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This report examines the Government's proposals for radical reform of the Legal Aid system. The Government plans to change the basis on which Legal Aid is to be procured by introducing a transitional system of fixed and graduated fees for cases (rather than payment on an hourly basis as is the practice now in many areas of legal aid work) as a way of preparing for full competitive tendering for Legal Aid contracts by solicitors.
The Government is rightly concerned about the considerable increase in the Legal Aid budget in recent years. The purpose of these reforms is to find a way of halting these increases and easing the pressure on civil legal aid. To do this, it suggests a wholesale reform of the Legal Aid system, even though the two main areas in which expenditure has risen unsustainably are Crown Court defence work and public law children cases — other areas of expenditure are either stable or, in real terms, declining. Despite the rise in Legal Aid expenditure, in recent years there has been considerable financial pressure on solicitors providing Legal Aid services. Many have stopped doing Legal Aid work.
Legal Aid practitioners and others have criticised the plans for imposing fixed and graduated fees in the transitional period. They are seen as over-complex, rigid and likely to impose unsustainable cuts in the fee income of solicitors' firms. The plans have not been based on adequate data. The most vulnerable clients — those most in need of Legal Aid assistance — are likely to suffer. The plans for a transitional scheme should not proceed.
The Government's goal is to introduce a market-based approach by way of Best Value Tendering. No detailed plans for how this will work have been made public. The Legal Services Commission has not yet thought through how it intends to implement this reform. There is a complete lack of reliable research into the potential effects of competitive tendering on legal aid suppliers and clients. These proposals need to be tried out in a geographically limited area before any general scheme is introduced.
The drive to limit the cost of provision of Legal Aid by ensuring price competitiveness raises questions about the continuing quality of the advice provided by Legal Aid solicitors, especially in areas of specialist expertise. A system of peer review is proposed to ensure the maintenance of high quality. There are concerns about peer review's effectiveness, particularly under a system of competitive tendering.
The Government's plan is to involve fewer but larger solicitors' firms in the Legal Aid system in order to achieve administrative savings. We doubt whether the potential savings resulting from such a move would justify the risks inherent in this change. There is no evidence to suggest that larger providers would necessarily be more efficient and deliver legal aid work at a higher quality than smaller providers.
The impact of the reforms on black and minority ethnic (BME) firms and their clients is one of our main areas of concern. Such firms will be disproportionately disadvantaged by these proposals. The question has been raised whether they would constitute a breach of Race Equality legislation.
The clear breakdown in the relationship between the Legal Services Commission and suppliers has been a disquieting aspect of the inquiry. This has recently come to a crisis point. Before any successful reform can be implemented, the two sides must rebuild a sense of trust in each other.
Overall, while we support the fundamental aims of the reforms and recognise that there is an urgent necessity to limit Legal Aid expenditure, we believe that the Government has introduced these plans too quickly, in too rigid a way and with insufficient evidence.
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