|
|
Legal aid: the price of not being able to afford it
Recent developments in the funding of legal services have
had the result that fewer people than ever are elligible for
publically funded legal support, and that the amount that
the state recovers from supported litigants - successful or
unsuccessful - is larger than ever before. Moreover, the
Law Society claims that in some parts of the country there
may now be no publically funded support available at all.
This article will argue that these changes are wholely
inappropriate: justice now not only has a price, but the
price is rising. In addition, it will show that the total
cost to society of public legal services is not only
justifiable, but nugatory when compared to other public
services. The fact that the UK has the largest per-capita
spending on public legal services in Europe should be a
matter for pride, not embarassment. If the cost of funding
legal aid is to be checked, it can best be done by
controlling legal costs in general.
The first years of the public legal aid system - the early
1950s - were perhaps the closest that justice came to having
no price. In those days there were relatively few lawyers
(compared to the present day) and relatively few litigants
(again, compared to the present day). Approximately 80 percent of
the adult population was elligible for assistance. Over the
next twenty years this situation changed dramatically. The
scope of public legal aid was increased to encompass more
cases in more courts; people became more willing to resort
to litigation; the increased availability of divorce led to
a larger number of family cases; and the decline in the UK's
economic fortunes meant that people were more likely to find
themselves litigants. Throughout this time, the whole system
remained demand-led: any applicant that satisfied the means
test and the merits test could be funded. As a result, the
cost of the system increased dramatically.
Governments from the 1970s to the present day have
sought to impose control on legal aid spending, in a number
of ways: the elligibility criteria have been made more
stringent; the range of actions that will be supported has
narrowed; and litigants have increasingly been expected to
pay at least part of the cost. More controversially, recent
Governments have started to encourage the use of entirely
different funding models, particular conditional fee
agreements (CFAs). Indeed, Lord Mackay -- the most recent
Conservative Lord Chancellor -- expressed a long-term goal
of removing state funding of legal services completely.
The most recent reforms, enacted in the Access to
Justice Act 1999, have had the following effects.
First, the Legal Aid Board has been replaced by a new
administrative structure headed by the Legal Services
Commission (LSC). It is now necessary for practitioners who
carry out publically funded work to have specific contracts
with the LSC. The LSC's budget for civil legal aid is
capped.
Second, the eligibility criteria were again made more
stringent. Funding for civil actions is now avilable only
for litigants of very meagre means - the thresholds are
approximately the same as for income support. It appears
that about 5 percent of the population are within this threshold.
Third, except for a few types of action, even the
poorest litigants may have to pay a contribution from their
income if they are represented in court.
Fourth, the `statutory charge' applies to most civil
cases. This allows for the costs of the case to be recovered
from a successful litigant from any damages awarded against
the losing party. In other words, money is recovered by the
state from both successful and unsucessful litigants in many
types of action. Since the average cost of a county court
action appears to be 60-70 percent of the sum recovered (according
to the Law Society) the statutory charge will be particular
harsh if the winner's full costs cannot be recovered from
the loser.
Fifth, the types of claims inelligible for support are
again widened. There is now no public support at all for
defamation actions, most tribunal hearings, personal injury
actions, or any company or business matters. These are
expected to be funded -- if at all -- through CFAs or
insurance.
In short, traditional `legal aid', in which the entire
cost of legal support is met by the state, remains available
only in criminal cases where the `needs of justice' require
it, and for access to a duty solicitor.
Changes to the legal aid funding model have also had
the effect of reducing the profitability of legal aid work
for the practitioner. Even the Legal Services Commission
had to admit that in the period 2001-2002 6 percent of contracted
suppliers left the system. According to the Law Society's
recent consultation paper `The future of publically funded
legal services', up to 50 percent of practices are considering
considering giving up public work. The most common reason
cited was the marginal profit such work now generates; the
second most common was the increased beaureaucracy
engendered by the new administrative structure.
The current Lord Chancellor has pinned his hopes on the
success of CFAs as an alternative means of funding
litigation. However, CFAs only have a future if they are
workable for the practitioner, as well as the litigant. For
the litigant, a problem with CFAs is that if the case is
lost, the CFA will not cover the winning side's costs.
Although `after the event' (ATE) insurance is available for
personal injury cases, it remains unclear to what extent the
premium is recoverable if the funded litigant does
eventually win the case. In Callery v Gray the House of
Lords supported a Court of Appeal decision that a premium of
£350 was recoverable, but neither court was prepared to lay
down general rules about the level of premium that should be
recoverable. For the practitioner, the cost of losing
CFA-fundeded cases has to be offset from the gains from
winning cases; hence it will be necessary to charge an
uplift over normal fees. Again, it remains unclear how much
uplift can normally be recovered. In principle, the uplift
can be as high as 100 percent. However, the Court of Appeal
decision in Halloran v Delaney has unsettled solicitors by
stipulating that the uplift in uncomplicated cases that
settle before a hearing should be capped at 5 percent. If the
recent reforms in civil procedure do turn out to front-load
costs to the extent feared (as descibed, for example, by
Professor Zander in his recent lecture to the Denning
Society) then CFAs may not be economically viable for the
practitioner. In any event, CFAs sit uneasily with the
long-standing indemnity principle; it is reasonable to ask
why the costs paid by the loser of an action should depend
on whether or not the winner was funded by a CFA, or had to
take out ATE insurance.
Even if CFAs are workable in specific cases, there
remains the risk that practitioners will accept only cases
where the outcome is a near-certain win, leaving difficult
or marginal cases unsupported.
Despite the reduction in the level of service, the cost
to the taxpayer of publicly funded legal services has
continued to increase. According to the LCD, the total
expenditure for the year 2002 was about £1.7 billion. One
has to wonder where this money is going. Although there is a
popular belief that it is lining the pockets of rapacious
lawyers, at least one London burrough now offers subsidised
housing to legal aid solicitors. The Legal Aid
Practitioner's Group has estimated the total income of a
London solicitor who does primarily legal aid work at
£25000-£30000, which is in the same range as a teacher or
nurse. If this figure is generally applicable, it is hard
to see how the Lord Chancellor's other cost saving proposals
- such as using only state-employed defenders for criminal
cases, and opening up probate and conveyancing to
non-solicitors - will save much money, without reducing the
quality of advice and advocacy. Worse, such moves might have
the effect of forcing small law practices out of business
altogether.
The expenditure on legal aid needs to be put into context.
The UK currently spends approximately £56 p.a. per
wage-earner on funding legal aid. This includes both civil and
criminal cases. Based on figures from the Labour Government's
last Budget, and
assuming that there are thirty million wage-earners in the UK,
current expenditure on the National Health
Service is £1,800 p.a. per wage earner, education £1,500. If
estimates provided by the DSS are correct, as a nation we
spend much more on fraudulent welfare payments than the
entire legal aid budget. According to
the last Budget, it is expected that
total expenditure on public services in 2003 would be £263
billion, or £8,700 p.a. per wage-earner. Legal aid spending
is a drop in the ocean.
In addition, as a society we need to evaluate the cost
of not providing legal services, which will be felt in
social dissatisfaction and disenfranchisement. It can be
argued that access to the courts is a basic civil right. A
civilised democracy may give its populace the right to
education, healthcare, and welfare at the public expense,
but it has also to give it the right to take legal action to
ensure that these other services are properly provided. It
may be in the public interest that certain cases be
litigated; lacking funding they may never be.
It would be interesting to know how much of the legal
aid budget goes to the suppliers of services, and how much
is spent administering the system.
I submit that the best way to reduce legal aid
expenditure is to tackle the problem of the high costs of
the legal process in general. Lord Woolf's recent reforms
set out to do this for the civil justice system, but early
indications are that costs are not coming down. In this
context, it is interesting to note that in his original
report on the civil justice system, Lord Woolf repudiated
the notion that increasing the uptake of CFAs would reduce
the total cost of civil justice to society. Unless lawyers
are prepared to meet the cost of losing CFA-funded claims
from their own pockets, this must surely be correct.
In summary, an ever-increasing number of people of modest
means are becoming unable to afford access to legal
services, and are not being provided with a workable method
of financing their claims. It would cost relatively little
to rectify this situation, and it may rectify itself if the
more fundamental problems of legal costs were resolved.
|
