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Legal Services Bill [HL]

moved Amendment No. 50: 50: Clause 15 , page 7, line 8, leave out ““body or other person (““B?)? and insert ““person (““P?)? The noble Lord said: My Lords, this set of amendments contains various technical changes designed to ensure that the authorisation and other requirements in the Bill for different types of bodies and individuals apply effectively and consistently. This includes changes in relation to employees, employers and foreign lawyers; changes to ensure that the threshold provisions of the Part 5 licensing regime take account of current practice structures; and further provision for bodies formed under foreign law. Amendments Nos. 50, 51, 52, 54, 55, 57, 59, 61, 62, 622 and 623 do two things. First, they ensure that where an employer that is entitled to carry out reserved activities carries out a reserved legal activity through an individual who is not entitled, the employer will commit an offence. This would apply, for example, where the employer allows non-lawyers to conduct reserved activities without being supervised by lawyers. The employer would have a defence of reasonable precautions and due diligence, and the penalty for the offence and other related provisions, such as contempt of court, will be the same as presently set out in the Bill for the offence of carrying out reserved activities if not entitled. The amendments are being made to take account of the fact that that there could be instances where a company or firm could be active or complicit in the carrying on of reserved legal activities by an employee who is not individually entitled. The change therefore closes a potential loophole, which could be exacerbated with the increasing regulation of companies or firms as well as individuals, and ensures that sanctions in the Bill are targeted according to regulatory default. Secondly, these amendments ensure that both this offence and the other offence circumstances set out in Clauses 14 and 15 apply to employers whether they are bodies such as companies and partnerships or sole practitioners. Amendments Nos. 53, 56 and 68 are technical, ensuring that the Bill’s treatment of employed lawyers is consistent and does not disrupt the status quo. To clarify, Amendments Nos. 53 and 56 amend Clause 15 to ensure that a body or individual whose business includes the provision of certain reserved activities to the public will still be able to use its own employed lawyers to carry out other reserved activities on its own behalf. It makes clear that a separate authorisation for further reserved activities will only be necessary where it is intended to provide reserved legal services to the public. Amendment Nos. 68 amends Schedule 3 to ensure that, where certain individuals are exempt from the requirement to be authorised to conduct reserved activities, employers on whose behalf the activities are conducted may also benefit from the exemption in appropriate circumstances. Amendments Nos. 86, 87, 312, 318 and 319 ensure that references to registered European lawyers, non-registered European lawyers and other foreign lawyers and practices are consistent with current statutory provisions, and do not disrupt the status quo. In particular, Amendments Nos. 318 and 319 amend Clause 108 to ensure that the definitions in Part 5 do not cause a large number of multinational firms to become alternative business structures purely by virtue of being partially owned by foreign lawyers. A further function of the amendments in this group is to make certain alterations to the detail of the Part 5 licensing regime to ensure that the requirements take account of current practice structures and regulatory practice. More specifically, Amendments Nos. 203 and 261 propose technical changes necessary to take account of the fact that members of firms such as limited liability partnerships are often other firms or bodies and not just individual lawyers, and to ensure that any bodies to which this applies are regulated appropriately. Amendments Nos. 256, 258, 259, 260 and 274 amend the licensing regime in Schedule 11 to make it clear that licensing authorities will have the flexibility to waive fees in appropriate cases. Amendments Nos. 262 to 273 amend Schedule 11 to provide that licensing rules must make provision for review by the licensing authority of a decision not to approve a person as head of legal practice or head of finance and administration, or to remove a person’s designation in relation to one of those roles. This is consistent with the Government’s policy; for example, provisions elsewhere in Schedule 11 stipulate that licensing rules must make provision for review of certain decisions that could affect the rights of licensed bodies or individuals within them. Amendment No. 305 makes it clear that the obligation which licensing authorities have to trace the beneficiaries of sums recovered following intervention in a licensed body’s practice is an obligation to take such steps as are reasonable in all the circumstances of the case. This follows a similar amendment made to the intervention powers of the Law Society in Schedule 16 of the Bill, following an amendment tabled in Committee by the noble Lord, Lord Kingsland, which the Government agreed to consider. We are replicating that amendment in Schedule 14 because it is desirable for statutory intervention powers to be consistent where appropriate. Amendments Nos. 304, 627, 632 and 633 make technical changes to ensure that certain provisions in the Bill can be amended as necessary by secondary legislation in cases where it is necessary to take account of bodies formed under foreign law. I thank the noble Lord, Lord Kingsland, and the Law Society of Scotland for the point raised in Committee in relation to Clause 107, which my noble friend agreed to consider. Clause 107 enables the Lord Chancellor to modify the provisions of Part 5 in relation to bodies formed outside the law of the UK. The noble Lord queried whether this power should also apply in relation to bodies formed under the law of Scotland or Northern Ireland. The Government have considered this and agree that it would be desirable to extend the power, as the noble Lord suggested. Amendment No. 314 has therefore been tabled to achieve this. I note that the noble Lords, Lord Kingsland and Lord Hunt of Wirral, have added their names in support of this amendment, which reassures me that the Government have adequately accomplished the noble Lord’s objectives in this regard. Amendments Nos. 627, 632 and 633 create a similar power for the Lord Chancellor to modifythe current definition of manager, as set out inClause 197 of the Bill, to ensure that it remains effective for bodies formed under law outside England and Wales. That is similar to the existing power in Clause 107 to modify the provisions of Part 5 that a new clause is required as the definition of manager applies to other parts of the Bill. The power will be subject to the affirmative resolution procedure. The amendments are technical, and essentially tighten up the existing provisions relating to the authorisation requirements for different types of bodies and individuals, and ensure, in particular, that the arrangements in Part 5 of the Bill provide for effective regulation and control of any firm’s licence. Failure to make these changes would leave a number of uncertainties, inconsistencies and potential loopholes in the legislation, putting at risk both consumers and providers of legal services. The purpose of the amendments is to ensure that the detail of the regulatory framework can operate effectively and consistently. I beg to move.