Select Committee on Constitutional Affairs Third Report


5  A move to fewer and larger suppliers

Lord Carter's plan: fewer and larger legal aid providers

176. Central to Lord Carter's and the DCA/LSC's procurement reform plans is the plan to reduce the number of legal aid providers the LSC deals with in order to limit administration and transaction costs. Through a consequential reduction in the number of LSC staff from 1,600 to 1,000, it is estimated that that the LSC could save 30% of its current £100 million administration budget.[205] Generally, the DCA/LSC believe that an increase in the size of legal aid providers would allow these providers to "release efficiencies"[206] and better absorb reductions in remuneration rates based on planned cuts in LSC expenditure for travel and waiting times of criminal legal aid practitioners in urban areas.

177. Where the LSC decides to introduce minimum contract sizes for the award of a contract, a decrease in the number of legal aid firms the LSC deals with will be the automatic and intended consequence. The Lord Chancellor, told us:

"You will certainly reduce the number of firms, you will probably reduce the number of fee earners, though probably by not nearly as much as you reduce the number of firms, but you end up with a procurement system which drives efficiency, costs less and has a more efficiently organised provider market. That is [Lords Carter's] thesis, that is what he spent over a year looking at, and we accept his premise."[207]

178. According to Andrew Otterburn's first study of criminal legal aid firms for the LSC of June 2006, the most profitable and thus long-term sustainable legal aid firms are those with a large number of fee earners and high gearing, i.e. a high ratio of non-qualified fee earners, such as paralegals or 'accredited representatives' for police station work to qualified ones (solicitors).[208] Yet, Mr Otterburn made a point of stressing that "some large firms with good gearing, effective systems and strong management are struggling to run their crime departments at a profit",[209] and that the reasons for that were difficult to explain. Therefore we question whether, by itself, growth in the size of legal aid providers will deliver sustainability.

The impact of moving to larger providers

179. In the course of our inquiry we received evidence on a number of issues pertaining to the Government's intention to move to fewer, larger legal aid providers.

GEARING IN LEGAL AID FIRMS AND THE IMPACT ON QUALITY

180. The 'Carter model' of highly efficient and profitable legal aid firms is based on a large number of fee earners and high gearing (as discussed in paragraph 177 above), i.e. a high ratio of unqualified fee earners to solicitors. We question whether there is so great a correlation between large size and quality, and we are concerned that the LSC's desire to reduce its own administration and transaction costs is playing too significant a role in consideration of this issue.

181. In the area of civil and family legal aid, the Government's thinking behind the deliberate move to larger providers is that "fewer but larger providers can actually increase access by offering more categories of law and by increasing access points through flexible services such as outreach - both of which become more sustainable with larger contract size".[210] Larger firms may indeed be better equipped to deal with cluster problems in an efficient and comprehensive way. However, during this inquiry we received repeated warnings that firms' growth in size and breadth of categories of advice they offer must not occur at the expense of the depth and quality of the legal advice provided.[211] The Law Society told us in its written submission that:

"The Carter model envisages a high ratio of fee earners to partners. Suppliers will be under pressure to delegate work to the least qualified fee earners to reduce costs. There is a real risk that quality will suffer if less qualified staff take on work that is beyond their level of experience."[212]

182. Only where firms operate an adequate and robust system of supervision can what Richard Jenner called a "dumbing down" be prevented.[213] Adequately supervising unqualified staff is in itself a time-consuming task. A legal aid solicitor commented that:

"On two separate occasions, our LSC contract manager has advised us to consider appointing unqualified staff to undertake basic casework so as to drive down our average costs. We are unconvinced about the usefulness of unqualified staff to provide advice without intensive supervision. Too often, we have picked up the pieces of cases after such advice by other suppliers."[214]

183. The most profitable and efficient legal aid providers are not necessarily always the ones providing clients with advice and representation at the highest quality. We note with interest the fact that the LSC initially tried to present evidence of a link between efficiency and quality of legal aid providers on their peer review programme, a position they did not persist with. The LSC has a substantial peer review programme and the absence of a robust link between quality and efficiency is telling. Similarly, we would have expected the LSC to produce evidence of a link between the size of a firm and the quality of its work to support its reform proposals if such evidence were available. It has not.

ADEQUATE PROVISION IN RURAL AREAS AND SMALLER TOWNS

184. The LSC's intention to deal with fewer and larger firms has also been criticised for failing to take adequate account of the situation of clients in areas outside the major conurbations. In their written evidence to us, the Legal Aid Practitioners Group (LAPG) warned:

"The economic model suggested by Lord Carter is not achievable outside the biggest cities. His proposals depend on firms building up volumes of work that are not available in rural areas and market towns. Any payment structure therefore has to ensure that good quality criminal defence services can be provided by viable businesses outside the cities as well. The Carter Report tells us nothing about how this might be achieved".[215]

Andrew Otterburn voiced a similar caution in his study for the LSC on the impact of the Carter proposals:

"Difficulty may also be encountered in rural areas, as it is likely that economies of scale may never be realisable in areas with small, scattered populations and lower volumes. Schemes are likely to need to operate differently in rural areas from concentrated urban areas."[216]

These concerns not only apply to criminal legal aid providers, but also to civil and family legal aid lawyers, particularly those offering advice and representation in social welfare law. The Access to Justice Alliance predicted that the implementation of the new fee schemes and the envisaged move to competitive tendering aimed at reducing the number of providers the LSC deals with, may pose a risk to geographic coverage:

"[t]he introduction of fixed or graduated fees, the unified contract for not for profit organisations, and competitive tendering are all likely to cause a drop in the number of providers. This will increase the risk that advice deserts will grow rather than diminish, with the consequent impact on clients. People may need to travel further, wait longer for appointments, or lose a choice of representative."[217]

185. We were warned of difficulties in dealing with criminal cases involving multiple defendants where the issue of conflicts of interest in conducting an effective defence might arise.[218] Similarly, some family law cases, such as multi-party child care proceedings or contact proceedings, may require different firms of solicitors acting for each of the parties to the case to prevent conflicts of interest. The LSC recognised some of these risks[219] but it remains unclear how it will deal adequately with them if the number of legal aid providers continues to fall.

186. Outreach programmes, referred to by Carolyn Regan in her oral evidence to us, [220] and telephone advice and referral services, especially through an improved CLS Direct and the modified CDS Direct, can alleviate the problem of insufficient local or regional legal aid coverage in rural areas and market towns as a consequence of a move to fewer, larger providers. But such programmes cannot replace adequate geographical spread of legal aid providers' offices. We repeat the comments in the Constitutional Affairs Committee Report of the last Parliament Civil Legal Aid: adequacy of provision on the potential that outreach programmes might have in securing adequate legal aid coverage in smaller towns and rural areas, especially in social welfare law that "the details of their implementation is of crucial importance;" and that for them to have a chance of working, "they must not be irregular or infrequent and they must integrate properly with other legal services to enable proper referral".[221]

187. Restructuring and growing in size might be a solution for criminal legal aid firms in London and other major cities to improve their efficiency and provide services in a more localised way, thus reducing the time spent travelling to advise and represent clients in police stations and magistrates' courts. However, the move to fewer, larger suppliers is a solution confined to geographical areas and categories of the law where there is clear over-supply. The welcome desire to reduce the LSC's administration and transaction costs through a reduction in the number of firms it has to deal with must be balanced against the risk to the availability and quality of publicly funded legal advice and representation associated with a reduction in the number of legal aid suppliers.


205   Lord Carter's Review of Legal Aid Procurement, Legal Aid: A market-based approach to reform, p 7; Ev 300  Back

206   Q 323 [Sir Michael Bichard] Back

207   Q 342 Back

208   Otternburn Legal Consulting, 2005 and 2006 Surveys of Crime Firms, June 2006, pp 33/34, www.legalaidprocurementreview.gov.uk Back

209   Ibid., p 34 Back

210   Ev 293 Back

211   E.g. Ev 136 ff [Access to Justice Alliance]; Ev 97 [Simon Hutchence] Back

212   Ev 159 Back

213   Q 175 Back

214   Ev 243 [Pierce Glynn] Back

215   Ev 102 Back

216   Otterburn Legal Consulting, The impact on the supplier base of reductions in criminal fees from April 2007, November 2006, para 5.18 (p 36), www.dca.gov.uk Back

217   Ev 138 Back

218   Q 84 [Andrew Holroyd] Back

219   LSC, Police Station Reforms: Boundaries, Fixed Fees and New Working Arrangements, February 2007, para 4.9 Back

220   Q 313 Back

221   Fourth Report of Session 2003-04, Civil Legal Aid; adequacy of provision, HC 391-I, para 53 Back


 
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