Archive for the ‘Chapter 10’ Category
Alternative Business Structures: keeping up to date
I’ve already noted that it is really hard keeping on track with the development of Alternative Business Structures. The Legal Futures blog (list in the right hand side of this page) is the best source of news and comment. I draw attention to two recent items which I think are important and interesting.
First is a piece by Chris Kenny, Chief Executive of the Legal Services Board, who argues that it is the market, not regulation, that is driving the development of ABS.
Second, is a really excellent survey by Neil Rose, founder of Legal Futures of where the ABS market has reached over the last couple of years.
To read these, go to http://www.legalfutures.co.uk/blog/time-turn-back-clock for the Kenny piece; and http://www.legalfutures.co.uk/blog/waiting-dyson-moment for the Rose article
Delivering legal services to the public in an age of austerity
Like it or not, there is widespread acknowledgement that the funding of legal aid is not going to be restored to pre-Government cut levels. But knowing how to respond to this gloomy prediction is not easy. The Nuffield Foundation has recently published (February 2014) a really interesting research report which, drawing from international examples, offers many ideas for how we might deliver services effectively in this country as well. It deserves widespread attention.
The report concluded that websites, telephones, video communication and other means of digital communication can, if properly used, assist in maintaining access to justice in a time of austerity.
In their report, the researchers (Prof Alan Paterson and Roger Smith) emphasise the need to devise models of delivery that take account of the fact that not everyone can use websites and telephones. They also highlight the example of NHS Direct, an integrated telephone and internet project, unfortunately abolished just as it seemed to producing results.
However the report says that much could be done through:
- Leadership from the Ministry of Justice in maintaining access to justice despite austerity cuts – a positive commitment to helping citizens to help themselves where they can and continued free access to legislation and cases.
- The fostering of innovation through awards, recognition and, as in the US Legal Services Corporation’s Technical Innovation Grants programme, funds for strategic projects.
- Rigorous testing of channels of delivery including the use of dummy clients.
- Integrated ‘digital first’ but not ‘digital only’ delivery as happens in jurisdictions like New South Wales and New Zealand where internet advice is linked with telephones and face to face provision if required.
- Dynamic digital systems that assist a person through a process such as obtaining a divorce, for example, the rechtwijzer.nl site in The Netherlands.
These are findings that fit well with the conclusions of the Low Commission, also published in early 2014.
The text of the Paterson-Smith report is at http://www.nuffieldfoundation.org/face-face-legal-services-and-their-alternatives-global-lessons
The final report of the Low Commission is at http://www.lowcommission.org.uk/
Further reforms to legal aid
At the end of February, the Government announced its latest plans for reforming the legal aid scheme. The focus is centrally on criminal legal aid. The main driver remains cutting public expenditure on legal aid.
The latest proposals focus on three key elements:
1 Reducing the fees paid for services provided under the criminal legal aid scheme. Under the latest proposals, the cuts will impact more severely on more established practitioners (on average a 6% reduction) with a reduced impact on junior members of the criminal bar. The Government has undertaken to review the effect of these changes in 12 months time. There will also be a further reduction in solicitors’ fees of 8.25% which takes effect in March 2014. Again the Government has undertaken to review the impact of this change in summer 2016.
2 Recognizing the business impact that these cuts will have on practitioners, the latest paper suggest that the Government is prepared to provide some assistance to firms to restructure themselves and to develop business models more viable in the new tougher economic climate. This will include providing specialist help and guidance on where further financial help could be available to lawyers who need access to finance to help restructure their businesses. It will be very interesting to see whether this initiative simply gets up the noses of practitioners and makes them even more dissatisfied; or whether there will be practitioners who can see that new ways of doing things could be more cost effective and enable them to make money as well as deliver a service to the public.
3 Potentially the most interesting aspect of the latest announcement is that there will be a review of procedure in the criminal justice system to see ho far pre-trial steps can be taken without requiring the attendance of practitioners in court. This could help to drive out some waste.
Debate about how legal aid will continue to be a battle between government and practitioners. My own view is that there is no likelihood of return to the funding levels that existed before the current cuts were introduced. Lawyers committed to delivering legal services to the public will continue to be challenged to offer those services in different and more cost-effective ways.
For the text of the Government response to consultation see:
https://consult.justice.gov.uk/digital-communications/transforming-legal-aid-next-steps and click on Government Response to Consultation.
Co-operative Legal Services: Podcast with Christina Blacklaws
Co-operative Legal Services was the first large organisation to be authorised by the Solicitors Regulatory Authority as an Alternative Business Structure. In this podcast, I talk to Christina Blacklaws, Head of Policy of Co-operative Legal Services.
She explains how the Co-op wanted to move into the legal services market by building on advice services they had for many year provided to their members. There is still a lot of emphasis on helping people to help themselves. But they wanted to be able to offer full legal services for members (and other members of the public) on issues that affect their daily lives, for example moving house, consumer matters, employment matters, family matters, housing matters, probate issues.
The new service is based in the fundamental values of the Cooperative movement.
3 hubs – in Manchester, Bristol and London – are supported by other staff in the Co-op – e.g. in their banks. They also work with other agencies, e.g. Shelter.
She argues that they key to their service is transparent pricing: each issue brought to the service is broken down into segments and clients pay for those segments of the service that they want.
She also argues that the structure of Co-operative Legal Services is an attractive environment for staff; there are opportunities for staff to develop legal skills to enable them to develop their full potential as lawyers.
To hear what Christina has to say go to http://fdslive.oup.com/www.oup.com/orc/resources/law/els/partington13_14/student/podcasts/Blacklaws.mp3
For more information about Co-op Legal Services go to http://www.co-operativelegalservices.co.uk/
Reforms to Civil Justice 2013 – funding of civil litigation
Keeping track of the changes made to the Civil Justice system, in particular those which followed the reforms recommended by Lord Justice Jackson, is quite a challenge. The Ministry of Justice has provided a useful summary of the changes in the following note. There is also a link to a further website that gives more detail of the legislative basis for the changes that have been made. Links to both sites are set out below.
The main changes are:
- No win no fee Conditional Fee Agreements (CFAs)remain available in civil cases, but the additional costs involved (success fee and insurance premiums) are no longer payable by the losing side.
- No win no fee Damages Based Agreements (DBAs) are available in civil litigation for the first time.
- Referral fees are banned in personal injury cases.
- The introduction of new protocols extending the Road Traffic Act personal injury scheme to £25,000.
- A new fixed recoverable costs (FRC) regime.
- Claimants’ damages are protected: the fee that a successful claimant has to pay the lawyer – the lawyer’s ‘success fee’ in CFAs, or ‘payment’ in DBAs – is capped at 25% of the damages recovered, excluding damages for future care and loss
- General damages for non-pecuniary loss such as pain, suffering and loss of amenity are increased by 10%
- A new regime of ‘qualified one way costs shifting’ (QOCS) is introduced in personal injury cases which caps the amount that claimants may have to pay to defendants. Claimants who lose, but whose claims are conducted in accordance with the rules, are protected from having to pay the defendants costs.
- A new sanction on defendants to encourage earlier settlement of claims.
In addition, the functions of the Advisory Committee on Civil Costs, which was to provide advice to the Master of the Rolls on the Guideline Hourly Rates for solicitors, was transferred to the Civil Justice Council with effect from January 2013.
Information in this blog has been adapted from http://www.justice.gov.uk/civil-justice-reforms
More details are available at http://www.justice.gov.uk/civil-justice-reforms/main-changes
Litigation funding – meeting the cost of litigation
One poorly understood development in the civil litigation field is that of litigation funding. This refers to the practice of the provision of financial resources to a claimant so that litigation can proceed. Litigation Funding is the arrangement through which a litigant obtains the financing of all or part of its legal costs from a private, commercial Litigation Funder who has no direct interest in the proceedings. In return, and assuming the case is won, the funder will receive an agreed share in the proceeds. If the claim is, however, unsuccessful, the funder will lose its money and nothing will be owed to it by the litigant.
The share in the proceeds is negotiated between the funder and the litigant. This financial reward of the funder can take a variety of forms. It typically consists of either a percentage of the damages recovered, or a multiple of the amount advanced by the funder, or combination of these options. Litigation Funding provides a cost effective financing tool that must be taken into consideration by solicitors when planning the funding of a case. Solicitors will have to bear this in mind when advising on this issue.
The Litigation Funding market in the UK has, in the last decade, experienced increased mainstream attention due to its potential to provide a valuable means for access to justice, particularly for SMEs.
However, Litigation Funding is not a substitute for legal aid. This financing tool is currently limited to commercial cases of a high value. It is not suitable for consumer cases, personal injury cases or generally claims that do not carry a sufficiently high level of damages.
For more information go to http://associationoflitigationfunders.com/
New ways of funding legal services – responding to cuts in legal aid. The Low Commission
Government cuts to the legal aid budget are making people who want to deliver legal services to the poorest in society think hard about how this can be done into the future. I have already noted that one law firm has created an Alternative Business Structure to enable it to use its profits from private client work to fund its social welfare advice work. See https://martinpartington.com/2013/08/
To get more general thinking going on this, the Legal Action Group has established a Commission under the chairmanship of Lord Low to develop a new strategic approach. It has recently published an important Consultation Document on which it is consulting until the end of September 2013.
As background, the Commission states: “For many people, having access to advice and legal support on Social Welfare Law issues is central to ensuring that they receive fair treatment at the hands of the state, when in dispute with an employer or when struggling with debt. This type of advice and support is currently provided by both the not for profit sector (for example, by organisations such as Law Centres or Citizens Advice Bureaux), through the private sector (solicitors) and occasionally via welfare rights units run by Local Authorities.
“These services are currently funded by both central and local government as well as by charitable trusts and the private sector. However, changes to the scope of legal aid as a result of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 combined with other reductions in central and local government funding due to the period of austerity are threatening the provision of these services as never before.
“These cuts come at a time when advice agencies are seeing an increase in demand due to a combination of welfare reform, other austerity measures and the financial downturn.”
The aim of the Commission is “to develop a strategy for the future provision of Social Welfare Law services, which:
- meets the need for the public, particularly the poor and marginalised, to have access to good quality independent legal advice;
- is informed by an analysis of the impact of funding changes and by an assessment of what can realistically be delivered and supported in the future;
- influences the thinking and manifestos of the political parties in the run up to the 2015 election.”
In its Consultation Paper summary, the main components of the Commission’s strategy are::
- Legal aid should be viewed as part of a continuum including information, general advice, specialist advice, legal help and legal representation, rather than as a stand alone funding mechanism; the more we can do at the beginning of this spectrum, the less we should have to do at the end.
- By reducing demand, taking early action and simplifying the legal system it will be possible to reduce some of the need for advice and legal support.
- For those who can afford to pay, affordable advice and legal support should be more accessible and the routes into it much better communicated and understood.
- People with pressing problems need a simple and effective way of accessing good advice, without hurdles or confusion. Much basic provision can be developed using a combination of public legal education, national telephone helplines and websites, local advice networks and specialist support for front line advice agencies.
- More in-depth and intense support should be targeted at those most in need.
- Ensuring the quality of all levels of service provision must be a high priority
- We would like to see a more open and collaborative advice sector. There is considerable scope for local advice agencies to work more closely together and in some cases even to merge. We would also like to see the national advice services umbrella bodies work more closely together and share their resources and experience more widely
- The importance of advice and legal support on social welfare law to people’s lives, coupled with challenges to its continued provision and additional costs to government that are likely to result if no action is taken, makes it imperative that the next UK Government develops a National Strategy for Advice and Legal Support in England for 2015-20 and that the Welsh Government develops a similar strategy for Wales
- Local authorities should co-produce or commission local advice and legal support plans in conjunction with local not-for-profit and commercial advice agencies; these plans should review the services available, including helplines and websites, whilst targeting face to face provision to ensure that it reaches the most vulnerable and ensuring some resources are available for legal representation where it is most needed, to supplement the reduced scope of legal aid
- We estimate that currently, post the implementation of the 2012 Legal Aid, Sentencing and Punishment of Offenders Act (LASPO), there is about £400m per year available to fund advice and legal support services- mainly coming from local authorities, the Money Advice Service and the legal aid that remains for social welfare law.
- We estimate at least a further £100m pa is required in order to ensure a basic level of provision
- We are calling on the next UK Government to provide half this extra funding by establishing a 10 year National Advice and Legal Support Fund of £50m pa, to be administered by the Big Lottery Fund (BIG), to help develop provision
- We propose this Fund should be financed by the Ministry of Justice, the Cabinet Office and the DWP, as the main creator of the need for advice and legal support (on the polluter pays principle)
- 90% of the Fund should be used to fund local provision, with 10% for national initiative.
- BIG should allocate the 90% share of the National Fund to local authorities, based on indicators of need, to help implement local advice and legal support plans, which should be prepared in conjunction with the local advice sector.
- We are also calling on other national and local statutory, voluntary and commercial funders to contribute a further £50m pa to help develop provision. These should include NHS clinical commissioning groups, housing associations, additional Money
Advice Service funding, charities, trusts and foundations and lawyer fund generation schemes, such as the interest on money held for clients and dormant accounts. - Most of our recommendations apply equally to Wales, but it will be important to build on the momentum resulting from the Welsh Government’s Advice Services Review published in May 2013.
A final report is due to be published at the end of 2013. it makes clear that legal aid budgets, as such, are unlikely to be restored so that alternative funding models must be developed.
Links to the full consultation report are at http://www.lowcommission.org.uk/Can-you-help
Legal aid – updating the book
When I was preparing the last edition of the book, in October 2012, the full details of how the legal aid scheme would work once the Legal Aid Agency had started its work, were not available. As a result of the changes that are now fully effective there is a number of points in the book that are now out of date.
1 The Funding Code (see p 273), under which the former Legal Services Commission operated, has been abolished. The new Legal Aid Agency works under the regulations that have been made under the Legal Aid, Sentencing and Punishment of Offenders Act 2012. These include most importantly the Civil Legal Aid (Procedure) Regulations 2012/3098, see http://www.legislation.gov.uk/uksi/2012/3098/contents/made; and the Civil Legal Aid (Merits Criteria) Regulations 2013, see http://www.legislation.gov.uk/uksi/2013/104/contents/made.
2 The Lord Chancellor’s priorities (p 273) are repealed and do not apply to the Legal Aid Agency.
3 Similarly the statement of Objectives for the Legal Services Commission (p 275) has been abolished and does not apply to the Legal Aid Agency
Alternative business structures – recent developments
Those coming new to the study of law are facing a rapidly changing legal profession. The ability to create Alternative Business Structures (ABS) is one of the factors driving this change. At present there is little in the way of organised research to enable students to find out what the impact of their creation is on the ways in which legal services are delivered. But the Legal Futures website (see links at the side of this page) is a good place to start finding out what is happening.
I last wrote about developments with ABS in March 2013. I was commenting on the report of the Solicitors Regulatory Authority on its first year of operation. I noted that the number of ABS licensed by the SRA was then over 100.
Since then, numbers have continued to rise. Now (August 2013) the current total is 183. And there are some big beasts waiting in the wings who have started the process of applying for a licence under the scheme. Most notable is the application by the Direct Line Insurance company – the largest motor insurer in the UK – to apply for an ABS licence. This has been done in partnership with a legal practice Paribas Law – which itself was one of the early firms to achieve an ABS licence.
At least part of the reason for Direct Line seeking to do this is that, with the abolition of referral fees (from which it derived a lot of income) it now wants to provide the legal services that arise out of accident claims itself.
But developments in the ABS are not limited to high profile applications such as Co-op Legal Services or BT or now DLG Legal Services (which is the commercial name being used by Direct Line in its application).
At the other end of the market a number of existing providers of legal services at the social welfare end of the market have been contemplating how ABS might help them sustain their services, facing as they are huge cuts in publicly funded legal aid. Leading the field here is the legal advice charity in Leicester, which in April 2013 became the first not-for-profit organisation to set up an alternative business structure (ABS). The Community Advice and Law Service (CALS) won approval to launch Castle Park Solicitors Community Interest Company, whose profits will go to support the continuing work of the charity.
Research carried out by Warwick University earlier this year suggested that around 20% of existing advice centres are likely to explore this option. It is far to early to conclude from this example that the ABS will fill the funding gap left by reductions in legal aid. But it does show that those lawyers who are dedicated to providing legal services to the poor are being innovative in the light of public expenditure cuts.
To date I have only commented on ABS approved by the SRA. But it should be remembered that the Council of Licensed Conveyances also has authority to license ABS applications for companies supplying conveyancing services. To date, 38 licences have been granted.
For information about ABS available in Legal Futures, see http://www.legalfutures.co.uk/tag/alternative-business-structures
For information about SRA licences see http://www.sra.org.uk/solicitors/firm-based-authorisation/abs-register/register.page
For information about CLC licences see http://www.clc-uk.org/absregister.html
Reform of Legal Aid – government concessions
The Government’s Consultation on the (further) reform of legal aid was noted in this blog in April 2013. While there is no evidence that the Government intends fundamentally to change its mind on its original proposals, it has made two concessions.
First it has abandoned the idea that those in receipt of legal aid should not have the ability to choose the lawyer they want.
Second, it has decided to do more work on proposals from the Law Society about how changes to legal aid practice might deliver savings while encouraging different forms of practice delivery. There will be a further limited consultation on these proposals in the autumn.
An excellent summary of the Secretary of State’s comments to the Justice Committee can be found at http://www.lawgazette.co.uk/news/grayling-promises-second-consultation-legal-aid-sets-red-lines
You can see what Mr Grayling said to the Justice Committee at http://www.parliamentlive.tv/Main/Player.aspx?meetingId=13501
Martin Partington: Introduction to the English Legal System 15th ed 2021
Oxford University Press Learning Link Resources
Martin Partington: Spotlight on the Justice System 