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16 April 2014
High street solicitors morale is at a low ebb after the Cardiff speech but, says Henry Hodge, the profession can bounce back. Henry Hodge is senior partner at Hodge Jones & Allen and deputy chairman of the Legal Aid Board. There is lots of doom and gloom on the high streets as the legal aid frontliners digest Lord Irvines Cardiff message. His vision for legal aids future has three distinct elements: altering the basis of payments to contracts at agreed fixed prices; tightening the merits test; and the widest possible extension of conditional fee arrangements in preference to legal aid from the taxpayer. So will high street practice survive? If so, how?
History is at least with us. There was doom and gloom over matrimonial prescribed fees (1991); standard fees in magistrates courts (1994) and prescribed fees in civil cases (1995). We have constantly complained about the failure of government to increase our fees. Meanwhile, legal aid eligibility has been regularly cut for our clients. But the world did not stop. Over 15 per cent of our gross fees of u7,415m in 1995/7 still came from legal aid. We continue to provide over 3.5 million acts of assistance every year. The poor among the public are still served by us many of them, but not enough, very well. So how do we face up to this latest crisis?
We should start by looking at the finer points in the Cardiff speech. Consultation is the first hope. Can we change the main direction? Probably not, but something can be salvaged. The Lord Chancellor talks of excluding most claims for money or damages from legal aid. Personal injury cases are largely a lost cause. But campaigns in favour of preserving social welfare claims, particularly damages claims in housing, accident compensation claims by children, and even medical negligence claims, may succeed. Get to work in your specialist interest groups or with the Law Society. The merit test proposal, under which all clients must pass a 75 per cent likely success test, is a very blunt instrument. It needs to be, and can be, refined. Join the consultation.
The Governments apparent aim is to redistribute about u150m to u200m from the civil legal aid scheme but within the overall budget. If that is right then legal aid solicitors must place themselves to provide the services to clients the Government will pay for. By 1999, we expect the introduction of the Woolf fixed-fee regime for fast-track civil litigation and they might not stop there.
On top of this we must prepare for contracting the core of the Lord Chancellors long-term budgetary control plans. Taking money claims outside the scope of legal aid is very crude but it can release cash for other parts of the scheme. And extending conditional fees will help some who do not currently qualify for legal aid, although nowhere near as many as the Lord Chancellor seems to think. A fixed-fees regime might just mean more people have the confidence to litigate. And for the high street the increase of the small claims limit to u5,000 is another significant threat.
In all these areas firms face a major rethink of how they run their cases and their businesses. The Government, like all our clients, wants more work for less cost, better work but cheaper. Can we do it?
First, if people want to do legal aid work they have to get franchised. There will be no contracts for non-franchised firms. Next, we must all make better use of technology, particularly for financial management. We cannot contract profitably or compete on price unless we know how much it really costs to do our work. We have to know high, low, median and average costs of our cases. This means far more efficient control and recording of time by fee earners, support staff and even secretaries while they survive. Market leaders will have very expert systems which provide continuous productivity gains so they can compete in a regime of contracts and low fixed prices. We also need to become accurate risk assessors to make conditional fees work. Rigorous management control and supervision of casework will be essential. Lawyers will have to market themselves to attract new work and then vet it before it is taken on.
Most solicitors need to specialise. This does not mean they should limit themselves to one subject only, but they should probably stick to no more than two work areas. The pressure on margins will be huge. We will need to be, if anything, more efficient than our highly capitalised colleagues in the major commercial practices.
And we have to be tougher on our clients. Weak cases will no longer get the benefit of any doubt. This is not the cosy legal world some of us joined and many would like to stay with. But we can survive. We can make a living, but the living wont be easy. As long as we care for our clients and our work, high street practice can continue to provide an interesting legal life, whatever the Government decides to do.