Legal Aid, Sentencing and Punishment of Offenders Bill

My Lords, this group of amendments sets out the refinements to the architecture of the Bill that I have previously suggested. Noble Lords heard from me at some length before and I do not propose to repeat everything I said. I would just remind your Lordships that the model I am suggesting is that lawyers' success fees should not be paid if the case settles or liability is admitted before proceedings are commenced. The reason for that is that there is no risk to the lawyers that they will not be paid. Noble Lords will recall that I quoted from my own speech back in 1998 when I indicated then that the question of risk was important, but had never been properly assessed. That is the first limb of my argument, and it is set out in Amendment 132C. I went on to draw attention to the significance of the point of allocation within proceedings where a case is sent to the fast track of small claims or becomes one of the multi-track cases. In the multi-track cases, I suggested that the success fee should be paid, but split 50:50 between the successful claimant and the losing defendant. While in this area, I suggested that the claimant would have an interest in the amount of the success fee and that there would be the possibility of competition. Those points are set out in Amendments 132E, 133B and 133E. That is the point I reached when the noble Lord, Lord Bach, suggested that I had gone on for too long, and no doubt I had. It is interesting because we are supposed to have these discussions about legislation on Report. The last time I spoke on this issue, the noble Lord, Lord Newton, said that he was in a fog and someone leant across to ask, ““What on earth is he talking about?””. That suggests that legislation on these detailed points should not be on the face of the Bill but should be dealt with in secondary legislation following negotiations between interested parties. This system builds in a form of solidity that it is very difficult to remove. I want to make one or two points before I deal with the other matters. The first is ATE insurance premiums. The point has been made and accepted that one-way costs-shifting should be applied where there are conditional fee agreements. However, they should not only be applied in personal injury cases; rather, there should be a power along the lines proposed in my amendment to extend the areas of law to which one-way costs-shifting should be involved to when the Lord Chancellor thinks it is appropriate. Consequently I think there is far more flexibility, in the light of the experience available, in my Amendment 142B on one-way costs-shifting than was suggested by the noble Lord, Lord Beecham. It states: "““Rules of Court may provide that in proceedings of a description specified by order made by the Lord Chancellor””," so that the introduction of other areas of law could come in by stages. I think that that is the way to go forward. I shall give two specific examples of areas of law proceedings which I suggest should be subject to the one-way costs-shifting regime. The first and most important is environmental cases. These cases bring additional complexities. The United Kingdom is a full signatory to the Aarhus convention, which includes the requirement that the costs of environmental proceedings should not be prohibitively expensive. The Aarhus principles are themselves embedded in a range of European legislation which has been incorporated into a range of United Kingdom law. Indeed, I could quote cases in which those principles have been discussed. I addressed in Committee the point that the changes which are to be implemented will mean that this jurisdiction is not compliant with the underlying requirements of the convention. Protective costs orders are not an answer. Your Lordships who were here in Committee may recall that my noble friend Lord Lester raised protective costs orders. Now that I have had the opportunity to consider them, as opposed to having a swipe from behind, I can give some answers to his arguments. First, a protective costs order is not available to claimants who want an injunction in nuisance or private proceedings. The whole arrangement is too uncertain and discretionary to be a reassurance for claimants who are contemplating environmental proceedings. The procedure is stressful, time-consuming and expensive. All sorts of satellite litigation are involved. The prohibition on a private interest in proceedings is of uncertain application and scope. If you have the private interest, if the nuisance is affecting you, you cannot apply for a protective costs order, which is an enormous limitation on its usefulness. The cap on the defendant's costs of £30,000 may be sufficient in some cases, but there are certainly cases where a cap of £30,000 in a protective costs order will not be. It will ruin claimants, who will be put off taking proceedings. The application for a protective costs order has to be renewed at different stages of proceedings. One-way costs-shifting is needed to ensure compliance with Aarhus and the international obligations which we have accepted, and they require specific provision; that is Amendment 142BA. Amendment 142BB deals in matters that were raised by the noble Lord, Lord Ramsbotham; that is, actions against the police, false imprisonment and deaths in custody. Such actions are pursued by civil liabilities firms and should be within the area of one-way costs-shifting, because the defendant is the state—in this situation, a powerful state, whether it is a police force or a prison; those are the sort of cases that I am referring to. The amendments make it clear that one-way costs-shifting should apply where there is a claim which entails either the protection of the environment or civil liberties. The Bill should import a specific definition which ensures that the rule is engaged only where the convention applies. The model, which I have outlined in my past two speeches and which is fully supported by the personal injuries Bar, although it is not the solution that it originally argued for, strikes the right balance. It builds the house with a structure which is fair and will last. The claimant whose case settles before issuing proceedings receives his damages in total, free of any success fee deduction. The claimant who settles after issuing proceedings will receive most of his damages and there will be a commercial interest in driving down success fees. Claimants with smaller claims, such as whiplash, will pay a limited success fee out of their damages, but there is an incentive for insurers to admit liability early and settle. If the case is allocated to the multi-track, that opens up liability to the insurers for 50 per cent of the success fee. There is an incentive for lawyers to engage in difficult cases where liability is denied on the multi-track, because they can earn a significant success fee if they win. A claimant with a difficult case on the multi-track will pay only half the success fee out of his damages and not, as the Government now propose, 100 per cent of the success fee. One-way costs-shifting will break the excessive ““after the event”” market, and premiums for ““after the event”” cover merely for disbursements will be much lower. Even then, my amendment would divide up those ATE premiums between the claimant and the defendant, whereas the Government propose that, if there is a premium, it should be payable by the claimant only. This is a refinement of the Government's scheme. I know that the Minister is anxious to maintain the architecture of the Bill; my proposal does not destroy it but amends it in a way that is fair. The reforms introduced by the noble and learned Lord, Lord Irvine, in 1999 were brought in in good faith but they were open to exploitation and abuse. I am not with those from the Opposition and Cross Benches who argue for simply taking their particular area of law out of the new arrangements. The current status quo has to be changed. It is no good saying that in this area, that area or another area we should maintain the status quo. It has to be reformed. We on these Benches pride ourselves as being the party of reform. It is in that spirit that I ask my noble and learned friend to continue the dialogue that we have had on these amendments and to come to some conclusions before Third Reading. I beg to move.