Code Amendments Legal Advice Centres

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1 Code Amendments Legal Advice Centres The Bar Standards Board would like to make the following amendments to the Code of Conduct using the de minimus process if possible: 1) An amendment to rule 807 in light of s194 Legal Services Act 2007 that allows for pro bono costs orders to be paid to prescribed charities (such as the Access to Justice Foundation). 2) An amendment to the definition of Legal Advice Centres in Part X of the Code of Conduct to reflect the fact that waivers are now granted by the Solicitors Regulation Authority rather than the Law Society 3) An amendment to the definition of Legal Advice Centres in Part X of the Code which currently refers to the Employed Solicitors Code 1990; this has now been repealed and replaced by the Solicitors Code of Conduct Background: 1. Rules 806 and 807 in the Code of Conduct apply to barristers working at Legal Advice Centres: Legal Advice Centres 806. A barrister may supply legal services at a Legal Advice Centre on a voluntary or part time basis and, if he does so, shall in connection with the supply of those services be treated for the purpose of this Code as if he were employed by the Legal Advice Centre A barrister who is employed by a Legal Advice Centre: (a) must not in any circumstances receive either directly or indirectly any fee or reward for the supply of any legal services to any client of the Legal Advice Centre other than a salary paid by the Legal Advice Centre; (b) must ensure that any fees in respect of legal services supplied by him to any client of the Legal Advice Centre accrue and are paid to the Legal Advice Centre; (c) must not have any financial interest in the Legal Advice Centre. 2. A Legal Advice Centre is defined in part X of the Code: "Legal Advice Centre" means a centre operated by a charitable or similar noncommercial organisation at which legal services are habitually provided to members of the public without charge (or for a nominal charge) to the client and:

2 (a) which employs or has the services of one or more solicitors pursuant to paragraph 7(a) of the Employed Solicitors Code 1990 or for whom the Law Society has granted a waiver, or (b) which has been and remains designated by the Bar Standards Board as suitable for the employment or attendance of barristers subject to such conditions as may be imposed by the Bar Council or Bar Standards Board in relation to insurance or any other matter whatsoever; Issues: 1) Pro Bono Costs Orders 3. Rule 807(b) requires that a barrister must ensure that any fees in respect of legal services supplied by him to any client of the Legal Advice Centre accrue and are paid to the Legal Advice Centre. This rule requires amendment in light of s194 Legal Services Act 2007 that allows for pro bono costs orders to be paid to prescribed charities (such as the Access to Justice Foundation). See Annex 1 for an article by Jeremy Morgan QC which sets of the process and Annex 2 for s194 of the Legal Services Act S.194 enables a court to make an order, equivalent to an order for inter party costs, against the opponent of a litigant who has been represented pro bono. However, unlike a normal costs order under which the beneficiary is the successful litigant, the beneficiary of a s.194 order is the Access to Justice Foundation. The legislation is permissive rather than mandatory and so requires a positive application for a costs order to be made. 5. If a barrister represents a client in a civil matter as counsel instructed by the Legal Advice Centre, they would be in breach of rule 807 if they sought and were granted a pro bono costs order as it would arguably be a fee for the supply of legal services that would be then paid to the Access to Justice Foundation rather than the Legal Advice Centre. 6. The Bar Standards Board has agreed that rule 807 should therefore be amended to read: 807. A barrister who is employed by a Legal Advice Centre: (b) must ensure that any fees in respect of legal services supplied by him to any client of the Legal Advice Centre accrue and are paid to the Legal Advice Centre ;or to the Access to Justice Foundation or other such charity as

3 prescribed by order made by the Lord Chancellor under s194(8) of the Legal Services Act ) Definition of Legal Advice Centres in the Part X of the Code a) Waivers 7. Part (a) of the definition of Legal Advice Centres in Part X of the code mentions waivers granted by the Law Society: (a) which employs or has the services of one or more solicitors pursuant to paragraph 7(a) of the Employed Solicitors Code 1990 or for whom the Law Society has granted a waiver, or 8. This definition needs to be updated to take into account the fact that waivers are now granted by the SRA rather than the Law Society (Law Society should be replaced with Solicitors Regulation Authority see para 10 of this paper for the amendment). b) Reference to the Employed Solicitors Code The definition of Legal Advice Centres in Part X refers to the Employed Solicitors Code 1990 which has been amended and has now been repealed and replaced by Solicitors Code of Conduct The relevant provisions are SRA Rules and 13.09: Pro bono work (1) You may, in the course of your practice, conduct work on a pro bono basis for a client other than your employer or authorised non-sra firm provided: (a) the work is covered by an indemnity reasonably equivalent to that required under the Solicitors' Indemnity Insurance Rules; and (b) either: (i) no fees are charged; or (ii) a conditional fee agreement is used and the only fees charged are those which you receive by way of costs from your client's opponent or other third party and pay to a charity under a fee sharing agreement. (2) Paragraph (1) above does not permit you to conduct work on a pro bono basis in conjunction with services provided by your employer under (Associations), (Insurers), (Commercial legal advice services) or (Foreign law firms) Law centres, charities and other non-commercial advice services

4 (1)If you are employed by a law centre or advice service operated by a charitable or similar non-commercial organisation you may give advice to and otherwise act for members of the public, provided: (a) no funding agent has majority representation on the body responsible for the management of the service, and that body remains independent of central and local government; (b) no fees are charged save: (i) where the client is publicly funded; or (ii) where the organisation indemnifies the client in relation to your Costs insofar as they are not recoverable from any other source; (c) all fees you earn and costs you recover are paid to the organisation for furthering the provision of the organisation's services; (d) the organisation is not described as a law centre unless it is a member of the Law Centres Federation; and (e) the organisation effects indemnity cover reasonably equivalent to that required under the Solicitors' Indemnity Insurance Rules. 10. The Board has agreed that the following amendments should be made to the definition of Legal Advice Centres in Part X of the code: "Legal Advice Centre" means a centre operated by a charitable or similar noncommercial organisation at which legal services are habitually provided to members of the public without charge (or for a nominal charge) to the client and: (a) which employs or has the services of one or more solicitors pursuant to rules and of the Solicitors Code of Conduct 2007paragraph 7(a) of the Employed Solicitors Code 1990 or for whom the Solicitors Regulation AuthorityLaw Society has granted a waiver, or Following the significance, risk and impact framework I would suggest the changes should be exempted for the following reasons: Significance The amendments are minor and reflect new statutory provisions and the delegation of regulatory functions from the Law Society to the SRA. The amendments would not have required approval under the old MoJ process;

5 The amendments do not have any adverse impact on the regulatory objectives in the Act and are consistent with the Better Regulation Principles. The changes do not require a statutory instrument and / or parliamentary time in order to be considered. Impact The impact of these code amendments will be minimal, they reflect statutory provisions. Risk If an amendment to rule 807 is not made, a barrister representing a client in a civil matter as counsel instructed by the Legal Advice Centre would be in breach of rule 807 if they sought and were granted a pro bono costs order as it would arguably be a fee for the supply of legal services that would be then paid to the Access to Justice Foundation rather than the Legal Advice Centre. Consultation and an equality impact assess are not required because the code amendments are minor and reflect new statutory provisions and the delegation of regulatory functions from the Law Society to the Solicitor s Regulation Authority. If you require any further information or if you feel it would be useful to meet up to discuss this please feel free to contact me. Clare Vicary May 2011 Annexes: 1) Annex 1: Section 194 Legal Services Act 2007 article by Jeremy Morgan QC 2) Annex 2: S194 Legal Services Act 2007

6 Annex 1 Article by Jeremy Morgan QC Section 194 Legal Services Act 2007 Pro bono came of age on October 1st That was the day when s.194 Legal Services Act 2007 came into effect, conferring legislative recognition of pro bono legal services and enabling a valuable new source of financial support for organisations (such as law centres) which provide free legal services and the pro bono charities that organise the provision of free legal services. This article is intended to provide practitioners with an introduction to the new system. S.194 enables a court to make an order, equivalent to an order for inter party costs, against the opponent of a litigant who has been represented pro bono. However, unlike a normal costs order under which the beneficiary is the successful litigant, the beneficiary of a s.194 order is the Access to Justice Foundation. The Access to Justice Foundation The Foundation is a charity the objects of which are to receive and distribute additional financial resources which will ultimately benefit those, like advice agencies, law centres and pro bono organisations, who help to provide pro bono legal advice or assistance to those who need it most. The Foundation distributes some of the funds it holds, whether from s.194 orders or other sources, through Regional Legal Support Trusts modelled on the successful example of the London Legal Support Trust. Other of the funds it holds are distributed directly to the national pro bono organisations, which deploy pro bono legal expertise both here and in the developing world. The aim of this structure is to provide a single national body to enable a strategic approach to the distribution of this extra support for legal assistance, coupled with regional bodies to identify specific local needs. The Foundation is not an alternative to Community Legal Service funding, nor is it ever likely to have the resources, inclination or structure to make it so. It does not, for example, directly fund legal representation in individual cases at all. Rather it aims to provide financial support where most needed to organisations such as those described above, which assist those to whom LSC funding is not available. The statutory scheme S.194 sets out the criteria for the making of an order, and provides for these to be supplemented by Rules of Court. S.194 orders may only be made by a civil court, which is defined as the Court of Appeal (civil division), the High Court and the county court. Such orders may be made in any proceedings in which a party had legal representation, all or part of which was provided free of charge. They may be made even if one of the party s legal representatives (say, counsel) was not acting free of charge. They may not, however, be made against a party who was himself wholly represented pro bono or under LSC funding. In deciding whether to make an order the court must have regard to what costs order would have been made if the party applying for the order had not been represented pro bono (s.194(4)), and cannot make a s.194 order for more than the amount which would have been determined under a conventional costs order (CPR 44.3C(2)). Although the order must provide for payment to the Foundation (CPR 44.3C(3)), the mechanism for this is that the pro bono represented litigant is treated as the receiving party and is therefore the one to apply for the order and to quantify the costs. S/he is bound to notify the Foundation by sending it a copy of the order within 7 days of receiving it.

7 S.194 contains an important transitional provision. No s.194 order may be made in respect of representation provided before 1st October, but the corollary must be that such an order may be made in cases on-going at 1st October in relation to work done after that date. The Costs Practice Direction has been amended to take account of s.194 orders. Bills of costs under s.194 must not include VAT (para. 5.21). Para. 6.2, which concerns estimates of costs, has been adapted to extend them to pro bono cases. The assessment of s.194 costs may be either summary or detailed, as in the case of ordinary costs (CPR 44.3C(2)). Although the rules for when summary assessment should be used are no different in s.194 cases, it is anticipated that there will be a tendency to opt for summary assessment where possible. How does this affect the parties to pro bono litigation? In one sense the new regime operates to level the playing field between the litigant represented pro bono and his conventionally represented opponent. The threat of costs will henceforth be a weapon in the armoury of the pro bono litigant (just as to date it has been in the armoury of his opponent), and the new exposure to adverse costs will cause the opponent to adopt a more cautious approach to his opposition. S.194 will undoubtedly bring more opponents to the negotiating table and be an important factor when negotiations are taking place. In another sense, though, the playing field is not level. Pro bono litigants remain liable for any costs which are ordered in favour of the opponent, but their impecuniosity continues to make that risk more theoretical than real in many cases. S.194 does not contain an equivalent to the shield against inter partes costs orders that LSC funding carries by statute, but it does not need to do so: the shield is created by the impracticality of getting money out of most pro bono litigants. Pro bono advisers should not, though, adopt too casual approach to this: bankrutpcy remains a remedy to the opponent of an impecunious litigant, and pro bono clients are as exposed to this as much as any other litigant with insufficient resources. The creative opponent of an unsuccessful pro bono litigant who seeks to level the playing field by seeking an order for costs against the Foundation under s.51 Supreme Court Act 1981 will, however, be disappointed. The Foundation meets none of the criteria for the making of such an order. It will not usually even know of the existence of the litigation until an order under s.194 has been made: it will never be in a position to control or direct the litigation and it does not fund it in any way. It is simply the recipient of any costs that are obtained from an opponent. If those who backed Neil Hamilton MP s unsuccessful libel action against Mr. Al Fayed were held to be pure funders and not susceptible to a s.51 order because of their lack of control of the litigation, charitable motives and lack of financial stake in it other than for the return of their funds, the Foundation, which is a registered charity, designated as recipient under a statutory regime and serving the public interest, and which has provided no funds and has no control and no greater financial stake in the outcome, must be equally free from risk see Hamilton v Al Fayed (No.2) [2003] 1 QB There is one practical issue which needs careful consideration. This concerns what happens in a case where there is a series of costs orders going either way. If the first order is made in favour of the Foundation and the second made in favour of the opponent, it will not be possible to direct a set-off of these orders, as they lack the mutuality essential for ordering set-off: as a later court has no general power to revoke an earlier order, both will stand and be enforceable. There is an obvious unfairness about such a result. The solution is to invite the court in pro bono cases to reserve costs until the trial or other final hearing, preferably with a note on the court file to indicate the order which would have been made but for this problem. The court conducting the final hearing can then make a single order, one way or

8 the other, which reflects the justice of the case overall including the interlocutory successes and failures. What is pro bono? It might seem strange to end with a question the answer to which seems obvious. Pro bono means free of charge. Free of charge is defined in the section as otherwise than for or in expectation of fee, gain or reward. Just in case you were wondering, CFAs are not pro bono. Jeremy Morgan QC 39 Essex Street

9 Annex 2 S194 Legal Services Act 2007 Pro bono representation 194 Payments in respect of pro bono representation (1) This section applies to proceedings in a civil court in which (a)a party to the proceedings ( P ) is or was represented by a legal representative ( R ), and (b)r's representation of P is or was provided free of charge, in whole or in part. (2) This section applies to such proceedings even if P is or was also represented by a legal representative not acting free of charge. (3)The court may order any person to make a payment to the prescribed charity in respect of R's representation of P (or, if only part of R's representation of P was provided free of charge, in respect of that part). (4) In considering whether to make such an order and the terms of such an order, the court must have regard to (a)whether, had R's representation of P not been provided free of charge, it would have ordered the person to make a payment to P in respect of the costs payable to R by P in respect of that representation, and (b)if it would, what the terms of the order would have been. (5) The court may not make an order under subsection (3) against a person represented in the proceedings if the person's representation was at all times within subsection (6). (6) Representation is within this subsection if it is (a)provided by a legal representative acting free of charge, or (b)funded by the Legal Services Commission as part of the Community Legal Service. (7) Rules of court may make further provision as to the making of orders under subsection (3), and may in particular (a) provide that such orders may not be made in civil proceedings of a description specified in the rules; (b) make provision about the procedure to be followed in relation to such orders;

10 (c) specify matters (in addition to those mentioned in subsection (4)) to which the court must have regard in deciding whether to make such an order, and the terms of any order. (8) The prescribed charity means the charity prescribed by order made by the Lord Chancellor. (9) An order under subsection (8) may only prescribe a charity which (a)is registered in accordance with section 3A of the Charities Act 1993 (c. 10), and (b)provides financial support to persons who provide, or organise or facilitate the provision of, legal advice or assistance (by way of representation or otherwise) which is free of charge. (10) In this section legal representative, in relation to a party to proceedings, means a person exercising a right of audience or conducting litigation on the party's behalf; civil court means the civil division of the Court of Appeal, the High Court, or any county court; free of charge means otherwise than for or in expectation of fee, gain or reward. (11)The court may not make an order under subsection (3) in respect of representation if (or to the extent that) it is provided before this section comes into force.

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