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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