IDENTIFYING THE MAJOR COST DRIVERS
31. In order to assess the current reform proposals
it is imperative to identify the real cost drivers in the two
high cost areas of legal aid. Only where reforms tackle these
cost drivers can they have the potential of delivering a long-term
sustainable legal aid budget and be justified in the light of
the considerable risk to the viability of a high quality legal
aid supplier base.
32. However, neither the precursor to Lord Carter's
report, the DCA command paper: A Fairer Deal for Legal Aid
of July 2005, nor the Carter Report itself contain a thorough
analysis of the factors leading to the increase in legal aid expenditure
for Crown Court and child care cases. Professor Cape told us that
there was inadequate research on cost drivers on which Lord Carter
could have based his Report:
"[…] Carter did not really conduct any
research to try to understand in any greater detail why legal
aid costs have been increasing and that is a fundamental problem.
If you do not understand why they have been increasing and do
not understand the true nature of that increase - because, although
in overall terms it is quite significant, the vast majority of
that comes from the Crown Court and quite a large proportion of
that increase is accounted for by a very small number of cases
- if you do not understand why it has been going up, I do not
understand how you can know whether the proposed solutions are
going to solve the problem. In general terms my view is that the
proposed solution will not solve the problem because the fundamental
causes have not been understood, let alone been tackled."[31]
33. These comments were echoed by Professor Judith
Masson, of Bristol University, a family law expert and member
of the Family Justice Council, who said with regard to cost drivers
in child care proceedings:
"The real difficulty in relation to public childcare
proceedings is that the Legal Services Commission and Lord Carter
know much, much less about this system than they know about the
criminal system. Lord Carter did a lot less work. He did not even
speak to the Family Justice Council […], it was a great shame
that he only sent questions rather than came to speak to the Family
Justice Council and the questions suggested that he had a very
limited understanding of the system. I have to say that goes too
for the childcare proceedings review that the DCA commissioned
prior to Carter out of A Fairer Deal for Legal Aid.
They really did not understand how care proceedings operated.
They did not understand the sort of proceedings that there were.
They had no idea how much they cost. […] I would reiterate
the things Professor Cape has said about lack of knowledge in
the Legal Services Commission about care proceedings' costs."[32]
34. We were not surprised to hear those comments.
The terms of reference for Lord Carter's review did not go beyond
the immediate issue of devising a new procurement system for publicly
funded legal services and therefore severely limited the scope
of his review. Much of our evidence made this point. We agree
with the comments submitted to us by Alderson Dodds Solicitors:
"The extremely narrow scope of its terms of
reference to procurement in our view has made it something of
a sterile exercise. No consideration has been given to the external
factors affecting the cost of Legal Aid. No consideration has
been given to alternative sources of funding, such as a diversion
of local authority and charitable funding away from the Not for
Profit sector to the more cost effective front line providers.
Defendant Cost Orders and alternative directions for funding of
experts are all matters which could usefully have been considered
in the wholesale review which is needed."[33]
35. The Constitutional Affairs Committee in its 2003-04
inquiry into the Criminal Defence Service Bill and the re-introduction
of means testing for criminal legal aid in the magistrates' court
lamented the paucity of available research into the cost drivers
of criminal legal aid expenditure. The Committee hoped that "the
Fundamental Legal Aid Review will enable the Department [for Constitutional
Affairs] to identify the major factors which have caused the increase
in the Criminal Defence Service expenditure".[34]
That hope has not been realised.
36. We received a great deal of largely anecdotal
evidence about the cost drivers in the legal aid budget. Increases
in case volumes, the number of criminal offences on the statute
book, complexity of procedural law and the increase in the number
of expert assessments in care proceedings were only some of the
reasons cited for the increase in legal aid spending over the
last decade.[35] Views
differed as to whether the procurement and remuneration reform
proposals would address the major cost factors.[36]
In the absence of comprehensive qualitative and quantitative research
into the true cost drivers in legal aid expenditure on Crown Court
and care proceedings, we are not able to judge whether the reform
proposals will indeed tackle the major cost drivers and lead to
a more sustainable development of the 'problem areas' in the legal
aid budget.
37. However, we understand that certain factors widely
believed to be important cost drivers in the Crown Court and child
care legal aid budget, such as rising legal aid expenses for expert
evidence, are about to be examined by the DCA and LSC through
further research.[37]
We also noted with interest the promising positive results of
the magistrates' courts tests in 2006 which formed part of the
overall Criminal Justice: Simple, Speedy, Summary Review
by the DCA, the Home Office and the Attorney General's Office:
this programme led to a 70% reduction in first hearing adjournments
in the magistrates' courts and significantly increased the number
of cases where guilty pleas were entered at the first hearing
and which could then be dealt with on the day of that hearing.[38]
When introduced nationally, these reforms to case management in
the magistrates' courts may have a beneficial impact on legal
aid expenditure.
38. The major
cost drivers in the criminal legal budget and in the budget for
child care proceedings are not fully understood. We believe that
radical reforms of the criminal and civil legal aid system, intended
to put legal aid on a more sustainable footing, can only be planned
on the basis of a fuller understanding of the actual reasons for
the increase in expenditure in the areas of concern. Necessary
qualitative and quantitative research into the cost drivers in
criminal legal aid and child care proceedings needs to be carried
out as a matter of urgency.
The supplier base
THE DECLINE IN THE SUPPLIER BASE
39. Change in the legal aid supplier base is already
a matter of considerable concern. Various studies commissioned
in the context of the Carter reform discussions confirm this.
The number of solicitors' offices holding a civil legal aid contract
with the LSC is in steady decline: while 4,854 solicitors' offices
held civil contracts in 2001, only 3,632 firms held contracts
in March 2006, a decline of about 25%. This trend, as the LSC
noted in its Annual Report 2005-06, is a continuing one.[39]
In some of the civil law contract categories the decline is even
more marked (N.B. A firm usually holds LSC contracts for more
than one category of the law):
