A committee established to examine the draft Legal Services Bill has unleashed a scathing attack on how it has been handled by government.

The all-party Lords and Commons Parliamentary Select Committee said the Bill threatens the independence of the legal profession. Proposals to give powers to the Lord Chancellor to oversee the legal industry have been met with scepticism.

Plans to introduce alternative business structures (ABSs), which will effectively allow insurers to set up their own legal departments, have also been attacked.

"The proposals for ABSs are welcome, in that they should allow greater innovation in the provision of legal services," said Lord Hunt of Wirral, who chaired the select committee. "However, the way they have been put forward without sufficient thought to their impact runs the risk of allowing conflicts of interest between legal practitioners and the shareholders who, ultimately, will become their employers."