Justice 1 Committee, 01 Dec 2004

Meeting date: Wednesday, December 1, 2004

Official Report 193KB pdf

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Legal Fees (Transparency)

Item 5 is on the transparency of legal fees. I refer members to a note that the clerk has prepared, which sets out the background and the committee's consideration of the issue. There are several options for us to consider. A separate but related issue was raised in a letter from one of Margo MacDonald's constituents to me, as convener, about a dispute that he had had about legal fees and the auditors of court. I felt that there was a general issue to be pursued, and we pursued the matter with the Scottish legal services ombudsman, who agreed that there were issues. One issue of note was the requirement for a practice rule, whereby solicitors must outline the work that they are going to do for their client.

The committee has had some success. The Law Society of Scotland wrote to the committee on 29 June, confirming that its council had agreed to make a practice rule that will require solicitors to provide in writing to their clients, at the earliest possible opportunity, information on the work that they are to carry out and the fees and outgoings that are to be charged. English solicitors have operated a similar rule for some time, but the practice has not been widespread in Scotland. The practice rule will require solicitors to provide the identity of the person or persons by whom the work will be carried out and the identity of the person to whom the client should refer in the event of there being any dissatisfaction with the work. The committee should take full credit for getting that important concession from the Law Society, which should have been operating such a rule in the first place.

I invite the committee to make any comments or suggest any action.

The clerk has laid out several options for us. It would be sensible for us to write to the Law Society. I take it that the proposed meeting would be an informal briefing meeting with the Law Society's remuneration committee, which would be useful. It would also be useful for us to request information from the Minister for Justice and the Scottish Court Service about the work that is being undertaken on the taxation of solicitors' accounts. I would prefer not to take up the offer of an informal briefing on the transparency of legal fees and the taxation of solicitors' accounts until we have received those responses.

We should take up options (b), (c), and (d). Before we meet the remuneration committee, it would be helpful for us to have more background knowledge on and understanding of the issue.

I concur with that. Fees require to be absolutely transparent, particularly in the light of moves to introduce greater competition in the legal system. When people are making fee comparisons, they need to know exactly what they are based on and how services can be judged. For example, people need to know whether they are paying for a junior or a fully qualified solicitor who has 20 years' experience. If competition is to be introduced, the position and how fees are charged must be transparent from the outset. A useful first step would be for us to understand the mechanism.

We are to hear from the Scottish legal services ombudsman—all we have to do is to find a slot for the session. Notwithstanding what comes out in the consultation, we might want to consider legislation to give the ombudsman additional powers. Certainly, in principle, the system would be greatly assisted if the ombudsman were given additional powers and, if we are going to continue to support self-regulation, the way forward must include an independent ombudsman with the appropriate powers. At the moment, the powers are not strong enough. We will have to see what comes out of our other work on the subject. I made the suggestion in the knowledge that we have no idea at the present time of the level of commitment that such a suggestion would incur.

I support the convener's suggestion. I have great reservations about the self-regulation of the legal profession. For me, the issue is a matter of principle. Clearly, if the profession is going to continue down that route, we need to put in place better methods of redress than exist at the moment. Frankly, it does not matter whether that is done by giving increased powers to the ombudsman or by another course; we need to put in place a mechanism that is capable of challenging the vested self-interest of such self-regulatory bodies.

All right; let us conclude our discussion. It has been suggested that we go with option (b), which is to

"consider whether to accept the offer of a meeting with the Law Society's Remuneration Committee to discuss transparency of legal fees",

and option (c), which is to

"write to the Minister for Justice and the Scottish Court Service requesting an update on work being undertaken by the Scottish Court Service regarding the arrangements for the taxation of solicitors' accounts".

The suggestion was also made that we go with option (d), which is that we accept Professor Alan Patterson of the University of Strathclyde's offer of an informal briefing on the subject. He has some expertise in the area.

As I said, we will take evidence from the ombudsman at some point and we should be well prepared by the time that we reach that session.

No member has mentioned option (a).

I did.

I am sorry; you did, Stewart.

I think that we assumed that the point was covered—

I am relaxed about it.

So far, we have agreed options (b), (c) and (d), as well as option (a), which, as Stewart Stevenson said, is to write to the Law Society to say that we would welcome

"the introduction of a practice rule requiring solicitors to issue clients with a letter of engagement"

and to ask

"whether it has considered making a practice rule requiring solicitors to provide clients with itemised bills (without charging for such a bill to be produced)"

and

"whether solicitors advise clients that they have the right to challenge the level of fees charged by a solicitor by going to the Auditor of Court".

The Law Society has told us that, as part of its new practice rules, in the event of a client expressing dissatisfaction with work that has been undertaken on their behalf, it will give out the identity of the person to whom the client should refer. We could ask the Law Society to confirm whether information on the right to challenge the level of fee will also be given.

I assumed that our agreeing to option (b) left it open for us to raise all these matters with the Law Society of Scotland when we meet it. We are meeting the remuneration committee. Does agreeing to option (b) preclude us from raising some of the issues that appear in option (a)?

I thought that our agreeing to option (b) meant that we would not pursue option (a), but there is no reason why we should not pursue option (a) as well—forewarned is forearmed. If we wrote to the Law Society, it would know our concerns and the areas that we intend to target. We do not want to hear from the remuneration committee that it has not thought about an issue and would like to get back to us on it. It might be best for us to cover that possibility beforehand.

Do we agree to adopt option (a) in addition to option (b), so that we have some answers in writing before meeting the remuneration committee?

Yes. That would give us an agenda for the meeting.

Option (a) is agreed.