Legal Services Act 2007 (c. 29)

(The document as of February, 2008)

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(ii) for the words from "and subject to" to the end substitute " , a recognised body is not liable to account to any client, other person or trust for interest received by the recognised body on money held at a bank or building society in an account which is for money received or held for, or on account of--

(a) clients of the recognised body, other persons or trusts, generally, or

(b) that client, person or trust separately. " , and

(b) omit sub-paragraph (2).

90 After that paragraph insert--

" 4ZA Where rules made under section 32 of the 1974 Act and containing any such provision as is referred to in section 33(1) of that Act are applied to managers or employees of recognised bodies in accordance with section 9(2)(fb), then, except as provided by the rules, a manager or employee to whom the rules are applied is not liable to account to any client, other person or trust for interest received by the manager or employee on money held at a bank or building society in an account which is for money received or held for, or on account of--

(a) clients of the recognised body, other persons or trusts, generally, or

(b) that client, person or trust, separately. "

91 For paragraph 4A of that Schedule (inspection of bank accounts) substitute--

" 4A (1) This paragraph applies where rules made under section 33A(1) of the 1974 Act are applied--

(a) to recognised bodies in accordance with section 9(2)(f) of this Act, or

(b) to managers or employees of such bodies in accordance with section 9(2)(fb) of this Act.

(2) The Society may disclose information about the accounts of a recognised body, or a manager or employee of a recognised body, obtained in pursuance of such rules for use--

(a) in investigating the possible commission of an offence by the body or any of its managers or employees, and

(b) in connection with any prosecution of the body or any of its managers or employees consequent on the investigation. "

92 For paragraph 5 of that Schedule (accountants' reports) substitute--

" 5 Where rules made under section 34 of the 1974 Act are applied to recognised bodies in accordance with section 9(2)(f), section 34(9) and (10) of that Act apply in relation to a recognised body as they apply in relation to a solicitor. "

93 After that paragraph insert--

" 5A Where rules made under section 34 of the 1974 Act are applied to managers or employees of recognised bodies in accordance with section 9(2)(fb), section 34(9) and (10) of that Act apply in relation to a manager or employee to which the rules are applied as they apply in relation to a solicitor. "

94 For paragraph 6 of that Schedule (compensation fund) substitute--

" 6 (1) Section 36 of the 1974 Act applies in relation to recognised bodies as if for paragraphs (a) and (b) of subsection (1) there were substituted--

" (a) an act or omission of a recognised body or former recognised body;

(b) an act or omission of a manager or employee, or former manager or employee, of a recognised body or former recognised body; " .

(2) Section 36A(2) and (3) of the 1974 Act applies in relation to recognised bodies as it applies in relation to solicitors. "

95 In paragraph 7 of that Schedule (solicitor who is justice of the peace not to act in certain proceedings) for "an officer" (in both places) substitute "a manager".

96 In paragraph 9 of that Schedule (restriction on employment of person struck off roll or suspended)--

(a) the existing provision becomes sub-paragraph (1) and in that sub-paragraph after "recognised body" insert "(and any manager or employee of it)", and

(b) after that sub-paragraph insert--

" (2) No recognised body (or manager or employee of such a body) may, except in accordance with a written permission granted by the Society under this paragraph, permit a person to whom sub-paragraph (3) applies to--

(a) be a manager of the body, or

(b) have an interest in the body;

and for this purpose a person has an interest in the body if he has an interest in the body within the meaning of Part 5 of the Legal Services Act 2007 (see sections 72 and 109 of that Act).

(3) This sub-paragraph applies to a person who to the knowledge of the recognised body (or, as the case may be, the manager or employee) is a person--

(a) who is disqualified from practising as a solicitor by reason of one of the facts mentioned in section 41(1)(a), (b) or (c) of the 1974 Act (name struck off the roll, suspension etc), or

(b) in respect of whom there is a direction in force under section 47(2)(g) of that Act (prohibition on restoration to roll).

(4) Permission granted for the purposes of sub-paragraph (2) may be granted for such period and subject to such conditions as the Society thinks fit.

(5) A person aggrieved by the refusal of the Society to grant permission under sub-paragraph (4), or by any conditions attached by the Society to the grant of any such permission may appeal to the High Court which may--

(a) confirm the refusal or the conditions, as the case may be, or

(b) grant a permission under this paragraph for such period and subject to such conditions as it thinks fit.

(6) In relation to an appeal under sub-paragraph (5) the High Court may make such order as it thinks fit as to payment of costs.

(7) The decision of the High Court on an appeal under sub-paragraph (5) is final. "

97 In paragraph 10 of that Schedule (failure to disclose striking off or suspension)--

(a) the existing paragraph becomes sub-paragraph (1) of that paragraph,

(b) in that sub-paragraph after "recognised body" insert "(or any manager or employee of such a body)", and

" (2) It is an offence for a person ("P") to whom sub-paragraph (3) applies--

(a) to seek or accept from any person an interest in a recognised body, without previously informing that person (and, if different, the recognised body) that P is a person to whom that sub-paragraph applies, or

(b) to seek or accept a position as a manager of a recognised body, without previously informing that body that P is such a person.

(3) This sub-paragraph applies to a person--

(a) who is disqualified from practising as a solicitor by reason of one of the facts mentioned in section 41(1)(a), (b) or (c) of the 1974 Act (name struck off the roll, suspension etc), or

(b) in respect of whom there is a direction in force under section 47(2)(g) of that Act (prohibition on restoration to roll).

(4) A person guilty of an offence under sub-paragraph (2) is liable on summary conviction to a fine not exceeding level 3 on the standard scale.

(5) Subsection (2) of section 42 of the 1974 Act applies in relation to an offence under sub-paragraph (2) as it applies in relation to an offence under that section.

(6) For the purposes of sub-paragraph (2)(a) a person seeks or accepts an interest in a recognised body if the person seeks or accepts an interest which if it were obtained by the person would result in the person having an interest in that body within the meaning of Part 5 of the Legal Services Act 2007 (see sections 72 and 109 of that Act). "

98 Omit paragraph 11 of that Schedule (control of employment of persons convicted of offences of dishonesty and certain other persons).

99 Omit paragraph 12 of that Schedule (offences in connection with orders under section 43(2) of the 1974 Act).

100 Omit paragraph 13 of that Schedule (redress for inadequate professional services).

101 For paragraph 14 of that Schedule (examination of files) substitute--

" Information about suitability for recognition

14 (1) The Society may give a notice under this paragraph if it is satisfied that it is necessary to do so for the purpose of investigating whether--

(a) a recognised body continues to be suitable to be recognised under section 9, or

(b) a manager of a recognised body who is not legally qualified (within the meaning of section 9A) continues to be suitable to be a manager of a recognised body.

(2) A notice under this paragraph is a notice which requires a person within sub-paragraph (3)--

(a) to provide information, or information of a description, specified in the notice, or

(b) to produce documents, or documents of a description, specified in the notice.

(3) The persons are--

(a) the recognised body;

(b) an employee or manager of the recognised body;

(c) a person who has an interest in the recognised body (within the meaning of the Legal Services Act 2007 (see sections 72 and 109 of that Act)).

(4) For the purposes of this paragraph, section 44B(4) to (7) of the 1974 Act applies--

(a) in relation to a notice under this paragraph as if it were a notice under section 44B of that Act, and

(b) in relation to a person given a notice under this paragraph as if that person were a person given a notice under that section,

and references in subsections (6) and (7) of that section to powers conferred by that section are to be read as references to powers conferred by this paragraph.

(5) Where powers conferred by Part 2 of Schedule 1 to the 1974 Act are exercisable in relation to a person within paragraph (a), (b) or (c) of sub-paragraph (3), they continue to be so exercisable after the person has ceased to be a person within the paragraph in question.

(6) Section 44BA of the 1974 Act (power to require explanation of document or information) applies in relation to a notice under this paragraph and the person to whom such a notice is given as it applies in relation to a notice under section 44B of the 1974 Act and the person to whom such a notice is given.

(7) Subsection (1) of section 44BC of that Act (falsification of documents etc) applies in relation to an investigation of the kind mentioned in sub-paragraph (1) as it applies in relation to the investigations mentioned in that subsection, and subsections (2), (4) and (5) of that section apply accordingly.

(8) Subsection (3) of that section (provision of false information etc) applies in relation to a requirement imposed under this paragraph as it applies in relation to a requirement imposed by section 44B of that Act, and subsections (4) and (5) of that section apply accordingly. "

102 For paragraph 14A of that Schedule (payment of costs of investigations) substitute--

" Power to charge for costs of investigation

14A (1) The Society may make regulations prescribing charges to be paid to the Society by recognised bodies who are the subject of a discipline investigation.

(2) A discipline investigation is an investigation carried out by the Society into a failure or apprehended failure by a recognised body to comply with any requirement imposed by or by virtue of this Act or any rules applicable to it by virtue of section 9.

(3) Regulations under this paragraph may--

(a) make different provision for different cases or purposes;

(b) provide for the whole or part of a charge payable under the regulations to be repaid in such circumstances as may be prescribed by the regulations.

(4) Any charge which a recognised body is required to pay under regulations under this paragraph is recoverable by the Society as a debt due to the Society from the recognised body.

(5) This paragraph applies in relation to a manager or employee of a recognised body as it applies in relation to a recognised body. "

103 After that paragraph insert--

" Disciplinary powers of the Society

14B (1) This paragraph applies where the Society is satisfied that a recognised body, or a manager or employee of a recognised body, has failed to comply with a requirement imposed by or by virtue of this Act or any rules applicable to that person by virtue of section 9 of this Act.

(2) The Society may do one or both of the following--

(a) give the person a written rebuke;

(b) direct the person to pay a penalty not exceeding £2,000.

(3) The Society may publish details of any action it has taken under sub-paragraph (2)(a) or (b), if it considers it to be in the public interest to do so.

(4) Where the Society takes action against a person under sub-paragraph (2)(b), or decides to publish under sub-paragraph (3) details of such action under sub-paragraph (2)(a) or (b), it must notify the person in writing that it has done so.

(5) A penalty imposed under sub-paragraph (2)(b) does not become payable until--

(a) the end of the period during which an appeal against the decision to impose the penalty, or the amount of the penalty, may be made under paragraph 14C, or

(b) if such an appeal is made, such time as it is determined or withdrawn.

(6) The Society may not publish under sub-paragraph (3) details of any action under sub-paragraph (2)(a) or (b)--

(a) during the period within which an appeal against--

(i) the decision to take the action,

(ii) in the case of action under sub-paragraph (2)(b), the amount of the penalty, or

(iii) the decision to publish the details,

may be made under paragraph 14C, or

(b) if such an appeal has been made, until such time as it is determined or withdrawn.

(7) The Society must make rules--

(a) prescribing the circumstances in which the Society may decide to take action under sub-paragraph (2)(a) or (b);

(b) about the practice and procedure to be followed by the Society in relation to such action;

and the Society may make such other rules in connection with the exercise of its powers under this paragraph as it considers appropriate.

(8) Before making rules under sub-paragraph (7), the Society must consult the Tribunal.

(9) A penalty under this paragraph may be recovered as a debt due to the Society, and is to be forfeited to Her Majesty.

(10) The Lord Chancellor may, by order, amend paragraph (b) of sub-paragraph (2) so as to substitute for the amount for the time being specified in that paragraph such other amount as may be specified in the order.

(11) Before making an order under sub-paragraph (10), the Lord Chancellor must consult the Society.

(12) An order under sub-paragraph (10) is to be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

(13) This paragraph is without prejudice to any power conferred on the Society, or any other person, to make an application or complaint to the Tribunal.

14C (1) A person may appeal against--

(a) a decision by the Society to rebuke that person under paragraph 14B(2)(a) if a decision is also made to publish details of the rebuke;

(b) a decision by the Society to impose a penalty on that person under paragraph 14B(2)(b) or the amount of that penalty;

(c) a decision by the Society to publish under paragraph 14B(3) details of any action taken against that person under paragraph 14B(2)(a) or (b).

(2) Subsections (9)(b), (10)(a) and (b), (11) and (12) of section 46 of the 1974 Act (Tribunal rules about procedure for hearings etc) apply in relation to appeals under this paragraph as they apply in relation to applications or complaints, except that subsection (11) of that section is to be read as if for "the applicant" to "application)" there were substituted "any party to the appeal".

(3) Rules under section 46(9)(b) of the 1974 Act may, in particular, make provision about the period during which an appeal under this paragraph may be made.

(4) On an appeal under this paragraph, the Tribunal has power to make an order which--

(a) affirms the decision of the Society;

(b) revokes the decision of the Society;

(d) in the case of a recognised body, contains provision for any of the matters mentioned in paragraph 18(2);

(e) in the case of a manager or employee of a recognised body, contains provision for any of the matters mentioned in paragraph 18A(2);

(f) makes such provision as the Tribunal thinks fit as to payment of costs.

(5) Where, by virtue of sub-paragraph (4)(e), an order contains provision for any of the matters mentioned in sub-paragraph (2)(c) of paragraph 18A, sub-paragraphs (5) and (6) of that paragraph apply as if the order had been made under sub-paragraph (2)(c) of that paragraph.

(6) An appeal from the Tribunal shall lie to the High Court, at the instance of the Society or the person in respect of whom the order of the Tribunal was made.

(7) The High Court shall have power to make such order on an appeal under this paragraph as it may think fit.

(8) Any decision of the High Court on an appeal under this section shall be final.

(9) This paragraph is without prejudice to any power conferred on the Tribunal in connection with an application or complaint made to it. "

104 In paragraph 16 of that Schedule (complaints to Tribunal with respect to recognised bodies)--

(a) in sub-paragraph (1), in paragraph (a) omit "in the United Kingdom",

(b) in paragraph (b) of that sub-paragraph for "section 34 of the 1974 Act" substitute "any requirement imposed by or by virtue of this Act",

" (c) a complaint that the body has acted in contravention of section 41 of the 1974 Act or paragraph 9(2) of this Schedule or of any conditions subject to which a permission has been granted under section 41 of that Act or that paragraph of this Schedule; or " , and

(d) after that sub-paragraph insert--

" (1A) The Tribunal shall have jurisdiction to hear and determine any of the following complaints made to it under this paragraph with respect to a manager or employee of a recognised body ("the relevant person")--

(a) a complaint that the relevant person has been convicted by any court of a criminal offence which renders that person unsuitable to be a manager or employee (or both) of a recognised body;

(b) a complaint that the relevant person has failed to comply with any requirement imposed by or by virtue of this Act or any rules applicable to the relevant person by virtue of section 9 of this Act;

(c) a complaint that the relevant person has acted in contravention of section 41 of the 1974 Act or paragraph 9(2) of this Schedule or of any conditions subject to which a permission has been granted under that section or for the purposes of paragraph 9(2) of this Schedule;

(d) a complaint that the relevant person has knowingly acted in contravention of an order under section 43(2) of the 1974 Act or of any conditions subject to which a permission has been granted under such an order. "

105 In paragraph 17 of that Schedule (procedure on applications and complaints)--

(a) for "(7)" substitute "(9)",

(b) in paragraph (a)--

(i) omit "11(1), 15(2) or",

(ii) omit "13(3) or", and

(iii) after "16(1)" insert "or (1A)", and

(c) in paragraph (c) after "body" insert "or, in the case of such a complaint as is mentioned in paragraph 16(1A), to a manager or employee of such a body".

106 In paragraph 18 of that Schedule (powers of Tribunal with respect to recognised bodies)--

(a) in sub-paragraph (1) after "this Schedule" insert "(other than paragraph 16(1A)",

(b) in paragraph (b) of that sub-paragraph for "section 34 of the 1974 Act" substitute "any requirement imposed by or by virtue of this Act",

(d) in sub-paragraph (2) omit "not exceeding £3,000", and

(e) omit sub-paragraphs (3) and (4).

107 After that paragraph insert--

" 18A (1) Where, on the hearing of any complaint made to it under paragraph 16(1A) of this Schedule, the Tribunal is satisfied that a manager or employee of a recognised body--

(a) has been convicted as mentioned in paragraph (a) of paragraph 16(1A),

(b) has failed to comply with any requirement imposed by or by virtue of this Act or any rules applicable to the relevant person by virtue of section 9 of this Act, or

the Tribunal may, if it thinks fit, make one or more of the orders referred to in sub-paragraph (2).

(2) Those orders are--

(a) an order directing the payment by the relevant person of a penalty to be forfeited to Her Majesty;

(b) an order requiring the Society to consider taking such steps as the Tribunal may specify in relation to the relevant person;

(d) an order requiring the Society to refer to an appropriate regulator any matter relating to the conduct of the relevant person.

(3) The matters referred to in sub-paragraph (2)(c) are--

(a) that as from the specified date--

(i) no solicitor or employee of a solicitor shall employ or remunerate, in connection with the practice carried on by that solicitor, the person with respect to whom the order is made, and

(ii) no recognised body, or manager or employee of such a body, shall employ or remunerate that person, in connection with the business of the recognised body,

except in accordance with a Society permission;

(b) that as from the specified date no recognised body or manager or employee of such a body shall, except in accordance with a Society permission, permit the person with respect to whom the order is made to be a manager of the body;

(c) that as from the specified date no recognised body or manager or employee of such a body shall, except in accordance with a Society permission, permit the person with respect to whom the order is made to have an interest in the body.

(4) For this purpose a person has an interest in a body if the person has an interest in the body within the meaning of Part 5 the Legal Services Act 2007 (see sections 72 and 109 of that Act).

(5) Subsections (1) to (1C), (3) and (4) of section 44 of the 1974 Act (offences in connection with orders under section 43(2) of that Act) apply in relation to an order under sub-paragraph (2)(c) as they apply in relation to an order under section 43(2) of that Act, except that references in those subsections to provision within section 43(2)(a), (b) or (c) of that Act are to be read as references to provision within sub-paragraph (3)(a), (b) or (c).

(6) Section 44(2) of the 1974 Act, paragraph 16(1)(d) and (1A)(d) of this Schedule and paragraph 15(3A) of Schedule 14 to the Courts and Legal Services Act 1990 apply in relation to an order under sub-paragraph (2)(c) as they apply in relation to an order under section 43(2) of the 1974 Act.

(7) For the purposes of sub-paragraph (2)(d) an "appropriate regulator" in relation to the relevant person means--

(a) if the person is an authorised person in relation to a reserved legal activity for the purposes of the Legal Services Act 2007, any relevant approved regulator (within the meaning of that Act) in relation to that person, and

(b) if the person carries on activities which are not reserved legal activities, any body which regulates the carrying on of such activities by the person. "

108 In paragraph 20 of that Schedule (powers of Tribunal in respect of legal aid complaints), in sub-paragraph (1)--

(a) for "an officer" substitute "a manager",

(b) for "director" substitute "manager", and

(c) for "legal aid work" substitute "providing representation funded by the Legal Services Commission as part of the Criminal Defence Service",

and omit sub-paragraph (2).

109 In paragraph 21 of that Schedule (revocation of recognition by reason of default by director)--

(a) in sub-paragraph (1), in paragraph (a) for "director" substitute "manager",

(b) in paragraph (b) of that sub-paragraph for "director" (in both places) substitute "manager",

(d) in sub-paragraph (3) for "director" (in both places) substitute "manager", and

(e) after that sub-paragraph insert--

" (4) The reference in paragraph (c) of sub-paragraph (1) to a person employed by a recognised body includes a reference to a person who was so employed at the time of the conduct leading to the making of the order referred to in that paragraph. "

110 In paragraph 23 (orders as to remuneration for non-contentious business)--

(a) the existing provision becomes sub-paragraph (1) of that paragraph,

(b) in that sub-paragraph for "regulating (in accordance with paragraph 22)" substitute "prescribing (by virtue of paragraph 22) general principles to be applied when determining",

" (b) in paragraph (d), the reference to the solicitor or any employee of the solicitor who is an authorised person were a reference to any manager or employee of the recognised body who is an authorised person. " , and

(d) after that sub-paragraph insert--

" (2) In this paragraph "authorised person" means a person who is an authorised person in relation to an activity which is a reserved legal activity, within the meaning of the Legal Services Act 2007 (see section 18 of that Act). "

111 For paragraph 24 of that Schedule (effect of contentious business agreements) substitute--

" 24 (1) This paragraph applies in relation to a contentious business agreement made between a recognised body and a client.

(2) A provision in the agreement that the body shall not be liable for the negligence of any of its managers or employees shall be void if the client is a natural person who, in entering that agreement, is acting for purposes which are outside his trade, business or profession.

(3) A provision in the agreement that the body shall be relieved from any responsibility to which it would otherwise be subject in the course of carrying on its business as a recognised body shall be void.

(4) A provision in the agreement that any manager of the body shall be relieved from any responsibility to which the manager would otherwise be subject in the course of the carrying on by the body of its business as a recognised body shall be void. "

112 In paragraph 25 of that Schedule (effect of supervening incapacity on contentious business agreements)--

(a) for sub-paragraph (1)(b) substitute--

" (b) a relevant insolvency event occurs in relation to the body; " ,

(b) in sub-paragraphs (2) and (3)--

(i) for "taxation" (in each place) substitute "assessment", and

(ii) for "taxing officer" (in each place) substitute "costs officer",

(d) after that sub-paragraph insert--

" (4) For the purposes of this paragraph a relevant insolvency event occurs in relation to a recognised body if--

(a) a resolution for a voluntary winding-up of the body is passed without a declaration of solvency under section 89 of the Insolvency Act 1986;

(b) the body enters administration within the meaning of paragraph 1(2)(b) of Schedule B1 to that Act;

(d) a meeting of creditors is held in relation to the body under section 95 of that Act (creditors' meeting which has the effect of converting a members' voluntary winding up into a creditors' voluntary winding up);

(e) an order for the winding up of the body is made. "

113 In paragraph 26 of that Schedule (taxations with respect to contentious business)--

(a) in the paragraph heading for "Taxations" substitute "Assessments",

(b) the existing paragraph becomes sub-paragraph (1) and in that sub-paragraph --

(i) for "taxation" substitute "assessment",

(ii) for "taxing officer" substitute "costs officer",

(iii) after "the body" (in the second place) insert "or any manager or employee of the body", and

(iv) for "any solicitor, being an officer" substitute "any authorised person, being a manager", and

" (2) In this paragraph "authorised person" means an authorised person, in relation to an activity which is a reserved legal activity, within the meaning of the Legal Services Act 2007. "

114 In paragraph 28 (power of court to order recognised body to pay over clients' money) after "client" (in the third place) insert "or any manager or employee of such a body".

115 For paragraph 29 of that Schedule (actions to recover costs) substitute--

" 29 (1) Subsection (2A) of section 69 of the 1974 Act shall have effect in relation to a bill of costs delivered by a recognised body as if for paragraphs (a) and (b) there were substituted--

" (a) signed on behalf of the recognised body by any manager or employee of the body authorised by it to do so, or

(b) enclosed in, or accompanied by, a letter which is so signed and refers to the bill. "

(2) Subsection (2E) of that section shall have effect in relation to such a bill as if for "the solicitor" there were substituted "the recognised body". "

116 In paragraph 30 (power of Society to inspect files relating to certain proceedings), for paragraph (b) substitute--

" (b) for the appointment of an administrative receiver within the meaning of section 251 of the Insolvency Act 1986; or " .

117 In paragraph 31 of that Schedule (bank accounts)--

(a) omit "or (2)", and

(b) after "bank" insert "or building society".

118 After that paragraph insert--

" 31A Where rules made under section 32(1) of the 1974 Act are applied to managers or employees in accordance with section 9(2)(fb) of this Act, section 85 of the 1974 Act shall apply in relation to a manager or employee to whom the rules are applied who keeps an account with a bank or building society in pursuance of any such rules as it applies in relation to a solicitor who keeps such an account in pursuance of rules under section 32. "

119 (1) Paragraph 32 of that Schedule (intervention by Society) is amended as follows.

(2) In sub-paragraph (1)(a)--

(a) for "Council are" substitute "Society is",

(b) after "recognised body" insert "or a manager of such a body", and

(3) For sub-paragraph (1)(c) substitute--

" (c) a relevant insolvency event occurs in relation to a recognised body; or " .

(4) In sub-paragraph (1)(d)--

(a) for "Council have" substitute "Society has",

(b) for "officer" substitute "manager", and

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