Examination of Witnesses (Questions 1-19)
RT HON
LORD IRVINE
AND SIR
HAYDEN PHILLIPS
GCB
WEDNESDAY 2 APRIL 2003
Chairman
1. Good morning, Lord Chancellor and Sir Hayden.
This is the first time you have appeared in public session of
the Committee, but of course we have seen you before in private
session of the Committee at an early stage. Before we start, I
should simply record that interests have been declared by members.
Mr Vaz has declared his wife as a solicitor who holds a judicial
appointment, Mr Cranston is a recorder and barrister, Mr Field
is a non-practising solicitor and my wife is a Member of the House
of Lords. Having got that out of the way, we look forward to spending
a bit of time on what I would call some bread-and-butter issues,
but rather significant bread-and-butter issues in the Department
and then moving on to the wider issues about the constitutional
role and the general position of the Lord Chancellor and the Lord
Chancellor's Department. The supplementary estimates of the Department
are a bit worrying. The Department found early in the financial
year which has just ended that it needed an extra £281 million
and that in turn did not prove to be enough and another £131
million was granted, making a total of £412 million. Is it
not a bit embarrassing to find the Department running out of cash
by as much as 14% in the course of a year?
(Sir Hayden Phillips) Perhaps I could
try and help the Committee.
2. I do not think you can answer the question
as to whether the Lord Chancellor is embarrassed or not, but you
can give us some facts.
(Sir Hayden Phillips) No, I will not pick up the embarrassment.
I think the reality here is really essential, as we tried to explain,
that there are two major elements of expenditure. The first is
asylum where the workload going through the appellate authorities
moved from 4,500 cases a month to 6,000 cases putting increasing
pressure on our budget and this decision was taken to lift this
up after, as it were, the SR 2000 settlement had been made. We
were conscious of that within about three or four months of the
start of the financial year which is why we had an agreement with
the Treasury, which they supported in this area, to the tune of
£281 million last summer. The other area of growing difficulty
during the year was pressure on criminal legal aid which is essentially
a demand-led pressure and there were a number of elements in that
and gradually during the course of the year it became clear that
we were going to have a real difficulty in meeting that expenditure.
We were tracking it through and we were beginning to find out
the reasons for the underlying growth in criminal legal aid, but
they were both realities out there in the real world which we
had to cope with. We had to have the money for those, hence the
agreement with the Treasury for the supplementary estimate of
the size and the sort of which you are aware.
3. I will put my question again to the Lord
Chancellor. Is it not embarrassing given that part of your role
might be to remind the Cabinet of the legal aid and other consequential
costs of policies that they are pursuing, whether it is new initiatives
by the Home Office or new legislation, and that perhaps your Ministers
in the Commons should also be alerting the Commons to the consequent
costs of other government policies if the argument is, and I understand
it is, that most of this increase has resulted from decisions
by other departments which generate a legal aid requirement?
(Lord Irvine of Lairg) Well, first of all, it is quite
obvious from what Sir Hayden said that the Department is financially
embarrassed. I am not personally embarrassed because I think that
Sir Hayden has given a perfectly sound explanation of how that
arose, but you have put your finger on an absolutely major point
which I do accept. It is absolutely critical when changes to the
substantive law are being made, particularly in the criminal field,
which have downstream consequences for the courts, that the thing
should be looked at end to end and the downstream consequences
should be funded and that is a position that I have consistently
maintained.
4. One of the arguments, and we will come on
to this later, which is advanced for the present position of the
Lord Chancellor, and I do not mean in a personal sense, but the
constitutional position of the Lord Chancellor, is that in the
Cabinet he is a voice for the judiciary. In this particular case
of course that voice is presumably heard in Cabinet saying that
there are consequential costs of all these things, but I do not
remember in a parliamentary argument about any of these policies
anyone saying that the legal aid bill is going to be such and
such and it has got to be calculated on this basis.
(Lord Irvine of Lairg) Well, public expenditure issues
of this detail are not in fact in practice discussed in Cabinet,
but they are discussed extensively in our discussions with the
Treasury and you can be absolutely assured that the point that
you make which you regard as valid I regard as valid and we put
continuously, as Sir Hayden has said. One of the problems is that
criminal legal aid is demand-led. It is therefore, inherently
difficult to predict and in times past we have had underspends
and this time we had an overspend, but because something is inherently
difficult to predict because it is demand-led, you cannot look
for perfection in budgeting, but you must do as best you can and
I agree with you that it is absolutely critical that changes are
not made to the substantive law unless also you take on board
the downstream consequences for the courts and fund that.
5. Does the Treasury not listen to your arguments?
(Lord Irvine of Lairg) I am sure the Treasury does
listen to these arguments and I am sure the Treasury accepts the
validity of these arguments, but at the end of the day, as you
know as well as I do, it has to translate into pounds, shillings
and pence and the fact is that we have not been sufficiently funded
for the way matters have turned out.
(Sir Hayden Phillips) I think in fact the Treasury
do recognise that by working with us in order to assist us during
the course of this year. I think what we do have to say in addition
to what the Lord Chancellor has said is that the criminal justice
system is much more joined up than it was three, four, five years
ago, but we still have a long way to go in technical terms in
being able to forecast precisely the impact on legal aid, the
changing behaviour of the magistrates' courts, different actions
by the probation service and so on. The next really important
task is to get that end-to-end budgeting and costing process working
really well. We are not there yet, but we are on target.
(Lord Irvine of Lairg) An important point about that
is that the success of the police impacts directly upon the courts.
This is what was called "tackling the attrition target",
how many cases which are recorded as crime are actually cleared
up by the police in the sense that they have a suspect whom they
wish the prosecution authorities to prosecute. Now, obviously
if they succeed significantly in that task beyond their current
level of achievement, that has downstream consequences for the
courts of a significant character. Of course if the Treasury are
not completely persuaded that that success will be achieved, then
our Department may not be funded to the extent that it requires,
but, as I say, the principle that downstream consequences should
be predicted and funded is acceptable.
Mr Field
6. I also wish to focus on some of the financial
aspects and you will be gratified to know that I am just old enough
to remember pounds, shillings and pence, but it is to do with
the asylum issues that Sir Hayden referred to. How much of the
legal aid bill would you estimate is being wasted due to immigration
lawyers milking the system, as was suggested by a High Court Judge
earlier in March?
(Sir Hayden Phillips) Well, I think it
is very difficult to assess the degree to which there has been
over-claiming, but it is undoubtedly the case that the Legal Services
Commission, which polices this for us, are concerned about a number
of law firms. The Chief Executive of the Commission and I gave
evidence to the PAC on this matter some while ago. They will actually
target and withdraw contracts from firms that are over-claiming,
so there is a policing system for this. Abuse is not, I can assure
you, widespread and we are focused on trying to do something about
it where it occurs.
7. I accept that financial abuse may not be
entirely widespread on this matter, but I speak as an inner-city
Member of Parliament, and the same applies to Clive Soley and
various others, and we do find it an enormous paperchase effectively
where legally-aided lawyers are well aware of the way the system
works, but in a sense Members of Parliament quite rightly are
directed to the Home Office which has a special department and
they know, therefore, there is a massive paperchase which continues
and it is in their interests to ensure that our constituents write
directly to us or indeed the law firms also begin that process.
I appreciate there may not be out and out fraud, but that was
not really the question I was asking. I was looking at how the
system is being milked. Clearly where there is evidence of fraud,
that is totally unacceptable and understandably you will wish
to stamp down on that initially, but is there also a sense that
there needs to be a reassessment of the entire process to ensure
that legally-aided lawyers and various other immigration advisers
are not using the system and legitimately getting monies, but
legitimately under a system that is not necessarily doing good
either for your budgetary constraints or, perhaps more importantly,
for the people they are purporting to represent?
(Lord Irvine of Lairg) Well, because of the huge expansion
in applications for asylum, it was necessary to build up a market
in specialist asylum and immigration lawyers actually to meet
the demand and in fact early legal advice is of great advantage
to the system provided it is quality advice because it assists
IND, the department in the Home Office which deals initially with
asylum applications, to come to a sensible and well-documented
decision which will withstand appraisal when it goes to the adjudicator,
so there is great merit in involving lawyers of the integrity
and quality in the giving of legal advice at that stage. Also
the supplier base had to be expanded. The Legal Services Commission
is concerned to maintain the quality of its suppliers. As Sir
Hayden has said, they are subject to contracts which can be withdrawn.
The extent of abuse is something which I would not exaggerate,
but the Legal Services Commission has got strong powers to investigate
and withdraw a contract from a firm that was proved to be, as
you put it, milking the system.
(Sir Hayden Phillips) I have three quick points to
make. First of all, in terms of the jurisdiction of immigration
and asylum, in terms of the part the Lord Chancellor is responsible
for, it has been the largest and fastest growth of any jurisdiction,
I think, in this Century in terms of dealing with this problem
and I would hope to argue when the Committee come to look at this
that that has been a managerial success story from the point of
view of handling the work. The second point is that we and the
Home Office look extremely closely at each stage of the process
to see how it can be streamlined and we do that on a continuous
basis. The third point is that we were asked about this in the
Public Accounts Committee because of the number of inner-city
MPs who said that they were concerned about themselves perhaps
being used as part of the system, and Baroness Scotland and has
written round to some MPs, I think about a dozen, asking them
for their views and we have received their evidence, as it were,
back which I am going to pass on to the Chairman of the PAC and
I imagine, Chairman, that that information and that process of
correspondence would also be of interest to you and your Committee.
I am sure there is no problem about our making that available
to you. We were asking the question in very much the way you are
posing it to us to MPs, so we have better communication with Members
of Parliament about the problems they see on the ground in this
area.[1]
Mr Soley
8. I certainly see abuse in my area of the legal
aid system for asylum and I have raised this a number of times,
including with the Law Society. I have to say there are a number
of solicitors' companies I would actually pay not to defend me.
The area of abuse that I am most interested in actually is multiple
claims or withdrawing claims and putting in new claims and general
delay. I would accept that the early advice is right, but the
reality is that we have got some companies who are accepting and
turning a blind eye to multiple and overlapping claims and to
some extent encouraging it. What do you say to that?
(Lord Irvine of Lairg) We would frown
on that seriously. I think again perhaps I can turn it back, as
I did to Mr Field, and say that where there is evidence of that,
where MPs come across cases of that sort, we need to know that
quickly and then if there is action needed, we will take it.
9. But what would you do in a situation where
they put in, for example, a claim for asylum and then changed
that claim half-way through or put in an overlapping claim with
it? What would you actually do with that?
(Lord Irvine of Lairg) What do you mean by an overlapping
claim?
10. Putting in another claim for another basis
of staying here, which may be a work permit or whatever, or a
student permit.
(Lord Irvine of Lairg) Basically what would assist
us would be if you wrote with the detail of particular cases.
If there is abuse, it is the duty of the Legal Services Commission
to clamp down on it. If there was a pattern of a particular firm
gaming the system in the way that you are describing, then the
Legal Services Commission would investigate under sanction and
could withdraw the contract so that they did not get any more
work.
11. I have done that and some have had it withdrawn.
There are the more difficult ones where you get the painful cases
where you are worried that it is only one person in the practice,
one lawyer.
(Lord Irvine of Lairg) My own view would be that if
there was one person in the practice who was the sinner, that
would nonetheless be the sinner's practice and they would either
get rid of that individual who was abusing the system and retain
their contract or not and lose their contract, and I would be
in favour of the very toughest sanctions.
12. Can I finally ask you how much would you
work with the Law Society on policing this system? The Law Society
began to work with me in terms of drawing up a code of conduct
for solicitors in relation to MPs.
(Lord Irvine of Lairg) Well, I think it is primarily
the job of the Legal Services Commission to police the expenditure
of public money. I think that if what is improper professional
conduct emerges, then that should be reported by the Legal Services
Commission to the Law Society to deal with as a professional misconduct
matter. Speaking for myself, I would come down on anything like
this like a ton of bricks.
Ross Cranston
13. I wanted to ask you a couple of questions
about access to justice, but before that could I come back to
criminal legal aid and the problems I can see you have got because
it is demand-led. Have we not reached a point where that position
has to be addressed? I was particularly struck when Sir Hayden
said last year that something like 49% of criminal legal aid goes
on high-cost case.
(Sir Hayden Phillips) 46%.
14. I imagine that some of them are fraud cases,
but just as a casual observation one often sees these multi-handers
with a silk and a junior for each defendant.
(Lord Irvine of Lairg) Well, we are dealing with that
and you are quite right to identify it as an important problem
because of the proportion of the criminal legal aid budget that
it represents, but we have put forward in the last Spending Round
a proposal in relation to very high cost criminal cases and basically
these have been provided for by fixed-price contracts. That is
going to go ahead and that should significantly reduce the cost
of these cases.
(Sir Hayden Phillips) Absolutely.
15. Can I ask you about a couple of issues on
the access to justice side. I think a lot of progress has been
made on areas like community legal partnerships and I see that
in my own constituency. I am very impressed by the telephone advice
lines, the advice back-up centres and so on, so there is a lot
of progress there, but you will forgive me if I concentrate on
a few of the difficulties. The first point put to us by, for example,
the Legal Aid Practitioners Group is that there is a drift away
from legal aid work. Now, you, I think, have taken one of the
initiatives here in funding something like 100 legal aid traineeships
which I think is a very good move, but do you see this as a problem
and what more could be done? Could I also ask you, will that funding
of the traineeships be continued?
(Lord Irvine of Lairg) I cannot give any commitment
to any particular funding being continued, but obviously the traineeship
idea was an original idea and I am glad that you favour it. There
is no crisis yet in supply of legal aid lawyers. It is true that
there has been some weakening of the supply base and there is
no doubt that it is attributable to the fees which we can afford
to pay, but at present there is a sufficient supply at current
rates to meet the demand.
(Sir Hayden Phillips) The area of greatest difficulty
is not in crime, but in family law and in certain parts of the
country and we are aware of that and we will try and take steps
where we can. We are aware of the frailty and the fragility of
that part of the supply base, but in crime generally we have not
had a real problem.
16. Sorry, my question was mistaken to start
with. It was actually the Legal Aid Practitioners Group and the
family bar saying that there is a drift away in that area.
(Lord Irvine of Lairg) Well, there is some evidence
of the drift away and I would be the first to acknowledge it,
but it is not at such a level that there is an insufficiency of
quality supply to meet current demand, but it is a state of affairs
we have to keep a very close eye on, I quite agree.
17. Could I ask you about conditional fee agreements
because again we are being told by people like the Association
of Personal Injury Lawyers and other groups that there are problems
there and it is obviously the case that there has been satellite
litigation, that insurance companies are trying to attack particular
agreements and so on, but I guess my question is that three years
down the line, what is your assessment of the impact? I should
say, incidentally, that I support the idea that if litigation
can be funded outside legal aid, it is absolutely right, but what
assessment has the Department made, for example, of the extent
to which there is at least an equivalent number of personal injury
cases being brought as there were under the previous system?
(Lord Irvine of Lairg) We have no reason to. I never
get letters, never, ever, and my mailbag is as vast as any Cabinet
Minister's complaining about the system that the Cabinet Minister
is responsible for. I get many thousands and thousands of letters,
but I do not think I have received a single one saying that they
are unaided and had to find a conditional fee agreement to support
a personal injury case that they wanted to bring, so I do not
think there is any problem about access to justice. The problem
is the one that you raise, that there has been warfare between
plenty of solicitors or trade unions on the one side and the defendant's
insurer's solicitors on the other, and I quite agree with you
that there has been a vast amount of unacceptable satellite litigation.
The Civil Justice Council, at the initiative of the Master of
the Rolls, was trying very hard to mediate agreements between
both sides to resolve this. I have high hopes that it will succeed.
Only the other day I wrote a very detailed letter on the subject
to Andrew Dismore and I will ensure that I write before the morning
is out a similar letter to you setting out all the detail, as
I see it at the moment, but not precluding further action by way
of legislation, if need be, to ensure the system works. My own
belief is that we are going to mediate our way out of these problems.
(Sir Hayden Phillips) We have done some research and
evaluation and I will check where that has got to and it might
be of interest to the Committee to see that.[2]
18. I think it ought to cover collective CFAs
as well because I think that is another concern raised by the
trade unions.
(Lord Irvine of Lairg) Collective CFAs
is something the trade union movement sought and we thought it
right to grant so that they were not at a disadvantage because
of their tradition of funding the whole of their service to their
members in personal injury cases out of the costs they received
in successful cases.[3]
19. Do you think there is scope for contingency
fees?
(Lord Irvine of Lairg) No. My own view
is that contingency fees are basically objectionable because they
give the lawyers an interest in the outcome, as I think is called
sometimes "a slice of the action", and I think the view
would be that we ought to give CFAs a chance if they have substantially
succeeded. Quarrels about costs between a defendant's insurers
and plaintiff's solicitors have adversely affected the operation
of the system a bit, but I think it is by far preferable that
the solicitor in a CFA agreement runs the risk of nothing if he
fails but enhanced costs against the unsuccessful defendant in
the cases where he wins, but not to take something out of the
recovery of the injured plaintiff to diminish the compensation
that the court has decided the injured plaintiff is entitled to
in order to fund the litigation. The basic objection with contingency
fees are that the plaintiff gets less than he is entitled to.
Mr Cunningham
1 Ev 17 and 18 Back
2
The Impact of Conditional Fees on the Selection, Handling and
Outcomes of Personal Injury Cases Lord Chancellor's Department
Research Series No.6/02 Back
3
Note by witness: Special provisions were included in the
Access to Justice Act 1999 to provide for the particular needs
of unions. Foremost was the ability of Trade Unions to become
approved Membership Organisations. Membership Organisations support
members' cases and assume liability for any costs incurred. While
it is open to the organisation to purchase commercial insurance
for each case, trade unions have traditionally borne the costs
within their own provision. Membership Organisation status allows
trade unions and other approved organisations to recover a national
insurance premium for each successful case they support on behalf
of their members. Provision was also made for collective CFAs.
CCFAs are a variation on CFAs and were developed for organisations
or individuals engaged in large volume, routine casework. CCFAs
are made up of two elements- the collective aspects of the agreement
that will apply to all cases taken under the agreement (such as
terms and conditions of the contract); and the risk assessment
that is specific to the individual case and is reflected in the
individual success fee. Back
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