Legal Aid, Sentencing and Punishment of Offenders Bill

My Lords, in opening this group of amendments, I shall do my best to be as brief as I can. The Committee is obviously in very tolerant mood this afternoon, as was shown to the noble Lord, Lord Thomas of Gresford, who made an excellent speech in favour of his amendments in the first group. His speech was almost as impressive as the report of Lord Justice Jackson in its completeness and, I was going to say, in its size. Both pieces of work are very much to be commended. Before I discuss Amendment 123, I shall also speak to Amendments 124, 126, 132, 153, 154 and 156 in the group. It is worth pointing out to the Committee that for shorthand purposes we talk about the Government, as it were, accepting Lord Justice Jackson’s report. They have accepted part of it and rejected other parts. It is important to remember that at all times. Lord Justice Jackson himself, as all people in his position do, when putting forward his report before the previous general election, made it clear that it was to be seen as a package or not at all. Of course, the Government have decided to pick and mix—maybe all Governments, to be fair, would have decided to pick and mix, but this Government have certainly done that. What we meet in Part 2 of the Bill is not pure Jackson; it is very much a part of Jackson that the Government like but not the part that they do not like. In particular, that relates to legal aid and to clinical negligence. Other matters in Part 2 are not just not pure Jackson; they are anti-Jackson. I shall set the scene for Amendment 123. An elderly pensioner places her life savings of, say, £40,000 with an investment adviser. That adviser assures her that he will keep it ticking over so she has some moderate income but will not be exposed to risk. Instead, the adviser, who has not his client’s but his own interests at heart, places the money in a high-risk instrument for which he gets a hefty broker fee. This otherwise impecunious pensioner loses all her money in the first year. Today, if she sued that investment adviser for professional negligence and won her case, he would have to give her back the £40,000—her own £40,000—pay her lawyers’ costs and a success fee which can range up to, as we have heard, 100 per cent of basic costs if he denies liability for as long as possible, and the insurance premium that the pensioner takes out to cover herself should she lose the case. Under the proposed legislation, should it go through unamended, things would change dramatically. The pensioner would get her money back but then her lawyer’s success fee and the cost of insuring against losing would be deducted from her original capital. In short, the £40,000 might become £20,000, or even less. Surely the Committee would agree that that is an inequitable outcome, and not one that many in Parliament or outside could welcome. It is simply a by-product of legislation that purports to deal with tens of thousands of road traffic personal injury cases—largely whiplash—that drive up the cost of motor insurance, rather than the few hundred professional negligence cases which is what this amendment is about, that are heard each year. It is only common sense that we should not seek to legislate for a system of litigation that allows professional people to prey on their impecunious and weak clients. The Committee today is full of professional people of one sort or another and the House is even more full of them when it is sitting. As we all know, being in a profession is a privilege. When a professional takes on contractual fiduciary and moral duties to do their best to help their clients, they take on an important responsibility. We have professions in our society because we need experts who specialise, whether it is expertise in finance, in my example, the law, engineering or medicine. They should know that society takes seriously if and when they act negligently, with malice, or breach their duty of care. Should we make it so difficult for the individual to take action and claim back their damages in full? Would that not have a corrosive impact on trust in the professions and their regulation, which is something that professions and the professionals themselves should not and do not welcome. We think that the answer to this dilemma is to listen to what Lord Justice Jackson said and extend one-way costs shifting to all litigation, not just keep it to personal injury. That in one fell swoop would deal with the problem that the Government talk about with regard to losing defendants’ paying the insurance premiums of winning claimants, which we are told simply inflate costs without adding a huge amount of value. Secondly, perhaps we could limit the non-recoverability of success fees to 80 per cent of the litigation market—the side of the market that has more nuisance and abuses— which is low-value road traffic cases and public liability personal injury cases. Should we fail to do this, and leave the Bill unamended, the perpetrators of the PPI mis-selling scandal—the mortgage mis-selling scandal of the 1980s and 1990s which noble Lords will remember—and thousands of other instances when rogue professionals have abused their position of trust, will go unpunished and unheard. Their victims will multiply in a system where those who have been wronged are dissuaded from taking action against rogues, knowing that Parliament will have legislated to substantially limit their rights to redress. It would be something of a rogues’ charter. I end what I have to say about this amendment by citing the views of the president of the Professional Negligence Lawyers Association who said that many litigants face the dilemma of having had their trust betrayed by one professional adviser and that their only redress by way of litigation is to risk remaining assets and perhaps insolvency by trusting another—meaning another professional adviser—to win their case. That is not a satisfactory position and we ask the Government to think again. The subject of Amendment 124 is privacy and defamation. Both matters are—as always, but particularly at the moment—the subject of intense discussion. We are still living through a scandal that was as devastating to the reputation of the media industry as the expenses scandal was to the political world. Every Member of this Committee believes in both the freedom and the viability of the press; clearly that is something that unites us. At the moment we have the potential of major reform of the law of defamation being pursued through Parliament. The Minister who will respond to this group of amendments has responsibilities in that area. I commend what he has done up to now and I am delighted that the noble Lord, Lord Lester, is in his place, because he is in many ways the author of the reform of defamation that I hope we will see before long. We welcome discussion and reform, which are important. The balance is wrong between the freedom of the press and the rights of the individual to be free of tortious defamation; we should look at that. However, the impact on the law of the legislation that we are discussing will be too grave for us to stand by while it passes. The impact of Part 2 of the Bill will be to make defamation and privacy proceedings in the main completely inaccessible to the average citizen. It is not just the Official Opposition who see this problem. The Liberal Democrats tabled amendments on Report in another place to exempt these cases from the reforms. The Joint Committee on the Draft Defamation Bill stated: "““Nonetheless we are sufficiently concerned about””," the Government's proposals, "““to ask the Government to reconsider the implementation of the Jackson Report in respect of defamation actions, with a view to protecting further the interests of those without substantial financial means””." I come to the Dowler case. As the Committee will know, Bob and Sally Dowler lost their daughter Milly. They wrote to the Prime Minister, asking for the reforms that we are debating to be withdrawn. They wrote: "““What we wanted to make clear to you is that we could not have done this without a ““no win no fee”” agreement ... What helped was the fact that we would be insured if we lost a case and a premium for the insurance would be taken from the other side if ""we won. Without that we would not have been able to start a case or even threaten it … We are sure that you do not want to go down in history as the Prime Minister who took rights away from ordinary people so that large companies could print whatever they like and break the law without being able to challenge them””." That is perhaps the best example I can give the Committee this afternoon. It shows what is at stake here. Let us imagine that, in the wake of a scandal as extraordinary as the hacking scandal—the hacking of the phones of hundreds of innocent people—our response in Parliament was to make it more difficult, or even impossible, for the victims to take action and expose further scandals. Without the powers of the court to compel disclosure as part of litigation, we would not have seen the mountain of evidence that we now know exists. There would have been no information, no investigation and no justice. Why are privacy and defamation cases so problematic in this legislation? It comes down to the fact that in general the courts here do not award huge damages to victims of defamation or invasion of privacy. Damages are very low—an average of some £4,000. According to research analysis by Mr David Howarth, a Cambridge law professor better known to us as the shadow Justice Secretary in the previous Parliament and MP for Cambridge, average costs are around £11,000. According to Lord Justice Jackson, insurance fees are around £65 for cover of £100, and I am afraid that defendants sometimes rack up costs in denying liability for as long as they can. So the costs of the claimant and defendant dwarf the damages that are sometimes involved. Should I successfully sue a newspaper now for defaming me, I will receive small damages and the satisfaction of redress. My lawyer's fees will be paid by the paper, as is normal, as will their success fee and the premium for my insurance. Under the new system, I would receive a small uplift of 10 per cent in damages, taking the figure in my example to £4,400. My lawyer would receive his costs from the wrongdoer—the defendant—as is normal. However, the success fee would come from my damages. If the paper had stretched out the litigation, the success fee might be as high as 100 per cent of base costs: £11,000. In this example, I now have a net loss of £6,600 from winning my case. However, we argue that it might get worse. My insurance premium will also be taken from me as a winning claimant. The defendant has stretched this out and built up costs. My insurance premium, which of course reflects the potential cost liability, is perhaps £10,000. We should remember that the Government have no plans for one-way cost shifting in this type of case, even though the case for it has been well argued by the noble Lord, Lord Thomas of Gresford, and by my noble friend Lord Beecham, among others. There is no succour for me to be had there. Suddenly, despite winning my case, in my example I am left with a bill of £16,600. Who on earth would take action to defend their good reputation if they faced being left with an enormous bill? According to Lord Justice Jackson, we are talking about between 200 and 250 cases a year. It does not appear to be a great crisis in a compensation culture. Without doubt the result of the Bill would be that the ability to take action would be very much restricted for ordinary people and would allow media companies, if they were so inclined, to print whatever they liked without challenge. I have no problem with fixing the law around defamation if we find it to be broken—and I think that changes need to be made. However, making it unenforceable would be something quite different. I hope that the Government will think about cases of this kind and will deal with this credibly, instead of carrying on with their approach so far: namely, the blanket dismissal of a compelling argument advocated by this side of the House, by the Liberal Democrats in another place, and by a Joint Committee of both Houses. I will now be very quick. Amendment 126 is about small businesses. We are trying to deal with small businesses suing large ones for breach of contract. Like professional negligence cases, these cases do not involve general damages per se but concern past loss. It is hard enough now for small businesses, even without being in that situation. If they sue for breach of contract, they do not get all their losses back. It is difficult for them to find a lawyer to take their case. I fear that this may be a serious miscalculation. There is no award of general damages that will increase by 10 per cent in these cases. There is no capping of how much lawyers can take, either. We know of the general sympathy that there is for small businesses around the Committee and in both Houses of Parliament. If the Bill is not amended, they will be prey to the worst kind of economic uncertainties at a time when they are struggling. Finally, I come to Amendment 132. I hope the Government will think about this as well. Cases of public importance are highly risky, and we want to encourage lawyers to take them on because they set precedents and help make our law by evolving the common law, which is crucial, as the Committee will agree. If those cases are restricted to just the wealthy, then the cases in which the rights of the impecunious are in question will just not come before the courts. They are difficult and tough cases. We want to make sure that they get a fair hearing. It is something we want the Government to consider amending before the Bill goes through. I am sorry to have taken up so much of the Committee’s time on these important amendments. They could, of course, have been split into different groups, but perhaps it is right that they have not been. I hope that the Government will listen carefully to what has been said in this group. I beg to move.