4 Impact on suppliers
32. It is clear from the evidence above that the
Government does not appear to have considered adequately the impact
of these proposals on suppliers. In its evidence to the Committee,
the Legal Aid Practitioner Group indicated that:
Private practice solicitors working in this field
are running businesses, and must take sensible commercial business
decisions. Those working for non-profit making organisations must
still cover the costs of the organisation and cannot afford to
work for nothing. Few other businesses are required to work speculatively
in this manner, and those that do can generally name their own
price to attach to the commercial risks of doing so. Furthermore,
such organisations generally know very clearly in what circumstances
they will or will not get paid. Such clarity is absent in the
proposed new system.[21]
33. In its submission, the Bar Council indicated
that it was profoundly surprised and concerned to find in the
Department's consultation document a reference to High Court proceedings
being funded through CLR rather than being funded as licensed
work as is at present the case with statutory review and all other
publicly funded judicial review proceedings. It went on to indicate
that:
Drafting review applications to the High Court is
essentially judicial review drafting, requiring the same knowledge
of public law and the same drafting expertise, and there is no
basis whatsoever to fund it differently from other judicial review
work. Standard CLR preparation rates are often less than half
that charged by experienced practitioners on judicial review and
statutory review to the High Court. The effect of moving to standard
CLR fees would be that the proposed 25% 'uplift' is applied only
after cutting the basic hourly rate in half. Any move to reduce
barristers' present hourly rates before applying the risk premium
would conflict with the representations made by the Lord Chancellor
to Parliament concerning payment of a premium. The Bar Council
therefore welcomes the clear assurance that has been provided
to it in meetings with the DCA and LSC that this bizarre result
was unintended and that there will be no move to reduce present
fees on High Court proceedings before applying the risk premium.
It is entirely unnecessary to fund High Court proceedings by CLR
rather than the present arrangements simply to permit for retrospective
application of the merits test (which the Bar Council was told
was the thinking behind the suggestion in the consultation paper).
This could be achieved quite straightforwardly in relation to
licensed work. The present funding arrangements for assessment
of fees in respect of licensed work are tried and tested, and
as indicated above, no concern has been raised about their operation.
The Bar Council has indicated that it is happy to work with the
LSC on ways of avoiding the upheaval of seeking to create an equivalent
assessment system under CLR.[22]
34. In evidence to the Committee, however, the Department
announced that:
Work for the review and reconsideration stages of
the process will be paid for as part of Controlled Legal Representation
(CLR). Under the current system work done at the adjudicator
and IAT stages is paid for as part of CLR and High Court work
is claimed as Licensed work. In line with the introduction of
a single tier of appeal it is considered appropriate to administer
funding for the new process through one scheme.[23]
[emphasis added]
35. Since the CLR rate is currently lower than the
rate for licensed work it would therefore appear that despite
the assurances previously given, fees will be reduced before the
risk premium is applied.
36. In its consultation paper, the Department indicated
that a "risk premium will be added to mitigate the risk associated
with taking forward review and reconsideration work under the
new scheme."[24]
Following the consultation exercise, the Department has announced
that the risk premium has increased from the original proposal
(a 25% uplift, which it had consulted on) to an uplift of 35%
on successful cases. In written evidence, Baroness Ashton added
that:
It will be the case that the rates paid under the
Controlled Legal Representation scheme (CLR) prior to the 'uplift'
are lower than the rates currently paid for High Court certificated
work. However, only the review stage of the new process would
currently attract funding under High Court certificated rates.
The reconsideration stage would be payable at basic CLR rates.
Under the new arrangements there will be an uplift to CLR rates
for work which is undertaken over both the review and reconsideration
stages of the onward appeals process. Therefore, when considering
the appeal work undertaken as a whole the rates overall are higher
than the current payments.[25]
37. It seems plain that, under a retrospective funding
policy, providers will not be paid in some cases. When this is
taken in conjunction with moves to lower the payable rate for
some work, it is likely that remuneration for this type of work
will decrease overall.
38. The Department also consulted on how the risk
should be shared as between solicitors and barristers acting for
an appellant. A number of groups have also argued that if these
proposals are accepted, an adequate appeal mechanism needs to
be available for lawyers, to challenge a decision not to award
funding. ILPA have indicated that:
There should also be a right of appeal to an external
body against the Tribunal's decision if funding is refused following
an oral hearing. If nothing else this will militate against the
risk of unfair inconsistency in decision making by different Tribunals.
Recourse might be had, for example, to the Legal Services Commission's
Funding Review Committee if it were felt undesirable to establish
a wholly new entity for this purpose.[26]
39. It went on to add that it is "important
that both barristers and solicitors each have rights of review
so that rights of one are not dependent on whether or not the
other chooses to apply, and to protect the position of each in
cases where their interests do not coincide".[27]
40. In its written evidence to us, the Department
acknowledged this problem, stating that:
The regulations include provision for decisions on
funding following reconsideration to be challenged on application
to the Tribunal. In response to the consultation responses received
this right can be exercised by either the supplier or by counsel.
An oral hearing can be requested, which can be granted at the
Tribunal's discretion. Consultees have expressed concern about
the Tribunal's impartiality to review its own decisions. The regulations
therefore prescribe that reviews must be conducted by a different
senior Tribunal judge to the judge that made the original funding
decision. The costs of making a successful review application
will be paid as part of the overall costs payable under section
103D.[28]
41. This does not entirely answer the question posed,
since where the President of the AIT were to make an order, it
would presumably be reconsidered by a subordinate judge. Moreover,
if the practitioner has to incur further potentially unrecoverable
costs in pursuing a subsequent appeal to the tribunal, it might
be viewed as throwing good money after bad. In particular, practitioners
will not be able to appeal to an alternative body on a costs related
point, but will instead be reliant on a differently constituted
panel from the same tribunal. Given the small size of this jurisdiction,
this may not give the appearance of fairness and should be reconsidered.
42. We are concerned about the impact on suppliers
which will result from the implementation of these proposals.
Most suppliers in this area are small businesses or charities
who may struggle to cope with an unexpected drop in income. The
move to reduce fees to CLR rates before introducing the risk premium
seems to be another attempt to reduce spending on this area of
law. It is not clear that the Department has answered the concerns
of practitioners about risk sharing and appeals relating to costs.
21 Ev 37, para 5 Back
22
Ev 28, paras 24-27 Back
23
Ev 57 Back
24
op cit Back
25
Ev 58 Back
26
ILPA's response to the DCA Consultation Paper CP(L) 30/04 Back
27
ibid Back
28
Ev 57 Back
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