Reform of Legal Aid in England and Wales: the Government Response Part 36
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This is Part 36 of the government response to Reform of Legal Aid in England and Wales. Please read the other parts for a full picture. Used under the terms of the Open Government Licence http://www.justice.gov.uk/downloads/consultations/legal-aid-reform-government-response.pdf.
Key issues raised in consultation – reducing civil and family fees
5. There was strong opposition to the proposed general reduction in fees
across all respondents, most particularly amongst solicitors. As noted in
Annex F above, the general view was that this would render legal aid
work unviable, deter experienced practitioners from carrying out this type
of work, and result in only those cases with the greatest prospect of
success being taken. While the Bar Council questioned the amount of the
savings that would be made, they did concede that if a saving had to be
made it would be better to achieve this through an overall reduction in the
level of fees paid rather than a more general restructuring of fees. This
was subject to there being a period of stability once the reductions were
introduced.
Key issues raised in consultation – codifying and reducing barristers’
rates
6. The Law Society, and solicitor respondents generally, strongly supported
the proposed reform as a first step towards harmonising the rates paid to
barristers and solicitors. While the Bar Council opposed the proposal, this
was on the basis that the proposed benchmark rates did not make any
allowance for more complex cases where they argued that a greater level
227 Reform of Legal Aid in England and Wales Government Response
of experience, complexity or expertise merited a higher rate. However,
they did agree that any general reduction to rates would have to be
applied equally to barristers’ fees.
The Government response
7. Under section 25(3) of the Access to Justice Act 1999, the Lord
Chancellor is explicitly required to have regard to the cost to public funds
and the need to secure value for money when setting remuneration rates.
Given the urgent need to address the fiscal deficit the Government’s view
is that it is crucial to review every area of expenditure to ensure that this
duty is being met and that the amount that it pays for any service
represents maximum value for money. In this context the Government
considers that it needs to ensure that it only pays those fees that are
absolutely necessary to secure the level of services that are required.
8. As noted above, the Bar Council specifically argued that the benchmark
rates set out in Table 5 of the consultation paper were incorrect. While
they did not provide any specific examples of cases where higher fees
were being paid, the Government made it clear in paragraph 7.14 of the
consultation paper that it intended to set the rates for Queen’s Counsel in
the Supreme Court at a different level to those in the High Court and
Court of Appeal to reflect the novelty and complexity of the case issues
being advocated at that level. Therefore the rates set out in Table 5 of the
consultation paper for Queen’s Counsel High Court and Court of Appeal
do intentionally represent a reduction to the rates currently paid at that
level. However, the Government has revisited the other proposed rates
and has identified that the rate of £120 per hour for junior counsel in the
county court contained in Table 5 in the consultation paper was incorrect.
Further discussions with the LSC have confirmed that split rates of
£125.00 outside London and £150.00 inside London are currently used as
the starting point for payments to counsel in the county courts, with staff
having discretion to award higher levels if they consider it justified.
Otherwise the Government is satisfied that the rates set out in Table 5 do
accurately reflect the rates currently paid.
9. Clearly no provider is likely to support changes that directly impact on
their own income, therefore the opposition to the proposed general
reduction in fee levels was to be expected. However, in this context it is
interesting to note the substantial support from the solicitor sector for
codifying and reducing barrister’s fees. This reflects concern amongst
solicitors, generally, about the different rates currently payable to
barristers and solicitor advocates for comparable work.
10. The proposals to codify barrister’s rates and reduce all fees paid in civil
and family matters by 10% will deliver an estimated £50 million in annual
steady-state savings. This will make an important contribution to making
substantial savings in overall legal aid spend. While the Government
accepts that there is a risk that the proposed fee reductions could lead to
at least some providers leaving the legal aid market, given the current
fiscal deficit it considers that it has to look critically at what the market can
228 Reform of Legal Aid in England and Wales Government Response
sustain as opposed to what providers would like to receive in terms of
remuneration for legal aid work.
11. As set out Annex F, taking into account all of the available data, on
balance, the Government considers that the proposed reductions are
likely to be sustainable. It considers that they draw an appropriate
balance between the need to reduce spending and encouraging providers
to be efficient and innovative, while ensuring that clients can continue to
access legally aided services. Although there is a risk of short term
disruption in supply in some areas, particularly immigration and asylum
and some other areas of work mainly provided by the not-for-profit sector,
it is confident that these could be dealt with by appropriate mitigating
action by the LSC, such as running additional bid rounds and/or
expansion of other services such as telephone, if suitable.
12. For the reasons set out above the Government has decided to:
– implement the proposed 10% reduction in all fees paid under the civil
and family legal aid scheme; and,
– codify barristers rates, subject to a 10% reduction, as proposed in
Table 5 of the consultation paper, subject to amending the county
court rate to reflect that currently being applied by the LSC
13. The 10% reduction will apply to all fees and hourly rates paid under the
civil and family legal aid scheme, except those where the service has
been procured following competition on price, regardless of whether the
service provided is subject to fixed rates, general assessment or an
individually negotiated contract. This includes Very High Costs Cases
which are paid under hourly rates or “events rates” models, but not those
paid under risk rates.
Enhancements in civil and family cases
14. The consultation asked:
Question 33: Do you agree with the proposal to cap and set criteria for
enhancements to hourly rates payable to solicitors in civil cases – If so, we
would welcome views on the criteria which may be appropriate.
Question 37: Do you agree with the proposal to cap and set criteria for
enhancements to hourly rates payable to solicitors in family cases. If so,
we would welcome views on the criteria which may be appropriate.
15. There were 1,148 responses to question 33. 317 (28%) agreed with the
proposal, 751 (65%) disagreed and 80 (7%) neither agreed nor
disagreed. There were 1,089 responses to question 37. 382 (35%)
agreed with the proposal, 662 (61%) disagreed and 45 (4%) neither
agreed nor disagreed.
229 Reform of Legal Aid in England and Wales Government Response
Key issues raised in consultation: new caps
16. Although there was general opposition to these proposals, a sizeable
minority of respondents support the proposed reductions in both areas.
The Bar Council, and barrister respondents generally, were firmly
opposed to the proposed caps, arguing that given the low level of
standard rates, the current maximum rates for enhancements were
necessary to allow for highly skilled, complex and urgent work to be
remunerated at a reasonable rate. They also noted that, given that these
higher rates were used very rarely, the savings from capping these at the
proposed new lower limits would result in negligible savings. The
Association of Her Majesty’s District Judges partly echoed this view and
expressed concern that such a cap might deter more experienced
litigators.
17. The Law Society and many solicitor respondents took a different view.
While they accepted that the proposal would impact on solicitors doing
very complex cases, they took the view that as such cases were fairly
rare the proposed change was unlikely to affect many cases or save
substantial sums for the legal aid fund. On this basis they saw no
particular problem with introducing the new caps provided that they did
not result in a pro-rata reduction in the level of enhancements currently
awarded below these rates.
Key issues raised in consultation: new guidance
18. The consensus amongst respondents generally was that it was
unnecessary for the LSC to issue any new criteria for the setting of
enhancements, as the current bases for enhancements are well
understood and are sufficiently flexible to take account of a wide range of
factors. These factors are already set out in guidance published by the
LSC. Only very limited suggestions for new criteria were received and
these did not differ significantly from those already used by the LSC.
The Government response
19. Although the current limits have been in place since 2007, indicative data
from the LSC and the general consensus amongst respondents is that
very few cases currently exceed the proposed new lower limits. The
Government therefore accepts that any savings that would arise at this
time would be negligible. It also recognises that, while it is not possible to
assess what the precise impact on individual providers might be, where a
particular provider has received enhancements at the higher rates in the
past, the proposed new caps would mean that they would receive less
income for similar cases in the future. While the Government accepts that
this may mean that some practitioners would leave the legal aid market,
as noted in Annex F above, the Government is satisfied that the proposed
changes are likely to be sustainable.
230 Reform of Legal Aid in England and Wales Government Response
20. As noted above, the Government accepts that any savings that would
arise from the introduction of the proposed new limits on enhancements
at this time would be negligible. However, this is solely due to the fact that
very few cases currently appear to exceed the proposed new limits. It is
far from clear that this would be the case in the future. Given the pressing
need to address the fiscal deficit the Government considers that it is
important to take steps now to ensure that there are appropriate controls
in place to avoid future cost pressures. It considers that the proposed
changes to the maximum level of enhancements that can be paid in civil
and family cases are critical to this in providing greater certainty and
control over those areas not covered by standard fees and hourly rates.
Given the general consensus about the very limited numbers of cases to
which higher rates currently apply, it is satisfied that lower maximum limits
can be applied without adversely affecting sustainability.
21. During the consultation the Government identified that paragraph 7.12 of
the consultation paper incorrectly suggested that the maximum rate of
enhancement that would payable in civil (non-family) cases in the Upper
Tribunal would be 50%. These cases currently attract the same level of
enhancement as the High Court, Court of Appeal and Supreme Court and
it is not the Government’s intention to alter this link. Therefore, the
maximum rate of enhancement that would be payable in these cases
should also be 100%.
22. The LSC already publish guidance on the application of enhancements
which contains detailed and comprehensive criteria. Given that only a
small minority of cases appear to currently exceed the proposed new
thresholds and the limited suggestions for additional/revised criteria, the
Government is satisfied that new criteria are not necessary at this time.
23. The Government has therefore decided to cap the maximum level of
enhancements that can be paid to solicitors in civil and family cases
generally, as proposed in the consultation paper, but to apply the 100%
cap on enhancements to civil (non-family) cases in the Upper Tribunal.
However, the Government does not intend for this to lead to a pro-rata
reduction in the level of enhancements currently awarded below the new,
lower caps and will consider with the LSC how this can be clarified in
guidance.
24. Given that the existing LSC guidance is sufficiently detailed and
comprehensive the Government has decided not to introduce new criteria
at this time.
231 Reform of Legal Aid in England and Wales Government Response
Risk Rates
25. The consultation document asked:
Question 35: Do you agree with the proposals:
i) to apply ‘risk rates’ to every civil non-family case where costs may be
ordered against the opponent; and
ii) to apply ‘risk rates’ from the end of the investigative stage or once
total costs reach £25,000, or from the beginning of cases with no
investigative stage –
Question 36: The Government would also welcome views on whether
there are types of civil non-family case (other than those described in
paragraphs 7.22 and 7.23 of the consultation document) for which the
application of ‘risk rates’ would not be justifiable, for example, because
there is less likelihood of cost recovery or ability to predict the outcome.
26. There were 666 responses to question 35 (i). 81 (12%) agreed with the
proposal and 585 (88%) disagreed. There were 667 responses to
question 25 (ii), of which 84 (13%) agree with the proposal and 583 (87%)
disagreed. 346 respondents provided views on the types of case in which
risk rates would be justified.
Key issues raised in consultation
27. There was strong opposition to the proposed extension of risk rates from
the vast majority of respondents, including both the Law Society and the
Bar Council. The Bar Council, in particular, identified risk rates as being
the single biggest threat to the sustainability of the civil legal aid Bar.
There was general concern that ‘risk rates’ would apply to a very large
number of cases where costs are often not recoverable even though a
successful outcome is achieved for the client. Many respondents argued
that any extension of their use would deter experienced practitioners from
carrying out this type of work, and result in only those cases with the
greatest prospect of success being taken.
28. In broad terms, respondents agreed that any extension of risk rates would
need to meet three separate tests:
i) There must be adequate time to carry out an assessment of risk.
In many cases, particularly those where the legally aided party is
defending a case, for example a possession case, the litigation
timetable is driven by the other party and there will be no opportunity
to carry out a full investigation before beginning to defend the claim.
In others, the merits cannot be evaluated until after disclosure and
witness statements have been obtained. Standard limitations on
public funding certificates currently recognise these features by
providing for claims to be re-assessed at various stages.
ii) They should not apply to cases involving fundamental rights.
Currently, the Funding Code permits cases to be supported because
the consequences for the defendant are so grave or it is a matter of
overwhelming importance to them for some other reason, even if the
232 Reform of Legal Aid in England and Wales Government Response
prospects of success are poor. Logically, a high proportion of these
types of cases, which include possession proceedings, will fail.
Applying risk rates to such cases would mean that they would not be
accepted by providers.
iii) Cost recovery must be likely. Many publicly funded cases do not
involve the litigant seeking to recover money. For example, where
they are defending a possession case or appealing against a
homelessness decision. In such cases, the defendant will often settle
the matter out of court on the basis that the defendant/appellant does
not seek an order for costs. Even where the case is resolved in court
it will often result in no order for costs.
Reform of Legal Aid in England and Wales: the Government Response Part 35
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Very High Cost Cases
83. The consultation asked:
Question 29: Do you agree with the proposal to align the criteria for
Very High Cost (Criminal) Cases (VHCCs) for litigators so that they are
consistent with those now currently in place for advocates –
84. There were 616 responses to this question. Of this 250 (41%) answered
‘no’ to the proposal, and 285 (46%) answered ‘yes’. 81 (13%)
respondents neither agreed nor disagreed with the proposal.
Key issues raised in consultation
85. Mixed responses were received on this proposal. Solicitors and their
representative bodies opposed the proposal on the basis that the LGFS
was modelled on the present system of cases lasting up to 40 days, not
up to 60 days as proposed. They said that the LGFS was not designed to
deal with VHCC cases and especially the particular problem of high
volumes of unused material. It was pointed out the LGFS had no
adequate mechanism for the consideration of electronic and other nonpaper evidence, whereas the current structure of the VHCC cases
allowed for that work to be remunerated. Respondents also highlighted
the difficulty for litigators in the degree of risk involved in taking on a very
large case, allocating substantial resources and time, and simultaneously
being at risk in respect of the fee outcome. Concerns were also
expressed that a shift in payments to the end of a case (which would
occur as more cases were caught by the LGFS) rather than three-monthly
staged payments during the life of a case would cause significant cash
flow issues.
86. A few other respondents agreed that VHCCs absorb a large part of the
legal aid budget and need closer scrutiny, but they suggested that a more
detailed examination followed by proper consultation was required before
changing the working criteria.
87. The Bar Council and the CPS on the other hand were supportive of the
proposal. The Bar thought that this proposal had the effect of putting
litigators on the same footing as advocates. The CPS noted that defence
litigators and advocates would have a different threshold to prosecutors
(the prosecution threshold for a VHCC is 40 days), but they did not see
that as an issue as it simply reflected differences in the operation of the
221 Reform of Legal Aid in England and Wales Government Response
CPS and defence Graduated Fee Schemes (GFS) and VHCC fee
schemes. The CPS welcomed the suggestion of exploring the definition of
page count as they intend to make more use of electronic file transfer and
electronic evidence and new rules for this would need to be agreed.
The Government response
88. There are already a significant number of cases paid through the LGFS
where the original trial estimate was fewer than 41 days but the trials
have in practice taken longer. In spite of this, firms do not make very
heavy use of the existing provisions within the LGFS to make interim
payments in the case of financial hardship. Given this, and the fact that
there is a safety net in cases of genuine financial hardship, the potential
risks to provider cash flows do not appear to outweigh the substantial
operational benefits for Legal Services Commission (LSC) in aligning the
LGFS and AGFS so that VHCCs are standardised as cases with an
estimated trial length of over 60 days. There is, in our view, an adequate
mechanism for remunerating viewing of electronic documents by way of
special preparation.
89. The Government remains of the view that, consistent with the approach
currently in place for advocates, only cases due to last above 60 days at
trial or more should continue to be paid at VHCCs rates and that payment
for all work on cases due to last under 60 days should therefore be at the
levels set out in the Litigators’ Graduated Fees Scheme. We have
decided that the most straightforward way to achieve this is by continuing
to provide for individual case contracts for cases due to last 41 to 60
days, but to be paid at the rates set out in the Litigators’ Graduated Fees
Scheme, rather than VHCC rates.
90. Cases classified as VHCCs with estimated trial lengths of over 60 days
will continue to be remunerated under the current VHCC fee scheme
(hourly rate, stage negotiations).
Appointment of independent assessor for VHCCs
91. The consultation paper asked:
Question 30: Do you agree with the proposal to appoint an independent
assessor for VHCCs – It would be helpful to have your views on the
proposed role of the assessor (i) the skills and experience that would be
required for the post, and (ii) whether it would offer value for money –
92. There were 597 responses to this question. 322 (54%) disagreed with the
proposal to appoint an independent assessor, and 232 (39%) agreed.
43 (7%) respondents neither agreed nor disagreed with the proposal.
Key issues raised in consultation
93. The majority of respondents were against the appointment of an
independent assessor and thought that this would add an additional layer
of bureaucracy. The Judges Council were not in favour and noted the
potential for conflict with trial judges. Other respondents felt that there
222 Reform of Legal Aid in England and Wales Government Response
were insufficient details in the consultation paper on how much money
would be required to implement the new scheme and how an assessor
would maintain independence.
94. A few respondents were however supportive of the proposal. They
argued that VHCCs consume a disproportionate amount of the legal aid
budget and that a suitably skilled assessor would guarantee
independence and provide rigorous assessment which would offer the
public reassurance that taxpayers’ money was not being wasted in the
process.
95. Those who responded affirmatively to this proposal expressed a range of
views as to the suitability for the post. It was suggested that anyone on
the Serious Fraud Office (SFO) list would have the necessary skills and
would be able to oversee the work being done. Other respondents
suggested that a senior member of the Criminal Bar with knowledge of
how the system works, a cost judge, or a solicitor with good experience of
working on VHCCs would be a suitable candidate. Other suggestions
included: a retired High Court Judge with experience of dealing with
difficult and complex cases would provide the appropriate level of skills;
someone independent of the legal profession and the judiciary with a
sound knowledge of the work involved; and someone with a wide
experience in similar cases and their handling, both prior to going to court
and during case in court to be suitable for the position.
96. The majority of respondents took the view that an independent assessor
would not offer value for money given the few cases that are involved and
the necessity of an appeal system, suggesting that consideration should
be given to hiring experienced account managers instead.
The Government response
97. The Government accepts the argument that the appointment of an
independent assessor, especially if a serving or recently retired judge,
could potentially give rise to a conflict with the trial judge in a system
where judicial case management is being given greater weight.
98. The Government also acknowledges that the LSC has recruited lawyers
within the Complex Crime Unit as recommended by Lord Carter, and the
LSC is well supported by the LSC Appeal Committee, which upholds the
majority of LSC decisions. The Appeal Committee is chaired by a senior
practitioner and is made up of a panel of senior and experienced
practitioners, so in effect provides the kind of independent oversight
envisaged.
99. Overall the Government is persuaded that the limited benefits of the
reform are likely to be outweighed by the additional administrative costs,
and we have therefore decided not to proceed with this proposal.
223 Reform of Legal Aid in England and Wales Government Response
Amendment of criteria for the appointment of two counsel
100. The consultation asked:
Question 31: Do you agree with the proposal to amend one of the criteria
for appointment of two counsel by increasing the number of pages of
prosecution evidence from 1,000 to 1,500 pages –
101. There were 696 responses to this question. Of this, 437 (63%) answered
‘no’ with 229 (33%) answering ‘yes’ whilst 30 (4%) commented on the
question without answering yes or no.
Key issues raised in consultation
102. Many respondents, including some judges, believed that page count was
largely irrelevant to the question of allowing representation by two
advocates. Many respondents argued that some serious cases require
two counsel due to the seriousness and factual complexity,
notwithstanding a relatively low page count. The judiciary suggested that
the courts should be given unfettered discretion to allow for
representation by two advocates where the judges felt that it was
appropriate. They argued that the judiciary are already acting to ensure
that two counsel are allowed only in “exceptional cases involving
substantial, novel or complex issues of law or fact which could not be
adequately presented by a single advocate”. They argued that this was
the most important criterion and it is being applied competently by the
senior judiciary. It was suggested that increasing the page limit makes no
difference to whether a case contains substantial, complex or novel points
of law. The judiciary further argued that evidence from digitally stored
media such as disc or audio/visual recordings was increasingly being
served in electronic format, which did not count towards the page count –
which meant that a case could run to 1,500 pages if it were printed out
but because of the format in which it is was served, it would not qualify for
the revised criteria.
103. Some respondents did agree with the proposal. The Bar Council agreed
with the proposal, provided that the material disclosed electronically was
included and that the primary consideration remained the novelty or
complexity of facts or law in a case.
104. The CPS welcomed the suggestion of joint working with the LSC and the
judiciary to review the criteria for instructing two counsel. They believed
that the decisions to instruct one counsel on serious cases can cause
some concern among practitioners and that a more overt set of rules
would be helpful.
105. It was suggested that, rather than increasing the page count requirement
as a consideration for the appointment of two counsel, it would be more
effective for orders granted to be kept under constant review. It was often
the case that two counsel could be appointed at the commencement of
the proceedings, but that as the case progressed the matter may become
more straightforward, therefore potentially allowing for the order for two or
224 Reform of Legal Aid in England and Wales Government Response
more counsel to be revoked. This could be applicable, for example, in
cases which start with numerous defendants on the indictment but as the
case progresses they enter pleas leaving only one or two defendants
standing trial. It was suggested that this was something which the court
could keep under review throughout the proceedings.
The Government response
106. The Government has considered the arguments made by consultees.
We accept that the benefits of the proposed reform are likely to be very
limited, as the appointment of two counsel is very rarely determined in
practice with reference to the number of pages. We have therefore
decided not to proceed with this proposal. Instead, we will work with the
judiciary and prosecutors to review the criteria more broadly before we
consider proposing any changes to the criteria for appointment of two
counsel at the outset and through the lifetime of the case.
Conclusion
107. Having considered carefully the responses received on the consultation,
the Government has decided that it intends to implement the following
reforms to criminal remuneration:
i) to implement an overall fee of £565 for either way cases deemed
suitable for summary trial, but with the fee split between litigation and
advocacy as set out in paragraphs 28 and 29 above; and to enhance
the lower and higher standard fee in the magistrates’ court as set out
at paragraphs 24 and 25, and to abolish the committal hearing fee,
as set out in the consultation paper;
ii) to reduce Crown Court fees for cracked cases by 25%, leaving the
fees for guilty pleas unaltered, as set out at paragraphs 43 and 44;
iii) to align the fees paid in cases of murder and manslaughter with
those paid in cases of rape and other serious sexual offences, as set
out in the consultation paper;
iv) to remove the distinction between cases of dishonesty based on the
value of the dishonest act(s) below £100,000,as set out in the
consultation paper;
v) to remove the premium paid for magistrates’ courts cases in London,
as set in the consultation paper;
vi) to remove separate ancillary payments (or “bolt-on” fees) for
sentencing hearings and to subsume sentencing hearings within the
standard graduated basic fee as one of the five standard
appearances included within the base fee, as set out in paragraphs
81 and 82above; and
vii) to pay litigators in all cases with an estimated trial length of between
41 and 60 days under individual contracts at rates specified under
the Litigators’ Graduated Fee scheme, rather than at Very High Cost
Case rates, as set out at paragraph 89 above.
225 Reform of Legal Aid in England and Wales Government Response
108. Details of the new fees we intend to introduce for criminal
proceedings have been published separately and can be found at:
http://www.justice.gov.uk/consultations/legal-aid-reform.htm. We intend
to bring forward the necessary secondary legislation giving effect to
these reforms from October 2011.
226 Reform of Legal Aid in England and Wales Government Response
Annex H: Remuneration in civil and family proceedings
Introduction
1. The consultation sought views on a series of proposed reforms to
remuneration in civil and family proceedings.
2. Many respondents raised concerns that the proposed fee reforms to
criminal civil and family proceedings threatened the ability of providers to
deliver legally aided services. These concerns are considered at Annex F
above, and responses to specific questions on civil and family fees are
considered below.
Payments to solicitors and barristers
3. The consultation document asked:
Question 32: Do you agree with the proposal to reduce all fees paid in
civil and family matters by 10%, rather than undertake a more radical
restructuring of civil and family legal aid fees –
Question 34: Do you agree with the proposal to codify the rates paid to
barristers as set out in Table 5, subject to a further 10% reduction –
4. There were 1,735 responses to question 32. 115 (7%) supported the
proposal, 1,525 (88%) disagreed, and 95 (5%) neither agreed nor
disagreed. There were 1,061 responses to question 34. 369 (35%)
agreed with the proposal, 638 (60%) disagreed, and 54 (5%) neither
agreed nor disagreed.
Reform of Legal Aid in England and Wales: the Government Response Part 34
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The Government response
60. The Government notes the alternative proposals put forward by
respondents, but we believe that there would be benefits from the
simplification that the proposal would bring. Moreover, we continue to
believe that the value of an offence does not provide a particularly reliable
216 Reform of Legal Aid in England and Wales Government Response
proxy indicator for the complexity of the case, and that the enhancement
available for pages of prosecution evidence provides a reasonable and
adequate remuneration for case complexity, as more complex cases will
generally have a greater number of pages of evidence.
61. For the reasons set out above, the Government intends to proceed with
the implementation of this proposal as set out in the consultation.
Fees for magistrates’ courts cases in London and ancillary
payments (“bolt-ons”)
62. The consultation asked:
Question 28: Do you agree with the Government’s proposal to: (i) remove
the premium paid for magistrates’ court cases in London; and (ii) reduce
most ‘bolt on’ fees by 50% –
(i) Fees in the magistrates’ courts in London
63. There were 629 responses to question (i), and of those 473 (75%)
answered ‘no’, arguing that the premium paid for magistrates’ court in
London should be retained, and 156 (25%) agreed that the premium
should no longer be paid.
Key issues raised in consultation
64. The majority of respondents, including the London Criminal Courts
Solicitors Association, the Bar Council, the Law Society and individual
solicitors and barristers practising in London, did not support the removal
of the premium paid for magistrates’ courts work in London.
65. The LCCSA argued that London was a unique criminal justice area. It
was approximately 650 square miles and, as a result of a lack of
planning, there were no planned complexes of police station, magistrates’
courts, Crown Court centre and/or prison of the type often found in other
urban areas or cities. Hence costs in London were higher than elsewhere.
Respondents pointed out that clients were frequently held in custody
miles from their solicitor’s office and court centres where they were due to
appear, citing those located in HMP Belmarsh as an example. One
respondent commented that the proposal took no account of the fact that
duty solicitors were required to be able to attend a police station within 45
minutes.
66. A small number of respondents commented that London weighting was
introduced in 1992 following evidence being submitted to the then Lord
Chancellor’s Department as part of the fixed fee negotiations. They
argued that a separate impact assessment should be undertaken before
proceeding with the proposal to remove it. The London Criminal Courts
Solicitors Association (LCCSA) estimated that the removal would involve
a cut between 20% and 22% of solicitors’ income.
217 Reform of Legal Aid in England and Wales Government Response
67. The LCCSA suggested that the number of duty schemes should be
reduced thereby bringing about a consolidation of work for firms in more
local areas and perhaps some economy of scale. Some argued that the
larger number of London schemes and larger number of solicitors on
these schemes was simply a reflection of the higher population density of
London rather than an indication of a “more than adequate supply of
solicitors willing to undertake criminal work in London”.
68. It was also highlighted by respondents that London had been subject in
recent times to the arbitrary reallocation of work (for example, long delays
in Snaresbrook Crown Court led to the reallocation of its work to the
Isleworth Crown Court) with all of the inconvenience that involved for
practitioners, defendants, witnesses and victims. Similarly work was
arbitrarily moved from one magistrates’ court to another, or trials listed
away from the home court.
69. A number of respondents argued that London had a greater proportion of
Black, Asian and Minority Ethic owned and controlled firms and
employees and had been the most successful in the profession in
encouraging diversity and therefore any restrictions in economic viability
would disproportionately impact on diversity, as well as inhibit young
lawyers from entering legal aid work, particularly as the LSC Training
Grant scheme has been abolished. The Bar noted that the removal was
likely to have a marked effect upon the earnings of young barristers in
particular, given the degree of competition among advocates in London.
70. Some respondents, including some solicitors, working outside London
agreed with the proposal arguing that there was no justification any longer
for London weighting given the level of oversupply in the number of firms
providing legal aid services across London, in common with other urban
areas. A few respondents suggested that the premium should be
redistributed to rural areas with recruitment problems, whilst other
respondents queried the justification for paying a premium for
magistrates’ court work when there was no similar premium for Crown
Court work in London.
The Government response
71. The Government accepts that overheads tend to be higher in London.
However, fees for Crown Court work and for Very High Cost Cases are
uniform across England and Wales, although police station work in
London incurs higher fees than elsewhere in the country. Approximately
21% of criminal legal aid firms are based in London. In 2009-10, however,
London represented only 17% of the total of representation orders in
England and Wales. This may indicate that there is some oversupply of
criminal legal aid providers in London compared to the rest of the country,
or simply that there are on average more cases per provider outside
London for other reasons. While some firms may wish to leave the market
if fees are reduced, our assessment is that it is likely that sufficient
suppliers will remain to meet demand (see Annex F for further
consideration of market sustainability).
218 Reform of Legal Aid in England and Wales Government Response
72. For these reasons, the Government intends to proceed with the proposal
in the consultation and reduce all magistrates’ courts fees in London in
line with other urban areas, including the underlying hourly rates used to
determine whether or not a standard fee or non-standard fee is payable.
(ii) Ancillary Payments (bolt-ons)
73. Of the 691 respondents who answered this question, 543 (79%)
answered ‘no’ believing that ‘bolt on’ fees should be retained at current
level, 148 (21%) agreed with the proposed reduction.
Key issues raised in consultation
74. The majority of respondents directly answering the questions on ‘bolt-on’
fees disagreed with the proposed 50% reduction. They argued that these
reductions were significant, especially on top of the other consultation
proposals and reductions to the Advocates’ Graduated Fees Scheme
(AGFS) in train that would cut advocacy fees by 13.5% by April 2012.
Some respondents argued that this was no justification for any further
reduction, particularly as the ‘bolt ons’ were fully examined and approved
by Lord Carter of Coles as part of his review of legal aid procurement in
2006.
75. Barristers and their representative bodies argued that the 50% reduction
was crude, and would directly affect all advocates, but would have a
particularly adverse impact upon the junior bar as litigators would simply
pass the loss to the independent bar. In addition to having a detrimental
effect upon fees payable to junior advocates, it was argued that the
proposal would also discourage the young and talented advocates from
joining the criminal bar and this would consequently lead to fewer suitable
candidates coming through to the senior bar and the judiciary.
76. Some respondents argued that the proposal was another undermining of
Lord Carter’s recommendation. They stated that MoJ relied upon Carter
saying that ‘bolt-ons’ should be capped at £10 million, but they pointed
out that Carter made that recommendation at the same time as he
recommended that they be incorporated in the base fee for all cases. For
this reason they argued that the two proposals should go hand in hand.
77. Advocates argued that “bolt-on” payments were an important part of the
AGFS and reflect unusual but important hearings such as abuse of
process or disclosure. These hearings were often complicated and time
consuming to prepare. They argued that a half day hearing (of up to 2 ½
hours) would require many hours of preparation and that a great deal of
preparatory work was required, for example, in sentencing hearings
where sentencing reports had to be considered and issues such as
dangerousness properly addressed. It was also argued that the legislation
introduced by the last Government in respect of dangerousness,
indeterminate sentences, extended sentences, Anti- Social Behaviour
Orders, Sexual Offences Prevention Orders and Serious Crime
219 Reform of Legal Aid in England and Wales Government Response
Prevention Orders had meant that sentence hearings were invariably
more complex.
78. Other respondents argued that the comparison with prosecution fees was
irrational as defence lawyers had to act for a real person with associated
demands such as: language difficulties; learning difficulties; mental health
issues; alcohol or other substance abuse issues and juveniles.
Furthermore, it was argued that the prosecution lawyer might deal with a
number of cases on the same day thus giving economies of scale. It was
suggested that the job of presenting a case on a guilty plea was less
onerous than the job of mitigating for a client and that the CPS pay
advocates for written advice and for conferences not paid separately
under the defence advocates’ scheme.
79. A small number of respondents including the CPS however agreed with
the proposal to bring the defence fees broadly in line with current CPS
fees in respect of the standard and sentence appearance “bolt-ons”.
Bedfordshire Criminal Justice Board supported this view as well as a few
other respondents who took the view that the proposal would achieve
efficiency in the sense that removing the “bolt-on” sentence fee might
mean more cases listed for plea and sentence rather than plea then
sentence, especially if there was modest increase in the AGFS fee
payable on a guilty plea to reward representatives who concluded matters
at first hearing.
The Government response
80. The Carter review recommended in July 2006 that ancillary payments
should be subject to a fixed budget of just over £10 million, and that if that
budget were exceeded, ancillary payments should cease and be
absorbed into the base fee. The previous Government accepted this
recommendation, reserving the right to return to the issue if there was an
overspend. As the cost of “bolt-ons” is currently well in excess of that
limit, even after taking account of the reductions to the AGFS
implemented by the previous administration in April last year, there are
good grounds for reviewing them.
81. The Government accepts, however, that there is some force to the
argument that the proposed 50% across-the-board cut was too crude an
approach, given the great variety in nature of the hearings involved. An
amended approach, which we believe is the appropriate way forward, is
to retain ‘bolt-on’ fees for those cases which normally raise genuinely
complex or lengthy legal arguments, but to remove them for those which
do not. This would see ‘bolt-ons’ retained at current levels for all hearings
other than sentencing hearings. We propose to treat sentencing hearings
as one of the five appearances covered within the standard graduated
fee. These hearings take place in around 85% of Crown Court cases, and
do not routinely raise novel, complex or lengthy arguments. This is
analogous to the position with Plea and Case Management Hearings
(PCMH), which take place in almost every case, and are included as one
of the standard appearances within the base fee. However, an additional
220 Reform of Legal Aid in England and Wales Government Response
82. As with the original proposal in the consultation paper, payments for
committals for sentence and appeals from the magistrates’ courts would
remain, as these are fixed fees for stand-alone pieces of work rather than
“bolt-ons” to the overall graduated fee. We are also not proposing to
make changes to fees for committals for sentence or deferred sentence
hearings.
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67
AGFS payments for cracked trials vary according to the point in the life of a case when the
crack occurred. The period between the date after a case is either fixed or placed into a
warned list and the fixed date or the beginning of the warned list is divided into three equal
periods (‘thirds’), and any additional days are added to the final third.
211 Reform of Legal Aid in England and Wales Government Response
more sensible proposal might be to consider different rates of
remuneration where the defendant pleaded guilty to the original charges,
as opposed to pleading guilty to new or alternative charges laid by the
Crown.
36. Some respondents took the view that early guilty plea fees with a nonstandard fee for exceptional cases could represent a viable structure. It
was also submitted that the proposed 25% uplift would benefit those
undertaking routine work but not those undertaking more difficult and
demanding work and would therefore not provide a reasonable level of
remuneration.
(ii) Special preparation
37. 635 responses were received on question (ii) on whether access to
special preparation provides reasonable enhancement for the most
complex cases with 517 (81%) answering ‘no’, and 118 (19%) answering
‘yes’.
38. The majority of respondents including solicitors’ and barristers’
representative bodies did not believe that access to special preparation
provided reasonable enhancement for the most complex cases. They
argued that the ‘escape’ for exceptional cases with more than 10,000
pages to ‘special preparation’ hourly rates was, in reality, illusory as so
few cases would qualify, and that even if the special preparation threshold
were lowered, a move to hourly rates, as opposed to a graduated fee,
was a backward step to a payment method that would not reward the
most efficient providers.
39. A number of respondents, including the Junior Lawyers’ Division of the
Law Society, suggested that the Government should consider what cost
savings could be gained from a review of prosecution conduct before
making changes to defence fees.
40. Again, some respondents (including the CPS, Justices’ Clerks Society
and Bedfordshire Criminal Justice Board) favoured the proposed
harmonisation saying that would lead to increased efficiency, freeing up
courtrooms to hear truly contested trials. Some of these respondents also
highlighted the benefits of the proposal to victims in terms of certainty
when a plea is entered, not being warned to attend for ineffective court
hearings and less time spent waiting for trials. The CPS however noted
the risk of the economic incentive for the defence to maintain the not
guilty plea to trial, in order to earn the more attractive trial fee, particularly
if the difference between the plea fee and trial fee was significant.
The Government response
41. As with the previous proposal, the Government accepts that the final
decision on plea rests with the client and we do not suggest that lawyers
necessarily advise on plea based on the likely legal aid fee. However, as
before, we remain concerned that the current system of fees does not
212 Reform of Legal Aid in England and Wales Government Response
sufficiently support the aim of speedy and efficient justice and may
discourage the defence team from giving early consideration of plea given
the great disparity in fees depending upon the timing of the plea.
42. We recognise that there is some force in the argument that, even after
taking account of the 25% enhancement for early guilty pleas, the
proposals would not always adequately remunerate the most complex
cases which required significant and sustained work to prepare for trial,
and where the defendant changed his or her plea or the prosecution
changed its view at a late stage in the run-up to trial. It was for this reason
that we consulted on whether the existing rules on special preparation for
cases involving over 10,000 pages of prosecution evidence provide
reasonable enhancement for the most complex cases. Most respondents
disagreed that special preparation would provide appropriate
enhancement in the most complex cases.
43. We have concluded that the best way to achieve our aims, taking into
account the responses to consultation, is to leave fees for guilty pleas at
current levels while reducing the fees for cracked trials by 25% overall,
rather than the 33% implied by harmonisation at early guilty plea level.
This would reduce the current significant differential in fees between guilty
pleas and cracked trials, and thus remain consistent with the rationale
behind the original proposal. But it also addresses the key concern
expressed in consultation, namely the impact on the more complex
cases, as there would continue to be additional remuneration for work in
the run-up to trial. We therefore propose to reduce payments for cracked
trials under the Litigators’ Graduated Fees Scheme (LGFS) by 25%.
44. However, a simple reduction would not work for the Advocates’
Graduated Fees Scheme (AGFS) as some cracked trial fees would pay
less than the fees for an early guilty plea. We therefore propose to reduce
the value of pages of evidence under the AGFS for trials that crack in the
final ‘third’
68
to the same level as trials that crack in the second third and
then reduce all cracked trial base fees by 11%. This achieves an overall
reduction of 25% in AGFS payments. For payments under both AGFS
and LGFS the amended approach produces a higher payment than under
our original proposal for the most complex and paper heavy cases that
crack late. Fees for guilty pleas and trials that crack in the first third are
unaffected.
68
Ibid.
213 Reform of Legal Aid in England and Wales Government Response
Fees in cases of murder and manslaughter
45. The consultation asked:
Question 26: Do you agree with the Government’s proposal to align fees
paid for cases of murder and manslaughter with those paid for cases of
rape and other serious sexual offences –
46. This question was answered by 753 respondents, 592 (79%) of those
disagreed with the proposal to align the fees, and 123 (16%) were in
favour of the proposal. A further 38 respondents (5%) neither agreed nor
disagreed with the proposal.
Key issues raised in consultation
47. Most barristers and their representative bodies were opposed to this
proposal. Those against the proposal took the view that a reduction in
fees payable for murder cases would merely remove the requirement for
any heightened level of expertise and experience and would result in less
experienced advocates being instructed to conduct murder cases. They
argued that murder was unique, as on conviction it carried a mandatory
life sentence, adding that the pressure to ensure that everything was
done in representing a client charged with murder was much more acute
than in a rape trial where the average sentence was 6 – 8 years and that,
unless an Indeterminate Public Protection sentence was imposed, the
defendant would only serve half of that sentence.
48. Respondents also argued that a murder trial placed a significant burden
of responsibility on litigators and advocates and had a much higher public
profile. They covered a very large range of types of cases, including
mercy killings, and murder by stranger. In manslaughter there were often
complex health and safety issues. Respondents also argued that murder
trials were subject to intense public scrutiny and public interest and were
factually often much more complex and often involve for example, gangs
carrying firearms, CCTV, cell-site analysis, several victims, numerous
witnesses and complex legal issues such as diminished responsibility,
joint enterprise and provocation which were likely to be more technical
and wide ranging than in cases of rape and/or other serious sexual
offences. It was also argued that murder trials involved more complex
evidence, including the examination of forensic evidence, and it was
suggested that the volume of unused material was often very high in
murder cases, particularly in killings where there are other suspects and
lines of enquiry to pursue.
49. It was further argued that significantly more resources were allocated to
murder trials by the police and the prosecution and therefore any
reduction in funding to the defence would lead to “inequality of arms”
under the Human Rights Act. The Judges’ Council commented that there
was a difference: murder cases were class 1 (the most serious
categorisation) while rape cases class 2, and a very much more limited
cadre of judges was authorised to try class 1 cases.
214 Reform of Legal Aid in England and Wales Government Response
50. A specialist consultant in legal practice management suggested that there
were murder and manslaughter cases which raised particularly complex
issues and it would be appropriate to retain a fee structure that
recognised this, adding that it might be appropriate to consider complexity
on a case-by-case basis and for it to be certified by the Judge rather than
by offence type. This, it was argued, could result in savings in respect of
any complex cases across categories.
51. The CPS and Bedfordshire Criminal Justice Board (BCJB) agreed with
the proposal to align the fees. The CPS thought that the complexities
could be differentiated by page count on a case-by-case basis. The BCJB
argued that the cost of preparation of murder and manslaughter cases
was not necessarily greater than the costs of preparing for rape and
sexual offences.
The Government response
52. The Government accepts that murder is a unique crime, but notes that
many respondents also acknowledged that a complex rape case could be
more demanding than a ‘routine’ murder. It might be the case that murder
cases do tend to be more paper heavy than serious sexual offences and
that the same may be true of unused material. However, paper-heavy
cases do get paid more under the existing graduated fees schemes, as
both take pages of prosecution evidence into account in the fees payable.
53. The Government also accepts that a more limited cadre of judges is
authorised to try murder cases, although this does not necessarily mean
that there is more work to do to defend in a murder case. Many of the
factors highlighted in cases of murder (gangs carrying firearms, CCTV,
cell-site analysis, several victims, numerous witnesses and legal issues
such as joint enterprise) often also arise in cases other than murder.
54. In addition, we believe that the argument made about “equality of arms”
with the prosecution is misplaced. The AGFS payments proposed for
murder will still exceed the payments under the CPS graduated fees
scheme for prosecutors. On top of this, there will continue to be a fee
payable to the defence litigator, plus arrangements to ensure that where
necessary in the circumstances of a specific case the defence can gain
access to appropriate expert advice. When taken together, we believe
that these continue to provide reasonable assurance as to equality of
arms.
55. For these reasons, the Government intends to implement the proposal to
align fees for murder with fees for rape and other serious sexual offences,
as proposed in the consultation.
215 Reform of Legal Aid in England and Wales Government Response
Fees in cases of dishonesty
56. The consultation asked:
Question 27: Do you agree with the Government’s proposal to remove the
distinction between cases of dishonesty based on the value of the
dishonest act(s) below £100,000 –
This question was answered by 714 respondents with 375 (53%)
disagreeing with the proposal, and 290 (41%) in support of the proposal
to remove the distinction. 49 respondents (7%) neither agreed nor
disagreed.
Key issues raised in consultation
57. Many respondents accepted that the differentiation in fees according to
the value of the dishonesty was somewhat arbitrary and that the current
cut-off at values over £30,000 was probably ‘out of date’. Most, however,
agreed with maintaining a distinction for cases where the value exceeded
£100,000. Some suggested maintaining an increment, such as at £50,000
(so differentials would be between values of up to £50,000, between
£50,000 and £100,000, and over £100,000).
58. Some respondents took the view that the value of the dishonest act was a
good indication of the amount of work involved and the current fee
structure should be preserved. Some respondents also suggested that all
cases be aligned irrespective of value but at a rate above the current
Category F rate. It was argued that as the number and complexity of
transactions involved in an allegation of dishonesty increased so the
value involved increased, becoming more complex and requiring the
review of numerous pages of documentation which could be timeconsuming. Respondents also argued that the number of prosecution
pages was not an adequate marker of complexity and that both
complexity and seriousness should be considered. It was argued that
crimes concerning a higher value would attract higher penalties on
conviction and continue to require more senior advocates.
59. Some respondents, including the CPS, agreed with the proposal and felt
that the £30,000 threshold was far less significant than it used to be and
that the complexities could be differentiated by page count on a case-bycase basis. The BCJB also took the view that the complexity of a case,
rather the value obtained by dishonesty, was a better determinant of the
degree of legal aid to be afforded to defending it. It suggested that all
cases could be banded into Category F with an escalator applied for
aggravating factors such as volume of case papers or complexity of
issues.
Reform of Legal Aid in England and Wales: the Government Response Part 31
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203 Reform of Legal Aid in England and Wales Government Response
Annex G: Remuneration in criminal proceedings
Introduction
1. The consultation document sought views on a series of proposals for the
reform of remuneration in criminal proceedings.
2. Many respondents raised concerns that the proposed fee reforms to both
criminal and civil and family proceedings threatened the ability of
providers to deliver legally aided services. These concerns are
considered at Annex F above, and responses to specific questions on
criminal fees are considered below.
Single fixed fee for guilty pleas in either way cases in the
Crown Court deemed suitable for summary trial
3. The consultation asked:
Question 24: Do you agree with the proposals to:
i) pay a single fixed fee of £565 for a guilty plea in an either way case
which the magistrates’ court has determined is suitable for summary
trial;
ii) enhance the lower standard fee paid for cracked trials and guilty
pleas under the magistrates’ courts scheme in either way case; and
iii) remove the separate fee for committal hearings under the Litigators’
Graduated Fees Scheme to pay for the enhanced guilty plea fee –
(i) Single fee
4. 817 respondents answered question (i) on a single fixed fee of £565,
681 (83%) of whom disagreed with the proposal, 136 (17%) agreed.
Key issues raised in consultation
5. The overwhelming majority of respondents, including the Law Society,
the Bar Council, and individual solicitors and barristers, opposed the
introduction of a single fixed fee on the grounds that it would unfairly
penalise defence representatives for a decision made by the defendant.
They said that the proposal, if implemented, would see a significant
reduction in income for elected late guilty pleas. They argued that the
decision on election for jury trial and the timing of a guilty plea lay
ultimately with the defendant and there was no widespread evidence to
suggest that such decisions were influenced by lawyers out of selfinterest. Even if the clear advice to a defendant were to enter a plea of
guilty, there were some defendants, they argued, who would choose to
maintain a plea of not guilty and elect Crown Court trial in exercise of their
statutory right to do so. The respondents cited numerous reasons why
defendants might elect a Crown Court trial irrespective of any advice they
204 Reform of Legal Aid in England and Wales Government Response
might have received to the contrary. These included: a belief that they
would receive a fairer trial or had a greater chance of acquittal before a
jury or they might elect Crown Court trial in an attempt to delay
proceedings in the hope that the passage of time would lead to witnesses
changing their minds.
6. A wide range of respondents (including the Bar Council, the Law Society,
the Judges’ Council and individual firms) also argued that it would be
unfair and inappropriate to reduce fees where: the prosecution accepted
at the doors of the court a plea they had previously refused; where there
was a late provision of evidence by the prosecution; or where a case had
been dropped at the last minute or dismissed due to lack of evidence or
for any other reasons beyond the defence’s control. They pointed out that
full disclosure was unlikely to have taken place during the early stages of
a case and therefore a lawyer was often not in a position to give the sort
of robust advice that might be given at a later stage in the proceedings.
7. This view was echoed by the London Criminal Courts Solicitors
Association (LCCSA) who expressed concerns about court and
prosecution processes, the legal aid application process and a lack of
time between charge and first appearance, all of which meant that as a
matter of process there was insufficient time to prepare for a truly
effective first hearing. It was also suggested that in practice there was
often no possibility of having a meaningful dialogue with the prosecution
before charge and first appearance in Court and that frequently, the only
way to obtain sight of the prosecution evidence or be in a position to
discuss alternative charges was to elect trial at the Crown Court.
8. LCCSA added that the charging process had introduced a degree of
inflexibility and unwillingness to revisit a charging decision and that
defence lawyers are not given the opportunity to have some input into or
participate in the charging process, before the charge was laid. This
inflexibility coupled with the lack of ownership of prosecution cases at the
magistrates’ courts stage usually meant that there was no one with whom
to negotiate.
9. The Judge’s Council agreed in principle that fees for an early guilty plea
in either way cases deemed suitable for summary trial should be
substantially the same irrespective of whether the case was heard in the
magistrates’ court or in the Crown Court. However, they disagreed with
the idea of fixing a single fee for such cases in the Crown Court on the
grounds that failure to remunerate lawyers for additional work undertaken
before a late plea of guilty (cracked trial) would not only be unfair but
would perversely incentivise lawyers to pressurise defendants (with
vulnerable defendants particularly at risk) to plead guilty at an early stage
irrespective of the appropriateness of such a plea and before there has
been full disclosure of information. Other respondents also pointed that it
was often very difficult to establish at an earlier stage in proceedings
whether the defendant would get credit for a guilty plea. It was also
argued that the proposal could potentially lead to fewer guilty pleas by
perversely incentivising lawyers to allow a case to proceed to trial (and
205 Reform of Legal Aid in England and Wales Government Response
thereby earn the higher trial fee) rather than advising a change of plea,
where appropriate, before trial. This would lead to an increase in
contested trials, and higher prosecution costs, in addition to increased
defence costs. It was suggested that the Government should instead try
to encourage defendants to enter an early guilty plea (where appropriate)
through sentencing discounts rather than implementing this proposal. A
number of solicitors suggested a discount of 33% as assisting early
decision.
10. Both the Bar Council and the Criminal Bar Association expressed their
concern that the introduction of a single fee would be particularly unfair to
junior barristers as solicitors (litigators) would control what proportion of
that fee went to the advocate. They argued that this was likely to result in
payments to the junior bar being substantially less than those currently
paid under the Advocates Graduated Fees Scheme. They said this was a
particular concern in London where, commonly, relatively junior barristers
gain experience acting as counsel on an unassigned basis in the
magistrates’ courts. Barristers also argued that solicitors negotiated very
low rates with unassigned counsel and that more senior members of the
Bar would decline to take such poorly paid work. They suggested that the
overall quality of representation would be affected, particularly for
vulnerable clients. They suggested that the proposal could, in effect, deny
the right to jury trial. They also suggested that if this proposal was
implemented then a separate fee should be paid for the advocacy
element of a case in the Crown Court to ensure that standards were
maintained.
11. A number of other issues were raised by consultees including the
following:
i) the proposals were said to be based on 2008/09 financial data which
was already three years out of date and did not take into account
cuts to police station, Crown Court and file review fees which had
been imposed since that time, and that cast doubt on the accuracy of
the projected cost savings. Also it was argued that the assumptions
did not take account of the significant fall in the number of
defendants in the magistrates’ court arising from the introduction of
conditional cautions and reduced charging by the prosecution;
ii) given that the LSC had acknowledged at the Committee of Public
Accounts hearing on the Ministry of Justice Financial Management
Report in November 2010 that the introduction of fixed fees had
created a more complex system for both the LSC and the legal firms
to administer, it was argued that the proposals would further increase
the complexity of the current payment system.
206 Reform of Legal Aid in England and Wales Government Response
(ii) Enhancement to lower standard fee
12. There were 753 responses to question (ii) on enhancing the lower
standard fee paid for cracked trials and guilty pleas under the
magistrates’ court scheme. 530 (70%) of those were against the proposal
with 223 (30%) answering ‘yes’ to enhancing the fee.
Key issues raised in consultation
13. A majority of respondents, including the Law Society, said that the
proposal to enhance only the Lower Standard fees would not remunerate
adequately those cases where more work was required before a
defendant entered a guilty plea, meaning those cases were more likely to
be paid (an unchanged) Higher Standard fee. They also argued that the
proposal was likely to lead to an increase in more complex either way
cases being heard in the magistrates’ courts. They therefore suggested
that the Higher Standard fee should also be enhanced (by 25%).
14. It was also suggested that the enhanced payment to cover guilty pleas for
cracked trials and guilty pleas was somewhat illusory given the other cuts,
particularly, the proposed reduction in fees for magistrates’ courts cases
in London.
15. LCCSA agreed in principle with the proposal, but highlighted the danger
of placing too much pressure on defendants to enter a guilty plea through
both the discount on sentence and the fee arrangements. To guard
against this, it was suggested that full disclosure of evidence should take
place at the earliest opportunity and that efforts should be made to
change magistrates’ court and prosecution processes and culture.
(iii) Removal of committal fees
16. 768 respondents answered question (iii) on removal of committal fees,
with 707 (92%) of those arguing that committal fees should be retained,
and 61 (8%) agreeing with the proposal to abolish the fee.
Key issues in consultation
17. A number of respondents, including the main solicitors’ representative
bodies, argued that the removal of the committal for trial fee (payable for
the committal proceedings in the magistrates’ court even if the defendant
was financially ineligible for legal aid there) would lead to defendants
being unrepresented at committal. This in turn, they argued, would lead to
delays in proceedings as an unrepresented defendant could not simply be
committed to the Crown Court ‘on the nod’. It was also pointed out that
the removal of the committal fee would discourage the early preparation
of cases.
18. Some respondents took the view that committal fees should not be
removed without consideration of the removal of committal proceedings
themselves and their replacement with a similar transfer process or
207 Reform of Legal Aid in England and Wales Government Response
alternatively a proper paper process without the need to attend court
unless there was a need to make an application.
19. Concerns were raised about the sustainability of legal aid providers if the
overall package of proposals on criminal remuneration were
implemented.
20. Some respondents (including the Crown Prosecution Service,
Magistrates’ Association, Justices’ Clerks Society, the National Bench
Chairmen’s Forum and Bedfordshire Criminal Justice Board) were in
favour of the proposals. The CPS argued that the proposals would reduce
the number of defendant’s elections which were ‘fee focused’ rather than
‘merit focused’, allowing the CPS, police and Court to concentrate on truly
contested cases. The Magistrates’ Association noted that too many minor
cases were being heard at the Crown Court, resulting in lengthy trials and
pressures on both victims and witnesses. They believed that this
proposal, coupled with incentives directed at defendants, would
significantly increase the number of either way cases being heard in the
magistrates’ courts, although they suggested that the proposed fixed fee
needed to be sufficiently close to the amount payable in the magistrates’
courts to be effective. Bedfordshire Criminal Justice Board stated that
cases that can be heard under the jurisdiction of the magistrates’ courts
should be heard there and enhancing the lower standard fee for cracked
trials would encourage trials to remain in the magistrates’ courts and
thereby achieve efficiencies in the Crown Court.
The Government response
21. Many respondents argued that lawyers do not have any influence over
plea. The Government accepts that the final decision on plea rests with
the defendant. However, there is a body of research, cited recently in a
Legal Services Research Centre report,
65
suggesting that many
defendants enter the plea their lawyer advises. The Government does not
suggest that lawyers necessarily advise on plea based on the likely legal
aid fee. However, there remain concerns that the current system of fees
does not sufficiently support the aim of speedy and efficient justice and
may discourage the defence team from giving early consideration of plea.
For the specific group of cases to which these proposals would apply,
there are significant differences between fees paid in the magistrates’
courts and those paid in the Crown Court, depending upon the timing of
the plea.
22. Despite the points raised in consultation responses, the Government
takes the view that, in this narrow group of cases that were considered by
the magistrates’ court to be of a level of complexity and seriousness
suitable for trial by the magistrates, it is not appropriate for the taxpayer to
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63
At the same time, legal aid remuneration
rates fell in real terms and there was an overall 4% fall in the number of
self-employed barristers undertaking legal aid work. Over the same
period, the total amount paid to self-employed barristers for civil and
family legal aid work increased by 12% with the average payment
increasing by 16% and the number of self-employed barristers receiving
over £50,000 from the legal aid fund increasing by 13%.
27. This suggests that there is a strong demand for advocacy services in the
legal aid market and while there have been some departures amongst
self-employed barristers over the past four years, this has provided an
opportunity for those remaining to increase their market share without
impacting on quality. Although this is a market reaction to a particular set
of market conditions and is not determinative of future reactions, it does
indicate that self-employed barristers are able to adapt to a changing
legal environment and take advantage of opportunities to generate
potentially significant income.
28. In the context of criminal cases, the data the Government holds on
advocates is limited, and not robust enough for us to comment on the rate
of market entry and exit, because advocates do not usually enter directly
into contracts with the LSC. While the final part of the staged reduction of
13.5% to the Advocates’ Graduated Fee Scheme (AGFS), to be
implemented in April 2012, is likely to impact on advocates alongside the
proposals discussed above, the Government does not believe that the
combined effect will have a significant impact on the sustainability of
advocacy. This is partly because of our understanding of the profitability
of advocacy work, and partly because, in these firms, advocacy is
63
Data from the Legal Services Commission.
200 Reform of Legal Aid in England and Wales Government Response
provided as a largely separate service.
64
Therefore, if these firms then
perceive this work to no longer be profitable, they should be able stop
providing it without jeopardising their supply of other criminal legal aid
services.
29. There is sufficient supply of suitably qualified barristers willing to work at
the legal aid rates currently paid and the Government believes that this
supply, of both barristers and Higher Court Advocates, is sufficient to
make up any shortfall should some advocates move away from criminal
work. The Crown Prosecution Service (CPS) also reports no current
problems securing the services of appropriately qualified members of the
Bar, even though the CPS graduated fees for advocacy are lower than
the defence fees.
Key issues raised: impact on the not-for-profit sector
30. The not-for-profit sector is particularly important as suppliers in the
welfare benefits/debt and immigration/asylum sectors have also argued
that they would be significantly impacted by the proposed changes. For
example, in their response to the consultation, Citizens Advice reported
that 30% of the Bureaux that had responded to a survey on the proposed
reforms had confirmed that they would not be able to cope with the
proposed 10% reduction and would be unable to continue to operate
under the legal aid scheme.
31. The Government accepts that the proposed reforms may be particularly
challenging to the not-for-profit sector. It also recognises that this sector is
also likely to be at risk from threats to other sources of funding (for
example from local authority cuts) which may make supply in the areas
they cover vulnerable in any event. This is clearly a matter for concern for
the Government as a whole, and the issue of the future of the voluntary
advice sector is being considered in a cross-Government review.
However, in the context of legal aid services, the issue is whether
services will be available for clients, rather than whether the legal aid
work is done by any particular type of provider
The Government response
32. The Government accepts that the proposed changes to scope will have
an impact on the current legal aid market. A number of respondents felt
that the proposed changes in scope would significantly alter the mix of
cases on which the legal aid fee schemes are based, meaning that the
remaining fees may no longer be viable and would need to be
reassessed. While the proposals would mean that many types of cases
would no longer be eligible for legal aid, the Government does not agree
that this necessarily requires the current fee schemes to be revised. Any
64
As highlighted in a Frontier study on the potential impact of a single fee for litigation and
advocacy.
201 Reform of Legal Aid in England and Wales Government Response
new contracts will be tendered on the basis of these fees for which
providers may choose to tender. Given the current fiscal deficit it
considers that it is critical that it ensures that the amount that it pays for
any service represents maximum value for money. In this context the
Government considers that it needs to ensure that it only pays those fees
that are necessary to secure the level of services that are required.
33. The proposed scope changes will require primary legislation and are
therefore some time away, which will provide time for the Government
working in conjunction with the LSC to develop and put in place a new
robust client and provider strategy that both reflects the demands and
requirements of the new legal aid market and also extracts the maximum
value from the ongoing structural developments in the legal market (set
out below). It is confident that that there will be a sufficient number of
providers willing to undertake legal aid work under the new strategy once
the proposals have been implemented.
34. In contrast, the proposed fee reforms would take effect much earlier and
the Government takes the view that the impact of these particular reforms
on individual providers will depend on any mitigating steps that they
choose to take, for example, changing working practices.
35. The legal aid market does not operate in a vacuum. Providers in this area
will also be affected by and be able to take advantage of wider structural
changes, in particular, the implementation of the Legal Services Act 2007
which provides an opportunity for firms to radically change the way that
they operate, combining and streamlining services to maximise efficiency
and returns. Significantly, the Act addresses the current anomaly that
means that solicitors can employ barristers but not form partnerships with
them and will also permit barristers to form their own partnerships and
employ solicitors.
36. The Solicitors Regulation Authority has already changed its regulatory
rules to allow Legal Disciplinary Partnerships which enable solicitors to
enter into partnerships with barristers and it is expected under the Act that
the Bar Standards Board will follow suit very soon and allow barristers to
take advantage of different business structures in meeting consumers’
needs. Alongside these changes, alternative business structures will be
introduced shortly, allowing non-lawyer organisations to provide legal
services and giving lawyers, generally, much greater flexibility in the way
they practise.
37. It is not for the Government to decide what structures lawyers should use
to deliver legal aid services, nor to restrict the use of those structures that
are lawful. Rather provided that there are enough providers of sufficient
quality willing to work at legal aid rates, the Government must simply
specify the services it wants to buy for clients and the required level of
quality and access. However, we do believe that we should not obstruct,
and where possible should facilitate, changes taking place within the
market that will support the efficient and effective delivery of legal aid
services ensuring that the Government is able to maximise value for
202 Reform of Legal Aid in England and Wales Government Response
money. How far providers take advantage of such opportunities is a
matter for them but we would expect at least a proportion of the market to
do so.
38. We will, in any event, have the opportunity to see the actual reaction to
market of remuneration changes. It is intended that the proposed reforms
to family fees and housing work carried out under the Unified Contract
would be introduced by way of the planned retender of the family
contracts, which would enable the Government to see the reaction of a
key part of the market to the proposed changes in advance of their
implementation.
39. The proposed changes to civil and criminal fees generally will be
introduced by the LSC by way of amendments to the current civil and
criminal contracts following secondary legislation. It is intended that the
proposed changes to fees for housing work not covered by the Unified
Contract will be introduced in the same way in October 2011, at the same
time as the other civil fee changes, but are still considering whether this is
feasible. Under these contracts providers are required to give 3 months
notice before exercising their right to withdraw. The Government is
therefore satisfied that the LSC would have advance notice of any
developing market shortfall and is working closely with them to ensure
that they are able to respond promptly, effectively and appropriately,
should this materialise in any form.
40. There are a number of actions that the LSC could take to mitigate any
shortfall that might develop. For example, they could run a limited
focussed bid round. This recently happened for immigration cases in
Dover where, following the end of the 2010 civil bid round, there were no
providers. The LSC completed a focussed retender exercise within a few
months on a new contract that took effect in June 2011. In the interim, the
LSC put in place temporary measures to ensure supply using providers
from the surrounding area to allow them to provide the necessary
services on a short term basis. This typically involved office sharing or an
outreach programme. In cases where there are already providers
available in an area, an alternative approach would be to reallocate
additional New Matter Starts to these other providers. In the case of
criminal fees, if, for example, there were difficulties in relation to coverage
of specific police station duty rotas, scheme membership rules could be
relaxed. In the past, the Public Defender Service has also stepped in to
provide coverage where there have been localised problems.
41. Overall, therefore, the Government is satisfied that the proposed reforms
to civil, family and criminal fees would be likely to be sustainable, and
that, although individual providers may leave the scheme, there will be
sufficient supply of providers of sufficient quality to provide an appropriate
level of service.
Reform of Legal Aid in England and Wales: the Government Response Part 29
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Key issues raised: impact on solicitors
4. The most significant reform in the package of proposals affecting civil and
family practitioners is the proposed 10% reduction in the level of fees.
5. As was made clear in paragraph 7.27 of the consultation paper, the
proposed 10% reduction will apply to all payment rates and fees for family
in force at the point of implementation. This means that the proposed
10% reduction would also apply to the new Phase 2 family fees fee
schemes (Phase 2 fees) which were implemented on 9 May 2011 and
195 Reform of Legal Aid in England and Wales Government Response
which introduced new standard schemes for representation in private
family law and advocacy in all family cases.
6. The Phase 2 fee schemes redistributed the way payments were made on
the basis of the historical spend in 2007/08. The effect of this
redistribution is that some providers will experience a reduction in the
amount of income they receive from the legal aid fund while others will
experience an increase. Overall the Impact Assessment on the family fee
schemes indicated that the majority of providers and advocates would
experience an increase as a result of the redistribution. However, the
changes were also intended to cap payments at 2007/08 spend
(assuming no changes to the number and type of cases started); stripping
out any inflationary increases and therefore also delivering savings. This
means that the cumulative effect on some firms of the introduction of the
Phase 2 fees together with the proposed legal aid fee reforms may be a
reduction in income of more than 10%. However, given the different data
sets used for the two sets of proposals, the changes that will have taken
place in practice between 2007-8 and 2009-10, and the differing
responses of individual practitioners and firms to the Phase 2 fee (for
example, by undertaking more advocacy) modelling the impact of the
changes together is not seen as likely to provide any indication of any
changes in the behaviour of providers and the impact on them.
7. The Family Law Bar Association, amongst others, raised specific
concerns about the cumulative impact of the Phase 2 fees and the
proposed 10% reduction in its response to this consultation. However, in
their recent responses to the statutory consultation on the draft Funding
Order introducing the Phase 2 fees, the representative bodies, generally,
have either not opposed or welcomed the introduction of the Phase 2 fees
in their final form. The Government, therefore, does not consider that the
phase 2 fees are likely to decrease the sustainability of supply.
8. The vast majority of consultation responses argued that many providers
would be forced to withdraw from the legal aid market as the reduced fee
levels that would result from the proposed remuneration reforms,
generally, would mean that the work will no longer be commercially
viable.
9. There has been a downward trend in the overall number of providers
dealing with civil and family legal aid over the past few years, a decrease
of around 23% between 2006/07 and 2009/10. Over the same period
there has been an increase of 11% in the number of civil (including
family) matter starts opened for clients and a 5% increase in the number
of certificates granted. This is because there has been a continuing
process of providers that do only small amounts of legal aid work leaving
the market or merging with other firms, so that the work is done in larger
volumes at fewer offices. At the same time the LSC has over time sought
to terminate dormant accounts where no work was being done. The
Government believes that these trends have not affected the ability of the
public to obtain legal aid when they require it. In addition, the CLA
helpline was established in 2004 to provide advice on debt, housing,
196 Reform of Legal Aid in England and Wales Government Response
welfare benefits, employment and education and was extended to offer
advice in family matters in 2009. The helpline provides legal advice to
clients and has improved access to advice for clients.
10. The same arguments about sustainability were made by the profession
when Phase I of the fixed fee schemes were implemented in October
2007 and January 2008. The LSC analysis of the consultation responses
to Legal Aid: a sustainable future, published in November 2006, said:
“Many respondents anticipated that they and many of their colleagues
would see a drop in income, and that this would cause them to reevaluate whether to continue with publicly funded work. It was noted that
this would have the likely effect of reducing access to justice. The
principal concern had to do with the fixed fees proposed in the
consultation, which many respondents thought were set at a level that
would make legal aid work uneconomic”.
Civil and family providers
11. The Impact Assessment undertaken by the LSC at that time indicated that
a high proportion of providers in the civil and family sectors would be
adversely affected. Subsequent analysis of the provider base undertaken
by the LSC has shown that over 80% of those civil and family providers
who had been identified as being adversely affected by the Phase 1
reform were still actively providing legal aid services.
12. While this does not indicate what particular mitigating action these
providers may have taken and is not determinative of future behaviour, it
does indicate that they have been able to adjust to the new fees. Of those
firms who had been identified as being adversely affected, and
subsequently left the market, almost half of them were among the
smallest 25% of providers of legal aid work.
13. It is important to note that over the same period, LSC data also indicates
that, overall, the proportion of cases reporting positive benefits to the
client has remained broadly constant. Therefore, while this was a specific
market response to a particular set of remuneration changes it does
suggest that providers in this area are able to make changes to their
business practices and structures without adversely impacting on quality.
Criminal providers
14. In the case of criminal fees, there are a number of proposed reforms that
would impact on providers. These would be introduced in addition to the
planned staged reduction of 13.5% to the Advocates Graduated Fee
Scheme (AGFS) currently being implemented. The impact on advocates
(both barristers and Higher Court Advocates) is discussed further below.
15. While MoJ analysis into active supply (i.e. the numbers actually
undertaking work, rather than just holding contracts) shows a decline in
the number of active providers by around 14% between 2006/7 and
2009/10, we are unable to attribute this decline to a single cause such as
profitability. Other factors may have had an impact, such as mergers or
197 Reform of Legal Aid in England and Wales Government Response
the recording of contracts by firm rather than office. The Government
does not believe however, that the current net rate of exit indicates a
threat to delivery or the sustainability of suppliers.
16. In line with the above, most CJS areas have experienced a reduction in
provider base in this period, and those areas with the largest decrease
are generally rural areas with a small population group, and lower
volumes of work. There are a small number of police station duty
schemes with low membership (3 or 4 suppliers), indicating that supply is
more fragile, but also reflecting the low volumes of work on these
schemes.
17. However, unlike the proposed changes to civil and family fees, the
criminal fee reductions would not fall equally across the range of work –
the biggest impact would be felt by those who specialise in, or solely
practice in, Crown Court work. Our analysis shows that this is rare. It
indicates there is no specialisation in contracts over time, and typically
firms tend to provide both areas of work in various degrees depending on
demand in that year. For example, in 2009/10 the vast majority of criminal
legal aid providers, some 85%, received 60% or less of their total
revenues from Crime Higher. Only 10% of crime providers received more
than 80% of their fees from Crime Higher contracts, and for most of these
firms this was not the case in previous years.
18. The proposal to align magistrates’ court fees in London with those paid in
other major urban CJS areas brings the treatment of these cases in to
line with those at the Crown Court, where there is currently no London
uplift paid. The Government does not see a specific threat to
sustainability arising from this proposal. Approximately 21% of criminal
legal aid firms are based in London, however in 2009/10, the proportion of
magistrates’ courts and Crown Court representation orders in London
were 17%. This could indicate there is some oversupply of criminal legal
aid in London compared to the rest of England and Wales, where there
are on average proportionately more cases per provider, but it could be
an indicator of other market features. Additionally, in the most recent
tender round, the number of offices in London increased by 31%,
compared with 18% outside London. Therefore bringing the London
magistrates’ courts rates more in line with the rest of the country should
be sustainable without risking supply.
Otterburn report
19. As part of its consultation response, the Law Society submitted an
independent analysis of the profitability of solicitor legal aid firms
undertaking civil, family and/or criminal work by Andrew Otterburn, a law
firm management consultant. While the Government welcomes the report
as an important recognition of the need for respondents, generally, to
provide robust data to support their arguments, there are a number of
issues about the data used in this particular report. For example, it is not
clear whether the solicitor firms that participated are representative of the
entire supplier base. In particular, there is a significant risk that self
198 Reform of Legal Aid in England and Wales Government Response
selection bias may exist because, given the short time to respond to the
questionnaire used to gather data for the report and the urgency in the
response to the consultation, it is possible that solicitor firms most
adversely affected by the cuts were more likely to reply. In addition, the
sample size is very small with only 171 solicitor firms responding. Of
these only 163 completed the questionnaire with financial information.
This is the equivalent of about 8% of the total number of civil solicitor
firms operating in the legal aid market. Therefore, these findings should
be treated with caution due to the small number of solicitor firms involved.
20. Although this analysis must therefore be viewed with caution, overall it
does indicate that while the proposed fee reductions would have a
negative impact on solicitor firms by reducing their income, on the whole,
they would still make a profit even before making any efficiencies to their
working practises. Subsequent to his report, Otterburn specifically
confirmed to the Ministry of Justice that, in his view, an overall phased
reduction in fees of around 10%, with the reduced fees only applying to
new cases commenced after the implementation date, would allow
solicitor firms time to adjust to the new fee levels and would not,
therefore, necessarily make supply unsustainable.
21. In addition to assessing the impact of the proposed fee reductions,
Otterburn also examined the likely impact of the proposed changes to the
scope of civil and family legal aid. In broad terms his analysis suggests
that the loss of income as a result of these changes would make the
market in those areas unsustainable in its current form.
22. None of the other consultation responses contained any form of detailed
numerical analysis on likely sustainability.
Key issues raised: impact on advocacy
23. The Bar Council expected that the proposed changes, generally would
adversely impact on the availability of publicly funded legal advice with
fewer advocates willing to work at legal aid rates and fewer good quality
candidates willing to pursue publicly funded work. In the context of the
proposed changes to civil and family fees they were also particularly
concerned that the proposed benchmark rates were incorrect and that the
proposals, generally, did not make any allowance for more complex
cases where they argued that a greater level of experience, complexity or
expertise merited a higher rate. As a result, they expressed the concern
that more experienced barristers in particular could be expected to leave
the market.
24. While the Government accepts that this issue needs to be monitored, it
takes the view that this is not a new phenomenon. Whilst legal aid
provides a source of guaranteed work for advocates and there will be a
small proportion of cases that require very experienced advocates, a lot
of the work is more straightforward and able to be handled effectively and
competently by relatively junior advocates. We would therefore expect
that more straightforward legal aid work is undertaken by junior
199 Reform of Legal Aid in England and Wales Government Response
advocates, who gradually increase the proportion of non-legally aided
work that they undertake, moving into more ‘lucrative’ areas as they
increase their experience. As long as that legal aid work continues to be
performed to an acceptable standard, this is not necessarily a practice
that is of concern.
25. As noted in the 2009 Ernst and Young report Market Analysis of Family
Advocacy, solicitors can choose between different barristers and one
barrister may substitute for another one if needed, meaning that they are
not tied to a single provider or group of providers. Instead providers have
a wide potential pool of advocates to choose from and provided that
overall there are sufficient numbers of advocates of the requisite quality, it
does not matter whether these are the most experienced or not. What
matters is that they are able to perform effectively in the cases in which
they are involved.
26. Between 2006/07 and 2009/10 there was a 5% increase in the number of
legal aid certificates granted.
Reform of Legal Aid in England and Wales: the Government Response Part 28
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65. Many respondents questioned the administrative costs to the legal aid
body processing and registering the charges arising from the
discretionary waiver, arguing that these may negate any gains to legal
aid.
189 Reform of Legal Aid in England and Wales Government Response
66. Some respondents stated that the proposed interest rate was excessive
whereas others argued that the interest rate should be capped at 8%.
Others were of the view that interest should be simple interest and that
the rate should be reviewed at regular intervals.
67. The Law Society argued that Legal Help cases should be exempt from
the charge where there was a property worth £200,000 or less (this was a
separate proposal in the consultation). It also argued that the
implementation of the charge should be subject to a “de minimis” principle
whereby the amount recoverable must be significantly in excess of the
overall costs of administering the charge.
The Government response
68. The Government proposed this waiver scheme as part of a package of
proposals with those for capital disregards. For the reasons set out
earlier, the Government has decided not to proceed with the related
package of reforms to capital disregards, and it is not therefore necessary
to introduce consequential reforms to the waiver scheme.
Legal Help and the capital waiver
69. The consultation asked:
Question 18: Do you agree that the property eligibility waiver should be
exercised automatically for Legal Help for individuals in non-contested
cases with properties worth £200,000 or less (£300,000 in the case of
pensioners with disposable income of £315 per month or less) –
70. There were 863 responses to this question. 312 (36%) agreed with the
proposal, 433 (50%) disagreed and 118 (14%) neither agreed nor
disagreed.
Key issues raised in consultation
71. While most respondents disagreed with the proposal, they accepted that,
in the event that the proposal to introduce a gross capital limit of
£200,000 (£300,000 for low income pensioners) were implemented, the
proposed waiver for Legal Help clients was reasonable.
The Government response
72. The Government proposed the waiver as part of a package of related
reforms to capital disregards. For the reasons set out earlier, the
Government has decided against proceeding with this package of capital
disregard proposals, or to the discretionary waiver scheme.
190 Reform of Legal Aid in England and Wales Government Response
The ‘subject matter of the dispute’ disregard
73. The consultation asked:
Question 19: Do you agree that we should retain the ‘subject matter of
dispute’ disregard for contested property cases, capped at £100,000 for
all levels of service –
74. There were 831 responses to this question. 480 (58%) agreed with the
proposal, 265 (32%) disagreed and 86 (10%) neither agreed nor
disagreed.
Key issues raised in consultation
75. Respondents generally agreed that the ‘subject matter of the dispute’
disregard should be retained. Some respondents did not agree with
setting the cap at £100,000. For example, Citizens Advice argued that
there should be no cap for legal help cases. The rationale being that the
absence of a cap for legal help cases will encourage early resolution of
legal disputes. There was also concern about the impact that the
proposals would have on the service to families who are not entitled to
non-means tested funding.
76. Many respondents argued that the equity may be inaccessible as the
party may not be able to secure a loan against it in circumstances where
the assets were the subject of a dispute. A further argument was that
disputed property should continue to be disregarded in its entirety for
early advice. To do otherwise may mean that an applicant was ineligible
(on capital grounds), which, it was argued, may reduce the prospects of
an early settlement.
The Government response
77. This proposal was developed to address a deficiency in the current
system that means that parties who are contesting ownership of a very
expensive property may be eligible for legal aid for advice (though not
representation). For this reason, although it is related to the wider
proposals on capital disregards, it can be considered separately, and is
not contingent on the implementation of the others. The Government
believes that its implementation would serve to streamline and ensure a
consistent limit is applied to different types of cases. This would ensure
that limited legal aid resources are not expended on those who own high
value properties but instead are focussed on those most in need.
Currently, in assessing eligibility for controlled work, such as Legal Help,
the value of any assets that are disputed in the proceedings is completely
disregarded, meaning that extremely wealthy people can currently obtain
legal aid for advice in relation to disputes about contested property.
191 Reform of Legal Aid in England and Wales Government Response
78. While we note respondents’ arguments that the £100,000 cap should not
apply for legal help, we are of the view that early resolution should be an
objective in all cases in so far as possible and is not contingent on the
availability of free legal aid help where clients have the resources to pay
for or contribute to the costs of legal advice. While we note respondents’
concerns that the disputed nature of the assets may make it more difficult
to secure a loan against these assets we also note that:
i) persons seeking legal aid for representation are already subject to
this £100,000 subject matter of dispute cap and as such are required
to draw upon their own resources where they have sufficient assets;
and
ii) the sums required to pay for legal advice would be significantly lower
than the current expectation that clients above the limits fund their
own legal representation
79. Having considered the responses to the consultation, it remains the
Government’s view that a consistent £100,000 cap for the subject matter
of the dispute should be applied to different types of cases and at all
levels of service. For this reason, we have decided to retain the subject
matter of the dispute disregard but to cap it at £100,000 for all levels of
service, as proposed in the consultation.
Income contributions
80. The consultation asked:
Question 22: Do you agree with the proposal to raise the level of incomebased contributions up to a maximum of 30% of monthly disposable
income –
Question 23: Which of the two proposed models described at paragraphs
5.59 to 5.63 would represent the most equitable means of implementing
an increase of income-based contributions – Are there alternative models
we should consider –
81. There were 1,065 responses to question 22. 96 (9%) agreed with the
proposal, 881 (83%) disagreed and 88 (8%) neither agreed nor
disagreed. There were 668 responses to question 23. 117 (18%)
favoured option 1, 21 (3%) preferred option 2, and 530 (79%) preferred
neither option 1 nor option 2.
Key issues raised in consultation
82. Many respondents opposed this proposal indicating that current
contribution levels were not readily affordable for clients and were already
onerous. Many respondents recognised that the monthly contribution
served to encourage speedier resolution to cases. However, many
respondents argued that a contribution of up to 30% of disposable income
was too high unless there were adjustments to the definition of disposable
income, which they considered needed to be revisited.
192 Reform of Legal Aid in England and Wales Government Response
83. Many respondents therefore argued that the Government should
additionally address the disposable income criteria, although this was not
covered in the consultation proposals. With regard to the disposable
income criteria, several respondents commented that the definition of
disposable income in the regulations:
– allows deductions for tax and national insurance, housing costs, and
small fixed amounts for employment expenses and each dependent;
but
– items of household expenditure for essential items, such as food,
utilities, transport, school costs, were not covered.
84. The Legal Aid Practitioners Group argued that the discretionary power to
disregard income should be reintroduced to remove a risk of noncompliance with legal obligations around ECHR and equalities,
particularly in respect of disabled clients.
85. Some respondents stated that the proposal would remove up to 10% of
the monthly disposable income of those who are already in the lowest
income quintile.
Options
86. Of those respondents who expressed a preference, option 1 was viewed
as being fairer as it better reflected the means of the clients. Under this
option, the proportion of the disposable income required ranges from
0.6% to 27.8% (as opposed to 0.8% to 28.8% that clients would incur
under option 2). However, even among those who expressed a
preference many underlined that they viewed both options as being
inequitable. The significant majority of respondents expressed no
preference as they supported neither proposal.
The Government response
87. The Government expressly addressed the issue of expenditure on food,
utilities and other items in the consultation paper. The Government
explained that it had taken the decision not to lower the £316 threshold
for financial contributions, as this threshold broadly reflects the level of
subsistence benefits payments which are intended to cover the basic
elements such as food, utilities and other items. As such, the consultation
paper did not propose to change the criteria used to assess disposable
income, and there are no plans to amend these.
88. This proposal aimed to achieve the Government’s objective of increasing
financial ownership of litigation and was developed to ensure that the
increased contributions for low income clients were limited. However, the
potential savings from this proposal are significant. By increasing the
contribution of those who have the means to contribute, limited public
legal aid funds are preserved to assist those who are the most financially
vulnerable and do not have the means to contribute.
193 Reform of Legal Aid in England and Wales Government Response
89. The Government does not accept the suggestion that the means test fails
to take account of the position of disabled clients. Under the relevant
regulations certain disability benefits, such as disability living allowance,
are disregarded in calculating disposable income to reflect the extra costs
incurred by disabled people.
90. Of those respondents who expressed a preference, the majority favoured
option 1 as being the more equitable of the two options for increasing
monthly contributions.
91. For these reasons, the Government intends to proceed with this proposal
to increase the monthly income based contributions as set out under
option 1 in the consultation paper.
Conclusion
92. Having given due consideration to the responses to the consultation, the
Government has decided:
i) to apply the same capital eligibility rules to applicants in receipt of
“passporting” benefits as other applicants for legal aid;
ii) to retain the ‘subject matter of the dispute disregard’ and to cap it at
£100,000 for all levels of service;
iii) to increase the levels of income based contributions to a maximum of
approximately 30% of monthly disposable income, as set out under
option 1 of the consultation.
194 Reform of Legal Aid in England and Wales Government Response
Annex F: Legal aid remuneration: market sustainability
Introduction
1. The consultation paper made a series of proposals for reforms to criminal,
civil and family remuneration, in order to reduce legal aid expenditure.
Given the need to make substantial savings from the legal aid fund,
changes to fees will be introduced in advance of legislation to amend the
framework and the scope of the legal aid scheme. These changes to fees
will therefore be subject to the requirements of section 25(3) of the Access
to Justice Act 1999. This places the Lord Chancellor under an explicit duty
to have regard to the need to ensure that there is sufficient supply of
competent providers when setting remuneration rates. In exercising this
duty, the Lord Chancellor is required to have regard to the cost to public
funds and the need to secure value for money when setting remuneration
rates.
2. The main issue that was identified in the consultation responses in
respect of the proposed reforms to fees across all sectors is the ability of
the market to sustain the 10% reduction in fees. The reduction will apply
to all fees and hourly rates paid under the civil and family legal aid
scheme, except those where the service has been procured following
competition on price, regardless of whether the service provided is
subject to fixed rates, general assessment or and individually negotiated
contract. This includes Very High Costs Cases which are paid under
hourly rates or “events rates” models, but not those paid under risk rates.
3. As clarified during the consultation period, the proposed reduction will not
apply to family mediation fees. Nor will the proposed reduction apply to
the fees payable to telephone providers under the Community Legal
Advice Telephone Service. This is because the contracts for telephone
advice were subject to competitive tenders on price and as a result the
rates payable under these contracts are already significantly below the
rates payable to face-to-face providers. As indicated in paragraph 1.13 of
the consultation paper, it is the Government’s long term intention to
introduce price competition for civil and family proceedings delivered
face-to-face. Once completed this will remove the need for further
changes to fee levels.
Reform of Legal Aid in England and Wales: the Government Response Part 27
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Key issues raised in consultation
44. Respondents generally agreed that the mortgage disregard should be
retained with the £100,000 limit removed. There was agreement that the
gross capital limit should be higher for pensioners with low incomes.
However, some respondents disagreed with the gross capital limits
arguing that these are arbitrary and disproportionately discriminate
against pensioners and those in London and the South East. Others were
opposed in principle to the gross capital limits in property cases,
considering it unnecessary due to the operation of the statutory charge.
45. Many respondents also argued that these proposals assumed that people
would be able to access equity in their property and that this was not
necessarily the case.
46. As with the abolition of equity and pensioner capital disregards (set out at
paragraphs 28 to 41 above), some respondents queried what mechanism
would be in place to ensure that the property and its equity could be
accurately valued, and they questioned the relative costs and benefits of
this process.
47. It was suggested by some respondents that if there were to be capital
and/or property related disregards then they should reflect, as a
percentage of value, the average property prices in given zones or areas,
subject to minimum thresholds.
The Government response
48. Retaining the mortgage disregard limit with the £100,000 cap removed
found favour with many respondents. However, introducing a gross
capital limit received a much less favourable response. The Government
also recognises that implementing these proposals in isolation from the
other changes to capital disregards may also lead to more individuals
(with relatively expensive properties but high mortgages) eligible for legal
aid. This in turn may result in additional financial demands on limited
public legal aid funds.
49. The proposals on the mortgage disregard and gross capital limits were
developed as part of a package of proposed changes to capital
disregards and the discretionary waiver scheme. However, the
Government recognises that abolishing the current capital disregards and
introducing the revised system set out in the consultation paper, would
mean that a complex and expensive administrative system would have to
be put in place.
187 Reform of Legal Aid in England and Wales Government Response
50. The Government has concluded that, as an overall package, the limited
financial benefits are outweighed by the additional administrative costs.
We therefore do not intend to implement these proposed reforms on
mortgage disregards and gross capital limits.
Discretionary waiver scheme
51. The consultation asked:
Question 16: Do you agree with the proposal to introduce a discretionary
waiver scheme for property capital limits in certain circumstances – The
Government would welcome views in particular on whether the conditions
listed in paragraphs 5.33 to 5.37 are the appropriate circumstances for
exercising such a waiver.
52. There were 905 responses to this question. 485 (54%) agreed with the
proposal, 336 (37%) disagreed and 84 (9%) neither agreed nor disagreed.
Key issues raised in consultation
53. The majority of respondents agreed with this proposal. Of those who
disagreed, the main opposition was to the creation of a gross capital limit
and/or the removal of the equity and pensioner capital disregards rather
than to the discretionary waiver scheme.
54. In the event of implementation of the gross capital limit and / or removal
of the equity and pensioner capital disregards, many respondents stated
that a discretionary waiver scheme would be essential.
55. Responses also indicated that the proposed criteria for applying the
waiver set out in the consultation paper seemed sensible. Some
respondents suggested additional criteria for the proposed waiver, for
example, ‘physical safety, mental health, risk of neglect of harm, or
possible liberty of the client’.
56. Again applications for a waiver were viewed by many respondents as
likely to become routine rather than the exception. The Advice Services
Alliance argued that it would be simpler if applicants could opt for
repayment (or a charge) under the waiver scheme rather than requiring a
discretionary decision to be made in each case.
57. It was argued the LSC would need to become the lender to eligible clients
where:
– eligible applicants were likely to find it very difficult to obtain credit to
release the equity in their property; or
– repayments would cause financial hardship even if credit were
available.
58. Some respondents argued that the proposals would burden lenders as
evidence of applications and refusals would need to be obtained to
support the waiver application.
188 Reform of Legal Aid in England and Wales Government Response
59. Respondents questioned the administrative costs to the legal aid body
processing the waiver applications. There were also concerns that
numerous futile applications for credit would adversely impact clients’
credit ratings.
60. The Government proposed this waiver scheme as part of a package of
proposals with those for capital disregards, recognising that there may be
situations where the client may find it difficult to access their equity
readily.
The Government response
61. For the reasons set out earlier, the Government has decided not to
proceed with the related package of proposals to abolish capital
disregards or to the discretionary waiver scheme.
Waiver conditions
62. The consultation also asked the following question on the waiver scheme:
Question 17: Do you agree with the proposals to have conditions in
respect of the waiver scheme so that costs are repayable at the end of
the case and, to that end, to place a charge on property similar to the
existing statutory charge scheme – The Government would welcome
views in particular on the proposed interest rate scheme at paragraph
5.35 in relation to deferred charges.
63. There were 883 responses to this question. 363 (41%) agreed with the
proposal, 395 (45%) disagreed and 125 (14%) neither agreed nor
disagreed.
Key issues raised in consultation
64. Most respondents accepted that, where a waiver operated, the costs of
the case should be repayable but underlined that:
– the client should not be forced to sell their home to discharge the
charge;
– enforcement of the charge should always be postponed where the
client does not have the means to pay at the end of the case;
– discretion would be needed on enforcement where pensioners are
selling their homes to purchase a smaller property as they age and
using the proceeds to prevent reliance on state support for their living
needs.
Reform of Legal Aid in England and Wales: the Government Response Part 26
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Conclusion
96. Having given due consideration to the responses to the consultation, the
Government has decided to:
– implement a mandatory single telephone gateway limited to the
following areas of law:: debt (insofar as it remains in scope),
community care, discrimination (claims relating to a contravention of
the Equality Act 2010) and Special Educational Needs subject to the
exceptions set out at paragraph 23;
– introduce a phased expansion of the provision of specialist telephone
advice into the areas of law remaining in scope (except asylum
matters); and
– run a pilot scheme which will further examine the feasibility of
offering the option to clients to pay for advice over the telephone.
179 Reform of Legal Aid in England and Wales Government Response
Annex E: Financial eligibility
Introduction
1. The consultation asked a series of questions about proposed reforms to
the financial eligibility rules in civil and family proceedings which aimed to
ensure that those who could afford to pay, or to contribute towards, the
costs of their cases should do so.
Capital passporting
2. The consultation asked:
Question 12: Do you agree with the proposal that applicants for legal aid
who are in receipt of passporting benefits should be subject to the same
capital eligibility rules as other applicants –
3. There were 1,331 responses to this question. 327 (25%) agreed with the
proposal, 940 (71%) disagreed and 64 (5%) neither agreed nor
disagreed.
Key issues raised
4. The majority of respondents opposed this proposal. They argued that it
targeted those in society who had already been judged the most
economically vulnerable and that it would deter vulnerable people from
seeking advice and therefore impacted on access to justice.
5. A consistent response was that passporting benefits are set at a minimum
level which a person needs to subsist. Many respondents argued that a
more generous capital limit for those on passporting benefits is justifiable.
They argued that, unlike non-passported persons, people receiving these
benefits are most likely to need to draw on their savings and least likely to
be able to replenish them. They are therefore more reliant on their
disposable capital as a safety net and unlikely to be able to secure credit
from scrupulous lenders. Citizens Advice argued that this proposal was
likely to have most impact on groups reliant on savings, such as retired
people or those who have received capital as a result of damages awards
for personal injury. For example, the Law Society was opposed to
applying the same capital eligibility rules to those receiving subsistence
benefits, except where the applicant owned their home and had
significant equity in the property. The Law Society was similarly opposed
to applying the same capital eligibility rules to those receiving subsistence
benefits, except where the applicant owned their home and had
significant equity in the property.
6. Many respondents also argued that the additional administrative burden
(to both providers and the LSC) of assessing the means of all applicants
had not been properly quantified. It was argued that a relatively small
proportion of those in receipt of passporting benefits had disposable
180 Reform of Legal Aid in England and Wales Government Response
7. Some respondents, such as the Bar Council, took a different approach.
The Bar Council argued that the distinction between capital and income
was illogical and that it should not matter whether the financial resources
related to capital or income. The Bar Council instead proposed a system
of legal loans akin to Student Loans, arguing that this would increase the
‘contribution basis’ for legal aid, create an asset (a loan book) and free up
more capital to fund legal action.
The Government response
8. Currently a person who receives certain income-based benefits
(subsistence benefits) is automatically deemed eligible for legal aid on
both income and capital grounds. However, while the legal aid eligibility
rules provide that people who have more than £8,000 disposable capital
are not eligible for legal aid, automatically passporting certain benefits
recipients has meant that over time people who have more than £8,000
disposable capital have been awarded legal aid (as their disposable
capital has not been subject to the legal aid eligibility test). This has led to
a position where passported benefit recipients may be awarded legal aid
even where they have up to £16,000 disposable capital. However, a
person of similar income but who is not in receipt of these passporting
benefits and who has more than £8,000 disposable capital is ineligible for
legal aid. The capital limits for those receiving passporting benefits are de
facto more generous. The consultation paper therefore proposed that
applicants receiving these benefits should be subject to the same capital
test as other applicants.
9. The Government recognises that many consultees have concerns about
the capital eligibility test being applied to all applicants including persons
receiving subsistence benefits.
10. However, the current position allows some passported clients to receive
legal aid who would be found to be ineligible on capital grounds if their
capital assets were assessed in the same way as other applicants. The
Government believes that this is inequitable as it means that applicants
with similar levels of disposable income and capital may be eligible for
legal aid or be excluded from it depending on the source of income.
Ensuring that the capital assets of all individuals are subject to the same
eligibility test helps to ensure that limited public legal aid funds are
properly focused on the most financially vulnerable clients, and that those
who can afford to pay, or contribute towards, the costs of their case do so.
11. Instances of individuals having a higher level of disposable capital due to
an award of damages in personal injury cases arise under the present
system. In most of these cases, individuals have a sum exceeding £8,000
in a trust fund and presently there is no disregard for the damages. This
proposal does not change the rules on the treatment of capital in personal
injury trust funds being treated differently from the current position.
181 Reform of Legal Aid in England and Wales Government Response
12. The Government recognises that implementing this recommendation will
generate additional administrative work. We estimate that these costs are
minimal and do not outweigh savings arising from this proposal.
13. Overall, it is the Government’s view that applicants who are in receipt of
subsistence benefits should be subject to the same capital eligibility test
as other legal aid applicants, thereby focusing limited public legal aid
funds on the most financially vulnerable clients. We therefore intend to
implement this reform as proposed in the consultation.
Capital contributions
14. The consultation asked:
Question 13: Do you agree with the proposal that clients with £1,000 or
more disposable capital should be asked to pay a £100 contribution –
15. There were 1,362 responses to this question. 318 (23%) agreed with the
proposal, 941 (69%) disagreed and 103 (8%) neither agreed nor
disagreed.
Key issues raised in consultation
16. Many respondents accepted in principle that:
– it is important that litigants have some financial interest in the
conduct of their case to ensure that costs are sensibly managed;
– those who can afford to pay towards their costs should do so.
17. However, many respondents argued that many clients already have a
financial stake in their case through paying a monthly contribution from
income. While recognising the importance of a financial contribution, the
Bar Council argued that in family law cases, among others, financial
contributions by the client make no or little difference to the management
of the case.
18. Many respondents argued that a £100 contribution from £1,000 of
disposable capital would be likely to deter vulnerable people from seeking
advice and legal aid. Some viewed this deterrent effect as a barrier to
justice. Furthermore, it was argued that the proposed £100 contribution
was inconsistent with the Department for Work and Pension’s (DWP)
approach to financial contributions from benefit payments. Some
respondents highlighted that DWP approve only small weekly payments
from benefits to social landlords for rent arrears. They argued that an
upfront £100 payment to legal advice providers would run counter to
DWP’s treatment to date of benefit recipients with low income. The Law
Centres Federation viewed this proposal as a punitive measure towards
the very poorest in society.
19. Some respondents who are also advice providers were concerned about
how the £100 would be recouped where emergency work is needed and
the cash was not immediately available, as well as where the financial
182 Reform of Legal Aid in England and Wales Government Response
risk would fall should emergency work be undertaken but the financial
contribution subsequently remained unpaid by the client. Some
respondents, whose role in the advice sector and community is premised
on offering free advice, were concerned about how their organisations
would recoup a £100 contribution (the fee would not apply at the level of
initial advice, and this concern was therefore misplaced).
20. There were also concerns about the practicality and administrative costs
of recouping payments, particularly where this is not presently part of the
organisation’s role. Several respondents questioned the costs of
implementing this proposal and the number of potential applicants who
may be affected. Some respondents queried whether this cost would be a
one-off payment or by instalments. Many respondents also expressed
concern over how the level of disposable income would be ascertained,
and whether funds should be counted or disregarded which are needed
for fees, payments and bills that are pending.
21. Some respondents, such as the Institute of Legal Executives (ILEX), did
not object to the proposal although they questioned the impact of DWP’s
proposed introduction of the universal credit/ benefit. Other respondents
agreed to the proposal subject to certain provisos, for example, that the
applicant was not receiving income-based benefits or that the capital was
‘genuinely disposable’ such as cash.
The Government response
22. An important driver of this proposal was to give clients a direct financial
interest in their case, making clients more likely to approach litigation in a
similar way to privately paying litigants and possibly deterring
unnecessary litigation. The proposed £100 contribution aimed to help
underline that litigation is not cost- and risk-free, and needs to be
approached proportionately.
23. The Government accepts the argument that in some cases (for example,
those involving particularly emotive issues) there are likely to be drivers
more powerful than financial considerations in motivating the client’s
interest in the conduct of their case. However, the Government’s view is
that this does not justify the absence of a financial interest where the
client has sufficient income or disposable capital. We accept the Bar
Council’s arguments that in some cases, (for example, family law cases)
the financial contribution may not be a significant consideration when
deciding how to proceed, but we believe that clients should have a
financial stake in their case wherever possible. The Government notes
that the Bar Council, along with other respondents, agreed in principle
that it is important for litigants to have some financial interest in the
conduct of litigation in order to ensure that costs are sensibly managed.
This includes litigants with limited financial resources.
24. The argument presented by some respondents comparing the £100
capital contribution to deductions that DWP takes from benefit payments
for rent arrears payments to social landlords conflates the issue of income
183 Reform of Legal Aid in England and Wales Government Response
deductions with issues of capital. As such, the Government does not find
this argument against the capital contribution to be compelling. Under this
proposal, free legal aid would remain targeted on the most vulnerable
(individuals whose disposable capital is less than £1,000) who do not
have the ability to pay towards their case.
25. The Government notes concerns from respondents such as advice
organisations, whose role in the advice sector and community is premised
on offering free advice, about recouping the £100 contribution. However,
the £100 capital contribution would not apply at the level of initial advice,
so this concern appears to be misplaced. Should, for example, law
centres offer legal representation in cases, then clients of those
organisations are already subject to the legal aid rules relating to
contributory payments.
26. The Government is firmly of the view that people who can afford to pay,
or contribute to, the cost of their case, should do so. However, we
recognise that at the level of £1,000 of disposable capital individuals’
assets may be highly variable in nature, and sums below £1000 may
represent for many a contingency fund. We also recognise the
importance of individuals saving for necessities. In addition, the collection
of the fee would deliver only modest savings which would be off-set, to an
extent, by the administration costs of collection. Having considered
respondents’ concerns we have decided not to proceed with this proposal
to introduce a £100 capital contribution.
27. The Government considers that proceeding with the proposals to ensure
that all applicants’ disposable capital is assessed and that monthly
contributions are increased will ensure that individuals with sufficient
means have a financial interest in how their case is conducted.
Capital disregards
28. The consultation asked the following questions about equity and
pensioner capital disregards:
Question 14: Do you agree with the proposals to abolish the equity and
pensioner capital disregards for cases other than contested property
cases –
Question 20: Do you agree that the equity and pensioner disregards
should be abolished for contested property cases –
29. There were 995 responses to question 14. 140 (14%) agreed with the
proposal, 803 (81%) disagreed and 52 (5%) neither agreed nor
disagreed. There were 784 responses to question 20. 179 (23%) agreed
with the proposal, 582 disagreed (74%) and 23 (4%) neither agreed nor
disagreed.
30. Under the current means assessment, significant sums associated with
capital (including interests in land) are disregarded.
184 Reform of Legal Aid in England and Wales Government Response
Key issues raised in consultation
31. The majority of respondents disagreed with the proposal to abolish the
equity and pensioner capital disregards. Respondents argued that there
was a fundamental difference between accessible liquid capital and
equity in the main dwelling house, the latter of which is often inaccessible.
32. Respondents including the Housing Law Practitioners Association argued
that those with equity in their property who receive state benefits will only
be able to release the equity by selling their home, which may ultimately
result in state dependence for accommodation. It was also argued that
this proposal would have limited effect in increasing contributions or
reducing funded cases.
33. Respondents also argued that homeowner pensioners and those living in
London and the South East would be disproportionately affected. Indeed,
some respondents including Shelter argued that this proposal
discriminated against pensioners. A further argument offered against this
proposal was that the cost of an unsecured personal loan would have a
significant impact on monthly income versus expenditure and that for many
this would be unmanageable. Many respondents also argued that if the
Government were to abolish the capital and pensioner disregards as
proposed, applications for the proposed waiver scheme were likely to
become routine rather than the exception.
34. Respondents queried what mechanism would be in place to ensure that
the property and its equity would be accurately valued. Questions were
also raised about the administrative costs of this process. Some
respondents also suggested that if these proposals were to be
implemented, a formula relating to average property prices in differing
zones or areas should be used.
35. Furthermore, respondents indicated that applicants involved in contested
property disputes would be extremely unlikely to be able to secure any
credit against the property or otherwise unlock the value of their property
due to the dispute over ownership.
36. It was also argued that for contested property disputes, unless it could in
some way be realised, the equity in a property should be disregarded
given the likelihood that the statutory charge would apply once the
dispute was resolved, against which the legal aid fund would recover the
costs of the case.
37. Other respondents supported these and related proposals on capital
disregards recognising that they would save costs. For example, the
Institute of Legal Executives (ILEX) was of the view that generous capital
limits have contributed to a media backlash against legal aid and that
these proposals therefore ought to be welcomed.
185 Reform of Legal Aid in England and Wales Government Response
The Government response
38. The Government recognises that the system of capital disregards and the
waiver system are closely connected. The Government accepts that the
waiver is likely to be routinely applied if these and related proposals on
capital disregards were implemented.
39. The Government recognises that there may be practical difficulties with
using capital in equity to fund proceedings, and for this reason a waiver
was proposed. We accept, as respondents have argued, that it is likely
that the vast majority of clients subject to this proposal would need to take
advantage of the waiver, and therefore immediate savings would be
minimal (see paragraphs 51 to 68 below on the waiver). In addition it is
likely to take a number of years before charges placed on property would
be redeemed. Having conducted further work during the consultation
period, the Government considers that the proportion of homeowners who
are eligible for legal aid is significantly smaller than originally estimated.
Therefore, only a small proportion of legally-aided individuals are
homeowners, and the vast majority of them would qualify for the waiver,
and savings would only be delivered in the long-term. We therefore
consider that this reform does not justify the additional complex and
potentially expensive administrative burden it would place on individuals
or the Legal Services Commission’s successor.
40. The Government recognises that this may mean that people with
substantial assets may still be eligible for legal aid. We acknowledge that
some respondents have commented that the current system of capital
disregards is generous. However, we consider that retaining the current
system is capital disregards can be justified as:
i) a relatively small proportion of home owners will be eligible for legal
aid; and
ii) they may have difficulty in releasing the equity from their property.
41. The Government has therefore concluded that the costs of these
proposed reforms outweigh the benefits and has decided not to proceed
with these proposals to abolish the equity and pensioner disregards.
Mortgage disregards and gross capital limits
42. The consultation asked the following questions about mortgage
disregards and gross capital limits:
Question 15: Do you agree with the proposals to retain the mortgage
disregard, to remove the £100,000 limit, and to have a gross capital limit
of £200,000 in cases other than contested property cases (with a
£300,000 limit for pensioners with an assessed disposable income of
£315 per month or less) –
Question 21: Do you agree that, for contested property cases, the
mortgage disregard should be retained and uncapped and that there
should be a gross capital limit of £500,000 for all clients –
186 Reform of Legal Aid in England and Wales Government Response
43. There were 964 responses to question 15. 346 (36%) agreed with the
proposal, 550 (57%) disagreed and 68 (7%) neither agreed nor
disagreed. There were 771 responses to question 21. 475 (62%) agreed
with the proposal, 236 (31%) disagreed and 60 (8%) neither agreed nor
disagreed.