Select Committee on Delegated Powers and Deregulation Fifth Report


PART III - LEGAL SERVICES


CLAUSE 27 - CONDITIONAL FEE AGREEMENTS

58.  Clause 27 reforms the law relating to conditional fee agreements. It replaces section 58 of the Courts and Legal Services Act 1990 with two new sections, 58 and 58A. As now, the amended section 58 empowers the Lord Chancellor to make:

  • regulations prescribing requirements that conditional fee agreements must fulfil in order to enforceable through the courts (section 58(3)); and
  • orders specify proceedings in which conditional fee agreements that provide for enhanced fees in the event of a successful outcome are to be enforceable, and providing for the maximum uplift permissible in such agreements (section 58(4)).

59.  The changes to the existing law introduced by the amended provisions are:

  • the distinction between conditional fee agreements that do and do not provide for an enhanced fee, and the limitation of the order-making power under section 58(4) to the latter. This reflects the decision of the Court of Appeal in the Thai Trading case that conditional fees in proceedings not subject to an order under the 1990 Act are enforceable if they do not provide for enhanced fees (see paragraph 46 of the Explanatory Notes to this Bill).
  • the provision (in new section 58A(3)) that regulations under section 58(3) may make different provision for different types of agreement (eg. those that do and do not provide for enhance fees), and may include requirements about the information that must be provided before an agreement is made.
  • the provision (by virtue of clause 27(2)) that regulations under section 58(3) should be subject to the negative resolution procedure. Orders under section 58(4) remain subject to the affirmative procedure. This change reflects the need to be able to deal quickly with unsatisfactory practices which may emerge as the use for conditional fees develops.

60.  As now, the Lord Chancellor is required to consult the Lord Chief Justice, Master of the Rolls, Vice Chancellor, President of the Family Division, General Council of the Bar and Law Society before making an order under section 58(4) (see new section 58A(5)).

61.  The new section 58A(6) provides that enhanced fees under a conditional fee agreement are recoverable between the parties to litigation; and confirms that rules of court may make provision about the award of such costs. The existing powers to make rules of court are contained in section 1 of the Civil Procedure Act 1997, and exercisable subject to the negative resolution procedure.

62.  New section 58A(7) re-enacts the existing provision which confirms that rules of court may provide for the taxation of costs under conditional fee agreements, extending this to cover any enhanced fees.

CLAUSE 28 - RECOVERY OF INSURANCE PREMIUMS BY WAY OF COSTS

63.  Clause 28 provides that the cost of any insurance policy against the risk of incurring costs in proceedings is recoverable between the parties, and confirms that rules of court may make provision about the award of such costs.

THE LEGAL SERVICES CONSULTATIVE PANEL

64.  Clause 29 contains no delegated powers.

RIGHTS OF AUDIENCE AND RIGHTS TO CONDUCT LITIGATION

65.  Clauses 30 - 34 contain no delegated powers.

CLAUSE 35 & SCHEDULE 5 - AUTHORISED BODIES: DESIGNATION AND REGULATIONS AND RULES

66.  Clause 35 of the Bill gives effect to Schedule 5, which contains provisions about the procedures for authorising new professional bodies to grant rights of audience or rights to conduct litigation, and for approving changes to a professional body's qualifications regulations and rules of conduct for such rights. The Schedule re-enacts existing delegated powers under Schedule 4 of the Courts and Legal Services Act 1990, and gives the Lord Chancellor one additional power. Paragraphs 140-146 of the Explanatory Notes set out how the procedures for exercising these powers are amended by the Bill.

67.  The delegated powers under the new Schedule 4 are:

  • paragraph 7: power to recommend an Order in Council designating an authorised body, and power to approve the related qualification regulations and rules of conduct.
  • paragraph 16: power to approve proposals to change of existing qualification regulations or rules of conduct.
  • paragraph 24: power to make an order changing existing qualification regulations and rules of conduct. This is novel.
  • paragraph 25: power to recommend an Order in Council revoking the authorisation of a professional body. Such an order may make appropriate transitional and incidental provisions (paragraph 33).

Orders under Schedule 4 are subject to the affirmative resolution procedure (by virtue of section 120(4) & (5) of the Courts and Legal Services Act 1990, as amended by paragraph 11 of Schedule 6 to this Bill). This is appropriate because they affect the regulations and rules of independent, self-regulating professional bodies.

68.  The Lord Chancellor's new power to alter the qualification regulations and rules of conduct of own volition only applies to rules and regulations which concern rights of audience or rights to conduct litigation. In deciding whether to alter rules, and if so how, the Lord Chancellor is bound by the general principle and statutory objective set out in section 17 of the Courts and Legal Services Act 1990. The statutory objective is the development of legal services in England and Wales (and in particular the development of advocacy, litigation, conveyancing and probate services) by making provision for new or better ways of providing such services and a wider choice of persons providing them, while maintaining the proper and efficient administration of justice. Before exercising the power to alter rules, the Lord Chancellor is required to notify the authorised body concerned of his proposed alteration. The body then has three months in which to respond. Before finally making a decision, the Lord Chancellor is obliged to obtain the advice of the Legal Services Consultative Panel (which will be created by this Bill), the Director General of Fair Trading and the Lord Chief Justice, Master of the Rolls, President of the Family Division and Vice-Chancellor.

69.  The Bill is intended to extend rights of audience and rights to conduct litigation, but these rights are governed by the rules and regulations of the authorised bodies, which are independent and self-regulating. The new power is therefore required in order to ensure to ensure that Parliament's will is carried out, while preserving as far as possible the independence of the professions. The Courts and Legal Services Act 1990, which was similarly intended to extend rights of audience has had only a limited effect, because it was left to the professions themselves to propose changes to their rules to facilitate extended rights to which they were, in some cases, opposed. Consequently the expansion of rights of audience that was expected has not taken place. The Government does not wish to take away from the authorised bodies the general power to regulate the rights of audience and rights to conduct litigation of their members. Nevertheless, it believes that there is a need for a reserve power to alter the rules of the authorised bodies, subject to Parliamentary approval, in order to ensure that the will of Parliament is not defied. The power could also be used in the future if there were concerns that the rules of a particular body had become too lax.

70.  The Government has not proposed to legislate directly to replace the existing framework of professional rules governing rights of audience and rights to conduct litigation with statutory rules, both because this would be insufficiently flexible to meet changing circumstances, and because it would effectively end the independence and self-regulatory status of the legal professions.

71.  Clause 36 and 37 contain no delegated powers.


 
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