Government proposals to slash the civil legal aid bill come under fire

The coalition government has introduced the Legal Aid, Sentencing and Punishment of Offenders Bill (LASPOB) in a bid to reduce the burden on taxpayer funded legal aid, which currently stands at £2.1 billion a year. The Law Society has described the proposals contained in LASPOB as the “single biggest attack on access to justice since the legal aid system was introduced". The government argues, however, that the legal aid system has become unaffordable and has encouraged litigious behaviour. The two main areas of civil legal aid to be cut by LASPOB are: (1) claims against the National Health Service (NHS); and (2) advice on welfare benefits. It also seeks to limit the effect of ‘no win no fee’ arrangements that the government claims have become too expensive.

How did England and Wales inherit such an expensive system in the first place? It appears the answer lies in the post-war welfare state. Prior to World War II, a patchwork of voluntary organisations were responsible for funding pro bono work on behalf of what were then termed ‘plaintiffs’. As a result of a report commissioned by the Lord Chancellor the Legal Aid Act 1949 was introduced. From 1972, most people in England and Wales were entitled to free means tested legal advice on any topic in English law. But universal entitlement has gradually been whittled away over the past 12 years. Various areas of legal work were dropped from legal aid representation while financial eligibility was substantially tightened. One of the first areas cut was legal aid in personal injury cases.

Understandably, LASPOB has been criticised by advice centre lawyers and medical negligence practitioners alike. They claim the reforms will deny justice for vulnerable people, such as debtors and victims of medical negligence and will ultimately end up costing the government more money. They assert that social welfare law can be complicated and removing the option of free specialist legal advice to someone, for example, imminently at risk of losing his or her home due to debt, will create injustice. In respect of claims against the NHS, medical negligence practitioners assert that such cases are by their nature complex and likely to be lengthy. The government claims that other agencies should be able to meet the demand of such cases, which are currently funded by legal aid.

The other major proposal in LASPOB is to limit the ‘no win no fee’ culture. After legal aid for personal injury cases was abandoned twelve years ago, lawyers started to bring ‘no win no fee’ claims based on the fact that claimants’ legal fees would be paid for by defendants if the claim was successful. Lawyers were allowed to claim twice as much from the losing party in the cases they won to make up for earning nothing in the cases they lost. These extra payments are referred to as ‘success fees’. Claimants started to take out insurance to cover the risk of being ordered to pay defendants’ legal costs. While successful claimants do not have to claim on the insurance, there is still a premium to pay for taking out the insurance in the first place; which has to be paid for by defendants. The cost of insurance premiums has increased the cost of defending "no win no fee" cases. This is the reason ‘no win no fee’ cases are so expensive for unsuccessful defendants and why the government wants to stop the practice whereby claimants get their success fees and most of their insurance premiums paid by defendants. Under the new proposals, successful claimants will pay their lawyer's fees out the damages they win. Under the new proposals, lawyers will be able to charge their clients a success fee which their clients will have to pay from their own damages.

The main reason why the government is so determined to save money for defendants is that often the taxpayer is funding defendants, such as local authorities, police authorities and the NHS litigation authority. While it accepts that defendants must pay successful claimants’ legal costs; the government does not accept that it should also compensate lawyers for the cases they lose! By removing ‘success fees’ from the litigation equation, the government hopes that the explosion in the number of medical negligence claims, (fuelled by conditional fee agreements), against the NHS will be extinguished.  It also hopes to limit the taxpayers’ burden of indirect funding of legal fees in unsuccessful cases brought against public authorities.

The Law Society recently commissioned economist Dr Graham Cookson from the School of Social Science and Public Policy at King’s College, London to analyse the impact the government’s proposals would have on the public purse. Dr Cookson’s report ‘Unintended Consequences’ estimates that the maximum the government would save regarding its proposed changes in the scope of legal aid funding is £100 million, and even this may be an overestimate.  He expects the government to save even less than this figure because other government departments will end up having to spend more if claimants can’t access the advice that they need. But Justice Minister, Ken Clarke disputes these figures. Mr Clarke estimates that, while precise estimates are difficult, the current view is that the proposals will save £350 million.

LASPOB has already been through the House of Commons and has just finished its committee stage in the House of Lords. When it starts its report stage next week there will be an opportunity to force concessions by the government, but Mr Clarke is no mood to entertain such concessions. He stated to the BBC that burgeoning welfare and medical negligence claims have become a ‘major burden’ on the NHS. With its already strident opposition to the Welfare Bill and the mooted opposition to LASPOB, Mr Clarke claims the House of Lords is making its own case for radical reform. In this regard, Mr Clarke observed that the UK has“…by far the most generous (legal aid) system in the world and has to be cut back. For the House of Lords to be lobbied by the Law Society and decide ‘no, no, no, this is far too hard on the lawyers and we want some of this put back’…is not something I am likely to accede to…”

Ironically, the government’s current Welfare Bill, which is facing a rocky passage through the House of Lords, is likely to create a huge demand for legal advice regarding welfare benefits. This advice, of course, will no longer be freely available!