The price is right

Are legal aid firms being made scapegoats by the National Audit Office? Jon Robins reports on how access to justice is being compromised for easy headlines

Worse was to come in the form of an aggressive hearing of the influential House of Commons Public Accounts Committee (PAC) to consider the work of the National Audit Office (NAO). One committee member, Labour MP for Hemsworth Jon Trickett, hit out at the alleged wrongdoers. “Solicitors are taking more money for less cases – they are ripping us off in significant numbers,” he said. “There's no quality control – they're being featherbedded by the system.”

This current backlash comes at a time when legal aid lawyers are feeling increasingly beleaguered and many are simply calling it a day. They see themselves as starved by pay freezes, smothered by red tape and beset by recruitment problems. In short, they do not feel 'featherbedded' by the state. A recent Law Society survey of 270 firms found that some 78 per cent intended to drop or reduce publicly funded work in the next five years; and shockingly, one in five were set to leave the field entirely.

Those that attended the PAC hearing were shocked at the sentiments of the politicians. “There was a lot of hostility to private practice solicitors generally,” reports Richard Miller, chairman of the Legal Aid Practitioners Group (LAPG), who attended the Commons. “The talk was all about how we could provide this service without lawyers, and there was no recognition of the fact that for a lot of cases you need a lawyer, and there's a reason for having properly trained people giving advice.”

The spending watchdog has called upon the Legal Services Commission (LSC) “to tackle poorer-performing suppliers more quickly, redouble its efforts to target resources where unmet need is greatest and communicate a clear vision for developing the supplier base”.

“I welcome the improvements that have been made to improve scrutiny of civil legal aid expenditure,” said Sir John Bourn, head of the NAO, at the report's launch. “However, I urge the LSC to clamp down faster on suppliers that overclaim.”

In particular, the NAO claims that audits of the LSC's spending have revealed that 35 per cent of suppliers were in “the lowest category” – that is, overclaiming in excess of 20 per cent. However, legal aid lawyers are enraged at such findings. “It's difficult for lawyers to accept that [35 per cent] figure as either reasonable or understandable,” comments LAPG chair David Emmerson. The group argues that the NAO has failed to understand the audit process conducted by the LSC which it relied on. “It's easy with the benefit of hindsight to say that the bills should have been done differently, and that's what the auditors are doing,” the lawyer comments.

He argues that the LSC has gone over firms' bills “with a level of scrutiny that is not even comparable with assessment by the court. The basic problem here is that you send off the files to the auditors, who don't know your work procedures, and if there's an opportunity for them to not understand something on the file, they do,” he continues. “You then have no opportunity to have a dialogue with the auditors and explain.”

Emmerson argues that there needs to be a clearer distinction between those firms whose files have been questioned by the NAO because there is “a misunderstanding”, and cases of fraud committed by “a small but significant minority of firms”. “The LSC knows the difference between the two, but the NAO hasn't distinguished,” he adds. It is a complaint echoed by many practitioners.

Lawyers are further incensed that any action would be entered into on the basis of an NAO report that was flawed in its execution. The LSC has already promised to remove suppliers that persistently overclaim. According to the new report, the removal process takes 18 months, and the NAO has called for that period to be cut. Following the report's publication, the LSC has already announced that those immigration firms in the worst audit category have had their number of cases slashed by 20 per cent.

The dubious practice of a small number of immigration law advisers has long been a problem for the profession and a source of considerable interest to the tabloids, which have a two for the price of one chance to bash both lawyers and asylum seekers. The NAO report delivered just such an opportunity. 'Lawyers' scam runs up £138 million asylum bill', blasted the Daily Star. Unsurprisingly, the Daily Mail pulled no punches in its condemnation of the 'asylum gravy train', dusting down the old claim that “some immigration specialists have become notorious for touting for business among asylum seekers at ports and airports, and supplying them with false stories calculated to help win their claims for refugee status”. Nevertheless, spending on immigration increased from £58m in 2000-01 to £138m last year, with a projected £160m for 2002-03.

Andrew Holroyd, a Law Society Council and immigration law committee member, readily acknowledges that a number of dodgy firms have entered the market, tempted by “easy legal aid pickings”. He welcomes action from the Law Society and the LSC to drive out such firms. “It gives us all a bad name,” he says. “We're certainly battling with the kind of reputation we have through papers like the Daily Mail, and also because some of our fellow practitioners do a poor job before the adjudicators, who often tar us all with the same brush.”

But Holroyd, a partner at Liverpool firm Jackson & Canter, is also deeply unhappy with the NAO report. In particular, he takes issue with the 'overcharging' label. “It's a complete misnomer,” he says. “What they mean is that, when the file audit was done, [the legal advisers] hadn't put on their file note exactly how they had justified more than the contract time, and therefore that extra time was disallowed.” He offers as an example the typical scenario of an interview with an interpreter who takes three hours instead of the one hour that it might normally take. He also complains that the LSC seems to have an attitude that is “almost to try and pick holes in our files. We've worked very hard as a firm to try and ensure our costs are fully justified; but before, they'd been second-guessing the time my advisers spent with clients taking statements through interpreters.”

The LAPG also wants action to be taken against the problem immigration firms, but is concerned that the LSC could start penalising those firms on the basis of its own audit. “It's a crude measure of who is and who isn't a good firm, and it's not acceptable given the flaws in the process at the moment,” argues Miller at the LAPG.

“A bean-counter's report,” is the frank assessment of the NAO report by Karen McKay, director of the Legal Action Group (LAG). “It's entirely concerned with controlling costs and there's just nothing in there about the end-users of the service.” The LAG believes there is a desperate need for some kind of independent inspectorate to counter the “astonishing lack of management information” about what is going on in stark contrast to the old days at the Legal Aid Board.

The NAO report hints at the beginnings of an exodus from the profession. It reveals that the total number of firms providing legal aid services has dropped from 4,866 to 4,427 from January 2000 to July 2002, whereas the number of not-for-profit firms has only risen from 344 to 402. The reduction is “partly a deliberate move away from the reliance on a large number of generalist support firms towards a smaller number of specialist, quality-assured providers”. It adds: “However, the reduction also reflects concern among some firms about the level of remuneration offered on civil legal aid work.”

McKay at the LAG says that the only way to judge whether legal aid work has become unviable would be if firms began to “vote with their feet”. “I've listened to legal aid practitioners saying 'The end is nigh' for 20 years now,” she says. “But they're beginning to sound quite serious now.”

It would not be surprising that lawyers are fleeing legal aid, given the findings of the Law Society research last year which revealed that 57 per cent of firms reckoned they could no longer cope with the demands of maintaining their legal aid status.

“We haven't got to crisis point yet, but we will do,” says Holroyd. “They're simply not going to keep the same number of suppliers they need in the system.”

The problem of lawyers pulling out of legal aid is most acute in criminal law. Rodney Warren, chairman of the Criminal Law Solicitors Association (CLSA), reports that, in the last four weeks, three firms have had to shut up shop. In a recent CLSA member survey, one respondent wryly recorded his reason for dropping his criminal contract: “Crime doesn't pay,” he quipped.

“There have been only 5 per cent increases in legal aid expenditure since 1992,” Warren says. “The legal aid expenditure has continued to rise in that period and it is reasoned that the lawyers have been paid more money. But it is because they've been representing more people and undertaking more cases, and not because they've been paid more for each case. The turnover of each firm has increased, but their overheads have increased even more, and the problem is, as the overall expenditure increases, the work becomes less profitable.”

There is even greater pessimism as to what the New Year might bring, not least because there is an estimated £50m-£70m shortfall in the LSC's crime spending. The CLSA fears that the Government will seek to recoup that sum from its budget. It is a “huge question-mark” over the LSC's finances, says Warren.

Last July there was official confirmation of the crisis in criminal defence work, when the LSC annual report expressed concerns about the dwindling number of new criminal lawyers, supported by “evidence that the average age of those practising in crime is growing, with few young lawyers willing to do this work”. One lawyer in South Sheffield puts the average age of his fellow defence lawyers at 55.

Under the CLS, there are parts of the country that are well-documented advice deserts. It is a failure the NAO acknowledges, in particular in family law. The Times recently revealed the problems that one woman in Essex had to endure to find a solicitor to advise her on the financial aspects of her divorce. “I called over 20 central London solicitors, all of whose numbers were given to me by the Law Society, only to find after a dismal day on the phone that not one of them took legally aided standard divorce any more,” she told the paper.

Godfrey Freeman, a family law partner at Liverpool firm Morecroft Urquhart, who heads the Solicitors Family Law Association's legal aid committee, believes that there is not only a problem in terms of firms stopping legally aided work altogether, but also with firms “cherry-picking” work. “We're finding that in Liverpool some of the firms still have a contract but will only do, for example, ancillary work, public law work or children care work, where they're reasonably remunerated,” he reports. “But they won't take on the bog standard divorce cases or the ones where there are no assets.” He attributes the overcharging allegations to “the exhaustion of trying to keep up with the bureaucratic process”, rather than any attempt to “milk the system”.

There are other cracks in the CLS coverage, such as housing law advice. In an effort to honour its public duty to make sure people have access to legal services, the LSC decided last year to plug the gaps with a telephone service through a commercial call-centre provider, Capita Assistance.

But, as the McKay at the LAG argues, no one is certain as to the precise shortfalls of the CLS and whether it offers the much-vaunted access to justice. And that, she believes, is her big problem with the NAO report. “It's meaningless to talk about costs if you don't make some assessment of the service you're getting for that cost, and there's a huge gap on information in this area,” she says.

Legal aid: a minor outbreak of 'unhappiness' or a 'catastrophe'

Only last week the brewing crisis on the high street even disturbed the rarefied world of the House of Lords with a short-tempered exchange about how many firms with a legal aid franchise had closed up shop last year. According to Baroness Scotland, the Parliamentary Secretary at the Lord Chancellor's Department, 257 firms pulled out of civil work and 10 firms pulled out of criminal defence work. “We're aware that the profession expressed unhappiness about the level of remuneration,” she commented. But the peer went on to reassure her colleagues that the Government was doing all it could “within the limits of resource constraints”.
Unsurprisingly, not everyone was consoled. “There is, if not a serious catastrophe, a serious crisis developing,” countered Lord Phillips of Sudbury, founding partner of Bates Wells & Braithwaite, a firm which is, in his own words, “stupid enough” to still do legal aid. The solicitor thought the minister's take on the travails of legal aid lawyers was “a little anodyne” given the scale of the problem. He went on to quote form the Legal Services Commission annual report, which reckons that up to 50 per cent of all firms are considering stopping legal aid work. “Is this not a crisis?” he asked.
Lord Alexander of Weedon, chairman of civil rights group Justice and joint head of leading insolvency set 3/4 South Square, had no doubts. “Is the minister aware that we take the view that this is the closest we have come to a crisis for a considerable number of years?” he asked.