Evidence submitted by Neil Howlett, solicitor
I attach submissions on the Frontier Economics
Report on Solicitors which I have sent to the DCA. I hope these
will inform the consideration of the report and the recently announced
Fundamental Review.
FRONTIER ECONOMICS
REPORT: A MARKET
ANALYSIS OF
LEGAL AIDED
SERVICES PROVIDED
BY SOLICITORS
I am writing in response to the above. I wish
to point out fundamental flaws in the work which make many of
its conclusions valueless.
These comments are put forward constructively.
I do not think it is right to directly Frontier Economics criticise;
they seem to have answered the questions put to them. The problem
is that however powerful the equations and computers the outcome
is valueless if the assumptions underlying the analysis are false.
I am not so cynical as to think the questions were put in a way
that inevitably produced an answer so favourable to the DCA. However,
as a taxpayer I am concerned that so much of my money has been
spent on such a valueless project, and as a lawyer that the DCA's
Fundamental Legal Aid Review may plan policy for the provision
of legal advice to the socially excluded based upon it.
I also note that in the Frontier Economics report
on Barristers they state that in this report they found "strong
evidence of excess supply". Someone reading that report might
assume it is fair summary of this report. It is not. I have searched
for this phrase or finding in this report. It does not occur.
So that you can understand why I feel qualified
to comment I will outline my background. I will set out thematically
the fallacies which undermine the report's analysis. I also attach
a more detailed analysis of defects in the report.
PERSONAL BACKGROUND
I write as someone who chose a legal career
specifically to help the "socially excluded" and who
would like to see that help available in the future. I do not
think solicitors in private practice have an exclusive right to
provide it, although they have performed a valuable role in the
past and could still in the future.
I was educated at St Paul's School, London,
and at Cambridge where my first degree was in Geography. I then
converted to Law at Bristol Polytechnic, and after qualification
as a solicitor in 1984 worked for Harman and Harman, a "Legal
Aid Practice" in Kent, before joining the "High Street"
firm in Somerset where I am now a Partner.
My firm is probably characteristic of well managed
firms in rural areas. We have Lexcel Accreditation, and have held
contracts for Crime, Family and Mental Health in two offices.
Although almost all solicitors in the firm have at some time done
legal aid work, but number willing or able to continue that has
fallen steadily. Despite having a busy criminal practice we did
not apply for a CDS contract because we could foresee being placed
in a position where our commitment to quality would be put under
pressure by the administrative burden and constraints of the contract
and also because we could not recruit staff to do that work. All
those concerns have been more than confirmed. We recently abandoned
Contracts for Family and Mental Health in one office, (they still
exist on paper but the LSC are aware we are not taking on any
work). We are constantly reviewing whether we will do the same
in the remaining office. If we do I will regret that as I have
been a Mental Health Specialist for nearly 20 years, and find
the work personally satisfying, and it will concern me because
I have for some time been the only Mental Health Contract holder
based in Somerset.
INCORRECT ASSUMPTIONS
IN FRONTIER
ECONOMICS REPORT
A. That switching between Legal Aid and Private
work is symmetrical
The report assumes that that switching from
private client work to publicly funded work is equally difficult
as switching from legal aid to private client work. The barrier
is more easily permeable in one direction, which is away from
legal aid. In practice transferring from legal aid to private
work is relatively easy and happens frequently. Switching from
private to legal work is hard and almost non existent.
Anyone who has been able to operate a legal
aid contract, with its additional administrative requirement beyond
any legal knowledge, deal with legal aid clients, (who are by
definition the socially excluded, many of whom have limited intellectual
ability, social and communications skills), and make a living
would find it easy to do privately funded work of the same type.
In many practices where fee earners do both the pattern has been
to reduce the number of legal aid hours over time until they become
negligible, and then give up altogether. That happens on a personal
level, and also on a firm level, especially where the LSC Contract
now requires us to look more carefully at the profitability of
doing legal aid work. I know many examples of this.
I know of nobody who has transferred from private
to legal aid work. I cannot think of any rational reason for someone
to do it.
B. That the legal market has one skills base
which is transferable
Frontier Economics appear to rely upon assumptions
and anonymous information which is completely contrary to all
trends in legal work over the past 10 years. "General Practice"
solicitors are now almost unknown. Even Sole Practitioners limit
the type of the work they do. There are many reasons for this:
— Clients expect specialist advice;
we changed to vertically integrated departments more than a decade
ago.
— The introduction of Specialist Panels
and the Law Society Quality Mark have promoted specialisation.
— Since the Professional Indemnity
Insurance market was opened to a free market there has been pressure
from insurers to specialise.
— Most importantly in the context of
this report Frontier Economics seem unaware that the whole structure
of Contracting is based on an assumption of specialisation. Every
Specialist Level Contract must have a Supervisor. The LSC requires
Supervisors to undertake a specific numbers of hours work plus
training in the area of law they supervise. That make it impossible
for one Supervisor to supervise more than one or two contracts,
or have time to do other several of work. Because of this it is
very hard for a Supervisor working in one are to transfer to another.
Similar but less specific constraints apply to less senior staff.
— Legal Training has become less general;
we find Trainees have no understanding of the basics of law which
we assume to be fundamental although in the specific areas in
which they have trained they may be more knowledgeable than we
were.
— It also fails to understand the nature
of the career; lawyers generally know from an early stage what
kind of work they want to do. Although theoretically skills may
be transferable many staff have skill sets relating to client
care and case management which do not transfer easily, or an emotional
commitment to a client group. In my experience these emotional/moral
commitments are very important in motivating lawyers to enter
or continue legal aid work.
C. The Nature of Local Markets
Frontier Economics do appear to identify that
for clients the legal market is local. However, they do not consider
the implications of this for excess demand.
The LSC contracting and RLSC advisory systems
are based on a model which assumed local markets with small areas.
These realistically represent the legal market for legal aid work,
excluding specialist areas of law.
Even within the single Bid Zone in which our
two offices are based clients who are socially excluded would
not travel from one to the other. Such a journey was impractical
by public transport; you cannot reasonably expect a person to
travel more than an hour each way by bus to get advice. Although
I applaud the efforts of the LSC to create an effective referrals
system it simply does not work if there is nobody to whom the
socially excluded can be referred.
D. Does Excess Supply coincide with Excess
Demand?
Frontier Economics purport to identify excess
supply, but have no evidence that the excess supply is anywhere
near the excess demand. Such a coincidence would conflict with
the market theory upon which the report is based. The report suggest
that even on a regional level excess supply is where legal aid
firms do not have enough demand, and excess demand is where there
are not enough firms. If they do not coincide the existence of
excess supply is irrelevant to the excess demand. The report fails
completely to consider the implications of this.
E. Who is doing legal aid work?
My own experience and the report do agree here,
although the report does not spell out the findings explicitly.
Legal Aid is done by a reducing number of ageing lawyers with
a moral commitment to it who are working excessive hours and are
burning out.
It was always the case that as legal aid provided
no career structure, eg, if I as a lawyer with 20 years experience
can do something efficiently in 30 mins but it takes an inefficient
inexperienced paralegal 60 mins I am paid half as much. The very
small increments for Panel Membership do not compensate for experience.
The present audit system will not pick up the inefficiency, and
no economic audit system is ever likely to.
In the past new lawyers, filled with confidence
and social conscience would replace those leaving legal aid work.
Now there are few new lawyers who want to work excessive hours
for poor pay, and if present policies continue there will be fewer.
What are the implications of this? I know that
announcements of the end of legal aid have previously been premature.
However, there are great dangers in relying upon a system with
an ageing provider base and few new entrants. I suggest that part
of the DCA's Fundamental Legal Aid Review should be to identify
why those lawyers and firms still providing legal aid choose to
do so, and to build on that motivation.
FRONTIER ECONOMICS
REPORT: A MARKET
ANALYSIS OF
LEGAL AIDED
SERVICES PROVIDED
BY SOLICITORS:
Detailed analysis
p.7 On their survey Frontier Economics say
that "Of particular importance was in formation relating
to the operation of the legal aid scheme, not only as a base from
which to consider alternative procurement options but also as
a factor directly influencing both demand and supply." I
agree that an understanding of the legal aid scheme is fundamental
to their analysis. I regret that Frontier Economics show a woeful
lack of knowledge. They are not to blame; as a solicitor if I
get a report from an expert which is meaningless because I have
not made sure that the expert knew what was necessary that is
my fault. In this case I think those who commissioned the report
have failed to provide them with the information they needed to
ask meaningful questions or produce valuable analysis of the answers
they got.
p.9 Frontier Economics identify some ways
firms might react to a change in legal aid rates. However, they
do not follow these up in any meaningful way.
p.16 2.1.1 This assumes that substitutability
is symmetrical, which it is not. The responses to the survey are
impressionistic, not an objective measurement against specific
parameters. In response to the bullet points below the chart:—switching
between private and publicly funded law—This fails to understand
that the issue when considering a switch from legal aid to private
or vice versa is not the type of legal work but the administrative
background to it. Even in those parts of the General Civil Contract
which allow firms to make decisions these have to be made against
criteria set by the LSC, and recorded according to the Contract.
This requires a good working knowledge of at least two large loose
leaf folders and a constantly changing set of forms. Fee Earners
working under LSC Contracts can easily transfer legal skills out;
they simply loose a layer of bureaucracy. Fee Earners who are
not used to working under those rules are not be permitted to
"dabbles" with the occasional case for fear of getting
it wrong. The time and costs of re-training staff make it unviable
to do unless they are going to do a significant amount of legal
aid work. Therefore the flow is all one way.
— Switching within civil categories
of law—This again fails to understand the reality of practice
and relies upon speculation.
— My experience would suggest that
the differences in response reflect the way firms are organised.
In firms with significant amounts of work being done by paralegals
with limited skills directed from above it may be possible to
reallocate these less skilled staff. Whether these people are
giving quality advice at a fair cost is another issue.
— Frontier Economics seem completely
ignorant of the LSC's training and Supervisory requirements which
make working in multiple categories of work very difficult.
— As the availability of legal aid
has become more restricted by type of work that there are far
fewer Fee Earners doing work that is both legal aid and privately
funded. In my experience almost the only areas now where there
is any overlap is Family Law. However, good Family Lawyers who
have sufficient private work are unlikely to see any business
case for continuing with legal aid work in the long run.
— The Report correctly notes that some
areas of law require specialist skills. As a Mental Health Specialist,
(Law Society Panel since 1987) I practice in one of those. Nobody
else in my firm could undertake that work. One of the reasons
I still do it is that if I did not there would not be a solicitor
based in Somerset who could or would do it.
p.17 The report makes no realistic investigation
into supply side substitutability, probably because Frontier Economics
do not understand it.
— The questions on which the analysis
is based are not specific enough to properly address the issues
raised. They are theoretical and impressionistic, and in each
part of the question they compare different things. There is no
evidence of actual experience of this happening, or the circumstances
in which it might happen.
— I agree it is easy to switch from
legal aid to private work. It is difficult to switch from private
to legal aid work, (see above). There is no reason to suppose
that there is a pool of fee earners doing private working waiting
to move into legal aid work.
— The survey suggests that it is not
hard to switch between "civil categories". It does not
address the question of whether these categories are:
— Types of work for which legal aid is
available, or
— Those for which there is excess demand.
— It does not disaggregate the level
of fee earner. It does not support any suggestion that "Supervisors",
who are key to LSC contracts, could move with such ease nor is
there any evidence of a pool of other staff who could actually
be transferred.
p.18 para 1 This paragraph shows both ignorance
and misinterpretation.
— The survey results are that 66% of
fee earners work in one category of legal aid work. (see below)
— Anyone choosing to do legal aid work
in a law firm is choosing to work longer hours for less pay; they
must be morally committed to the idea of helping the socially
excluded in general, and in practice most come to this through
a particular experience or commitment. Many paralegals are committed
to work in a sector (eg immigration, housing); they would not
transfer to other work.
— The report is misguided in suggesting
that lawyers have been trained in and experienced in several areas
of law. In terms of the LSC Contract categories this is completely
wrong. I find the reported comment of the Law Society that most
solicitors maintain expertise in four or five areas of law and
all could do conveyancing contrary to my experience.
— The profession has been under enormous
pressure since the introduction of the open market for Professional
Indemnity Insurance to introduce procedures that ensure work is
allocated only to specialists and to improve service to clients.
p.18 I fundamentally disagree with the Law Society
that "most solicitors maintain expertise in four or five
areas of law".
— The only way this statement could
be justified is of the "areas of law" are slices of
a cake cut very thin. It is my experience that solicitors are
increasingly specialising, and even in High Street practices such
as mine few would claim expertise in more than two or three related
areas.
It is true that as educated and intelligent
people all solicitors could do conveyancing if they chose to,
in the same way I could do your job if given the chance or you
could do mine; it doesn't mean we would ever want to or that either
of us would be any good at it if we did.
— The comment is irrelevant to the
issue in the report unless:
— the different areas of law are all different
categories of publicly funded advice, and
— that if given the option solicitors would
choose to do that, rather than apply their talents elsewhere.
— The suggestion of easy substitutability
also ignores the reality of practice, and LSC strategy.
p.18-19 I suspect that a large number of firms
maintain a Family Contract on a residual basis, because it is
occasional helpful to clients, but only as an adjunct to private
Family Law. The legal aid work is not core business and they would
not increase the amount they did.
p.19 Figure 3
— This undermines the assumption relied
upon in p.18 above. The report shows that nearly 50% of the firms
operate in five areas of law or less, the figure Frontier Economics
suggest is covered by the skills of one solicitor.
— The Figure does not specific whether
the areas of law are ones in which the firm:
— has an LSC Contract, or,
— has accredited specialists, or,
— merely would provide advice under Tolerance.
(Tolerance is a key flexibility in the LSC Contract which allows
firms to provide advice on subjects in which they do not have
Specialist Level Contracts. I believe it was introduced as a transitional
measure, but is now a key element in those areas where there are
insufficient/no Specialist Contracts, see eg, p.97. However, it
is in direct contradiction to the LSC Contracting strategy. I
note the word does not appear in the Report and assume therefore
that Frontier Economics know nothing about it).
p.20 2.1.2 This is wonderful theoretical economics
of the kind I used to put in A Level Essays. It has nothing to
do with the real world. Again Frontier Economics seem completely
ignorant of the fundamentals of actual legal practice in the areas
in which they are theorising. They seem to suggest that private
hourly rates will be similar nationwide. Did nobody in the DCA
tell them about the Four Band Costs Figures issued under the CPR?
p.23 fn12 Again Frontier Economics do not appear
to be aware of current practice. They say costs are subject to
"taxation". They are not. Since the introduction of
the CPR they have been "assessed".
p.20 Demand is very localised. My own experience
is that those seeking publicly funded advice are unlikely to follow
through a referral which requires a bus journey of more than one
hour each way.
p.23 fn11 Frontier Economics note that at the
end of Contract Periods about 7% of Matter Starts are not used
and speculate this may be lack of demand. Again, if they understood
the operation of the legal aid system they would understand the
main reason for this is the structure of the contracting system.
By setting absolute limits the LSC passes the obligation to monitor
new cases to firms. If we exceed our allocated Matter Starts at
the end of the Contract Period we will not be paid at all for
the excess work. Therefore firms ensure they do not get into that
position, by limiting work taken on or asking for additional Matter
Starts before that point. The 7% is roughly one month's Matter
Starts, and represents a reasonable leeway, allowing for an influx
of new cases in the last few months of the contract. It is not
an indicator of lack of demand, just a product of the contracting
system.
p.30 The fundamental problem with the econometric
approach is that it fails to include any considerable of the non
monetary reasons why firms provide legal aid. If lawyers were
motivated solely by financial gain we would all work in the City.
Most "legal aid lawyers" are/were motivated by social
conscience and willing to set aside financial gain, to a degree.
The gap between legal aid and private work is so large that it
will never close enough to attract those primarily motivated by
their own income. The question is whether it will close enough
to prevent more lawyers leaving. Econometrics will not help you
to predict at what level lawyers are willing to trade quality
of life and income for social conscience.
p.33 Supply of Services:
— Frontier Economics state that of
300 firms in their sample only 40% might be able to do more legal
aid work. Of those only 40% were able to do so. That is 16% of
the firms sampled.
— Frontier Economics accept that the
sample represents firms more committed to legal aid and is not
representative of firms doing legal aid. (see p.40)
— There is no evidence that they are
not in areas where there is already excess supply. It is likely
that they are.
p.35 Figure 8. Again as Frontier Economics do
not understand the legal aid system their analysis is meaningless
unless is also includes an analysis of the types of contracts.
Contracts are not evenly distributed by type. The vast majority
are for Crime and/or Family and almost all firms with any contracts
at all will have Crime and Family. Other types of Specialist Level
Contracts are relatively uncommon, and held in addition to Crime
or Family or operated by small specialist firms.
p.36 Frontier Economics do not spell out that
the firms in the sample derive on average twice the proportion
of their income from legal aid that the average form doing legal
aid. This emphasises that the sample is from those who are dependent/committed,
and are not representative of the actual supplier base.
p.36 fn 20 The basis for the cost of fee earners
is completely illogical:
— Staff costs are their wages, and
the facilities for them to work. The normal figure has been that
the latter equal the former so the Frontier Economics figures
are 50% of the actual figure.
p.40 Figure 14. This shows that firms doing
a mix of legal aid and private work are much less likely to take
on more legal aid work than the sample. The LSC say that the average
proportion of income in the supplier base is 28%. Comparing that
with the Figure the actual proportion of firms willing to take
on more work is closer to 20% than 40%. Even assuming they are
as able as the sample, that suggests only 8% of the present supplier
base is willing and able to take on more legal aid work. If you
are considering the maintenance of a national supply base this
is not an encouraging figure. It suggests that urgent action is
required to retain the firms doing lower proportions of legal
aid work within the supplier base.
p.43 Figure 16. This shows that the primary
motivation for being willing to take on more legal aid work amongst
the firms able to do it was financial. Contrast this with Figure
15 which shows that the primary motivation for those doing legal
aid work was moral. This suggests that those willing and able
do not have demand now because they are in areas where there no
excess demand. If that is right it follows that the firms who
are morally committed to doing legal aid are not willing in practice
to do more even though they may already be in areas of excess
demand. You need to know why?
p.44 See above p.36 fn20 which is confirmed
by Figure 8. It also raises the question that if firms could not
take on work because they could not recruit how will firms willing
to take on work going to do it if they have to recruit?
p.46 fn23 Again because of their ignorance Frontier
Economics have not asked the right questions. It is common knowledge
that lawyers doing legal aid work longer hours than those doing
private work. As the hourly rates for qualified staff are about
35%-50% of private hourly it is the only way solicitors doing
legal aid work can make up that differential. Therefore the figures
will underestimate the number hours already worked by those doing
legal aid work.
p.47 Figure 19.
— I am intrigued that the survey reveals
that in >5% of firms the average number of chargeable hours
recorded annually by fee earners is over 2,000. I am presently
acting for a clerk who worked for a legal aid firm 10 years ago
and who is being prosecuted for fraud on the Legal Aid Board.
One of the major planks of the CPS case against him is that such
hours are "ludicrous", "impossible" and are
themselves clear evidence of fraud.
— The econometric approach of "optimising"
hours seems at odd with Government policy of promoting "work
life balance". The chargeable hours they suggest are "optimum"
would require working hours well in excess of those allowed under
the Working Time Directive.
— In my own firms we have rejected
suggestions from our accountant that we should increase chargeable
hour targets, on the grounds that we do not consider the economic
benefits to the partners would justify the increased pressure
on us and on staff. Many lawyers attempt to maintain a work life
balance, and the profession has been encouraged to make efforts
to allow this, especially to allow women with children to work
part time. This applies especially to Family Law in which there
is a high proportion of female lawyers with their own families.
— I assume you will reject this part
of the report, or we will all be asking what happened to "joined
Up Government"?
p.48 Table 1. Although the question might be
justified the answer is simple. Legal Aid firms are subject to
a burden of administration, but no legal aid firm could survive
if fee earners did it. Non legal staff are employed to do as much
as possible, increasing overall costs and reducing profitability
compared with private practice, which are not considered by Frontier
Economics.
p.48 Table 3. This suggests that there are firms
with spare capacity but they do not want to use it for legal aid
work, (see p.43).
p.56 Frontier Economics refer to a "comparator
public price". This phrase is not explained, nor is there
any basis for the figure of £71 ph used. Where does this
come from? It bears no relation to the actual rates paid for legal
aid work. Only the very highest rates for advocacy or where rates
are enhanced come anywhere near this. Legal Help is paid at <£60
ph and there are no figures significantly above £71 which
would produce an average at this level. This figure is fundamental
to the calculations in the report but appears to have been plucked
out of the air. The same applies to the "comparator public
price" for "other civil work" (p.57).
p.56 fn 32 Frontier Economics state:
"The categories of law are defined, as far
as possible, on the basis of keeping similar types of law together.
For example, conversations with the Law Society suggested that
conveyancing, probate, wills and trusts, and personal injury typically
require little specialist expertise and it is likely that most
solicitors would be able to undertake this type of work. The same
is not true of commercial and litigation work, where considerable
specialist expertise is required, which to a certain extent can
be overlapping. Family is identified separately as a category
as this might Housing and employment are treated".
Leaving aside that the last sentence makes no
grammatical sense the whole paragraph is fundamentally wrong.
Assuming it is right Frontier Economics have failed to realise
that it would add to the non symmetricallity of the market. Most
of the specialist type work is legal aid work, and hard to transfer
into. Most of the non specialist type work is private, making
it easier to transfer within these, or into them from legal aid
work.
p.57 Frontier Economics say "The results
of the econometric analysis, described below, should be considered
in the light of this understanding of the outside opportunities
for firms", and base this on the "comparator public
price" figures, (see p.S6). Such analysis is meaningless;
the old phrase was "garbage in, garbage out". The purely
economic analysis shows that there is a significant differential
in the rates paid for private and legal aid work even on these
defective figures. The actual differential is much higher. This
suggests that income is not the primary motivation for lawyers
doing legal aid and that asking econometric questions will not
provide any useful answers. Rather you should be finding out why
the remaining lawyers who provide legal aid chose to do it, and
try to encourage them to continue.
p.57 3.3.4 Frontier Economics do at least acknowledge
that, "In aggregate, there is relatively limited existing
spare capacity". However, this is not a conclusion they follow
through. This statement is also inconsistent with the statement
in the Frontier Economics report on Barristers they state that
in this report they found "strong evidence of excess supply".
p.60 3.4.1 Frontier Economics say that their
econometric analysis is based on the assumption that "Firms
implicitly respond to changes in the price of legal aid work to
the same extent as they do to changes in the price of private
work."
— If firms were that sensitive to the
price of legal aid work they would not be doing it now. It also
assumes that the barrier between private and legal aid work is
equally permeable in each direction. If it was not clear to them
I hope that it is clear to you that this is not true.
— Frontier Economics also accept that
their analysis may not be accurate because "Firms who have
recently stopped doing legal aid work or firms who might start
doing legal aid work were not sent a questionnaire". They
say "It is possible that these firms are relevant for an
analysis of potential supply and may be more responsive to small
changes in relative price". Again I hope it is now clear
to you that the opposite is true.
— Although there may be new contracts
being granted there is no evidence of new suppliers entering the
legal aid market in significant numbers. It is my experience that
those new firms who are seeking contracts are formed by solicitors
committed to legal aid work who are having to leave larger firms
no longer willing to undertake it. Those firms who have left will
not return for even a large change in the price.
p.65 I agree in part with Frontier Economics
conclusion based on their sample and assumptions that:
"The results of the analytical work described
above suggest that there is a relatively stable supplier base
for the provision of legal aided services that is, in the short
term, relatively insensitive to the price that can be achieved
for private dent work. The implication is that, if prices for
publicly funded work were to fall further behind the price for
private client work, there might be a relatively limited response
from firms in terms of any reduction in legal aided hours supplied.
Equally, if a substantial increase in supply were to be required
over a short time period, prices for legal aided work would need
to rise by a considerable amount."
However, the result relies on the flawed assumptions.
— Their stable supply base is that
part represented by their sample. The remainder of the supply
base which did not respond is fundamentally different, but is
the foundation of a national system for the supply of legal services.
— There is no prospect of Tescolaw
tendering for legal aid work; it is not paid well enough, the
opportunities for cross selling are insufficient and the clients
are not affluent enough to be advertised to.
p.66 LSRC Survey
— I would draw your attention to the
high levels of satisfaction with service provided by solicitors.
— It may be that geographical access
is not presently a problem, but anyone working in the system knows
that is not paper thin in some areas, and dependent on people
like me who maintain services for non commercial reasons. Any
reform of legal services following Clementi which places greater
commercial pressure on solicitors will inevitably require those
presently providing legal aid at the margin to review whether
they should continue to do so.
— I would also point out that the LSRC
Survey was conducted four years ago before "legal aid deserts"
and that the number of suppliers has fallen since then by 10%.
— Frontier Economics accept that this
is not a measure of demand in terms of "need", as it
excludes demand which has not been met. It also fails to take
into account any regional or local problems.
p.68 Frontier Economics say at p.7 that "The
forecasts of demand were a core input to the study". Here
they set out the basis on which they predict "demand".
— In practice of the six criteria they
set four define demand by reference to supply and two limit demand
by reference to state policy.
— No attempt to investigate actual
demand is made.
— Frontier Economics accept (fn 39)
that the determinant of demand for legal services is not those
wanted or needed by the socially excluded but those which the
state will fund.
— The marginal increase projected does
not reflect actual experience in any recent years.
— See p.81 for an honest summary of
the basis on which they make their calculations.
p.69 Frontier Economics suggest that this artificially
limited demand could be met by each fee earner in this sample
working an additional 1½ hours a week chargeable time per
year for the next three years. In other words, after three years
they would record an additional 4½ hours a week.
— Will the DCA be expecting its staff
to do this ? Will the LSC to require CDS staff to increase their
weekly working hours by this amount? If not the suggestion is
simply silly.
— Frontier Economics do not consider
why they might do this. They might more sensibly reduce the amount
of legal aid work they do by two hours a week, and do private
work for one of those hours, in which case their fee income would
increase by the same amount, but their working hours would fall.
— Frontier Economics one considers
the possibility of all legal aid fee earners increasing their
hours by 10 minutes a week each year. This is simply stupid, as
their analysis accepts that whatever they do know about demand,
which isn't much, that it is not evenly distributed.
— Frontier Economics do not consider
the effect on these projections of the trend for the supplier
base to fall. The supplier base has fallen by 10 in less than
three years, (see p.76). Frontier Economics give no figure for
the number of extra hours which will need to be worked by remaining
legal aid lawyers to make those lost by those leaving the supplier
base. These need to be added to the Frontier Economics figures.
p.70 4.3.1 Recruitment
— Frontier Economics might have been
able to provide better evidence if they had bothered to speak
to the CDS about their recruitment problems or read their Annual
Reports. The CDS provide much better working conditions and more
limited hours than many firms.
— If there are recruitments problems
now what they be like for graduates with substantial student loans
to repay. Why should they choose work in which they will be expected
to work longer hours for lower pay?
p.76 Table 9
— This shows that in a period of less
than three years the number of firms providing legal aid has fallen
by 10% nationally.
— No analysis is provided of whether
the firms entering are the same as those leaving.
— I suggest than many of the entrants
in this period are small specialist firms formed by lawyers who
have left larger firms who have decided to stop legal aid. They
are likely to be committed but providing a much more limited service.
— Fall in supplier numbers would be
greater were it not for the high entry level in London, where
the LSC say there is oversupply and they intending to closing
60% of CDS firms.
p.77 Frontier Economics say that solicitors
are entering the profession. They do accept this does not mean
they will do legal work. All the indications are that they will
not. This is recognised by the CDS and LSC, (see also p.70).
p.80 Frontier Economics says that
". . . the econometric analysis is based
on the sub-set of legal aid firms that have responded to the survey
and that, on average, might be expected to be less sensitive to
price changes than the population of legal aid firms as a whole
(for reasons discussed primarily in Section 3.4);"
This is simply wrong, and unjustified. I suggest
the opposite is true. Frontier Economics also say that
". . . even if on average, the supply response
is small, it might only require one or two firms to exit or significantly
reduce the services that they offer for a given locality for problems
of excess demand to arise.". I agree with this, it is happening.
p.81 Frontier Economics come closer to an honest
summary when they say ". . . demand is forecast to rise by
2% from current levels over the next three years, assuming a rebalancing
of aid towards those facing criminal charges and a reduction in
current eligibility and scope for the areas of civil law".
In other words the projection for demand is based on the DCA removing
some of the socially excluded from eligibility. Is that DCA policy?
Who is to be removed?
p.87 5.2.2 Other Models
— Fixed Pricing—I am sure I do
not need to remind you of the surveys from trials of contracting
models which showed that fixed pricing was the worst option for
quality of service.
— Bidding—Such a model is meaningless
except for volume work; the costs of operating the system would
be far greater than the saving made, if any.
— Transparency—This seems contrary
to all other kinds of privatisation in which commercial confidentiality
is constantly pleaded. Frontier Economics can see the hourly rate
I get paid for the legal aid work I do. If I asked whether econometric
firms published their hourly rates or what they were paid for
this report you would regard me as being flippant. (I have in
this submission used the words "legal aid", not "publicly
funded"; there is a vast amount of commercial legal work
which is publicly funded, but the basis on which that is procured
is completely different).
p.89 5.2.3 Again I am sure I do not need to
remind you of the costs of the PDS experiment.
p.95 Frontier Economics recognise that "LSC
data indicates that holding competitions at the level of the individual
bid zone (a geographic area) would be too limited for certain
areas of the country if only firms with existing contracts were
to be invited to take part in the competition." They fail
to identify who else might wish to bid (see p.65).
p.97 Figure 36. Housing being a real area of
social exclusion it may concern you that in 65% of bid Zones there
is no firm with a specialist Housing contract (see p.20).
Neil Howlett
29 May 2004
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