Legal Aid Reform - Justice Committee Contents


Memorandum submitted by the Law Centres Federation

FIXED FEES AND THE CRISIS IN LAW CENTRES

A Plea for Community Lawyers

  In October 2007, the Legal Services Commission imposed a radical change in its funding of legal help. A year into the new funding regime, many Law Centres are facing serious financial problems. Four have already closed their doors, and many more are teetering on the brink. This is putting at risk not only legally aided work, but the whole range of work that Law Centres do. They are being forced by the one-size-fits-all fixed fee contracts either to close or to deliver an impoverished service.

BACKGROUND

    "...all the members of this court would wish to express their appreciation of the skilful professional service which Ms Faarah has had from the Southwark Law Centre. As the history set out by Lord Justice Toulson shows, the Law Centre, by careful and well-informed correspondence, was able to locate and challenge the precise error of public administration which this appeal has confirmed. It is of importance to the administration of justice, as well as to many individuals, that there should continue to be law centres like Southwark's which are able to offer professional help of high calibre to the neediest people."

    Lord Justice Sedley, R (Faraah) v London Borough of Southwark Court of Appeal (2008) EWCA Civ 807.

    "The impact of Law Centres has been out of all proportion to their size, the number of lawyers who work in them and to the amount of work it is possible for them to undertake. The volume of work they have attracted has shown how deep is the need they are attempting to meet."

    Final Report of the Royal Commission on Legal Services 1979.

  For nearly 40 years Law Centres have contributed to public legal services the idea of a team of community lawyers working in, and with, the communities that they serve. Law Centres have independent, elected management committees and close working links with a wide range of local people and community groups : with schools and children's centres; tenants and residents groups; faith communities; trade unions; disability organisations; black and minority ethnic groups; and women's groups, as well as with local Councils and advice agencies. They are rooted in their communities.

  Law Centres have played a key role in developing and sustaining legal services for disadvantaged communities and marginalised groups. They are part of, and help sustain, those networks of information and support that make cohesive communities possible—especially in hard-pressed areas. Law Centres provide in these communities the independent, expert legal assistance that is essential to the maintenance of the rule of law in our society.

  Law Centres have been responsible for major advances in the substantive law as it affects the communities they serve: in housing, employment and immigration and asylum law; for breaking new ground in forensic practice [ it was a Law Centre which first used DNA identification in legal proceedings ] ; for innovating the delivery of services, such as the County Court Duty schemes for housing possession now being rolled out across the country ; for pioneering pro bono initiatives ; for championing public legal education; and for training much of the present generation of social welfare lawyers. In recent years this has included community care and education law as well as being at the forefront of taking up discrimination and human rights cases.

  Law Centres have been able to develop strategic responses to the needs of their communities which not only provide solutions to a client's problem but attempt to address the underlying causes. As such their work is also preventative in effect. For example, Law Centres have been pivotal in establishing local forums to support refugees, services for women suffering domestic violence, and those subject to human trafficking. Law Centres have worked in their local Councils to help prevent eviction and homelessness and by using a range of public legal education methods, help ensure people are treated fairly at work and in their dealings with governmental and private bodies.

  A recent report produced by the New Economics Foundation on the socio-economic benefits of Law Centres found that every £1 spent by Law Centres in the provision of a service created £25 of "social value" in savings to Government and benefit to the individual client and the community.

  In other words, Law Centres have always been an innovative value-for-money service working with their communities to provide legal assistance that combines high quality casework with strategic support and policy work. Law Centres deliver a joined-up, holistic service that responds to local needs—as directed from below, not from above.

  At the beginning of 2008 there were 60 Law Centres, forming a network that has built up since 1970 in response to unmet legal need. Four have already closed this year, and many more are teetering on the brink. At least 22 are at serious risk of closing before the end of the financial year.

  Over half of Law Centre funding now comes from the Legal Services Commission, with the remainder from local authorities and other funding bodies. Local Councils have slowly reduced their contributions, but the coup de grâce has been delivered by recent changes to Legal Aid contracting.

  Law Centres are not solicitors' firms, and they are not general advice agencies. They are being forced by the one-size-fits-all fixed fee contracts either to close or to deliver an impoverished service.

THE PROBLEM

  When the Legal Services Commission announced its plans to abolish the Not for Profit contract on which most Law Centres relied, and to bring in a new Unified Contract based on fixed fees for legal help, Law Centres and the LCF had serious concerns about the likely impact of these changes on the operation and future viability of law centres, and our ability to respond to the legal needs of our communities. These concerns were expressed in our response to the consultation.[22]

  Under the new scheme, providers are paid a fixed fee for each type of case, regardless of how much work is involved. For example, the fixed fee for each employment case is £230. For debt it is £200, for Welfare Benefits £167, and for housing cases just £174.

  These fee levels were set by LSC, not negotiated. LSC claims that they were based on average case costs in each category. The data on which they relied was never fully disclosed and there is some indication that they were based wholly on data from the previous Solicitor Contracts with private practice, excluding the not for profit providers.

  Only if the work involved, based on a standard hourly rate (inherited from the previous NFP contract, despite claims by the LSC to have put all providers on a "level playing field") is more than 3 times the fixed fee is the case deemed to be `exceptional'. In these cases, the whole file has to be sent for auditing, and following close scrutiny, LSC will pay the full cost of the time undertaken.

  Our concerns were widely shared by our partners in the Not for Profit advice sector, reflected in the strong views expressed by the Advice Services Alliance. They were also shared by the Constitutional Affairs Select Committee, who produced a report in May 2007 which was highly critical of the proposals.

Risk to specialist providers

    It is of crucial importance that any fixed or graduated fee system allows specialist and niche suppliers to obtain a reasonable return for their work in order to guarantee the provision of high quality advice for complex cases and thus to ensure access to justice for those requiring specialist advice and representation. There is a major risk that specialist providers will be lost to the Legal Aid system.

Protecting vulnerable clients

    For schemes which only provide for relatively flat fixed fees with very little graduation provide economic disincentives to taking on more complex cases. This is likely to disadvantage already vulnerable clients. Only appropriate graduated fee schemes which allow adequate remuneration for more complex cases and those where attandance by, or communication with, a client is unusually difficult would encourage providers to devote the time to deal with such cases.

    Constitutional Affairs Select Committee May 2007.

  Now, 12 months into the operation of the scheme, our worst fears are being realised:

1.  Standardised fixed fees severely underfund the complex debt, housing, employment, education, mental health and community care cases which Law Centres focus on

  The Legal Services Commission argue that the system is fair because of "swings and roundabouts"—the loss on cases that cost more than the fixed fee to undertake will be balanced by short, simple cases. However, this depends entirely on the type of casework that each provider undertakes.

  To try to prevent the cherry-picking that the system so obviously encourages, the contract also stipulates that providers may not amend their existing case mix.

  Dealing with a complex housing matter which may result in a client losing their home, working to put in place adequate care arrangements for clients with mental health problems, dealing with multiple debts and families in crisis, assisting victims of domestic violence: these are the typical cases that Law Centres take on. It is already clear that most Law Centre cases cost significantly more than the fixed fee, but often less than the exceptional threshold.

  It is worth noting that the providers who are contracted to work with the Legal Services Commission as part of Community Legal Advice—the telephone advice service, are paid on an hourly basis. Here it is recognised that some clients will need additional time taken on their case in order to obtain a good outcome, and that the length of time required is so variable that this is a more equitable way of remunerating providers

  Fixed fees are a crude one-size-fits-all approach with perverse incentives not to take on the most challenging cases, or the clients with the greatest needs.

2.  The scheme cuts across the local economy of advice, and puts at risk longstanding partnerships and collaborative work

  All Law Centres have collaborative arrangements with other advice providers, which have developed through formal and informal partnerships at local level. These arrangements take varied forms, but it is common that front line advice agencies deal with many simple queries, but refer more complex cases, especially those requiring input from qualified lawyers, to more specialist providers. In many communities, Law Centres have been a key provider of this more specialist provision, taking on the more complex and challenging cases. Some Law Centres operate wholly as second tier agencies, taking all their cases on referral from front line agencies.

  It is precisely this more specialist and challenging work, often for the most vulnerable clients, that is put at risk by standardised fixed fees.

  At the same time, pressure to take on more short and simple cases in order to bring the average case cost down to nearer the fixed fee level means that Law Centres are not only less able to take on complex referrals from partner agencies, but are forced in effect to compete with these same agencies for the simple cases. This is not a recipe for good partnership working at local level.

3.  The transitional arrangements have put immense cash flow pressure on agencies

  Previously, Law Centres were paid monthly for work as it was done—now they are paid as cases close, which may be a year or more down the line. Almost a year into the new arrangements, many Law Centres are running a significant volume of legal help cases on which they have not been paid for either casework time or disbursements since the scheme came in. This is not about inefficiency; it is about the nature of the work that is carried out such as waiting on a response from the Home Office with Immigration matters. As a result many Law Centres are said to have a "debt" to the LSC. Even though there is a significant value of work in progress that simply is not ready to be reported.

  Like most third sector organisations, Law Centres operate on very low reserves, and find it hard to identify funding to increase these. The transitional arrangements mean that the LSC is often clawing back money from agencies who have "live" cases worth tens of thousands of pounds, but do not have significant cash in the bank. This is pushing Law Centres and other not for profit agencies to the brink.

4.  The lack of London weighting puts even more pressure on London Law Centres (who make up almost half or all Law Centres)

  Public services such as health, education and local government all have arrangements that recognise the additional costs of providing services in London, and in some areas of service there is additional weighting for e.g. the proportion of the population who do not have English as a first language. The national fixed fee takes no account of either of these factors, and the LSC's own projections showed that a significant majority of London providers would be worse off under the new scheme. This has been the experience of Law Centres.

5.  The loss of telephone advice from local Not for Profit providers has reduced seamless access to services

  The removal of the ability of Law Centres to deliver telephone advice under the contract has removed acts of assistance from local agencies. By routing them through a national framework, it is harder for people needing face to face advice or representation following initial advice to receive a seamless service. Income has been redistributed away from local providers to a central service. This has added to the reduction in access to local services.

6.  Fixed fees make a mockery of the LSC's stated support for holistic responses to clusters of problems

  Research by the LSC's own Legal Services Research Centre showed how the experience of problems has an additive effect; "meaning that each time a person experiences one problem, they become increasingly likely to experience another". It illustrates how this additive effect can act to reinforce social exclusion. It also explains how certain justiciable problems are more likely to lead to others, and then demonstrates the extent to which justiciable problems also lead to broader social, economic and health problems. Research by the Research Centre details how some problems tend to occur together or in sequence in problem clusters. It highlights the sense of powerlessness and helplessness often experienced by those who face them, and confirms there is a general lack of knowledge about obligations, rights and procedures on the part of the general public.[23]

  The LSC uses the need for holistic services tackling clusters of problems as the main justification for CLACs (Community Legal Advice Centres), which it has been promoting since July 2005.[24] So far, five have been established (if the Hull CLAC is included). At the same time they have instituted a funding regime for the 95% plus of provision outside of these Centres which does the exact opposite.

  Fixed fees create a perverse incentive to split any holistic response to the client's problems into separate matters, each with its own case file. The end result is an expansion of paperwork, much greater complexity for agencies in running multiple cases for a single client—a worse client experience (for example, each case matter will require a separate Controlled Work form, including means testing)—but no net benefit to the client. The only perceived benefit will be in the Commission's ability to report an increase in the number of "individual acts of assistance" carried out through the CLS.

  Law Centres are experts in dealing with clusters of problems, together with a range of wider activities developed in response to local needs via their elected management committees, local experience and connections. As a result Law Centres have been able to respond flexibly to legal needs as they arise. Law Centres are experts in providing individual case work (including highly complex legal work and work for highly vulnerable clients); group work that addresses community legal needs; public legal education work; policy work; local liaison, networking and community strengthening.

  Rather than embracing and working with Law Centres and other local advice providers at grass roots level, the Commission has instead tried to re-invent the wheel, but with a top down model that leaves out a key element of Law Centres' success—community control.

7.  Fixed fees for Not-for-Profit agencies fly in the face of wider Government policy and good practice in funding the third sector

  In June 2008, the Ministry of Justice published it's Third Sector Strategy for 2008-11. This includes commitments to respect the Compact and Treasury guidance on the timing of payments, monitoring requirements, and in the recovery by the provider of appropriate management and overhead costs. Indeed it talks of "driving forward progress across Government in implementing full cost recovery."

  Fixed fees are fundamentally incompatible with full cost recovery. They do not even reflect the direct costs of delivering the service, let alone the management and overhead costs which full cost recovery has mainly focussed on.

  The imposition of fixed fees and payments only on case closure is at odds with Treasury guidance to funders and purchasers:[25]

    —  Funding arrangements should be agreed between all parties if they are to be effective and offer the right incentives to deliver value for money.

    —  It is vital that the timing of payments is considered in collaboration with, and not imposed upon, the organisation responsible for providing the service.

WHAT WILL BE LOST?

Key providers of social welfare law in many of the most deprived communities in England and Wales

  The LSC acknowledge that 68% of all their funded provision of social welfare law is provided by the Not for Profit sector, which includes Law Centres, CABs and independent advice centres.

  As charities, members of the Not-for-Profit sector can attract grants from trusts and charities such as the Big Lottery Fund. Law Centres are also attracting significant pro-bono support from large City firms. The additional funding provides valuable resources for project work and for work that falls outside of the legal aid scheme. This additional funding being brought into the sector and which benefits local people, will be lost if the sector is dismantled in favour of private sector providers.

Loss of skills and expertise in key areas of social welfare law

  It is clear that some areas of social welfare law are heavily concentrated within Law Centres—for example, employment and homelessness. Law Centres are losing many experienced people. Many of these staff hold LSC Supervisor Status, which takes years to acquire, making it impossible for all areas of social welfare law to be adequately provided elsewhere in the short term. These departures are about to become an exodus.

The Law Centre model of public legal service delivery

  The new regime is forcing Law Centres, out of sheer survival, to change the style of service they provide. They have to move away from what they do best and what was their unique contribution to the provision of a legal service.

  This contribution includes taking the time to do a proper job for clients that other agencies have difficulty assisting because of the client's complex personal needs or their legally complex set of problems.

  Law Centres have traditionally worked together with their colleagues in advice agencies and private practice. A traditional of support and non-duplication of services is being replaced by competition instilling an era of uncertainty and mistrust.

The wider contribution that Law Centres make to communities

  Law Centres are not only public legal service providers, they are major builders of social capital and connectedness in some of the most deprived pockets of our society. Having elected management committees is not only essential to identifying what the problems are at a very early stage so that resources can be properly targeted. It is also the crucial mechanism through which the community can take ownership of their service.

  Law Centres have traditionally provided innovative public education strategies to address the needs of their local communities. Often arising from case work, targeted initiatives for vulnerable groups offer better access to justice.

  Furthermore, all Law Centres promote voluntary activity via their elected Management Committees and many have an active volunteer programme. At a time when participation and involvement are at a premium it surely makes little sense to dismantle such a rich network, and one that is rooted and owned by those who need and use it.

  If Law Centres close their doors significant additional pressure is put on other statutory services, and making it much harder for Local Authorities and Strategic Partnerships to meet their aspirations around poverty and worklessness. And Law Centres, along with other grassroots advice providers could have a key role in strategies to support those most affected by the housing and credit crisis.

LAW CENTRES are not alone—all specialists in social welfare are under threat.

What affects one, affects them all

The LOSERS?

The Poor and the Vulnerable

SHORT AND LONG-TERM ACTION NEEDED BY THE GOVERNMENT

  The current economic situation makes it even more vital that immediate steps are taken to prevent Law Centres from closing. Law Centres are critical to the fabric of social welfare law provision. This is not the time to discard the community lawyer.

  The Law Centres Federation is calling for:

    —  An urgent review of the Unified Contract, to consider changes such as the introduction of London weighting, a longer buffer which reflects the real length of cases, and a funding model that reflects the higher cost of challenging cases, and of working for clients with specific needs, such as clients who do not speak English as a first language, those with mental health problems and those with disabilities.

    —  An immediate relaxation of the transitional arrangements to assist Law Centres with their cash flow, and short term "lifeboat" funding to ensure Centres do not close before the review of the Unified Contract is completed. A similar modest investment made in the late seventies by Lord Elwyn Jones, then Lord Chancellor, helped to sustain Law Centres for over 20 years.

    —  Urgent consideration of longer term funding outside the "judicare" model for strategic work, legal education, and local initiatives which link up with wider government agendas on protecting the most vulnerable, on social inclusion, community cohesion, and development of civil society. Instead of top down CLACS, we propose a strategic investment in Law Centres and grassroots advice services, of 5% of the CLS budget (around £40 million a year) over five years, both to support and strengthen existing providers and to promote effective local networks of advice.

December 2008









22   Legal Aid : A Sustainable Future- Law Centres Federation Response October 2006. Back

23   Causes of Action: Civil Law and Social Justice. 2nd edition 2006. Back

24   The first mention of CLACs was in a DCA (now MoJ) paper A Fairer Deal for Legal Aid in July 2005. Back

25   Improving financial relationships with the Third Sector: Guidance to funders and purchasers. HM Treasury May 2006. Back


 
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