my Amendment No. 55, which would allow funding to be given exceptionally in an individual case where the Lord Chancellor agrees to a request initiated by the commission, meets the substance of my noble and learned friend's concern. I do not think that the executive should intervene in individual cases in the way that this amendment would permit but I believe I would be entitled to respond to an approach from the commission in an exceptional case. On that basis, I would invite my noble and learned friend not to press his amendment.

Finally, perhaps I may make a further comment on Amendments Nos. 59, 61 and 62. These amendments would restore funding for negligent damage to property and for disputes in partnerships and companies in certain circumstances. I say only this. The Bill is about ensuring that limited resources are directed to areas of priority. I do not believe that, given a controlled budget, these areas will have sufficient priority to qualify for public funding within the foreseeable future. There is simply not enough public money to bring those areas back within scope. To do so could only be at the expense of priority areas such as clinical negligence or cases involving children. That would go against the whole underlying principle of the changes that I seek to make to the legal aid system--changes which are designed to ensure that the limited money available is spent on those cases that are most deserving of public funding. On that basis, I--


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