The Legal Services Act 2007 (Designation as a Licensing Authority) (No. 2) Order 2011

• Citation: S.I. 2011/2866
• Sections: 18

Section 1 Citation, commencement and interpretation

(1) This Order may be cited as the Legal Services Act 2007 (Designation as a Licensing Authority) (No. 2) Order 2011.

(2) This Order comes into force on 23rd December 2011.

(3) In this Order—

“ the 1974 Act ” means the Solicitors Act 1974 ;

“ the 2007 Act ” means the Legal Services Act 2007;

“ licensed body ” means a body which holds a licence issued by the Law Society which is in force under Part 5 of the 2007 Act; and

“ the Society ” means the Law Society.

Section 2 Designation as a licensing authority

(1) The Society is designated as a licensing authority in relation to the reserved legal activities mentioned in paragraph (2).

(2) The reserved legal activities are—

(a) the exercise of a right of audience;

(b) the conduct of litigation;

(c) reserved instrument activities;

(d) probate activities;

(e) the administration of oaths.

Section 3 Accountants' reports for licensed bodies

(1) Where an accountant, during the course of preparing a report in accordance with licensing rules made by the Society—

(a) discovers evidence of fraud or theft in relation to money held by a licensed body for a client or any other person (including money held on trust) or money held in an account of a client of a licensed body or an account of another person which is operated by the licensed body; or

(b) obtains information which the accountant has reasonable cause to believe is likely to be of material significance in determining whether a licensed body is a fit and proper person to hold money for clients or other persons (including money held on trust) or to operate an account of a client of the licensed body or an account of another person,

the accountant must immediately give a report of the matter to the Society.

(2) No duty to which an accountant is subject is to be regarded as contravened merely because of any information or opinion contained in a report under paragraph (1).

Section 4 Bank accounts of licensed bodies

(1) This article applies where a licensed body keeps an account with a bank or a building society in accordance with licensing rules made by the Society.

(2) The bank or building society—

(a) does not incur any liability;

(b) is not under any obligation to make any inquiry;

(c) is not deemed to have any knowledge of any right of any person to any money paid or credited to the account,

which it would not incur, or be under, or be deemed to have, in the case of an account kept by a person entitled absolutely to all the money paid or credited to it.

(3) The bank or building society has no recourse or right against money standing to the credit of the account, in respect of any liability of the licensed body to the bank or society, other than a liability in connection with the account.

(4) In this article—

(a) “ bank ” means—

(i) the Bank of England;

(ii) a person (other than a building society) who under Part 4 of the Financial Services and Markets Act 2000 has permission to accept deposits;

(iii) ... and

(b) “ building society ” means a building society incorporated (or deemed to be incorporated) under the Building Societies Act 1986 .

Section 5 Provision of information as to compliance with licensed body's licence

(1) The High Court, on the application of the Society, may order a person who does not fall within section 93(2) of the 2007 Act (information) to—

(a) provide information, or information of a description, specified in the order; or

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

(2) The High Court may make an order under this article only if it is satisfied that—

(a) it is likely that the information or document is in the possession or custody of, or under the control of, the person; and

(b) there is reasonable cause to believe that the information or document is likely to be of material significance for the purpose of enabling the Society to ascertain whether the terms of a licensed body's licence are being, or have been, complied with.

(3) An order under this article may direct the Society to pay to a person specified in the order such reasonable costs as may be incurred by that person in connection with the provision of any information, or production of any document, by that person pursuant to the order.

(4) An order under this article—

(a) may specify the time and place at which, and the manner and form in which, the information is to be provided or the document is to be produced;

(b) must specify the period within which the information is to be provided or the document produced;

(c) may require the information to be provided, or the document to be produced, to the Society or to a person specified in the order.

(5) Paragraphs 10, 12, 13 and 15 to 17 of Schedule 14 to the 2007 Act apply in relation to an order under this article as they apply in relation to an order under paragraph 9 of that Schedule, except that for this purpose, each reference to the licensing authority in paragraph 13(1) and (2) of that Schedule is to be construed as including a reference to any person specified under paragraph (4)(c) of this article.

Section 6 Powers of Solicitors Disciplinary Tribunal in respect of legal aid complaints

Where the Solicitors Disciplinary Tribunal makes an order under section 47(2A) of the 1974 Act in the case of a solicitor who is a manager or employee of a licensed body, the Solicitors Disciplinary Tribunal may, if it thinks fit, order that any other solicitor who is for the time being a manager or employee of that body shall also be excluded (either permanently or for a specified period) from providing representation funded by the Legal Services Commission as part of the Criminal Defence Service or from providing criminal legal aid work (within the meaning of section 47(3C) of the 1974 Act) .

Section 7 Application of Part 3 of the Solicitors Act 1974 to licensed bodies

Schedule 1 (which applies provisions of Part 3 of the 1974 Act to licensed bodies) has effect.

Section 8 Application of existing legislation to licensed bodies

(1) The modifications set out in paragraph (2) apply to the provisions listed in Schedule 2 to this Order.

(2) In any provision to which this paragraph applies—

(a) any reference to a solicitor or solicitors shall be construed as including a reference to a licensed body;

(b) any reference to a person's solicitor shall be construed as including a reference to a licensed body which is acting for that person;

(c) any reference to a solicitor's employee shall be construed as including a reference to an employee of a licensed body;

(d) any reference to the address, place of business or office of a solicitor shall be construed, in relation to a licensed body, as a reference to the address specified by the licensed body as its address in the matter in question or, in the absence of a specified address, to its registered office and any reference to notices or other documents being sent or delivered to or served on a solicitor shall be construed accordingly;

(e) “he”, “him” or “ his ” shall be construed in relation to a licensed body as meaning “it” or “its”.

(3) The modifications set out in the second column of the table in Schedule 3 to this Order apply to the enactments and instruments to the extent specified in that Schedule.

Section 1 Application

The provisions of Part 3 of the 1974 Act applied by virtue of this Schedule apply in relation to any activity of a licensed body which is an activity regulated by the Society in accordance with a licence issued to it under Part 5 of the 2007 Act.

Section 2 Interpretation

(1) Subject to sub-paragraph (2), any expression used in this Schedule which is also used in the 1974 Act has the same meaning as in that Act.

(2) In section 87(1) of the 1974 Act the definitions of “client”, “contentious business” and “non-contentious business” apply for the purposes of—

(a) this Schedule; and

(b) any provision of the 1974 Act in so far as it has effect in relation to a licensed body by virtue of this Schedule,

as if for any reference to a solicitor there were substituted a reference to a licensed body.

Section 3 Modification of provisions of Part 3 of the 1974 Act

In any provision to which this paragraph applies—

(a) any reference to a solicitor or to a client of a solicitor shall be construed as including a reference to a licensed body or to a client of such a body;

(b) any reference to a client's solicitor shall be construed as including a reference to any licensed body acting for a client;

(c) “he”, “him” or “ his ” shall be construed in relation to a licensed body as meaning “it” or “its”;

(d) any reference to any employee of a solicitor who is an authorised person includes a reference to any employee or manager of the licensed body who is such a person;

(e) except as provided by sub-paragraph (d), any reference to any employee of a solicitor includes a reference to any employee or manager of the licensed body.

Section 4 Modification of provisions of Part 3 of the 1974 Act

(1) Paragraph 3(a), (c) and (e) applies to section 56 (except subsections (1)(e) and (5)) of the 1974 Act.

(2) In relation to an order made under section 56 of the 1974 Act prescribing (by virtue of sub-paragraph (1)) general principles to be applied when determining the remuneration of licensed bodies in respect of non-contentious business section 56(5) has effect as if—

(a) in paragraph (a) for “the solicitor” there were substituted “ the licensed body ” ; and

(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 employee or manager of the licensed body who is an authorised person.

Section 5

Paragraph 3, except sub-paragraph (b), applies to sections 57, 59, 61, 62, 64 to 67 and 70 to 74 of the 1974 Act.

Section 6

(1) Paragraph 3(a) and (b) applies to section 60 (except subsection (5)) of the 1974 Act.

(2) In relation to a contentious business agreement made between a licensed body and a client section 60(5) of the 1974 Act has effect as if for that subsection there were substituted—

(5) 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.

(6) 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 licensed body shall be void.

(7) 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 licensed body shall be void.

Section 7

(1) Paragraph 3(a) and (c) applies to section 69 (except subsection (2A)) of the 1974 Act.

(2) In relation to a bill of costs delivered by a licensed body section 69 has effect as if for subsection (2A) there were substituted—

(2A) A bill is signed in accordance with this subsection if it is—

(a) signed on behalf of the licensed 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.

Section 8 Effect on contentious business agreement of supervening incapacity of licensed body to act for client

(1) If, after some business has been done under a contentious business agreement made between a licensed body and a client but before the body has wholly performed it, the body ceases to be capable of wholly performing it by reason of one of the following events, namely—

(a) the body ceases (for any reason) to be a licensed body;

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

(c) the client terminates the retainer or employment of the body in favour of another licensed body, a recognised body or a solicitor (as, notwithstanding the agreement, he shall be entitled to do),

any party to, or the representative of any party to, the agreement may apply to the court, and the court shall have the same jurisdiction as to enforcing the agreement so far as it has been performed, or setting it aside, as the court would have had if the licensed body were still capable of wholly performing it.

(2) The court, notwithstanding that it is of the opinion that the agreement is in all respects fair and reasonable, may order the amount due in respect of business under the agreement to be ascertained by assessment, and in that case—

(a) the costs officer, in ascertaining that amount, shall have regard so far as may be to the terms of the agreement; and

(b) payment of the amount found by him to be due may be enforced in the same manner as if the agreement had been wholly performed.

(3) If in such a case as is mentioned in sub-paragraph (1)(c) an order is made for the assessment of the amount due to the licensed body in respect of the business done under the agreement, the court shall direct the costs officer to have regard to the circumstances under which the termination of the body's retainer or employment has taken place, and the costs officer, unless he is of the opinion that there has been no default, negligence, improper delay or other conduct on the part of any manager or employee of the body affording the client reasonable ground for terminating its retainer or employment, shall not allow to the body the full amount of the remuneration agreed to be paid to it.

(4) For the purposes of this paragraph a relevant insolvency event occurs in relation to a licensed 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;

(c) an administrative receiver within the meaning of section 251 of that Act is appointed;

(d) a winding up becomes a creditors’ voluntary winding up under section 96 of that Act (conversion to creditors’ voluntary winding up);

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

Section 9 Power of court to order delivery of bill of costs, etc

Any jurisdiction—

(a) of the High Court to make any such orders as are referred to in subsection (1) of section 68 of the 1974 Act in relation to a solicitor (whether or not business has been done by him in the High Court); or

(b) of a county court to make any such orders as are referred to in subsection (2) of that section in relation to a solicitor,

shall be exercisable in relation to a licensed body.

Section 10 Power of court to order licensed body to pay over clients' money

(1) Any jurisdiction of the High Court to make, in the case of a solicitor who is acting or has acted as such for a client, an order of the kind referred to in sub-paragraph (2) shall be exercisable in the case—

(a) of a licensed body which is acting or has acted as such for a client; or

(b) of any manager or employee of such a body.

(2) The order referred to in sub-paragraph (1) is an order requiring the payment or delivery up of, or otherwise relating to, money or securities which the solicitor has in his possession or control on behalf of the client.