Surviving the collapse of legal aid

The Legal Aid Board (LAB) is not having an easy time of it. In February, The Lawyer revealed that it was planning to slash pay among senior staff and introduce lower salaries for newcomers (1 February).

In April, The Lawyer's campaign to protect legal aid for personal injury cases highlighted the Government's attacks on the system (19 April). And in May, The Criminal Law Solicitors Association demanded a meeting with the LAB to call for extra cash, even threatening a strike if it was ignored.

Legal aid may be in crisis here, but the crisis facing the LAB in this country is nothing in comparison with that facing its South African counterpart.

To put it bluntly, South Africa's LAB is going bankrupt. And with more than £7m owed to legal practitioners across the country, it is taking many lawyers down with it.

Steve McLoughlin is director of a young Cape Town firm of attorneys which has had to “laugh off” a host of unpaid legal aid bills. He says: “There is no doubt the Legal Aid Board has been the demise of many attorneys practising in the poorer communities, especially the single practitioner.”

To pinpoint the exact moment when things began to fall apart is not easy. Established in 1969 to administer a scheme for defendants who could not afford legal fees, the board's administration has been floundering for years.

Director of the Cape Law Society, Susan Aird, says the turning point came with the introduction of the new constitution in 1996.

“Until then, legal aid was a means-tested option. However, under the terms of the new constitution virtually every accused person qualified for legal aid and the means test went out the window with immediate impact. Lawyers with a client base who could pay, now had one that became legal aid-dependent,” she says.

LAB acting director, Pieter Brits, also traces the crisis back to the new constitution. “When the constitution gave all accused persons charged with serious crimes a fundamental right to legal representation at state expense, the board was allotted the task of appointing and paying the lawyers required. The extension of legal aid into new areas such as land claims, labour tenant and Truth and Reconciliation matters, together with the expansion of legal aid for criminal trial and criminal appeals severely taxed the board's human and financial resources,” he says.

Debts that had been taking up to six weeks to process stretched to three months, and McLoughlin says he has unsettled bills that are more than four years old.

The exact reason for the chaos in the system is still not clear.

Justice Mahomed Navsa, chairman of the LAB, said at a press conference last month that the present crisis was a result of “years of maladministration”. (He suspended the previous director, Nic Pretorius, in April this year.)

He acknowledged that, due to past mismanagement, there was still a backlog in the payment of accounts to attorneys and advocates but said that “simplistically calling for more staff and money was not the solution, nor was vilifying the LAB”.

The judge identified a number of factors that caused the backlog. Firstly, there was a dramatic increase in legal aid cases during the 1990s. In 1990/91 the LAB issued 35,410 instructions in criminal, civil, divorce and industrial cases. By 1998 this had increased to 208,000. The expected caseload for 1999 is over 223,000. The judge also blamed bad book-keeping, the administration of many legal practitioners and extensive fraud.

With all these pressures the system was bound to hit a crisis.

The co-chairpersons of the Law Society of South Africa, Julian Von Klemperer and Willie Seriti, have responded by saying: “As far as we know, the provincial law societies have received no complaints about any of the matters covered in the allegations by Judge Mahomed Navsa's office.”

Whichever way you look at it, the situation has “catapulted the profession into crisis”, says Aird.

Initially the Law Society tried to facilitate faster payment by launching a “whole machine” to assist the board. Attorneys volunteered to sit on panels in magistrates courts taxing accounts, which was intended to free the board to process payments.

“After two or three months it became apparent that the board was treating us with scepticism and suspicion and was, in fact, duplicating any work we were doing,” says Aird.

“So demoralised attorneys gave up and the system fell apart.” Aird claims these same attorneys had already done work for the LAB at hugely discounted prices, had not been paid for 18 months to two years, and were assisting them for free.

And then the banks got involved. “When the story broke in the news in early 1997 that the board was floundering, bank managers who had attorneys with overdrafts running because of a state body owing payment began questioning that any money would be forthcoming at all,” says Aird.

The only comfort from the LAB chairman is that it will “take time” to put a workable system in place, and time is just what lawyers facing a four-year delay in payment and an impatient bank manager do not have.

Aird says: “More and more attorneys are suing the board in desperation. Sometimes this works and they get paid, but more often it ends up as defended litigation which takes years to sort out.”

A leading Cape Town law firm, Holmes Meyer and Associates is suing the LAB for an outstanding amount of R163,000 (£16,850).

Eslin Meyer, a partner in the firm, was quoted in The Cape Times this week as saying: “Somebody had to take a stand against the LAB. I know of law firms which have dipped into their trust funds to carry on.” Meyer says that if the board does not sort out its finances firms will have to close. “Many law firms rely on that money for their survival,” Meyer says.

The Cape Times also reported that Gerald Holmes, also a partner of Homes Meyer and Associates, was an acting judge until July this year and lawyers are hoping that Holmes' standing might bring the point home to the LAB that firms need the money owed to them to survive.

The solution, according to attorney Charles Abrahams, who has a small practice in one of the hardest-hit areas, is to get some bread-and-butter clients on the books.

“Firms who are planning their practices around legal aid are fighting a losing battle,” says Abrahams.

“Legal aid was always a good source of revenue for young practitioners starting out and township lawyers. The big firms cannot be bothered with it, they just take it on as good practice for their articled clerks.

“But it is the smaller firms who need to get more creative and think of spreading their wings.”

Abrahams speaks with the authority of experience. He has built up a successful practice over three years in a very disadvantaged area.

He describes Bishop Lavis, on the outskirts of Cape Town, as “a crime-infested neighbourhood where the majority of the workforce are unemployed”.

From a working-class family and active in the anti-apartheid struggle in his school days, Abrahams paid for his legal studies with a mixture of scholarships, a helping hand from the local priest and a break of three years – when he set up a group of educational charities – to make some money.

“Three days after being admitted as an attorney, I set up my own practice in my parent's back room,” he says with a smile. “Without capital I had no choice, and I didn't care what people said.

“I didn't even have enough money to connect the telephone.

“In those days there was already a problem with legal aid. I felt it was my duty to put my name on the roster, but I also knew my practice could not rely on legal aid – I would have to come up with something innovative.”

The young lawyer had already built a reputation among the local community by offering legal advice for free during his final years of study, and through his civic work. As soon as word spread that he had set up a practice, people were flooding to his office. “The problem now was that my advice was no longer free. I had to convince them to pay,” he says.

He devised a scheme that would both bring him in much-needed hard cash and cut his fees in the interests of his clients.

“I entered into an agreement with my clients that went like this: 'this is the legal aid tariff. I'm not keen to work on legal aid, but if you can afford to pay some fees in installment then I wouldn't have a problem helping you',” he explains.

“It was difficult to do this, because I knew these people and their circumstances, but I had to be business-orientated.”

In the early days, the majority of his work was criminal cases.

“I got a lot of bail application work and for that I charged upfront, which meant I immediately had money coming in,” he says.

He also made sure that in civil cases, people were paying a deposit of 35 per cent of the total cost to carry the firm through the initial costs.

After eight months Abrahams was able to bring in a partner, while still in his parents' house, and they ploughed everything they made back into the practice. A year and a half later they put down a deposit for premises. “Now we employ six staff,” he says.

The key to his success, he says, was devising a clear strategy. “Lawyers, especially black lawyers, cannot afford to rely on the board. They must be committed, but they must also have a sound business plan.

“If they don't look after their administration, they will go down. It is all about putting the plan into practice and making it work.”

Although, inevitably, some of Abrahams' clients default on payment, he has managed to keep building. “I am fortunate to have weathered the storms and am confident we will keep on growing,” he says.

In fact, he is so confident that he is taking a sabbatical. After winning the Cloisters Chambers' Eddie Quirst-Arction Scholarship in 1998, he has been admitted to Leiden University for a master's degree in public international law.

“I was overwhelmed to be admitted,” he says with a smile, “and intend to write my thesis on the doctrine of odious debt.”

And while he is in Leiden, Abrahams knows that whether South Africa's LAB goes down (or not), his firm is one that is keeping afloat.

As for the rest, last month Judge Navsa reminded everyone that “the object of the LAB is to provide legal aid to the indigent, not a living to the legal profession”.

The current method of providing legal aid mainly through payment to attorneys and advocates in private practice (known as the Judicare system) was no longer feasible, he argued. “The country does not have the resources to continue to fund legal aid through the profession at current unrestricted levels,” said the judge.

The proposal is to phase out the Judicare system and to have LAB salaried advocates and attorneys who will work in Justice Centres around the country.

The judge said private attorneys and advocates would still play a role but in view of limited funds, prioritising demands on the LAB's service would have to take place.