Series of fraud trial blunders sparks plans to cut legal aid

Complex criminal fraud trials are running over-time and over-budget. In a letter to the Law Society, the Lord Chancellor, Lord Falconer wrote: "The financial situation within the DCA [the Department for Constitutional Affairs] is such that I must take steps to reduce spending now. On present projections, the legal aid budget will overspend by some £130m this year and by similar amounts in subsequent years". As a result, he proposes to cut the differential rates that silks and top solicitors have enjoyed in cases over 10 days, "which can be seen to provide an incentive to prolong cases", as well as reducing enhancements.

The recent Jubilee Line fraud fiasco, which ran into the buffers with a £60m costs bill, including a legal aid bill of £13m, followed by the collapse of the prosecution of five people by the Inland Revenue and Customs at the start of the summer with total costs of £65m, pretty much guaranteed the axe was going to fall - and fall heavily.

However, what has surprised commentators is that Lord Falconer has taken a pre-emptive strike ahead of the findings of the Whitehall trouble-shooter Lord Carter of Coles, who was charged with the job of reviewing legal aid in July. "Surely it's more sensible to await the outcome of a reasoned and in-depth review from Lord Carter than it is to impose knee-jerk, ill-thought-out and probably ineffective cuts without proper and full consultation?" argued the London Criminal Courts Solicitors' Association (LCCSA) in a letter sent to the Legal Services Commission on 19 August.

Lord Falconer is proposing a series of pay cuts in serious and 'very high-cost cases' (VHCCs). The one that is going to hurt practitioners most is the plan to reduce the level of enhancement payable to solicitors in fraud cases from 200 per cent to 100 per cent. A grade-A fee-earner would earn in the region of £160 an hour under the enhancement scheme as opposed to £60, in recognition of the particular complexity and skill involved in litigating such cases.

So what does that mean, other than the fact that profitable firms specialising in fraud will be slightly less well-off?
Richard Miller, director of the Legal Aid Practitioners Group, believes such a cut could have a drastic effect on the precariously-balanced finances of criminal defence firms and could be the difference between life and death for some. "All it will end up doing is completely unbalancing the payments for the system and it may make these cases unviable for firms and in turn make those firms unviable overall," he says. "The worst thing is the short notice that firms have been given." While firms are expected to draw up three-year business plans, he points out that their paymasters have effectively given them six weeks' notice. "This kind of short, sharp shock to the system could kill a firm regardless of how well they're doing," Miller adds.

"All the main fraud firms in London will be looking very seriously at their practices and they'll have to review their bottom lines," comments Angus McBride, a partner at Kingsley Napley. He points to the small tier of fraud specialists in the profession big enough to run an investigation as large as the Jubilee Line case. "Those firms have to run such cases in Central London so that they can make a profit. These proposals are going to cause major questions over the ability to carry on doing this kind of work on legal aid," says McBride, who acted for defendant Mark Skinner in the aborted Jubilee Line trial.

The bottom line for a three-partner firm such as Corker Binning is that it would be more difficult "to justify spending partner time on legally-aided cases, which would have a knock-on effect in terms of the quality", says name partner Peter Binning. "What people have failed to understand is that a lot of what the criminal defence lawyer does is giving forceful and carefully considered advice about pleading guilty - most criminal cases don't end in trials," he argues. "If you don't get experienced solicitors and counsel acting in serious cases, there's a real risk there'll be a knock-on effect in terms of more delays, longer periods between discharge and disposal and the risk of more trials starting. The judges and courts are going to be increasingly frustrated if a low-quality legal aid system is allowed to develop."

What about the accusation that defence lawyers milk the system and string out lucrative cases?
Unsurprisingly, it is not a charge that they accept. "None of the defendants in Jubilee Line wanted to be on trial for two years," says McBride. "It completely ruined their lives. The reality is that a lot of frauds have been very badly prosecuted with the Jubilee Line case just being one of the worst."