Coroners and Justice Bill

My Lords, these amendments provide for the statutory regulation of damages-based agreements relating to employment matters. Previous amendments on damages-based agreements were tabled for Report stage. However, as the House will recall, I withdrew those amendments in light of the concerns raised by some noble Lords, including the noble and learned Lord, Lord Woolf, and of course the noble Lords, Lord Hunt of Wirral and Lord Thomas of Gresford, about the wide scope of those amendments. I undertook to bring back at Third Reading revised amendments, which would be narrower in scope and limited to the regulation of damages-based agreements in respect of employment tribunal claims. These amendments achieve that objective. It may be helpful if I briefly explain how these agreements work. Damages-based agreements allow for the representative to claim a percentage of any damages awarded to the claimant. In contrast, of course, conditional fee agreements, which are typically used in court proceedings, allow for an "uplift", or success fee, on top of the representative’s normal fee. Unlike conditional fee agreements, damages-based agreements are not permitted in court proceedings and the amendments do not change this. They are, however, commonly used by some solicitors and some claims managers in proceedings before the employment tribunal. Recently published research into claimants’ experience of employment tribunals, by Professor Moorhead of Cardiff University, shows the worrying absence of specific consumer protection in respect of this type of agreement, particularly in relation to information about costs and charges, and the potential availability of other forms of representation. The Government believe that damages-based agreements, like conditional fee agreements, require specific statutory regulation to ensure that claimants have the protection they require. They do not currently have that specific statutory regulation. While these amendments set out the broad regulatory framework, the details of the regulatory requirements will be set out in regulations to be made under the new statutory provision. These regulations will be subject to the affirmative resolution procedure. We published a consultation paper on the regulatory requirements, seeking the views of the judiciary, the Law Society, the Bar Council and others. The consultation closed at the end of September and we published a summary of the responses on 27 October 2009. While some questioned the need for statutory regulation, others highlighted the need for, and welcomed the introduction of, more specific statutory requirements in the interests of protecting consumers in employment tribunals. It is envisaged that the first regulations could include, among other things, a requirement for representatives to provide claimants with clear and transparent information on all likely costs and expenses, and to provide claimants with information about other sources of funding to which they may be entitled and which may allow them to keep all of their damages. These amendments are necessary now to ensure consumer protection for claimants in employment tribunals. I emphasise that the amendments only seek to regulate damages-based agreements in respect of employment matters to ensure that these claimants are protected from the outset. These amendments do not extend beyond employment matters that may go to the employment tribunal. In particular, any potential extension of damages-based agreements to civil litigation would require further consideration by us at a later date. As the House knows, this is being looked at by Sir Rupert Jackson in his review of civil litigation costs, which is due to report by the end of December. We all await that report with interest and will consider carefully any recommendations for further legislation in this area. I beg to move.