23. On 23 January 2009 the Legal Services Commission
invited tenders for a piece of research into the potential economic
impact of its proposals on the supplier market. The research,
said by the Commission to be costing about £63,000, was aimed
- the market segmentation of
family advocacy services;
- the current levels of supply of family advocacy
services, and whether or not there is excess supply (including
issues of regional variations, the level of experience of advocates
and quality assurance measures);
- price elasticity of supply for family advocacy
services (including the risk of a drop in supply due to the proposed
changes in rates for self-employed and in-house advocates);
- rates of utilisation of self-employed and in-house
family advocates; optimum annual earnings of a fully utilised
self-employed barrister under the proposed rates (including impact
of inefficiency in the system e.g. cancelled hearings, over-running
hearings, waiting time etc.);
- the extent to which different types of advocate
compete for the same family advocacy work.
The Family Justice Council wrote in its response
to the consultation that: "It is very surprising (to say
the least) that this research was not commissioned before
the Consultation proposals were made."
24. The Family Law Bar Association was informed of
this work on 20 March 2009, two days after the original deadline
for responses to the consultation. The Legal Services Commission
said that this had been as early as procurement legislation allowed.
Although initial findings from the study were expected in June,
the Commission originally intended the findings of this research
to be utilized, alongside consultation responses, to inform the
final policy on family advocacy remuneration with the final report
of the study formally published as part of its consultation responses
in August this year, 2009. The Family Law Bar Association, the
Association of Lawyers for Children, and other witnesses, see
this research as fundamental to the character of the system that
the Commission was seeking to put in place and the family Bar
described the timetable as "deplorable".
The Association of Lawyers for Children wrote that: "if ever
there was a demonstration of the principle of 'verdict first,
evidence later', then this was it".
25. The majority of our witnesses condemned the fact
that there would be only a limited opportunity to see the findings
of the study before the Legal Services Commission (LSC) finalised
its proposals and that the Commission had originally given no
guarantee to take account of responses to the study from stakeholders.
Lucy Theis QC, of the family Bar, told us "it makes a mockery
of the consultation process to produce such an important piece
of evidence without the courtesy of even a meeting after the report
has been produced. They [the LSC] have rather grudgingly said
that they are going to share it with us."
This approach by the Legal Services Commission does not appear
to be in line with the stated aims of its consultation paper or
the principles of public consultation set out by the Cabinet Office.
26. In response to a letter from the Chairman of
the Committee on this subject, Lord Bach wrote that:
"As a courtesy, and as part of their continuous
and transparent dialogue with providers on the consultation proposals,
the LSC has informed stakeholders that they are carrying out this
research, and as a further courtesy, the LSC has also agreed to
share the final report produced with stakeholders when it is available.
The research is not considered to be fundamental
to the structure of the final fee scheme, nor is it considered
that stakeholders needed the information produced in this report
to respond to the consultation. The consultation asks stakeholders
to consider the proposed structure of the fee schemes and not
the principle of harmonisation, which is already widely accepted.
The research will, however, be relevant in any final impact assessment
of the effects of the proposed scheme. We await the outcome of
the research with interest, and I can assure the Committee that
we will act as fairness dictates in relation to its findings."
27. We found the line taken by Lord Bach to be highly
unconvincing. The structure of the fee scheme is likely to be
the crucial factor determining whether the proposed reforms work
with, or against, the grain of legal services provision, encouraging
or deterring providers from offering effective, high quality services
while enabling the Legal Services Commission to remain within
budget. The principles behind the scheme are generally accepted
but the Government's over-riding statutory duty to ensure provision
from a suitable range of providers will depend on the impact of
the new scheme on those providers; and this is what the research
in question was designed to determine. The Family Law Bar Association
described the study as "a critical piece of evidence in relation
to the impact of what they are proposing, particularly when that
impact falls on the most vulnerable in society".
28. We pursued the question of the role of the Ernst
and Young economic study with the Legal Services Commission in
oral evidence. The
Legal Services Commission initially said that they had never regarded
the Ernst and Young study as "fundamental" to the shape
of the proposals. It was additional economic analysis which they
would have done anyway and the timing was a "resource issue".
However, the Commission did concede that an assessment of the
impact on suppliers of its proposalspart of the Ernst and
Young studywas very important, as a substantial drop in
supply would cause a "significant problem", and that
the study was "fundamental" to the decision on whether
the new fee scheme went ahead. We agree.
29. This is not the first time that controversy
has arisen in relation to work commissioned by the Legal Services
Commission (LSC) on this issue. In November 2006 the LSC received
a report it had commissioned from Andrew Otterburn Consulting
on the impact of Lord Carter's initial proposals on suppliers.
However, the paper was not published until after our predecessor
Committee had made representations to the Secretary of State.
In the relevant report our predecessors said the following:
"This [second Otterburn] study
of the short transitional period between the introduction of the
fee schemes and the roll-out of competitive tendering and of the
lack of adequate evidence to come to a reliable assessment of
the risks associated with the Lord Carter's fixed fee proposals.
It warned that changes to the timetable of the reforms should
While we accept the apology by the Lord Chancellor
for what looked like an attempt by his Department and the LSC
to suppress an important piece of research relating to the speed
of the current reforms, we remain profoundly troubled by the handling
of the Otterburn issue on the part of the LSC. It suggests
an inability on the part of the LSC to address fairly and openly
a critical aspect of the reforms: the ability of the supplier-base
to survive the reform proposals."
emphasise and welcome the undertaking given to us in oral evidence
by the Legal Services Committee that, "we have always been
clear that we would show stakeholders a copy of the [Ernst and
Young] report and allow them some time to comment on it."
We regard a very much higher and consistent level of constructive
engagement between the Commission and all its stakeholders is
required if effective progress is to be made with family legal
aid reform this year, 2009.
31. Clearly, there is a significant discrepancy of
views between the Legal Services Commission and its stakeholders
on the scope and quality of data that would constitute a satisfactory
evidence base on which to erect a new system of fixed fees for
legal services in family law. We note that these issues have some
pedigree. Our predecessor's 2007 report on Lord Carter's proposals
for legal aid reform said that a meaningful process for developing
a new system for the future of the legal aid market could only
be undertaken on the basis of adequate knowledge of case costs
presupposing the right data and statistical research. The report
"It appears that the LSC has inadequate information
on which to base its proposed fixed and graduated fee schemes.
Equally, there is very little reliable statistical
information about the economic situation of the legal aid supplier
base on which valid predictions of the impact of changes to remuneration
or procurement arrangements could be based".
32. The lack of transparency and the last minute
nature of data-gathering and publication means that, we
cannot come to a definitive view on the statistical significance
of the outstanding data issues. What clearly is significant is
that the existence of flaws in the evidence base has damaged the
confidence of practitioners in the process that the Legal Services
Commission is conducting. At the same time, the LSC has commissionedextremely
late in the processfundamental economic research into its
supplier base where hitherto it was relying on anecdote. These
discrepancies and gaps in its evidence, which can come as no surprise
to the Commission, should have been sorted out in advance of any
proposals being published. The objectives of the economic research
could have been discussed with stakeholders before it was commissioned.
The Legal Services Commission has made a substantial rod for its
own back by not doing so.
27 Ev 36, paragraph 10 Back
Ev 105 Back
Ev 23, paragraph 81 Back
Ev 57, paragraphs 22 and 23 Back
Ev 70 Back
Q 9 Back
Q 8 and see ev 52 Back
Q 27 Back
Q 28 Back
Ev 76, 77 and 111 Back
Ev 67, paragraph 126 (original emphasis). Back
Ev 35, paragraph 6, and Q 29 Back
Ev 39 Back
Ev 22, paragraph 76 Back
Q 9 Back
Ev 40 Back
Ev 69-70 Back
Q 9 Back
QQ 29-32 and 44-48 Back
Constitutional Affairs Committee, Third Report of Session 2006-07,
Implementation of the Carter review of legal aid, HC 223,
paras 235-6 Back
Ibid., paras 127 and 128 Back