Increasing competition in the legal services market
HM Treasury has just published (30 November 2015) a policy paper: A better deal: boosting competition to bring down bills for families and firms.
It notes that 40% of the average persons post-tax income is spent on buying essential services, including
Housing costs including mortgage repayments: £4,880
Energy £1,280
Clothing £1,180
Insurance £875
Telecoms £725
Water £385
Health products and services £325
Legal and Banking £35
Total £9,685
The policy paper sets out its aim of ensuring that there os more competition in all these markets to drive down costs to the indovidual and small business. This is also part of the drive for increased productivity.
Although only a small part of the total, the provision of legal services is not going to be immune from scrutiny. In a Consultation paper, to be published in Spripng 2016, ideas will be set out on new business models, and independent regulators, for legal services.
The White Paper states:
2.10 According to a recent survey by YouGov, 62 per cent of adults have used a law firm or solicitor at some point in their lifetime and the cost of legal services is now considered the most important factor when searching for a legal representative. The government wants to ensure that innovative businesses are able to enter the market, providing greater choice for consumers. Alternative business models are around 15 percentage points more likely to introduce new legal
services than other types of regulated solicitors’ firms.
2.11 The government will launch a consultation by spring 2016 on removing barriers to entry for alternative business models in legal services, and on making legal service regulators independent from their representative bodies. This will create a fairer, more balanced regulatory regime for England and Wales that encourages competition, making it easier for businesses such as supermarkets and estate agents among others, to offer legal services like conveyancing, probate and litigation.
But that is not all. The policy paper promises other initiatives as well. These include:
Saving motorists money on their insurance policy
2.13 The government is determined to crack down on the fraud and claims culture. Whiplash claims cost the country £2 billion a year, an average of £90 per motor insurance policy, which is out of all proportion to any genuine injury suffered. As set out at the Spending Review and
Autumn Statement 2015, the government intends to introduce measures to end the right to cash compensation for minor whiplash injuries, and will consult on the details in the New Year. This will end the cycle in which responsible motorists pay higher premiums to cover false claims
by others. It will remove over £1 billion from the cost of providing motor insurance, and the government expects the insurance industry to pass an average saving of £40 to £50 per motor insurance policy on to consumers.
These changes are likely to have significant impact on those firms which specialise in providing legal services to the victims of road accidents.
Injecting innovation into the process of home buying
2.18 The government wants to inject innovation into the process of home buying, ensuring it is modernised and provides consumers with different – and potentially quicker, simpler and cheaper – ways to buy and sell a home. Encouraging new business models (for example, online only estate agents) is key to enhancing price competition in the real estate sector, but these have yet to penetrate the market.
2.19 In addition, emerging findings from government research suggest that consumers incur costs of around £270 million each year when their transactions fall through and they have already spent money on legal fees and surveys, and many more sales are subject to costly delays. Similar issues can affect businesses trying to buy or sell commercial property – the UK ranks 45th for registering property in the World Bank’s Doing Business index, and improving performance will help unlock additional economic growth.
2.20 The government wants to consider and address the way the real estate and conveyancing markets have developed around the existing regulatory frameworks, encourage greater innovation in the conveyancing sector and make the legal process more transparent and efficient. The government will therefore publish a call for evidence in the New Year on homebuying, exploring options to deliver better value and make the experience of buying a home more consumer-friendly.
The knock on implications for changes to conveyancing are also likely to impact significantly on law firms and conveyancers.
In addition, the Government has promised a further review of how the regulatory structure created by the Legal Services Act 2007 is operating, with a view to making it more efficient. Although nothing will happen immiediately, the legal profession faces considerable policy change which will require innovative and and imaginative reponses, which professionals need to start thinking about now.
The text of the paper is at https://www.gov.uk/government/publications/a-better-deal-boosting-competition-to-bring-down-bills-for-families-and-firms
Abolition of the Criminal Court charge
Prediction is a hazardous business. On 30 Novermber 2015, I wrote – in relation to the Criminal Court charge –
While it is unlikely that there will be abolition so soon after introduction, my hunch is that the Government will be returning to the issue in the not too distant future.
Well I was both right and wrong: the Government has returned to the issue, but much more rapidly that most people anticipated.
Michael Gove, the Justice Secretary announced yesterday (3 Dec 2015) that the charge would be scrapped from 24 December 2015. The announcement was made to the Magistrates’ Association, a number of whose members had resigned from the magistracy over the imposition of the charge.
No doubt such a rapid change of mind will be portrayed as a U turn (though of course the initial decision to introduce the charge was taken by Gove’s predecessor Chris Grayling). But if a policy is shown to be absurd and not working, then surely it is more rational to change it rather than to doggedly adhere to it?
Anyway, at least on this occasion a rapid decision has been taken to kill off a policy was had drawn substantial criticism, not just from the magistrates but more widely from the legal world.
At the same time the Lord Chancellor has annouced to Parliament, perfectly sensibly in my view, that there should be a wider review of the different ways in which financial orders can be made against those convicted of crime – for example by fines, the victim surcharge, compensation orders, and making contribution to prosecution costs.
The Lord Chancellor would like to see a simpler and more rational structure of these different matters, which have developed over recent years in very piece meal fashion.
The Lord Chancellor’s statement is at: https://www.gov.uk/government/speeches/courts
New Code of Practice for Victims of Crime
In October 2015, a new Code of Practice for Victims was published, replacing one originally published in 2013. It sets out in some detail what victims of crime should expect from the criminal justice system. There are separate sections for adult and young victims. It also sets out the responsibilities the Code places on the key actors in the criminal justice system.
It is relevant to all stage in the criminal justice process: investigation and pre-trial; the trial itself; and post-trial.
The code summarises the entitlements as follows:
You are entitled to:
• A written acknowledgement that you have reported a crime, including the basic details of the offence;
• An enhanced service if you are a victim of serious crime, a persistently targeted victim or a vulnerable or intimidated victim;
• A needs assessment to help work out what support you need;
• Information on what to expect from the criminal justice system;
• Be referred to organisations supporting
victims of crime;
• Be informed about the police investigation, such as if a suspect is arrested and charged and any bail conditions imposed;
• Make a Victim Personal Statement (VPS) to explain how the crime affected you;
• Read your VPS aloud or have it read aloud on your behalf, subject to the views of the court, if a defendant is found guilty;
• Be informed if the suspect is to be prosecuted or not or given an out of court disposal;
• Seek a review of the police or CPS’s decision not to prosecute in accordance with the National Police Chiefs Council (NPCC) and CPS Victims’ Right to Review schemes;
Be informed of the time, date and location and outcome of any court hearings;
• Be informed if you need to give evidence in court, what to expect and discuss what help and support you might need with the Witness Care Unit;
• Arrange a court familiarisation visit and enter the court through a different entrance from the suspect and sit in a separate waiting area where possible;
• Meet the CPS advocate and ask him or her questions about the court process where circumstances permit;
• Be informed of any appeal against the offender’s conviction or sentence;
• To opt into the Victim Contact Scheme (VCS) if the offender is sentenced to 12 months or more for a specified violent or sexual offence;
• If you opt in to the VCS to:
– make a VPS for consideration by the Parole Board if the offender is considered for release or transfer and apply to the Parole Board to read it out at the hearing;
– make representations about the conditions attached to the offender’s licence on release and be informed about any licence conditions relating to you;
• Apply for compensation under the Criminal Injuries Compensation Scheme;
• Receive information about Restorative Justice and how you can take part;
• Make a complaint if you do not receive the information and services you are entitled to, and to receive a full response from the relevant service provider.
To see the whole Code, go to https://www.gov.uk/government/publications/the-code-of-practice-for-victims-of-crimeThis also gives links to a leaflet about the code and a text of a note that is given to victims.
Public expenditure review: impact on the Justice system (2): the future of personal injuries litigation
A totally unexpected announcement in the 2015 Autumn Statement relates to how personal injuries cases are to be dealt with in future. The statement says (at p 125):
3.103 Motor insurance – The government will bring forward measures to reduce the excessive costs arising from unnecessary whiplash claims, and expects average savings of £40 to £50 per motor insurance policy to be passed onto customers, including by:
••removing the right to general damages for minor soft tissue injuries (Claimants will still be entitled to claim for ‘special damages’, including treatment for any injury if required and any loss of earnings);
••removing legal costs by transferring personal injury claims of up to £5,000 to the small claims court.
This announcement has caused consternation amongst PI claimant lawyers since, by moving many more cases into the small claims track, they will not be able to claim their costs from the insurers when they win. This will result in many claimant lawyers giving up this type of work.
Two consequences seem likely to follow:
First, insurers will be able to put more pressure on claimants to settle on terms dictated by the insurers.
Second, claims management companies may well try to find ways to move in to this work.
Despite the fact that many claimants may end up with a lower level of damages than they might have done had they been represented by a lawyer, many will think that the estimated reduction in insurance premia is a price worth paying to ensure that the costs of small claims are more proportionate than they currently are.
There might, however, be another way of looking at the issue.
In Ireland, the Injuries Board – established by Act of Parliament in 2003 – can deal with all personal injury claims on line. The injured party submits details of the accident and the injury; the insurer makes an offer; and this is assessed by an independent assessor with practical experience of PI and familiar with current trends on the awards of damages by the courts.
There is no compulsion to use the system, but it is free to claimants who win their case, and the services costs much less for the insurers (though still makes an annual surplus).
An analogous scheme already operates in the UK for dealing with tenancy deposit disputes.
The full statement is downloadable at https://www.gov.uk/government/publications/spending-review-and-autumn-statement-2015-documents.
For the Irish Injuries Board, go to http://www.injuriesboard.ie/eng/
Public spending review: impact on the Justice system (1): Court closures and investment in IT
The long awaited announcement that there would be significant investment in prisons and also in the IT infrastructure for the Courts and Tribunals service, paid for by selling existing old prisons and little used court buildings, was made by the Chancellor of the Excehquer in the Autumn Statement and Spending Review, announced on 25 November 2015.
More specifically, the Ministry of Justice website notes:
On prisons
£1.3 billion will be invested to reform and modernise the prison estate to make it even more efficient, safer and focused on supporting prisoner rehabilitation. The government will build 9 new, modern prisons – 5 of which will open this Parliament – with better education facilities and other rehabilitative services, while selling ageing, inefficient prisons on prime real estate to free up land for new homes.
By investing in the prison estate, the government will reduce running costs in prisons by £80 million a year when the reforms are complete. New investment will also fund video conference centres, allowing up to 90,000 cases to be heard from prison instead of court, and will deliver more safety improvements in prisons, including body scanners and mobile phone blocking technology.
The Government states its hope that these reforms will reduce reoffending through more effective rehabilitation, and will reduce the cost of transporting prisoners between courts and prisons, stamp out the organisation of crime from within prisons, and stem the availability of drugs and other illicit substances.
The Government also states that these developments will build on the probation reforms undertaken in the last Parliament, which will reduce the costs of the system and reinvest them into extending probation support to 45,000 short-sentence offenders for the first time, to tackle reoffending.
On courts and tribunals
Over £700 million will be invested to fully digitise the courts and create a more modern estate. This will generate savings to the taxpayer of approximately £200 million a year from 2019-20. The government will also look at changes to court fees as it continues to put the courts on a more sustainable financial footing.
The text of the statement and other documents may be accessed at https://www.gov.uk/government/topical-events/autumn-statement-and-spending-review-2015
The impact on the Ministry of Justice is at https://www.gov.uk/government/news/ministry-of-justices-settlement-at-the-spending-review-2015
The future of the Criminal Courts charge
The Criminal Justice and Courts Act 2015 introduced the principle that those convicted of crimes should be required to make a contribution towards the costs of the criminal court. Regulations prescribe the charges that must be imposed:
|
Conviction by a magistrates’ court in proceedings conducted in accordance with section 16A of the Magistrates’ Courts Act 1980 (trial by single justice on the papers)(a) |
£150 |
|
Conviction by a magistrates’ court for a summary offence on a guilty plea |
£150 |
|
Conviction by a magistrates’ court at a trial of a summary offence where (a) the defendant did not enter a plea, (b) the trial proceeded in the absence of the defendant, and (c) the court dealt with the case on the papers without reliance on any oral evidence |
£150 |
|
Conviction by a magistrates’ court for an offence triable either-way on a guilty plea |
£180 |
|
Conviction by a magistrates’ court at a trial of a summary offence |
£520 |
|
Conviction by a magistrates’ court at a trial of an offence triable either way |
£1000 |
|
Conviction by the Crown Court on a guilty plea |
£900 |
|
Conviction by the Crown Court at a trial on indictment |
£1200 |
|
Magistrates’ court when dealing with a person under section 21B(1)(b), (c) or (d) of the Prosecution of Offenders Act 1985 |
£100 |
|
Crown Court when dealing with a person under section 21 B(2)(b) or (c) of the Prosecution of Offenders Act 1985 |
£150 |
|
Crown Court dismissing an appeal by a person against conviction or sentence |
£150 |
|
Court of Appeal dismissing an application for leave to bring an appeal under Part 1 of the Criminal Appeal Act 1968 against a person’s conviction or sentence |
£150 |
|
Court of Appeal dismissing an appeal under Part 1 of the Criminal Appeal Act 1968 against a person’s conviction or sentence |
£200 |
The charges have been criticised by many lawyers and judges on the basis that they have the potential to create a perverse incentive to plead guilty (and thereby attract a lower charge) even in cases where the case should go to trial. Press reports have suggested that the current Lord Chancellor, Michael Gove, is not unsympathetic to reviewing the rules, although the recent statement on Public Expenditure did not mention the charge.
Nonetheless, the Justice Select Committee decided that it would issue an urgent report on the matter. This was published on 20 November 2015. It recommended abolition, or, failing that, that sentencers should have discretion over whether or not to impose a charge and what the amount of the charge should be.
While it is unlikely that there will be abolition so soon after introduction, my hunch is that the Government will be returning to the issue in the not too distant future.
You can read the Justice Committee report at http://www.publications.parliament.uk/pa/cm201516/cmselect/cmjust/586/58602.htm
Enhancing the Quality of Criminal Advocacy
In 2014, a review of criminal advocacy services by Sir Bill Jeffrey was published. In his report he pointed out some harsh truths for the legal professions:
For example:
- Recorded and reported crime are down.
- Fewer cases reach the criminal courts.
- More defendants plead guilty, and earlier than in the past.
- Court procedures are simpler.
- There is substantially less work for advocates to do.
- Its character is different, with more straightforward cases and fewer contested trials.
- In the publicly funded sector (86% of the total), it pays less well.
- There has been a marked shift in the distribution of advocacy work in the Crown Court between the two sides of the profession. There are many more solicitor advocates than there were in the years following the liberalisation of rights of audience. Between 2005-06 and 2012-13, the percentage of publicly funded cases in which the defence was conducted by a solicitor advocate rose from 4% to 24% of contested trials and from 6% to 40% of guilty pleas. Both figures are on a rising trend.
- In 2012-2013, Crown Prosecution Service (CPS) in-house lawyers led the prosecution in approximately 45% of Crown Court trials.
He noted that there would be serious implications for the criminal justice system, if current trends towards the use of solicitor advocates and away from the criminal Bar continue. Sir Bill was clear that it would be neither feasible nor desirable to wind the clock back on rights of audience. He found that solicitor advocates are a valuable and established part of the scene. But if the Bar’s share of the work continues to decline, as the current generation moves to retirement, the supply of top-end advocates to undertake the most complex trials would be in doubt.
This stark assessment is the background to a new consultation, launched in October 2015 by the government, setting on a number of measures it argues are necessary to enhance the quality of advocacy in criminal cases.
The paper sets out two principal reasons why it feels it must undertake this consultation:
- The Government has a responsibility to ensure the delivery of an efficient, fair and effective justice system in which the public has confidence and therefore has a legitimate interest in making sure that good quality criminal advocacy services are available to those that need them.
- The government, via the Legal Aid Agency (LAA), is also the largest single procurer of criminal defence advocacy services, and has a responsibility to ensure that, where such advocacy services are being paid for with public money, they are of a good quality.
The specific proposals on which the Government is seeking views can be summarised as follows:
- the proposed introduction of a panel scheme – publicly funded criminal defence advocacy in the Crown Court and above would be undertaken by advocates who are members of this panel;
- the proposed introduction of a statutory ban on referral fees in criminal cases;
- how disguised referral fees can be identified and prevented; and
- the proposed introduction of stronger measures to ensure client choice and prevent conflicts of interest.
The period of consultation expires at the end of November 2015. If these, or measures similar to what is proposed go ahead, they will have a profound impact on the ways in which criminal practitioners work and the way in which the Legal Aid Agency operates.
For Sir Bill Jeffrey’s report go to https://www.gov.uk/government/news/advocates-must-adapt-to-a-changing-landscape.
For the consultation go to https://consult.justice.gov.uk/digital-communications/enhancing-the-quality-of-criminal-advocacy
Legal Ombudsman – complaints about Claims Management Companies
After some delay, the Legal Ombudsman acquired jurisdiction to deal with complaints against Claims Management Companies in January 2015.
On 5 November 2015, Simon Tunnicliffe, the Legal Ombudsman’s Head of Claims Management Complaints, reported in an interview that they have had 9,000 enquiries about claims management companies since they widened their remit to consider complaints about these companies, in addition to their previous remit. Many of the complaints concern the amount of money retained by CMCs, and not passed on to the original claimant, e.g. for personal injury.
Further information about the work of the Legal Ombudsman in relation to CMCs is available at http://www.legalombudsman.org.uk/helping-cmcs/#publications
Unbundled legal services
The concept of unbundling legal services is still relatively new, but has already been the subject of an important research paper from the Legal Services Board, published in September 2015.
Unbundling is where a package of legal services is separated into parts and the work shared between the consumer and lawyer. An example of unbundling is a consumer preparing the evidence and the court bundle themselves and then directly instructing the barrister who represents the consumer at the court hearing.
The Press release on the research states:
This research paints a picture of law firms beginning to respond to consumer demand and changes in their commercial environment by developing affordable alternatives to full-service representation. It suggests that:
– reduced cost and the opportunity to exercise greater control over the case were the primary reasons why those consumers interviewed chose to unbundle
– unbundling tended to be identified as an option during the initial interview between a consumer and their legal advisor rather than being actively marketed to potential clients. As a result, while some consumers are making savings on their legal bills, this development is not benefiting large numbers of people who are currently put off approaching lawyers in the first place due to cost concerns
– no regulatory barriers to unbundling were identified, but some concerns were raised around assessing consumer capability, giving advice based on limited information and ensuring there is clarity on agreements about the scope of work, and
– members of the judiciary felt that if full representation could not be obtained then, as a starting point, some legal advice and assistance ought to be beneficial. They also echoed some potential difficulties with unbundling identified by providers and felt it important that advice and assistance is given by regulated advisers.
There is a clear indication that the Legal Services Board would like to see unbundling develop further.
The Co-operative Legal Services is an example of a legal service provider who do make clear in their advertising that they are offering unbundled legal services, leaving the clients to choose which parts of the service they wish to pay for. (Of course clients can also go for a full legal service.)
For further details on the research go to http://www.legalservicesboard.org.uk/news_publications/LSB_news/PDF/2015/20150916_LSB_Publishes_Report_Into_The_Unbundling_Of_Legal_Services.html
For Co-operative Legal Services go to https://www.co-oplegalservices.co.uk/
The financial list – recent developments
On 1 August 2015, I noted the decision to create a new financial list and set out a diagram explaining how this would operate in the High Court.
In October 2015, further guidance on the financial list was published, and a formal event to launch the new list was held on 21 October 2015.
It will be overseen by the Chancellor of the Chancery Division and the Judge in charge of the Commercial Court of the Queens Bench Division. Cases will be heard in the Rolls Building in London.
This is an important strategic move by the judiciary, in collaboration with those groups of the legal profession who deal with these major financial cases, to try to ensure that London remains the litigation forum of choice for these kinds of cases.
One of the interesting points that was made at the time of the launch was the extent to which judicial decisions emanating from these arrangements will (or will not) align with rulings from Financial Regulators.
To read the guide, go to https://www.gov.uk/government/publications/financial-list-guide
To read some remarks of the Lord Chief Justice on the launch of the list go to https://www.judiciary.gov.uk/announcements/financial-list-press-release/
Martin Partington: Introduction to the English Legal System 15th ed 2021
Oxford University Press Learning Link Resources
Martin Partington: Spotlight on the Justice System 