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Legal Services Bill [HL]

I am grateful to the noble Lord for explaining the purpose behind the amendment so succinctly. I understand why he has picked out shareholders specifically in connection with shareholding in ABS companies, ensuring that the involvement of non-lawyer directors does not jeopardise professional duties. I agree entirely with his objective. In creating new opportunities to deliver legal services, we must make it clear and beyond doubt that professional duties must apply in the same way as they always have done. This is the key purpose of Clause 169; it places lawyers’ duty to comply with regulatory arrangements on a statutory footing. This duty will cover all professional conduct rules and apply not only to individual lawyers but to all companies and firms providing legal services and to all managers and employees of these providers. Moreover, Clause 88 provides further protection. This clause ensures that if a non-lawyer partner, director, shareholder or employee acts in a way that causes or contributes to a breach of professional duties by the firm or its lawyers, that person will be breaking the law. Non-lawyer directors, partners and shareholders may be disciplined by licensing authorities as a result, and may lose any rights to hold shares in the ABS firm, as provided for by Schedules 11 and 13 to the Bill. While I agree entirely with what the noble Lord seeks to do, we believe that his amendment is unnecessary, as the Bill already prevents ABS firms and their shareholders or anyone who owes duties to shareholders from acting in a way that conflicts with lawyers’ professional conduct rules. Further, a director of a company could not in good faith argue that to break the law as it applied to his firm was to act in the interests of the company and its shareholders. That applies as much to a licensed ABS body, with its particular legal obligations, as to any other. If a company is authorised to undertake only certain activities by being licensed and the terms of the licence require particular forms of behaviour, including compliance with regulatory arrangements, that behaviour is something that all shareholders must accept and support as well. I would not wish, by virtue of a provision such as the one proposed here, to cast general doubt on the continuing validity of obligations owed under other law, when it is clear already from the Bill that that this will not be able to operate to adversely affect the ability of regulated persons to comply with regulatory arrangements. In other words, as long as we make it clear in the Bill that there is a statutory duty to comply with professional conduct rules, there is no need for an override provision. On that basis, I hope that the noble Lord will withdraw his amendment.