House of Lords - Explanatory Note
Access to Justice Bill [H.L.] - continued          House of Lords

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Criminal Defence Service

27. The purpose of the CDS is to secure the provision of advice, assistance and representation, according to the interests of justice, to people suspected of a criminal offence or facing criminal proceedings.

28. The Commission will be empowered to secure these services through contracts with lawyers in private practice, or by providing them through salaried defenders, employed by the Commission itself or by non-profit-making organisations. This will necessarily mean that suspects' and defendants' choice of representative is limited to contracted or salaried defenders, although the intention is to maintain a reasonable level of choice in most cases. All contractors will be expected to meet quality-assurance standards and contracts will, where possible, cover the full range of services from arrest until the case is completed. (The current arrangements for criminal legal aid are fragmented: a person can receive assistance in respect of the same alleged offence under several separate schemes, each resulting in a separate payment for the lawyers involved.)

29. There will be a transitional period while contracts are developed and extended to cover the full range of services. The Commission will therefore be able to pay lawyers on a case by case basis for representation provided on a non-contractual basis, according to remuneration scales set in regulations (that is broadly on the same basis as the current criminal legal aid scheme).

30. As now, the courts will grant representation under the scheme to defendants according to the interests of justice. But the courts will no longer have to conduct a means test as well before granting representation. Instead, at the end of a case in the Crown Court, the trial judge will have power to order any defendant who is not acquitted to pay some or all of the cost of his or her defence. The judge will also be able to ask the Commission to investigate the defendant's means before making an order. The intention is to abolish the system of means testing every defendant, which is considered an ineffective and wasteful aspect of the current scheme, while ensuring that in the more expensive cases defendants who are not acquitted continue to pay towards the cost of their defence when they can afford to do so.

Conditional fees

31. The Bill reforms the law relating to conditional fees in two main ways.

  • Section 58(10) of the Courts and Legal Services Act 1990 bars the use of conditional fees in family proceedings. The Bill permits conditional fee agreements in cases involving disputes between couples exclusively relating to property and financial issues. Public and private law cases under the Children Act 1989 and other cases involving children will remain subject to a statutory bar.

  • It will enable the court to order a losing party to pay, in addition to normal inter partes costs, the uplift on the successful party's lawyers' fees, and in any case where a litigant seeks protective insurance against losing and facing an order for the other side's costs, any premium paid by the successful party for insurance (see paragraphs 45 and 47 below). The intention is to:

    • ensure that the compensation awarded to a successful party is not eroded by any uplift or premium. The party in the wrong will bear the full burden of costs.

    • make conditional fees more attractive, in particular to defendants and to plaintiffs seeking non-monetary redress. (These litigants can rarely use conditional fees now, because they cannot rely on the prospect of recovering damages to meet the cost of the uplift and premium).

    • discourage weak cases and encourage settlements.

    • provide a mechanism for regulating the uplifts that solicitors charge. In future, unsuccessful litigants will be able to challenge unreasonably high uplifts when the court comes to assess costs.


Legal Aid

32. The present scheme is contained in the Legal Aid Act 1988.

33. A common feature of existing civil and criminal legal aid schemes is that expenditure on them is demand-led. Any lawyer can do legal aid work for a client who passes the relevant means test (if any), and whose case passes the statutory merits test (in the case of civil legal aid), or the interests of justice test (in the case of criminal legal aid). Lawyers are paid on a case-by-case basis for each individual case or other act of assistance, usually at rates or fees set in regulations, but in some cases on the same basis as a privately-funded lawyer.

34. This means that there are few mechanisms or incentives for promoting value for money or assuring the quality of the services provided; and that neither the Government nor the Legal Aid Board is able to exert adequate control over expenditure or determine the priorities for that expenditure.

35. Over the last 6 years, expenditure on legal aid overall has increased from £620m in 1991/92 to £1,526m in 1997/98, a rise of 68%. In comparison GDP rose by 18% over the same period. Meanwhile the number of people helped overall has increased by 18% to 3.6m. In civil and family legal aid, expenditure rose from £330m to £634m, an increase of 92%, while the number of people helped has fallen by almost 10%. Average payments in civil and family cases have risen by almost 90%, from £1,598 in 1991/92 to £3,018 in 1997/98. The cost of criminal legal aid rose by 50% between 1991/92 and 1997/98, from £397m to £597m, while the numbers helped has remained at around 615,000. Over the period average payments to defence lawyers went up by 11% and 66% in the magistrates' courts and Crown Court respectively.

Quality assurance and contract pilots

36. Since August 1994, the Legal Aid Board has operated a voluntary quality assurance scheme, known as franchising. Currently, some 2,520 solicitors firms have franchises in one or more of the 10 subject categories in which they are awarded (criminal, family, personal injury, housing etc.) A further 1,047 applications for franchises are pending. The Board is continuing to develop the franchising scheme, and introduce new categories, in order to underpin the move to a generally contracted scheme under the reforms in this Bill.

37. In Autumn 1994, the Board set up a pilot scheme which showed that non-profit-making advice agencies could provide legally-aided advice and assistance to the same standard as solicitors' firms. In October 1996, a second pilot was established, involving a larger number of agencies, to develop systems for contracting for advice and assistance work.

38. In November 1996, the Board began to pilot contracts with solicitors' firms to provide advice and assistance in civil matters. A pilot of contracts to provide mediation in family cases under the legal aid scheme commenced in May 1997. A pilot covering advice and assistance in criminal cases began June 1998, and will be extended in cover representation in the Youth Court early in 1999. 39. Since October 1997, the Board has set up a Regional Legal Services Committee in each of its 13 Areas to advise it about future priorities for contracting.

40. The Government has announced that all civil advice and assistance, and all family work will be provided exclusively under contract from January 2000. Only organisations with a relevant franchise will be eligible to bid for these contracts. Also, a new clinical negligence franchise will come into effect in February 1999; and from July 1999 only firms with that franchise will be able to take these cases under the legal aid scheme.

41. Two documents recently published by the Legal Aid Board explain aspects of the approach to contracting:

  • Legal Aid Quality Assurance Franchise Standard. Third Edition. Draft for Consultation, Legal Aid Board, September 1998.

  • Reforming the Civil Advice and Assistance Scheme. Exclusive Contracting - The Way Forward. Report Following Consultation, Legal Aid Board, October 1998.

Advice sector

42. There are over 1,500 non-profit-making advice agencies in England and Wales. They receive their funding - over £150 million a year in total - from many different sources, mainly local authorities, but also charities, including the National Lottery Charities Board, central Government, the Legal Aid Board, and business.

43. The provision of advice services is not spread consistently across the country. Some areas appear to have relatively high levels of both legal practitioners and voluntary outlets, while others have little or none. For example, the Legal Aid Board's South East Area has one Citizens Advice Bureau per 46,000 people, but in the East Midlands 138,000 people share a Citizens Advice Bureau. The Government believes that the fragmented nature of the advice sector obstructs effective planning, and prevents local needs for legal advice and help from being met as rationally and fully as possible.

Conditional Fees

44. Section 58 of the Courts and Legal Services Act 1990 allowed the use of conditional fee agreements in such types of case as the Lord Chancellor specified by Order (and subject to any requirements made by him in regulations). Section 58(10) excluded from the potential scope of conditional fees all criminal and family proceedings.

45. Conditional fee agreements allow clients to agree with their lawyers that the lawyer will not receive all or part of the usual fees or expenses if the case is lost; but that, if it is won, the client will pay an uplift to the solicitor in addition to the usual fee. In July 1995, conditional fee agreements were allowed for a limited range of cases (personal injury, insolvency and cases before the European Commission of Human Rights). The maximum uplift that could be charged if the lawyer was successful was set at 100% of the normal fees. In addition the Law Society recommended that lawyers should voluntarily limit the uplift to a maximum of 25% of the damages if that was lower than the 100% uplift of fees. At the same time, insurance policies were developed which allowed the client to take out insurance to cover the costs of the other party, and the client's own costs other than the solicitor's fees, if the case should be lost. Generally the uplift and the premium are taken from any damages recovered by the client. In July 1998 the Government extended the availability of conditional fees to all civil cases excluding family. Conditional fees may not be used in criminal cases.

46. Since the introduction of conditional fees, the common law has been developed in two recent decisions by the courts (in Thai Trading Co. (A Firm) v Taylor, The Times, 6 March 1998, and Bevan Ashford v Geoff Yeandle (Contractors) Ltd, unpublished judgment of Scott VC on 8 April 1998). In the first of these cases the Court of Appeal held that there were no longer public policy grounds to prevent lawyers agreeing to work for less than their normal fees in the event that they were unsuccessful, provided they did not seek to recover more than their normal fees if they were successful. (The latter was only permissible in those proceedings in which conditional fee agreements were allowed). In Bevan Ashford, the Vice Chancellor held that it was also lawful for a conditional fee agreement to apply in a case which was to be resolved by arbitration (under the Arbitration Act 1950), even though these were not court proceedings, provided all the requirements specified by regulations as to the form and content of the agreement were complied with.

47. There are also available insurance policies which can be taken out when someone is contemplating litigation to cover the costs of the other party and the client's own costs (including, if not a conditional fee case, the client's solicitor's fees) if the case is lost. Some of them were developed to support the use of conditional fee agreements but others are used to meet lawyers fees charged in the more traditional way. For the same reason that the success fee under a conditional fee is being made recoverable, it is also proposed to make any premium paid for protective insurance recoverable too.

48. The principles behind the Government's desire to see an expansion in the use of conditional fee arrangements were set out in a consultation paper, Access to Justice with Conditional Fees, Lord Chancellor's Department, March 1998.

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Prepared: 3 december 1998