1. Advice on an application for the approval of rules to prohibit barristers from practising unless authorised by a certificate issued by the General Council of the Bar in accordance with s.46 of the Access to Justice Act 1999 and on an invitation to the Lord Chancellor by The General Council of the Bar to make an order under s.46(3)(a) of the Access to Justice Act 1999 (Compulsory Practising Certificates for the Bar)
The Main Issues
2. Advice on a submission to the Lord Chancellor by the Law Society in relation to the Lord Chancellor's application of s.47 of the Access to Justice Act 1999 (purposes for which the Law Society may apply fees payable on the issue of practising certificates)
The Legal Services Consultative Panel (LSCP) was established by the Access to Justice Act 1999 in January 2000.
The Panel has considered the two references made to it by the Lord Chancellor. The first concerned an application for the approval of rules to prohibit barristers from practising unless authorised by a certificate issued by the General Council of The Bar in accordance with s.46 of the Access to Justice Act 1999 and an invitation to the Lord Chancellor by the General Council of the Bar to make an order under s.46(3)(a) of the Access to Justice Act 1999 (Compulsory Practising Certificates for the Bar). Their advice was given in August 2000.
The second reference concerned a submission to the Lord Chancellor by the Law Society in relation to the Lord Chancellor's application of s.47 of the Access to Justice Act 1999 (Purposes for which the Law Society may apply fees payable on the issue of practising certificates). Their advice was given in December 2000.
The advice is published on behalf of the Panel by the Lord Chancellor's Department. The complete document appears on the Lord Chancellor's Department's website as well as being available in hard copy.
Previously published is the Panel's advice to the Lord Chancellor on aspects of proposals by the Bar Council to alter its Code of Conduct following changes introduced in the Access to Justice Act 1999 and parallel proposals from the Law Society for alterations to its Rules and Principles of Professional Practice (including its Advocacy and Employed Solicitors Codes) and its Higher Courts Qualification Regulations.
Further copies of the Panel's advice are available from Mrs the Panel Secretariat (telephone: Mrs Susan Samuel, on 020-7210 1454 or e- mail: Susan Samuel ).
The panel comprises
| Lord Justice Potter (Chairman) Professor Lee Bridges Lady Elizabeth Finsberg Professor Bob Hepple QC |
Mr Ian McNeil Ms Barbara Mensah Ms Anne Owers Mr Charles Plant Mr John Randall QC |
Mr Simon Sapper Mr Alan Street Ms Peta Sweet Mr Richard Wise |
Advice on an application for the approval of rules to prohibit barristers from practising unless authorised by a certificate issued by the General Council of the Bar in accordance with s.46 of the Access to Justice Act 1999 and on an invitation to the Lord Chancellor by The General Council of the Bar to make an order under s.46(3)(a) of the Access to Justice Act 1999 (Compulsory Practising Certificates for the Bar)
This advice relates to the above application and invitation to the Lord Chancellor, in respect of which the General Council of the Bar ("the Bar Council") seeks the approval of the Lord Chancellor by early October 2000.
The Panel was informed at its meeting on 22nd May 2000 that it could expect to receive a reference in connection with such an application. The Panel had a preliminary discussion on the topic that day and established a working group comprising 5 members of the panel under the chairmanship of Mr McNeil to look at the matter. Pursuant to the approval of a minute by the Lord Chancellor on 19th May 2000, a formal reference of the application to the Panel for advice pursuant to Section 18A (3) (b) of the Courts and Legal Services Act 1990 was issued on 24th May 2000.
The working group met on 7th June 2000 and again on 26th June 2000, when, with the Chairman of the Panel, it met and had a constructive discussion with a delegation from the Bar Council led by its chairman, Jonathan Hirst QC.
The application as originally referred to the Panel was limited to an application for the approval of rules. However, following the meeting of 26th June 2000 the application was refined and elaborated in the form of a detailed document from the Bar Council ("the Application") received under cover of a letter from Mr Hirst QC dated 13th July 2000. The Application, incorporating two amendments subsequently supplied to the Panel under cover of a letter from David Hamilton-Rump for the Bar Council dated 18th July (an additional rule 14(e) in annex 5, and a revision to one page of annex 6), was considered by the Panel.
The Application now incorporates an invitation to the Lord Chancellor ("the Invitation") to make an Order under s46(3)(a) of the Access to Justice Act 1999 ("the 1999 Act"). While such an invitation is not expressly mentioned in the formal reference to the Panel, as the Invitation is so closely linked to the subject matter of the formal reference, and as the proposed rules themselves are now drafted on the basis that the suggested Order is made, the Panel proposes to address the Invitation in the course of this Advice.
The Panel has also given preliminary consideration to outline proposals from the Law Society contained in its letter dated 17th May 2000 (signed by Roger Smith, Head of Strategy/Director of Training). While the 2 sets of proposals raise broadly similar considerations and in an ideal world would be dealt with together, the Bar Council wishes to introduce Practising Certificates and the related fees with effect from 1st January 2001, based on planned expenditure for the year 2001. To do so, it will be necessary to have obtained approval from the Lord Chancellor by early October 2000, in order to permit the necessary administrative work to be completed prior to implementation.
The Panel considers that the Bar Council should indeed be in a position to implement the proposals (in so far as they are approved) with effect from 1st January 2001. The Bar Council has promptly and fully responded to the Panel's requests for information and meetings to this end. In those circumstances the Panel does not think it right to delay its advice in respect of the Bar Council's application.
In giving its advice below, in particular in relation to the Invitation, the Panel has borne in mind that during the debate on the Access to Justice Act in the House of Lords, the Lord Chancellor made reference to the Government's desire to see a continuing dual role for both Bar Council and the Law Society, in relation to both regulatory and representational affairs. Speaking on 14 July 1999, the Lord Chancellor said:
The Application as it now stands reflects the Bar Council's discussions with the Panel's working group and Chairman on 26th June 2000. In addition to a request for the approval of Practising Certificate Rules (Annex 5 to the Application), the Bar Council makes the Invitation (set out at paragraph 43 of the Application) so as to extend and clarify the purposes for which Practising Certificate Fees may be raised and applied. Annexes 6 and 7 to the Application illustrate how the Bar Council expects that its proposals for the calculation and collection of practising certificate fees will operate in practice in the year 2001, if approved.
There appear to be four main issues for the Panel's consideration arising from the Bar Council's proposals, albeit subject to some points of overlap. These are:
Categorisation of the Bar Council's activities as between s.46(2)(b) matters (regulatory/education & training) and representational and other activity
Calculation and allocation of the Bar Council's expenses and overheads as between such categories
Whether an Order under s.46(3)(a) of the 1999 Act is appropriate in the form, or along the lines, of the Bar Council's draft at paragraph 43 of the Application
The content of the proposed Practising Certificate Rules (Annex 5 to the Application).
CATEGORISATION OF THE BAR COUNCIL'S ACTIVITIES AS BETWEEN s.46(2)(b) MATTERS (REGULATORY / EDUCATION & TRAINING) AND REPRESENTATIONAL AND OTHER ACTIVITY
The Panel approves and endorses the Bar Council's proposed categorisation of its activities. The Bar Council would refer to paragraphs 4- 9 of the Application for its general approach, and to paragraphs 11-36 for its detailed analysis and conclusions. The Panel accepts the Bar Council's proposed categorisation and its general approach, but has a number of comments in relation to the allocation of activities and costs under particular heads in respect of s.46(2)(b) of the Act, which are dealt with under Main Issue 2 below.
The Panel notes that in so far as the Bar Council's analysis and conclusions involve calculating and applying a percentage to the Bar Council's overall activity within a particular area in order to determine what proportion of that activity should be funded from practising certificate fees (see paragraphs 16, 19, 22, 25, 26, 28, 31, and 34 of the Application), there is necessarily an overlap with Main Issue 2 below.
CALCULATION AND ALLOCATION OF THE BAR COUNCIL'S EXPENSES AND OVERHEADS AS BETWEEN SUCH CATEGORIES
At paragraph 5 of the Application, the Bar Council make the point that their calculations and allocations are to a large degree of a somewhat 'rough and ready' nature. The Panel considers that, for the present at least, it would not be practicable for this exercise to be undertaken on any other basis, because the kind of cost centres described in the Application have not hitherto been relevant for, and hence not separately maintained by, the Bar Council.
Following careful questioning of the Bar Council's representatives at the meeting on 26th June 2000, the Panel has no reason to believe that the Bar Council's estimates (in particular, the percentages in the various paragraphs of the Application referred to at paragraph 12 above) are anything other than honest estimates based on experience, and recommends that they should be accepted.
However, this is subject to the observation that the allocation of activity and the implementation of the charging regime should be independently audited and reviewed to ensure its suitability and compliance with the terms of the 1999 Act. The percentage approach to allocation of activity invariably carries with it some subjective assessments. Despite the Bar Council's long experience and undoubted good faith, the Panel nonetheless considers that an independent audit and review process would be an appropriate safeguard to ensure that the Bar Council continues to follow both the letter and the spirit of the 1999 Act in respect of the raising and application of its practising certificate fee income. The Panel recommends that such an independent audit and review should be carried out after the first year of operation of the proposed Practising Certificate Rules, but thereafter at three-yearly intervals.
The Panel takes as axiomatic the need for close and careful monitoring of any organisation which discharges a dual representational and regulatory role. The Panel believes this to be consistent with the tenor of the recently published Annual Report for 1999/2000 of the Legal Services Ombudsman entitled "Demanding Progress" and notes in particular the passage headed "Consumer concern" at page 9 of her report.
Additionally, there are a number of specific comments which the Panel makes in respect of the following proposed allocations:
| 17.1 | International Relations The Panel has considered the possible objection that the effect of this allocation is to favour limited parts of the Bar at the expense of the remainder. However it accepts the argument that expenditure under this head is for the benefit of the profession generally and that it is in the public interest that there should be good working relations between the Bar Council and its equivalents abroad, as well as the other bodies mentioned in paragraph 18 of the Application. The Panel notes the overlap between this comment and the considerations relevant to Main Issue 3 below (the Invitation). |
| 17.2 | Remuneration Committee 17.2.1 The panel is evenly split on the question of whether, in principle, remuneration should be regarded as partly a regulatory function of the Bar or as wholly representational. On the casting vote of the Chairman, the majority (which also includes all 5 members of the working group who met with the Bar's representatives on 26th June 2000) accepts the Bar Council's argument that much of the activity under this head leads to a number of regulatory outcomes, including in particular the devising and adoption of new, compulsory fee structures governing and controlling payment of all practising members of the Bar for various types of publicly funded work, and is thus appropriate to be funded from Practising Certificate fees (see paragraph 23 of the Application). 17.2.2 The majority further agrees that, for the purposes of the proposed Practising Certificate Rules, 80% of the costs of the Bar Council's Remuneration Committee should be accepted for the present as a reasonable allowance for the regulatory element of this activity and 20% for its representational or 'trade union' element. There can be an argument as to the exact split between these two elements, but the 'right' figure is not readily quantifiable and the Panel would adopt, for the first year at least, the approach referred to in paragraph 14 above. However, this area affords a good example of the need for and value of an independent audit and review process, which the Panel recommends should first be carried out after one year's operation of the Practising Certificate Rules (see paragraph 15 above). 17.2.3 The minority view within the Panel is that none of the activities of the Bar Council under this heading is essentially different from those which are performed by other trade unions or professional associations, especially those with members in the public sector, in representing those members' interests in matters of remuneration. The activities of such bodies can and often do extend to formulating proposals for structures and machinery for determining remuneration and for incorporating these in regulations or similar schemes. Therefore, to include expenditure on such activities within a compulsory Practising Certificate fee would be, in effect, to create similar conditions to a 'closed shop' and contrary to current public policy in this respect. For these reasons, the minority would advise that all expenditure relating to the Remuneration Committee should be excluded from the compulsory element of the Practising Certificate fee authorised under s 46 (2) (b) of the Act. |
| 17.3 | Public Affairs 17.3.1 In its discussions with the Panel, the Bar Council has asserted that all its lobbying/Public Relations costs are currently easily identified, as the charges of a single firm of consultants employed for this purpose. However, if the Bar Council were to change its current arrangements, identification and allocation of costs might not be so straightforward. The Panel therefore considers that, whereas the current arrangements facilitate transparency in allocation of costs and activities, any successor arrangements should do likewise by the institution and monitoring of an appropriate cost centre. 17.3.2 The Panel notes from its discussions with the Bar Council's representatives that the Bar Council believes it inappropriate to participate in public or parliamentary affairs on a party political basis. The Panel endorses this view and is quite clear that, were the Bar Council to undertake any party political activity, it should not be funded from practising certificate fee income. |
| 17.4 | Administration Costs, etc. The Panel endorses the Bar Council's assessment that all activities carry an overhead, and that therefore a pro rata allocation of administrative costs to its various areas of work can properly be included when calculating the sums to be funded from Practising Certificate fees. It also recognises that an appropriate proportion of contingency funding may properly be so allocated. It is satisfied that the Bar Council's proposals in this regard (see paragraphs 35-36 of the Application) are reasonable. |
WHETHER AN ORDER UNDER s.46(3)(a) OF THE 1999 ACT IS APPROPRIATE IN THE FORM, OR ALONG THE LINES, OF THE BAR COUNCIL'S DRAFT AT PARAGRAPH 43 OF THE APPLICATION
The Panel takes the view that it would be appropriate for such an Order to be made. It agrees with the relevant passages of the Application, and in particular paragraphs 9-10, 13 and 43 thereof.
All four of the activities which are the proposed subject of the Order are in the Panel's view clearly useful functions in the public interest which the Bar Council does or should perform. The Panel has in mind the words of the Lord Chancellor set out in paragraph 8 above. The activities at sub- paragraphs 43(i)-(iii) of the Application are those from which the public and/or the government directly benefit. The proposed Practising Certificate Rules at Annex 5 allow for the entire cost of these to be funded from practising certificate fee income (see proposed rule 8c). The activity at sub- paragraph 43(iv) of the Application [international relations] is not only one from which the Bar as a whole benefits, but it is also one which in the Panel's view is in the public interest (see paragraph 17.1 above). In this case the proposed rules at Annex 5 allow for 90% of the cost to be so funded (see proposed rule 9b).
The making of the suggested Order would also have the advantage of rendering certain whether or not these desirable activities may be funded from practising certificate fee income. Without the order there may be room for sterile argument as to whether these activities are in any event at least partly permitted by the existing wording of s.46(2)(b) of the 1999 Act. This point is reflected in the opening words of the Bar Council's suggested amendment to s.46(2)(b) "and, so far as not falling within those purposes, …" (paragraph 43 of the Application).
The Panel has considered whether the Bar Council's unqualified wording of purpose (i) ["participation by the barristers' profession in the process of legislation and law reform"] might give the Lord Chancellor legitimate concern that it could be used to justify the funding of purely representational or 'trade union' activity. Broadly, the Panel accepts the argument that the Bar's participation in the process of legislation and law reform is very much in the public interest. The only question is whether there may be occasions in future when the Bar addresses legislative proposals from a purely representational standpoint. However, in most instances where the Bar is directly affected by legislation, including that concerning fees, the Bar's work may (if the Application is approved in accordance with the Panel's advice) be largely funded from practising certificate fee income on the basis that it is more attributable to its regulatory function than any other. The Panel therefore concludes that it is neither feasible nor desirable to add any additional wording of restrictive purpose (i).
THE CONTENT OF THE PROPOSED PRACTISING CERTIFICATE RULES (ANNEX 5 TO THE APPLICATION)
The Panel considers that annex 5 is appropriate for approval pursuant to s.46(5) of the 1999 Act, subject only to the minority view in respect of proposed rule 9d which is recorded at paragraph 17.2.2 above.
The Panel strongly endorses the proposed requirement for Barristers to be in possession of current professional indemnity insurance embodied in proposed rule 14(e), and notes from the Bar Council's letter of 18th July 2000 that the delay in implementing this rule is expected to be only 12 months, for the reasons stated.
The Panel also endorses the arrangements set out in proposed rule 18 in respect of non-payment of practising certificate fees.
The Panel notes, and would encourage, the continuation of the payment of subventions by the Inns of Court to the Bar Council for education and training purposes (see paragraph 38 of the Application). Further, the Panel agrees with the Bar Council's proposal that the amount it should be entitled to raise by way of practising certificate fees should be the cost of relevant activities net of the sum received by it from the Inns of Court by way of subventions for those activities (see paragraph 38 of the Application and proposed rule 5).
The Panel has noted the contents of Annexes 6 and 7 to the Application, which are proffered by the Bar Council by way of illustration of how it envisages that is proposals would work in practice in 2001 (see the Application at paragraphs 40-41). Their contents cause the Panel no concern, but as they are illustrative in their nature the Panel does not consider it appropriate to proffer any specific advice or recommendation in relation to their content.
The Panel welcomes the constructive approach taken by the Bar Council in its dealings with the Panel concerning these proposals, as well as the Bar Council's willingness to revise its proposals following its discussions with the Panel. The Panel endorses the approach taken by the Bar Council in the Application, including the Invitation. It advises that:
| 27.1 | the proposed Practising Certificate Rules (annex 5) should be approved by the Lord Chancellor pursuant to s.46(5) of the 1999 Act, subject to provision being made, or a commitment being given by the Bar Council, for the adoption of an independent audit and review process to monitor the allocation of activity and the implementation of the charging regime provided for by the proposed Practising Certificate Rules; |
| 27.2 | the Lord Chancellor should accede to the Invitation by making the proposed Order pursuant to s.46(3)(a) of the 1999 Act. |
This advice relates to the above submission ("the Law Society's Submission"), by which the Law Society submits that if an Order is to be made under section 47, Access to Justice Act 1999 ("the 1999 Act"), it should be in the terms set out in paragraph 4 of the submission, namely :
practice support, practice maintenance and the raising and maintaining of standards;
participation by the solicitors profession in the process of legislation and law reform;
the provision by solicitors or those wishing to become solicitors of free legal services to the public;
the protection by law of the human rights and fundamental freedom of persons; promoting relations between the solicitors' profession and national and international regulatory bodies, governments and the legal professions of other jurisdictions."
The Panel was informed at its meeting on 22nd May 2000 that it could expect to receive a reference in connection with any such submission. The Panel had a preliminary discussion on the topic that day and established a working group comprising 5 members of the panel under the chairmanship of Mr McNeil to look at the matter. Pursuant to the approval of a minute by the Lord Chancellor on 19th May 2000, a formal reference of the Law Society's submission to the Panel for advice pursuant to Section 18A (3) (b) of the Courts and Legal Services Act 1990 ("the 1990 Act") was issued on 24th May 2000. Pursuant to the approval of a further minute by the Lord Chancellor on 2 December 2000, a formal reference of the Law Society's Submission to the Panel for advice pursuant to Section 18A (3) (b) of the 1990 Act was issued on 5 December 2000.
At its meetings on 22nd May and 26th June 2000 the Panel gave preliminary consideration to outline proposals from the Law Society contained in its letter dated 17th May 2000 (signed by Roger Smith, Head of Strategy/Director of Training). However the Panel was informed that it was not practicable for the Law Society to progress the matter for some months thereafter.
The working group met representatives of the Law Society (including Mr Smith) on 25th September 2000, when they had a constructive discussion including consideration of a first draft submission produced by the Law Society to facilitate discussion. The Law Society then produced a revised draft submission, and on 23rd October 2000 its representatives met with the Panel and the matter was further discussed. The Law Society's Submission was finalised and sent to the Panel on 31 October 2000.
The Panel and the same working group have already considered an application from the General Council of the Bar ("the Bar Council") for the approval of rules to prohibit barristers from practising unless authorised by a certificate issued by the Bar Council in accordance with s.46 of the 1999 Act and an invitation to the Lord Chancellor by the Bar Council to make an order under s.46(3)(a) of the 1999 Act. The Panel issued its advice thereon to the Lord Chancellor on 2 August 2000, and that advice records the reasons why the Bar Council's application and invitation were dealt with separately and first. The Panel understands that the Bar Council provided the Law Society with a copy of that advice in response to its request. Thus the Law Society has been able to take into account the terms of that advice in its discussions with the Panel and the working group, and in formulating and finalising the Law Society's Submission.
That said, the Panel :
| 6.1 | notes the practical differences involved in the implementation of s.47 of the 1999 Act affecting solicitors, as contrasted with the implementation of s.46 affecting the Bar, referred to in paragraphs 6 and 10-15 of the Law Society's Submission; and also |
| 6.2 | considers it important to record that there are material differences between the ways in which sections 46 and 47 of the 1999 Act operate so far as the Bar Council and the Law Society are respectively concerned. |
Section 11(3) of the 1974 Act currently allows all fees collected 'to be applied in such manner as the Society may think fit for the purposes of the Society, including facilitating the acquisition of legal knowledge'.
Section 47(1) of the 1999 Act allows the Lord Chancellor by order to limit the expenditure by the Society of such fees by substituting in section 11(3) of the 1974 Act different permissible purposes as follows:
the purposes of the regulation, education and training of solicitors and those wishing to become solicitors, or
both those purposes and such other purposes as the Lord Chancellor considers appropriate.
Section 47(2) of the 1999 Act states that no such order may be made unless:
the Lord Chancellor has consulted the Master of the Rolls and the Law Society; and
a draft of the Order has been laid before, and approved by a resolution of, each House of Parliament.
Section 11(1) of the 1974 Act, which will be unaffected by the provisions of the 1999 Act in any event, provides that the amount of the solicitors' practising certificate fee is such sum as the Master of the Rolls, with the concurrence of the Lord Chancellor and the Lord Chief Justice, may from time to time by order determine.
Section 11(4) of the 1974 Act, which will also be similarly unaffected, provides that the Law Society shall submit annually to the judges mentioned in section 11(1) an account of all its practising certificate fees and of their application, as well as depositing a copy thereof at the Law Society's hall for inspection by any solicitor.
In the case of the Bar Council there has hitherto been no compulsory practising certificate for barristers and hence no fee in relation to such certificates requiring any form of statutory approval. Section 46 of the 1999 Act provides for the making of rules in relation to such certificates by the Bar Council, which shall not have effect until approved by the Lord Chancellor. There is no direct equivalent to such rules provided for by section 47 of the 1999 Act, although of course there are already in existence the provisions of the Solicitors Act 1974 ("the 1974 Act").
As for the purposes for which fees payable for/on the issue of practising certificates may be applied, there is a greater degree of similarity in the statutory provisions. Section 46(2)(b) and (3) provide (in effect) that the permissible purposes for which barristers' practising certificate fees might be applied are the regulation, education and training of barristers and those wishing to become barristers, plus such other purposes as the Lord Chancellor considers appropriate and specifies in an order made by statutory instrument. Section 47(1) provides (in effect) that if and when the Lord Chancellor exercises the power thereby conferred on him to amend section 11(3) of the 1974 Act by order made by statutory instrument, the permissible purposes for which solicitors' practising certificate fees may thereafter be applied will be the regulation, education and training of solicitors and those wishing to become solicitors, plus such other purposes as the Lord Chancellor considered appropriate.
In giving its advice below, the Panel has borne in mind that during the debate on the Access to Justice Act in the House of Lords, the Lord Chancellor made reference to the Government's desire to see a continuing dual role for both the Bar Council and the Law Society, in relation to both regulatory and representational affairs. Speaking on 14 July 1999, the Lord Chancellor said:
I much prefer agreeing activities that justify compulsory fees on a case-by-case basis to creating a rather vague and problematic category [sc. "work in the public interest"] …. Those functions of the Law Society and the Bar Council that we can agree are in the public interest will qualify for funding from compulsory subscriptions …. We have no wish whatsoever to stifle the many useful functions in the public interest that both bodies currently perform and from which both the public and the Government benefit."
The Panel has also borne in mind the terms of the advice it has given the Lord Chancellor concerning the Bar Council's application and invitation mentioned in paragraph 5 above, and the differences in the position affecting barristers and solicitors mentioned in paragraphs 12-13 above.
The Panel also notes that, by virtue of s.47(2)(a) of the 1999 Act, before making any such order the Lord Chancellor is required to consult the Master of the Rolls, as well as the Law Society.
Under section 47(2) of the 1999 Act, the Lord Chancellor is bound to consult the Law Society before making an order under section 47(1). The Law Society is therefore clearly entitled to make representations, as it seeks to do at paragraph 3 (and following) of the Law Society's submission.
For the most part, the Law Society's suggested wording for such an order follows that put forward by the Bar Council in its above mentioned invitation to the Lord Chancellor to make an order under s.46(3)(a) of the 1999 Act, substituting 'solicitors' for 'barristers' where appropriate. The Panel considers that there is no material difference between the position of solicitors and barristers which renders this wording or any part of it unsuitable or inappropriate for adoption in the context of an order under s.47(1) of the 1999 Act. Accordingly, for like reasons to those set out in paragraphs 18-21 of the Panel's advice to the Lord Chancellor mentioned in paragraph 5 above, the Panel agrees that this wording is suitable and appropriate.
There are 2 additions to this wording proposed by the Law Society. The first is set out at sub-paragraph (i) of its proposed permitted purposes. This adopts words used by the Lord Chancellor in the House of Lords on 14th July 1999, which are included in the quotation set out in paragraph 14 above. It also represents a form of words which reflects a particular feature of the work which the Law Society does for the solicitors' profession as a whole. In this regard the Panel notes paragraphs 7, 8 and 17 of the Law Society's Submission, and (with the possible exception of the first sentence of paragraph 7 thereof, which the Panel finds it is unnecessary to go into for present purposes) accepts that (subject to the question of the appropriate percentage of such activity to be so funded) they support and justify the inclusion of this additional purpose. The Panel therefore agrees with its proposed inclusion in any order under s.47(1) of the 1999 Act.
The second is the addition of the words shown underlined within sub- paragraph (v) of the proposed permitted purposes, which deals with (put broadly) international relations. In this regard the Panel notes paragraphs 5 and 19 of the Law Society's Submission, and accepts that (subject to the question of the appropriate percentage of such activity to be so funded) they support and justify the inclusion of the additional words proposed. The Panel therefore agrees with the inclusion of this purpose in the extended form proposed in any order under s.47(1) of the 1999 Act.
Accordingly, the Panel endorses the Law Society's proposal for the inclusion within an order made under s.47(1) of the 1999 Act of the wording proposed in paragraph 4 of the Law Society's Submission, and in the conclusion hereof so advises the Lord Chancellor.
In the case of the Bar Council's Application and Invitation, the effect of making its suggested order under s.46(3)(a) and at the same time approving its suggested rules is such that, in the case of some of the categories of activity set out in the suggested order, only a proportion of the costs thereof may be funded out of practising certificate fees. That limitation is effected by the terms of the rules.
In the case of the Law Society's Submission, however, there are no equivalent rules to accompany the making of the proposed order, by reason of the rather different statutory scheme briefly described and considered in paragraphs 7-11 and 12-13 above.
The Panel notes that the overall effect of paragraphs 16-28 of the Law Society's Submission is :
| 24.1 | to contend that some of its activities (briefly described in paragraphs 16-19) ought to qualify for funding in their entirety out of practising certificate fees; |
| 24.2 | to contend that some of its activities (briefly described in paragraphs 20-26) ought to qualify for funding up to a specified percentage out of practising certificate fees; and |
| 24.3 | to recognise that some of its activities (briefly described in paragraph 27) ought not to qualify for funding out of practising certificate fees at all. |
In principle (and without commenting on the particular categories or percentages put forward at this stage) the Panel agrees that this would appear to be an appropriate approach, and (in the absence of any formulated alternative approach put before it for consideration by either the Bar Council or the Law Society) considers that it would not be practicable for the scheme of the above-mentioned statutory provisions to be implemented in any fundamentally different way.
In terms of a mechanism to give effect to the approach summarised in paragraph 24 above, there is no difficulty in giving effect to 24.1 and 24.3 by means of respectively including in and excluding from any order made under section 47(1) of the 1999 Act the activities in question. However (in contrast to the position in respect of the Bar) there is no provision for the adoption and approval of regulations which may be used as a mechanism to give effect to 24.2 .
The Panel does not consider that the body of a statutory instrument is the appropriate place for the qualifying percentages to be specified. It considers it desirable for there to be some flexibility as circumstances change from time to time, and all the more so given that the Law Society faces the prospect of significant internal change within the near future, as paragraph 12 of its Submission briefly describes and the Society's representatives developed in their meeting with the Panel.
The Panel concludes that it is by virtue of sections 11(1) and (4) of the 1974 Act that the adoption of the approach at 24.2 above may most conveniently be achieved. Quite apart from the respective roles of the Master of the Rolls and the Lord Chief Justice, as to which it is not for the Panel to comment, the Lord Chancellor has both a direct involvement in the determination of the amount of the practising certificate fee and a statutory right to receipt of an account of its application. The Lord Chancellor may therefore wish to give an indication to the Law Society that with effect from the implementation of any order under s.47(1) of the 1999 Act he would not be minded to concur in the setting of a practising certificate fee in excess of that required to cover all the activities within 24.1 and what he regards as an appropriate percentage of the activities within 24.2 above (as to which see next below).
For the reasons set out above, the Panel considers that it would be inappropriate and premature for it to give the Lord Chancellor any formal advice upon these percentages. All we have done is to consider them in the light of the information provided by the Law Society as to their current activities, as a guide to the manner in which the Law Society would propose to comply with any Order under s.47 in the future. The Panel is in no position to perform the auditing function involved in any more detailed consideration of the exact percentages proposed and the spreadsheet which accompanied the Law Society's Submission. We have some reservations concerning whether any and if so what percentages should be disallowed under the headings of "Remuneration" (which the Panel notes is part of the work covered under the heading "Private Client Team" in paragraph 22 of the Law Society's Submission) and "International". As to the former (Remuneration), the same minority of the Panel has similar reservations to those set out in paragraph 17.2.3 of the Panel's Advice concerning the Bar mentioned in paragraph 5 above, and the view of the Panel as a whole is similar to that set out in paragraph 17.2 of that Advice. As to the latter (International), we agree that the great majority of the expenditure should qualify but have some reservations as to whether this amounts to the full 100 per cent. However, looking at the matter broadly the Law Society's suggested percentages do not appear unreasonable. Nevertheless, we repeat that they are not required, and in the Panel's view not appropriate, for inclusion within any order made under s.47(1) of the 1999 Act.
If the Lord Chancellor is minded to follow the Panel's advice as to the appropriate wording for any order to be made under s.47(1) of the 1999 Act, then : 30.1 If he shares the Panel's views expressed in paragraphs 25-28 of this advice, and wishes to give a specific indication to the Law Society along the lines contemplated in the last sentence of paragraph 28, then he might wish to refer to the Panel for further advice the terms of any such indication and/or any representations he may receive from the Law Society in consequence. However should the Lord Chancellor see fit to make any further such reference, the Panel considers that, in order to be able to provide advice going significantly further than paragraph 29 above, it would have to obtain reports and take professional advice from either the Law Society's auditors or other auditors, and thereby incur the necessary professional fees. In these circumstances the Lord Chancellor may prefer to obtain such reports and advice direct, for consideration within the Department without further involving the Panel. 30.2 The Lord Chancellor will in any event continue to be involved in the operation of sections 11(1) and (4) of the 1974 Act. It may be that he will wish to refer to the Panel for advice one or more future applications to him by the Law Society for his concurrence in the determination of a practising certificate fee thereunder (and in particular the first such application after the implementation of any order under s.47(1) of the 1999 Act). However again the Panel considers that in order to be able to provide advice on such a reference going significantly further than that given in paragraph 29 above, it would have to obtain reports and take such professional advice as would be necessary from either the Law Society's auditors or other auditors, and thereby incur professional fees. In these circumstances, again, the Lord Chancellor may prefer to obtain such reports and advice direct, without further involving the Panel.
The Panel welcomes the constructive approach taken by the Law Society in its recent dealings with the Panel concerning its proposals, as well as its willingness to revise its draft proposals following its discussions with the Panel and/or its working group. The Panel :
| 31.1 | advises that in any order made under s.47(1) of the 1999 Act the wording proposed in paragraph 4 of the Law Society's Submission be adopted; |
| 31.2 | draws the Lord Chancellor's attention to the considerations set out in paragraphs 22-28 above; and |
| 31.3 | by reason of those considerations on implementation and for the reasons given in paragraphs 29-30 above declines to comment further on the percentages suggested in paragraphs 16-28 of the Law Society's Submission at this stage. |