This Order may be cited as the Late Payment of Commercial Debts (Interest) (Legal Aid Exceptions) Order 1998 and shall come into force on 1st November 1998.

(1)    In this Order—

“the 1998 Act” means the Late Payment of Commercial Debts (Interest) Act 1998;

“the 1988 Act” means the Legal Aid Act 1988; and

“legal aid contract” means a contract made pursuant to the 1988 Act by the Legal Aid Board with another person or body (in this Order referred to as “the service provider”) for the provision of one or more of the following services, that is to say, advice, assistance, mediation or representation under Part II, III, IIIA, IV or V of the 1988 Act.

(2)    In this Order, “advice”, “assistance”, “mediation”, “person” and “representation” have the same meanings as in the 1988 Act.

(1)    A contract of a description specified in paragraph (2) below which is made whilst this Order is in force is an excepted contract for the purposes of section 2 of the 1998 Act.

(2)    The specified description of contract is a legal aid contract under which the amount of the charges and fees payable are, or are the same as, those provided by regulations made under section 34(2)(e) of the 1988 Act.

(3)    For the purposes of paragraph (2) above, the charges and fees payable under any legal aid contract may be taken to be, or to be the same as, those provided for in such regulations notwithstanding that—

(a)    such regulations make provision in relation to remuneration and payment for contracts of the description to which that legal aid contract belongs different from the provision made for remuneration and payment applicable to services of the same description where no legal aid contract is in force; or

(b)    it is provided (however worded, and whether by that legal aid contract, or by such regulations in respect of contracts of a description to which that legal aid contract belongs) that—

(i)    the total of the amounts which may be paid in respect of any period of time shall not exceed a limit; or

(ii)    amounts may be paid on account either at times, or subject to limits, different from the times or limits applicable under such regulations to services of the same description where no legal aid contract is in force; or

(iii)    in the event of termination of the legal aid contract, or any contract schedule thereto, provisions relating to payment shall apply different from the provisions which apply whilst the legal aid contract, or contract schedule as the case may be, is in force.

(4)    In paragraph 3(b)(iii) above—

“contract schedule” means the provisions of a legal aid contract which relate to the descriptions of services which may be provided pursuant to a legal aid contract by a particular office of the service provider; and

“provisions relating to payment” means provisions relating to the amounts of the charges and fees, the limit in respect of any period of time, the times at which payments on account may be made or the limits to which payments on account are subject.

Kim Howells

Parliamentary Under Secretary of State for Competition and Consumer Affairs,

Department of Trade and Industry

3rd October 1998

This Order provides for certain contracts made by the Legal Aid Board for the provision of advice, assistance, mediation or representation to be excepted contracts for the purposes of section 2 of the Late Payment of Commercial Debts (Interest) Act 1998 (“the 1998 Act”). The contracts concerned are those where the charges and fees are not negotiated but rather are those determined in accordance with the relevant regulations under the Legal Aid Act 1988. Payments made under such contracts by the Legal Aid Board will therefore not carry statutory interest under the 1998 Act.

At the time of making this Order, the contracts affected are franchise agreements and multi-party action contracts. This Order does not affect pilot contracts for the provision of Legal Aid, where the charges and fees are negotiated by the solicitor or other service provider.

Statutory interest is not available—

(a)    on barristers' fees payable by the Legal Aid Board;

(b)    where advice, assistance and representation is provided by solicitors or not for profit organisations pursuant to the Legal Aid Act 1988 other than pursuant to a contract.

Nothing in this Order applies to payments made by the Scottish Legal Aid Board or by the Legal Aid Department of the Incorporated Law Society of Northern Ireland.

This Order comes into force on the same date as the 1998 Act is brought into force in relation to certain contracts by the Late Payment of Commercial Debts (Interest) Act 1998 (Commencement No 1) Order 1998 (SI No 2479 (C 56)), that is to say, on 1st November 1998. The contracts concerned are those made by a supplier whose business is a small business with a purchaser either who is a United Kingdom public authority, or whose business is a large business. The terms “small business”, “large business” and “United Kingdom public authority” are defined in that Order. The 1998 Act does not apply to contracts made before it comes into force.

Two further instruments will come into force on the same date—

(a)    the Late Payment of Commercial Debts (Rate of Interest) Order 1998 (SI No 2480), which sets the rate of interest under section 6 of the 1998 Act;

(b)    the Late Payment of Commercial Debts (Interest) Act 1998 (Transitional Provisions) Regulations 1998 (SI No 2481), which provide that, while the Act is not fully in force, it shall be presumed until the contrary is proved that the business of the purchaser is a large business.