Evidence submitted by the Legal Aid Practitioners
Group (LAPG) (LAR 66)
1. The Legal Aid Practitioners Group (LAPG)
is an independent organisation representing solicitors' firms
and advice agencies providing legal aid services under Legal Services
Commission (LSC) contracts. We have 600 hundred member organisations
from across the country and covering all fields of legal aid.
2. Although the Carter report focused primarily
on criminal work, the accompanying consultation paper proposed
detailed payment structures and rates for civil and family work.
These proposals came out of the blue. There was no prior discussion
with the representative bodies to check whether the proposals
made sense in the real world. From the feedback we have had, we
believe that if implemented as they stand, these proposals will
cause meltdown in family legal aid and significant damage to the
civil and social welfare law supplier base. We therefore hope
the Committee will consider the questions it has raised in relation
to all legal aid services, not just criminal defence services.
In the following paragraphs we submit our comments on the questions
in the call for evidence.
Whether there is a need to modernize the procurement
of legal aid?
3. We do not consider that the concept of
"modernising" is particularly useful to this debate.
Just because something is new, this does not necessarily mean
that it is good. The current system has developed piecemeal over
many years, with the result that what we currently have was never
designed as a whole. But it has evolved in a way that makes it
reasonably fit for its purpose.
4. We also find it noteworthy that no other
lawyers paid by the Government are expected to work on fixed fees,
or even at such low rates as legal aid lawyers. In a clinical
negligence case, for example, the publicly funded solicitors'
firm acting for the health authority is paid in accordance with
a centrally-set schedule of fee rates at least twice as much as
the publicly funded solicitors' firm acting on the same case for
the patient. If the Government is genuinely concerned about achieving
value for money for the taxpayer from the lawyers paid out of
public funds, there are many more worthy targets for reform. No
other publicly funded lawyers deliver such exceptionally good
value for money as legal aid lawyers.
5. The key problem facing the legal aid
system is not that it is old but that the Government has required
lawyers to do exponentially more work, and has then feigned surprise
when this results in the budget increasing. In "Demand induced
supply?" Cape and Moorhead identified the drivers in the
increase in the criminal legal aid budget. They concluded, "Our
analysis shows that the system itself creates significant demand:
it has increased the number and seriousness of cases being processed
through the police stations and the courts and it has probably
increased the volume of work that needs to be done on those cases.
At the moment those demands are being met out of the civil legal
aid fund, reductions in profitability for private practitioners
or, perhaps most worryingly, reductions in the quality of service
being provided to defendants."
6. This is why LAPG deplores the regular
comments from ministers and civil servants to the effect that
the increase in the legal aid budget is "outstripping inflation"
or that practitioners have "got a pay rise" because
the budget has increased. The Government is purchasing a greater
volume of services at the same unit price. That is not inflation.
That is not a pay rise.
7. Similarly, the assertion that change
is needed because there is no more money is not an eternal verity
but a political choice. There is only no more money because this
Government has decided that access to justice is insufficiently
important. The annual increases in the health and education budgets
are many times the entire legal aid budget.
8. Legal aid rates have been squeezed over
the years so that instead of being slightly lower than private
rates, they are now around one third to one half of what solicitors
charge private clients. As Andrew Otterburn's research for Lord
Carter's review pointed out, "some large firms with good
gearing, effective systems and strong management are struggling
to run their crime departments at a profit." The same is
true of civil and family practitioners.
9. With this background, a new structure
that is at best cost neutral and at worst imposes significant
cuts is not going to deliver a viable, sustainable system. Merely
changing the structure under which solicitors are underpaid will
not address the problem that the budget is inadequate to deal
with the additional demands that have been placed on it. Putting
solicitors onto fixed fees for work that is not fixed will not
control those Government-created demands, but will make legal
aid practice less viable. Profits will be squeezed further (or,
in many cases, losses will be increased), and quality will be
reduced, a far cry from Lord Carter's vision of a quality service
delivered by a stable and viable profession.
10. We have doubts about the extent to which
market solutions can work in legal aid, a service industry where
many of the prerequisites of a competitive market do not and cannot
exist. The Government is a monopoly purchaser. Those who leave
the market will not maintain their expertise until they can return.
Consumers are not able to judge quality even after they have received
services, and post-hoc measurements of quality may be ineffective.
Most purchases by consumers are "one-off" rather than
repeated. Services are not homogenous and have not been sufficiently
defined to attach a market price to them. Purchasing under this
command model will be based on inaccurate forecasts of need, rather
than on actual need.
11. Legal aid services currently survive
in many firms due to cross-subsidy from other work. Lord Carter
acknowledges that this should not happen, and that any market
should work on the basis of full recovery of the cost of doing
the work. There is no doubt that without cross-subsidy, the cost
of legal aid services will increase significantly, something the
DCA claims cannot be permitted to happen. The DCA has in effect
announced in advance that it intends to buck the market if it
does not like the results.
12. 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.
13. We accept that the system could be improved.
Those improvements might include some elements of what the Carter
report and the consultation paper contain. Any fee system has
to reflect the amount of work reasonably required on cases, the
differences between cases, and the inevitability that the law
and Court procedures will change over time. It may be that a much
more sophisticated graduated fee system could be developed to
achieve this. Block contracts with service level agreements might
be worth considering. Another possible approach might be a system
of best value tendering for criminal contracts as happened with
civil contracts in 2004. Such a system could be based on quality,
breadth of service and quantity but not price. The nature of the
service is such that price cannot be identified in advance without
such a detailed specification of the service to be provided that
the end contract may bear no relationship to the service that
is needed. Carter is not the solution, but it could be a stepping
stone towards finding a solution.
Whether the timetable for implementation suggested
in Lord Carter's Report is realistic?
14. The suggested timetable is unworkable.
It is nonsense to suggest that a complete restructuring of the
entire system can be proposed in outline form in July, consulted
on until October, with final decisions of principle being announced
in November, and then have all the necessary detailed planning
consulted on and concluded in time for implementation by the following
April. The extent of detailed planning and drafting needed means
that with the best will in the world, it is implausible that the
LSC and DCA would be ready to proceed before October 2007; April
2008 seems more realistic.
15. As Lord Carter notes, he wants to deal
with stable, viable businesses. No business can cope with that
degree of upheaval in that short a timescale. It is unreasonable
to attempt to introduce new payment structures before April 2008;
it makes a mockery of firms' attempts to build stable long-term
businesses with meaningful business plans.
16. Lord Carter says that to survive under his
proposals, firms must restructure, grow, or merge; otherwise they
must close down. A merger normally takes at least a year from
first idea to conclusion, and that is if everything goes smoothly.
Many merger proposals break down before conclusion, and many mergers
that take place don't work out.
17. Firms that wish to grow will need to
do so organically over time. Carter cannot give firms the certainty
needed to risk everything on a step-change in the size of the
business, with the financial investment and the commitment to
leases, staff and equipment that this would require. On the civil
side, firms face the additional obstacle of a clause in the contract
permitting the LSC to terminate the contract on just three months'
notice, without compensation. The LSC has already confirmed that
it intends to use this provision whenever it sets up a Community
Legal and Advice Centre or Network.
18. Moreover, contrary to Lord Carter's
suggestion, we doubt that banks will be prepared to make the necessary
investment in firms to enable them to do so. Legal aid firms are
seen as a poor risk even now.
19. For those firms that wish to withdraw,
time is required for an orderly exit. By undermining firms so
abruptly, the Government risks bankrupting a lot of small businesses,
putting many people out of work. This prevents the lawyers who
ran those businesses from working as solicitors—even though
the Government needs roughly the same number of lawyers as at
present, but organised differently. Furthermore, it damages the
faith of the banking sector in those businesses that remain: if
the Government can casually destroy some firms like that, it can
do so to others. This will undermine the ability of remaining
firms to reorganise as the Government wants.
20. Unfortunately, because of the short
timescale, firms are making binding business decisions now based
on current information. Some firms are already taking irreversible
steps to close down their legal aid departments, and will not
return in the event of more realistic proposals emerging after
consultation. The DCA and LSC have thus already done damage to
the supplier base by issuing such contentious proposals with such
a short implementation date.
What benefits might be generated for defendants
and others by adopting these proposals? Also what impacts/disadvantages
might result from implementation?
21. We do not see any benefits, only disadvantages.
Cyrus Tata and Frank Stephen's research on fixed fees in the Scottish
Criminal Justice System (reported on in Criminal Law Review, August
2006) found significant disadvantages for clients and stakeholders
from a fixed fee system. We understand that the Committee has
a copy of this research.
22. Recent initiatives such as the Effective
Trial Management Project have tried to encourage early preparation.
A fixed fee payment system is guaranteed to incentivise solicitors
to leave preparation as late as they possibly can. It will be
almost certain to undo much of the good work done by the ETMP
to improve the efficiency of the Court process, virtually none
of whose failings can currently be laid at the door of defence
lawyers.
23. A key problem of a fixed fee system
is that it penalises those doing complex and lengthy cases as
much as it penalises people who are inefficient. The LSC cannot
tell the difference between the two, and appears oblivious to
the negative side of this equation.
What impact the proposals will have on different
communities (such as Black, Minority Ethnic and rural communities).
24. Fixed fees contain a discriminatory
impact against BME clients. Working through an interpreter takes
longer than communicating directly with the client. Solicitors
will be discouraged from taking on such clients by a payment system
that doesn't recognise the additional work needed to serve them.
Similarly, the needs of clients with hearing difficulties or mental
health or impairment issues may be neglected, so the system will
also introduce discrimination on the grounds of disability.
25. These proposals will have the biggest
impact on small firms. Ethnic minority solicitors are disproportionately
represented within such firms. There will be an indirect discriminatory
impact on solicitors based on race. LAPG commends the excellent
work done by the Black Solicitors Network to highlight this concern.
26. Rural communities will suffer from reduced
supply if these proposals are introduced, because the payment
structure proposed depends on an economic model that cannot work
outside the biggest cities, for reasons mentioned above.
How the proposals will affect firms of differing
size, structure and practitioner mix.
27. The responses LAPG has heard have been
universally negative. LAPG's director has heard from hundreds
of solicitors since the Carter proposals were published. Only
two did not consider that the proposals would be deeply damaging
to clients and to their businesses. Not for profit organisations
have been equally alarmed.
28. Family practitioners estimate that the
proposals will reduce firms' fees by up to 60%, and that the firms
would therefore be rendered insolvent. LAPG's Director attended
a meeting of childcare practitioners in Kent. Almost all Kent's
practitioners were represented. They unanimously said that they
would not be able to continue with this work.
29. LAPG received a letter from the Dorset
Child Care Support Group, which represents all Children Panel
members in Dorset as well as local authority solicitors and officers
from CAFCASS. This letter states, "The Children's Panel members
in Dorset have calculated that they will all earn far more shelf
stacking at Tesco's than providing quality representation for
children and other parties. They are therefore planning exit strategies."
The letter notes that the average cost per case for these Panel
Members was £7,800. The new structure will pay a fee per
case of around £5,000.
30. LAPG has also received a letter from
Cardiff practitioners, which says, "All members at our meeting
(two dozen Children Panel solicitors) indicated that the current
proposals would mean a drop in income of about 50%. In practical
terms, this means that the work is not sustainable."
31. The private law family proposals are
judged to be even more devastating than the proposals for care
proceedings. The structure and the rates bear no relation to the
work required. LAPG's expectation is that a very large minority,
and perhaps even a majority, of family lawyers will leave the
system in the next 12 months.
32. A criminal lawyer from the West Midlands
wrote to LAPG. "My wife (a chartered management accountant)
and I started our firm in 2000. The firm grew rapidly... We became
a Category 1 firm by 2002, the firm was and is the largest in
[our area] for criminal law, with fees of nearly £1 million
every year since 2003. According to Carter, we should do OK, but
we beg to differ... Even though we have the capacity, we doubt
the volume will save us as there is no profit at all. One million
cases x £0 = £0. So my wife's professional advice to
me is to close down the firm from April 2007." We have heard
similar views from other defence firms of all sizes.
33. The payments for civil certificated
work will remain unchanged at least for another year. However,
there are concerns that the payments for legal advice and assistance
will be unsustainable for many whose work is more complex than
the average and who therefore will be underpaid for that work
as a result of the changes. We believe that many firms will withdraw
from providing such services, and unfortunately it will be the
more skilled lawyers, providing the more complex services who
will withdraw.
34. Immigration practitioners view the proposals
as an attempt to reinstate by the back door the caps on immigration
funding that the Constitutional Affairs Committee criticised in
its Fourth Report of the 2002-03 session. It is considered that
these proposals will penalise those who try to provide a good
quality service that takes account of the needs of the individual
client.
Whether the measures proposed will promote the
provision of high quality advice and support the effective and
efficient operation of the Justice System.
35. LAPG firmly believes that they will
not. As the Scottish research clearly demonstrates, a system of
fixed fees will inevitably have the effect of decreasing or delaying
preparation and reducing quality of service.
36. Even if amendments could be made to
the structures, the rates on offer, which are said to be cost
neutral for civil work and to impose cuts for criminal defence,
are inadequate to make this work viable. Some firms may continue
cross-subsidising it from other work. Others may struggle on for
a few months and then become insolvent. Others may continue by
significantly reducing the quality of service they provide or
by cherry picking only smaller and simpler cases, leaving those
with more complex needs (personal and legal) without help. A few,
who feel they cannot or do not wish to retrain, may be willing
to continue doing the work even if it generates incomes for them
only in the region of £15-£20,000. But however many
solicitors continue to do this work, there will be no next generation
of lawyers to replace them if these proposals are implemented.
October 2006
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