Reform of Legal Aid in England and Wales: the Government Response Part 41
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This is Part 41 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.
The Government response
17. The SLAS proposals were intended not only to create an alternative
funding stream to supplement the legal aid fund but also to provide the
opportunity to address the relationship between legal aid and Lord Justice
Jackson’s proposals for reform to the costs of civil litigation, thereby
ensuring that alternative sources of funding, such as conditional fee
agreements (CFAs), remained no less attractive a funding mechanism
than legal aid in cases involving damages.
18. Lord Justice Jackson proposed that the recoverability of CFA success
fees from the losing side should be abolished in all cases, including
personal injury. He also proposed that in personal injury cases the
success fee which lawyers can take should be limited to 25% of
damages, excluding damages awarded for future care and loss. On 29
March 2011, the Government announced
72
that it would implement the
following:
– abolish the recoverability of CFA success fees in all cases;
– limit CFA success fees in personal injury cases to 25% of damages
(excluding damages awarded for future care and loss); and
72
See footnote 8 above.
247 Reform of Legal Aid in England and Wales Government Response
– increase by 10% non-pecuniary general damages such as pain,
suffering and loss of amenity in tort cases.
19. The legal aid consultation paper proposed implementing a Supplementary
Legal Aid Scheme (SLAS) for all areas of civil legal aid cases where
general damages are successfully claimed. In addition, the Government
proposed that the SLAS would also apply to any out-of-scope case which
was funded through the exceptional funding scheme.
20. The Legal Aid consultation paper suggested a number of methods under
which a partially self-funding Supplementary Legal Aid Scheme could
calculate and collect funds. The options which suggested recouping a
percentage of:
– the inter-party costs awarded to the claimant lawyer at the conclusion
of the case paid by the successful claimant lawyer; or
– costs paid to the unsuccessful defendant
received limited support.
21. The third option suggested recouping a percentage of damages paid by
the successful legally aided client. However, this proposal was
(unintentionally) narrower than the proposal set out in the Jackson
consultation to cap success fees in personal injury cases at 25% of all
damages other than damages for future care and loss, as the SLAS
proposal referred only to general damages. Several respondents
highlighted this anomaly. For example, the Bar Council Civil Legal Aid
Committee commented that the SLAS restricted to general damages was
a better option for claimants than a CFA because of the narrower types of
damages to which the SLAS related.
22. The Government recognises that those respondents who argued that a
SLAS restricted to general damages would make legal aid more attractive
than CFAs are correct. The Government did not intend this outcome. The
Government’s view is that legal aid should generally be no more attractive
than CFAs or other forms of funding and that the approach to the SLAS
should be consistent as far as possible with the wider reforms to the costs
and funding of civil litigation.
23. Some respondents argued that the SLAS should be set at 10% (in line
with the increase in general damages for non-pecuniary loss in tort
cases).
The Government’s response
24. The Government acknowledges that the number of respondents
supporting the SLAS was lower than those who opposed the proposal.
Some respondents (both supporters and opponents of the proposal)
indicated that they were not sure how the SLAS would operate,
particularly, in light of the proposed scope changes. It was also notable
that a higher number and proportion of respondents supported the
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concept of the SLAS recouping a percentage of damages than those who
expressed support for the SLAS itself.
25. The Government recognises that the SLAS proposal represents a new
and unfamiliar way of funding some civil cases in England and Wales, but
is of the view that no compelling argument against the SLAS was
presented. At a time when the public purse is constrained, the partially
self-funding SLAS represents an important innovative measure to enable
legal aid funding for civil cases. The funds raised by the partially selffunding SLAS will supplement the legal aid fund, thereby supporting
members of the public to pursue civil cases. Failure to innovate when
public funding is limited is likely to result in greater pressure on the legal
aid fund. This measure, along with others adopted by the Government, is
intended to put legal aid on a sustainable footing and to ensure that those
most in need receive legal aid funding.
26. Several respondents questioned the viability of the SLAS proposal should
clinical negligence, education damages and housing damages cases be
removed from scope. The Government has decided to proceed to remove
clinical negligence, education damages and housing damages cases from
legal aid scope. While the SLAS would apply to out-of-scope cases
funded through exceptional funding, we recognise that respondents’
concerns are well-founded in the context of a SLAS that is fully selffunding. In addition to the risk that SLAS funds would be easily depleted
and difficult to replenish, a self-funding SLAS has the additional burden of
requiring different percentages of damages to be recouped from different
cases depending on risk and therefore would entail significant
administration.
27. The Government’s view is that this proposal should be consistent with the
wider reforms to the costs and funding of civil litigation and that legal aid
should generally be no more attractive than CFAs or other forms of
funding.
28. Under the Jackson CFA reforms announced on 29 March, the success
fee which a solicitor may claim from a successful client in personal injury
cases (including clinical negligence cases) will be capped at 25% of all
damages, other than those for future care and loss. Solicitors will be able
to charge a success fee which is less than 25%, and the Government
anticipates that market forces will encourage this.
29. The Government has therefore decided to implement a partially selffunding SLAS. The funds recouped will supplement the legal aid fund and
therefore the funding of civil cases. This partially self-funding model is not
only viable in light of the Government’s changes to legal aid scope, it also
ensures that the level of damages recouped to the legal aid fund can be
set at a fixed percentage rather than the variable rates that the selffunding SLAS would entail. The partially self-funding model also facilitates
a consistent approach with the wider reforms to the costs and funding of
civil litigation.
249 Reform of Legal Aid in England and Wales Government Response
30. Consequently, the Government has decided to introduce a SLAS which is
partially self-funding and takes for the legal aid fund a percentage of all
damages other than damages for future care and loss, in a way that is
consistent, so far as possible, with the reforms to civil litigation costs in
personal injury cases.
The percentage of damages
31. Some respondents argued that the SLAS should be set at 10% (in line
with the proposed increase in general damages for non pecuniary loss in
tort cases). However, the Government considers that this would mean
that legal aid would generally be more attractive than CFAs in personal
injury cases (to the limited extent that legal aid is relevant in these cases).
32. The Government recognises that in damages cases other than personal
injury cases, the SLAS may, in some cases, be more attractive than a
CFA because: there will be no cap on the CFA success fee; a legally
aided claimant is protected from having costs awarded against him if he
loses the case; and will not need to take out After the Event (ATE)
insurance (although he may be required to make a contribution to the
costs of his case). However, having considered the points raised by
respondents, the Government has concluded that the recovery level for
the SLAS should be consistent with the Jackson reforms to ensure, in so
far as it is possible to do so, that CFAs are no less attractive than legal
aid. The Government has decided to set the level of recovery at 25% of
all damages successfully claimed, other than any damages for future care
and loss.
Conclusion
33. Having considered the responses to the consultation questions on
alternative sources of funding, the Government has decided to introduce
a Supplementary Legal Aid Scheme, under which 25% of all damages
successfully claimed, other than damages for future care and loss, in
cases funded by legal aid will be recovered by the legal aid fund. This will
include cases funded through the exceptional funding mechanism.
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