A joint Lords and Commons Parliamentary Select Committee has raised concerns over various aspects of the Government's draft Legal Services Bill, most notably potential damage it might cause to the independence of the legal profession.
In particular, the Committee has raised concerns about the proposed role of the Secretary of State (the Lord Chancellor) in the appointment of the chairman and members of the new Legal Services Board.
The Committee recommends that the draft Bill be amended so that initial membership of the LSB is appointed by the Secretary of State, but only after full consultation with the Lord Chief Justice and the Constitutional Affairs Select Committee of the House of Commons.
It also proposes that the LSB should then be allowed to establish a nominations committee to appoint future members, other than the chairman, who would continue to be appointed by the Secretary of State after full consultation with the Lord Chief Justice.
The Committee also expressed concerns with regard to the direct powers over the legal profession the draft Bill would grant to the Lord Chancellor.
It asks the Government to consider whether these powers are necessary, and to transfer as many as possible back to the legal regulators.
The Committee also draws attention to the critical importance of the legal profession being perceived by the public to be independent from government influence and criticises proposals in the draft Bill to ‘de-regulate' the business structures within which legal services can be provided.
The report raises concern about potential conflicts of interest in these Alternative Business Structures (ABSs), particularly between lawyers and shareholders if firms offering legal advice have outside ownership.
Another concern is that, within firms offering legal and other services, lawyers might be pressurised into promoting or ‘cross-selling' other services, such as insurance.
The Committee's overall view of the ABS proposals is that the Government should have consulted more widely and ought to consider moving more slowly and cautiously towards implementation.
It also contends that, even at this stage, the Government should look to instruct the LSB to take a step-by-step approach to ABSs, initially allowing only partnerships of different types of lawyers without outside ownership or management. Its conclusion about the impact of ABSs is that “no-one can be sure how it will work out”.
The Committee also highlights concerns about the Government's estimates of the cost of the reforms and questions whether there is evidence for the future efficiency savings identified.
The tight deadline the Committee was set for conducting its inquiry is also criticised: the Committee, which was formed only on 23rd May, was required to report by 25th July. The Committee felt this was not an adequate timescale for investigating fully all the relevant details of so complicated a Bill.
Commenting on the report, Lord Hunt of Wirral, who served as Chairman of the Joint Committee on the Legal Services Bill, said: “We have some very real concerns about the proposals put forward in this Bill.
"The draft Legal Services Bill departs from the recommendations of Sir David Clementi in a number of important respects and it is essential the Government should explain each of those departures fully.
"Most of our substantive recommendations would come under a single heading, namely that of going back to the future - the future envisaged by Clementi."
Other recommendations in the report include:
