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Lord Clinton-Davis: My Lords, I have expressed in the past, in Committee and earlier on Report, some apprehension about conditional fee agreements, but much more about their availability and about ensuring that access to justice is realised than about some of the considerations which the noble Lord, Lord Phillips, has introduced into the debate. It is true that I have referred to some of those considerations, but I feel that the noble Lord has taken an unduly gloomy view on the issue of probity and the profession. There are some concerns, which I share, that cases may be settled when it is seen to be more in the interests of the lawyer than of the client, but one must not gainsay the fact that at present lawyers give their clients the most careful advice on such issues, particularly with regard to payments into court.

Having said that, I am concerned to ensure that the most careful invigilation and monitoring are undertaken with regard to the way in which CFAs may evolve. They are still at the embryonic stage of their development. It is most important that the question of the availability of adequate insurance is included in that.

I join the noble Lord, Lord Phillips, in seeking to ensure that we arrive at a situation whereby the Lord Chancellor is able fully to appraise the position himself, with the benefit of his advisers. Even more important than that is the fact that we, the public, should have some knowledge so that we can ensure that access to justice is not being inhibited but is being improved as a result of the enhancement of this still new development in the law.

It is clear that anomalies could be thrown up during an investigation and that they will need to be addressed. It is right that Members of both Houses of

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Parliament should be aware of that. However, it may well be that what my noble and learned friend is suggesting in Amendment No. 158 will cover such issues. I am not entirely satisfied that the wording covers the anxieties which have been raised by the noble Lord, Lord Phillips, and myself. However, I am concerned with the practical consequences as much as, if not more than, with the ethical considerations with regard to monitoring.

Lord Ackner: My Lords, I should have thought that the noble Lord, Lord Phillips, is pushing at an open door here. The Lord Chancellor chided me from some three or four days ago, so he will no doubt forgive me if, in response, I tease him. I know that he will feel that this is grossly out of date, but on 7th April 1989 he addressed his predecessor's suggestion of contingency fees. He said this--it is very short, very impressive and is really the last word on this subject in relation to this amendment:

    "The Green Paper's sole suggestion to improve access is to promote the idea of speculative actions by lawyers on some contingency basis. I regard contingency fees in any shape or form, however diluted, as abhorrent".
Then Hansard records noble Lords saying, "Hear, hear!". No doubt encouraged by that support, the noble and learned Lord went on to say:

    "The argument that professional standards are so high that there would be no risks does not impress. Lawyers are ordinary human beings. No lawyer at the front end of litigation should be in the position that the ability to pay next month's mortgage turns on the outcome of the case. Litigation turns on advocates being trusted by the courts and by one another to play fair. Flirting with contingency fees is another gimmick to avoid state responsibility and to secure justice on the cheap. Like so many bargain basement practices, the lawyers would be no exception to the risk that shoddy standards would result".--[Official Report, 7/4/89; col. 1326.]
I think that that is deuce to the Lord Chancellor!

7.30 p.m.

The Earl of Dartmouth: My Lords, I had not intended to speak this evening. I had intended only to listen and perhaps to learn a little. However, I was absolutely astonished by the noble Lord's speech on what purports to be a detailed amendment. In fact, that speech was entirely opposed in principle, and at some length, to the whole concept of conditional or contingency fees. I was a parliamentary candidate 25 years ago and I am well aware that the Liberal Democrat Party, of which the noble Lord is a nominee, is extraordinarily blinkered. It is astonishing that someone should make a serious speech on the subject of conditional fees--he accurately described them as contingency fees--without even mentioning the United States, which has a large and important economy. It operates a common law system which is very similar to our own and where contingency fees have successfully operated for a very long time.

I lived and worked in the United States for eight years of my adult working life. The point that the noble Lord and others who think like him should seek to understand is that the great advantage of

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contingency or conditional fees is that it is possible for anyone to obtain redress from the courts. There was an example last week. A smoker successfully sued one of the biggest and most powerful corporations in the world; namely, Philip Morris. I certainly agree with the judgment that the settlement was much too large. But because there are contingency fees it is possible for anyone in the United States to obtain redress in the courts.

However, in this country there are no contingency fees and the losing side pays the costs. It means that people without legal aid do not have access to the court. That is one of the crying scandals of British justice. I remember a good old joke being told 25 years ago that the British courts are rather like Claridges. It is open to everybody, but one must be able to afford the fees.

I do not wish to make a very long speech, but I wish to make two quick points on what the noble Lord said. He quoted Lord Esher in 1875. The noble Lord is shaking his head, but that is what he said.

Lord Phillips of Sudbury: My Lords, I said 1895.

The Earl of Dartmouth: My Lords, I am sorry and I stand corrected. The noble Lord quoted Lord Esher from 1895. The point is that very powerful mores were operating at that time. There was a very powerful and explicit code of behaviour which meant that people behaved in such a way that the courts rarely had to be used. Therefore, in consequence of that code of behaviour, which no longer exists, we have a system which assumes that most litigation is vexatious. In turn that means that there is a bias against all litigation. That is something which this Bill seeks to put right.

The noble Lord also quoted the 1990 Bar report. He said that it was critical of conditional fees under two heads; first, the relaxation of ethical standards and, secondly, a conflict of interest. I do not know what that Bar report actually said, but I can certainly assure the noble Lord that he did not prove his case under either of those points.

I praise the noble and learned Lord the Lord Chancellor for bringing in conditional fees. To some extent it does something to redress the fundamental problem with the British court system, which is that it is open to very few people unless they are legally aided. This amendment seeks to dilute to the point of destruction the concept of conditional fees. To be fair, the noble Lord, Lord Phillips of Sudbury, made that abundantly clear. I strongly urge that the House does not approve this amendment.

Lord Goodhart: My Lords, before the noble Lord sits down, is he really suggesting that we should copy a legal system in which one can obtain damages of a couple of million dollars or a contingency fee, for spilling a cup of hot coffee over oneself?

The Earl of Dartmouth: My Lords, there are certain excesses in the American legal system. The point is that it is possible for an individual to gain redress against

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even the most powerful corporation. The case to which the noble Lord referred involved an unemployed housewife who managed to sue McDonald's successfully.

Lord Clinton-Davis: My Lords, will the noble Earl be kind enough to apologise to the Ritz Hotel to which his reference applied and not Claridges?

The Earl of Dartmouth: My Lords, I stand corrected.

The Lord Chancellor: My Lords, when I listened to the noble Lord, Lord Phillips of Sudbury, moving this amendment, I became progressively more depressed. He seems to have a much dimmer view of the ethics of his own profession than I have myself. But towards the end of his speech I was encouraged because he seemed to perk up a little and expressed a more optimistic view about the ethics of his profession.

He made the specific point--I do not know how much truth there is in it--that clients have a tendency to mislead their solicitors under conditional fee agreements in order to secure agreement to a lower uplift. It is possible that clients mislead their solicitors when they try to get legal aid. It may be that solicitors will be even more astute in their own interests to assess the true strength of cases when they are considering whether, and under what terms, to enter into conditional fee agreements than perhaps to protect the Legal Aid Fund.

I welcomed the intervention of the noble Earl, Lord Dartmouth. It is salutatory to remind the House that lying behind all this is the expansion of conditional fee agreements, which signals a colossal expansion of access to justice. I welcome the noble Earl putting that on record again.

I am delighted that the noble and learned Lord, Lord Ackner, has had such affection for my speeches over the years. I had the impression that he must have a complete library of them. I am ready to be quite flattered. I never knew that he cared so much.

He described what I said in 1989. I am minded to invoke what I believe a Victorian judge said when taxed with a previous decision he had made from which he had intellectually parted company in his own mind when sitting in an appellate court. He said something along the lines, "That is how it appeared to me then, but it is not how it appears to me now". If great judges can get away with that, mere Lord Chancellors can as well.

I have no difficulty in accepting the principle that the operation of conditional fee agreements should be kept under review to enable us to know that they are working well and are serving the interests of justice. I am very happy in principle for the panel to give me advice. I doubt that we need this amendment on the face of the Bill. However strong our concerns are today, they will not necessarily be the concerns of tomorrow. In five years' time conditional fees may be of little concern. They may be a familiar part of the

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geography of our legal system with their operation accepted as part of legal services. That is my view of what will happen.

I do not see any point in imposing a duty in perpetuity on the panel to monitor conditional fee agreements. But I am willing to give a commitment to the noble Lord, Lord Phillips of Sudbury. I shall ask the panel to give advice on the operation of conditional fee arrangements as part of its first year's programme of work. I shall also ask it to consult the Civil Justice Council and to continue to review its work on an appropriate regular basis until we can all be assured that conditional fee agreements are working as well as we intend and in the interests of justice. On that basis I hope that the noble Lord will withdraw his amendment.

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