Examination of Witnesses (Questions 115-119)
RT HON
LORD FALCONER
OF THOROTON
QC AND ALEX
ALLAN
28 FEBRUARY 2006
Chairman: May we welcome you both and
do our usual formula of declaring interests.
Jeremy Wright: I am a non-practising
barrister in the field of criminal law.
Chairman: I am not sure that I have to
declare this but my wife is a Member of the House of Lords.
Keith Vaz: I am a non-practising barrister.
My wife holds a part-time judicial appointment.
James Brokenshire: I am a non-practising
solicitor.
Julie Morgan: My daughter works for Shelter
Cymru and one of my employees also works for the Special Support
Services of the Legal Services Commission.
Q115 James Brokenshire: Let us start
with legal services. If the market for legal services is widened
to allow banks and supermarkets and other sorts of providers to
provide legal services to the public what impact do you think
that will have on legal aid provision?
Lord Falconer of Thoroton: I think
it will not have a detrimental impact on legal aid provision.
I do not think the fact that, for example, some practices do legal
aid and some practices do private work and the private work, it
might be said, supports the legal aid stuff, will be a factor
in many practices. There are two things going on that may have
a big impact on the supplier market for legal services. One is
the changes in legal aid that Carter is working on and the other
is in effect reducing the regulation in the market. I think the
effect of that is going to be for there to be provision of legal
services for consumers in some cases more accessibly, like in
banks and supermarkets. As far as legal aid provision is concerned,
I think in some places it will be provided through bigger firms
than currently exist, thereby getting some economies of scale.
I think the supplier market will change but I do not think it
will have an impact on the provision of legal aid. Indeed, I think
there will be more money available for front-line legal aid rather
than supporting things like travel and overheads.
Q116 James Brokenshire: Let us pick
up on a couple of those things. Do you expect these new providers,
like the supermarkets, to bid for legal aid contracts? Is that
the expectation at the moment?
Lord Falconer of Thoroton: I would
not have thought so, no. I would have thought the effect of the
reduction in regulation of the market would be for suppliers like
that to provide services for people that they do not get at all
at the moment—legal advice, for example, in relation to
employment matters where they do not qualify for legal aid—or
provide advice and services that are currently provided in solicitors'
firms but that could be provided more accessibly in other places.
Q117 James Brokenshire: You have
touched upon this issue of the cross-subsidy and the fact that
we could see some cherry-picking of certain "profitable"
services and the fact that there is in operation in some firms
some cross-subsidy of services by those firms in terms of being
able to fund the legal aid services. Do I understand you correctly,
that effectively you are saying that the impact of this change
is likely to be that smaller firms may disappear and this will
force a change towards larger firms?
Lord Falconer of Thoroton: Yes,
I think there might be a reduction in the number of smaller firms.
Indeed, I am pretty sure that there will be. I think the difficulty
about the sort of firm that you describe, one that has private
work and public work, is that, because public work, ie, work that
has been funded by legal aid, is being done in lots and lots of
small firms, the price that is being paid has quite a significant
element of things like overheads, so it is more expensive than
it otherwise would be. There will be a drive to bigger suppliers
as a result particularly of the Carter changes. I do not think
that is going to reduce the supply of legal aid. Far from it:
I think it will increase it because the amount of money that is
being spent on the front line will go up and the amount of money
being provided on the overheads will go down.
Q118 James Brokenshire: Would you
accept though that there is a risk that the public may find it
more difficult to access those services, because obviously the
smaller providers that you talked about tend to be on the high
street, tend to be more accessible to the public? How do you see
that changing?
Lord Falconer of Thoroton: I do
not think it will have that effect because most people, particularly
when we are talking about criminal legal aid, though this is obviously
not the only area of legal aid, will be referred to their solicitor
by some other source, for example, the police or an acquaintance,
and I do not think for one moment that drop-in selection of solicitors
is the way that people choose them. I do not think therefore that
it will make it less accessible than it is at the present. Indeed,
the reduction in regulation—the supermarket, the bank—will
for many services make them much more accessible. The other aspect
one needs to look at is the question of price. You know that the
conveyancing monopoly was removed from solicitors. The consequence
of that was that solicitors tended to reduce their prices. The
quality of conveyancing and the accessibility of conveyance providers
did not go down.
Q119 James Brokenshire: Just on the
issue of professionalism and the general ethos, obviously, it
is a question of whether we see that same ethos being maintained
amongst all of the new entrants. Do you see that there is any
problem if the Legal Services Commission moves to a market-based
competitive tendering model of legal aid provision? Do you see
that having any impact on that professionalism or ethos?
Lord Falconer of Thoroton: Carter
has made clear, and I fully agree with this, that we have to make
sure that quality does not drop. What Lord Carter is proposing
is that the professions themselves, the Law Society and the Bar
Council particularly, should undertake more of a burden and an
obligation in ensuring that professional standards are kept up.
Both the Law Society and the Bar Council think that that is a
good idea. I think the question of ethos is very important. If
the professional societies, the professional regulators, the front-line
regulators, think they should increase their role in that, that
will probably have an effect of at least maintaining and possibly
increasing professionalism.
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