By Neil Rose


The government suffered its first bloody nose over the Legal Services Bill this week, when peers voted to require the head of the proposed oversight regulator for the profession to be appointed with the concurrence of the Lord Chief Justice.



It came as the Department for Constitutional Affairs (DCA) admitted that estimates for the start-up costs of the new regulatory regime are spiralling upwards to nearly £40 million and could yet go higher.



The amendment that the Lord Chancellor can only appoint the chairman of the legal services board with the concurrence of the Lord Chief Justice was approved by 175 votes to 134 on the first day of the Bill's report stage. An amendment imposing the same requirement on the appointment of other board members was then agreed.



DCA minister Baroness Ashton said she would look at what the Lords had said and continue discussions over the issue. Law Society President Fiona Woolf welcomed the vote.



The government had insisted that a process based on Nolan principles would guarantee the integrity of the appointment, but opponents argued that allowing a minister the unfettered right to choose the chairman could potentially compromise the independence of the profession - or at least the impression of it.



Transitional costs were estimated at around £27 million, but Baroness Ashton told the Lords that further work has now indicated that 'something like £38 million or £39 million is required, with a built-in contingency'. But responding to newspaper reports that the costs may reach almost £50 million, she said that 'although the figures were not inaccurate, the assumptions about transitional costs were not right'. The minister pledged to provide definitive figures on the third day of the report stage, scheduled for next month.



On other issues, the government bowed to pressure to add 'protecting and promoting the public interest' to the overarching objectives of regulation. Lord Hunt of Wirral, who chaired the all-party joint select committee that reported on the Bill, said: 'This will restore balance to the Bill, ensuring that the new system of regulation will not be biased in favour of any single, special interest group.'



The government has also replaced references to the secretary of state with the Lord Chancellor, which was welcomed by opposition parties for ensuring greater independence of the profession.



But otherwise Shadow Lord Chancellor Lord Kingsland expressed 'great disappointment' at how few amendments of substance the government had put forward.



Ms Woolf said she was 'very concerned at the spiralling estimate of transitional cost', adding: 'We will also continue to press the government to meet the start-up costs.'



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