Legal Aid – Franchise hopefuls' time runs short

Firms that want a legal aid franchise have only three months to prepare. Peter Warner warns what is involved. The recent announcement by the Legal Aid Board (LAB) of the timetable detailing the dates by which they expect to move towards exclusive contracts has dismayed many practices.

The last date to make an application for a franchise in order to be considered for a contract in year one is 31 December 1998.

It seems odd that the profession and the Law Society appear to have been caught unawares. After all, franchising has been around for a long time.

The outline proposals were published in November 1992. Applications were first made in October 1993, with the original tranche of contracts awarded in August 1994.

A window of opportunity which extends for a period of more than five years (October 1993-December 1998) would seem to be a reasonable amount of time for firms wishing to continue to conduct legal aid work.

The Law Society has said that it will try to gain an extension to the year-end deadline for potential franchisees, but realistically applicants now have barely three months in which to get themselves organised.

Undoubtedly there will now be a scramble of firms which attempt to get on board at the last minute.

By the end of August the LAB had granted franchises to around 2,400 offices with another 650 applications pending. Already it seems that the numbers required by the LAB to make exclusive contracting a viable proposition will be achieved with something to spare.

The overall picture reveals an uneven take-up with patches of resistance or inertia depending on legal aid area. For example Leeds and Reading area offices have experienced a huge response while Newcastle and Birmingham have been relatively slow.

Coupled with the deadline for applications has been the publication of the “Third Edition of the Legal Aid Franchise Quality Assurance Standard”.

The standard introduces a number of novel requirements relating to business planning, finances and management information. In addition, the new arrangements mandated for supervision, supervisor standards and file reviews have been made much more stringent.

The net effect of these changes will be extra work for existing franchisees who will be advised at their next audit, following 1 January 1999, how they measure up to the reformed standard.

The standard's overall thrust is to encourage firms to take a more commercial view of their practice. This approach is essential for them to be able to sustain a decent level of profitability under exclusive contracts.

The standard provides a great deal of useful guidance notes and illustrations on how to tackle issues surrounding contracting and the way that it will impact upon the organisation and management of the firm.

It expands on the changes outlined in the LAB's consultation paper of April 1998, “Reforming the Civil Advice and Assistance Scheme – Exclusive Contracting and the Way Forward”.

The key changes outlined in that paper are:

future business planning;

financial management and cost control;

supervision of work: qualifying standards; and

requirements for internal quality control file review by supervisors.

The standard is rigorous in its requirements and directs practices through the use of guidance notes. This results in a greater emphasis on:

making the business planning process geared to budgets and cash flow forecasts;

looking for firms to produce detailed financial information on, for example, average costs per case;

mandating the use of IT systems;

evidence of active monitoring and performance review;

analysis of variance from budget;

supervisors to be trained in supervisory skills;

supervisor self-declaration checklists for each work type/category; and

prescribed number of files to be reviewed at regular intervals.

The standard will be daunting to those firms planning to make a franchise application before the deadline of the end of 1998.

Although it may be possible to put together a practice manual which will include the necessary procedures to meet the requirements within the time available, it is extremely unlikely that applicants for a franchise will have sufficient time to implement a number of the procedures.

Existing franchisees are better placed to come to terms with the revisions, but many have allowed standards to slip. They should seriously consider a fundamental review of franchise procedures within their practices to enable them to prepare for the rigours of contracting.

For them the next key milestones occur this month when details of contract terms are to be published and in November when applicants are to be invited to join the first year contract tender panel.