by Layla Link
Legal aid in the UK was introduced in 1950 as a second branch of the welfare state, the legal equivalent of the NHS. Legal aid can help meet the costs of legal advice, family mediation and representation in a court or tribunal.Whether or not a person is eligible to receive financial help with their legal issues will depend on three things: type of legal problem, income and probability of winning your case. After the Labour government introduced the Access to Justice Act in 1999, there were some major reforms introduced to improve the quality and accessibility of the legal services while not over-spending the government budget. To do this, the community legal service commission set up a community legal services partnership (CLS).
The CLS contains a fixed amount of money, set aside each year from the government budget. In the mid-to-late 1990s, the top lawyers doing legal aid work could earn £300,000, or more in a year! The direct funding from the community legal services fund will provide financial help for the following services: legal help, help at court, family mediation, legal representation and family help. However, some criticise the lack of state funding in key areas such as personal injury cases and cases of defamation and malicious falsehood. Comparisons with other jurisdictions are even more enlightening: a comparison by the Soldan Institute in 2007 discloses that while legal aid accounts for 13% of state funding for litigation in England and Wales, in a major European country such as Germany it is only 8%. This poses the question as to whether we are hindering ourselves in the UK by placing so much emphasis on state funding. To what extent is this state fund part of the future legal landscape for civil litigation? Is it now time to look beyond state aid to other forms of funding, such as legal insurance and third party funding?
So what are our options for reform? Before the event (BTE) insurance has traditionally been purchased as an add-on to a motor, home or commercial insurance policy; in case a future legal action has to be fought or defended. However, as people become more and more aware of their legal rights, and more willing to take legal action, the need for before the event insurance has never been greater, especially for businesses. BTE insurance for individuals and businesses would seem to be a positive alternative forwards. A wider application of BTE legal insurance could over the long term allow those who are not eligible for legal aid to get it and thereby widen the constricted access to justice considerably.
Third party funding is another way of moving forwards. Third Party Funding is an arrangement between a specialist funding company and a client, whereby the funder will agree to finance some or all of the client's legal fees in exchange for a share of the 'case proceeds'. While third party funding may appear an expensive option because a claimant agrees to give up a proportion of any damages to the funder. This is outweighed by the potential to unlock claims which could not otherwise be brought. It allows a partial recovery of damages, which is better than no recovery at all. Across other jurisdictions, other funding alternatives exist, such as contingency legal aid funds and supplementary legal aid schemes. However, there is a lack of costs protection in such schemes and therefore these are not suitable.
In conclusion, legal aid needs reform. It seems unlikely the situation will change; in 2006, Lord Carter claimed that in the UK we spend more on legal aid per capita than anywhere else in the world and that legal aid had increased from £1.5 bn to over £2 bn. What seems to be the best way forward is for BTE insurance to run alongside the existing legal aid scheme as it would allow a long term expansion of legal aid availability. Such alternative pathways are the reality of funding today.