Select Committee on Constitutional Affairs Fifth Report


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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