Djanogly stripped of power – but how far did justice minister’s influence go?

Justice minister Jonathan Djanogly being stripped of his regulatory powers, but key questions remain, writes Left Foot Forward’s Alex Hern.

Following revelations last week about conflicts of interest with the bill he had responsibility for, minister of justice Jonathan Djanogly has been stripped of his responsibility to regulate claims management companies: firms which collect a referral fee for putting victims in touch with lawyers, often known as “ambulance chasers”.

The Guardian reports:

In May the Legal Services Board, the independent body which advises minsters on legal regulation, had said the case for banning referral fees “had not been made out”.

Four months later – without any consultation or impact assessment – Djanogly announced a ban on referral fees in personal injury cases, but effectively excluded his brother-in-law’s businesses, which deal with employment law.

Djanogly admitted last week that Sir Gus O’Donnell, the cabinet secretary, had launched an inquiry into the apparent conflict of interest…

O’Donnell said that Ken Clarke, the justice secretary, would now be in charge of the industry, leaving Djanogly in charge of legal aid and civil litigation. This still means he will be able to identify growth areas for claims management companies.

The ministry of justice issued a statement about Djanogly’s dressing-down, claiming:

The cabinet secretary has concluded that Jonathan Djanogly took the appropriate steps to prevent any conflict between his financial interests and his ministerial duties. There is no evidence that he acted in any way other than in the public interest.

Mr Djanogly retains ministerial responsibility for civil justice policy. He has requested that the Claims Management Regulation Unit be overseen by a different justice minister, to avoid any possible distraction from this important issue. The Ministry of Justice has agreed to this change.

Shadow justice minister Andy Slaughter told Left Foot Forward:

“We welcome the minister being divested of his powers. However, questions remain as to how the policy process was influenced while he did have a conflict, and over confusing statements made in parliament last week. Thats why I’ve written to Gus O’Donnell today to get to the bottom of this.”

The ‘confusing statements’ Slaughter refers to were uncovered by this site:

When confronted about this fiduciary interest [to his family firm] by Tom Harris in the transport committee today, Djanogly’s answer was as revealing as it was curt:

“That’s my duty to the LLP, not to parliament.”

He apparently sees no problem in having a legal duty to a company in the very industry he is regulating.

As Jonny Mulligan, of the Sound Off for Justice campaign, told us:

“It is hard to see how this can be the end of the affair. To start with it is hard to believe the nonsense around having no financial interest because he has put things in a ‘blind trust’. This is duplicitous word play and makes no difference. In the long run he and his family, friends and brother in law all stand to benefit. They benefit more if the Jackson reforms come in to act.

“The next question that must be answered is why for the last year minister Djanogly, Ben Gummer MP and other front bench MPs have been trotting around promoting the perception of a compensation culture that does not exist. David Cameron himself has accepted Lord Youngs assessment that it is a perception ‘created by the media’. Why has the Djanogly been briefing parliament the complete opposite from what the prime minister?

“We need a full disclosure. Who are the puppets and who are the puppet masters? What we need to know is who has influenced the minister and his decision making over the Jackson reforms over the last 18 months. We know he has family interests and that the Association for british Insurers (ABI) have had a lot of meetings with him and his officials in the MOJ.”

Adding:

“Djanogly’s performance at the bill stage and in debate in Parliament really question his ability to get his head around the facts.

“The real question today must be asked how competent is the minister able to turn this disaster around. Does he actually understand the impact his bill will have. Will he take responsibility for the outcomes – or will the cost to the taxpayer be shoved in another ‘blind trust’?”

The cabinet office’s response cannot be the end of the matter. It is clearer than ever the minister did have a conflict of interest, large enough to render his position at the head of this regulation untenable. Despite being stripped of his powers, his pernicious effects on the last eighteen months of legislation will persist, as will his influence over the other aspects of the legal aid bill – aspects over which he is not free of conflicts either.

In addition, there remains a question of enforcement of the ministerial code: If, as we argued previously, Djanogly has created even just the perception of a conflict of interest, he has broken the ministerial code. That is not something which a simple apology, and a promise to be better in the future, can fix.

Our original conclusion stands:

This is a bill drafted by an insurer in the interest of the insurers. It is too tainted by his association to be allowed to pass in its current form, and it is clear that it must be drastically rewritten or scrapped altogether.

See also:

Exposed: The legal aid minister’s £97,000 conflict of interestAlex Hern, October 11th 2011

Will Djanogly debunk the myth of a compensation culture?Jonny Mulligan, October 11th 2011

Outrage at government plans to fast track legal aid legislationJonny Mulligan, June 24th 2011

Civil justice “reforms” mean corporate wrongdoers will be beyond the lawAndy Slaughter MP, June 16th 2011

Two women a week die from domestic violence; legal aid cuts will see moreJonny Mulligan, June 16th 2011

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