Justice 1 Committee,

Meeting date: Wednesday, May 30, 2001

Official Report 235KB pdf

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Legal Aid Inquiry

Once again we have with us Professor Alan Paterson from the University of Strathclyde law school, whom we decided we wanted to give evidence again. We heard from him on 27 February. I apologise to Professor Paterson for the late start of the meeting.

We have identified one or two issues that we would like to take up with you, Professor Paterson. One is quality assurance, which has been raised by several witnesses. It has been pointed out that we lack a quality assurance system for civil legal aid, but that there are systems elsewhere. How are quality assurance systems implemented elsewhere?

It is fair to say that although legal aid quality assurance has been on the agenda in a number of advanced jurisdictions for some time, some have made greater progress than others have. England and Wales have made the greatest progress, and the Netherlands has shown some interest in that area, so I will talk about them.

The jurisdiction of England and Wales has been working in that area for 10 years. It started with the concept of franchising. Basically, solicitors who got franchises were required to deliver a better quality service, which was measured and defined in a variety of ways, in return for advantages. One can measure quality, and the English have done it in three ways.

The first thing that can be measured is input. That is the easiest to achieve, but it is also furthest away from the delivery of quality. Nevertheless, it is important, and includes such things as the qualifications of staff, having effective supervision mechanisms for junior staff and qualified staff, having a good business plan, cost control, financial management, strong internal file review, practice management standards and general standards. Those are all important measures of input, but they have only limited impact in ensuring that the quality of work meets the standard that has been set.

The next set of measures is process measures. The English use measures that are called transaction criteria, which are similar to checklists and work on the basis of file review. The auditors examine a random selection of legal aid lawyers' files and check those files against the checklist of tasks that the auditors would expect to have been done in a case of the type to which the file relates. Those matters are specified in some detail; a checklist can contain 100 items or more. The lawyer does not have to get 100 per cent right, but a figure of about 65 per cent must be obtained. If enough files do not meet the target, the auditors will take a second trawl of the files. If that fails, the auditors will consider further measures.

The problem with process measures is that although they show whether people are doing the right things and doing what would be expected, they do not show whether the right advice has been given. To discover that, we must consider outcome. Such matters as cost or client satisfaction can be considered. However, client satisfaction measures are good at giving us only some information about quality. They tell us whether the lawyer is good at handling clients, relates well to them, communicates well with them, shows empathy and appears to respond quickly to requests from clients. All those matters are important to service, but on key issues such as whether the lawyer obtained the right result for the client, whether the lawyer achieved that in the appropriate time and whether the cost of the case to the client was reasonable, the client cannot answer without having information given to them by the lawyer. Therefore, the lawyer can influence the client's interpretation of the result. Client satisfaction measures only part of quality.

How can the result be measured? That is tough. The measures that have been used in England and Wales, which I helped to develop as part of a team, are peer review and mystery shoppers. Peer review involves file review by peers who are trained in the matters with which the file deals and who have worked together on a set of agreed criteria for measuring or assessing such files. Such people were sent into firms in England and Wales, and we found that we could obtain some consistency in the results that were achieved.

We agreed with legal aid practitioners that, as part of the contracts that those practitioners received from the Legal Aid Board, which is now the Legal Services Commission in England and Wales, they would occasionally receive a mystery shopper—a client who would present with a problem and who would not be genuine. That client would come from the researchers and measure how well the practitioner dealt with the problem. The Dutch have used that technique to measure the quality of general practitioners in the Netherlands and the technique has also been used in a variety of service sectors.

The Dutch have used a lesser set of measures and have concentrated and restricted legal aid more to allow people to do legal aid work only if they are prepared to do a set amount. The Dutch have considered some of the measures that the English have adopted and might take them further.

That all sounds fairly expensive, but perhaps I am wrong. Have you any idea what compliance costs the measures impose on suppliers of civil legal aid?

No, but I think that you are right that the system is expensive. Input measures are the least expensive. The Scottish Legal Aid Board has introduced some input measures, particularly on criminal legal aid. However, as I said, such measures bite least.

On process measures, transaction criteria have been quite expensive to implement and audit. There might be ways of making those criteria less expensive, and the Legal Services Commission is investigating that. Peer review is so expensive that one simply would not use it as the primary or standard method of quality assurance. Instead, one would use it as an appeal mechanism or as a checking mechanism.

You mentioned franchising, and I presume that some method of quality control is essential if a significant proportion of the operation is to be franchised out. Is it suggested that people who obtain franchises do so on the basis of their quality, their price or simply on their willingness to do the work?

Franchising has given way to contracting, but it was a form of contracting. Contracting in England and Wales is exclusive—in other words, one cannot provide legal aid services, such as giving advice or assistance, unless one has a contract from the Legal Services Commission. Firms must bid to do that work, but, at present, they do not bid on the basis of price.

Observers have feared for more than 10 years that the Treasury might look towards competitive tendering as a way of allocating contracts in England and Wales. That was one reason why the Legal Aid Board and the Legal Services Commission were so keen to ensure that quality measures were in place and that there was a quality floor below which competition could not drive practitioners.

If people do not bid on the basis of price, on what basis do they bid?

They bid to do so much work—the price is more or less set for them by the Legal Services Commission. However, we might well reach the stage at which people will be expected to compete on price. In order to get a contract, one must show that one meets quality assurance standards, including the input standards that I mentioned—a strong supervisory structure, strong cost controls, file review and practice management—as well as compliance with the transaction criteria.

Do certain firms not get that work after bidding for it?

Yes.

On what basis do those firms not get that work, while other firms get it?

I do not have the figures on which firms did not get contracts. The process, which has been implemented over the past year only, is continuing. Certain firms did not get franchises, but at that time, one did not have to have a franchise in order to do legal aid work, so the problem was not so great. A firm would not get a franchise if it could not meet the input standards that were required. Most people who underwent the process of trying to acquire a franchise found it a valuable experience, because they were asked to implement sound business practices, which, to be frank, the legal profession should have been—and many firms had been—implementing for a while.

That leads me to my next question. It has been suggested that we do not need such a system in Scotland because the quality of solicitors' work is guaranteed by their training, codes of conduct and so on. Is that assertion justified?

It might be justified—we simply do not know.

There is no evidence as to the quality of work that is done by solicitors or advocates in legal aid in Scotland. If you like, that is where the pressure comes from. Substantial amounts of public money are spent on legal aid. In other areas on which large sums of public money are spent—such as schools, higher education or health—it is accepted that quality assurance measures must be in place in order to show that the money is being spent and that value is being achieved. There are no equivalent measures in relation to legal aid spend.

The Law Society does have a requirement that all its members provide an "adequate professional service". However, when it comes to identifying such a service, the Law Society, for understandable reasons that I do not share, has always been reluctant to identify what an adequate standard is. The Solicitors (Scotland) Act 1980 does not help, because it refers simply to

"services which are in any respect not of the quality which could reasonably be expected of a competent solicitor."

What are the standards that could be expected of a competent solicitor? We are looking to the Law Society to identify them. The Scottish Legal Aid Board and—if there was one—a legal services commission would undoubtedly want, in their pursuit of value for money, to say what they regarded as an adequate legal service and to have that monitored.

Paul Martin has some questions about a legal services commission.

When you previously appeared before the committee, we discussed your proposal for a legal services commission. You urged that such a body should have flexibility. What exactly do you mean by that?

It is not just about flexibility. The commission should have a planning and proactive role. The current board has its hands tied by legislation. It does not have a planning role. It cannot say how a pot of money should be spent. Its statutory role is to be a good housekeeper—to manage the fund. The board is demand led—everything depends on who comes to it for money. The board cannot say that it has examined need and provision in Scotland, that it has identified certain gaps and that it would like to fill them. It is within the board's role to carry out an assessment of need and to examine the availability of supply. However, it has no statutory powers to fill gaps that have appeared.

The English Legal Services Commission has such powers. Its role is to identify gaps and to say what priorities need to be addressed. The commission develops those priorities in conjunction with the Lord Chancellor's Department and suggests ways in which gaps in provision can be filled.

Best practice around the world in advanced jurisdictions is to have a complex, planned mixed model. We do not have a planned model, we probably do not have a complex model and we barely have a mixed model, because we have very few salaried lawyers. In the jurisdictions that can give us a lead, there is a strategic balance between the private profession, which still does the bulk of the work, salaried lawyers employed by the commission, law centre lawyers and the not-for-profit sector. Each has a role to play. The commission then experiments. It asks itself what sort of provision is best suited to a particular operation.

Last night, I examined the strategic plan of Legal Aid Ontario. It is considering how the internet can best be used to deliver legal services in rural areas. It is experimenting with pilot projects in relation to what it calls expanded duty-counsel salaried lawyers, in relation to immigration and in relation to youth courts. It can tailormake pilot projects in particular areas to meet needs that have developed in relation to asylum seekers, for example. We cannot do that. Our board does not have strategic powers or a policy-making role. A legal services commission would.

Do you think that a legal services commission should be able to revise eligibility criteria or fee levels?

The Legal Services Commission in England and Wales is partly involved in that area, although decisions are still made by the Lord Chancellor's Department. Recently the commission proposed that solicitors working in areas of priority need—such as social welfare law—should be paid more. I believe that that proposal has now been implemented. I think that that is a sensible approach, as it enables one to say, "These are our priorities, which have been agreed between the commission and the Lord Chancellor's Department." One can then reward providers who are prepared to work in those areas of legal aid.

Do you believe that a Scottish legal services commission could consider such issues as eligibility and fee levels?

A Scottish legal services commission could have a role in that. The English Legal Services Commission has a research arm, as does the Scottish Legal Aid Board, but the English Legal Services Commission research arm has been looking at eligibility, the question of passporting benefits and other issues that have been troubling the committee. The results of the research will have to be with the Lord Chancellor's Department if they are to be implemented, but the commission has had a key role to play.

Evidence has been given to us that suggests that many aspects of the legal aid system are in need of revision. Should there perhaps be the opportunity for an on-going strategic review?

Absolutely. The balance of policy making between the Executive and the commission would have to change, and that is sensible. One cannot take all policy-making powers away from the Executive. After all, it is the paymaster at the end of the day. However, the commission should be doing a lot of the strategic planning in conjunction with the Executive.

Finally, would you like to make any further points that have not been covered in your written and oral evidence?

I think that I have covered most points.

Some oral evidence has suggested the need for a rationalisation of eligibility criteria in terms of passporting benefits with respect to advice and assistance and civil legal aid. What is your view on that?

That is an area that the English Legal Services Commission has been looking into. Rather curiously, as I understand its interim results, it is not in favour of extending passporting across the board. In fact, it is considering getting rid of it. That is curious because, on the face of it, passporting saves on administration costs. However, the commission's microeconomic modelling suggests that it does not increase the range of people who benefit from the scheme. The commission is concerned that it brings in a number of people who, under the current rules, are ineligible for legal aid. The commission thinks that that is a problem. I am not sure that I agree with that, but research has certainly been conducted in that area.

I can see the argument for saying that the eligibility test for advice and assistance, assistance by way of representation and legal aid should be the same. That looks like a tidy approach. However, one could equally take a different approach. One could say that advice and assistance is more important than legal aid in a sense. Research that has been done by Professor Hazel Genn of the Nuffield Foundation, in which I have been involved, has shown that what is needed is quick, early intervention. Strong, competent advice at the earliest stages is needed to head off developing problems. As Professor Richard Susskind said, what is needed is a fence at the top of a cliff, not ambulances at the bottom.

On that basis, it would be quite logical to put more money into, and increase eligibility for, advice and assistance, on the ground that one wants to get the early diagnosis right first off. One might therefore choose to make eligibility stronger and wider in relation to advice and assistance than in relation to representation. I am just saying that one can construct an argument for doing it that way.

My personal view is that we have to examine the whole issue of eligibility because—this cuts against my earlier argument—we have lost the middle-income sector that used to be covered by legal aid. That is unfortunate. As I suggested when I gave evidence on a previous occasion, I would like the Executive—or a legal services commission, if we had one—to look at other ways in which people on middle incomes could be brought back in.

I say that for two reasons. There is evidence from other jurisdictions that, if something is widely available in a society, it is more valued and supported by the society as a whole. For example, Norway has consumer legal aid that is widely available to consumers and is very popular. Because it is not restricted to only a small sector of the community, it attracts much popular support.

The other argument is that, at the current juncture, people who are just outside the legal aid limits simply cannot afford to litigate in many cases. That seems to me to be unfortunate. I would like us to explore ways of bringing the middle-income people back in, even if that means that, in effect, the contribution that is given is 100 per cent.

You seem to be suggesting that there is some injustice in the civil legal aid scheme, which has pushed the thought into people's minds that civil law is for the very poor and for the very rich—those who are in the middle miss out.

Further to that, you mentioned a commission, on which you have already answered some questions. Surely, now that we have a Scottish Parliament and many more members of Parliament, that would be Parliament's job. Why do we need to pass on responsibilities to yet another outside body?

The commission would not co-exist with the Legal Aid Board. It is likely that, as in England and Wales, the Legal Aid Board would be transformed into a legal services commission, which would do much the same job that is currently done by the Legal Aid Board but would have a wider remit. It would cover planning and policy and would manage the fund and the proper delivery of poverty legal services in Scotland.

I do not think that the Parliament would want to spend its time planning the proper delivery of poverty legal services, even if it could do that only once a month. The commission would do that, but the key decisions can still be made by the Executive and by the Parliament.

I want to return to the fairness of civil legal aid. If awards are made against people who are on civil legal aid, any awards that should be paid to others seem to be swallowed up by the Legal Aid Board itself. Only if there is any residue after the Legal Aid Board has got its money does the individual who has successfully taken a case through the courts get anything.

Also, is it fair and right that, even if the court makes the other party responsible for the costs, the costs of the successful individual are not met? That happens on the great majority of occasions. Should that be changed?

I understand that you are referring to the clawback or statutory charge, which is a feature of many legal systems. In effect, it works in this way: if a person loses the action, the legal aid is considered to be a grant; but if the person wins the action, it becomes a loan, which someone has to pay back. The loan should be paid back by the other side, but it is usually not paid back in full for a variety of reasons. Therefore, the Legal Aid Board will look to the litigant who was given legal aid to pay it back from contributions. Usually, the contributions will not cover the legal costs, so the board needs to look to any winnings that have been achieved. I can see the Treasury's rationale in doing things in that way.

However, two things should be said. First, the first £2,500 is disregarded for the purposes of clawback. That is not big enough. It has not gone up in six or seven years or more and should have been uprated. Secondly, members of the public simply do not understand that that is what will happen. It is also fair to say that some members of the profession do not understand how the charge works. Members of the profession, therefore, occasionally appear to be willing to accept that the other side will not pay any expenses—or pay only limited expenses—without realising that that will have the knock-on effect that their client will pay the charge. That does not happen routinely, but it happens from time to time because some members of the profession—as with members of the public—find the charge difficult to understand.

You spoke earlier about a possible case for a 100 per cent contribution for higher up the income scale. Were you suggesting that that would protect against the costs that you have been discussing?

No. You may ask why anybody would pay a 100 per cent contribution. The answer is, first, that the contribution can be spread over a substantial period—some jurisdictions have experimented with contributions being paid over a very long period indeed. Secondly, some people say that the real advantage of legal aid is that, when people lose, their liability to pay the other side's expenses can be, and usually is, modified by the court, even if they have to pay 100 per cent of their own lawyer's fees.

You suggested that the state should pick up 100 per cent of fees higher up the income scale than it does at present. Would you suggest that that be extended to all costs?

No—I may inadvertently have misled you. When I talked about 100 per cent contributions, I meant clients paying up to 100 per cent of the contribution. The sliding contribution scale would mean that, after a while, clients would be paying 100 per cent of their costs, or rather of their contribution. They might do that, first to spread out the contribution over a longer period and, secondly, because if they lose, their liability to pay the other side's expenses may be modified by the court.

You mentioned that the amount of money that is disregarded has not been updated for a number of years; neither have the rewards for advocates and solicitors participating in the schemes. You stated that there is some concern about that. How could and should the fees be updated and subsequently maintained at an acceptable level?

It is true that there have not been annual increases in fees for advocates' or solicitors' legal aid work. If I were a Treasury official, or the Scottish equivalent thereof, I would say that it is interesting that the unit cost per case keeps rising year on year. In other words, cases cost more each year, despite the fact that fees have not gone up.

The Dutch froze legal aid fees to advocates and solicitors for 10 years. I am not saying that theirs is a model to be followed, but the net result was that there was negotiation and the relevant Dutch minister said to Dutch advocates that the Government would increase legal aid fees, but wanted something in return: quality assurance. I am not surprised; if I were in the Scottish Executive and solicitors and advocates approached me wanting more fees, I would probably say that I would like some movement on the quality assurance front.

There is also an argument for considering the disincentives that some of the fees introduce in relation to social welfare law. Social welfare law largely involves advice and assistance and now ABWOR in relation to appearance before tribunals. However, the restrictions on the fees that may be obtained for advice and assistance are considerably higher than the restrictions on civil legal aid. Preparation time is limited, there is no research time and travel time is limited. That means that because most of social welfare lawyers' work is done under advice and assistance, they are in effect paid much less than civil legal aid lawyers, who themselves would say that they are not paid particularly well. That sort of penalty should be examined. Nobody planned it but, for historic reasons, most social welfare law comes under advice and assistance rather than full civil legal aid. In a well-planned system, that situation should be avoidable.

You say that the unit cost of cases has risen. If solicitors' and advocates' fees have stayed on a straight line, would not it be fair to argue to the Treasury that the rise is due to increased Crown Office court costs rather than solicitors' and advocates' fees, although that is not an argument against reconsidering their fees? Solicitors' and advocates' expenses have gone up, but their fees have stayed on a straight line. Are you suggesting that solicitors and advocates are somehow extending the system so that they can earn more?

I am not aware of research to show why the unit cost has risen; I merely observed what a Treasury official would observe—that although fees are pegged, the unit cost keeps rising. Why the unit cost keeps rising is an interesting question and more research is required. The allegation that some of the rise is caused by lawyers cost chasing is easy to make but it has not been substantiated. I believe that the supplier-induced demand thesis, which some economists espouse, is an easy one that is not fully borne out by the facts. Economists have considered the matter in England and Wales. It is true that lawyers are economically rational—in other words, if you give them an incentive to work one way, they will work that way and if you give them an incentive to work another way, they will work another way. The allegation that solicitors or advocates are inflating their fees is not one that I would make, nor do I think that the facts would bear it out.

I did not make that allegation, but it is a logical conclusion to draw. If their fees are on a fixed line, they cannot affect the overall unit cost of cases. Their fees would be excluded.

That assumes that the same amount of work was done in previous cases as is done in current cases. It may be that changes in the law or in procedure mean that more work has to be done.

I do not want to put words in your mouth. I accept what you say about higher payments perhaps being needed in some areas, especially for advice and assistance in social welfare cases, to try to encourage people to go in that direction.

In your original evidence to the committee, you said:

"in my opinion, civil legal aid is certainly under-remunerated in Scotland."—[Official Report, Justice 1 Committee, 27 February 2001; c 2195.]

Is that the same as saying that civil legal aid practitioners are under-remunerated, or are you just saying that certain areas are under-remunerated?

My answer is both. The question of what is an appropriate level of fee turns on our expectation of what is a reasonable salary. I cannot answer that—what the state is prepared to pay legal aid practitioners is a question for policy makers. From my discussions with civil legal aid practitioners, I am persuaded that, by and large, the fee rates for civil legal aid practitioners in Scotland are, across the board, on the low side. In particular areas, such as social welfare law, people labour under a particular disincentive, because it predominantly involves advice and assistance.

You say "on the low side", which is a fairly measured comment. One of our witnesses described the legal aid system as being at "the stage of meltdown". Was that an exaggeration?

I am not sure that I am prepared to comment on—

I presume that, if it is at the stage of meltdown, next week we will see no civil legal aid cases.

Scottish Legal Aid Board research is mapping provision and considering the number of outlets and the number of solicitors that provide advice and assistance. The figure has gone up in the past seven years. The board has also looked at the number of lawyers doing civil legal aid; that figure, too, has gone up in the past seven years. Therefore, to say that no lawyers are willing to do civil legal aid work is not true. However, to say that there are disincentives to their doing civil legal aid work is true, and I am not sure that that is a good thing. What we do not yet have from research—although we hope to get it—is evidence on whether people who used to do a lot of civil legal aid are no longer doing it.

If I were the Treasury official looking at the system and I heard that more practitioners were coming forward, I would ask why I should pay them more when I was getting more volunteers at the current rates.

We do not know who is doing the work or how much they are doing. Something like 75 per cent of civil legal aid work is done by 25 per cent of the profession. A similar picture prevails in England and Wales. The English have concentrated resources on that 25 per cent. By and large, the franchises and contracts have gone to those people, on the argument that specialists in legal aid will be more committed to the system and will have more throughput, which means that there will be a greater economy of scale.

I thank you for your evidence, Professor Paterson. It has been helpful.