Legal aid: the state pays and the state benefits

Paul Taylor says that the removal of legal aid for personal injury litigation is based on faulty logic and that once that fallacy is recognised, the case for State funding is abundantly clear. Paul Taylor is an assistant solicitor at Lorimer Longhurst & Lees. I recently attended a lecture where the speaker – a non -lawyer, referred to the logical argument for the withdrawal of legal aid for certain types of case.

The logic runs something like this: At the outset of a case, a lawyer has to perform a provisional assessment of the likelihood of that case succeeding. If the lawyer is not sufficiently confident to take on the case, why should the tax payer be asked to bear the risk? The implication is that lawyers use the legal aid system to finance worthless cases.

At first sight, there is a certain amount of plausibility in this argument, but I believe that the apparent logic can be demonstrated to be misleading.

Consider the following situation: four aces from a pack of playing cards are placed face down on the table. You are given the opportunity to choose one of the four cards and, as long as the card that you choose is not the ace of spades, your stake will be doubled. In other words, you have a 75 per cent chance of doubling your money.

If the stake was £1 or even £10, I suspect that most people would be willing to participate in such a gamble. If the stake was £100, I think that some people would now begin to wonder whether they could afford to take the risk of losing.

Consider the position if the stake is £1,000, £5,000 or £10,000. Although the chances of success have not changed, most people would begin to have serious reservations and some, I am sure, would feel that they could not afford take part.

Those that will be able to cope with stakes of this size will be those who have the greater resources.

They will be able to keep playing the game because they can afford to take the risk of losing, even at these higher stakes. Since on balance, they will win three times out of four, those with greater resources will be able to get even richer.

The important point is that, although the risk of success has not changed, a person's ability to participate depends not only on the likelihood of success, but also on the person being able to afford to lose.

Turning to personal injury litigation, it is perfectly foreseeable that there will be cases where the prospects of success are 75 per cent but, because of the likely costs, a lawyer would decide that they could not accept instructions.

This is far more likely to happen with smaller firms, where a large failure could result in financial ruin.

In contrast, larger practices are more likely to be able to take on the risks associated with these more expensive claims – and hence make the most money out of personal injury litigation. I believe the long-term outcome would be a gradual shift of plaintiff personal injury work away from smaller firms and towards larger firms. This will almost certainly lead to a reduction in choice for the public.

I have used a 75 per cent assessment of risk as an example. The same principles apply where the prospects of success are greater. In Russian roulette, for example, the risk of losing is less than 17 per cent, but how many people would be prepared to take part?

Of course, there are important differences with personal injury litigation. Whereas in the example I gave the risk could be ascertained easily, in most personal injury claims there are a large number of uncertainties and, particularly at the outset of the case, it can be very difficult to assess the risk accurately.

Another important difference is that in personal injury litigation, the 'winnings' may not materialise for a number of years. Once again, it is likely to be the larger firms that can withstand the inevitable cash flow problems.

This is also one of the reasons that the state should finance some form of conditional fee system via the legal aid board. The state has the resources to take on even the most substantial cases, and if there are profits to be made, why not let the state benefit?

If such a system could be produced – along the lines proposed by the Bar Council and the Law Society – which allows smaller firms to continue to participate in the more substantive litigation, then so much the better.