Full speed ahead?
Date: 13 July 2007
Authors: Michael Zander
Issue: Vol 157, Issue 7281
Categories: Features
The Constitutional Affairs Committee’s report on the Carter reforms of legal aid, Implementation of the Carter Review of Legal Aid, HC 223, was probably the committee’s sharpest ever critique of government policy (See NLJ, 22 June 2007, pp 872–74 and NLJ, 29 June 2007, pp 912–14).
Despite this, the government’s 50-page response, published on 22 June, rejected all the criticisms and promised that the reforms would go ahead as planned (see Implementing Legal Aid Reform: Government Response to the Constitutional Affairs Select Committee Report, Cm 7158).
The response asserted that controlling costs is not, in and of itself, the goal of the reform programme and that “the aim of improved efficiency and better control over spending is, ultimately, to ensure that more people can be helped by legal aid within the resources available, without any reduction in quality, and in a way that contributes to, and benefits from, improved efficiency in the wider justice systems” (para 33).
NEED FOR MORE RESEARCH
The select committee said that before such radical reform was undertaken, more research was needed to identify the causes of rising expenditure. The response rejected the suggestion of delay pending further research:
“Potential cost drivers are clear, quantifying their relative impact is difficult…Detailed research on cost drivers—would take a great deal of time, with no guarantee of clear results, accompanied by the danger that it would become dated quickly. Moreover the drivers vary from provider to provider depending upon the interaction between their own work practices and the wider justice system.” (para 45)
FOCUS ON THE PROBLEM CATEGORIES
The select committee said that reform should be concentrated first on the areas where expenditure was rising fastest—crown court work and child care proceedings. The response accepted that these are the areas where costs have been rising fastest, but said that control is needed generally.
The government claimed to be “conscious of the risks in the procurement programme” and to have “listened to what providers told us during consultation”, which led it to moderating the speed of introduction of most of the fee schemes, as well as bringing forward the proposed introduction of best value tendering (para 44).
The intention, however, was to move right ahead. The government and the Legal Services Commission (LSC) had decided to “follow Lord Carter’s plan to tackle known cost drivers as a matter of urgency” and had also set out their intention to “move at an early stage to best value tendering which will enable providers to reflect the true price of doing business, including the impact of cost drivers” (para 46).
THE FRAGILITY OF THE PROVIDER BASE
The select committee warned that the reforms should not aggravate the fragility and decline of the legal aid supplier base. The government response accepted that “a strong legal aid provider base is clearly important” but argued that reduction in the number of providers is not the only test:
“[I]t is important to be clear that a reduction in the number of contracted providers does not necessarily impact on client access…Numbers of providers have been in decline for some time in most areas of legal aid. [The introduction of the general criminal contract in 2001] led to a drop in the number of solicitor offices claiming for criminal legal aid work from around 8500 in 1999/2000 to under 3000 by the time the contract was introduced. This figure has now dropped to 2510 (May 2007), whilst 100% coverage of duty solicitor schemes has been maintained.” (para 49)
The same was true in civil and family legal aid. “For example, the 32% reduction in the number of family providers between 2000–01 and 2005–06 did not prevent a rise in cash expenditure of 28% over the same period. In housing, the numbers receiving help have increased from 80,000 in 2000–01 to 140,000 in 2005–06 and over 170,000 in 2006–07” (para 50).
The response stated that the government and the LSC did not accept that the provider base was generally in decline. “The LSC has not experienced any significant supply issues in criminal legal aid. There is certainly no evidence of a mass exodus of firms. On the civil side, there are problems in covering every area of social welfare law in certain geographical areas” (para 51).
The response said this was being addressed:
“The Lord Chancellor has made clear his commitment to ensuring consistent access to civil legal aid across England and Wales. In successfully increasing the numbers of acts of advice through civil legal aid, the LSC has shown that legal aid providers are willing to take on additional contracts to deliver more services to clients…[o]ur view is that the provider base will be able to work with the new fee schemes.” (paras 51–52)
SHORT-TERM TRANSITIONAL ARRANGEMENTS
The select committee accepted that it was right in principle to move from payment by hourly rates to payment by the case. But it feared that the short-term introduction of transitional fixed and graduated fee schemes “at breakneck speed” would not allow carefully planned business restructuring. Quality legal aid suppliers might be forced out of business on grounds of income reduction before they had the chance to compete in the best value tendering process. It urged the government to reconsider the need for “potentially short sighted”’ transitional arrangements in light of the roll out of competitive tendering from October 2008.
The government response said that proceeding from the present arrangements to competition “would constitute too great a leap for the vast majority of providers”. It said:
“Fixed fees are a necessary precursor to best value competition, as they encourage providers to closely consider their costs in relation to particular volumes of work. In particular, the new fees will act as a baseline for providers, so that they are able to bid competitively using the knowledge and discipline gained under a fixed or graduated fee regime.” (para 55)
Also, fixed fees provided necessary controls on spending. The government claimed that the extension of the existing fixed and graduated fee schemes builds on 15 years of experience of these types of fees, as well as consultation, and detailed work carried out internally and externally. It “cannot agree with the Committee’s suggestion that the new schemes have been rushed or introduced in an ‘atmosphere of panic’” (para 60).
INSUFFICIENT BASIC DATA
In the committee’s view the government did not have sufficient information on which to base the proposed fixed and graduated fee schemes and the information it did have pointed to significant problems in “forcing radical change on the profession”.
Accepting that the scheme needed to be based on adequate data, the government’s response argued that the LSC had designed the new schemes on the basis of the existing experience with fixed and graduated fees and consultation with providers. The starting point for the civil and family schemes was that the existing budget would be used to pay fees reflecting the previous average for that type of case instead of hourly rates. On the criminal side, to rebalance expenditure from criminal to civil legal aid, there would also be some savings on historical costs.
In the longer term, best value tendering would establish the right price for the provision of different services in different regions or particular areas of the law.
APPROPRIATE GRADUATION
The committee emphasised the need for the new schemes to provide for adequate graduation for more complex and more difficult cases.
The government’s response said that the new schemes would provide appropriate graduation for exceptional cases. The LSC would be watching to make sure practitioners were not avoiding taking on more complex cases. It would be unlawful to refuse to take on a client on the ground that their language, skills, disability or ethnicity made the work more expensive. Providers who cherry-picked simple cases would face contract sanctions.
GEOGRAPHICAL VARIATIONS AND COMPLEXITY
The committee recommended that fixed or graduated fees should where possible reflect geographical variations and the complexity of cases. On geographical variations, the government’s response stated:
“We agree in principle, that as far as practicable, fees should reflect variations in cost. That is why we are moving to regional prices set by best value tendering for most areas…In the future, wherever possible, we propose that appropriate regional prices will be best set by competition to allow the best value—or ‘true’—price to emerge. Nonetheless, the LSC has been sensitive to the need to make transitional fixed fee schemes reflect local circumstances, though how far that is possible will vary with the particular scheme and the particular sector.” (para 73)
Moreover, existing differentials did not necessarily reflect true prices. Competition would be expected to reduce prices in some high cost areas where there were lots of providers.
On complexity, the response said the escape mechanism for “exceptional” cases was an important safeguard. But the fact that the work on a case involved costs beyond the fixed fee did not mean that the provider was underpaid on that case, since there would be other cases on which the work would cost less than the fixed fee.
TRAVEL AND WAITING TIME
The committee said that it was not right to include travel costs in fixed fees in rural areas or small towns where providers were thin on the ground. Waiting time was generally outside the control of providers. It was “manifestly unjust” to make providers bear the economic cost of waiting times beyond the average allowed for in fixed fees.
The response stated that the proportion of new standard fees assigned to travel and waiting times was based on historic costs. In the long run, best value tendering would encourage providers to minimise wasted time, but allow them to price it in where it was unavoidable, for instance police station practices that cannot be changed.
SPECIALIST PROVIDERS
The committee pointed to the danger that in a system of fixed fees, specialist firms that concentrated mainly on complex cases would be lost to legal aid.
The government’s response in effect accepted this:
“The new fixed and graduated fee schemes (for civil, family and immigration legal aid) are predicated on providers carrying out a range of cases that address the full spectrum of clients’ needs…Providers may choose to use particular practitioners as specialists to deal with more complex cases, however, the organisation as a whole will need to provide a full range of services in order to profit effectively from the new fees.” (para 90)
The select committee warned that the reform proposals might have a disproportionate impact on black and minority ethnic (BME) firms.
The government’s response argued that this issue mainly affected London firms, but that preliminary analysis of the data suggested “that the impact on BME providers in London is no worse than that on white providers in London” (para 108).
Michael Zander QC is Emeritus Professor, London School of Economics
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