Welcome to this afternoon’s session of the Justice Committee. We are starting a few minutes late, for which apologies to those attending, particularly our witnesses. This is the latest session on access to justice and we have some witnesses in two panels that we are going to hear from. In a moment, I will ask them to introduce themselves. First, the members of the Committee will give their declarations of interest.

Hello. I am Warinder Juss, Member of Parliament in Wolverhampton West. I am a solicitor but not practising at the moment. I am a member of various APPGs as well as being a member of the central executive council of the GMB trade union.

I am Andy Slaughter. I am the Chair of the Committee. I am the Member of Parliament for Hammersmith and Chiswick. I am a non‑practising barrister. I am a member of the GMB and Unite trade unions and a patron of two justice-related charities, the Upper Room, for ex-offenders, and the Hammersmith and Fulham Law Centre.

Hello. My name is Tessa Munt. I am the Member of Parliament for Wells and Mendip Hills in Somerset. Everything is as per the register of interests, but I will highlight the fact that I am a director of WhistleblowersUK, which is a not-for-profit organisation. I am also the vice-chair of the all-party parliamentary group on penal affairs.

Hello. I am Vikki Slade, Member of Parliament for Mid Dorset and North Poole. My register of interest is as per the record. I have no relevant interests to this Committee.

Hello. I am Sarah Russell. I am the Member of Parliament for Congleton. I am a solicitor specialising in employment law, although I am not currently practising. My interests are as per the register, but I am a member of the USDAW and Community trade unions and chair of the access to justice APPG.

We have two panels this afternoon, each for about 45 minutes. The first panel is Tom Hayhoe and Dr Liz Curran. Would you very briefly like to introduce yourselves?

I am Tom Hayhoe. I chair the Legal Services Consumer Panel. I have some interests in professional regulatory law, sitting as a chair for one professional body and the chair of the board of another professional regulatory body, neither of which are involved in the law.

My name is Dr Liz Curran. I am an associate professor of clinical legal education at Nottingham Law School, Nottingham Trent University. I am also honorary professor of the Australian National University College of Law. I have been a practising solicitor, but non-practising here in the UK, for over 30 years. My area of research expertise is access to justice and health justice partnerships, and I evaluate effective legal services.

If you have followed this inquiry so far, you will see that we are looking at access to justice in broad terms. We have looked at legal aid and legal advice. We are now looking at broader and alternative methods of access to dispute resolution, access to courts and tribunals, and funding for those. We are finding a curious mishmash and that it is difficult for consumers to access. We think that you are people who could probably shed some clear light on that from the consumer’s point of view. Please feel free to answer either of these questions. This one is primarily directed to Tom. In your written submission to this inquiry, you state that the legal services market is confusing and fails to provide consumers with the information they need. What are the main reasons why the legal services market may serve the general public poorly? Has the general public’s experience of the legal services market changed over time and what is driving those changes?

If we start off with the issue of the complexity of the market, I sometimes make a comparison between my experience of retaining legal advice and calling a plumber. There is an acute asymmetry in terms of the knowledge and information, even though I happen to be married to an ex-lawyer. I do not really know what it is I am purchasing. I am not really sure what value for money will look like. Similarly, if I am dealing with a plumber, I do not know whether I have got value for money and whether the problem has been properly solved for maybe years later when nothing ever goes wrong. It is an issue that applies across all sorts of professional services, but it is particularly challenging in the case of legal services because the impact on us can be so acute and severe. If we then look at the complexity of the market, we have all sorts of different types of lawyer. We have the issue that is being addressed by the Court of Appeal only yesterday and tomorrow in relation to the legal executives and paralegals and their supervision when they are delivering their sorts of services. There are certain activities where I now know that I would certainly be better off dealing with a CILEX lawyer who is a specialist in a particular area than—I want to be cautious about the language and I cannot think of anything better—someone who is a jack of all trades high street solicitor who, in what is quite a difficult market, is desperate to get any bit of work that they can do. In relation to the work I do outside my Legal Services Consumer Panel work, chairing the Taxation Disciplinary Board, we get worried with the tax professionals about someone who strays beyond their real area of competence when they are giving tax advice. It might be probate or estates work or maybe something where they are not even a specialist at all. You have the question of “Who do I go to?” The classic issue would be probate. You might go to an accountant, a CILEX lawyer, a licensed conveyancer or a solicitor. There are those sorts of things that make it quite difficult for the consumer. There is that complexity about the nature of the profession and then, overlaid on it, there is a complexity about the way that regulation takes place. One issue that is in the ether is whether we should be doing more by way of regulating for activity as opposed to explicitly a profession. One thing that we are keen to see over the next few years is the MOJ reviewing the regulatory structure and framework.

I would agree with Tom and go further. The research tells us that people have very limited legal capability. Many people do not know that they have a problem and that it is capable of a legal solution, so that adds another dimension to this complexity. The other issue is the unnavigability of legal services. It is very piecemeal and fragmented. I do not want to go over old evidence that you have heard before the inquiry. I want to have a very problem-solving, solution-focused approach to my responses. I and my colleagues Professor Jane Jarman and Professor Jane Ching wrote a report, “Regulatory Leadership on Access to Justice”. It talks about the complexity of the regulatory environment and looks at things from a consumer perspective, or a people-centred perspective, in terms of the unnavigability and the lack of legal assistance services. That report provides us with multiple and many different solutions that have been used and done to great effect in other jurisdictions, such as Canada and Australia. Not only does that report flag them but it tells us how they went about it. Part of the research was using empirical data from those people about how they managed to make a difference and change culture. The problem here is that we have a really siloed, fragmented system that serves lawyers—I am sorry to those on the panel—rather than the consumer. We need to focus on what people need rather than what lawyers think they need. The legal profession needs to do a lot more work in terms of breaking down the barriers of legal jargon and self-promotion. I know that they need to make money, but often there is opaqueness around, as you said, Tom, fee structures and what services they offer. I was on the board of Nottingham Law Centre and I happened to see what the SRA requires as client care letters. I could not understand them and they did not seem to comply with the SRA. If I cannot understand them, I do not think that the average person who is retaining legal services can. I guess what I am saying, in a nutshell, is that there is a lot that can be improved. Having 11 regulators that do not communicate with each other, do not share the data and seem to focus on micro-managing and miss opportunities for early intervention to really protect the consumers is part of the problem. One of the final recommendations in our report was, in the longer term, to look at having a more simplified regulatory environment, so that consumers’ rights could be better protected than they are in the current regime. This is an inquiry on access to justice. This is a personal opinion, but I have seen very little appetite from the regulator in relation to improving access to justice. It commissioned the report and the Legal Services Consumer Panel has been working very hard alongside me to get those recommendations adopted and implemented. The question I keep asking is, “Why can it be possible to do things in other jurisdictions and not possible here?” Having too many regulators results in a lack of direction, strategy and understanding of who they are here to serve. That is a response, so I would go further than Tom.

Thank you. That is very helpful.

You have touched on some of the things that I wanted to ask you anyway. If we are looking at the Legal Services Act 2007, the board and the approved regulators have an objective, which is to improve access to justice. I wondered how effective that has been. Your face says it all. I do not think we need to answer that question perhaps.

I am not good at poker.

We spend quite a lot of time trying to remind it that that is its major statutory objective.

Right. That is disappointing, is it not? You submitted some evidence—I think, Tom, it was you—that said that the regulators were reluctant to even consider how their levers might be used in a more creative manner. Why do you think this is? Why is it so flipping difficult?

I wish I knew. Part of it, I think, is because, some of the individual regulators are very small. I find it really striking that even the SRA is responsible for regulating only a couple of hundred thousand professionals and some of the small ones are regulating fewer than a thousand. If one was reinventing or revisiting the Act, I suspect that you would have a single regulator with maybe some special interest groups to address the special interests of costs lawyers or whatever. There are some questions about the structure of the Act. It is a big risk, and it is actually embedded in part in the current two-tier structure—or almost three-tier structure, if we include the professional bodies as well as the frontline regulators—with the degree, at least in theory, of the people who undertake the regulation being beholden to the professional bodies, so the Law Society to the SRA and the Bar Council to the Bar Standards Board. I spent 13 years as an NHS trust chair and was involved in NHS governance before that. That is something that, in relation to the other statutorily regulated organisations, went away 20 years ago or so, but, for some reason or other, when the 2007 Act was passed, that two-tier structure remained.

I would refer you to paragraph 4.5 of my submission on page 18. This is the view that I have expressed in my submission to this inquiry: “The current composition of the LSB”— and, I would say, some of the other regulators—“is predominantly drawn from backgrounds in regulation, audit, and risk compliance, with limited representation from those with direct experience in access to justice service delivery, lived experience of disadvantage, or expertise in innovation and funding. Without a substantial shift in organisational culture, personnel, and strategic focus—specifically one that prioritises access to justice as a core objective and develops a robust action plan to fulfil its statutory duty—the LSB is unlikely to serve as an effective or credible steward.”

Maybe I have not picked this up somewhere, but that, no doubt, has been seen and I wondered whether there had been a response to your criticism.

No. The current CEO, while I was on holiday in Rome last week, sent me an email inviting me to give a submission to the current consultation. One of my colleagues who I wrote the report with will do that, because my area of interest is access to justice and I have to be focused on that, because there are 3.8 million people relying on me to improve things. Lord Bach, who launched the report on regulatory leadership on access to justice, asked me before the launch if I could look at all the recommendations in our report and the things that Parliament or Government could do to support the regulatory improvement. I attached to the submission a policy brief. I have slightly adjusted it now. Another issue about the actual overriding objectives is that there should be paramountcy. There is the rule of law and the public interest. The subpostmasters incident is an example of how it can let us down. There is an overemphasis on the commerciality of the legal profession and on the best interests of the client, which might serve the individual but does not look at the broader impact on justice and particularly on consumers and the individuals. I would refer to that. I had incredible assistance from an expert in that area as well. That is a reform, going back to your original question, of the Legal Services Act. That is what happens in Australia and I talk about that in the policy brief. The other thing about that is that it shifted the culture of the profession and the regulator as well. When we are talking about a long-term shift, flowing from that has been a greater concern with consumer protection, ethical conduct and access to justice. I do not think that they are either/or. When you do and enhance those things, they help and support and scaffold each other.

I want to say one thing in defence of the regulators. In the last couple of years we have seen an investment by the SRA in the consumer-facing, consumer-oriented staff there. We are getting some very good co-operation from it at the moment. These things ebb and flow. However, it should not be just dependent on whether the right individuals are in post or not. There are some problems. We can understand it in the context of the Post Office, SSB and Axiom Ince. There is a very big concern about trying to address the issues of regulatory oversight where there clearly have been some shortcomings, whereas we are wanting to say that we would really like to see regulators taking a view that they have a duty, if they are going to deliver access to justice, to look at being innovative about how they might do it. That raises really interesting questions when we look at things such as the Mazur case and what the implications are for making the market for particular specialist services work better than it does at the moment.

One of the questions is how much the public understands any of this: the regulators, their purposes and all the rest of it. In my view—and I do not know; I will ask you—that seems to be a signal of failure. If people do not understand, that is lost, is it not?

One challenge for the regulators, in whatever shape or form they are, is to engage with public legal education as a co-ordinated strategy across the board. We are never going to overcome the intrinsic asymmetry of information and knowledge. That is just the nature of professionalism against the consumer, but we could do a better job with greater investment in legal public education. That comes back to the concerns about the lack of progress made with the regulatory information system, which was recommended by the CMA report back in 2017. Those of you who study the legal pages of The Times will have seen the article I wrote early last month, exercised by the fact that there is less progress there. Part of that platform is something that would assist the consumer in understanding what it is when they are needing to engage a lawyer.

Yes, and how they choose—so how general members of the public choose the provider that they need. That is brilliant. Thank you.

I should say, for the record, that we have had a couple of references to Mazur so far. Normally we do not mention cases, or certainly do not discuss cases, that are literally in front of the Court of Appeal as we speak. However, we have been granted a sub judice waiver by Mr Speaker, so we can make reference to the case, for the avoidance of doubt.

I am going to direct this to Tom, because I think we know Liz’s answer. It is to set the scene about whether regulators are doing enough to protect consumers; obviously there is a difference in terms of them having enough information. In terms of protecting them, sometimes from their own decisions, how good a job is the regulator doing? What suggestions would you have on that?

One thing I was slightly anxious about there within your question was that you asked about protecting them from the outcomes of their own decisions. Is that protecting the public?

It is the consumers. We talked about them making a choice about how they access their justice and not really understanding how they are accessing it. Therefore, how does the regulator protect the consumer if the consumer does not understand what it is that they are buying?

One big problem is needing to protect the consumer from the legal professional who is not conducting themselves in what I think the general public would regard as being a professional way. Think about the Post Office Horizon scandal. Famously it was the dispute between Paula Vennells and Susan Crichton, where Susan Crichton, to her credit, stood up and said, “My duty is to the law, not to the Post Office.” Paula Vennells is alleged to have said, “No, your duty is to the Post Office.” You have that. We have the really quite egregious defects, in terms of poor conduct, by the lawyers at SSB and Axiom Ince. We have people engaged in some of the volume claims, so ambulance-chasing-type work. That does not mean to say that there is not a place for things such as no win, no fee, because subpostmasters would not have had access to justice had they not been able to access it. However, there is a question about how the regulators protect the public from poor conduct or even dysfunctional conduct, as opposed to egregiously unprofessional conduct. There is the question then of how you protect the consumer from making poor decisions. I am slightly reminded of the chief executive of Heathrow, who was complaining about congestion at Heathrow being a consequence of passengers at Heathrow being in the wrong place. I am an ex-retailer, and one of the things you learn in the consumer marketing world is that it is not the consumer’s fault. It is your fault for not providing the right service in a way that addresses them. That being said, there are things that can be done to protect the consumer, which are just making sure that everything is clear and transparent. I am of an age where I am just about to take advantage of a pension scheme. The way that I have been serviced by the financial services provider is exemplary, in terms of making sure that I have considered all the right sorts of issues. I am not confident that it is—and the evidence suggests that it is not—generally kept and delivered in the same way across the board. That is not to say that most solicitors, barristers and other legal professionals do not do their job very well and very professionally, but there are too many instances where they do not.

We have recently had some evidence regarding the ease with which people can end up entering these arrangements, often maybe no win, no fee. They can see an advert as they are scrolling in bed, they click on it and before they know it they are in. I wondered whether you think the regulators are attuned to the different ways people are entering these arrangements. It used to be that you would have a newspaper and a big advert and all the small print would be there. You might not read it, but it was at least there. Now it feels like you have pressed the button and started on a journey that you cannot get off. Do you think that the regulators are up to date with the way people are engaging with legal services?

We have a big debate taking place about the application of technology. In lots of cases, we do lots of stuff—we buy holidays and so on—online. Large proportions of the population think that there is room to do more using technology. At the same time, we need to protect the interests of those vulnerable consumers who are less adept at coping with it. A significant part of the work we do focuses on the issue of the vulnerable customer, as opposed to the customer who just has the disadvantage of being on the wrong side of an asymmetric relationship.

Touching on no win, no fee, why do consumers who sign up for no win, no fee claims sometimes end up owing thousands of pounds in legal costs? I thought the whole point was that that would not happen.

The small print is the issue. The question there is what the rules that surround those sorts of deals are and what protection there is for the public. For markets to work effectively, you need good regulation. I spent last year, as some of you may know, as the covid counter-fraud commissioner working in Treasury, where I was hearing an awful lot about, “What regulations can we get rid of?” A lot of regulations may be unnecessary. However, for good markets to work, particularly where you have a market failure, which is what you have, wearing the economist hat, where you have that imbalance of information, you need a better informed consumer. Consumers are never going to be better informed at our end of the market. I have had the good fortune to live in the same house, in Andy’s constituency, for the last 42 years. I may have one more property transaction in my life, having never done it again. I have had the benefit of never having had to be involved in criminal proceedings, so, if I had to retain a lawyer for that, it would be a first for me. I am the executor for a couple of elderly relatives’ estates. When I do that, that will be the first time. The nature of legal services is that most of us engage with them very rarely, so we are not experts. Consequently, there is a need to find ways to protect the public when they are accessing those services. Otherwise, we really are innocents abroad.

Do you think that legal services providers do enough to help consumers make informed choices? You are right: it is not the consumer’s fault. It is either the provider or the regulator who provides the framework for the provider. Is enough being done at that middle level?

The answer is that I do not know. I suspect not. One really important thing is not to look at legal services as being a discrete industry. Financial services has very comparable challenges and there may be some models where we can look at seeing what happens there.

It has a specific consumer duty as well that, as we say in the report, the legal regulator does not have. There are significant amounts of research. I did an ARC project across the UK and did empirical research where we talked to frontline services and frontline service users. The other thing that we cannot ignore is that there is a significant power imbalance that operates between consumers and their lawyer. There is a feeling that the research reveals—and I am talking empirical research, where you are actually talking to the consumer, not just what lawyers think people think—where they feel that they cannot do anything and they are already disempowered by the whole process. They think, “They are lawyers, so they know the law.” That is a significant thing that we cannot overlook. Using some of the examples, that is the case when a lawyer writes a letter, say a debt collection letter, to someone saying that they owe money that they do not owe, but it has a legal letterhead and it is a lawyer’s letter. It works the other way too, in my experience, when you go into the DWP with a lawyer on your team and they suddenly fold and give your client what they want. That is from my research. The issue is that a lot of consumers tend to think, “The lawyers know the law; therefore, I must be wrong. I am afraid of reprisals because I am relying on the lawyer for my other help.” They think that a lawyer knows the law. The solution is that more needs to be done to, as Tom said, have more transparency and use of plain English, which lawyers do not like, because it justifies them charging for the opaque language they use—sorry.

Apologies to all the lawyers in the room.

Well, I am a lawyer of 30 years’ practice. Also, it needs active regulation. One thing, again in the report, that we argue for is that there is a really missed opportunity in CPD. Lawyers in Australia, for example, in order to keep their practising certificate, be they a barrister or solicitor, are required to do mandatory areas of CPD, which do not just rest with the bar or the law society there—regulators can play a role—in terms of what good practice is and is not. That includes good ethical practice, how to communicate with clients, trauma-informed practice and dealing with vulnerable groups and people with intellectual disabilities, who also have legal problems. Let us not forget about the sorts of community members we are talking about here. Consumers are not some homogenous group. They are made up of people with disabilities, people who cannot speak English as their first language, people who have experienced trauma and people who are overwhelmed, referring to Hazel Genn’s work on referral fatigue. There is also a landscape, as you have heard from the advice sector, where it is very hard because of legal or advice deserts, the limited number of lawyers doing certain areas of work and the stress the charity sector is under. I am academic adviser to Central England Law Centre. It has six health justice partnerships, which is a great model. All these things are impacting on community members and they often do not have one problem; they have multiple cascading and intersecting problems. The regulator and the legal profession could do a lot more, but I do not think that the training of the legal profession, either at law school or in continuing professional development, is good enough. It could be led by the regulator. That is a wonderful opportunity for the regulators to really do something. It goes back to public legal education, but professional development is key.

It is very tempting to say “the legal profession”. There are many good lawyers out there doing great stuff who are public spirited and so on, and it is important not to lose sight of that, but there are questions. An interesting one, going back to the Chair’s question about what has changed, is the degree to which—and I am no expert in this—the opportunities for qualifying as a lawyer have allowed for a narrower base of legal knowledge, which affects the exposure of lawyers to some of those areas of underserved law. That even means that, if we are looking at people wanting to go and do pro bono work, they do not have the skills and knowledge to be able to support welfare law or housing law. You may want to take your break from working for a magic circle firm and do your little bit, but you have got to that point in your career without having the knowledge that, a generation ago, you might well have done. There are some interesting questions about the mix.

You talked at the beginning about there being so many regulators. If there were fewer, or a regulator that then had sub-regulators, would that make the CPD, the engagement and the landscape of how consumers engage with the system easier?

It would be coherent and strategic. You would have data in one place, perhaps even research and some evaluative work. That would shape and inform improved practice, absolutely. At the moment, with 11, it is a dog’s breakfast, to put it mildly.

We have to support and encourage the SRA to share its knowledge and support with the smaller regulators and vice versa. It would be easier; it wouldn’t be—I think it would be transformative though.

Lots of what you said already has resonated with me. Particularly, one thing you referred to was lawyers’ use of language. Particularly in engagement letters, there is a real problem with people not understanding what they are signing up to. I say this as an educated middle-class woman who has helped various friends to understand the legal advice that they are receiving. I am not providing that advice, but I am making sure that they understand what they are signing up to. This is usually other educated middle-class professionals who do not understand what is being put in front of them. They are not the people who are suffering from multiple disadvantages and the level of life complexity that you are referring to, Dr Curran. I was wondering whether the SRA does any proactive work that you are aware of in looking at people’s engagement letters.

I think that is a question to ask the SRA when it is with you.

I am happy to.

There are some really big concerns we have around some of the things that get in the way of access to justice. Perversely, there are adverse consequences of well-intentioned stuff. For example, if you are wanting to retain a lawyer for a small piece of work with whom you do not have an existing relationship, there are the know-your-customer requirements, which are there for very good protective reasons, such as anti-money laundering. There are some questions about the proportionality of that. Our job is to speak for the consumer. If I am told by the high street lawyers that it is prohibitively expensive for them to take on someone who is wanting a few hundred pounds’ worth of advice, there is a bit of a concern as to whether we have overcooked something. Proportionality is quite important when you are looking at access to justice at that low-budget end of the market.

I might tackle that one.

You have the international comparisons.

Yes, I do. Taking Tom’s point before, the law centres movement, Citizens Advice and others would not be able to survive without amazing pro bono efforts from a lot of the law firms. I want to acknowledge that. I also want to flag that properly funded legal support services are important first. I could earmark that there are other ways to get funding, given current restraints, that are completely underexplored in this country and could really make a difference. I am living proof of that. I have run a law centre. I have been the beneficiary of funds through ILCA. I have evaluated programmes. I have just finished a three-year and then a 10-year programme, all innovatively funded through interest. That is another issue. On pro bono, there are a lot of law firms that do a lot of Government work. Policy brief 3, which I have attached to the appendix, is on pro bono. I have a lot of experience from Australia and a little bit from Canada in pro bono. There is a really big missed opportunity in the UK at the moment. There are a number of large law firms that do not do pro bono work, although there is no data and research on this, so that would be a point that should be explored. I am looking at solutions. We have 3.8 million, I think at least, who miss out on legal help when they need it. We have a lot of Government work that brings in a lot of money. I worked with the Victorian attorney general in Australia in the 1990s through to the early 2000s and pushed and pushed. Finally, that Government agreed to mandatory pro bono with targets and research sitting behind it on pro bono. I must caution that it took us a while. I was involved in these conversations, not only in Victoria but Australia-wide, for a really good working definition of pro bono, because that is really important. In Australia now, not just in Victoria—it started in Victoria with Attorney General Rob Hulls and he introduced mandatory pro bono for all Government work—over the course of the last 20 years it has led to a shift in culture in the legal profession. They are generally committed to improving access to justice, they give student opportunities to work and they have developed their own in-house pro bono units. They have learned not to be an impost. That would be the other thing I would say on law centres, because you do not want everybody saying, “Alright, we are here to do pro bono. How can we help?” when the law centres cannot even keep the lights on and they have to pay for security. Pro bono can take different forms. If you are going to get large amounts of Government work—for instance, with the amount of money spent on a range of public inquiries and the range of lawyers and barristers who do that work—I do not think that it is too much to ask, given the rule of law and equality before the law, for something to be given back. The charity model of pro bono is a problem. All lawyers sign up to the rule of law and they are lawyers and upholding the legal system. At the moment, we have the big end of town able to use the courts funded by taxpayers, including the corporations and individuals there. A lot of public money is spent on the work that these people do when you have large sections of the community currently missing out. There is real potential. I know that the Government have an appetite for looking at this. I would encourage them to do it. There are fantastic models from around the world, such as America, Canada and, I would argue, Australia, led by the Victorian Legal Services Board in Australia, the commissioner and the other regulators. There is a huge opportunity there for pro bono.

I have to dissent slightly from that view. We are putting a sticking plaster on something that should not be there in the first place. We have a problem in terms of the fact that, for better or worse, legal aid no longer exists. We have a market that is failing. There are some questions there where, if we were able to harness all the other innovative stuff, we would not be looking to a mandated pro bono model. For that matter, while someone working on M&A for Linklaters may be super smart and have the best intentions, they will have forgotten anything they might have done in employment law once upon a time and will not have any qualification to look at housing or welfare law. There is a question.

To clarify, though, pro bono in Australia is not just direct legal services delivery. Pro bono takes multiple forms. As I said, it is not a substitution for an adequately funded legal system and legal aid system, but it is one way in which you can shift a culture. We have a mixed model in Australia, which Scotland is piloting. That would be a huge long-term aim in this country to improve. The pro bono lawyers have enhanced their skill and their knowledge set because they work alongside the advice sector. They learn about how to improve consumer protection and how to communicate and improve. It also has led to huge keeping of lawyers in the large law firm because they love the pro bono work, so it has a lot of benefits. I refer you to the policy paper 3. It is part of a repertoire where we can put the things together, because the unmet legal need in this country is so great. We have to find solutions and problem-solve. It is one thing that could be done really well, but, again, I caution that the definition of pro bono is really key here. It is not just about having lawyers in the commercial end of town giving housing advice down in the community centre. There are different ways the targets can be defined, but that mean that everybody is contributing. It is not a substitute for good Government funding or other sources of funding.

On pages 19 and 20 of my submission I list all the things. It is a blend of Canada and Australia. At the moment, as you know, there is some work being funded by Nuffield looking at interest on lawyers’ trust accounts. I flagged that as a beneficiary of that. That money is being invested. I have changed my view. I do not think that the LSB is the right repository for that. It might be the Access to Justice Foundation because it has the expertise. That money has funded innovation in legal services. In Australia, it was that money and some of the other money collected by the regulator, which I would not argue for here, and some of the residual funding from collective action and public interest purpose funds. That money is reinvested and they make millions by reinvesting it. That is given only to access to justice. It does not go into consolidated revenue in Treasury. It is earmarked for access to justice. I started in the first health justice partnership. I did not start in 1975, but it started in 1975. It was the first one in Australia. Interest on lawyers’ trust accounts and these other forms of revenue, including levies on professional bodies and practising certificates, has been used to fund health justice partnership start-ups. There are now 143 in Australia. They also fund integrated service delivery, so lawyers in schools. This is about putting people who have legal expertise and knowledge into the sites where people are likely to turn to for help, because they will not know they have a legal problem. They will not turn up to the law firm. If they are disclosing to their physiotherapist or their podiatrist that they are a victim of domestic abuse, and their partner is sitting outside in the waiting room, they can get the lawyer to come in the back door. While they are doing their podiatry they can get the legal support to leave that partner. These are incredibly innovative models. I was reflecting on this, because the Legal Services Consumer Panel has asked me to go on a panel next week. I was reflecting on all the programmes that I have had funded as a director of a legal service, or where, as an evaluator for many of those programmes, the funding has come from alternative sources. Often those alternative sources have led to the evidence-based practice that has then led to the Ministry of Justice or attorney general’s department to continue to fund it. It is an incredible, powerful way in which we can increase funding when there are so many pressures on the system from the NHS, education, SEND and so on.

We have to keep in perspective, in relation to that, the two major sources of lawyers’ balances. One of them is the conveyancing element. If we look at the Australian model, PEXA has basically removed that need for money to be sitting in a lawyer’s account. Currently, MOJ is consulting on this one. I know that the Institute of Chartered Accountants in England and Wales will be pointing out that, on probate, which is where the big sums are, accountants are not allowed to keep that money. The interest goes back to the consumer. There is something about regulators and their role in fostering innovation. There is something about the proactivity that we are pushing for. There are some really interesting models out there. You may have had presentations from Garfield.Law about its AI-informed small claims activity. There are things that will be transformative in various forms. There are different mixes. I spent many years in the NHS, as I have described, looking at what mix of professions is delivering a particular service and getting that right to find ways to improve access. Improving access is often finding ways of doing things more cost-effectively too.

On that point, I am on the Ministry of Justice legal support strategy delivery group, and that is a privilege. The team at the Ministry of Justice are really working hard on this idea of mixed models of funding and on innovation. They have also commissioned some research on, as Tom quite rightly says, the different make-ups of the different professions, the interest-earning accounts and the attitudes and appetite. A real danger comes if that money is not earmarked for access to justice, because it just looks like it is a money grab by Government. It needs a bit of nuance. There has been a real buy-in by the law society and the bar council in Australia because of the collaborative agreement that was designed—we talk about it in the report—by the Australian regulators, where they are all in it together and it is not about division. There is a strategy that drives it. That is part of the problem here. We do not have a fundamental vision or a strategy and collaboration. At the moment, a lot of people are arguing against ILCA because they say that it is going to make their firm go broke. Then I wonder why they are running their business and what the regulator thinks about that. I have to stress that we have more than 3.8 million people in this country who are not getting legal help. We have nine in 10 people who think that the law is a game that is not for them. There are ways in which we can really progress things. We will not have time today, but the mixed model in Australia, longer term, is something where people get holistic support in a one-stop shop. They do not have to go to different providers for different areas of law. If I am experiencing family violence and want to escape my partner, I need housing advice, income support and safety. I might need family law advice. I want to go to one place with a really good lawyer who then has a fabulous relationship with the profession. I can support that person while they get that legal help. I can do information, advice, legal education, law reform, based on my casework experience, and I can work in collaboration with other non-legal services. That is the mixed model. It sits alongside a duty of care model. Longer term, we need to realise that access to justice. It goes back to Tessa’s really good point. People just want legal help. They want their problems solved. They do not care who does it, but they want a quality service. They deserve a quality service. All these things are different parts of the pie, but there are great ideas out there. Other jurisdictions have done it and do it to great effect. The Victorian Legal Services Board and Commissioner generates millions of dollars through its schemes and funds really good access to justice. Why not in the UK?

Dr Curran, as you just indicated, time is against us, I am afraid. Thank you so much, both of you, for the time and the fullness of the answers that you have given. Thank you very much for coming along today. Examination of witness Witness: Dr John Sorabji.

Welcome, Dr Sorabji, and thank you for being here for the earlier part of the session so you know what we have been discussing so far. We do not need to do our introductions again; you have heard them. Perhaps you would like to very briefly introduce yourself.

I am John Sorabji. I am an associate professor at UCL and the co-director of its Centre for Dispute Resolution. I was also the co‑chair of the Civil Justice Council’s working party on litigation funding, which I imagine is the reason why I am here, although possibly not. In appearing today, and whatever I say today, I am not representing the CJC. I am here in my own capacity.

That is understood, but you bring a great deal of expertise, which we are grateful for.

Good afternoon, Dr Sorabji. I am going to ask you about third-party litigation funding. Could you begin by explaining the role that third-party litigation funding plays in facilitating access to justice in England and Wales? Would you also be able to quantify its significance to the civil justice system?

Probably the starting point to answer that question is that the one thing to note is that we have an extremely odd approach to litigation funding, and probably an approach that no other jurisdiction would take. We have three different regimes governing litigation funding and each of them has a different role where access to justice is concerned. That is in terms of litigation funding for non-lawyers. We have a separate two-part regime of litigation funding for lawyers, which is covered by conditional fee agreements, sometimes called no win, no fee agreements, and damages-based agreements. In terms of non-lawyer litigation funding, sometimes known as third-party litigation funding, we have the three regimes. First, we have a statutory regime that was introduced in the Courts and Legal Services Act. That has never been brought into force, and was intended, I think, to be a back-up for conditional fee agreements when they were first introduced. In terms of access to justice, that does not play a significant role, if any role at all, because it is not in force. We have two further regimes, one of which was thought to be outside statutory regulation until the Supreme Court confirmed that it was within statutory regulation. That is, in effect, third-party litigation funding where the funder provides funds for litigation in return for a percentage of the damages. From 2004 to 2023, that was thought to be permissible at common law and to be regulated at common law, or rather not regulated, because there was no statutory regulation of that system. I will come on to how it plays into access to justice in a moment. Then there is a common law regime, which the Court of Appeal confirmed remains common law and not subject to statutory regulation. That is where third-party litigation funders provide funding, for instance, for a multiple of the funds that are advanced. In terms of how they assist access to justice and their significance, it has been well understood—at least since 2004 when the Court of Appeal, in a case called Gulf Azov, accepted that the availability of this type of funding is necessary to secure access to justice—that they are an essential feature of the funding environment for litigation. This is particularly acute where collective actions are concerned, particularly collective actions that are brought in the Competition Appeal Tribunal, specifically opt-out actions. Those are the type of collective actions where the class who are not before the court but who are represented by the representative claimant do not have to voluntarily opt in to choose to be represented. They are represented unless they choose not to be. For that type of proceeding, it is essentially the only viable form of funding available. Damages-based agreements are not permitted and conditional fee agreements are not sufficient to fund this type of litigation. It is a very rare case—vanishingly rare—that a represented party would be able to fund the litigation themselves through self-funding. In essence, where access to justice is concerned, particularly for low-value claimants, where there are multiple claimants who are represented in a collective action, it is the only form of funding available.

There was a time when third-party litigation funding was considered to be contrary to the principles of public policy because you had a situation where a party that is not part of a lawsuit then seeks to benefit because of the recoverability of damages. Why has that principle now been changed? Does third-party litigation funding undermine equality of arms?

Most people suggest that it supports equality of arms, but let me deal with the first question first. Third-party litigation funding, lawyers funding litigation, was effectively prohibited up until 1990. One reason for that historically was that that type of funding from strangers to litigation was viewed as unethical, and particularly unethical for lawyers to carry out. For third parties who were not lawyers, it was viewed as meddling with or stirring up litigation, which is something that society frowned on, particularly in terms of it being used to bring abusive litigation, to harass people and so on. We saw a shift really from the 1990s for one specific reason. From the introduction of legal aid following the Legal Aid and Advice Act, we had, broadly speaking, what was intended to be a comprehensive system of public legal aid funding. From the 1990s in England and Wales—it is no different from very many jurisdictions around the world—we have seen a retreat from public civil legal aid. One of the counterbalances to that retreat has been the promotion of private sources of litigation funding. If you are going to remove an essential limb of access to justice or reduce it in terms of public legal aid, what are you going to put in its place? What was put in its place were private mechanisms. Through the Courts and Legal Services Act, we saw the private mechanisms for lawyers in terms of conditional fee agreements, of which there have been three different versions over the last 30 years. Again, we are not making it simple or easy for the consumer. We also saw, from 2013, the introduction of damages-based agreements again for lawyers. Particularly from the start of this century, we also saw—the starting point for this was really the commercial cases that were being brought in the early years of the noughties—the understanding, particularly by the courts, that there were litigants, claimants, who were not able to bring claims at all or pursue them effectively without a means of securing funding. To give you an example, one of the trilogy of cases that established third-party litigation funding at common law is a case called Arkin v. Borchard Lines Ltd, which used to be the case that everybody talked about until PACCAR two years ago. In that case, originally the claimant had civil legal aid. That was then withdrawn. His lawyers were working on conditional fee agreements, but the question was, “How do I secure funding to get expert evidence?” It was that question, really, that was the starting point for the real development of third-party litigation funding. It was to enable a claim to be prosecuted effectively without any other available source of funding. The courts, the Court of Appeal particularly during this period, accepted that third-party litigation funding, so funding from non-lawyers, was an essential mechanism to help secure access to justice. Lord Phillips, when Master of the Rolls, both in Arkin and in the Gulf Azov case, made the point, which has been repeated by the courts since then, that the public policy of securing access to justice is now the paramount public policy. Whatever concerns there may have been historically about the provision of funding by strangers to litigation or lawyers is now overridden by this overarching provision. The second question was, “Does third-party funding undermine equality of arms?” My answer to that is no, it does not. It promotes equality of arms. The reason why it promotes equality of arms is that for a funded party, first of all, it enables them to bring and pursue their claim. Previously to that, in the absence of funding, they would not be able to do so. There is an inequality of arms there—an inequality of access to the court. Secondly, once they are litigating, it enables them to carry out their obligation to prosecute the litigation properly: to gather evidence, to test evidence, to obtain expert evidence and to ensure that they have sufficient counsel, legal advice and representation, so they can present their case in court or in the Competition Appeal Tribunal effectively. On those grounds, it helps to promote equality of arms. There is another argument that it promotes equality of arms. When you bring in a third‑party litigation funder, one of the things that they bring with them is expertise in terms of how you budget, cost and finance a claim. One of the problems with litigation, particularly in England and Wales, is its high cost. Bringing that expertise is one way in which you can try to rein in or control costs and to budget costs more effectively, which helps secure equality of arms for both parties because it brings the costs down for both of them. At least, that is the argument.

You mentioned that collective actions are the kind of cases where third-party litigation funding can be used. Could you give examples of any other cases where third-party litigation funding can be used? We had a roundtable meeting yesterday on access to justice and I raised the concern that you could have a claimant who does not get their full amount of compensation because part of that compensation is going to be used to repay the funder. Could you say a bit more about the opt-in and opt-out scenarios? Would the opt-out mean that the claimant gets the full amount of compensation?

You asked about other cases. Primarily and essentially, this is for the Competition Appeal Tribunal and collective actions, but the majority of cases that are funded through third-party funding will probably be commercial cases and business cases. The reason why it is used there—it is not on the same basis that it is essential, in the sense that you could not litigate without it—is because it helps businesses litigate without diverting their resources from their business to litigation. It helps manage their finances. That would be another area. There is another area of use—it was alluded to a little bit by the previous panel—which is portfolio funding. Funders provide funding to a law firm and the law firm then uses that funding to help finance a range of low‑value litigation, for instance mass-volume litigation. It works in those types of areas as well. Again, it is not as essential as it is in competition and collective actions. In terms of the second question about full compensation, the first thing to note in that respect is that we do not have and never have had a system where claimants receive full compensation, in the sense that there will always be a deduction to pay their lawyers. Even though we have what is known as the loser-pays rule in cost shifting—when the claimant brings their claim, if they succeed, the defendant has to pay the claimant’s legal fees—that is not 100% indemnity. There is always a gap. The claimant will still have to pay their lawyers the difference or gap between what is recovered from the losing party. That either comes out of money they have already or it comes out of their damages. There is no principle of full compensation. In terms of third-party litigation funding, the question is whether the compensation is denuded to such a level, because such a large share of it goes to the funder in return for providing the funding, that that becomes problematic. There are a number of points that can be made there in terms of the validity of third-party litigation funding. The first is that the damages that are secured by the claimants, either in an opt-out or an opt-in, in respect of how much they get following the reduction to pay the funder, are still likely to be more than they will achieve otherwise. The comparison is not between what they would have achieved without the funder, for example, £100 without the funder or £20 with the funder. It is between £20 with the funder and, realistically, nothing. Given the types of claims that we are looking at, the value of those individual claims will be so low that they are never going to be otherwise prosecuted. They are not going to be brought before the court. For those types of claims, there is going to be no access to justice. What you are getting with this system is access to some compensatory justice in addition to the vindication of the right itself. That is in opposition, really, to the right going along the lines of unmet legal need, which again was talked about a lot by the previous panel, where access has been denied. There is no real difference in that respect between an opt-in and an opt‑out in terms of what is received. In terms of thinking about access to justice, we cannot just focus on compensation. Compensation to a claimant is one of the functions of the civil justice system. Promoting access to justice is not just promoting compensation; it is also promoting deterrence and regulatory compliance. When defendant corporations, assuming that they have done what they should not have done, become aware of the fact that proceedings can be brought against them and they can be held to account for their tortfeasing, if they are tortfeasing, that helps to promote deterrence. It helps to promote rule compliance or compliance with the law. It helps to ensure that individuals do not suffer from legal harm in the first place. You also have to think about the deterrence function and the regulatory compliance function. You then have to think about a further aspect of access to justice, which is that court judgments clarify the law. They show how the law is applied in this type of circumstance. Even if they are not precedents in the classic Court of Appeal or Supreme Court sense, they are a means to guide lawyers and individuals, who hopefully have access to legal advice, to order their affairs effectively within the law. Companies can do the same thing. Again, it is access to what you could describe or what has been described as preventive justice. You said earlier that the Committee is looking at access to justice in the broad sense. That broad sense should cover preventive justice and consensual justice, in the sense of consensual settlement and alternative dispute resolution. Knowing how the courts approach these cases, which have been brought and funded by claimants and have succeeded at trial or may even have been settled, guides future cases and disputes in terms of how the parties may want to settle their case. It is access to consensual justice as well as access to compensatory justice.

Yes, I take your point on that. From what you have said, are you also suggesting that third-party litigation funding is more likely to be used in lower-value claims?

In terms of collective actions, the answer to that is yes. Generally, in those types of cases, you are looking at individually low-value claims that would not be capable of being litigated economically because they are of such low value. The classic example of why we moved from a solely opt-in system for collective actions to an opt-in or opt-out system is the JJB Sports litigation, which arose maybe about 15 years ago—it might be longer now, which is showing my age—in terms of price fixing for replica football shirts. In that situation, the individuals who fell within the opt-in class all had potential claims of about £25 each and there were around about 2 million of them. Nobody is going to litigate a £25 claim individually. First of all, they are not going to do it because it is so low. Secondly, they are not going to do it because of the cost of doing it in terms of financing and time. They are not going to do it. The only effective way that you can litigate these cases is through some form of collective proceeding. The only way that you can effectively fund that is through litigation funding.

I just have a couple more questions, this time on the Supreme Court’s decision in PACCAR. You have confirmed that you are not here as a representative of the Civil Justice Council, but what would be your explanation as to why the CJC recommended that that decision should be reversed?

The primary reason behind the recommendation is that, first of all, the PACCAR decision is an interesting one, in the sense that it took nearly everybody by surprise. The only person it probably did not take by surprise was Professor Rachael Mulheron, who in 2014 raised the question of whether litigation funding agreements, third-party funding, fell within the damages-based agreements regime. She dismissed the possibility for a number of reasons, but it came as a surprise to everybody else. It did so primarily because of the interpretation of the legislation that it rests upon. The view that was taken was that the legislation encompassed litigation funding because of the extremely broad drafting of the relevant provisions in FSMA—that is, the definition of a claims management service. That definition is particularly broad. In her dissenting judgment, Lady Rose described it as being so broad as to be meaningless. It is not often you hear a judge describe legislative drafting as being so broad as to be meaningless. In other words, it could encompass anything. If I do not unfairly characterise the majority in PACCAR, they also took the view that it was very broad; they took the view that it was not meaningless but that it did what they said it did. The problem with that drafting had already been demonstrated. There was a concern around 2017-18 that the drafting was so broad that it turned expert witnesses into claims management service providers or services. An expert witness is not providing a claims management service. They are a witness. There had to be clarification to the legislation to make it clear that expert witnesses were not within the scope. I think I can say that the CJC probably took the view that it was only because of infelicitous drafting that litigation funding agreements were brought within the damages-based regulations. The drafting was infelicitous to such an extent that Government and Parliament did not expect it. When the Consumer Rights Act was going through, which introduced opt-out proceedings in collective actions and prohibited the use of damages-based agreements for opt-out collective actions, if it had been intended that litigation funding was a DBA, Parliament would have been creating a form of procedure that could not have been used because there would be no funding available for it. They would have prohibited the only mechanism to secure such funding because at the time everybody used percentage-based, damages-based litigation funding agreements. It was clear within the run-up to the legislation and the consultations on the Consumer Rights Act that both referred to damages-based agreements, in terms of, “A damages-based agreement refers to the situation where a lawyer is paid out of damages.” It does not say, “a lawyer and a non-lawyer”. It says, “where a lawyer is paid out of damages”. In the explanatory memorandum to the Consumer Rights Act, it says, “Damages-based agreements are where the damages are paid to the legal representative”. It is not, “to a third party and the legal representative”, but, “to a legal representative”. The view was that it was an unfortunate circumstance or eventuality, arising because of poor drafting. It is an unintended consequence. From 2004 onwards, funders, claimants and defendants—maybe not so much defendants—had operated on the basis that it was not a damages-based agreement, following 2014 as well. That legitimate expectation, however it may have arisen, wrongly as PACCAR would suggest, ought to be put back into place. Those were effectively the reasons, or might be behind the reasoning.

There is one final question for me. The Government have said that they will take up the CJC’s recommendation to reverse the PACCAR decision. I take it that you are satisfied with the Government’s proposals to proceed on that basis. Do you have any comments to make?

I entirely agree with the acceptance of the primary recommendations. Yes, absolutely. The one qualification is that, in saying that they will take forward the primary recommendation, which is to reverse PACCAR, the Government have said they intend to do so only on a prospective rather than retrospective basis, whereas the CJC recommended both retrospective and prospective. That would be the one caveat that I would have on saying that I support the position that the Government are taking. The Government have said twice now in written ministerial statements that they view this as a priority. I would hope that that priority will translate into legislation sooner rather than later, because there remains uncertainty in the marketplace. I would also have that caveat.

You want it to be retrospective, as recommended by the CJC.

Yes. The initial litigation funding Bill from 2024 was intended to be retrospective and prospective as well. I cannot see a principled reason why there should be a change of position now. It may well be that the view is taken that retrospective legislation is generally not something that is done for various reasons, although I do understand, at least from what I read in the newspapers, that the proposed legislation on jury trials is intended to be retrospective. There perhaps is not that much of a commitment to non-retrospectivity. Equally, in this type of situation, there remains a great deal of uncertainty as a consequence of legislation not coming in and it not being retrospective because not all agreements that fell foul of PACCAR have been renegotiated. There are some situations where you might have restitutive claims arising out of those agreements. I do not think it is as clear as to say, “Two or three years have gone by. Therefore, everything is sorted out and we can leave the past to itself.” That is not necessarily the situation. Thirdly, it may be that there is a concern that there might be ECHR issues in terms of retrospectivity. As the litigation funding Bill in 2024 was certified under section 19 of the HRA as being ECHR compliant, what has changed in those two years to make what was compliant then not compliant now? For those reasons, I would still say that you should make it retrospective, if you can.

Who should regulate third-party funding? How should we do it? The CJC said that it should not be self-regulation. We heard earlier on about whether the legal services regulators should have oversight. How should that happen? We have had some disasters in the near past. Who is going to protect the interests of the consumer?

At the moment, you have regulation for percentage-based litigation funding, which falls under the damages-based agreement regulations, and the rest is unregulated or self-regulated. It depends on your perspective whether self-regulation is non-regulation. That self-regulatory mechanism applies to only some litigation funders because it is voluntary. It does not apply to all litigation funders. That is the first point. In terms of who should take over, the CJC recommended a two-stage approach to regulation. The first stage would be to have the Lord Chancellor regulate litigation funding, which appears to be what the Government intend to do. That forms the second principal recommendation that the CJC made. That would be through the Lord Chancellor issuing regulations governing third-party litigation funding agreements, which in fact was the original intention under the Courts and Legal Services Act approach, which sits on the books but has still not been brought into force. The CJC suggested that the Lord Chancellor should do it for five years to see whether that form of regulation worked. If, at the end of five years, the review took the approach that it was not working effectively, we recommended that the Financial Conduct Authority should become the regulator. It would not be the legal profession but the FCA, because the FCA has greater expertise—this was said to the CJC in some of the submissions to it—in regulating financial instruments. Third-party litigation funding could be viewed as a financial instrument in some ways. The FCA would be the backstop, but the Lord Chancellor would do it for the first five years. That was the approach.

Is that another window into the world of legal services regulation that shows they are not doing a very good job or could do better?

The CJC did hear and receive consultation responses in terms of legal services regulation where third-party funding was concerned. That specifically focused on portfolio funding, which is where the funder provides funding to law firms to enable them to fund a variety of claims. Those responses came in in respect of the cases that you heard referred to by the previous panel, SSB Law, Axiom Ince and Pure Legal. Those are mass-volume claim firms, which were funded through portfolio funding. Some of the evidence that we were given suggested that there was no problem here at all in terms of regulation. That was very much a left-field approach. The main thrust of the evidence that we received was that this area of funding particularly was not regulated effectively. The solicitors’ profession was not providing clear guidance to prospective clients. The regulators, the SRA being the primary one in this respect, were not regulating this type of funding arrangement effectively through the way that they were regulating firms. As far as I am aware, the Legal Services Board, which knows more about this than the CJC did at the time because its report on this area came out after we reported, concluded that, yes, indeed, this is an area where there may be systemic problems in terms of effective regulation within the solicitors profession at least, which needed to be looked at and answered. Those included siloed working within the SRA, a lack of information transfer and a failure to recognise properly that the hundreds of complaints that were being made to them were not complaints about poor service quality but were complaints that pointed to strongly systemic flaws within the effective regulatory regime. In answer to your question, yes, there are areas where legal services regulation needs to improve. That was one of the reasons behind the fact that the report suggested that, first of all, the Government may want to look as a matter of urgency at legal services regulation and, secondly, in terms of the regulation of portfolio funding particularly, that should be transferred to the FCA now rather than in five years’ time, because it is in effect a loan. Where the use of that type of funding arrangement is in place, there ought to be consideration of co-regulation between the FCA and the SRA to ensure that the right regulatory expertise is brought to bear. A little bit like the points that Dr Curran was making, there needs to be a more coherent, cohesive and holistic approach to regulation. The CJC took that view and, as I understand it, the Legal Services Board has endorsed that position in terms of FCA regulation and greater co‑operation between the SRA and the FCA, so yes.

I have two fairly swift questions. I was going to ask you about legal expenses insurance. That is not so widely used. Would you be in favour of promoting a case for expanding its use or not?

I am probably eccentric where legal expenses insurance is concerned—maybe I am in other ways—because I would quite like serious consideration to be given to the introduction of mandatory legal expenses insurance. If everybody had to have it, we would have universal coverage for legal expenses. I may be the voice crying in the wilderness on that. The CJC did not recommend that, I have to say, although Sir Rupert Jackson did also consider the issue in 2009 when he looked at the costs of litigation. In terms of the more mainstream approach to legal expenses insurance, yes, we have a very poor approach to it. The statistics show that 8% of households in England have legal expenses insurance; it is 13% in Wales. I do not know the figures for Scotland and Northern Ireland. That compares markedly with other European jurisdictions. In Sweden, there is a 95% take-up of legal expenses insurance to be used before the event. You insure yourself.

Is that compulsory?

No, that is not compulsory. As far as I know, nobody has compulsory legal expenses insurance.

But it is 95%.

It is 95%. That is a consequence of clear Government policy in the 1990s to move individuals from civil legal aid to an insurance‑based model. It is 95%.

Is it regulated, though? Is it value for money? I suspect that one reason why people do not choose to have it in this country is because they think it is a rip-off.

I do not know about that. Most people do not take out legal expenses insurance because they think, “We are never going to have a legal issue.” The same argument was put forward in the US about mandatory health insurance. People do not take out health insurance when they are in their 20s and 30s, when they are fit and healthy, because they think, “We are not going to need it.” It is only when they need it, when they are in their 50s, that they cannot get it. People tend not to insure against things that they think are never going to happen to them, but you never know if you are going to need legal expenses insurance. In terms of Government policy, it was Government policy to move people from a publicly funded system to an insurance-based system. In Germany, you have a 35% uptake of legal expenses insurance. That is not because of a clear policy to move from civil legal aid to legal expenses insurance. I think that 8% of claims in Germany are funded through legal aid. Claims are funded much more by legal expenses insurance than by legal aid. In Germany at least there is a vibrant legal expenses insurance market. One of the things that is said here is that we do not necessarily have a vibrant market, but vibrant markets can be created and nurtured. I do not see why that ought to be an insuperable problem. At the moment, uptake in terms of legal expenses insurance is covered by household insurance. You have it as an add-on to your car insurance or your banking provision. You can take out mobile phone insurance and have legal expenses insurance. It can be an add-on. In terms of businesses, they can add it on to the insurance they have.

People have it on travel insurance.

Yes, it can be on travel insurance. Lots of people have it; 13% of people have it. In 2017, the Civil Justice Council did a report on legal expenses insurance. One of the things that it noted then was that a lot of people do not use it even though they have it. The question really becomes about, first of all, educating those who have it to use it and making it usable. There may be reasons why they do not think it is appropriate for their particular situation. We need to improve the use of it, but we should also improve the take-up of it as well, as a secondary point. One of the things that the CJC looked at in terms of improving the take‑up was the possibility of employers providing legal expenses insurance to their employees possibly as a taxable expense to increase its take-up. In that type of situation, it could become an opt-out. You are in the firm’s legal expenses insurance policy unless you opt out. We know that most people never opt out of things. I am still paying for insurance that I do not need 10 years after the fact.

Can I drill down into the Swedish example? There would probably be no need, but do people therefore buy flights without insurance?

I do not know the answer to that question, but I would assume the answer is that, if they already have expenses insurance, they would not need to. I would not want to hazard a guess.

I am just really interested. That is fine. It is a question for me to look at later. I know you said you were not speaking on behalf of the CJC in any way, but their report proposed an access to justice fund by hammering the profits of lawyers and third-party funders through conditional fee agreements and damages-based stuff. Is there a coherent argument as to why those profits should be subject to some sort of levy?

The idea there was that both lawyers and litigation funders are provided with the ability to make profits out of litigation through CFAs, DBAs and litigation funding agreements. They are making a profit out of helping to facilitate access to justice. The quid pro quo for that would be to help the public by improving legal education and early settlement. You gain from facilitating access to justice and the profits you make from it, and in that way you return something to society, which is the fact that you help to fund public legal education, citizens advice bureaux and consensual resolution services and so on. What you are doing is you are not using this money to fund more litigation; you are using it to fund access to justice in that wider sense. That was the rationale for that idea.

You are privatising altruism.

I know; I know.

That is a good note to end the afternoon’s proceedings on. Thank you very much, Dr Sorabji, for your extremely helpful answers. Thank you for coming to give evidence. That is all the business that we have to transact today. I will end the Committee meeting here.