Legal aid, referral fees, compensation culture dominate Law Society agenda

Legal aid, referral fees and the compensation culture dominated proceedings at this year’s Law Society conference.

Current Law Society president Edward Nally gave a rounded address, touching on issues as wide-ranging as Sir David Clementi’s review of regulation, diversity and the QC system. But in the forum afterwards, the audience focused on just one concern.

Guest panellist Baroness Scotland QC, the minister in charge of criminal justice reform, was grilled over legal aid by a series of solicitors, ranging from a prosecutor to a defence lawyer for the disabled.

Meanwhile, the other panellists – Wragge & Co’s Richard Haywood, Teresa Perchard from the Citizens Advice Bureau, Law Society chief executive Janet Paraskeva and Nally – were mostly ignored by the audience.

The 600 delegates at the event, held in Birmingham on 15 October, were largely high street and sole practitioners, with few of the country’s largest law firms in attendance except as speakers.

Civil litigation
Clifford Chance litigation partner Simon Davis, a new recruit to the Law Society Council, accused the legal system of being “in a muddle” post-Woolf, during the first breakout session of the conference.

The session on ‘The Future of Civil Litigation’ was chaired by Georgina Squire, chair of the Law Society’s civil litigation committee, with a panel of Davis, Lovells’ Graham Huntley and Fraser Whitehead of Russell Jones & Walker.

Davis argued that the justice system is being asked to provide a Rolls-Royce service at the price of a Smart car, with costs being continually cut. Expectations either have to be lowered or funds increased in order to achieve the results that are required.

Davis also pointed out the dichotomy that exists between calls for improved access to justice and simultaneous condemnation of the “compensation culture”.

Whitehead agreed, saying: “All aspects of litigation are stuck in a quagmire that is the compensation culture slur.”

Davis, Huntley, Whitehead and the audience all agreed that the compensation culture is in fact a myth.

Referral fees
Referral fees have been high on the Law Society’s agenda for some time now.

Although only 17 per cent of the Law Society’s members responded to a recent postal ballot on reinstating the ban on referral fees (with the majority in favour), the subject prompted some of the most passionate debate of the conference.

Eyebrows were raised when a delegate said she had heard rumours that Council members had been in breach of the ban before its relaxation. Vice-president Kevin Martin responded by assuring the audience that the code of conduct would be complied with, and he stressed that the rumours were just that – rumours.

Much of the talk was, as ever, about personal injury work and the role that referral fees play in that. However, management consultant Nick Jarrett-Kerr pointed out that referral fees can also be paid by larger firms and for other areas of work.

Former Law Society president Carolyn Kirby expressed her deep opposition to referral fees, pointing out that they cannot be in the client’s interest. She also questioned the ability of the Law Society to regulate referral fees, saying: “If we can’t police it, how can the Legal Services Commission police it?”

Money laundering
Lawyers are responsible for 80 per cent of all disclosures to the National Criminal Intelligence Service (NCIS), the afternoon session on money laundering revealed.

This is despite the Law Society’s advice that if a lawyer considers legal professional privilege to apply to a case, disclosure need not be made.

NCIS intelligence officer Fiona Nicolson had other statistics for the audience showing the amount of work done to combat money laundering.

The organisation receives an average of around 1,200 disclosure letters a month asking for consent to continue with a transaction and passes 35 per cent on to law enforcement agencies. These are the trickier cases where the audit trail goes abroad or law enforcement is already involved.

Nicolson revealed that a number of letters arrive with an entire client file – surely a breach of both client confidentiality and insurance policies. She also said that disclosure will breach confidentiality unless the lawyer has a real suspicion that money laundering is going on.

The good news is that, since July 2004, £2m has been restrained due to disclosures made and that consent for a transaction is refused in only 3 per cent of cases.