Get Carter

Plans for a thorough overhaul of the legal aid system were unveiled last July by Lord Carter of Coles as part of the Government's drive to stem the rising cost of publicly funded cases. Andrew Towler brings us up to date with the story so far.

Lord Carter was appointed by Lord Falconer in July 2005 to undertake a review of the legal aid system and make recommendations for a more efficient distribution of the legal aid budget. The Lord Chancellor endorsed Lord Carter's recommendations for a market-based system for legal aid procurement and payment of lawyers on completion of cases rather than by the hour. The proposals, including that firms should bid competitively for legal aid contracts, immediately sparked negative reactions among legal aid lawyers. Many said it will threaten firms serving local communities, particularly those handling work for minorities, and could signal the end of local firms which rely heavily on legal aid for their income.

A subsequent report commissioned by the Law Society predicted that over 800 legal aid firms could be forced out of business if the reforms proposed by Lord Carter went through. This was twice as many firms as anticipated by Lord Carter. The report, prepared by LECG, an offshoot of the University of California at Berkeley, warned that typical profits, allowing for all costs, would range from only 2 per cent down to about -6 per cent. By contrast, 'comparative industries' such as financial advisor services, typically expect a 10 to 15 per cent profit.

The Law Society stated that without higher fees and a rethink of the Carter implementation timetable, the consequences for legal aid would be “disastrous”.
“The Government is trying to make efficiency savings too soon, firms must be allowed to restructure first,” said Law Society Chief Executive Desmond Hudson. “The over-hasty imposition of this change programme on a very fragile supplier base could prove to be disastrous.”

One of the Law Society's biggest fears, backed up by the LECG research, is that no new solicitors will want to practice legal aid work, leading to the reversing of the ageing supplier base. The research highlighted a recent survey which found that whilst 60 per cent of student solicitors said they would like to do publicly-funded work, only 21 per cent actually do, due to “perceived low salaries, limited career prospects and poor working conditions.”

Andrew Holroyd, Law Society Vice President, said: “There has been an alarming reduction in the number of law firms doing legal aid work in recent years and there are few incentives for the legal aid lawyers of tomorrow. We will be pressing the government for increases in rates that allow viable businesses to develop and the entire sector to return to health.”

The Law Society is pointing to the recent increase in pay rates for the junior criminal bar and Scottish legal aid practitioners, as evidence that there are funds available. It also highlights that the administrative costs for the Legal Services Commission have risen from £62.4m in 1999/2000 to £96.4m in 2004/2005 – including a spend of £605,000 on stationery alone last year.

“The Government’s pledge to provide a ten million pound transition fund to help firms adapt to the new environment is a step in the right direction but given the scale of the change much more support will be needed,” said Holroyd.

The Legal Aid Practitioners Group welcomed the LECG research. Chairman Richard Miller said: “The legal aid supplier base is very fragile, and needs support if clients are not to lose the services they need. It is in danger of being significantly damaged by the Carter reforms: even treatment aimed at saving the patient may kill if the patient is not strong enough.”

The continued furore over Carter's plan led to the Government making minor amendments to the suggested timetable and other areas of the proposals - yet these failed to silence critics. "The changes announced by the government are welcome but they do not go far enough and there is much detail to be assessed,” said Andrew Holroyd. “Fundamentally, a budget that is to be cut from levels that are already not viable will further endanger the supplier base. Practitioner associations and individual solicitors tell us that further erosion in that supplier base may be inevitable.”

Steve Hynes of the Law Centres Federation welcomed the decision to delay the introduction of fixed fees for police station work and for civil legal services from April 2007 to October 2007. “Clearly by delaying the introduction of fixed fees the Government has listened to our concerns about the indecent haste at which they are trying to press ahead with the reforms,” he said. However, Hynes slammed the decision to introduce a unified contract for private and 'not-for-profit ' agency civil legal services in April 2007. “We will be putting strong representations to the Commission that they are in breach of their obligations under the voluntary sector compact if they press ahead,” he said.

The other concessions in the reform plan, entitled 'Legal Aid Reform: the Way Ahead', included forward price competitive tendering from 2009/10 to October 2008. Initially this would introduce revised standard fees for magistrates' courts - only in major urban areas - and set fixed fees for police station work according to new boundary areas to allow for local sensitivities. The Lord Chancellor also confirmed that there would be a re-consultation on the plans for family legal aid, although he denied this in anyway undermined Lord Carter's original report.

“In absolutely no sense at all are we not accepting Lord Carter's proposals,” said Falconer, sitting alongside Lord Carter at the new plan's launch. “He identified the need for more fixed fees and a move towards open competition on price and we accept those conclusions. We have changed some of the figures because we have listened to solicitors during the consultation and we accept there could be some improvements to the details of the family scheme...but we are committed to market-based reform.”

Lord Carter said he was “encouraged that the direction of travel had been maintained by the Government” and that the “amendments made a great deal of sense”.

Despite the surprising climb-down by the Government over a number of the vexatious issues, this does not appear to be a view shared by solicitors. This one could run and run.

Published on: 30-01-2007