LDLA MoJ Response Final [1]

Liberal Democrats Lawyers Association

RESPONSE TO TRANSFORMING LEGAL AID: Delivering a more credible and efficient system

Introduction

The Liberal Democrats Lawyers Association (LDLA) represents legal practitioners and others involved in the administration of justice who are members of the Liberal Democrats. We understand the financial pressures on the Ministry of Justice to find savings in Criminal Legal Aid, although we note that the legal aid budget has already been cut very substantially by the Legal Aid, Sentencing and Punishment of Offenders Act and by the lower fees built into the 2010 Criminal Legal Aid Contracts.  We are disappointed though that this new consultation continues the policy of previous administrations of salami slicing the legal aid budget by reducing the scope, supply and remuneration of legal aid rather than addressing the more costly and fundamental failures in the justice system (such as endless prison recidivism), or by working with the professions to redesign the legal aid system for a lower cost base or exploring options for bringing alternative funding sources into legal aid.

The Government is taking a huge risk with these proposals - the risk that the criminal defence system will simply fail as a result of this radical restructuring plan, that legal practitioners and firms will be put out of business on a massive scale and that defendants get summary justice but no defence. The cost of this occurring in terms of the credibility of the justice system, miscarriages of justice and additional burdens on the criminal justice system are immense, quite apart from departing from time honoured principles of equality before the law, set out in European Convention but arguably dating back to the Magna Carta itself.  It is within this context that we urge Government to look again at both principles and the practicalities of tendering for criminal defence, and if not workable or sustainable for this market Government should be prepared to abandon the plan. It needs to be understood that this is not a "market" that is oversupplied, research shows that high proportion of defendants currently go through the system unassisted and unadvised.[1] Nor is this a conventional market as whilst Government is both the purchaser and driver of demand, consumers are those at risk of losing their liberty.  We strongly urge that Government should not pursue reckless policies just because the client base are people who may have broken the criminal law- the majority of the population will find themselves at the wrong side of the criminal law at some point in their lives.[2]

Before answering the questions we reassert that there are political as well as economic questions to consider. Liberal Democrats came into Government to help sort out the deficit, but also to protect the rights and civil liberties of the most vulnerable in society who are often exposed to cruel winds during times of major social and economic change. Equality before the law is a fundamental principle on which the party stands. We do not believe the Party and its Parliamentarians should lend weight [7] to any proposals which strike at the heart of liberal democratic values, and nor does the party have any obligation to support proposals that were not within the Coalition Agreement. In this response we also make recommendations for alternative cost savings (summarised in our conclusion).

Restricting the scope of legal aid for prison law - Questions 1

Whilst we agree that some issues and complaints could be shifted from legal disputes to the Prison Ombudsman Service, legal aid for prison law remains an important tool for holding prison authorities to account. Issues such or serious bullying and discrimination by prison staff involve fundamental issues of human rights and dignity. We would  urge the Government to look again at the type of issues it wants to divert out the legal system here by restricting legal aid- there is a great deal of difference between a complaint regarding access to television or prison food quality, with serious maltreatment by officers, repeated  denial of contact with families, or ongoing prison detention of foreign nationals who have served their sentence but where UKBA/Home Office have failed to determine their future.    

Imposing a financial eligibility threshold in the Crown Court - Questions 2-3

In  principle we would support an income threshold.  The system of granting legal aid and then trying to get full contributions does not work well and is bureaucratic. Introducing a means limit for legal aid could provide for greater savings in relation to the costs of attempting to recover contributions and the shortfall in contributions.  The question is whether a client's "disposable household income" (which includes that of a partner) of £37,500 is the appropriate threshold - whilst this may look generous as the calculation excludes living costs and essentials, it needs to be offset against the potential legal fees which a non-legally aidable defendant might have to meet. As the consultation paper itself demonstrates, these can be considerable - for example up to £25K for a serious road traffic offence.   And if lawyers cannot recover their costs from non-legally aidable clients they will either go out of business or be unable to take privately paying clients in the first place.  If a client goes to prison and looses their £37.5k plus income, what is the position then? We propose that the assessment be against an individual's income and tapered upwards according to different legal costs.

Introducing a lawful residence test - Question 4

We disagree with the idea that foreign nationals resident in the UK should have lesser or no rights to legal aid just because their immigration status has not been regularised - this can often be due to severe delays and backlogs in UKBA's  caseload. This proposal would also effectively end legal aid for most refugees and asylum seekers - although technically an exception is proposed for asylum cases, the difficulty is that once asylum is granted they must wait a further 12 months, even if they have already been present for more than 12 months, before they can receive civil legal aid on any new matter.   

Judicial Review and civil merits test - Questions 5-6

We disagree with the proposal that preparatory work in judicial review cases should not be paid for from legal aid, as this is the most important work that is undertaken in judicial review applications; in over half of JR applications it enables the problem to be settled before the Judge grants leave to formally adjudicate the case.  Even if permission to proceed with an application is eventually refused, this does not mean that the case in frivolous or without merit an often it is impossible accurately to predict which cases are going to obtain permission and which will not.

As regards the civil merits test (question 6) for borderline cases, this raises similar issues about the difficulties of predicting the outcome- borderline cases by definition could go either way and much depends on the amount and quality of preparation that goes on. To exclude such cases, could risk serious injustices not getting to court.

Introducing Competition in the Criminal Legal Aid Market - Questions 7-25.

Disappointingly, the Government is not consulting here on the model of competitive tendering proposed or the principles of tendering for criminal defence work but rather is trying to impose a flawed model as a fait accompli and to an unrealistic timetable. Competition is not being 'introduced'  as such because it already exists for criminal defence firms, but there is a risk that competition may be seriously curtailed by a increasingly monopolistic model of provision (or one dominated by a few cartels) in which all casework allocation is fixed by the state and there is a fixed ceiling on the bids.  The consultation makes it clear that small and medium sized firms have no place in the market - a policy which runs counter to the Government's own business strategy of promoting SMEs. We question whether the public interest will be served by a system that tenders on the basis of lowest possible price but with no regard to quality or maintaining legal professional ethics. The proposals are also a significant departure from Lord Carter's report which first recommended competitive tendering for criminal defence work,[3] as the Carter proposals on tendering were unequivocal in supporting the principle of client choice as the driver of quality. Given the downward pressure on price, combined with fee cuts, restructuring costs and timetable constraints we seriously doubt whether doubt whether it will even be possible attract sufficient applicants under the proposed model. 

Many of these flaws become apparent in the consultation questions.

Procurement areas and contract size and scales-  Questions 9-15

Large procurement areas mean higher travel costs and overheads - it is far more efficient for practitioners to cover a small number of police stations or magistrates courts as this enables work (ie court appearances and duty slots) to be scheduled efficiently, and for cases to be handled seamlessly. Having to stretch resources too far in order to cover dispersed areas and service a high volume of clients in multiple centres could waste resources and involves far greater management oversight, the additional costs of which are not included in the proposed contracting system. We cannot see how contact sizes (in answer to question 14-15) are appropriately mapped to the proposed procurement areas (in answer to questions  10-12), as this expects Lincolnshire, Norfolk, North Wales, North Yorkshire, Thames Valley, Suffolk, Surrey and Wiltshire to be served by only four providers per county. Even if this model were potentially feasible, it is not helped by the proposal that a contract to deliver criminal legal aid defence services in one procurement area should not permit that provider to deliver services in another area. So for example where a provider may be able to partially cover two procurement areas, but is unable to cover one procurement area fully due to their office locations at the periphery of large county boundaries it will be impossible to deliver on the Government's specifications. 

Expanding a business to cover a whole CJS area may require significant investment and time. The proposed number of contracts envisages substantial restructuring in the current market - up-scaling businesses by on average 250%, merging with other firms or becoming an ABS, all of which will entail substantial cost and due diligence. This level of restructuring is likely to mean having to access loan finance to upgrade IT and management systems, when bank lending to businesses is at its lowest ebb for decades - a poor prospect if contracts can only be guaranteed for three years (question 9).

Bids: Price, cost and fees- Questions 8, 21-12

We share the concern of many practitioners that the Government's push for providers to bid for work at the lowest price possible may result in a race to the bottom, especially in respect of quality.  Proposing to cut fees by 17.5% (questions 8 and 21) on top of a previous 10% cut imposed in October 2011 and inviting bids below that level (ie below 27.5% of last year 's fee and cost levels), appears to be deliberately either inviting unsustainable bids or dis-incentivising bids at all which would clearly be undesirable for access to criminal legal aid. The model also requires the inclusion of all costs of travel and subsistence disbursements (question 22) under each category (police, magistrates and crown courts)  when submitting bids, making it harder to cover rural or geographically dispersed population centres (see comments on this above). The Otterburn report has already showed that many firms of solicitors doing crime work have been operating at the very margins of profitability even in 2010 before the initial 10% fee cut.[4] An NAO report from 2010 also found that profitability has been a downward trajectory for firms doing criminal defence work, given that legal aid accounts on average for over 60% percent of their income, and that government spending on criminal legal aid has been falling in real terms. The report also found that the larger the supplier, the lower the profit margin.[5]

Quality and Choice- Questions 17-18

We find it quite astonishing that the Government should be proposing to restrict client choice (question 17) on the basis this that gives 'an incentive to provide a legal aid service of a level of quality above the acceptable level specified by the LAA as firms effectively compete on quality rather than price.'[6] Given that consumer choice is the Government's mantra for reforming all other areas of public services and held up as the market mechanism for balancing quality and price and devolving power, it all the more strange that Government should be proposing a centralised state allocation system here.  It is quite clear that the Government do recognise in the consultation that there is no incentive at all, in a price competitive system where clients are allocated, for quality to be anything other than very poor and that this is the deliberate policy.  Even more astonishing however is that proposal that cases should be allocated on the basis of clients birthdays of surname initials (question 18). In our view access to a lawyer/supplier of choice or preference is a fundamental right and it should not be removed by administrative means. 

Bids: The procurement process - Questions 23-25

In answer to questions 23-25 we note that the  timetable for completion of the procurement process is short as Government expects the final stages to be completed by April next year. Firstly it is a complex process - a Pre-Qualification Questionnaire involving initial short-listing of potential providers and benchmarking against capability criteria, followed by invitation to tender involving a 'Quality and Capacity Assessment,' submission of a delivery plan, proof of relevant quality mark and peer review standards, and subsequent competition on price. Given the scope of contracts (question 7) each bid is intended to cover police station, magistrates court and crown court work - which is a lot to pack into one service offer.  Quite apart from the due diligence and corporate governance required with any restructuring changes, additional considerations will also arise from TUPE transfers given that this is a public service.  And if the presumption holds that only new ABS operations will be best place to win contracts and deliver services, this too looks implausible as it is impossible that new licences will be issued in time for the PQQ stage commencing this October - obtaining an ABS Licence from the regulators can take a minimum of 18 months.   

 

Given these steps - a process which is far more onerous than any contracting scheme introduced to date (for either civil or criminal legal aid) , we simply do not see how completing the invitation to tender stage by early march next year in order to start delivering new services under contracts by September is realistic. The new Legal Aid Agency's capacity to run such a competitive procurement process is as yet untested, and the Ministry of Justice's record in this area and getting value for money out of the procurement process is lamentable as the problems with court interpreter services has recently illustrated. The Ministry of Justice needs to consider what the implications will be if things go wrong. The stakes could not be higher - peoples civil liberties and the integrity of the criminal justice process; if the process fails either due to insufficiency of supply or poor quality services this will in miscarriages of justice and wrongful or unsafe convictions which can result in huge costs for the state.

Reforming Fees in Criminal Legal Aid- Questions 26-29.

We do not agree with these proposals (question 26) which appear to us to be a very cynical attempt to change the incentives in the system in a way that will work adversely against defendants. The new fee proposed fee scheme for Crown Court litigation raises the fee for early guilty pleas and drastically reduces the fees for ongoing trial procedures. This is clearly intended to be a deliberate financial incentive for lawyers to get their clients to plead guilty, or to shorten cases, regardless of the issues or evidence at stake. It is a conflict of interest for Government to push criminal defence services into this position, and the potential for injustice is huge.

The largest most single significant cut proposed (questions 27-8) is to high cost (VHCC) cases- 30 per cent. We understand the rationale for this given that a small number of cases absorbs such a disproportionate share of the overall legal aid budget- resources that could be redirected  elsewhere in the legal aid system. However, these are also by far the most complex cases for practitioners to deal with.  So what needs to be explored is whether VHCC savings could be achieved in other ways. Proposals that have been suggested by LDLA include far greater use and recovery of restrained assets (by amending the Proceeds of Crime Act), and use of compulsory Director's insurance for legal costs in fraud cases; this might enable some VHCC cases to be removed from the scope of legal aid altogether, whilst ensuring that all necessary defence costs are met.

Finally in regard to multiple advocates (question 29), this should primarily be a matter for the judiciary and case management rather the Legal Aid Agency.

Reforming Fees in Civil Legal Aid  - Questions 30-32.

We question whether it is possible to impose a further fee reduction in family legal aid cases by 10 per cent as these have already been cut by 10 per cent (and restricted in scope) under the LASPO reform package. This seems unfair to those firms which have recently signed new Family contracts, which started on 1 April 2013. It is also clear from this consultation that once MoJ have completed the crime tenders, they intend move to a price competitive system for the procurement of remaining family and civil work. Combined with additional scope restrictions, this could potentially devastate remaining provision for civil and family work.  

Expert Fees in Civil, Family, and Criminal Proceedings - Questions 33.

Our concern with proposing a 20% across the board cut is that this risks expert being less attracted to appearing in cases funded by legal aid or delivering a poorer service for legal aid clients, so once again a two-tier justice system. 

Equalities and Impact Assessments Questions 34-35

We note that there are no separate published equality impact assessments, but we would expect this package of proposals to be adverse to BME firms - operating as SMEs- and to the diversity in the supplier base despite the Government's drive to improve social mobility in the legal profession. The proposals well as adverse to vulnerable groups protected by the Equality Act in terms of access to judicial review remedies and also possible Equality Act issues on race grounds regarding the residency test, as well as the experience of black youth in the criminal justice system. However, in the impact assessments that have been undertaken, all of the risks that we have highlighted in this response, for example in respect of quality, access and legal aid supply chains are identified and mentioned- they should serve as warnings to Government. The biggest risk of all though which is not sufficiently discussed in the impact assessment is the risk of wide-scale breach of Article 6 of the European Convention (as incorporated by the Human Rights Act 1988.)    

Conclusion

The proposed package is highly risky and contains some exceptionally harsh cuts in fee rates - this combination of lower fees, restructuring and competitive procurement could decimate the entire legal aid supply chain, and with it undermine the Criminal Justice System. Given the risks it is imperative that the MoJ work through alternative scenarios for achieving similar scale savings. LDLA proposals comprise

-  lifting the bar on assets restrained by a criminal Restraint Order being used to fund reasonable legal expenses

- removing long and complex fraud cases from the scope of Legal Aid altogether and instead require company directors to take out insurance against the costs of defending in prosecutions arising out of the conduct of their company

- use of penalties (which could reimburse legal aid) against the CPS where prosecution conduct lead to wasted costs, long trial extensions etc 

- a strategy for decriminalising minor offences and reducing use of custody (currently the highest in Europe) through restorative justice alternatives

 - making savings from MoJ administrative, services and procurement budgets     

  



[1] Access to Criminal Defence Services, Vicky Kemp, LSRC 2010. Suggests up to or over 40% unrepresented in Magistrates Courts

[2] A Poll carried out by Onepoll 2008-9 found that well over half the poll respondents readily admit to lawbreaking; in fact findings suggest that the average brit breaks the law 8 times a day, driving related offences, illegal downloads, drug use and underage alcohol/tobacco purchase, public sex and underage sex, littering, and TV licence evasion ranked highest.   

[5] The procurement of Criminal Legal Aid in England and Wales by the LSC NAO 2009

[6] See Impact Assessment