Thursday, 8 September 2016

Why Legal Aid Needs Reform

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.

1 comment:

  1. In her article, “Why Legal Aid Needs Reform”, Layla Link argued for before-the-event insurance as an option for reform of the legal aid system. The article also stated that top legal aid lawyers could earn over £300,000 until 1990s. It also stated that in 2007 it was claimed that legal aid in England & Wales accounted for 13% of state funding for litigation, as compared with 8% in Germany.

    Anyone really interested in what lawyers in England & Wales earn should review Chapter 8 of Vol. 1 of the Jackson Review Preliminary Report for an analysis (Review of Civil Litigation costs: Preliminary Report, 13 May 2014 – Vol 1: Lord Jackson’s report determined that on average, remuneration of partners in private practice was £98,616, with assistant/associates earning £42,000. The weighted average for all solicitors was determined to be less than £70,000 (in 2014). Note this is the weighted average for all private practice lawyers, with legal aid solicitors salaries commonly being advertised at £25,000. Any implication that the cost of litigation in England & Wales is the result of ‘fat cat’ lawyers earning 6-figure salaries, be it in the civil or criminal legal systems, continues to be an urban myth.

    Any implication that the England & Wales legal aid system in 2007 was over generous in comparison to Germany is also a little unfair. Part of what the Jackson Review was trying to do was understand what the factors were that drove civil litigation costs in England & Wales. The England & Wales and Germany comparison figures come from a study conducted by the Soldan Institute for Law Practice Management (Hommerich and Kilian, Mandanten und ihre Anwälte: Ergebnisse einer Bevölkerungsumfrage zur Inanspruchnahme und Bewertung von Rechtsdienstleistungen, Bonn (2007)), with the summary published in the Jackson Review Preliminary Report (Jackson Review – Vol 2: The reason for the apparent higher cost of civil legal aid in England & Wales is not due to an overgenerous system, but the more strict rules in Germany civil litigation for recovery of costs, particularly limits on what can be recovered from the losing side. These more strict rules make estimates of the costs of civil litigation in Germany much more certain, with costs being limited to fixed statutory variables based upon the amount of damages being claimed or recovered. This makes insurance more widely available, whether before-the-event or after-the-event.

    Whatever the arguments are over the legal aid budget, it is clear that civil legal aid in now severely restricted. As a result, certain areas of law are suffering a national funding crisis. The Law Society is currently campaigning on the issue, stating that in a third of all England & Wales areas there is no more than one law firm providing housing legal aid - Family law is also suffering, as fans of The Archers will be well aware: Helen Titchener is not entitled to legal aid, whereas Rob Titchener is, in their ongoing custody battle for Henry and Jack-

    In practice, I and many readers of this post would not be eligible for civil legal aid. Criminal legal aid is also severely restricted and means tested. This means that if accused of a criminal offence, you would be responsible for the costs of your own defence, even if you were acquitted.

    Before-the-event insurance is arguably not a reform of the legal aid system; it is all that is left if legal aid has all but disappeared. If the NHS was made subject to severe means-testing, most of us would look to medial health insurance. Maybe we should check what legal insurance we have, too?


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